October 21, 2009
EDWARD J. MARTIN, III, PLAINTIFF-RESPONDENT,
DANA LISA DIXON N/K/A DANA LISA GENOVESE, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1971-94C.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 1, 2009
Before Judges Payne and Waugh.
Defendant Dana Lisa Genovese appeals from post-judgment orders requiring her to pay one-half of her children's college expenses, denying her applications for reimbursement of certain unreimbursed healthcare expenses, denying counsel fees, and denying reconsideration. We reverse and remand for a plenary hearing on the issues of the college expenses and unreimbursed healthcare expenses, and for further explanation of the decision not to award counsel fees.
Plaintiff Edward Martin and Genovese were married in 1985. They had three children: a son born in 1985; a daughter born in 1987; and a second daughter born in 1991. The parties were divorced in 1995. The final judgment of divorce included a property settlement agreement (PSA).
The PSA provided that "[t]he Husband shall provide health insurance for the benefit of the children until the children are emancipated." An addendum to the agreement stated that "[m]edical insurance deductibles will be paid for ninety (90%) percent by the husband and ten (10%) percent by the wife." The PSA did not address responsibility for post-secondary education. Both Martin and Genovese have since remarried. Genovese's new husband has been providing health insurance coverage for the children through his employer-provided plan, apparently at no additional expense.
Martin is a fifty percent owner and full-time employee of a ski and snowboard shop. He asserts that his business has lost money in recent years. In 2005, the business reported a loss of $18,255. In 2006, it reported a loss of $36,263. Martin's individual tax returns reported adjusted gross income of $62,158 in 2006, and $67,416 in 2007. He pays Genovese $625.00 in monthly child support. Martin claimed that his contributions to the older daughter's college costs and rent in 2007 totaled $20,135.45.
Genovese contends that she cannot work due to medical conditions that cause her pain. She has supported that claim with letters from her chiropractor and neurologist. Genovese reported a joint gross adjusted income of $120,409 in 2005, $135,618 in 2006, and $142,490 in 2007, attributable to her current husband's salary. She asserts that she does not have the assets to contribute to the children's education, claiming that the residence and vacation home she owns with her husband are heavily mortgaged and possess little equity from which to borrow for that purpose.
The children's living arrangements differ. In 2006, the son was living with Genovese. He attended Rutgers University full time, but transferred to a part-time program at Brookdale College. Later in 2006, he ended his enrollment and began working full time for Martin's business. The Family Part has since declared him to be emancipated.
At the time the motions involved in this appeal were filed, the older daughter was attending Rutgers University on a full-time basis. She lived on campus during the school year, and with Martin during the summer. The younger daughter attends high school and, at the time the motions were filed, lived with Genovese. She had occasional overnights at Martin's home. However, during the pendency of this appeal, the Family Part granted residential custody of the younger daughter to Martin.
In May 2007, Martin filed a post-judgment motion seeking to
(1) emancipate the son; (2) impute $20,000 of income to Genovese; (3) recalculate child support to reflect changes in circumstances; and (4) require Genovese to provide health insurance for the children. Genovese filed a cross motion seeking to (1) increase Martin's child support payments; (2) require Martin to pay for all college costs incurred by the older daughter; (3) require Martin to be responsible for health insurance; and (4) require Martin to pay her counsel fees and costs. Both parties sought other relief not relevant to this appeal.
Following oral argument on July 27, 2007, the Family Part judge entered an order (1) emancipating the son; (2) denying Genovese's request for a plenary hearing; (3) denying a credit towards Martin's payment of child support; (4) requiring Genovese's current husband to continue health insurance coverage for the children through his employer-provided plan; (5) denying Genovese's request for counsel fees; and (6) requiring the parties to "split the costs of the children's college education on a pro rata basis after the children have applied for all scholarships, loans, grants, and other forms of financial aid."
Martin's attorney wrote to the motion judge on August 29, 2007, seeking clarification of that part of the order dealing with college costs and requesting a conference to clarify its terms. Following a conference held in September 2007, the judge entered an order on October 1, 2007, vacating the requirement that the parties split college costs, and setting a discovery period of sixty days on the issue of the children's higher education costs.
On April 29, 2008, Genovese filed a motion seeking to require Martin to (1) contribute to college costs for both daughters; (2) provide their health insurance; and (3) pay counsel fees. Martin filed a cross-motion seeking to compel Genovese to contribute to the college costs. The judge issued an order on June 11, 2008, requiring Genovese to pay one-half of the college expenses from 2007 forward. The order required Genovese to pay one-half of the older daughter's 2007 expenses within thirty days, and to reimburse Martin for one-half of all future college expenses within thirty days of receiving notice of the expenses. The parties were ordered to split college expenses for the younger daughter equally. Genovese's motion concerning medical insurance and expenses was denied. The judge denied both parties' requests for counsel fees.
