July 23, 2010
SHERYL DENICOLA, N/K/A SHERYL HYER, PLAINTIFF-APPELLANT/CROSS-RESPONDENT,
DAVID DENICOLA, DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-155-06C.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued June 15, 2010
Before Judges Carchman and Parrillo.
Plaintiff Sheryl DeNicola appeals from an order of the Family Part reducing defendant David DeNicola's child support obligation, denying her request for a restraining order against defendant and for counsel fees, and in setting the date of termination of alimony. Defendant cross-appeals from a portion of that same order denying his request for a credit for prepayment of alimony. We affirm in part, reverse and remand in part.
The parties were married on September 16, 1994, separated in June 2004 and divorced on February 14, 2006 by final judgment (FJD), incorporating a marital settlement agreement (MSA). Two children were born of the marriage, on September 14, 1998, and September 12, 2001, respectively.
Defendant owns a landscaping construction business, which, he says, sells landscape designs and installs patios, pool decks, driveways, walkways and landscaping for newly constructed luxury estate homes. For settlement purposes, forensic accountants valued defendant's business in 2005. According to defendant, the forensic accountants took into account the preceding five years of income history, as well as future earnings potential, to impute defendant's business's worth and income for purposes of equitable distribution and spousal and child support. While the parties' 2005 joint tax return showed an income of only $165,333, in the MSA, the parties stipulated to an imputed "taxable income" of $275,000 for purposes of calculating defendant's support obligations. Furthermore, the MSA imputed no income to plaintiff for the first three years post-divorce and $20,000 per year for three years following the initial three-year term. Based thereon, the MSA set defendant's term alimony obligation at $90,000 per year for the first three years and $70,000 per year for two years thereafter, with an up-front non-taxable payment of $25,0000 payable within six months of the FJD. Alimony would terminate earlier upon plaintiff's remarriage. Defendant's child support obligation was fixed at $2000 per month.
Plaintiff remarried on August 22, 2008, and defendant's alimony obligation ceased as of then. By 2009, plaintiff was working twenty hours per week at Wachovia Securities, earning $20,000 annually. Defendant continued operating his landscaping business, although he claims that because of the economic downturn and the housing bust, the nature of his business has changed to more routine seasonal landscaping and maintenance services, resulting in reduced revenues and negative cash flow. Defendant also remarried and he and his current wife, a practicing pediatrician, have a new child.
When her alimony ceased, plaintiff sought an increase in child support as well as other relief. Among other things, plaintiff's January 9, 2009 motion sought to enforce litigant's rights with respect to defendant's past due alimony and lump sum equitable distribution payments; to restrain defendant from physically and/or verbally harassing her and her new husband; and for counsel fees. Defendant cross-moved on February 17, 2009, for, among other things, a reduction in child support due to decreased income and the birth of a child from his current marriage; restraints against plaintiff; termination of alimony prior to August 22, 2008; a credit for prepayment of a "sixth year of alimony"; and for counsel fees.
Following oral argument on March 16, 2009, the Family Part judge reduced defendant's child support obligation to $326 per week effective March 13, 2009. In its recalculation, the court utilized defendant's 2007 taxable income of $168,660 as reflected in his 2007 tax return and made adjustments for parenting time expenses and an "other-dependent" deduction to which defendant was entitled. The judge denied defendant's other requests to terminate alimony before August 22, 2008; for a credit for prepayment of a "sixth year" of alimony; and to prorate his August alimony payment for just twelve days from August 10 to August 22, 2008.*fn1 Moreover, defendant was held in violation of litigant's rights, Rule 1:10-3, and was ordered to pay alimony arrears and partial equitable distribution. Both parties' requests for counsel fees were denied. In its final order, the court did not address the parties' mutual requests for restraints against each other.
