March 7, 2011
SEAN KING, PLAINTIFF-APPELLANT,
DENISE A. KING, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-901-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 8, 2011
Decided Before Judges Messano and Waugh.
Plaintiff Sean King appeals an order of the Family Part denying his motion for a reduction in his spousal and child support obligations based on a change in his employment circumstances. We affirm.
We discern the following factual and procedural background from the record.
Sean King and defendant Denise King were married in February 1991.*fn1 They had five children, born between 1991 and 2000. In June 2006, having previously separated, they entered into a comprehensive property settlement agreement (PSA) to resolve all financial and parenting issues. They were divorced the same month, with the PSA incorporated into the judgment of divorce.
The PSA calls for the parties to share joint legal custody of their children, with Denise to be the parent of primary residence and Sean to have "liberal and flexible parenting time." The PSA requires the parties to cooperate with each other on issues related to the children, and provides for their education and the circumstances of emancipation. Each party is required to maintain life insurance in specific amounts for the benefit of the children, with the other spouse to be designated as their trustee.
With respect to equitable distribution, the PSA divided the couple's vehicles, bank accounts, other property, and debts.
Each party had an IRA, with Sean's being the larger of the two. The PSA required Sean to make a tax-free transfer of one half of the difference between the two IRAs. Finally, the PSA provides that Denise is permitted to live in the marital residence for twelve years, after which it would be sold. She is required to bear all of the expenses related to the residence while she lives there. The PSA contains a detailed formula for determining the distribution of the proceeds of the eventual sale of the residence, as well as a formula to be followed in the event Denise seeks to purchase the property for herself.
The PSA requires Sean to pay Denise spousal support in the amount of $50,000 per year for a period of twelve years. The spousal support is payable in bi-monthly installments of $2,083.33. The PSA also contains a broadly worded anti-Lepis*fn2
provision, which provides as follows:
The parties have had explained to them the provisions of Lepis v. Lepis, 83 N.J. 139 (1980) and Morris v. Morris, 263 N.J. Super. 237 (App. Div. 1993) and Crews v. Crews, 164 N.J. 11 (2000) and waive their rights for modification based upon a change in circumstance . . . . Furthermore, [plaintiff] understands his obligation in this Agreement to [defendant] and recognizes that it is not dischargeable in Bankruptcy . . . . The parties have envisioned and considered any and all events occurring toeither of them [and] . . . have specifically considered the following:
(a) increases or decreases in the cost of living;
(b) increases or decreases in their income;
(c) their loss of or inability to secure employment;
(d) any prospective changes of employment;
(e) the subsequent acquisition or loss of assets by either of them;
(f) the dissipation (whether negligent or not) of the assets received by each of them as and for equitable distribution in this matter;
(g) and any other event or events which may or do change the quality of their economic life.
The PSA also provides for child support in the amount of $389 per week, to be paid bi-monthly at the rate of $842.83 per bi-monthly period. The support was based upon the parties' then-existing income and calculated pursuant to the then-applicable child support guidelines.*fn3 As each child is emancipated, the amount of the child support is to be recalculated based upon the parties' then-current income. The PSA contains additional provisions with respect to medical coverage for the children, as well as the payment of uncovered medical expenses.
Following the parties divorce, Sean remarried. He and his current wife live, along with her two children from a prior marriage, in a residential property they purchased together. The residence was purchased in July 2007, apparently with a minimal down payment. It appears from the record that Sean's wife is employed.
Sean lost his employment in January 2008. According to Denise, Sean served a three-month incarceration for a DUI offense in the middle of 2007. Although he was paid by his then-employer during the incarceration, Denise alleges that he was terminated for non-performance following his release and also because he decided to change careers. Nevertheless, Sean received a severance package from his former employer, which contained a non-competition agreement. He also received unemployment insurance. He attended a technical school for training in the HVAC field.
According to Sean, since he lost his job, he has been unable to earn sufficient income to meet his support obligations under the PSA. Although Denise does not dispute that Sean's income is low, she argues that he is voluntarily underemployed.
In February 2008, the Family Part ordered Sean to pay an additional $1000 per month to reduce his arrears. The order also provided that, if the former marital residence were to be sold prior to the end of the twelve-year term, any arrears owed to Denise would be paid out of Sean's share of the proceeds. The former marital residence was in foreclosure at the time the motions on appeal were filed. Denise filed for personal bankruptcy, and received a discharge.