With respect to college costs, the judge explained his reasons as follows:
Since [the older daughter] is in her last year of college, the primary focus is now on each party's financial ability to pay the costs and the resources available to either party. The Court's decision to vacate the original order splitting college expenses on a pro rata basis is based on the Court's finding that Newburgh [v. Arrigo, 88 N.J. 529, 545 (1982),] looks at more than just income.
The discovery period was ordered after the income of the parties was known and when the resources of the parties needed to be determined in light of the Newburgh holding.
Both [the older daughter] and [son] attended Rutgers University. According to Mr. Martin's estimation, he spent nearly $40,000 on both children's education, including housing for [the daughter].
Although the Court has already decided that Ms. Genovese does not have the financial income to cover these expenses, it appears that she does have the resources to borrow the money as Mr. Martin did against a particular asset, such as her home.
Ms. Genovese does not report the value of her property on her CIS. However, she indicates that she has borrowed $150,000 against her home pursuant to a second and third mortgage. Furthermore, she has a summer home that she has borrowed against.
Since Ms. Genovese is married, only one-half of these resources should be attributed to her ability to pay, leaving her with access to at least $75,000. I'm satisfied these funds should be considered in the allocation of college expenses.
Mr. Martin indicates in his certification that Ms. Genovese's one-half share is approximately $20,000, a sum much less than the amount available through loans against her share of the marital assets held with her current husband. Ms. Genovese has the ability to pay one-half of the college expenses.
Since the plaintiff's motion to compel the defendant to contribute toward college expenses was not filed until June 2007, Ms. Genovese's responsibility toward the children's college expenses should be limited to the billing statements dated 2007 and beyond.
Ms. Genovese should pay one-half of [the older daughter's] 2007 college expenses within 30 days. In the future, one-half of all college expenses should be reimbursed to Mr. Martin within 30 days of receiving notice.
Mr. Martin's current wife co-signed a loan for [the older daughter] under the agreement that those monies would be used for her college expenses. Mr. Martin argues that because the loan proceeds were to be designated to college expenses, Ms. Genovese should be responsible for her one-half share of the liability in the event that [the daughter] defaults on that loan.
It would not be just for the Court to force a party into an agreement for which that party never bargained. There is no proof of Ms. Genovese's agreement to co-sign the loan for [the daughter] that was distributed through Union Federal Savings Bank. Motion to compel Ms. Genovese to now act as a surety on that loan is denied.
Genovese filed a motion for reconsideration on July 3, 2008. Martin filed a cross-motion, seeking to compel Genovese to reinstate the son's health insurance coverage or, alternatively, to require her to pay for all of the son's unpaid medical bills. The judge heard oral argument on the motions on August 1, 2008, after which he delivered an oral decision on August 5, 2008. With respect to the college expenses, he held as follows:
[Genovese] argues that the earlier decision of this Court to consider a current marital asset is palpably incorrect based on case law. In counsel's letter brief on behalf of [Genovese], reliance is placed upon Hudson v. Hudson, 315 N.J. Super. 577 (App. Div. 1998). In Hudson, the Appellate Court overturned a lower Court's decision that had incorrectly relied upon Ribner v. Ribner, 290 N.J. Super. 66 (App. Div. 1996), to include the current spouse's income in its methodology for determining child support and college contribution.
The Court held that, "the new guidelines exclude from consideration of a parent's gross income, 'income from other household members,' including a current spouse who is not 'legally responsible for the support of the child, for whom support is being established.'" [Hudson, supra, 315 N.J. Super. at 583 (quoting Pressler, Current N.J. Court Rules, Appendix IX-B at 2031-32).]
The matter before the Appellate Court concerned both child support and college contributions, and involved a methodology that incorporated a third party current spouse's income into the calculations. [Id. at 580-81.] Conversely, the matter before this Court involves college contributions alone, and significantly, a parent's access to financial resources.
In regard to determining an obligor's financial capabilities, the Appellate Court stated that despite the change in the child support guidelines, and its implications for the application of Ribner, the case still retains vitality as we conclude that a current spouse's income is still relevant in the determination of the financial resources of a parent, and the impact of such resources on determining a parent's contribution to college expenses. [Id. at 583.]
[Genovese's] access to borrow against the marital asset has to be considered in this situation. She is a half owner of the property. And part of a marital lifestyle that frequently borrows against assets to obtain extra fiscal resources.
