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Hutchison v. Hutchison

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 1, 2010

JOHN HUTCHISON, PLAINTIFF-APPELLANT,
v.
MARILYN HUTCHISON, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, FM-02-11938-94.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 1, 2009

Before Judges Wefing, Messano and LeWinn.

Plaintiff John Hutchison appeals from the September 26, 2008 order from the Family Part denying his application to modify his alimony obligation to defendant Marilyn Hutchison, denying him a plenary hearing and awarding counsel fees to defendant. We reverse.

The parties were married in 1981 and divorced in 1996. Their November 6, 1996 judgment of divorce does not contain a separately executed property settlement agreement. Rather, the judgment incorporates a transcript of their in-court settlement hearing of April 15, 1996.

At that hearing, the parties were represented by counsel who both participated in placing the terms of their settlement on the record. Pursuant to those terms, plaintiff agreed to pay permanent alimony to defendant in the amount of $3000 per month for the first five years, and $2500 per month thereafter.

The following colloquy ensued between the judge and counsel:

[DEFENDANT'S ATTORNEY]: And Your Honor, it's also my understanding that if [defendant] should become employed she'll be entitled to earn whatever income she can earn without there being an application made [by plaintiff] to reduce the amount of alimony that's being paid.

[PLAINTIFF'S ATTORNEY]: And for the same reason, You Honor, since we are attempt[ing] to limit the parties and we've agreed that obviously . . . any increases by [plaintiff] in terms of his income should not be looked at as . . . changed circumstances.

[THE COURT]: Okay. So in effect you have an anti-[Lepis] . . . provision?

[PLAINTIFF'S ATTORNEY]: Yes, we discussed that.

[DEFENDANT'S ATTORNEY]: That's correct, Your Honor.

[PLAINTIFF'S ATTORNEY]: We understand what the case was [sic]. The only aspect that we would deem as changed circumstances would of course be the retirement of the plaintiff.

When plaintiff was questioned by his attorney as to his understanding of the settlement terms, the following exchange occurred:

Q: Are you fully satisfied that with respect to the support, do you understand that this is permanent alimony?

A: Yes, I understand.

Q: You understand that this is a payment, which unless for example on your retirement there's a substantial change of circumstances, this is the amount that you're going to be paying, irrespective of whether [defendant] gains employment?

A: Yes, I understand that also.

Q: Do you understand, however . . . , that [defendant] will not look to you if . . . your income should increase as well?

A: Yes.

[PLAINTIFF'S ATTORNEY]: Your Honor, I . . . think [plaintiff] has an understanding. We've discussed this at length before, I believe, he's been under --even though under so -- so much stress today.

[(Emphasis added.)]

During the marriage, plaintiff worked as a stockbroker; his gross annual earnings ranged from $143,000 in 1992 to $203,000 in 1996. His annual earnings continued to increase after the divorce to $443,000 in 2005 and $412,000 in 2006. In January 2007, however, plaintiff was transferred to a different position in which he earned a reduced bonus; six months later he was terminated by his employer. In 2007, plaintiff earned $415,000 including $250,000 in severance pay.

Plaintiff filed his motion to modify alimony on August 4, 2008; he certified as to his efforts to find new employment. At some point, plaintiff succeeded in finding work at Smith Barney with a guaranteed salary of $75,000 plus commissions for two years; starting in 2010, plaintiff certified that he would be paid in commissions only.

On September 26, 2008, the trial judge entered an order denying plaintiff's application to modify alimony and cited from the transcript of the April 15, 1996 settlement proceeding in which the attorneys addressed the judge directly and agreed with the judge's characterization of the alimony provision as an "anti-Lepis*fn1 provision." The judge also quoted the exchange between plaintiff and his attorney, in which plaintiff was asked if he understood that "this is a payment, which unless for example on your retirement there's a substantial change in circumstances, this is the amount that you're going to be paying . . . . ?" (Emphasis added.) The judge concluded that the "transcript cited demonstrates that the [p]laintiff knowingly entered into the agreement and contemplate [sic] that it would not be modified." The judge further noted that defendant had made no application for an increase in alimony during the period of plaintiff's increased earnings.

The judge opined further that even if he were to ignore the agreement and the anti-Lepis clause, "[p]laintiff has failed to demonstrate the within [sic] decrease in salary is permanent and not temporary." Therefore, the judge denied plaintiff's requests for discovery, a plenary hearing and counsel fees.

On appeal, plaintiff raises the following contentions for our consideration:

POINT I.

THE PARTIES' AGREEMENT DOES NOT CONTAIN AN ANTI-LEPIS CLAUSE, AND AS SUCH, PLAINTIFF HAS THE RIGHT TO SEEK MODIFICATION OF SUPPORT PURSUANT TO STATUTORY AND CASE LAW

POINT II.

