November 2, 2009
JOSEPH E. MIELE, PLAINTIFF-APPELLANT/CROSS-RESPONDENT,
KATHY LEE MIELE, DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-337-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 7, 2009
Before Judges Miniman and Waugh.
Plaintiff Joseph Miele appeals the denial of his motion for a reduction in alimony. Defendant Kathy Lee Miele cross-appeals the denial of her application for counsel fees. We reverse and remand for further proceedings consistent with this opinion.
We discern the following facts from the record. The parties were married in October 1978 and divorced in December 2005. They had two children, both of whom were emancipated at the time of the divorce.
The financial terms of the divorce were resolved through a property settlement agreement (PSA). The first paragraph of the alimony section of the PSA obligated Joseph*fn1 to pay "permanent alimony" in the amount of $2,167.00 per month. It provided that the obligation was based on Joseph's "anticipated gross income in the amount of $165,000.00 per year" and Kathy's "imputed gross income in the amount of $25,000.00 per year." The yearly alimony obligation was $26,004.00. That paragraph further provided that Joseph's obligation to pay alimony would terminate on his or Kathy's death, or Kathy's remarriage or cohabitation. It also provided that the obligation "may be modified or terminated based upon changed circumstances including, but not limited to, [Joseph's] retirement."
The second paragraph of the alimony section provided that, "in addition to the foregoing," Joseph was to "make a lump-sum payment to [Kathy] in lieu of a greater alimony award, which payment shall be in the amount of $170,000.00." The following additional language was handwritten as an addenda to that requirement: "The $170,000.00 payment to be made by [Joseph] to [Kathy] represents a buy-out of twelve (12) years of alimony at the rate of $26,000.00 per year, which amount has been tax effected and discounted for present value."
The fourth paragraph of the alimony section set forth the parties' agreement that they would exchange their W-2 and 1099 forms, as well as their tax returns, for the years 2006, 2007, and 2008. It provided that there would be no further financial disclosure absent a court order.
It appears that the reference to Joseph's "anticipated gross income" is related to the fact he had involuntarily changed employment in 2005, the year the PSA was signed. From 1986 until December 2004, when he was laid off, Joseph was employed by Charter One Mortgage. His total income from that employment for 2004 was $331,295.72, of which $109,298.00 came from the sale of stock options.*fn2 The non-stock-related income for 2004 was $229,997.72.
In January 2005, Joseph obtained employment at National City Mortgage, at which he is apparently paid on a commission basis only. For 2005, he earned $152,975.10, slightly less than the "anticipated gross income" of $165,000.00 mentioned in the PSA. In 2006, he earned $107,853.55; and in 2007, he earned $89,976.30. In connection with the motion at issue on this appeal, Joseph estimated that his 2008 income would be in the neighborhood of $95,000.00.
Joseph moved for a reduction in his alimony obligation in July 2007. Kathy opposed the motion and sought counsel fees. The Family Part judge denied the motion and awarded counsel fees to Kathy. No appeal was taken from that order.
Joseph filed a second motion for a reduction in alimony in July 2008. Kathy again opposed the motion and sought counsel fees. A different Family Part judge denied the motion, but chose not to award counsel fees.
After setting forth some of the underlying facts, the judge explained her reasons for denying Joseph's motion as follows:
The key case with regard to modification of alimony is Lepis v. Lepis, 83 N.J. 139 (1980). In Lepis, the court held that "support orders can be modified at any time and are subject to review and modification on a showing of substantial change in circumstances." [Id.] at 145-46 . Lepis recognized that a change in circumstances warranting a modification includes the following:
1. An increase in the cost of living;
2. Decrease in the supporting spouse's income;
3. Illness, disability, or infirmity arising out of the original judgment;
4. Subsequent employment by the defendant spouse; [Id. at 151.]
The Supreme Court further noted that:
The courts have consistently rejected requests for modification based on circumstances, which are only temporary or which are expected but have not yet occurred. [Ibid.]
The Lepis court further noted that:
The supporting spouse's obligation is mainly determined by the quality of economic life during the marriage, not bare survival.
