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Droussiotis v. Droussiotis


October 1, 2009


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Union County, Docket No. FM-20-710-02V.

Per curiam.


Submitted September 16, 2009

Before Judges Graves, Sabatino, and J. N. Harris.

Christakis S. Droussiotis (Christakis) appeals from the August 15, 2008 final order of the Family Part denying his motion for modification of the parties' property settlement agreement, declining to compel the parties to amend their respective 2004 and 2005 income tax returns, and awarding June Droussiotis (June) counsel fees. We affirm substantially for the reasons stated by Judge Lisa F. Chrystal in her twenty-six-page Statement of Reasons attached to the final order.

We briefly add the following. June and Christakis were married in 1985; their marriage terminated in 2003. Four children were born of the union. On August 26, 2003, June and Christakis, with the extensive advice of their respective counsel and others, entered into a comprehensive arrangement to govern their separate lives post-divorce. Their arrangement was memorialized in a twenty-six-page Property Settlement Agreement (Agreement) that was incorporated in the final judgment of divorce.

Along with other financial provisions of the Agreement - such as child support, capitalization of the education fund, and insurance - was the following alimony clause that is the main source of the parties' current dispute:

3.1 Permanent Non-taxable Alimony. In consideration of the other provisions of this Agreement, commencing on the effective date of this Agreement, Husband agrees to pay to Wife permanent non-taxable alimony in the sum of eight thousand dollars ($8,000) per month. [Emphasis added.]

Paragraph 3.11 of the Agreement added the only other pertinent reference to alimony:*fn1

In addition to the non-taxable alimony above, for the period January 1, 2006 through December 31, 2018, Husband shall pay to Wife as taxable alimony, a sum equal to 30% of the gross amount of any additional forms of compensation (cash or non-cash) received by husband over and above his base salary within 5 days of his receipt of same. [Emphasis added.]

The parties expressly eschewed identifying any payments from Christakis to June as child support, notwithstanding his obligation to fund substantial categories of expenses earmarked for the couple's children. However, child support was provisionally considered, if alimony terminated pursuant to Paragraph 3.2. In that event, Christakis promised to pay June "child support for their unemancipated children in accordance with the marital lifestyle to be agreed upon by the parties or decided by a Court of Law."

In the calendar year following the divorce, as Christakis began to prepare his 2003 federal income tax return, he requested that June supply him with her personal financial and tax information so that he could calculate June's taX consequences resulting from his payment of $8,000 per month "non-taxable alimony."*fn2 Christakis interpreted the phrase "non-taxable alimony" in the Agreement to mean that such payments would be reportable by June as income taxable to her and, on the other hand, deductible on his own tax returns. Christakis claims that he was prepared to pay June dollar-for-dollar to compensate her for whatever negative tax consequences flowed from her receipt and reporting of the non-taxable alimony. He expected that June would likely endure little or no tax effect from the $8,000 per month alimony payments because they would be offset by June's expected itemized deductions such as mortgage interest and real property taxes, together with personal exemptions. His hope was that June's substantial deductions and exemptions would offset both her then-meager income as well as a significant portion of his alimony payments, only requiring him to compensate June with a relatively small amount to offset the tax effect. Things did not work out that way.

Christakis's approach is the antithesis of the agreed-upon "non-taxable alimony," because it requires, in the first instance, that Christakis's monthly payments be exposed to June's taxing authorities and be taxable, in the first instance, as income to her. This was something the parties clearly intended to avoid. If implemented this way, it would negate entirely the agreed-upon denomination of the payments as "non-taxable." The Agreement does not purport whatsoever to provide for taxation of June first, and reimbursement by Christakis second.

June's counter-methodology was simpler and more efficient. It involved merely not reporting the $8,000 per month as taxable income to her affected taxing authorities, leaving it entirely to Christakis and his affected taxing authorities to assign tax responsibility for the monthly payments. The Agreement is neither ambiguous nor capable of producing an unjust result for either of the contracting parties.

"Applying principles of fairness and justice, a judge sitting in a court of equity has a broad range of discretion to fashion the appropriate remedy in order to vindicate a wrong consistent with principles of fairness, justice, and the law." Graziano v. Grant, 326 N.J. Super. 328, 342 (App. Div. 1999). The Supreme Court has held:

Courts generally should not tinker with a finely drawn and precise contract entered into by experienced business people that regulates their financial affairs.

Equitable relief is not available merely because enforcement of the contract causes hardship to one of the parties. A court cannot 'abrogate the terms of a contract' unless there is a settled equitable principle, such as fraud, mistake, or accident, allowing for such intervention.

[Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 223-24 (2005) (quoting Dunkin' Donuts of Am., Inc. v. Middletown Donut Corp., 100 N.J. 166, 183-84 (1985)).]

"[I]t is not the function of the court to make a better contract for the parties, or to supply terms that have not been agreed upon. If the terms of a contract are clear, [the court] must enforce the contract as written and not make a better contract for either party." Graziano, supra, 326 N.J. Super. at 342 (citation omitted).

Christakis claims that June's execution of the non-taxable alimony provisions of the Agreement has left him near-bankrupt because of tax deficiencies assessed against him, to the point of rendering the Agreement unconscionable. He further argues that he has demonstrated changed circumstances sufficient to adjust the mode of operation of the Agreement. Finally, he argues that the Agreement is either conclusively interpretable as he construes it, or it is ambiguous, thereby entitling him to a plenary hearing to determine the intentions of the parties regarding non-taxable alimony. We agree with none of this.

The Statement of Reasons of the motion judge thoroughly addresses all issues in a careful and decisionally-accurate manner. We have no occasion to revisit, much less adjust, the well-developed conclusions of the Family Part judge in this case, including the court's detailed and reasonable analysis relating to the reallocation of counsel fees. R. 2:11-3(e)(1)(A) and (E). A trial court has broad discretion with regard to such counsel fees. R. 4:42-9(a)(1); R. 5:3-5(c); Williams v. Williams, 59 N.J. 229, 233 (1971). We detect no abuse of this principled discretion in the present matter.


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