On appeal, plaintiff raises the following issues:
I. CONSIDERING THE COURT'S OWN FINDING THAT THE DEFENDANT FAILED TO ESTABLISH A PRIMA FACIE SHOWING OF A CHANGE IN CIRCUMSTANCES AS TO HIS INCOME, THE TRIAL COURT ERRED WHEN RECALCULATING THE RESPONDENT'S CHILD SUPPORT OBLIGATIONS.
A. THE COURT WRONGFULLY USED THE NEW JERSEY CHILD SUPPORT GUIDELINES EVEN THOUGH THE PARTIES' COMBINED INCOME EXCEEDED THE MAXIMUM PROVIDED FOR UNDER THE GUIDELINES.
B. THE COURT FAILED TO ALLOW OR CONDUCT SUITABLE INQUIRY INTO THE [DEFENDANT'S] CURRENT SPOUSE'S INCOME WHEN CALCULATING THE OTHER DEPENDENT DEDUCTION.
II. THE TRIAL COURT ERRED IN MODIFYING CHILD SUPPORT BASED UPON A THREE YEAR AUTOMATIC REVIEW AND IMPROPERLY RELIED UPON AND MISCALCULATED STALE INCOME INFORMATION IN SUPPORT OF SUCH ERRONEOUS AWARD.
III. THE TRIAL COURT ERRED IN DENYING THE APPELLANT'S REQUEST FOR RESTRAINTS AGAINST THE RESPONDENT FROM PHYSICALLY AND/OR VERBALLY HARASSING HER AND HER CURRENT SPOUSE WHEN THE PLAINTIFF PROVIDED CLEAR AND CONVINCING EVIDENCE OF THIS HARASSMENT.
IV. THE TRIAL COURT ERRED IN DENYING THE PLAINTIFF'S REQUEST FOR COUNSEL FEES WHEN THE COURT MADE AN AFFIRMATIVE FINDING THAT THE DEFENDANT WAS IN VIOLATION OF LITIGANT'S RIGHTS FOR HIS FAILURE TO COMPLY WITH THE TERMS OF THE PARTIES AGREEMENT.
V. THE TRIAL COURT ERRED BY MODIFYING ITS ORDER DATED MARCH 16, 2009 BASED UPON A LETTER REQUEST, AS FACTUAL DISPUTES WERE TIMELY RAISED BY THE APPELLANT REQUIRING A FORMAL APPLICATION ON SUCH ISSUE.
On cross-appeal, defendant contends the court erred in denying him a credit for prepayment of a "sixth year" of alimony.
Plaintiff challenges the decrease in defendant's child support obligation on a number of grounds, including the lack of changed circumstances, misapplication of the child support guidelines and use of stale financial information. Essentially, plaintiff argues that defendant has not demonstrated changed circumstances because his taxable income in 2007 was the same as reported in 2005, when defendant's child support obligation was fixed in the MSA. Plaintiff also contends that the parties' combined income exceeds the maximum provided by the child support guidelines, and therefore, in fixing defendant's new obligation, the court should have supplemented the guideline figure with a discretionary amount. Lastly, plaintiff complains that the court erred in failing to update the 2007 financial information provided by defendant and his current spouse. We disagree with these contentions.
Pursuant to the amendment to N.J.S.A. 2A:17-56.9a, "child support orders are no longer subject to automatic court reviews every three years." Martin v. Martin, 410 N.J. Super. 1, 4 (Ch. Div. 2009). Instead, the child support amount is automatically adjusted every two years to reflect the cost of living, with each party having an opportunity to contest the adjustment.
Pursuant to Rule 5:6B, such contests are limited to situations (1) where an obligor's income has not increased at a rate at least equal to the rate of inflation or (2) where the order itself provides for an alternative periodic cost-of-living adjustment.
Otherwise, parties may contest a cost-of-living adjustment or seek a modification of a prior child support order only by showing that such a modification is warranted based upon changed circumstances. The mere passage of time since the entry of the child support order is not a sufficient reason to request that a court review the order or require that the parties exchange financial information. [Ibid.]