Although [Genovese] does not generate an income, she makes it clear that her current spouse contributes to all of her shelter, food and other necessary expenses. Were she not married, she would have to find the financial resources to pay for those necessary expenses.
Perhaps she would invest her distribution from the former marriage in high yield investments. In Esposito v. Esposito, 158 N.J. Super. 285[, 300] (App. Div. 1978), the Court explained how an obligor has the opportunity to earn income on an equitable distribution award. I will not labor the methodology that the Esposito Court utilized in order to show how an equitable distribution asset can be effectively invested in order to produce additional income.
[Genovese's] access to assets purchased during the course of her new marriage should be considered for the purposes of calculating her obligation for college expenses.
The expenses for [the daughter] have exceeded $10,000 in the last year. Given the fact that [Genovese] by her admission borrowed [approximately] 420,000  dollars for only one of the marital assets leads me to conclude that she is capable of contributing to a portion of the children's college education.
[Genovese] argues that these funds have already been spent on remodeling, [the daughter's] graduation party, loan repayments, car repairs and other expenses. And while some of those expenses such as the car repairs and the graduation party were for the children, neither of the remaining expenses take precedence over the college education of the children.
I'm satisfied that [Genovese] is responsible for allocating her borrowed funds toward her children's college education. The order that directed [Genovese] to be responsible for one-half of those college funds stands.
On August 5, 2008, the judge entered an order denying Genovese's motion for reconsideration and finding Martin's cross-motion concerning the son's health insurance to be moot.
This appeal followed.
On appeal, Genovese challenges the motion judge's determination that she should pay one-half of the daughters' college expenses, relying on her disability, the encumbered nature of her assets, the impropriety of requiring her current husband to support the children of her prior marriage, and the judge's failure to hold a plenary hearing. She also challenges the denial of counsel fees and the judge's application of laches to bar her claim for unreimbursed medical expenses.
Before turning to the specific issues raised in Genovese's appeal, we briefly address our standard of review. We ordinarily accord great deference to the discretionary decisions of Family Part judges. Donnelly v. Donnelly, 405 N.J. Super. 117, 127 (App. Div. 2009) (citing Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006)). Similar deference is accorded to the factual findings of Family Part judges. Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). However, in this case, there were no findings of fact based upon an evidentiary hearing. A judge's purely legal decisions are subject to our plenary review. Crespo v. Crespo, 395 N.J. Super. 190, 194 (App. Div. 2007); Lobiondo v. O'Callaghan, 357 N.J. Super. 488, 495 (App. Div.), certif. denied, 177 N.J. 224 (2003).
The primary issue on appeal concerns the Family Part's order that Genovese pay one-half of the daughters' college expenses. Although a very fact sensitive determination, it was made in this case without a plenary hearing, despite Genovese's request that one be held.
In Newburgh v. Arrigo, 88 N.J. 529, 545 (1982), the Supreme Court established a non-exhaustive list of factors that courts should consider in evaluating whether a parent is obligated to contribute to the expenses of a child's post-secondary education. Those factors include "whether the parent, if still living with the child, would have contributed toward the costs of the requested higher education," the parent's and child's expectation with respect to higher education, the financial resources available to the parents and the child, as well as the child's aptitude for the higher education sought, and the relationship of the child to the paying parent. Ibid. Six years after Newburgh was decided, the Legislature codified those factors in N.J.S.A. 2A:34-23(a). Gac v. Gac, 186 N.J. 535, 543 (2006).
Consequently, both the Legislature and the courts recognize that parents may be responsible for supporting their children while they pursue higher education under appropriate circumstances. Kiken v. Kiken, 149 N.J. 441, 450 (1997) (citing N.J.S.A. 2A:34-23(a); Newburgh, supra, 88 N.J. at 543-44). "[A] trial judge should balance the statutory criteria of N.J.S.A. 2A:34-23(a) and the Newburgh factors, as well as any other relevant circumstances, to reach a fair and just decision whether and, if so, in what amount, a parent or parents must contribute to a child's educational expenses." Gac, supra, 186 N.J. at 543.
In the matter before us, the parents do not appear to contest the desirability of having their two daughters attend college. The sole contested issue is how the expenses of their education should be paid. Genovese has asserted that she is not able to work because of a disability. Although Martin contested that issue, the motion judge accepted Genovese's assertion without holding a plenary hearing. However, he correctly noted that Genovese's inability to work does not end the inquiry because, under Newburgh, the court considers "the financial resources of both parents" in addition to "the ability of the parent to pay." Newburgh, supra, 88 N.J. at 545. See Weitzman v. Weitzman, 228 N.J. Super. 346, 357-58 (App. Div. 1988), certif. denied, 114 N.J. 505 (1989) (requiring parent to contribute to college expenses from an inheritance received shortly following the child's graduation).
