On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-718-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad, Sapp-Peterson and Espinosa.
In this post-judgment matrimonial matter, defendant Wayne Coleman (husband) appeals from the Family Part's August l0, 2009 order denying his motion to reduce his alimony and child support obligations. We reverse and remand for further proceedings consistent with this opinion.
The parties separated in October 2003 and plaintiff, Deirdre Coleman (wife), filed for divorce in November 2005, following a nineteen-year marriage. A dual judgment of divorce was entered on May 29, 2007, incorporating the parties' marital settlement agreement (MSA), that provided for them to share joint legal custody of their three sons, born in April l988, September l989 and August l997, with wife to have primary custody.*fn1 At the time of divorce, both parties were around fifty years old. Wife was not employed outside the home during the parties' marriage and defendant was employed as a broker of interest rate swap derivatives and, beginning in mid-2005, as a broker of credit default swaps. Husband's total earned income for the five years prior to execution of the MSA was as follows: $944,687 (2002); $1,098,643 (2003); $1,138,262 (2004); $988,959 (2005); $698,559 (2006), averaging $973,822. Husband had been terminated from his employment due to a merger in May 2005, thus his 2005 earnings reflect a $481,250 non-recurring severance payment. Husband promptly secured a new position with another Wall Street firm, GFI Group, which contract of employment extended to June 30, 2007, and provided for a non-recurring signing bonus of $300,000, with $100,000 payable in 2005 and $200,000 payable in 2006. The contract also provided for a base salary of $230,000 and a guaranteed bonus of $270,000; however, around October 30, 2006, based on circumstances beyond husband's control, his contract was voided, his position was changed, his base salary was reduced from $230,000 to $175,000 and his bonus became discretionary.
Against this backdrop, the parties entered into the MSA, which set forth the following provisions regarding the income upon which the agreement is based:
4. Each of the parties acknowledge that the Husband receives a base income of One Hundred Seventy-Five Thousand ($175,000) Dollars and is eligible for a bonus. The Husband's alimony and child support obligations . . . are entered into on the assumption that the Husband's base of One Hundred Seventy-Five Thousand ($175,000) Dollars and bonus income will amount to approximately Six Hundred Thousand ($600,000) annually.
5. The parties have imputed to the Wife the ability to earn approximately Twenty-Five Thousand ($25,000) Dollars in annual income. Therefore, the Wife's receipt of the first Twenty-Five Thousand ($25,000) Dollars in earned income subsequent to the execution of this Agreement shall not be a basis, in and of itself, for a modification of the alimony and child support provisions of the within Agreement.
As reflected in the MSA, husband agreed to pay permanent alimony to wife of $15,000 per month ($180,000 annually), tax deductible to him and reportable as income to wife. To the extent that husband's gross annual income exceeded $600,000 in a given year, he would pay wife, as additional alimony, 25% of the excess up to a cap of $l,l00,000, making his maximum additional alimony payment $125,000 per year.
Husband also agreed to pay $4,250 per month ($51,000 annually) as child support for the three unemancipated children, calculated as a deviation from the guidelines based on the significant family income. The parties provided for a $750 reduction when their oldest son, who was a full-time college student, was emancipated, a $500 reduction when their middle son entered college, and a review when their youngest son entered college. Husband also agreed to pay for all reasonable extracurricular activities and camp expenses and any costs for the children's college education in excess of the funds in their custodial accounts. Husband was also obligated to continue to maintain medical coverage for his unemancipated sons, with the uncovered expenses allocated 70% to husband and 30% to wife and containing an express agreement to review the allocation upon review of child support.
The parties set forth the following provisions regarding modification of the alimony and child support obligations established in the MSA:
6. If the income assumptions as to either party's earnings as set forth above should significantly change subsequent to the execution of the within Agreement, each party reserves the right to petition the Court for a modification, upwards or downwards, in alimony and/or child support.
7. Nothing within the preceding paragraphs shall preclude either party from making an appropriate application to the Court for modification of alimony and/or child support based on any other ...