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Pierson v. Pierson

March 18, 2010

JOHN J. PIERSON, PLAINTIFF-RESPONDENT,
v.
NANNETTE PIERSON, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-348-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 18, 2009

Before Judges Cuff, Miniman and Waugh.

Plaintiff John J. Pierson and defendant Nannette Pierson were married on October 21, 1985, and divorced on July 26, 2007.*fn1

The initial judgment of divorce and a supplemental judgment of divorce resulted from a settlement between the parties, with certain issues reserved for trial. Following a four day trial, the Family Part judge delivered an oral decision and entered a second supplemental judgment of divorce on July 30, 2007. Nannette appeals from the second supplemental judgment of divorce, as well as an order dated November 30, 2007, denying several post-judgment motions.

The issues raised on appeal concern (1) Nannette's involuntary removal from the marital residence following the divorce; (2) the amount of interim support given to Nannette between her removal and the sale of the marital residence (3) responsibility for interest and penalties on delinquent taxes resulting from the sale of a residence in South Carolina and the related late-filing of tax returns; (4) equitable distribution with respect to the marital residence; (5) responsibility for Nannette's health insurance; (6) imputed income attributed to Nannette in the event there is a need for child support; (7) a lien for counsel fees claimed by Nannette's prior counsel, which lien was imposed on her share of equitable distribution; (8) denial of Nannette's motion for reconsideration; (9) denial of Nannette's motion for a new trial; and (10) whether a different judge should preside over any remand proceedings.

We decline to address the issue of imputed income. It is our understanding that no child support is being paid by either party at this time, and that the parties agreed on the amount of spousal support prior to the trial. Child support will only become an issue when the marital residence is sold and then only if one or both of the children are still unemancipated and decide to reside with Nannette. At the time of oral argument before us, the marital residence had not been sold. Should the need arise, the issue of Nannette's income should be determined on the basis of then current facts, rather than facts that are almost three years old and projections as to future earning capacity made in 2007. As a result, the imputed income issue is moot at this time. "We will not render advisory opinions or function in the abstract." Zamboni v. Stamler, 199 N.J. Super. 378, 383 (App. Div. 1985).

We also decline to consider the issue of the lien for counsel fees, which is not properly before us. Nannette's prior attorney, who sought and obtained the lien, was not listed on the notice of appeal, and has not participated in the briefing and argument of this appeal.

I.

The following procedural history and facts developed at the trial and contained in the record, inform our disposition of this appeal.

A.

John and Nannette have two children: a daughter born in 1986; and a son born in 1990. The daughter was in college at the time of the trial. The record does not reflect her current status. The son was about to enter his senior year in high school, and would presumably be in college at this time.

Nannette had a son from her first marriage, who is emancipated.

At the time of their marriage, John and Nannette each owned a residence. On February 20, 1986, they jointly purchased the marital home in New Vernon for $460,000. Some renovations were made before the couple occupied that home. The purchase and renovations were financed largely through bridge loans. The other residential properties were then sold and the loans repaid. The trial judge found that John contributed approximately $160,000 and that Nannette contributed approximately $200,000 to the initial purchase and renovation of the marital residence. During the marriage, there were very extensive additional renovations and improvements to the marital residence. The trial judge found that they were financed primarily by John's income. Nannette claimed that she should receive an additional $40,000 in equitable distribution from the sale of the marital residence in light of her greater contribution to its initial purchase price.

In 1992, John and Nannette purchased a lot in Hilton Head, South Carolina. The lot was sold in 2001 and the proceeds were used to purchase a residence in Hilton Head. Because the transaction was structured as a like-kind exchange, there were no tax consequences flowing from that transaction. See 26 U.S.C.A. § 1031.

In 2005, while the divorce was pending, the Hilton Head residence was sold and the proceeds were escrowed. Escrowed funds in the amount of $180,000 were paid to Nannette for the purchase of another vacation home in South Carolina. Joint expenses and litigation costs were also paid out of the escrowed funds, which we understand have been significantly depleted.

Primarily as a result of the sale of the Hilton Head property, as well as some other financial transactions, the parties owed capital gain taxes of $237,000 for the 2005 tax year. However, they did not have the funds to pay the tax. In addition, they did not file timely tax returns for 2005.

According to John, he was unable to prepare the returns because the financial documents were in the possession of one of Nannette's experts.

Prior to trial, the judge ordered that the overdue taX would be paid out of the proceeds from the sale of the marital residence. The parties subsequently agreed that the principal amount of the taxes should be borne jointly. Nannette took the position that she should not be responsible for the penalties and interest resulting from the late filing of the returns and the deferred payment of the capital gain tax. John disagreed, so the issue was tried.