The needs of the dependent spouse and children "contemplate their continued maintenance at the standard of living they have been accustomed to prior to their separation." [Id. at 150.]
The Supreme Court followed its decision in Lepis with the case of Innes v. Innes, 117 N.J. 496, 504 (1990) stating that, "[t]emporary circumstances are an insufficient basis for modification," affirming Bonnano v. Bonnano, 4 N.J. 268, 275 (1950), where the Supreme Court stated that temporary unemployment was not sufficient to modify support.
In this case, the plaintiff's circumstances are temporary at best. The plaintiff's income fluctuates from year to year due to the real estate market. The plaintiff's current salary does not constitute grounds for a modification, as there is no proof that this amount is anything but temporary. Due to the nature of the real estate/mortgage financing business, it is always impossible to predict what the plaintiff's end of year income will be.
Additionally, in Lynn v. Lynn, 165 N.J. Super. 328 (App. Div.) certif. denied, 81 N.J. 52 (1979), a volunt[ary] but good faith, change in medical specialties resulting in a severe, although temporary, decrease in defendant's earning capacity was not a cause for decrease in child support. In that case, other assets were available upon which to draw. Similarly, the plaintiff has a substantial amount of assets available upon which to draw for his support obligation. The plaintiff has a Merrill Lynch IRA, which according to his Case Information Statement is valued at $579,000. The plaintiff also has a property, which is located at 87 East Parsonage Way in Manalapan, New Jersey, which, as set forth on his Case Information Statement, is valued at $630,000. Therefore, the plaintiff has approximately $1,209,000 in assets upon which to draw for his alimony obligation. Furthermore, as previously set forth in plaintiff's prior Case Information Statement, he sets forth that he is a fifty (50%) percent owner of a real estate office, which is named ReMax Team Realty located in Old Bridge, New Jersey.
It should be noted that in Halliwell v. Halliwell, 326 N.J. Super. 442,  (App. Div. 1999), the court stated that:
Current earnings are not the sole criteria to establish a parties' obligation for support.
Additionally, in Lynn v. Lynn, 165 N.J. Super. 328 (App. Div.) certif. denied, 81 N.J. 52 (1979), the potential earning of an individual, not his or her actual income, should be considered when determining the amount a supporting party must pay ([Halliwell, supra,] 326 N.J. Super. at 448).
The judge denied the request for counsel fees because she found that Joseph had not brought the motion in bad faith.
Joseph appealed the denial of his motion; and Kathy cross-appealed the denial of counsel fees.
Before turning to the specific issues raised on 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 those 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 motion judge treated Joseph's application as a straight-forward change of circumstances case under Lepis v. Lepis, 83 N.J. 139, 146 (1980). Based upon our review of the record, we disagree with that approach.
In this case, the supporting spouse had an involuntary change of employment during the pendency of the divorce proceedings. The terms of the PSA appear to recognize that there would be a decrease in Joseph's earned income from the level he sustained at Charter One Mortgage. Although his 2004 earned income, not including the realization of stock options, had been close to $230,000.00, the PSA set forth an "anticipated gross income in the amount of $165,000.00 per year" from his new employment, approximately $65,000.00 less than he had been earning at Charter One Mortgage. It would appear that the $165,000.00 figure was a projection based on Joseph's anticipated 2005 income at National City Mortgage. The projection was relatively accurate, in that Joseph's 2005 earned income was $152,975.10.
However, the parties apparently foresaw the need for close monitoring of the accuracy of the "anticipated gross income," because they provided for a three-year period during which they would exchange income and tax documents. Presumably, the monitoring was intended to disclose whether Joseph's actual income was higher or lower than the $165,000.00 projected, so that either party would be in a position to seek an adjustment of alimony based upon the facts as they occurred.
During the first two years of that three-year period, 2006 and 2007, Joseph's earned income was $107,853.55 and $89,976.30, respectively. Although the 2008 income was not known when the motion was decided, Joseph had estimated it as approximately $95,000.00. Assuming that the actual 2008 income was in that range, the result demonstrates that the PSA's prediction of Joseph's income was significantly inaccurate for the three years during which the financial information was to be exchanged.
