November 24, 2009
TAMALA LESTER, PLAINTIFF-RESPONDENT,
ARTHUR LESTER, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1490-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 27, 2009
Before Judges Carchman and Parrillo.
Defendant Arthur Lester appeals from a November 7, 2008 order of the Family Part denying his motion to reduce child support and awarding his ex-wife, plaintiff Tamala Lester, $2,500.00 in counsel fees, and from a December 9, 2008 order granting plaintiff $20,926.56 in additional counsel fees pursuant to our remand. We affirm in part and reverse in part.
Briefly, by way of background, the parties were married on June 10, 1990, had one child born in 1995, separated in 2004, and divorced by final judgment (FJD) on May 4, 2005. They executed a property settlement agreement (PSA) on January 17, 2005, which was later incorporated into the FJD. For purposes here relevant, the PSA provides that defendant pay child support of $350 weekly. At the time the PSA was executed, defendant was a sixty-two year old physician and president of the medical staff at Clara Maass Medical Center, earning approximately $230,000 annually, while plaintiff was a forty-six year old home improvement contractor, with no earnings that year.
About one year after the FJD, plaintiff moved for enforcement of litigant's rights (ELR), certifying that defendant was over $30,000 in child support arrears. In that same application, plaintiff also sought enforcement of the parties' separate contractual agreement concerning realty in Summit, New Jersey, unrelated to the marital estate and therefore not covered by the PSA.*fn1 Defendant cross-moved for a parenting time schedule and permission to take their child on a Florida trip. On November 17, 2006, the court awarded plaintiff $32,600 in child support arrears and fixed a parenting schedule. The court also ordered discovery and set a hearing date on the Summit property contract claim.
Following that plenary hearing on May 17, 2007, the court awarded plaintiff one-half ($40,500) of the equity remaining in the Summit home, but denied her request for counsel fees because plaintiff's breach of contract claims, being unrelated to the matrimonial action, were not claims for which counsel fees are authorized under Rule 5:3-5(c). The judge, however, did not address plaintiff's claim for counsel fees incurred in advocating the remainder of the relief sought in her enforcement motion.
Defendant appealed from that portion of the June 4, 2007 order awarding plaintiff $40,500 and plaintiff cross-appealed from the denial of her request for counsel fees. In an unpublished opinion, we affirmed as to the former, and as to the latter, we concluded that "the fact that [plaintiff] may not be entitled to counsel fees for prosecuting her claim for breach- of-contract damages does not preclude consideration of her request for counsel fees for those portions of her enforcement action clearly matrimonial in nature." Lester v. Lester, No. A-5812-06T3 (App. Div. July 1, 2008) (slip op. at 16-17). Thus, we remanded "for the limited purpose of reconsidering plaintiff's counsel fee request as it relates to matters in the enforcement action other than plaintiff's breach of contract claim." Ibid.
Consequently, on July, 11, 2008, plaintiff moved for attorneys fees, including appellate counsel fees and costs, which we directed the Family Part to consider in our interim order of August 14, 2008, pursuant to Rule 2:11-4. To this end, plaintiff's attorney submitted affidavits of services and schedules of fees showing billings of: (1) $1,625 for plaintiff's instant motion for counsel fees; (2) $7,087.25 for the parenting time and child support issues raised on her original motion in aid of litigant's rights; and (3) $12,214.31 for the entirety of the previous appellate litigation, with no further breakdown apportioning fees between contract and matrimonial fee issues.
While that matter was still pending, on October 3, 2008, defendant moved for a reduction in his child support payments, alleging that his pre-existing medical condition of psoriasis had worsened and negatively impacted his earnings. In support of this claim, defendant presented the report of his treating dermatologist, who stated that the condition was "extremely painful" and could lead to spontaneous bleeding. As a result of this condition, defendant claimed that he could no longer perform the "complex head and neck cancer surgeries" that were formerly part of his surgical practice, and accordingly was limited to "only the most simple and short surgical procedures," which he would perform two to four times per week. Defendant cited his declining earnings, which fell from $230,000 in 2004 to $202,000 in 2005, to $189,000 in 2006, and to $73,500 in 2007. He anticipated earnings in 2008 similar to those in 2007. Based on his decreased income, defendant requested a reduction in his weekly child support obligation to $170.