The parties continued to live in the marital residence up to the time of trial. John used an office at the residence to conduct his arbitration business, which was the primary source of the parties' earned income. He sought to have Nannette excluded from the residence, arguing that her conduct toward him made his life intolerable. He also alleged that she was a bad influence on their seventeen-year-old son, because she had an affair with a young man who had lived with them in the marital residence. Although Nannette admitted to the affair, she denied that it had been conducted at the marital residence and that the son had any knowledge of it. She argued that it was in the son's best interest for her to continue living in the marital residence pending its sale.

Although the parties had agreed on the amount of spousal support, Nannette argued at trial that she was owed in excess of $4,000 for past medical expenses and that John should be required to continue to pay for her health insurance. John disputed the medical bills and the claim for ongoing payment for health insurance.

B.

The trial judge delivered an oral opinion concerning the issues tried on July 27, 2007.

With respect to the distribution of the equity in the marital residence, the judge decided on an equal distribution.

He explained his reasons as follows:

Now, should those amounts be equalized? And my determination of that is no. First of all, [it is] twenty years later. Secondly, I've run through the remodeling, renovations, repair, and the like done to [the marital home] over the course of about eighteen years, such that the basis was increased from the acquisition price of $460,000 to a $1,500,000. So, about just over a million dollars [] has gone into the house by way of capital improvements, . . . [funded] exclusively, if not overwhelming[ly], by the earnings of Mr. Pierson.

This finding is significant for the reason that my conclusion is that those contributions, over the course of almost twenty years equalized the parties' interest in [the marital home]. [T]his is the only issue remaining in terms of how to distribute the proceeds of the sale, when the sale comes, hopefully soon, of [the marital home], and my determination is that the contribution by Ms. Pierson . . . should not result in a credit to her under [N.J.S.A.] 2A:34-23.1(i), because Mr. Pierson has made the financial contributions . . . to fund, repair, renovate, and remodel, and that accounts for the approximate $40,000 difference in contributions to the acquisition of [the marital home] at the outset.

Now, that does not, by any means, suggest that the distribution of the proceeds of the marital residence should be anything other than 50/50. It's clear that Ms. Pierson made significant, and important contributions to the marriage. The parties had two children. She was their caretaker. Mr. Pierson . . . I wouldn't say it was a classic . . . husband, bread winner, and wife, stay at home, and run the house, because Ms. Pierson did more than that. She worked too, and I'll talk a little bit about that in a few moments.

She worked for periods of time during the marriage as a hairdresser, and earned money, in her own right, and obviously in addition to her homemaking contributions, and child rearing contributions, she, too, made financial contributions. But over the course of . . . twenty years the contributions of the two parties come together, and suggest that they are correct when they divide the assets of the estate on a 50/50 basis. [M]y conclusion is that there has been so much time that has gone by, and contributions by both sides, that even assuming that there was a $40,000 differential in the initial contributions to funding the acquisition of the [marital] house, that has, simply, disappeared by virtue of the events of the subsequent twenty years.

The judge reached a similar conclusion with respect to the issue of interest and penalties related to the late reporting and payment of the capital gains for 2005. He explained his reasons as follows:

[I]f interest, and penalties are assessed, should Mr. Pierson . . . have to pay them in their entirety, or should they be shared, and my determination is that they should be shared equally, as the underlying tax liability is being shared equally, and the reason for that is, . . . this was a marriage, and although the property was sold at a time when the complaint for divorce was pending, it was a joint asset, it was jointly enjoyed, if I can say that, that is to say both parties made use of this marital asset, both parties vacationed there, lived there secondarily, as I say to their principle residence. Both parties are responsible for the taxes, and if the taxing authorities do assess interest, and penalties on the sum due, then both parties should be equally responsible to pay that.

So, that's my determination on the issue of whether the full impact of interest, and penalties on the $237,000 due for tax year '05 should be entirely visited on Mr. Pierson. Should it be shared? It should be shared equally, so that by the time the marital residence is sold, I presume the tax liability will have been paid . . . . They will be paid from the sale of the marital residence, and when that happens, if . . . the parties then know what the interest, and penalties assessed are, that will be equally divided off the top, as they say, before any division of the marital residence proceeds, the entire tax obligation for '05 will be paid off the top. So, that, effectively, both parties will be sharing 50/50 on that particular issue.

