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Paulus v. Paulus


August 25, 2010


On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, Docket No. FM-03-1216-05.

Per curiam.


Argued August 10, 2010

Before Judges Lihotz and Baxter.

In this matrimonial matter, plaintiff Denise M. Mason appeals from a post-judgment Family Part order reducing defendant Richard G. Paulus's obligation to pay child support, which was computed using a level of income based upon limited employment while he attended a full-time nursing program, rather than the level of earnings received while employed in the information technology field.

Based on our review of the arguments presented, in light of the record and applicable law, we conclude the trial court erred in failing to make factual findings and, as necessary, conduct a plenary hearing to determine whether defendant was voluntarily underemployed and, if so, whether a higher level of income should be imputed when calculating his child support obligation. These and other errors in the court's order mandate that we reverse and remand for additional proceedings.

The parties separated in 2003 after a fifteen-year marriage. Plaintiff is the residential parent of the three unemancipated children. While the divorce was pending, the parties amicably resolved collateral issues relating to child support and equitable distribution. A comprehensive Property Settlement Agreement (PSA) was incorporated in the July 5, 2005 Final Judgment of Divorce.

Since the divorce, as required by the PSA, several modifications of defendant's child support obligation have occurred based on changes in his employment or the custodial status of the children. Prior to defendant's current application, a July 3, 2008 consent order fixing child support was in place. When that order was entered, the oldest child, who had spent the prior year residing with defendant, was attending college and returned to reside with plaintiff during the school breaks and summer.

The terms of the order included that effective November 30, 2008, defendant would pay $61 per week in support for the oldest child and $348 per week for the other two children. The amounts were calculated by the parties based upon the older child's needs and "a compromise figure reached between the parties and their respective Child Support Guidelines [CSG] calculations[.]" See R. 5:6A; Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A (2010). The CSG worksheet attached to the order, reports plaintiff's gross weekly income as $913 and defendant's as $3,173.

In September 2008, defendant lost his job due to a reduction in force. His salary continued pursuant to a severance agreement. He then underwent previously scheduled hip replacement surgery. Defendant continued making child support payments pursuant to the consent order. Defendant's severance benefits ended in December 2009. He then unilaterally began paying only $69 per week and moved for reductions in child support and a related life insurance obligation.

In support of his motion, defendant explained his decision to change careers and enroll in a full-time accelerated R.N. program at Drexel University. Defendant claimed his attempts at reemployment in information technology proved unsuccessful and believed he would become more marketable as a nurse. While in school, he began working nights and weekends for Virtua Hospital, providing in-patient transportation services, for $443 per week.

Plaintiff objected to defendant's request for reduction. She also filed a cross-motion for enforcement of the terms of the consent order.

The Family Part judge entered an interim order on April 9, 2009, that required the submission of additional documentation and encouraged the parties to attempt a negotiated resolution. Their efforts proved unsuccessful. The court scheduled a second hearing, held on August 26, 2009. Following oral argument, but without benefit of a plenary hearing, the judge reserved decision. The final order was entered on November 16, 2009.*fn1

The court concluded defendant's child support obligation should be modified and ordered he pay $68 per week for the younger two children from January 1, 2009 to September 1, 2009, reduced to $48 per week when the middle child commenced college. No support was ordered for either college student. In determining the level of support, the motion judge apparently accepted defendant's representation that he had commenced employment as a hospital courier earning an annualized income of $23,000, as the CSG worksheets attached to the order recorded defendant's gross weekly income as $443.

On appeal, plaintiff seeks reversal of the April 9 and November 16, 2009 orders, as they are devoid of factual findings. She also challenges as error the judge's failure to award child support for the benefit of all three children, including the two unemancipated college students, after imputing income to defendant based on his historic earnings. Finally, plaintiff asserts the trial judge made a computation error when imposing defendant's obligation to pay for the youngest child's after school program costs. We agree.

"The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (citing Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). Reversal is reserved only for those circumstances when we determine the factual findings and legal conclusions of the trial judge went "so wide of the mark that a mistake must have been made." Div. of Youth & Family Servs. v. M.M., 189 N.J. 261, 279 (2007) (internal quotation omitted). It is when we are convinced the trial court's determinations "are so manifestly unsupported . . . as to offend the interests of justice," that we intervene. Rova Farms, supra, 65 N.J. at 484 (internal quotation omitted); Div. of Youth & Family Servs. v. E.P., 196 N.J. 88, 104 (2008).

