September 21, 2009
PAMELA A. SCHVEY, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
ROBERT M. SCHVEY, DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-549-94.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 21, 2009
Before Judges Graves and Grall.
Plaintiff's appeal and defendant's cross-appeal are from post-judgment orders entered on November 2, 2007. The orders terminate alimony, reduce child support for their youngest son, reinstate alimony upon emancipation of that child, emancipate his older brother and vacate all arrears.
Plaintiff Pamela A. Schvey and defendant Robert M. Schvey were married in 1977 and have two sons, the first born in 1985 and the second in 1987. The complaint for divorce was filed in 1993, and the final judgment terminating the Schveys' marriage was entered on October 1, 1997 and amended on January 9, 1998. The judgment incorporates their agreement on custody, equitable distribution and support.*fn1
Defendant agreed to pay monthly support of $4166.66 for the first three years. Thereafter, subject to an application by either party for review based on relative income, the agreed amount was $4500 monthly, $2250 as alimony and $2250 as child support. The Schveys' agreement also addresses college expenses. Responsibility for costs not covered by the children's trust funds, $107,000 per child at the time, is to be allocated "between the parties in proportion to their income at the time" after "all other means of funding the educational expenses are exhausted."
By post-judgment order of November 15, 2002, defendant's support payments were modified on his motion. At the time of that motion, plaintiff had no earned income and her unearned income, exclusive of alimony, was $2891. The judge found that defendant's earned and unearned income, $80,000, was about twenty-percent lower than the parties anticipated at the time of the judgment, and he reduced both support obligations by about twenty percent. Effective December 1, 2002, the monthly obligation was $3700, $1500 as alimony and $2200 as child support. The child support was allocated at $550 per month for the Schveys' eldest son and $1650 for their youngest son. The judge did not apply the child support guidelines.
Although no appeal was taken from the order of November 15, 2002, on December 5, 2002, defendant moved to have child support calculated pursuant to the guidelines, and plaintiff filed motions to have support reinstated or increased and to enforce the judgment. On June 16, 2003, the judge entered an order disposing of the parties' competing motions for modification of support and plaintiff's motion for enforcement of the judgment.
On appeal and cross-appeal from the June 16, 2003 order, this court reversed and remanded, directing the judge to consider specific issues: 1) whether there was "good cause" warranting disregard of the child support guidelines pursuant to Rule 5:6A; and 2) plaintiff's claim that defendant owed $1,071,819 for marital assets that were not distributed in accordance with the judgment. Schvey v. Schvey, No. A-6316-02 (App. Div. June 6, 2005) (slip op. at 5-6). Consequently, apart from any modification required by Rule 5:6A, the support order of November 15, 2002 was controlling and subject to revision only upon a showing of changed circumstances arising after its entry. Lepis v. Lepis, 83 N.J. 139, 146 (1980).
On remand, the judge did not consider the question of "good cause" under Rule 5:6A because defendant did not provide his tax return, but the judge ruled on plaintiff's application to enforce equitable distribution, defendant's new motion to eliminate a cost-of-living adjustment imposed pursuant to Rule 5:6B, and plaintiff's new requests for payment of the children's medical and camp expenses. Plaintiff appealed and challenged those rulings. Schvey v. Schvey, No. A-0150-06 (App. Div. June 23, 2008).
While that appeal was pending, the judge considered new applications for modification of support - plaintiff's application was filed on June 25, 2007 and defendant's on July 20, 2007.*fn2 Plaintiff sought alimony and child support at the rate established in the judgment or higher, and defendant, alleging inability to work attributable to his health and grounds for emancipation of Schveys' eldest son, sought a reduction of support.*fn3
Following exchange of discovery, the Schveys testified at a hearing held in September 2007. Defendant, who had provided a note from his doctor in March, was granted leave to testify by telephone. The court received documentary evidence and posed questions that were answered by plaintiff and defendant. There were no other witnesses.
Defendant was fifty-two years of age and plaintiff was fifty-three. Their eldest son had graduated from college in June 2007 and enrolled in a post-graduate program. Their youngest son had completed his second year of college out-of-state.
