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Caprio v. Caprio

January 21, 2010


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Somerset County, Docket No. FM-18-153-04.

Per curiam.


Submitted September 21, 2009

Before Judges Rodríguez, Reisner and Chambers.

Ray V. Caprio (ex-husband) appeals from four post-divorce judgment orders. The May 5, 2008 order granted summary judgment in favor of Joann Caprio (ex-wife) and denied ex-husband's application for modification of his alimony obligation based on changed circumstances. The July 31, 2008 order denied reconsideration. The October 8, 2008 order denied an evidentiary hearing on ex-husband's medical condition, which allegedly impacts his gross annual income. The October 10, 2008 order awarded counsel fees to ex-wife. We reverse and remand, concluding that in light of conflicting evidence, the motion judge should have conducted an evidentiary hearing rather than deciding the matter on summary judgment.

The parties were divorced on December 22, 2003, after fourteen years of marriage. They have a thirteen-year-old daughter. However, the child support award is not an issue on this appeal. The parties' Property Settlement Agreement (PSA), which was incorporated into the judgment of divorce, provides that ex-husband would pay alimony for a term of fifteen years at $130,000 per year for the first ten years and $80,000 per year for the last five years. The PSA also provides that:

[s]aid alimony payments are based upon the [ex-husband's] gross annual income in excess of $500,000.00 per year. In the event that his gross annual income falls below $500,000.00 per year, then and in that event, [ex-husband] will be entitled to seek a modification or reduction of his alimony obligation. In the event that the [ex-husband] makes an application to the Court to modify support, then and in that event, the [ex-wife] shall have the right to seek a modification of this Agreement to extend the duration of said alimony payments. The parties agree that the [ex-wife's] income will not impact the amount of alimony [ex-husband] is required to pay pursuant to this Agreement.

In 2003, the year of the parties' divorce, ex-husband earned approximately $2.3 million. In 2004, he earned $2.2 million and in 2005, $800,000. Ex-husband, however, alleges that in 2006, rather than earning income, he incurred $333,954 in losses. Ex-husband also argues that his annual gross income for 2007 was less than $500,000. Ex-husband alleged that Equihome Mortgage (Equihome), of which he was president and a fifty-one percent shareholder, collapsed during 2006 and 2007 after struggling financially. Equihome filed for bankruptcy in January 2008. According to ex-husband, once Equihome went bankrupt, Certified Abstract and Settlement, Inc. (Certified Abstract), of which he was also president and shareholder, collapsed. The same occurred to Silver Creek Financial, LLC (Silver Creek), of which he was a fifty percent owner.

In February 2007, ex-husband moved for a reduction of his alimony obligation due to changed financial circumstances. However, ex-husband withdrew this motion in order to pursue mediation. After mediation failed, ex-husband re-filed the motion, asserting the same financial grounds for a reduction in alimony, i.e., his gross annual income has decreased below $500,000. Ex-husband also alleged a change in circumstances based on a significant change in his medical condition. At the time of the divorce, he suffered from hepatitis C. This condition has moved from stage three to full-blown cirrhosis of the liver. Ex-wife opposed the motion.

Both parties submitted briefs. Judge Thomas H. Dilts heard the parties' respective arguments and ruled that ex-husband had made a prima facie showing of changed circumstances. Judge Dilts ordered discovery and a plenary hearing and reduced exhusband's alimony obligation pendente lite from $130,000 per year to $60,000 per year.

The parties exchanged discovery. These included: exhusband's personal federal income tax returns for the years 2003 to 2006; Equihome's corporate income tax returns for the years 2005 and 2006; Silver Creek's corporate income tax returns for the years 2001 to 2006; Certified Abstract's corporate income tax return for the year 2006; and ex-husband's personal bank account statements.

In December 2007, ex-wife moved for summary judgment to dismiss ex-husband's application for modification of alimony and to reinstate the $130,000 a year alimony, retroactive to the date of Judge Dilts's order. Ex-wife also moved to sanction ex- husband and requested counsel fees and costs. In support of her motion for summary judgment, ex-wife relied on the reports and certifications of Michael A. Gould, CPA, a forensic accountant, who reported that ex-husband's gross annual income in 2007 exceeded the $500,000 threshold contemplated in the PSA. Gould examined deposits made into ex-husband's personal bank accounts during 2007 and determined that ex-husband's gross annual income was at least $894,974 net of inter-account transfers and documented repayment of loans.

Ex-husband opposed the motion and cross-moved for fees and costs. Ex-husband acknowledges the deposits in excess of $900,000, but alleges that $104,000 of those deposits actually represent income earned in 2001; $163,000 represents a federal income tax refund for tax years 2004 through and inclusive of 2006; $112,500 was a repayment from his Equihome partner for advances he made to Equihome; and $72,000 represents a return of a deposit made by ex-husband on a parcel of real estate. Exhusband's expert, Jeffrey E. Callahan, J.D., CPA, certified that "[a]ccording to [ex-husband's] bank statements, [ex-husband] advanced a total of $925,000 to Equihome (on behalf of himself and [his partner]) of which he received repayment of only $702,500." These amounts together exceed $452,000, which would reduce ex-husband's gross annual income for 2007 to $442,994.

Callahan also identified additional amounts that would reduce ex-husband's gross annual income to approximately $244,000. Thus, there was a sharp dispute as to whether ex-husband's income had ...

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