Consequently, as New Jersey utilizes an adjustment program, in order to have a court review child support outside the automatic two-year adjustment, the party seeking relief must establish that there has been a substantial change of circumstances since the time of the last order. See Lepis v. Lepis, 83 N.J. 139, 157 (1980) ("The party seeking modification has the burden of showing such 'changed circumstances' as would warrant relief from the support or maintenance provisions involved.").
A support order is "always subject to review and modification on a showing of 'changed circumstances.'" Id. at 146 (citations omitted). The trial judge is afforded "'the utmost leeway and flexibility in determining what is just and equitable'" in assessing whether a support obligation should be modified. Id. at 147 (quoting Smith v. Smith, 72 N.J. 350, 360 (1977)). As noted, the party seeking modification carries the burden of showing "changed circumstances." Id. at 157. "A prima facie showing of changed circumstances must be made before a court will order discovery . . . . When the movant is seeking modification of child support, the guiding principle is the 'best interests of the children.'" Ibid.
A variety of situations may constitute "changed circumstances," including a change in the supporting spouse's income. Id. at 151. But, an alleged reduction in income [is] only part of the overall circumstances [the Family Part judge is] required to consider in determining whether [the supporting spouse] met the burden of demonstrating a right to either discovery or a plenary hearing . . . . The trial court must consider - in both fixing and altering a support obligation - what is equitable and fair in all the circumstances. This requires not only an examination of the parties' earnings but also how they have expended their income and utilized their assets. [Donnelly v. Donnelly, 405 N.J. Super. 117, 130 (App. Div. 2009) (citations omitted).]
Additionally, "it is not enough that an obligor demonstrate a reduction in income; the obligor must also demonstrate how he or she has attempted to improve the diminishing circumstances."
Id. at 130, n.5.
When making its decision, the trial court should consider all of the movant's assets, as [i]t has long been the law of this State that courts have the authority to consider the assets and other financial circumstances of the parties in addition to their income when determining child support. The Legislature has specifically expressed its intent in that regard through adoption of N.J.S.A. 2A:34-23a. . . . [It is] clear [that] child support [is] based upon total family resources and all parents' resources should be considered available for support of the children. [Connell v. Connell, 313 N.J. Super. 426, 432 (App. Div. 1998) (citing Cleveland v. Cleveland, 249 N.J. Super. 96, 101-02 (App. Div. 1991)).]
On review, the motion to modify the support obligation "'rests upon its own particular footing and the appellate court must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters.'" Donnelly, supra, 405 N.J. Super. at 127 (quoting Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006) (citation omitted)). Thus, "[t]he findings of a trial judge are entitled to great deference and will be overturned only if 'we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Platt v. Platt, 384 N.J. Super. 418, 425 (App. Div. 2006) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)).
Here, as the Family Part judge found, defendant provided, among other things, a case information statement (CIS), a 2007 income tax return for an "S" corporation and his most recently available (2007) individual income tax return, showing gross annual income of $168,660. In contrast, the income upon which his original child support obligation was based in the February 16, 2006 MSA was imputed to be $275,000 per year, a figure set by forensic accountants using historical data and presumably future earnings projections. However, as noted in his company's 2007 income tax return, after deducting defendant's compensation of $60,000 and other expenses, the ordinary business income was only $110,423. Defendant attributed his business's decline to the economic downturn and the construction "bust," which directly and negatively impacted his landscaping business.
Moreover, according to defendant's CIS, while his total gross assets amount to $640,000, his gross liabilities total $735,459.65, creating a negative net worth of $-95,459.65. Given the essentially undisputed nature of defendant's proofs, based on his current income, net worth and diminished business earnings, the Family Part judge's decision to recalculate defendant's child support obligations was not "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Ibid.