According to defendant, in 1996, which was prior to the divorce, he had quadruple bypass surgery. Although he was able to return to work thereafter and reported income from his business in excess of $188,000 in 2001, in October 2002 he had a heart attack. Earned income reported on his federal income tax returns for years 2002 through 2005 was: 2002, $48,544; 2003, $10,541; 2004, $3028; and 2005, $0.*fn4 His total income, including earned income, taxable and non-taxable interest, capital gains and income from rental was higher: 2002, $66,570; 2003, $23,113; 2004, $16,553; and 2005, $7530. According to defendant, he earned about $2000 in 2006 and had not yet filed his tax return for that year.
Defendant's testimony was as follows. In December 2006 he had a second bypass surgery, which his cardiologist said could not be delayed because his condition could not be addressed through angioplasty. In February 2007, defendant developed congestive heart failure, from which he was still suffering. His symptoms of fatigue and chest pain precluded him from doing what he had in the past. Defendant acknowledged that he was not receiving disability benefits from social security and had not received any disability benefits for about three years.*fn5 The support payments he had made in recent years were possible only because of contributions from his mother, who had since retired and was no longer in a position to assist him. By the time of the hearing, he had accumulated arrears on support in excess of $44,000.
Plaintiff produced evidence to discredit defendant's claimed inability to work - photographs and membership lists reflecting defendant's participation in a fraternal organization and a club for magicians, his performances at magic shows and his volunteer teaching. Defendant, however, explained that the course met for two hours, one night a week over five to six weeks. He claimed that he was not involved in any business and his worsening health required him to curtail all of his activities.
Over plaintiff's objection, a letter dated March 29, 2007, from defendant's cardiologist, uncertified, was read into the record. It includes references to defendant's December 2006 surgery and subsequent retention of fluid and a "new onset mitral regurgitation of cryptic . . . etiology." The doctor expressed his "doubt" that plaintiff would "be in a condition for work, travel, or court cases in the near future."
At the conclusion of the hearing, the judge asked defendant to submit an updated report on the status of his health. Defendant sent a letter, uncertified, from a different doctor, Michael L. Waters, M.D.:
Mr. Schevy has been a patient of mine for several years. He suffered his first heart attack at age 43 and has been suffering long standing Diabetic Neuropathy, Hyperlipidemia, Chronic Fatigue, as well as, worsening Coronary Artery Disease ever since. Mr. Schvey has suffered from Chronic Fatigue and we have tried various medications without success. He was under the care of a Psychiatrist for many years but this was deemed to be futile and this was stopped some time ago. Please see recent cardiology evaluation by Dr. Joel Schrank, dated March 29, 2007, for his coronary status. For this and the above medical reasons I do not feel Mr. Schvey can work in any capacity due to his severe fatigue which sometimes requires him to sleep 14-20 hours per day. Mr. Schvey is barely able to maintain his activities of daily living due on the above medical regimen. I really do not foresee any improvement in the future for Mr. Schvey as we have tried every type of medical and psychiatric regiment to maximize his functional capacity.
If you have any further concerns or questions, please do not hesitate to contact my office.
Plaintiff produced evidence of her earnings. At the time of the hearing, she had recently obtained employment as a paralegal at a salary of $65,000 per year. During the two preceding years, she had earned, respectively, $31,000 and $4092. She owned rental property, but her tax returns reflect a loss of income on that venture - -$3774 in 2005 and -$4663 in 2006. Apart from depreciation expenses of $4601 in 2005 and $3344 in 2006, expenses deducted from gross rent received were limited to advertising, utilities, property taxes and cleaning and maintenance.
The judge determined that it was appropriate to emancipate the parties' eldest son as of the date he graduated from college, June 1, 2007.
