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Halaka v. Halaka

May 10, 2010

KATHLEEN HALAKA, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
v.
GAMAL HALAKA, DEFENDANT-APPELLANT/CROSS-RESPONDENT.



On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FM-10-128-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 9, 2010

Before Judges Carchman and Parrillo.

Defendant Gamal Halaka appeals from those portions of a final judgment of divorce (FJD) awarding plaintiff Kathleen Halaka $55,000 in annual permanent alimony and $40,000 in counsel fees, and obligating him to pay a greater share of the marital debt. Plaintiff cross-appeals from that portion of the FJD requiring her to pay fifty-percent of the parties' home equity line of credit (HELOC). We reverse the alimony award and remand for reconsideration in light of this opinion, and affirm the FJD in all other respects.

The parties were married in 1987 and have two children, now ages twenty and eighteen. At the time of their marriage, plaintiff, fifty-six years old at trial, was employed as a secretary and remained so employed, earning as much as $27,000 annually, until the birth of her first child. She returned to work in 2005, as a substitute teacher, but cannot seek permanent employment as a full-time teacher because she has only an Associate's Degree in Secretarial Science. Plaintiff's employability expert opined her earning capacity is between $22,800 to $29,150 annually, while defendant's expert concluded she could earn between $35,000 and $38,000 per year.

Defendant, age fifty-three at the time of trial, operates his own physical therapy practice, which he began in 1991 and presently has a value stipulated at $75,000. Based on financial data from 2002 to 2006, plaintiff's own expert opined that defendant's practice generated, on average, gross income of $102,000 annually.*fn1

The parties jointly purchased a home in Long Valley shortly after they married, depositing $19,000 from the sale of defendant's first home as a down payment. They later sold the Long Valley home and in 1996, purchased a home in Califon for $518,000, which is currently valued at $749,000, with a first mortgage balance of $265,890 and a HELOC balance of $97,259.

The couple's lifestyle during the marriage exceeded their income. According to plaintiff's expert, the parties had expenses "in the range of $110,000 to $120,000 a year[,]...

[t]hat's a net number... net spending money." According to defendant, because of the parties' spending habits, he was not able to meet the family's monthly expenses from his income for several years, running a shortfall of anywhere from $2,000 to $4,000 per month. Consequently, defendant financed his family's monthly budget deficit by borrowing from the HELOC or the parties' credit cards. Thus, their HELOC account balance grew from $38,530 at the time the divorce complaint was filed in October 2006, to $97,259 at time of trial.*fn2 Also, at time of trial, the parties' credit card debt totaled approximately $53,000.

These sources also helped fund defendant's stock trading, of which plaintiff was apparently unaware. Defendant began trading on margin in 1999, largely from an A.G. Edwards account and, later, an E*TRADE account that he opened in 2004. These brokerage accounts were funded in part by a series of withdrawals, unbeknownst to plaintiff, from the parties' HELOC, including checks of $49,328, $44,777, $19,791 and $14,000 to A.G. Edwards, and multiple checks to defendant's E*TRADE account. In 2003 alone, defendant added $38,318 to his A.G. Edwards account, funded through the HELOC, and another $30,397 in deposits to the account, again funded through the HELOC. In June 2004, the account had $53,611 in it; at that time defendant emptied it in an effort to pay bills or pay down the HELOC.

Defendant suffered substantial losses almost from the outset and ultimately stopped day trading in November 2004. Defendant's Schedule D form on his 2004 tax return showed that defendant was involved in $9,440,307 worth of stock transactions, and his cumulative short-term capital loss over the years was estimated at $184,103. At time of trial, defendant claimed to have fully repaid his trading debt to his brokers.*fn3

Plaintiff filed her divorce complaint on October 17, 2006. On June 21, 2007, the parties were granted joint legal custody of their children, and plaintiff was designated the primary residential custodial parent. A pendente lite order of August 24, 2007, set defendant's interim financial obligations, restrained him from dissipating marital assets, and compelled him to submit a detailed accounting of all proceeds withdrawn from the parties' HELOC. A November 30, 2007 Family Part order, among other things, set aside the parties' pre-nuptial agreement,*fn4 and mandated compliance with its earlier August 24, 2007 order.

Following a six-day divorce trial, on March 9, 2009, the judge entered a FJD, equitably distributing the marital assets, allocating the marital debt, and establishing defendant's financial obligations to plaintiff, including permanent alimony of $55,000 annually, based on yearly income of $171,429 imputed to defendant.

On appeal, defendant raises the following issues for our consideration:

I. THE FAMILY PART'S IMPUTATION OF ADDITIONAL INCOME TO DEFENDANT WITHOUT NOTICE OR AN OPPORTUNITY TO BE HEARD VIOLATED MR. HALAKA'S DUE PROCESS RIGHTS UNDER THE CIRCUMSTANCES OF THIS CASE.

II. THE COURT'S ADDITIONAL IMPUTED INCOME TO THE DEFENDANT IS CONTRARY TO THE EVIDENCE.

III. THE PLAINTIFF'S ALIMONY MUST BE INCLUDED IN THE CHILD SUPPORT CALCULATION.

IV. THE CREDIT CARD DEBT AND THE HOME EQUITY LINE OF CREDIT SHOULD BE EQUALLY ...


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