Relying on defendant's uncontradicted financial information, including his current spouse's 2007 tax return, the court used the child support guidelines in recalculating defendant's child support obligation. Plaintiff argues, however, that because the parties' combined income of $295,000 greatly exceeded the $187,200 maximum amount set by the guidelines, the judge erred in failing to supplement the guideline figure with an additional discretionary amount.*fn2
Plaintiff's argument fails as she utilizes the wrong figure. The parties' combined gross annual income of $188,660 ($385 per week for plaintiff and $3243 per week for defendant), as found by the trial judge, when reduced by federal, state and local income taxes, leaves a combined net weekly income of $1937, well below the weekly amount of $3600, which triggers the guideline's mandate to add a discretionary amount to the minimum basic child support award.*fn3
Utilizing a combined net weekly income figure of $1937, the judge made an appropriate adjustment for parenting time expenses and defendant's other dependent with his current wife, after factoring in her annual income based on her 2007 tax return. Although plaintiff complains about the use of this "stale" information, we discern no error in the court's reliance on the most recent financial data available, including that of plaintiff. Having made these adjustments, the court reduced defendant's child support obligation to $326 per week. We are satisfied the fixing of such amount finds adequate support in the record as well as in the law.
Plaintiff next contends that the court erred in amending its March 13, 2009 order setting the amount of defendant's alimony arrears. We disagree.
The March 13, 2009 order, in paragraph two, granted plaintiff's request that "defendant pay $15,000 within ten days for alimony arrears[.]" Thereafter, defendant's counsel submitted a letter to the court, stating:
I have reviewed your order dated March 13, 2009 and request clarification of two points.
Regarding paragraph 2, Sheryl DeNicola was married on August 22, 2008. Mr. DeNicola had previously paid alimony through and including June 2008. He owed $7,500.00 for the month of July. August alimony should go from August 10, 2008 to August 21, 2008. Therefore alimony for August should be $2,661.34. I calculate his total arrears as $10,161.34. Consequently I request clarification of paragraph 2 to reflect the correct arrearage.
Thereafter, without further argument or a response from plaintiff, the court entered an amended order of April 3, 2009, stating: "Paragraph 2 of the March 13, 2009 Order is amended as follows: Defendant is to pay Plaintiff $10,161.34 for alimony arrears." The court effectively prorated defendant's alimony obligation for August 2008 from the tenth of the month instead of the first of the month when, plaintiff claims, the parties' MSA provides that alimony is to be paid on a monthly basis.
Rule 4:49-2 provides:
Except as otherwise provided by R. 1:13-1 (clerical errors) a motion for rehearing or reconsideration seeking to alter or amend a judgment or order shall be served not later than 20 days after service of the judgment or order upon all parties by the party obtaining it. The motion shall state with specificity the basis on which it is made, including a statement of the matters or controlling decisions which counsel believes the court has overlooked or as to which it has erred.
However, Rule 1:13-1 states:
Clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight and omission may at any time be corrected by the court on its own initiative or on the motion of any party, and on such notice and terms as the court directs, notwithstanding the pendency of an appeal.
Here, the MSA, in paragraph 16, expressly states that "The Husband's alimony obligation shall be paid in one monthly payment on the 10th day of every month, commencing on February 10, 2006." Plaintiff nevertheless argues that alimony is paid on a monthly basis and only due on the tenth of each month. This construction, however, is contrary to the plain meaning of the MSA, which clearly establishes that the tenth is the beginning of the month for purposes of calculating alimony. This interpretation is further supported by the fact that the first alimony payment was due on February 10, 2006, and all subsequent payments were due on the tenth of the month. Therefore, the amount due for August 1 to August 9 was covered in the previous month's alimony payment. Consequently, the alimony due for August 2008 should be calculated from August 10, 2008, to August 22, 2008, at which point alimony was terminated due to plaintiff's new marriage. Accordingly, although the revision is substantive and not a clerical mistake, Rule 1:13-1, the amended court order accurately reflects the corrected amount of defendant's alimony arrears, and plaintiff cannot show any prejudice resulting from the court's summary disposition of the issue.
