March 3, 2011
ERNEST BORSELLINO, PLAINTIFF-APPELLANT,
MARGARET BORSELLINO, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-310-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 3, 2010 - Decided Before Judges Payne and Baxter.
Plaintiff, Ernest Borsellino, appeals from a December 23, 2008 order denying his motion to reduce alimony on the basis of changed circumstances and from a January 21, 2010 order denying his post-judgment cross-motion to reduce alimony. We find the appeal from the 2008 determination to be untimely, Rule 2:4-1, and decline to consider it. Our focus will be on the court's January 21, 2010 order, which we affirm.
The record reflects that Ernest and Margaret Borsellino were married on September 29, 1974 and were granted a dual judgment of divorce on September 14, 2006. A property settlement agreement (PSA), negotiated by the parties and incorporated into the judgment of divorce, provided for the payment of alimony to defendant in the following terms:
Effective on August 1, 2006, Husband shall pay alimony to the Wife in the amount of $55,000 per year until termination as set forth herein. Alimony shall be paid directly to Wife, payable in 12 monthly payments of $4,583.33 on or before the first day of each month, as "permanent alimony" as defined pursuant to N.J.S.A. 2A:34-23 and the case law arising therefrom.
The parties agree that for purposes of computing alimony, they considered a marital lifestyle based upon the income available solely from Husband's income adjusted to take into account all income, benefits and perquisites.
Plaintiff is presently in his mid-fifties. At the time of the divorce, plaintiff owned a home inspection business known as All Pro Home Inspections. Plaintiff holds licenses as a home inspector, pesticide applicator, radon measurement technician, and electrician. He also has some training as an electrical engineer, but has not completed his degree in this field. Plaintiff employed two people in his business: another home inspector and a secretary. His adjusted income in the years before the divorce was $127,835 in 2000, $127,458 in 2001, $145,173 in 2002, $179,615 in 2003, $179,895 in 2004, and $197,695 in 2005. It was assumed for purposes of support at the time of the divorce that plaintiff's earnings were $187,000 per year.
Plaintiff has certified in connection with his most recent motion that, as the result of the decline in the real estate market, the loss in mid-2007 of an employee who has become a direct competitor,*fn1 and a reduction in the fees that can be charged for home inspections from a range of $600 to $700 to a present charge of $495, defendant's income has declined to $148,219 in 2007, to $115,975 in 2008, and to approximately $113,100 in 2009. Plaintiff alleges that he has been required to lay off his secretary, and as a consequence, he does all the administrative work in addition to the home inspections, working fifty to seventy hours per week. He maintains a home office.
Plaintiff states that, although he is licensed as an electrician, he has no experience in that field. Further, full-time employment as an electrician would require expenditures for a truck, equipment, advertising, and a helper, and would result in less income than plaintiff is presently making. Further, plaintiff claims that it would be unreasonable for him to work part-time as an electrician or in any other field because of his present fifty- to seventy-hour work week.
Plaintiff lives in a house in Maplewood, purchased during the parties' separation, that, as of November 2009, was encumbered by a first mortgage of $434,000 and a second mortgage of $70,000. Plaintiff pays mortgage charges of $4,821 per month. He claims that the mortgages on the property exceed the property's value. The parties' children are emancipated. However, plaintiff has resided since the winter of 2006 with a woman with a successful career in publishing.
Defendant, who is also in her mid-fifties, has a high school education and no substantial work experience outside the home. After the divorce, she worked part-time for a florist, but that temporary employment was seasonal and has now ended. She had been unable to obtain alternative full- or part-time employment. At the time of the divorce, the parties sold their home in Maplewood, equally dividing the sales price of approximately $700,000 and the costs incurred in the sale. Additionally defendant was paid $103,000 as equitable distribution of her share of plaintiff's business. She utilized $245,000 of her equitable distribution as a down payment on a house that she purchased for $420,000. She maintains approximately $60,000 as savings. Defendant claims that her sole support comes from plaintiff's alimony payments, and that her lifestyle has decreased since the divorce.