Here, although the interim order recited detailed statements of the parties' respective factual assertions, neither it nor the final order contained any fact finding upon which the conclusion rested. This flaw is fatal and necessitates reversal.

Rule 1:7-4(a) denotes a trial court's obligation to make findings of facts and state conclusions of law "on every motion decided by a written order that is appealable as of right." (Emphasis added). Our cases have repeatedly emphasized the importance of a trial judge's responsibility to provide findings and conclusions to assure informed appellate review. Rosenberg v. Bunce, 214 N.J. Super. 300, 303 (App. Div. 1986). In this regard, the oft-cited instruction by the Supreme Court regarding the trial court's factfinding responsibility bears repeating. The Court emphasized that the [f]ailure to perform that duty "constitutes a disservice to the litigants, the attorneys and the appellate court." Kenwood Assocs. v. Bd. of Adj. of Englewood, 141 N.J. Super. 1, 4 (App. Div. 1976). Naked conclusions do not satisfy the purpose of [Rule] 1:7-4. Rather, the trial court must state clearly its factual findings and correlate them with the relevant legal conclusions. [Curtis v. Finneran, 83 N.J. 563, 569-70 (1980).]

Without findings relevant to the legal standards, the litigants and the reviewing court "can only speculate about the reasons" for the decision. Rosenberg, supra, 214 N.J. Super. at 304.

Omission of this duty is particularly problematic in Family Part matters, where decisions involve discretionary determinations and have an immediate impact on the children. Here, defendant's child support obligation was reduced in the court's exercise of "'discretion to determine whether the prior support order or judgment should be enforced and whether and to what extent a spouse should be forced to pay . . . [.]'" Weitzman v. Weitzman, 228 N.J. Super. 346, 358 (App. Div. 1988) (quoting Mastropole v. Mastropole, 181 N.J. Super. 130, 141 (App. Div. 1981)). However, no basis explaining that determination was made.

There is no question that the order must be reversed. Generally, when a trial court has not made adequate findings of fact, the appellate court will remand for the court to make the necessary factual findings. See Foley, Inc. v. Fevco, Inc., 379 N.J. Super. 574, 588-89 (App. Div. 2005); Barnett & Herenchak, Inc. v. State of New Jersey, Dep't of Transp., 276 N.J. Super. 465, 470-73 (App. Div. 1994). In fact, the parties did not advocate the need for a plenary hearing at oral argument. Nevertheless, for the following reasons, we conclude on remand the matter may require an evidentiary hearing. Strahan v. Strahan, 402 N.J. Super. 298, 310 (App. Div. 2008); Heinl v. Heinl, 287 N.J. Super. 337, 347 (App. Div. 1996).

"A plenary hearing is required when the submissions show there is a genuine and substantial factual dispute" that the trial court must resolve. Hand v. Hand, 391 N.J. Super. 102, 105 (App. Div. 2007); see also Tretola v. Tretola, 389 N.J. Super. 15, 20 (App. Div. 2006) (reversing motion on emancipation and requiring a plenary hearing because the court failed to recognize material facts in dispute and evidence beyond the motion papers necessary for resolution of the matter); Conforti v. Guliadis, 128 N.J. 318, 322 (1992) (holding that plenary hearings are required when there are "contested issues of material fact on the basis of conflicting affidavits") (internal quotations omitted).

The issue presented is whether defendant is voluntarily underemployed, necessitating imputation of income. Although defendant's lay-off resulted through no fault of his own, and his overall plan for re-education leading to a new career may be laudable, these facts do not resolve whether his current income from a new, less financially lucrative career should be used for the purpose of modifying child support.

