June 14, 2010
JUSTINE P. COLE, PLAINTIFF-RESPONDENT,
JOSEPH R. COLE, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1608-03A.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted April 12, 2010
Before Judges Rodríguez, Yannotti and Chambers.
In this matrimonial action, defendant Joseph R. Cole appeals from the provisions of certain enforcement orders regarding the financial issues between the parties. Specifically, defendant contends that the trial court assigned a value to three retirement accounts that were to be distributed between defendant and plaintiff Justine P. Cole without any factual basis in the record for doing so. He also maintains that he should be given a credit of $19,800 toward his lump sum alimony payment. Finally, he asserts that the counsel fees awarded against him as sanctions were unwarranted. We agree and reverse and remand for the reasons expressed below.
We will not explore all of the procedural byways of this litigation or the ancillary issues raised in this appeal, but rather we will focus on the substantive and procedural issues that resolve the disputes at hand. The parties were married on April 30, 1994, and this divorce action was filed in 2003. The parties reached a resolution of the financial issues involved in the divorce, and that agreement was memorialized in the consent order dated May 14, 2007.
Among its provisions, the May 14, 2007 order required defendant to make plaintiff a lump sum payment of $75,000 in consideration of plaintiff's waiver of alimony. The payment was to be made from defendant's share of funds held in the trust account of plaintiff's counsel. The order also provided that three of defendant's retirement accounts, valued at approximately $43,985, were to be equally divided between the parties "at their current balances." Defendant was permitted to retain a fourth retirement account valued at $94,992.55.
Thereafter, defendant's former attorneys Budd Larner, P.C. asserted an attorney's lien thereby blocking distribution of funds being held in escrow by plaintiff's attorney. By order dated September 21, 2007, the trial court released to plaintiff her equitable distribution share from these escrowed funds. However, the order required that the $75,000 for the lump sum payment in lieu of alimony remain in escrow until defendant secured other funds to put in escrow as security for the attorney's lien of Budd Larner, P.C. Defendant was required to pay plaintiff $300 per week in alimony until she received the $75,000 lump sum payment. The order further required defendant to "liquidate" the three retirement accounts and divide the proceeds equally with plaintiff. He was also ordered to "liquidate" his fourth retirement account. His share of the retirement accounts was to be placed in Budd Larner, P.C.'s escrow account pending resolution of its attorney's lien.
Defendant contends that the trial court's requirement that he liquidate the retirement accounts was contrary to the agreement of the parties and violated ERISA, 29 U.S.C.A. § 1001 to 1461, and that the administrator of his retirement accounts refused to comply with the order, advising that a QDRO (qualified domestic relations order) was needed. The trial court denied defendant's request to modify the September 21, 2007 order and by order dated February 8, 2008, once again ordered that defendant "liquidate" his three retirement accounts and threatened sanctions.
The Judgment of Divorce was entered on August 8, 2008, and it incorporated the order of May 17, 2007, resolving the financial issues. An order entered that same day, awarded Budd Larner, P.C., a judgment of $50,000 for its attorney's lien. The trial court also ordered that plaintiff's lump sum payment of $75,000 in lieu of alimony that had been held in escrow be paid to her. Upon that payment, defendant's obligation to pay her $300 a week ended. The accumulated interest in the trust account was to be divided equally between plaintiff and defendant, and defendant's share was to be distributed to Budd Larner, P.C. Defendant was ordered to "liquidate" his retirement accounts, pay plaintiff her share from the proceeds, and pay from his share or other funds any balance due Budd Larner, P.C. Plaintiff's counsel distributed the funds in his trust account in accordance with these instructions.
A series of motions was heard by the trial court on October 17, 2008. At this hearing, defendant represented that he had attempted to secure a fifty-fifty division of the retirement accounts with the use of QDROS. Plaintiff indicated she would not agree to these orders because the value of the accounts had deteriorated due to market conditions that occurred after the financial settlement had been reached. Plaintiff demanded half of the value of the accounts as they stood in May 2007, which would provide her with more money than half of the value of the accounts as they stood in August 2008.