On November 20, 2008, approximately two years after the parties' divorce, plaintiff moved pro se for reduction of his alimony obligation, alleging that his income was not sufficient for him to pay the agreed amount, and that he no longer had credit against which he could borrow to make the payments. The motion was heard on December 23, 2008 and denied. In reaching his determination, the Family Part judge distinguished plaintiff's employment in the housing market from litigants employed in financial services, which the judge observed, were "really, really getting the big hit." In contrast, defendant was "a working man. He's got skills." Additionally, because plaintiff's business was his own, he could "put down whatever income he chooses to put down." Furthermore, "[h]e can work as much as he chooses to work."
The judge also noted that, although the income of plaintiff's woman friend could not be considered in connection with whether plaintiff could meet his obligations to defendant, it was "clear that her contributions to the household and her contributions in other areas do lighten the load for Mr. Borsellino, so that the money that he is earning can be used to make sure that he meets his agreed upon responsibilities."
The judge then discussed defendant's living expenses as set forth in her case information statement (CIS), finding them to be reasonable. Additionally, he credited defendant's claims that plaintiff had gone on multiple vacations and golf outings, including trips to Colorado, San Francisco, Mexico, and Argentina, he had spent summer weekends at the shore, he frequented Atlantic City, and he had engaged in golf outings at Myrtle Beach.*fn2 The judge noted that plaintiff had purchased a BMW, albeit used, when he already had a SUV, whereas defendant drove a 2002 Toyota Camry. He also noted that plaintiff was paying for his emancipated daughter's health insurance, had paid $15,000 toward his mother's assisted living bill, and had a cleaning lady.*fn3
In sum, the judge stated:
[B]ased on the information that I have been able to review here and the arguments of counsel, I am clearly not satisfied that Mr. Borsellino has been able to make and to meet his burden of proof with regard to this [claim]. Whether or not the reduction in income is self-imposed, whether or not the reduction in income is temporary in nature, either one of those factors eliminates and causes me to have to deny his request.
Plaintiff was ordered to pay arrears in alimony within thirty days and to continue alimony payments as set forth in the PSA.
On November 5, 2009, defendant filed a motion in aid of litigant's rights to enforce the parties' PSA and the December 2008 order. Plaintiff, through counsel, responded to the motion and filed a cross-motion seeking a reduction in alimony payments to $2,000 per month.
In support of her motion, defendant conceded in a certification that, at the time of plaintiff's 2008 motion, "home sales were down a bit," but she argued that plaintiff had the ability to pick up income from other trades, but did not do so because he was "living with a woman who can afford him a lifestyle even greater than the marital lifestyle." Defendant claimed that plaintiff "travels more than he ever did and to increasingly exotic locations." She alleged that plaintiff golfed once or twice a week, and that he had recently traded in his 2007 BMW and purchased a new one. Additionally, defendant claimed that since the parties' daughter had given birth to the child that she was carrying in 2008 and contemplated marriage to a law enforcement officer, plaintiff did not need to continue her insurance.
Plaintiff responded in the manner that we previously indicated. He denied that he had traded in the 2006 BMW for a new one, and he noted that he had stopped paying his daughter's health insurance in April 2009, which he stated he had always covered out of savings, not income. Additionally plaintiff asserted that the contributions to household expenses made by his woman friend did not come close to a $45,000 figure alleged by defendant. Plaintiff claimed that he derived $75,000 in income from his business in the form of loans; the remainder of his income consisting of "perquisites," such as tax deductions. He noted that if he were forced to sell his house, he would lose the substantial deduction that his mortgage payments permitted, which operated to reduce his tax liability to virtually nothing.
Following a non-testimonial hearing on the cross-motions, the judge ruled in defendant's favor. In reaching his decision, the judge reviewed his prior 2008 ruling, determining that he had not based it on the fact that plaintiff's financial situation was temporary. Instead, he stated that he found that plaintiff had failed to make a prima facie case. The judge stated:
[H]e is the sole principal of the business, . . . he has the ability to work or not work, he has the ability to . . . say that he's receiving assistance or not receiving assist[ance] from . . . his paramour. He has the ability to . . . adjust his numbers as he wants his numbers to be adjusted.