Following a hearing on November 7, 2008, the judge denied the application and awarded plaintiff $2,500 in attorney's fees and costs associated with plaintiff's defense of the motion. In denying any reduction in child support, the court cited to defendant's other assets, including $2 million in retirement savings, extravagant expenses and lifestyle (including a new Mercedes), and the fact that defendant continued to maintain a seven-plus person staff at his medical office, despite his alleged reduced workload.
Thereafter, on December 9, 2008, in a letter opinion, the judge rendered his decision on plaintiff's counsel fee application engendered by our earlier remand, awarding her $20,926.56 in counsel fees and costs pursuant to Rule 5:3-5(c). That award was divided as follows: "$7,087.25 [for] fees and costs incurred solely in regard to the parenting time and child support issues[;] $1,625 . . . for the instant [fee] application [incurred as a result of our remand][;] and $12,214.31 [for] the appellate matter." Defendant was ordered to pay the judgment in three equal installments of $6,975.52. In making this award, the judge cited a multitude of factors, including: (1) defendant's income and assets that far exceeded plaintiff's, who, at the time of the application, had no earned income and was using her credit cards and borrowed funds to pay her counsel fees; (2) the bad faith of defendant, who had amassed $32,600 in child support arrears by the return date of plaintiff's ELR motion; (3) plaintiff's accumulation of nearly $35,000 in counsel fees, which plaintiff has been satisfying from her own limited assets and by incurring debt; and (4) plaintiff's success at the trial and appellate levels.
On appeal, defendant raises the following issues:
I. PLAINTIFF'S FAILURE TO ALLOCATE BETWEEN SERVICES FOR WHICH FEES WERE AVAILABLE UNDER R. 4:42-9(a)(1) AND THOSE FOR WHICH FEES WERE UNAVAILABLE RENDERED HER FEE APPLICATION DEFECTIVE.
II. DEFENDANT MADE OUT A PRIMA FACIE CASE OF CHANGED CIRCUMSTANCES WARRANTING MODIFICATION OF HIS CHILD SUPPORT OBLIGATION.
III. THE COUNSEL FEE ASSESSED AGAINST DEFENDANT SHOULD BE REVERSED.
We disagree with defendant's contention that the court erred in denying his motion for a reduction in child support. A support order is "always subject to review and modification on a showing of 'changed circumstances.'" Lepis v. Lepis, 83 N.J. 139, 146 (1980) (citations omitted). A trial judge is afforded "'the utmost leeway and flexibility in determining what is just and equitable'" in assessing whether a support obligation should be modified. Id. at 147 (quoting Smith v. Smith, 72 N.J. 350, 360 (1977)). Of course, the party seeking modification carries the burden of showing "changed circumstances." Id. at 157. "A prima facie showing of changed circumstances must be made before a court will order discovery. . . ." Ibid. The changed circumstances must be material. Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006).
Courts have recognized a variety of situations that constitute "changed circumstances," including a change in the supporting spouse's income, or an illness or disability that arises after the original judgment. Lepis, supra, 83 N.J. at 151. However, [an] alleged reduction in income [is] only part of the overall circumstances [the Family Part judge is] required to consider in determining whether [the supporting spouse] met the burden of demonstrating a right to either discovery or a plenary hearing. . . . The trial court must consider-in both fixing and altering a support obligation-what is equitable and fair in all the circumstances. This requires not only an examination of the parties' earnings but also how they have expended their income and utilized their assets. [Donnelly v. Donnelly, 405 N.J. Super. 117, 130 (App. Div. 2009) (citations omitted).]
Additionally, "it is not enough that an obligor demonstrate a reduction in income; the obligor must also demonstrate how he or she has attempted to improve the diminishing circumstances."
Id. at 130 n.5 (citations omitted).
Moreover, the trial court should consider all of the movant's assets, as [i]t has long been the law of this State that courts have the authority to consider the assets and other financial circumstances of the parties in addition to their income when determining child support. The Legislature has specifically expressed its intent in that regard through adoption of N.J.S.A. 2A:34-23a. . . . [It is] clear [that] child support [is] based upon total family resources and all parents' resources should be considered available for support of the children.