Plaintiff also contends the court erred in denying her request for restraints against defendant. In its oral decision, while the court granted defendant's request to restrain plaintiff from physically or verbally harassing or threatening him,*fn4 it made no mention of, much less resolve, plaintiff's request for the same relief against defendant. In the absence of such a disposition, we are constrained to remand the matter to the Family Part for resolution.
Plaintiff next contends the court erred in denying her counsel fees. In declining both parties' request for attorneys' fees, the court stated in conclusionary terms: "[t]here is no factor in Williams v. Williams, [59 N.J. 229 (1971)], no factor in the Rule 5:3-5(c) that would warrant a fee transference in this case." The court did not elaborate.
In its March 13, 2009 order, the Family Part judge adjudicated defendant in violation of litigant's rights, Rule 1:10-3, for failure to abide by the terms of the MSA, and specifically ordered defendant to pay alimony arrears as well as make partial payment of equitable distribution within ten days. The court also awarded plaintiff various other forms of relief requested based on provisions of the MSA. Anticipating this very occurrence, the MSA expressly provides for the payment of counsel fees in the event of a default or breach of the MSA:
In the event that either party breaches or defaults on any provision of this Agreement (the "Defaulting Party") and such breach or default is not remedied within fifteen (15) days after written notice is made to the Defaulting Part specifying such breach or default, in addition to indemnifying and holding the other party (the "Complaining Party") harmless for any losses, damages, expenses and costs, including, without limitation, attorney's fees, incurred as a result of such breach or default, the Defaulting Party hereby indemnifies and holds the other party harmless from any and all losses, damages, expenses, costs, and attorney's fees resulting from or made necessary by the bringing of any suit or other proceeding to enforce any such provision, provided such suit or other proceeding results in a judgment, decree, award, or order in favor of the Complaining Party.
For purposes of this Agreement, it is understood and agreed that in the event that either party shall institute a suit or other proceeding against the other to enforce any provision of this Agreement, and after the institution of such action or proceeding and before judgment is or can be entered the Defaulting Party shall comply with such provision of the Agreement, the suit, motion, or proceeding shall be deemed to have resulted in a judgment, award, decree, or order in favor of the Complaining Party entitling the Complaining Party to the reimbursements described in the above paragraph. [(Emphasis added).]
Despite the express provisions of the MSA and its finding defendant in violation of litigant's rights, the court denied plaintiff's request for counsel fees.
In addition to the explicit language of the MSA, Rule 5:3-5(c) permits a court, in its discretion, to make an allowance for legal fees in a matrimonial action after considering a multitude of factors.*fn5 Gotlib v. Gotlib, 399 N.J. Super. 295, 314 (App. Div. 2008); R. 4:42-9(a)(1) ("No fee for legal services shall be allowed in the taxed costs or otherwise, except . . . [i]n a family action, a fee allowance . . . on final determination may be made pursuant to R. 5:35-5(c)."). Additionally, "[a]n application for an allowance of counsel fees must be supported by an affidavit of services addressing the factors enumerated by Rules of Professional Conduct 1.5(a) . . . ." Chestone v. Chestone, 322 N.J. Super. 250, 256 (App. Div. 1999) (citing R. 4:42-9(b)).*fn6
Where a party, by virtue of his or her need, seeks to compel the other party to pay all or part of counsel fees incurred, only those fees that represent reasonable compensation for such legal services performed and were reasonably necessary in the prosecution or defense of the litigation may be awarded. [Id. at 257 (citing Mayer v. Mayer, 180 N.J. Super. 164, 169 (App. Div.), certif. denied, 88 N.J. 494 (1981)).]
Moreover, R. 1:10-3 specifically allows a court to "make an allowance for counsel fees to be paid by any party to the action to a party accorded relief under this rule." The rule also references Rule 5:3-7, which specifically allows economic sanctions due to a violation of an alimony or child support order. R. 5:3-7(b)(4).