PLAINTIFF HAS MADE A PRIMA FACIE SHOWING OF A SUBSTANTIAL CHANGE IN CIRCUMSTANCES; THEREFORE, HE SHOULD BE GRANTED FINANCIAL DISCOVERY AND A HEARING ON THE RIGHT TO MODIFY ALIMONY

POINT III.

THE COURT BELOW ERRED IN FAILING TO GRANT TO PLAINTIFF A PLENARY HEARING ON BOTH THE INTERPRETATION OF THEIR PROPERTY SETTLEMENT AGREEMENT AND ON CHANGED CIRCUMSTANCES.

A. WHERE THERE ARE CONFLICTING AFFIDAVITS, THE COURT CANNOT DECIDE THE MOTION ON THE PAPERS ALONE

B. THE COURT SHOULD GRANT A PLENARY HEARING WHERE THE TERMS OF THE PROPERTY SETTLEMENT AGREEMENT ARE AMBIGUOUS

POINT IV.

THE COURT'S FINDINGS WITH REGARD TO COUNSEL FEES WERE UNWARRANTED AND UNJUSTIFIED UNDER THE RECORD. THE AWARD OF COUNSEL FEES SHOULD BE VACATED.

In Lepis, supra, 83 N.J. at 151, the Supreme Court recognized "changed circumstances" that warrant modification [of support obligations] in a variety of settings. Some of them include

(1) an increase in the cost of living;

(2) increase or decrease in the supporting spouse's income;

(3) illness, disability or infirmity arising after the original judgment;

(4) the dependent spouse's loss of a house or apartment;

(5) the dependent spouse's cohabitation with another;

(6) subsequent employment by the dependent spouse; and

(7) changes in federal income tax law . . . .

[(Citations omitted).]

Parties may waive the right to seek modification of alimony by agreeing to a provision specifically stating such an intention, known as an "anti-Lepis clause." Such a clause was first enforced in Finckin v. Finckin, 240 N.J. Super. 204, 205 (Ch. Div. 1990), in which Judge Conrad Krafte determined that this type of agreement did not violate public policy where "[t]he agreement . . . [was] explicit."

In Morris v. Morris, 263 N.J. Super. 237 (App. Div. 1993), we concluded that an anti-Lepis clause could be enforceable provided certain conditions were met by the parties. In that case, the parties had executed a property settlement agreement, unlike the situation in this case. Under those circumstances, we held that "the parties can with full knowledge of all present and reasonably foreseeable future circumstances bargain for a fixed payment or establish the criteria for payment to the dependent spouse, irrespective of circumstances that in the usual case would give rise to Lepis modifications of their agreement." Id. at 241.

The agreement in Morris was "explicit that it is not modifiable for any reason except for the husband's physical disability." Id. at 240. The husband suffered a decrease in earnings and sought to modify alimony on that basis. We affirmed the trial court's denial of the husband's application, finding "no great inequity, since each party has the expected benefit and burden of the contract." Id. at 244.

Had these parties executed a property settlement agreement, evidence of their mutual intent to abide by an anti-Lepis clause may well have been established and, therefore, enforceable. Id. at 246. The transcript of the settlement hearing, however, is sufficiently ambiguous to prevent us from making such a finding with any reasonable degree of confidence.

We are satisfied that the discussion of an "anti-Lepis" provision at that hearing was between the judge and counsel. Neither party was ever asked about his/her understanding of the meaning of that term. In fact, when plaintiff was questioned by his attorney about his understanding of the alimony obligation, he was specifically asked whether he understood that "for example" his retirement could constitute a change in circumstances. In short, nothing in the record demonstrates plaintiff's unequivocal waiver of his right to seek a modification of alimony based on circumstances other than his retirement.

Defendant contends that her post-divorce conduct clearly demonstrates the parties' intent to abide by an anti-Lepis clause, as she made no applications for an increase in alimony notwithstanding plaintiff's increased earnings after 1996. We are not convinced, however, that defendant's contention necessarily bars plaintiff from relief. The pertinent inquiry is plaintiff's understanding of the nature of his alimony obligation at the time the parties' settlement was placed on the record in court.

We note that plaintiff's certification supporting his motion to modify alimony addressed only the history of the marriage and his financial situations then and now. The fact that plaintiff did not address the "anti-Lepis" issue in his certification indicates to us that neither he nor his attorney anticipated that he would be barred from seeking relief for that reason.

In sum, we concur with plaintiff's contention that his understanding of the non-modifiable nature of his alimony obligation was not clearly demonstrated on the record of the settlement hearing. Therefore, we reverse and remand for a plenary hearing on that issue. We do not address plaintiff's remaining issues; plaintiff will have an opportunity to address the issues of the permanency of his change in earnings and counsel fees if he prevails on remand.

The order of September 26, 2008 is reversed, and the matter is remanded for further proceedings in conformity with this opinion.


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