The judge recited plaintiff's present salary, her earned income for two prior years and her total rent receipts rather than her income from rental. The judge also recited defendant's income for the three prior years. The judge found that plaintiff now had greater income than her former husband who "almost died," is "unable to [work]" and "faces failing health." The judge noted, "This is very difficult since no order of either alimony or child support of any past amount can be sustained by Mr. Schvey, yet the need for the child still exists." He also observed that the parties both had retirement accounts.
Concluding that the child support guidelines did not apply because the Schveys' unemancipated son was attending college and not living at home during the school year, the judge exercised his discretion to set the amount of child support and addressed alimony.
Based on these present circumstances, the payment of alimony and child support is reduced to the amount of $300 weekly which shall be paid ($1290 monthly) for the remaining [un]emancipated child until he graduates college. This figure shall include any obligation for [defendant] to make college contribution. The previous stated arrears [$44,400] will be diminished to $18,000 (as child support is not dischargeable) and reduced to judgment in favor of the plaintiff. All other arrears are extinguished, which the court has retroactively applied on the blended factors that cannot be supported with exact [arithmetic] but rather is an attempt at fairness. The $300 weekly will be deemed child support so that [plaintiff] has no tax consequence. When the child emancipates, the child support payment will end and alimony will be reinstated at the rate of $300 weekly. [Plaintiff] may seek to increase that amount at that time if changed circumstances exist.
The judge's written decision was issued on October 10, 2007. Following competing requests for reconsideration and plaintiff's motion based on newly discovered evidence, on November 2, 2007, the judge issued two orders. The first order provides:
1. [Eldest son] is deemed emancipated as of June 1, 2007, since he has graduated college on that date.
5. Effective this date, the payment of alimony is terminated and the payment of child support is reduced to $300 weekly, payable $1290 monthly, until [the youngest son] graduates from college. This figure includes any obligation for the Defendant to make college contribution.
6. When [the youngest son] is emancipated, the child support payment will end and alimony will be reinstated at the rate of $300 weekly, payable $1290 monthly. Either party may seek to increase/decrease that amount at that time if changed circumstances exist.
The second order further decrees:
2. While presently the guidelines no longer apply, they do apply from December 1, 2002 to August 1, 2003 for [the eldest son], when he commenced college, and from December 1, 2002 to August 1, 2005 for [the youngest son], when he commenced college.
Accordingly, all outstanding arrears (including alimony, child support and cost-of-living increases) are reduced to $-00-.
On appeal both parties claim error in the judge's ruling on alimony. Plaintiff contends that the record does not support termination of alimony, and defendant objects to reinstatement of alimony upon emancipation of the Schveys' youngest son. In addition, both plaintiff and defendant object to the adjustment of arrears. Plaintiff argues that it was error to calculate support for the children prior to their enrollment in college in accordance with the guidelines and contends that retroactive modification of child support during that period was prohibited by N.J.S.A. 2A:17-56.23a. Defendant claims that eradication of all arrears did not fully compensate him for his overpayment of support since December 1, 2002.
Decisions on alimony and child support are entrusted to the sound exercise of the judge's discretion. See Caplan v. Caplan, 182 N.J. 250, 271 (2005) (discussing discretion in the award of child support); Heinl v. Heinl, 287 N.J. Super. 337, 345 (App. Div. 1996) (discussing alimony). Our review is limited to determining whether the judge's factual findings are "supported by adequate, substantial, credible evidence" and the conclusions reached were based on a proper understanding of the relevant law. See Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (discussing deference owed to the factual findings of judges assigned to the family part due to their "special expertise" in family matters); N.J. Div. of Youth & Family Servs. v. Z.P.R., 351 N.J. Super. 427, 434 (App. Div. 2002) (noting that deference is not afforded to determinations based on a "misunderstanding of the applicable legal principles").
A reviewing court's authority to defer is largely dependent upon the judge's compliance with his or her obligation to state findings of fact and conclusions of law as required by Rule 1:7-4. In order to comply, the judge must articulate factual findings and correlate them with the principles of law. Curtis v. Finneran, 83 N.J. 563, 570 (1980). When that is not done, a reviewing court cannot know whether the ultimate decision is based on the law and facts or is the product of arbitrary action resting on an impermissible basis. See Monte v. Monte, 212 N.J. Super. 557, 565 (App. Div. 1986) (discussing the necessity for an adequate explanation of a judge's reasons that correlates the facts and legal conclusions); see generally State v. Madan, 366 N.J. Super. 98, 109-10 (App. Div. 2004) (discussing "judicial discretion").