In its denial of counsel fees to plaintiff, the court did not reference the MSA or Rule 1:10-3. Nor did it explain its balancing of the factors of Rule 5:3-5(c). We have previously noted that "an articulation of reasons is essential to the fair resolution of a case." Schwarz v. Schwarz, 328 N.J. Super. 275, 282 (App. Div. 2000). Indeed, Rule 1:7-4(a) expressly provides that a court shall "find the facts and state its conclusions of law . . . on every motion decided by a written order that is appealable as of right . . . ." More particularly, Rule 1:6-2(f) provides in relevant part that
[i]f the court has made findings of fact and conclusions of law explaining its disposition of the motion, the order shall indicate whether the findings and conclusions were written or oral and the date on which they were rendered. . . . If no such findings have been made, the court shall append to the order a statement of reasons for its disposition if it concludes that explanation is either necessary or appropriate.
As the Court has noted in another context, "[f]ailure to perform that duty 'constitutes a disservice to the litigants, the attorneys and the appellate court.'" Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (quoting Kenwood Assocs. v. Bd. of Adjustment of Englewood, 141 N.J. Super. 1, 4 (App. Div. 1976)). We have, as well, repeatedly referred to this observation in the context of appeals from orders entered in the Family Part. See, e.g., Schwarz, supra, 328 N.J. Super. at 282; Chambon v. Chambon, 238 N.J. Super. 225, 231-32 (App. Div. 1990).
While "[w]e will disturb a trial court's determination on counsel fees only on the 'rarest occasion,' and then only because of clear abuse of discretion[,]" Strahan v. Strahan, 402 N.J. Super. 298, 317 (App. Div. 2008) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)), we nonetheless cannot undertake meaningful appellate review in this instance in the absence of a statement of findings and conclusions. We, therefore, remand the matter to the Family Part for reconsideration of the issue of plaintiff's entitlement to counsel fees in light of the applicable principles of law, the evidence of record and the MSA.
In his cross-appeal, defendant contends the court erred in denying him a credit for prepayment of what he claims to be a "sixth year of alimony." We disagree.
In this regard, defendant argues that the lump sum $25,000 prepayment of alimony to plaintiff actually constituted a sixth year of alimony, and he sought a credit, as paragraph 14 of the MSA clearly provides for only term alimony of five years. The Family Part judge disagreed, reasoning:
Defendant seeks a reimbursement on the basis that the [$]25,000 lump sum payment was meant as a sixth year [of] alimony. Defendant's argument that he only agreed to the lump sum payment because he was too exhausted to argue is baseless.
Defendant provides to the Court canceled checks for payments toward the $25,000 where he refers to the payments as sixth year alimony. Even so, based upon the terms of the agreement, that $25,000 was not meant as sixth year alimony.
Defendant agreed to this payment. And therefore the agreement should be enforced as written. Defendant is not able to modify it, an agreement that he clearly consented to with the advise of a lawyer. As a result, the defendant's request to offset the prepayment amount of $25,000 by future equitable distribution payments is denied.
As noted by the Family Part judge, the provision in paragraph 14 of the MSA which called for a sixth year of alimony was crossed out, and replaced with a five year term. Additionally, the MSA specifically provides that, "[t]he Husband shall pay a non-taxable payment of $25,000 within six (6) months of the date hereof, which shall be non-dischargeable in bankruptcy and characterized in the nature of support." (Emphasis added). "As a general rule, courts should enforce contracts as the parties intended." Pacifico v. Pacifico, 190 N.J. 258, 266 (2007). Accordingly, as the plain meaning of the MSA reveals that the $25,000 lump sum was not intended to extend alimony beyond the five-year term, we discern no error in denying defendant's request for a credit for prepayment of alimony.
Affirmed in part; reversed and remanded in part.