The principle is well-settled that if a person is found to be voluntarily unemployed or underemployed without cause, a court shall impute income for the purpose of determining child support payments. See Caplan v. Caplan, 182 N.J. 250, 2708 (2005) (stating parent's ability to earn income, or "his human capital," should be "theoretically activated for the purpose of evaluating his support obligation" and the amount of income that "should be imputed to him"); Strahan, supra, 402 N.J. Super. at 314 (same); Halliwell v. Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999) (stating the potential earning capacity of an individual, rather than actual income, should be considered when fixing the ability to pay child support); Connell v. Connell, 313 N.J. Super. 426, 432-33 (App. Div. 1998) (noting that a court may consider the capacity to produce income when computing a child support obligation); Lynn v. Lynn, 165 N.J. Super. 328, 341-42 (App. Div. 1979) (stating a "'court has every right to appraise realistically defendant's potential earning power . . . In treating the matter of support, our courts have always looked beyond the [parent's] claims of limited resources and economic opportunity . . . [and] compel[led] a parent to do what in equity and good conscience should be done for his children.'") (quoting Mowery v. Mowery, 38 N.J. Super. 92, 102 (App. Div. 1955)), certif. denied., 20 N.J. 307 (1956).

An obligor who has selected a change in career, must establish that the benefits he or she derives from the career change substantially outweigh the disadvantages to the supported [children]. Absent that showing, a judge should deny the motion, in effect imputing prior earnings, unless the obligor establishes, in the alternative, that his capacity to earn [ha]s diminished, in which case the judge should impute earnings consistent with the obligor's capacity to earn in light of the obligor's background and experience. [Storey v. Storey, 373 N.J. Super. 464, 468-69 (App. Div. 2004).]

Indeed, "[t]he potential earning capacity of an individual, not his or her actual income, should be considered when determining the amount a supporting party must pay." Halliwell, supra, 326 N.J. Super. at 448. "[O]ne cannot find himself in, and choose to remain in, a position where he has a diminished or no earning capacity and expect to be relieved of or to be able to ignore the obligations of support to one's family." Arribi v Arribi, 186 N.J. Super. 116, 118 (Ch. Div. 1982).

From these authorities it is clear that when examining whether a parent is underemployed, the court must review the parent's education, experience, training, and past earning capacity, as well as consider whether a diligent pursuit for comparable employment was engaged. Imputation considers potential employment and earning capacity using the parent's work history, occupational qualifications, educational background, and prevailing job opportunities in the region. The court may impute income based on the parent's former income at that person's usual or former occupation or the average earnings for that occupation as reported by the New Jersey Department of Labor[.] [Pressler, supra, Appendix IX-A to R. 5:6A at 2393.]

As the moving party, defendant has the burden to make a prima facie showing he was unable to find comparable employment in his field. Storey, supra, 373 N.J. Super. at 469; see also Lepis v. Lepis, 83 N.J. 139, 157 (1980) (holding moving party has burden to prove changed circumstances to obtain warranting relief); Zazzo v. Zazzo, 245 N.J. Super. 124, 132 (App. Div. 1990) (same), certif. denied, 126 N.J. 321 (1991).

Defendant's certification briefly asserted he applied for various positions in his field and a lack of success fueled his decision to switch careers and work part-time. Defendant has a Master's degree in Human Resources Management and logged many years' experience in the ever-expanding field of information technology. Plaintiff challenged defendant's claims, noting he had recently earned between $135,000 and $175,000. The assertion that his earning ability was reduced to a mere $23,000 was not self-evident. Also, we note defendant's certification merely recites he "submitted job applications" in his field of experience, without any additional explanation or discussion. The attached list of prospective employers reflects submissions made while defendant was hospitalized after successive hip replacement surgeries.

This shallow record cannot support the court's conclusions. Based on the information presented, the efficacy of defendant's reemployment efforts and the reasons for and intent behind the voluntary decision to abruptly change his professional career, resulting in a seventy-two percent reduction in earned income, should have been tested by a plenary hearing.

A second glaring omission is an analysis of defendant's assets, which impacts his ability to pay support as ordered.*fn2

When deciding whether to modify child support, "the court also reviews the extent other assets are available to pay support[.]" Caplan, 182 N.J. at 268 (citing Pressler, supra, Appendix IX-A to R. 5:6A ¶12). However, the trial judge made no evaluation of whether defendant has the financial wherewithal to liquidate assets to support the children, as previously ordered, while he pursues his educational endeavors. N.J.S.A. 2A:34-23(a)(3). We note we have also held that non-income producing assets can be used as a basis to impute income for the purposes of calculating child support. Connell, supra, 313 N.J. Super. at 433.

