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Schambach v. Schambach

September 1, 2010


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-450-02C.

Per curiam.


Submitted March 9, 2010

Before Judges Carchman, Parrillo and Ashrafi.

Plaintiff Barbara Schambach appeals, and defendant Richard Schambach cross-appeals from a post-judgment order of the Family Part terminating defendant's obligation to make alimony payments but continuing his obligation to pay child support, including contributions to the parties' daughter's post-graduate education. We reverse and remand for a plenary hearing as to these issues.

These are the relevant facts. Plaintiff and defendant were married in July 1986, and have one child, Jessica Ann, born September 8, 1986. The complaint for divorce was filed in August 2001 when Jessica was still in high school. Prior to trial, the parties resolved a number of extant issues including the funding of Jessica's anticipated college and post-graduate education. They entered into a consent order of September 11, 2002, which provided that

[w]ith regard to college expenses, it is acknowledged that there is a college fund for Jessica in the amount of $100,000.00. The wife shall continue as trustee for Jessica and to administer and account for the funds upon consultation between the parties. Sixty five percent of the fund balance as of the date Jessica graduates from high school shall be applied to her undergraduate college expenses [].... Jessica will be obligated, upon expiration of the 65% of funds applicable to her colleges expenses, to apply for college related financial aid and she shall accept a maximum $5,000.00 per year student loan as her personal contribution towards the aforementioned college expenses. When the fund has reduced by 50%, the parties will, within thirty days, exchange formal Case Information Statements, prior two year taX returns and proof of year-to-date income and shall within sixty days thereafter, negotiate the issue of college contributions by the parties to Jessica's additional college expenses for undergraduate studies.

Any shortfall for college will be an obligation of the parties until Jessica obtains her undergraduate degree.

Contributions by the parties (beyond the 35% of the fund) are voluntary only. It is anticipated that 35% of the trust fund shall be applied to Jessica's post graduate expenses....

The order specifically reserved the issue of alimony for trial.

On December 11, 2002, the Family Part entered a final judgment of divorce, incorporating the parties' consent order. Concerning alimony and child support, the judgment ordered defendant to pay plaintiff $150 weekly in alimony and $162 weekly in child support. The judge arrived at this amount by concluding that defendant had the ability to earn $73,000 per year, and plaintiff $44,100 per year.

Jessica matriculated at Brandeis University in 2004 and by her graduation in 2008, had incurred a total of $124,711.52 in college expenses. Jessica had obtained $23,125.00 in student loans, leaving a balance of $101,586.52 to be born by the Fund and the parties. Plaintiff used the entire $100,000 in the Fund to pay for Jessica's undergraduate expenses, despite the contrary provision in the 2002 consent order. According to plaintiff, she obtained defendant's consent to use the entire Fund for that purpose.

Following graduation from Brandeis, Jessica matriculated at Brooklyn Law School in August 2008. The calculated total expenses for the six semesters required for graduation was $127,050 or $21,175 per semester. Jessica obtained student loans in the amount of $15,197.50 per semester, leaving her to defray the balance of $5,977.50 per semester.

In September 2008, defendant moved to terminate child support; the motion was denied without prejudice. That was followed by a second motion in November 2008 to vacate child support and alimony payments. Plaintiff filed a cross-motion seeking to compel defendant to repay his share of Jessica's college student loans and contribute to Jessica's law school tuition.

At argument on the motions, defendant asserted that Jessica is emancipated, that he never agreed to pay for law school and that plaintiff failed to account for distribution of the monies in the Fund. He further claimed that his obligation to pay for child support and to contribute to Jessica's law school expenses had terminated. On the issue of alimony, defendant argued that plaintiff now earns more money than defendant, constituting a sufficient change in circumstances warranting termination of his alimony obligation.

The judge entered a March 11, 2009 order, requiring defendant to reimburse plaintiff for forty-one percent of the $11,562.50 due on Jessica's college loan and contribute the same percentage for her law school tuition and related expenses. This was premised on the judge's determination that defendant had failed to "demonstrate[] changed circumstances that would warrant a termination in his child support obligation....

[D]efendant does have a legal duty to pay child support because he has not proven that his daughter is emancipated. It is the demonstrable needs of the child, not the age of the child, that is determinative of the duty to support." The judge was also persuaded that the parties contemplated, as early as 2002, that Jessica would attend post-graduate school. As plaintiff provided evidence that Jessica had exhausted all means of financing law school through loans, defendant and plaintiff were obligated to bear the balance. The judge used the child support guidelines to determine the ratio of contribution and determined, from the parties' recent paystubs, that plaintiff had a weekly net taxable income of $1248 and defendant $877, which obligated plaintiff to contribute fifty-nine percent of the total income and defendant forty-one percent. This calculation was used solely for the purpose of apportioning college and law school expenses and did not affect the ongoing child support amount which was set to continue as originally calculated in 2002.