The trial court also heard defendant's motion for reconsideration of the August 8, 2008 order on the basis that the requirement that he liquidate the retirement accounts was contrary to the parties' agreement and violated federal law. The trial court acknowledged that the earlier orders should have provided that the retirement accounts "roll-over" and that the reference to "liquidate" should not have been used. On appeal, plaintiff acknowledges that the trial court's requirement that the three retirement accounts be liquidated was in conflict with the May 14, 2007 order resolving the financial issues of the parties.
By order dated October 17, 2008, the trial court vacated the provision of its August 8, 2008 order requiring liquidation of defendant's retirement account. Instead of liquidation, the order required that defendant roll-over plaintiff's share of the three retirement accounts. The order states that the value of the three retirement accounts is $70,256, and hence fixed plaintiff's share at $35,128. This order also required defendant to pay plaintiff's counsel fees "for the necessity of filing this [m]otion." By order of October 27, 2008, defendant was ordered to pay plaintiff's counsel $2,947.50 in counsel fees. In response to plaintiff's motion to enforce litigant's rights, the trial court entered an order dated March 18, 2009, once again directing that defendant pay plaintiff's counsel fees in the sum of $2,947.50.
In this appeal, defendant seeks to overturn (1) the provision in the order of October 17, 2008, requiring that his three retirement accounts be valued as of 2007 and at $70,256; (2) the provision in the order of September 17, 2007, requiring that he pay plaintiff $300 a week in alimony as well as the $75,000 lump sum payment in lieu of alimony;*fn1 and (3) the provision of the October 17, 2008 order granting counsel fees and the October 27, 2008 and March 18, 2009 order requiring that he pay $2,947.50 in counsel fees to plaintiff's counsel.
Defendant also contends that the orders of October 17, 2008, and March 18, 2009, were a nullity because at the time they were entered appeals involving other aspects of this litigation were pending. We reject this argument. These two orders were in the nature of enforcement orders, and a trial court has "continuing jurisdiction to enforce judgments and orders." R. 2:9-1(a). Hence, we will consider the merits of the trial court rulings raised in this appeal.
We first address whether the trial court erred in determining the three retirement accounts to be worth $70,256.
The distribution of the three retirement accounts in question is governed by paragraph six of the consent order of May 14, 2007, which resolved the financial issues between the parties and was incorporated in the August 8, 2008 Judgment of Divorce. That provision provides:
6] JOSEPH COLE has three additional retirement accounts comprised of IRA's and/or 401(k)s. These accounts have approximately the following minimum balances as of April 23, 2007:
a) $11,082 as of 12/06 "CAPSTAR"
b) $25,658 as of 03/05 "CADENCE"
c) $7,245 as of 09/02 "SSI"
The above balances totaled $43,985.00 on the dates set forth above. These accounts at their current balances shall be divided 50/50 between the parties, utilizing transfers from the IRAs if possible in order to avoid the necessity of crafting a QDRO.
JOSEPH COLE represents that he has never withdrawn any moneys from these accounts.
We note that while the agreement indicates that the accounts are valued at approximately $43,985, that sum is based on evaluation dates that preceded the date of the order. However, the agreement stated that the accounts were to be divided "at their current balances" which would be the balances in May 2007.
At the October 17, 2008 hearing, when the court considered the distribution of these retirement accounts, plaintiff's counsel stated that their value in September 2007, apparently the closest valuation date he had to May 2007, was $70,258.76.*fn2
The trial court accepted this assertion, and ordered that the three accounts be rolled over so that plaintiff would receive one half of $70,256 which was calculated to be $35,128.
While we note that defendant's counsel did not question plaintiff's valuation of the accounts at oral argument, defendant's certification which was before the court stated that the value of the accounts on September 30, 2007 was $38,735.83. Again in his certification submitted in a subsequent motion defendant stated that the $70,256 figure was inaccurate and that the value of the retirement accounts in September 30, 2007 was $38,735.83.
We are bound by the factual findings of the trial court provided they are "supported by adequate, substantial, credible evidence" in the record. Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). However, we owe the trial court's factual determinations no deference when they are "manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Id. at 412 (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)).