Equally, if not more important, especially in cases involving protracted litigation and serial post-judgment motions in a contentious divorce case, an inadequate explanation of the order leaves the litigants to "speculate about the reasons" for the decision. Rosenberg v. Bunce, 214 N.J. Super. 300, 304 (App. Div. 1986). As a consequence of the inevitable speculation, the order serves as an invitation to file motions for reconsideration and appeal. Orders that lack clarity, further exacerbate the problem. The procedural history set forth above and the issues raised on this appeal illustrate the point.
Both parties object to the order terminating and reinstating alimony. Although not stated by the judge, a reasonable interpretation of that order based on its practical impact is that the judge intended to suspend alimony until the Schveys' youngest son completed college. The question for this court is whether a suspension is consistent with the law governing modification given the facts found by the trial court.
Support orders are subject to increase or reduction when the party seeking modification shows that the relief is warranted. Lepis, supra, 83 N.J. at 157. The changes relevant are those that substantially affect need and ability to pay.
Id. at 151, 155. Circumstances such as income, employment, disability with impact on earning capacity or living expenses, changes in the children's needs and emancipation of a child are relevant. Id. at 151-52. One who seeks modification can establish a sufficient change based upon circumstances that have an impact on either party's need and ability to pay or "a combination of changes on the part of both parties which together have altered the status quo which existed at the time of the entry of the support order under review." Stamberg v. Stamberg, 302 N.J. Super. 35, 42 (App. Div. 1997).*fn6
A temporary change is generally deemed inadequate to warrant modification of support. Lepis, supra, 83 N.J. at 151.
Nonetheless, there is limited precedent for suspension of support for a defined period related to a specific circumstance warranting a suspension. For example, this court has approved such measures in cases where the payor's ability to meet the support obligation is due to a term of incarceration or the payee's need for support is diminished by his or her incarceration or a period of cohabitation warranting retroactive modification for that period. Calbi v. Calbi, 396 N.J. Super. 532, 543-44 (App. Div. 2007); Kuron v. Hamilton, 331 N.J. Super. 561, 572 (App. Div. 2000); Garlinger v. Garlinger, 137 N.J. Super. 56, 65 (App. Div. 1975).
Based on this record and the facts found by the trial court, we are unable to identify evidence of a change or combination of changes in circumstances that support a suspension of alimony for a period coterminous with defendant's obligation to pay child support. The trial court concluded that defendant had been and presently remained unable to work. The only competent evidence of defendant's condition was his testimony about his symptoms and tax returns reflecting diminished earnings, but that testimony was not adequate to support the conclusion that defendant would recover by the date of his son's graduation. Similarly, nothing in the record permits the inference that plaintiff will have a greater need for alimony when her youngest son finishes college.*fn7
Accordingly, the order suspending alimony for a defined period is reversed.
Neither party established grounds for modification of alimony. Plaintiff, who had a significant increase in earned income since November 15, 2002, did not establish a need for additional alimony.*fn8 And, defendant did not have competent medical evidence to establish that his diminished earnings are attributable to a permanent health condition rather than a decision to retire early; the income a party can "derive from personal attention to business," not actual income, is the measure of ability to pay alimony. Lepis, supra, 83 N.J. at 150; see Capaccio v. Capaccio, 321 N.J. Super. 46, 58 & n.16 (App. Div. 1999) (discussing proof of incapacity); Deegan v. Deegan, 254 N.J. Super. 350, 358 (App. Div. 1992) (discussing early retirement). Without competent evidence of his involuntary unemployment or plaintiff's ability to maintain the marital standard of living on $65,000 per year, defendant was not entitled to relief based on the apparent disparity in actual income. Lepis, supra, 83 N.J. at 152. Accordingly, the adjustment of alimony is reversed without prejudice to any future motion filed in conformity with Rule 5:5-4(a) and based on circumstances extant at the time of filing when compared with those, stated above, existing at the time of the November 15, 2002 order.