The judge granted John's request that he be given sole possession of the marital residence, ordering that Nannette be given an advance on equitable distribution in the amount of $50,000, plus an additional $50,000 if the house did not sell within one year. He explained his reasons as follows:

Now, here's what's behind this. Over two years, according to Mr. Pierson's version of events in the house, and I probably should say that I made some comments at the outset of this case that we were really having a trial to determine who should be ousted from the house. I thought about that, and I decided that I had said the wrong thing, and before . . . we [review] the evidence, . . . I was trying it on the basis of an open mind in the sense that I was willing to conclude that one of the . . . potential results would be both parties would continue to reside in the marital residence together, and that the status quo could be preserved until the sale. My statements, I effectively, cancelled them, and said that I had an open mind about trying this case, that one of the results could be both parties . . . continue to live there until the sale, or one or the other would be excluded, based on what I heard, and I listened to the evidence with that frame of mind. Nothing here was prejudged, and I'm making a determination on this issue based on the evidence and the law as I see it.

Now, the evidence, in terms of Mr. Pierson's view of things. [H]is attorney quoted me back to myself, which is always nice, and I had referred to a toxic atmosphere in this home, and I based that on two years of experience with the case, many, many motions, many accusations, a domestic violence complaint made by Ms. Pierson against Mr. Pierson, a call to the police made by Ms. Pierson, alleging impropriety in the house on the part of Mr. Pierson, acrimony, hostility, ranker, bitterness.

It's all here, and so I use that term, and I think it's an accurate depiction of the circumstances that exist in that house.

Now, Mr. Pierson's contentions are that the atmosphere is so bad that the parties can't possibly continue to live together, and he fears that there will be future incidents between them that could amount to violations of the Prevention of Domestic Violence Act. He claims that Ms. Pierson is unstable, that she's erratic, volatile, explosive. That she is very, very angry, that she acts out, and that her rage is such that it is uncontrollable, that he, in his own words, is a "prisoner" in his home office.

I should describe, just for a moment, his work as an arbitrator, he has an office in his home, but not for purposes of receiving clients. [H]e is a neutral . . . arbitrator, and he goes off to sites to conduct arbitrations, brings what he needs back to the office, which he has maintained in the house since the beginning, and in the last renovation, in 2001, constructed a more expanded office for himself, but it's there that he does his writing. He keeps his books, his computer, his printer, his fax, his phone, his desk, certain aspects of a library, part of files, and personal financial files. Other files are kept offsite. And that's what we mean by his office.

He lives in that space. He says he sleeps in a reclining chair. Ms. Pierson said the chair broke, and now he sleeps on the floor, but there's no dispute about the fact that that's, basically, where he lives, behind closed doors. He says he's very frightened, or concerned about Ms. Pierson, and that it is dangerous, paraphrasing him, I think, to consider having them continue to live together, in spite of the fact that they've been there since the complaint was filed on September 22nd, of 2005. Of course, not without incident.

A domestic violence complaint [and the] issuance of a temporary restraining order on that complaint by Ms. Pierson [were] dismissed, the TRO was dismissed. There was no FRO issued. Judge Hansbury tried the case, and ruled against Ms. Pierson, who, during the course of the trial, on the record, apologized to Mr. Pierson for having filed the domestic violence complaint . . . and having sought the TRO, and blamed the whole incident on her attorney at the time.

By the way, her attorney she dismissed, . . . filed a motion to be relieved as counsel, and I conducted oral argument on that application, and I make this comment, because during the trial Ms. Pierson said that she didn't know why her counsel had left her, or had been dismissed, or had been relieved as counsel, but what she said at the time of oral argument on the motion --she came and represented herself on the motion, what she said, and I know because I was here, and . . . it's on the record, so I can refer to it, in the history of the case -- she said, at the time, that she had lost faith in her law firm . . . because they had no integrity, and that was the reason, and during the trial she said that she didn't know why they were no longer her attorney.

Now, that's the way Mr. Pierson works. I've described what he does, and how he does it, and he lives in this office, and so, he describes this bad atmosphere, animosity, hostility, he describes his view of Ms. Pierson, her emotional volatility, her explosiveness, her anger, her rage, and he said that they just can't continue, and I think I said that he describes himself as a prisoner in his office when he is in the home.

And he also said that he has to be there because his office is there, and it would be expensive to move the office, and he'd have to set up a new office. Well, that's true in any event, because the house is on the market. So, he's going to have to move . . . his business out of there sooner, or later, and it doesn't strike me as a reason to exclude Ms. Pierson from the home, because . . . if he moved out, he'd have to set up a new office, when he's going to have to do that anyway. It may well be that if he had to move out now he might have to rent commercial space while he looked for a new residence, and so, he had to have duplicate costs in a commercial setting, when if he had the time to buy a . . . residence, he could buy one that contained a room ...


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