Our review of the record before us does not reveal any factual basis for the trial judge's conclusion that the three retirement accounts were valued at $70,256 on September 30, 2007. That conclusion appears to have been based solely upon a statement of plaintiff's counsel at oral argument which is not backed by any financial statement or certification in the record before us. Plaintiff's certification that the accounts were valued at $38,735.83 at that time raises a factual dispute which must be resolved by the trial court. Accordingly, we reverse the trial court's determination that the three retirement accounts are valued at $70,256 and that plaintiff is to receive $35,128 from these accounts. This issue is remanded to the trial court to determine the value of the accounts as of May 2007, and it may reopen the record to do so.
We also reverse the trial court's award of counsel fees to plaintiff's counsel. The trial court may use its discretion and award counsel fees in a family matter "if deemed to be just." Rule 5:3-5(c). When awarding counsel fees, the trial court should consider the factors in Rule 5:3-5(c), Addesa v. Addesa, 392 N.J. Super. 58, 78 (App. Div. 2007), including the reasonableness and good faith of the parties' positions along with "any other factor bearing on the fairness of an award." R. 5:3-5(c)(3) and (9).
The fees awarded by the trial court were for plaintiff's efforts in making a motion after the August 8, 2008 order to secure distribution of the three retirement accounts. However, much of the difficulty in distributing the three retirement accounts was attributable to the trial court's error in directing that they be "liquidated." Further, despite the difficulties presented by that ruling, the record reveals that defendant did make efforts to effectuate distribution of the accounts. Accordingly, the award of attorneys fees was unwarranted.
On appeal, defendant maintains that the trial court rulings resulted in a windfall to plaintiff because she received both the $75,000 lump sum payment in lieu of alimony plus $300 a week in alimony after the agreement was reached contrary to the provisions of the final agreement of the parties. We agree.
As noted above, the final agreement of the parties, memorialized in the consent order of May 14, 2007, and incorporated in the Judgment of Divorce of August 8, 2008, provided that plaintiff waived her rights to alimony and in lieu of alimony defendant was to pay her the lump sum payment of $75,000 "forthwith." Due to the Budd Larner, P.C.'s attorney's lien, the funds that were anticipated to be used to pay this sum were not available. As a result, the trial court's order of September 21, 2007, required that defendant continue to make alimony payments of $300 a week until the lump sum of $75,000 was paid. That payment was not made until after the Judgment of Divorce was entered in August 2008. As a result, according to defendant's calculations, plaintiff not only received the full $75,000 pursuant to the provisions of the parties' financial agreement but she received an additional $19,800 in alimony payments after that agreement was reached.
Consensual agreements in matrimonial matters which are "fair and definitive arrangements arrived at by mutual consent should not be unnecessarily or lightly disturbed." Smith v. Smith, 72 N.J. 350, 358 (1977). There is a "strong public policy favoring stability of arrangements." Id. at 360. These agreements have a presumption of validity. Petersen v. Petersen, 85 N.J. 638, 642 (1981). Here the court's order provided plaintiff with $19,800 more than the parties' financial agreement provided to her.
We recognize that a court may reform a property settlement agreement when it finds "unconscionability, fraud, or overreaching in the negotiations of the settlement." Miller v. Miller, 160 N.J. 408, 419 (1999). Further, changed circumstances may make it "unfair, unjust and inequitable" to continue to enforce the agreement. Konzelman v. Konzelman, 158 N.J. 185, 194 (1999). However, the trial court did not find any of these circumstances present here.
There was no contention here that agreement of a lump sum payment in lieu of alimony was improper in any way. Rather the problem was that defendant was unable to make the $75,000 payment in a lump sum "forthwith" due to intervention of the attorney's lien. Thus, with respect to the lump sum payment, in essence, an enforcement issue was presented. Under these circumstances, the trial court certainly had the discretion to direct that defendant make partial payments to plaintiff not only because he owed her the money and but also because plaintiff presumably needed the income in order to support herself. However, those payments should have been credited against the $75,000 lump sum payment. Accordingly, defendant was entitled to a $19,800 credit against the $75,000 lump sum payment.
Reversed and remanded.