[Connell v. Connell, 313 N.J. Super. 426, 432 (App. Div. 1998) (citing Cleveland v. Cleveland, 249 N.J. Super. 96, 101-02 (App. Div. 1991)).]
Whether a change in circumstances is "material," Lepis, supra, 83 N.J. at 159, depends largely on whether the parties, at the time the PSA was executed, reasonably anticipated the very condition claimed to be changed. Glass v. Glass, 366 N.J. Super. 357, 376 (App. Div.), certif. denied, 180 N.J. 354 (2004); Larbig, supra, 384 N.J. Super. at 23; Dilger v. Dilger, 242 N.J. Super. 380, 387-88 (Ch. Div. 1990). In other words, a court must consider whether "[t]he circumstances claimed to be changed by [the movant's] income are, in reality, the circumstances contemplated by the very agreement [the movant] now seeks to abrogate." Glass, supra, 366 N.J. Super. at 376 (citing Aronson v. Aronson, 245 N.J. Super. 354, 363 (App. Div. 1991)). In Larbig, supra, we held that the defendant had not provided sufficient evidence of material changed circumstances largely because the parties' PSA acknowledged a downturn in defendant's company's fortunes, and therefore, "the circumstances presented by defendant in support of his motion 'mirror[ed] the situation at the time of the divorce.'" 384 N.J. Super. at 22.
Thus, in determining whether to modify a child support order, "[a]ll relevant considerations should [be] addressed, including the parties' understanding at the time of execution of the PSA." Glass, supra, 366 N.J. Super. at 376. The "guiding principle" remains, however, the "best interests of the child." Lepis, supra, 83 N.J. at 157.
On review, a motion to modify a support obligation "'rests upon its own particular footing and the appellate court must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters.'" Donnelly, supra, 405 N.J. Super. at 127 (quoting Larbig, supra, 384 N.J. Super. at 21). Thus, "[t]he findings of a trial judge are entitled to great deference and will be overturned only if 'we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Platt v. Platt, 384 N.J. Super. 418, 425 (App. Div. 2006) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)).
Governed by these principles, we are satisfied that the Family Part judge properly found defendant failed to establish a prima facie case of material changed circumstances. As noted, defendant's decreased income was only one of several factors considered in the overall assessment of whether defendant had met his initial burden. See Donnelly, supra, 405 N.J. Super. at 130. Here, the judge also considered a multitude of other relevant circumstances, including the fact that defendant's medical condition pre-existed the PSA and its potential worsening was presumably contemplated and understood by the parties at the time the PSA was executed. Moreover, the judge appropriately considered defendant's expenses and whether he "attempted to improve the diminishing circumstances," id. at 130 n.5, noting that defendant had failed to reduce staff or costs at his medical office despite his declining surgical practice. Most significant, in determining defendant's ability to pay, the judge took into account defendant's considerable assets, in addition to his income, see Connell, supra, 313 N.J. Super. at 432, and concluded that defendant "could . . . continue to pay at least[ ] what he has been paying [in child support] over the last three of four years . . . ." We are in accord with this determination.
Having rejected defendant's request to reduce his child support obligation, the judge awarded plaintiff $2,500 in counsel fees and costs incurred in opposing defendant's modification application. We find no abuse of discretion in light of plaintiff's ultimate success and defendant's far superior ability to pay. R. 5:3-5(c). Kelly v. Kelly, 262 N.J. Super. 303, 307 (Ch. Div. 1992) (citing Anzalone v. Anzalone Bros. Inc., 185 N.J. Super. 481, 486-87 (App. Div. 1982)).
We now turn to the propriety of the remainder of plaintiff's counsel fee award, amounting to $20,926.56 and representing fees and costs incurred both at the trial and appellate levels. In challenging the award, defendant contends that, on remand, plaintiff failed to follow our direction and to properly allocate counsel fees and costs between those expended on the Summit realty issue, which are not recoverable, and those expended on strictly matrimonial matters, which are recoverable. We disagree with this contention in part. As for the separate awards of $7,087.25 and $1,625, associated with plaintiff's November 17, 2006 ELR motion and her July 11, 2008 motion for counsel fees respectively, we find no deviation from our remand direction nor any abuse of discretion. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443-44 (2001). However, as to the $12,214.31 award for unallocated appellate fees and costs, we exercise our original jurisdiction to modify the award in an amount we deem a fair and reasonable recovery for that portion of the appellate expenses associated with strictly matrimonial matters.