We are unable to defer to the motion judge's exercise of discretion because it is apparent from her written opinion that she did not consider the facts of the case before her in the light of the language of the PSA and the events that gave rise to its terms. Whether modification is necessary rests on a determination relying "not only on numbers, but also on 'what, in light of all the facts presented to [the judge], is equitable and fair, giving due weight to the strong public policy favoring stability of arrangements.'" Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div.), certif. denied, 180 N.J. 354 (2004) (quoting Smith v. Smith, 72 N.J. 350, 360 (1977)); see also Rolnick v. Rolnick, 262 N.J. Super. 343, 353 (App. Div. 1993). Such a fairness and equity determination involves consideration of such issues as the adequacy of the agreement at inception, the presumed understanding of the parties at that time, the reasonable expectation of the parties during the life of the agreement, and the manner in which the parties acted and relied on the agreement. Glass, supra, 366 N.J. Super. at 373; see Savarese v. Corcoran, 311 N.J. Super. 240, 248-49 (Ch. Div. 1997) (finding the parties intended the PSA, which included an anti-Lepis clause, to be an integrated agreement, in light of what the parties "actually understood at the time and how they conducted themselves subsequently"), aff'd, 311 N.J. Super. 182 (App. Div. 1998); cf. Dilger v. Dilger, 242 N.J. Super. 380, 385 (Ch. Div. 1990) (stating that to determine whether defendant's retirement is a changed circumstance warranting modification of alimony, the court must first "examin[e] the intention of the parties as expressed in the agreement itself").
The judge's citation of Lynn v. Lynn, 165 N.J. Super. 328 (App. Div.), certif. denied, 81 N.J. 52 (1979), which involved a supporting spouse who voluntarily changed his employment, suggests that she may have believed that Joseph was underemployed. If so, we see no factual basis for that in the record. See Dorfman v. Dorfman, 315 N.J. Super. 511, 516-17 (App. Div. 1998) (discussing evidence of the job-search efforts and results deemed sufficient to demonstrate that the husband's underemployment was neither temporary nor voluntary).
Finally, we note that Joseph has demonstrated two, and possibly three, straight years in which his income has been substantially below the "anticipated gross income" estimated by the parties in the PSA. At some point, a reduction in earned income is more than merely passing or temporary. This may especially be the case during a significant downturn involving the economic sector in which the supporting spouse is employed. As we held in Larbig, supra, 384 N.J. Super. at 23, there is "no brightline rule by which to measure when a changed circumstance has endured long enough to warrant a modification of a support obligation." While "such matters turn on the discretionary determinations of Family Part judges, based upon their experience as applied to all the relevant circumstances presented," ibid., we are, as indicated earlier, unable to defer to the motion judge's discretion on the record before us.
We now turn to the cross-appeal. Kathy seeks reversal of the motion judge's denial of her application for counsel fees. While the decision is a discretionary one, Gotlib v. Gotlib, 399 N.J. Super. 295, 314-15 (App. Div. 2008), we cannot address the issue because the motion judge did not provide a sufficient analysis of the governing factors found in Rule 5:3-5(c). While the moving party's good or bad faith in bringing a motion is one factor to be considered, it is not the only factor. We therefore remand for further consideration and explanation.
Consequently, we reverse the order on appeal and remand to the Family Part for reconsideration of Joseph's motion in the context of a plenary hearing. The judge must consider the language of the PSA with respect to alimony and Joseph's "anticipated gross income"; the particular facts that gave rise to the numbers used in the PSA, including the decision to prepay half of the alimony; Joseph's actual income; his prospects for the future; and the parties' then current financial information. We express no opinion as to what the result of that inquiry should be. We also remand for further consideration and explanation as to Kathy's application for counsel fees, which should be made in the context of the remand on the substantive issue presented by Joseph's motion.
Reversed and remanded. Jurisdiction is not retained.