We reject defendant's assertion that an evidentiary hearing is unnecessary because his motives in pursuing the contemplated path of education and current part-time employment are sincere. In our landmark opinion regarding a parent's mid-life career change accompanied by a dramatic income reduction we said:

[T]he good faith of [defendant]'s motives does not automatically preclude reference to anything but current earnings in setting child support. We reject his contention that the court must find his alteration of economic circumstances to have been deliberately contrived to frustrate his support obligations before capital can be invaded to supplement child support payments out of current income. The controlling statute does not restrict the court to a consideration of current income alone but states that the court make such order for the care of the children "as the circumstances of the parties and the nature of the case shall render fit, reasonable and just, and require reasonable security for the due observance of such orders." [Lynn, supra, 165 N.J. Super. at 340 (quoting N.J.S.A. 2A:34-23).]

This matter is unlike Dorfman v. Dorfman, 315 N.J. Super. 511, 517 (App. Div. 1998), where we reversed the denial of a request for a reduction in child support when the defendant suffered an involuntarily termination. The facts in Dorfman reflected the defendant engaged in an immediate job search and interviews culminating in the accepted job offer, which was within his area of experience, but carried an accompanying lower salary. The case did not involve a dramatic income decline resulting from a decisive career change.

We also reject defendant's argument suggesting the parties recognized their incomes would fluctuate and "[t]his was a 'nonLepis' Agreement[,]" implying that every income change mandated a modification of child support. Notwithstanding the parties' agreement to report changes of income "of more than 10%" and recalculate support using the CSG, no provision of the PSA can deprive the children of their right to receive support. Pascale v. Pascale, 140 N.J. 583, 591 (1995); Patetta v. Patetta, 358 N.J. Super. 90, 94 (App. Div. 2003); L.V. v. R.S., 347 N.J. Super. 33, 41 (App. Div. 2001); Blum v. Ader, 279 N.J. Super. 1, 4 (App. Div. 1994).

Another flaw in the order warranting reversal is the motion judge's inexplicable denial of support for the two unemancipated college students. Admittedly, the court suggested at oral argument that the parties work out a budget for the children, as the judge correctly recognized support for children over eighteen fell outside the parameters of the CSG. However, both parties filed CISs listing budgeted expenses and plaintiff submitted a statement of the older child's college costs,*fn3 leaving us to wonder what exactly the judge believed was omitted. It was error to ignore the critical need to provide for the children's support, especially when defendant had the burden of proof.

Defendant remains obligated for the support of all three children until emancipation. Newburgh v. Arrigo, 88 N.J. 529, 543 (1982). Accordingly, support for the older two children must be computed pursuant to N.J.S.A. 2A:34-23.

The court also miscalculated defendant's proportionate share of the cost for the youngest child's annual after-school program. For the period from January to June, the cost totaled $1,080, of for which defendant was to pay 50%. However, the order incorrectly stated he pay 50% of $540, ordering defendant to pay $270. Consequently, an additional $270 is due plaintiff.

We reverse the orders dated April 3 and November 16, 2009, and remand the matter for additional proceedings. Based on arguments made before us we understand the motion record may be more expansive that that provided to this court on appeal. We are not certain whether it sufficiently includes proof directed to the factual determinations needed to analyze the issues raised by the parties. We leave to the Family Part Presiding Judge, or his designee, the determination of whether additional written submissions or a plenary hearing would best provide the information to allow a thorough examination of: defendant's justification for the dramatic change in career, accompanied by an extraordinary reduction in earned income; whether defendant satisfactorily attempted to obtain comparable employment in his field of experience or is voluntarily underemployed; whether and to what extent income should be imputed; whether child support as previously ordered or as modified should be paid from defendant's assets, as well as his income; and the amount of child support necessary for all three children retroactive to the date defendant unilaterally reduced the prior order. Finally, the provision of the April 3, 2009 order shall be corrected to include the actual proportionate share defendant owes for the youngest child's after-school costs.

Reversed and remanded for additional proceedings. We do not retain jurisdiction.

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