In contrast, the record demonstrates changed circumstances warranting modification of child support. When the controlling child support order was entered on November 15, 2002, both children were living with plaintiff. At the time of this hearing on modification, one of the Schveys' children had graduated from college and the other was attending college and living on campus during the school year. Thus, there was evidence of a substantial change in the needs of the children.
When a child is attending college and living on campus, contributions to college expenses and continued support for that child are "discrete yet related obligations," the extent of which "depends on the facts of each case." Hudson v. Hudson, 315 N.J. Super. 577, 584-85 (App. Div. 1998); see Beck v. Beck, 239 N.J. Super. 183, 190 (App. Div. 1990) (discussing tuition and reduction in child support included in unallocated alimony); cf. R. 5:7-4 (requiring a showing of "good cause" for award of unallocated support).
College expenses and child support due the parent of primary residence are not governed by the child support guidelines when the child attends college away from home. Child Support Guidelines, Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A, ¶ 18 at 2401 (2010). The decision to allocate responsibility for college expenses and support is left to the discretion of the trial court, which is to be applied after considering the relevant facts, including any agreement about college, and applying the relevant statutory factors and case law. See N.J.S.A. 2A:34-23(a); Newburgh v. Arrigo, 88 N.J. 529, 545 (1982); Hudson, supra, 315 N.J. Super. at 582, 584-85.
In this case, we cannot defer to the judge's determinations on child support and college expenses because there are no relevant factual findings or legal reasons provided. All that is stated is the conclusion - $1290 per month for tuition and support combined.*fn9 Unfortunately, we cannot bring this litigation to an end through exercise of our original jurisdiction because the record is not sufficiently clear.
R. 2:10-5; Tomaino v. Burman, 364 N.J. Super. 224, 234-35 (App. Div. 2003), certif. denied, 179 N.J. 310 (2004). Accordingly, we reverse and remand for further proceedings.
Arrears must be adjusted on remand. "Prior to the enactment of [N.J.S.A. 2A:17-56.23a], modification or extinguishment of child support arrears was addressed to the sound discretion of the court." Mallamo v. Mallamo, 280 N.J. Super. 8, 13 (App. Div. 1995). Pursuant to N.J.S.A. 2A:17-56.23a, a child support payment "shall be a judgment by operation of law on and after the date it is due." The statute further provides:
No payment or installment of an order for child support, or those portions of an order which are allocated for child support established prior to or subsequent to the effective date of [N.J.S.A. 2A:17-56.23a], shall be retroactively modified by the court except with respect to the period during which there is a pending application for modification, but only from the date the notice of motion was mailed either directly or through the appropriate agent.
Plaintiff contends that the judge's adjustment of arrears retroactive to December 1, 2002 contravened the statute. It appears the plaintiff is, in part, correct. Presumably arrears were adjusted in response to this court's remand of 2005, see Schvey, No. A-6316-02, supra, slip op. at 6-7, but defendant's claim for modification was dismissed after that remand, and a new application was filed on some subsequent date.
This is the third remand in this case. Review of the transcripts indicates that reassignment of the case is appropriate. See P.T. v. M.S., 325 N.J. Super. 193, 221 (App. Div. 1999) (discussing circumstances warranting reassignment of case). The narrow issues on remand focus largely on present circumstances, and, in any event, the judge who decides the issues on remand will require updated submissions from the parties that are in compliance with Rule 5:5-4(a), and the litigants will likely require additional discovery.*fn10 Further, the record does not clearly identify the documentary evidence that was considered, and the inquisitorial nature of the proceeding would not warrant reliance on the testimony or prior credibility determinations, which were made without the benefit of cross-examination by the parties.
Reversed and remanded for further proceedings in conformity with this opinion.