It is very difficult in these types of cases to be able to find what is the true situation with regard to his ability to earn.
Nonetheless, the judge found that plaintiff seemed to have burdened himself after the divorce in a fashion as to give him no ability to meet his alimony obligations. In this regard, the judge noted the fact that plaintiff had totally utilized the equity in his home, and had assumed mortgage payments of over $4,500 per month, whereas prior to the divorce, he was paying only $2,000.
Although the judge acknowledged that "[t]here doesn't seem to be any question at this point that Mr. Borsellino is earning less money than he earned at the time that the parties entered into the property settlement agreement," he stated that he had seen nothing to suggest that this income loss could not be replaced, either by working harder or expanding into other areas in which plaintiff was qualified to work. The judge stated:
This man is at a point in his life, maybe with the entrance of this new person into his life, where he suddenly [in] the past couple years has decided that he simply doesn't want to work as much as he did before, he doesn't want to push as much as he did before, he doesn't want to advertise the way that he did before, he doesn't want to go out and do two appraisals a day, he wants to minimize, he wants to be able to play golf when he wants to play golf, he wants to be able to travel when he wants to travel, whether he wants to be able to go to the Jersey shore when he wants to go to the Jersey shore[,] although he says that that was, you know, not at my expense, at someone else's expense. Yes, but the bottom line is that while he's at the Jersey shore he's not up here able to do appraisals that he needs to do.
As a consequence, the judge found that plaintiff had not made a prima facie case that he was unable to meet the required alimony payment, that plaintiff's reduction in income was intentional, and that plaintiff had to find ways to change his expense pattern. As a consequence, the judge ordered that plaintiff continue the same level of support, paid through the probation department, and that payment of his arrears, which then totaled $11,000, must be made within sixty days. Attorney's fees were awarded to defendant's counsel. This appeal followed.
On appeal, plaintiff argues that he in fact made a prima facie showing of changed circumstances under standards established in Lepis v. Lepis, 83 N.J. 139 (1980), and for that reason, the judge erred in failing to order discovery and, potentially, a hearing on plaintiff's claim.
In Lepis, supra, a case in which the dependent spouse sought an upward modification of alimony and child support, the Court held that "[t]he party seeking modification has the burden of showing such 'changed circumstances' as would warrant relief from the support or maintenance provisions involved." Id. at 157 (citing Martendell v. Martendell, 21 N.J. 341, 353 (1956). In a case such as this in which the supporting spouse seeks a downward modification of support without substantial evidence of an absence of need on the part of the recipient, the central initial focus is on the payor's ability to pay. Miller v. Miller, 160 N.J. 408, 420 (1999). A determination that the prima facie burden has been met triggers discovery, including a disclosure of the assets of the supporting spouse. Ibid. Once discovery has been completed, the court must decide whether contested factual issues require a hearing as to the proper level of support. Id. at 159.
The issue that arises in this case is whether plaintiff's proofs met the prima facie standard. The difficulty in resolving that issue arises from the fact that case law does not delineate the nature of the proofs that are required in this context. Further, cases do not establish what burden exists on the movant to produce corroborating evidence in circumstances in which that party owns his own business and is not a salaried employee whose earnings and expenses are more easily verifiable.
With respect to the nature of the proofs required, case law suggests that more is required than evidence that the movant has sustained a loss of income that is not temporary in duration. Indeed, the Supreme Court has repeatedly defined its focus more broadly, observing that when setting an award in a case in which the supporting husband sought to cease alimony payments as the result of unexpected termination of employment, "the supporting spouse's current income is the primary source considered [but] . . . his or her property, capital assets, and 'capacity to earn the support awarded by diligent attention to his [or her] business' are also proper elements for consideration. Innes v. Innes, 117 N.J. 496 (1990) (quoting Bonanno v. Bonanno, 4 N.J. 268, 275 (1950)). Similarly, the Court stated in Miller:
In an application brought by a supporting spouse for a downward modification in alimony, such as the present case, the central issue is the supporting spouse's ability to pay. A supporting spouse's potential to generate income is a significant factor to consider when determining his or her ability to pay alimony. Mahoney v. Mahoney, 91 N.J. 488, 505 (1982); Stern v. Stern, 66 N.J. 340, 345 (1975). Although the supporting spouse's income earned through employment is central to the modification inquiry, it is not the only measure of the supporting spouse's ability to pay that should be considered by a court. Real property, capital assets, investment portfolio, and capacity to earn by "diligent attention to . . . business" are all appropriate factors for a court to consider in the determination of alimony modification. Innes v. Innes, 117 N.J. 496, 503 (1990) (quoting Bonanno v. Bonanno, 4 N.J. 268, 275 (1950). [Miller, supra, 160 N.J. at 420-21.]