The problem on this appeal is that we do not have sufficient information with respect to the motion judge's determination that Genovese pay one-half of the older daughter's recent expenses and all of the younger daughter's college expenses to determine whether there was an abuse of discretion in his doing so.
We agree with the judge that Genovese's assets may be considered in determining her ability to contribute to college costs. Many parents, whether divorced or not, pay for their children's college expenses by either selling or borrowing against assets. However, there is no analysis of what proportion of those assets is to be made available and how much overall is to be paid for college expenses. The order is particularly open ended with respect to the younger daughter.
As we held in Hudson v. Hudson, 315 N.J. Super. 577, 584 (App. Div. 1998), "[a] court cannot consider issues such as college contribution in a vacuum and disregard substantial economic benefits and financial resources inuring to the benefit of a parent as a result of a remarriage." While a court cannot compel a parent's new spouse to support his or her step-children, the court can take the new spouse's financial position into account in deciding whether to require the parent to provide support. Ibid. Although, the "limit of a parent's college contribution should not exceed that parent's income [or in this case assets] whether earned, unearned or imputed." Ibid.
We also agree that Genovese cannot be permitted to avoid her responsibility to her children and their educational needs simply by spending or encumbering all personal assets so as to make them unavailable. See Connell v. Connell, 313 N.J. Super. 426, 432 (App. Div. 1998) ("The voluntary choice of the father placing his inheritance in a non-income producing asset should not result in exclusion of that asset from consideration in the child support equation."). Indeed, under the appropriate circumstances, it can be inferred from a party's conduct that there was an intent to "insulate it from consideration for support of [the] children." Id. at 432-33.
We have concluded that there needs to be a complete factual record and analysis by the motion judge with respect to the financial situation of the parties and, to the extent appropriate, the support available to Genovese from her current husband. If the judge believes that all of Genovese's available assets are to be used to fund the college expenses, the judge must explain his reasons and ensure that Genovese has adequate support from other sources, including her current husband. In addition, the judge must determine what happened to the assets received by Genovese in equitable distribution, as well as any separate assets. The judge must then determine whether any of those assets were used for purposes that would shield them from consideration in determining her ability to contribute to the children's educational expenses.
At the same time, the judge should determine whether Genovese is unable to work if Martin raises a genuine issue of material fact on that issue. Finally, the judge must clearly articulate the basis for determining that college costs should be split equally, in light of the apparently unequal financial situation of the parties. In doing so, the judge must be mindful of the possibility that the two parents together may not have sufficient resources to pay for all of the college expenses or that such payments may need to be made over time.
Consequently, we vacate that portion of the order on appeal that requires Genovese to bear one-half of the children's college expenses and remand for further proceedings consistent with this decision.
Genovese also challenges the motion judge's determination that her claim for reimbursement of medical expenses was barred by the doctrine of laches. Martin argues that Genovese cannot raise the issue because she did not file a timely appeal, inasmuch as that issue was not raised in her motion for reconsideration. We do not, however, read Rule 2:4-3(e) as tolling the time to appeal only as to those issues raised in the motion for reconsideration. To read the rule as Martin suggests would result in bifurcated appeals. Consequently, we reach the merits of the issue.
Genovese correctly cites our decision in Gotlib v. Gotlib, 399 N.J. Super. 295, 304-307 (App. Div. 2008), for the general proposition that the right to child support, including recovery of unreimbursed healthcare expenses, belongs to the child and is not subject to waiver by the parent, including through application of the doctrine of laches. See also L.V. v. R.S., 347 N.J. Super. 33, 40-43 (App. Div. 2002).
Consequently, we reverse and remand to the Family Part for disposition of the issue at the plenary hearing. At that time, both parties must be prepared to document their respective claims and defenses with respect to unreimbursed healthcare expenses.
Finally, Genovese seeks reversal of the motion judge's denial of her application for counsel fees. While the decision is a discretionary one, Gotlib, supra, 399 N.J. Super. at 314-15, we cannot address the issue because the motion judge did not provide any real analysis of the governing factors found in Rule 5:3-5(c). Consequently, we reverse and remand for further consideration and explanation, expressing no opinion on the merits of the claim.
In summary, we reverse and remand for a plenary hearing on the issue of the children's college expenses and the unreimbursed healthcare expenses, as well as further consideration and explanation with respect to the issue of counsel fees.
Reversed and remanded.
© 1992-2009 VersusLaw Inc.