As a preliminary matter, we note that Rule 5:3-5(c) permits a court, in its discretion, to make an allowance for legal fees in a matrimonial action after considering a multitude of factors.*fn2 However, Rule 4:42-9(a)(1) prohibits an allowance of fees for a non-matrimonial cause of action joined with matrimonial causes. Pressler, Current N.J. Court Rules, comment 4.2 on R. 5:3-5 (2010).
Additionally, "[a]n application for an allowance of counsel fees must be supported by an affidavit of services addressing the factors enumerated by Rules of Professional Conduct 1.5(a) . . . ." Chestone v. Chestone, 322 N.J. Super. 250, 256 (App. Div. 1999) (citing R. 4:42-9(b)).*fn3 The filing of an affidavit is a prerequisite to an award of counsel fees under this rule, but a "technically defective affidavit" will not prevent the court from granting a fee allowance. Pressler, supra, comment 3.1 on R. 4:42-9 (citing Glen v. June, 344 N.J. Super. 371, 381-82 (App. Div. 2001); Scullion v. State Farm Ins. Co., 345 N.J. Super. 431, 439 (App. Div. 2001); Kingsdorf v. Kingsdorf, 351 N.J. Super. 144, 158 (App. Div. 2002); Elizabeth Bd. of Educ. v. New Jersey Transit Corp., 342 N.J. Super. 262, 273 (App. Div. 2001)).
Where a party, by virtue of his or her need, seeks to compel the other party to pay all or part of counsel fees incurred, only those fees that represent reasonable compensation for such legal services performed and were reasonably necessary in the prosecution or defense of the litigation may be awarded. [Chestone, supra, 322 N.J. Super. at 257 (citing Mayer v. Mayer, 180 N.J. Super. 164, 169 (App. Div.), certif. denied, 88 N.J. 494 (1981)).]
"When a party is entitled to attorney's fees for only some of the work performed, the relevant services should be identified or a reasonable explanation made for the failure to do so." Ricci v. Corporate Exp. of the East, Inc., 344 N.J. Super. 39, 48 (App. Div. 2001) (citing Shuttleworth v. City of Camden, 258 N.J. Super. 573, 598 n. 17 (App. Div.), certif. denied, 133 N.J. 429 (1992)), certif. denied, 171 N.J. 42 (2002). Thus, in our earlier decision, we held that as part of the trial court's consideration of whether to award plaintiff counsel fees and costs, only those portions of her enforcement action that were "clearly matrimonial in nature[ ]" are recoverable. Lester, supra, slip op. at 17.
We are satisfied that as to the two counsel fee awards of $7,087.25 and $1,625, the trial court adhered to our direction. On remand, plaintiff's counsel submitted a Certification of Services, dated May 7, 2007, detailing all services performed on behalf of plaintiff from the time her September 2006 post- judgment ELR motion was filed up until, but not including, trial on the Summit property issue. Attached thereto was a "Schedule of Fees on Parenting Time and Child Support Issues," which set forth only those fees listed in the Certification of Services and specifically excluded all charges that were incurred solely in connection with the Summit property matter. Thus, fees associated with discovery and trial on the Summit realty matter were not included. Also, plaintiff's counsel represented that she reviewed each piece of correspondence that appeared in the Certification of Services and only listed in the Schedule correspondence that referenced either child support or parenting time. Another Certification of Services, dated October 21, 2008, detailed all of plaintiff's fees associated with her fee application incurred as the result of this court's remand.
Having properly determined, as a threshold matter, plaintiff's entitlement to counsel fees due to, on the one hand, defendant's superior financial condition and bad faith, and, on the other hand, plaintiff's need and success on the merits, the Family Part judge awarded plaintiff the full amount of these two requests. Defendant challenges these awards, claiming they include some charges for services performed on the Summit property issue. He cites, as an example, a charge for 2.5 hours at a March 1, 2007 case management conference during which the judge set a trial date on the Summit property issue. However, the truly substantive provisions of the order emanating from that conference addressed child support and parenting time, evidencing both the significance and continuing nature of these family-related issues. And although plaintiff sought the entirety of fees associated with an ELR motion that included a contractual claim, clearly the paramount relief requested pertained to the $30,000 plus in child support arrears defendant amassed post-FJD. Clearly, the efforts of plaintiff's counsel to screen out from the fee request any services devoted exclusively to issues concerning the Summit property - which at that time were mainly procedural only - were reasonable and in compliance with the spirit of both our direction on remand and the law.