See also Donnelly v. Donnelly, 405 N.J. Super. 117, 130 n.5 (App. Div. 2009) ("we have recognized, 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."); Aronson v. Aronson, 245 N.J.
Super. 354, 361 (App. Div. 1991); Arribi v. Arribi, 186 N.J. Super. 116, 118 (Ch. Div. 1982). Further, we have found relevant the extent to which the obligor has taken on debt and whether the obligor has adopted a life style that exceeds that existing at the time of the marriage. Donnelly, supra, 405 N.J. Super. at 129-30.
While the factors that we have discussed have been discussed primarily in cases in which discovery and a plenary hearing has been held, we find them to be relevant, as well, in the context of delimiting the boundaries of a prima facie case.
Moreover, we have observed that "the self-employed obligor is in a better position to present an unrealistic picture of his or her actual income than a W-2 earner." Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006). Thus, we do not find it unreasonable to require some level of evidentiary corroboration when diminished income is claimed by a self-employed obligor.
By noting these factors, we do not mean to suggest that an obligor seeking to present a prima facie case of changed circumstances must present the detailed proofs that would be required in discovery or in a plenary hearing. However, we find that in circumstances such as those presented in the case before us in which the evidence lies principally within plaintiff's control, something more than an unsupported assertion of changed circumstances as the result of a reduction in income is required. Were it otherwise, the parties would be required to bear the cost of discovery and further litigation in cases in which such costs were unwarranted. Further, we agree with the Family Part judge that, under the standard of proof that we have adopted, plaintiff's evidence of changed circumstances was insufficient.
We note in this regard that plaintiff alleged a reduction in real estate sales and a concomitant reduction in income of sufficient duration to justify the judge's consideration of a reduction in alimony payments. However, we note that plaintiff's home inspection business was conducted in and around Maplewood New Jersey, an affluent community with good schools and ready transportation access to New York City. Yet, plaintiff offered no evidence that real estate sales in Maplewood mirrored or continue to mirror conditions existing elsewhere in New Jersey and the United States.
Plaintiff offered virtually no verifiable evidence that would permit a comparison between his employment prior to divorce and his employment thereafter. The trial judge was not informed of the number of home inspections conducted yearly in the two periods. He was offered no support for the claimed diminution in per-inspection volume or price. He was offered no support for the fact that plaintiff was indeed working the number of hours claimed or that he continued to be working to full capacity, thereby precluding part-time employment.
While there were undoubtedly many areas of factual dispute between the parties, plaintiff conceded having taken four weeks' vacation, thereby giving rise to the inference that he was not working to full capacity. Additionally, his submissions in support of his prima facie case suggested a misapplication of assets, as the result of plaintiff's admitted financing at least some portion of the cost of his vacation time himself, and the unwarranted assumption of debt evidenced by mortgages on his house that equaled or exceeded the house's value, thereby doubling the carrying costs paid prior to the divorce and making the sale of the residence and a move to a more affordable living environment a practical impossibility.
Given the factual record presented, we find that the Family Part judge's determination that plaintiff had failed to set forth a prima facie case warranting discovery and a potential hearing was factually and legally well supported, and we affirm.
We decline to order a reassignment of this matter to a different Family Part judge, finding nothing that would suggest an inability on the part of the present judge to determine any future applications in a fair manner. Donnelly, supra, 405 N.J. Super. at 125-26.