On the issue of alimony, the judge determined that the 2002 calculations were premised on defendant's then yearly income of $73,000 and plaintiff's of $44,100. The judge found that while defendant's income had not substantially changed since 2002, plaintiff's income had been enhanced with income received from bonds she inherited from her mother, yielding $79,289 in aggregate yearly income. The judge concluded that defendant had demonstrated that plaintiff was now earning more than defendant, plaintiff's 2007 income of $79,289 compared to his 2007 income of $71,322, thereby eliminating plaintiff's entitlement to alimony, and granted this portion of defendant's motion.

Included in the analysis was a reference to $17,642 in interest income received by plaintiff, which increased her income to $76,530. According to plaintiff, the interest income reflects interest from inherited bonds that were cashed in and is not an annual income source. Plaintiff inherited an apartment in New York City that was valued, without any significant substantiation, at $500,000 and was apparently utilized by Jessica while attending law school.

No counsel fees were awarded.

On appeal, plaintiff asserts that the judge erred by failing to conduct a plenary hearing or make the requisite findings to establish a change of circumstances so as to warrant termination of alimony. In addition, plaintiff claims that the loan repayment was inaccurate and challenges the apportionment, and finally, that the judge erred in denying counsel fees.

On his cross-appeal, defendant challenges that portion of the order obligating him to contribute to Jessica's law school tuition and expenses.

Alimony and child support orders are subject to modification upon a showing of "changed circumstances." Lepis v. Lepis, 83 N.J. 139, 152 (1980). A party seeking modification of a support order bears the burden of demonstrating changed circumstances. Dorfman v. Dorfman, 315 N.J. Super. 511, 515 (App. Div. 1998) (citing Lepis, supra, 83 N.J. at 157-59). See also Isaacson v. Isaacson, 348 N.J. Super. 560, 579 (App. Div.), certif. denied, 174 N.J. 364 (2002). We will not modify a support award where the changed circumstances are merely temporary. Lepis, supra, 83 N.J. at 151; Bonanno v. Bonanno, 4 N.J. 268, 275 (1950).

Where there are significant issues in dispute, an application to modify support and other relief requires a plenary hearing. See Dorfman, supra, 315 N.J. Super. at 515 ("A plenary hearing may be necessary to adjudicate the matter if there are genuine issues of material fact."); Tancredi v. Tancredi, 101 N.J. Super. 259, 262 (App. Div. 1968); Mackowski v. Mackowski, 317 N.J. Super. 8, 11 (1998). As we note in our opinion, there were substantial factual disputes that require further inquiry and cannot be resolved on the motion papers.

While plaintiff argues that the judge failed to properly assess and consider plaintiff's personal expenses, see Crews v. Crews, 164 N.J. 11, 25 (2000), we consider a more basic flaw in the analysis warranting further inquiry.

In concluding that plaintiff's income equaled or exceeded defendant's income, the judge included both earned and unearned income. That standing alone is not error, except plaintiff claimed that her unearned income was not recurrent and resulted from bonds that she inherited and then cashed. This was not fully explored at the proceedings below and in fact, defendant questioned why the bonds were cashed. If in fact, the interest income was non-recurrent, its utility as an income source warranting termination of alimony is questionable. See Heller-Loren v. Apuzzio, 371 N.J. Super. 518, 527 (2004) (stating that gross income for the purposes of alimony calculation includes only that income which is recurring or will increase the income available to the recipient over an extended period of time).

In addition, in assessing the expenses of the parties and measuring these expenses against the standard of living of the parties, see Crews, supra, 164 N.J. at 25, as well as in considering any increase in plaintiff's income, the judge failed to engage in the analysis mandated by Glass v. Glass, 366 N.J. Super. 357, 370 (App. Div.), certif. denied, 180 N.J. 354 (2004). In Glass, we recognized that increases in income by the recipient of alimony will not, standing alone, warrant termination or reduction of alimony. We said:

[T]he standard of living experienced during the marriage... serves as the touchstone for the initial alimony award and for adjudicating later motions for modification of the alimony award when 'changed circumstances' are asserted. The standard of living during the marriage is the way the couple actually lived, whether they resorted to borrowing and parental support, or if they limited themselves to their earned income.

... where the marital standard has not been established, a judge addressing a modification application ...

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