We find differently, however, with respect to the appellate fee request of $12,214.31, which evidences no such allocation. On this score, plaintiff submitted a Certification of Services, dated July 11, 2008, that detailed all of plaintiff's fees incurred in connection with both defendant's appeal from the Summit property judgment and her cross-appeal from the order denying her counsel fees.
Rule 2:11-4 provides for attorney's fees on appeal, and states that fees for services rendered on appeal may be allowed "[i]n all actions in which an award of counsel fees is permitted by Rule 4:42-9(a). . . ." That rule, in turn, allows legal fees in a family action. R. 4:42-9(a)(1).
Clearly then, plaintiff was allowed attorney's fees and costs for her cross-appeal, which was directly related to, and emanated from, the underlying family action. However, she was not permitted recovery of those fees and costs associated with defendant's appeal, which concerned a purely contractual matter, unrelated to the matrimonial action. Although she argues on this appeal that the services were mixed and not capable of bifurcation, she offers no explanation why. Yet, plaintiff bears the burden of identifying only the relevant recoverable services or proffering a reasonable explanation for her failure to do so. Ricci, supra, 344 N.J. Super. at 48. As noted, plaintiff has done neither.
Contrary to plaintiff's contention, we view the appeal and cross-appeal here as divisible, inasmuch as the facts, law and theories pertinent to each are discrete and distinct. To be sure, we appreciate the difficulty at times of isolating and distinguishing charges for services related to a single, mixed work product, the contents of which were generated simultaneously and concurrently. Nevertheless, we do not view the task at hand as incapable of completion. Indeed, in multiple claim scenarios, counsel are frequently asked to distinguish between services rendered on successful and unsuccessful claims. See, e.g., Klawitter v. City of Trenton, 395 N.J. Super. 302, 307 (App. Div. 2007); Kluczyk v. Tropicana Products, Inc., 368 N.J. Super. 479, 499-500 (App. Div. 2004); Robb v. Ridgewood Bd. of Educ., 269 N.J. Super. 394, 404-05 (Ch. Div. 1993). As the court in Robb, supra, noted:
If the claims on which the plaintiff did not prevail and the claims upon which she did prevail are distinctly different claims that are based on different facts and legal theories, the court cannot award any fee for services on the unsuccessful claims. However, if the unsuccessful and the successful claims "involve a common core of facts" or are "based on related legal theories," it will be difficult to divide the hours expended on a claim-by-claim basis. . . .
The court may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success. The second method is particularly useful where the unsuccessful claims are related to the successful claims; in that event, it will frequently be impossible to identify a specific number of hours devoted to the unsuccessful, related claims. In any event, the decision as to the method to be used rests in the equitable discretion of the court. [269 N.J. Super. at 404-405 (internal citations omitted and emphasis added).]
Here, plaintiff failed to offer any alternative to full payment, such as reducing the fee by some factor to account for the wrongful inclusion of the contract claim services. Thus, in awarding plaintiff the full amount of her appellate fee request, which included counsel fees on a non-matrimonial matter, the Family Part judge abused his discretion.
Given its prior litigation history, we are reluctant to remand this matter once again for a re-determination of appellate counsel fees. Indeed, it appears at this point that the efforts of counsel to recreate from billing records an informed basis on which to identify a specific number of hours devoted to the matrimonial claim would be less than fruitful. Instead, in the interests of judicial economy and fairness, and because the matter of appellate fees resides with us in the first instance, Rule 2:11-4, we opt to exercise our original jurisdiction, Rule 2:10-5, and render a final determination on the issue. The method we choose to use is to reduce the full appellate fee award ($12,214.31) by a factor of one-third ($4,071.44), amounting to a counsel fee award of $8,142.87. We view the one-third reduction as fair and equitable, reflective of both the prominence of, and level of effort related to, the family matters.
Affirmed in part; reversed in part; and remanded for the entry of judgment in accordance with this opinion.