In June 2008, Sean filed a motion seeking to reduce his support obligations. Denise filed a cross-motion seeking reimbursement for expenses she incurred because of Sean's failure to meet his support obligation. On September 29, 2008, Sean's motion was denied. Denise's motion was granted in part, and Sean was ordered to make additional payments towards his arrears.
After further enforcement actions resulting from Sean's failure to meet his support obligations, Sean again filed a motion for a reduction in those obligations. His October 16, 2009 motion sought, in part, an order setting aside the PSA on the grounds that the anti-Lepis provisions were unconscionable, and a reduction in his spousal and child support obligations. Denise filed a cross-motion seeking payment of Sean's arrears.
The motions were argued on February 9, 2010. In an oral opinion placed on the record following the argument, the motion judge denied both applications without prejudice. The judge declined to reach the issue of the unconscionability of the PSA, finding instead that Sean had not made a prima facie showing of changed circumstances that would warrant a reduction in spousal or child support. However, after giving the parties and counsel an opportunity to confer on the details, she implemented a reduction in the amount that Sean would be required to pay to avoid further enforcement actions.
Following a short period of very low payments, the judge ordered Sean to pay Denise the greater of sixty-five percent of his net pay or $1600 per month, payable in bi-monthly installments. The parties were ordered to review those amounts in August 2010. It is implicit in the order that the difference between Sean's amount of support obligations under the PSA and the amount actually paid would be added to his arrears. The judge also required additional financial disclosures, including disclosure concerning Sean's wife's finances. The latter information was to be provided only to Denise's attorney. Arrears in the amount of $17,556 were reduced to judgment.
This appeal followed.
On appeal, Sean argues that the motion judge erred in failing to address the unconscionability of the PSA and in determining that he had failed to demonstrate a prima facie case of changed circumstances warranting a reduction in his support obligations. Denise argues in support of the PSA, and contends that the judge correctly determined that Sean failed to make a prima facie showing of permanently changed circumstances.
We ordinarily accord great deference to the discretionary decisions of Family Part judges. Donnelly v. Donnelly, 405 N.J. Super. 117, 127 (App. Div. 2009) (citing Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006)). Similar deference is accorded to the factual findings of those judges following an evidentiary hearing, Cesare v. Cesare, 154 N.J. 394, 411-12 (1998), although no such hearing was held in this case. A judge's purely legal decisions are subject to our plenary review. Crespo v. Crespo, 395 N.J. Super. 190, 194 (App. Div. 2007); Lobiondo v. O'Callaghan, 357 N.J. Super. 488, 495 (App. Div.), certif. denied, 177 N.J. 224 (2003).
There is nothing inherently unconscionable about an anti-Lepis provision in a PSA, which is generally viewed as a contract, Petersen v. Petersen, 85 N.J. 638, 642, (1981); Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983). It will be enforced to the extent it is fair and equitable. Carlsen v. Carlsen, 72 N.J. 363, 370 (1977). An anti-Lepis provision seeks to limit the "equitable power" of the courts "to modify alimony and support orders at any time," pursuant to N.J.S.A. 2A:34-23, Lepis, supra, 83 N.J. at 145, by embodying the parties' desire to waive that statutory right.
In Morris v. Morris, 263 N.J. Super. 237 (App. Div. 1993), we concluded that an anti-Lepis clause could be enforceable provided certain conditions were met by the parties. Specifically, the parties incorporating an anti-Lepis clause into a PSA must do so "with full knowledge of all present and reasonably foreseeable future circumstances" and further must bargain for a fixed payment or establish the criteria for payment to the dependent spouse, irrespective of circumstances that in the usual case would give rise to Lepis modifications of their agreement. Lepis established an approach that courts must take when faced with a request for modification of child support or alimony.
Where the parties have agreed on the amount of support or alimony, Lepis permits later modification to the extent that changed circumstances render the agreed terms no longer "fair and equitable." . . . .
To recapitulate, we must give an equivocal answer to the question of whether an anti-Lepis clause is enforceable. It is both yes and no. . . . If circumstances have made the parties' standards unreasonable, they can in extreme cases be modified. In less extreme cases, as here, the payments can be accrued with enforcement conditioned upon the payment of reasonable periodic payments. In short, the court should endeavor to carry out the agreement of the parties on a reasonable basis. [Id. at 241, 245-46 (citation omitted).]
The language of the PSA before us demonstrates compliance with those requirements.*fn4
The motion judge refused to alter the amount of Sean's support obligations, instead providing for the accrual of the unpaid portions of his support obligations conditioned on partial periodic payments. That is precisely the alternate remedy called for in Morris if, due to changed circumstances, the restrictive standards of an anti-Lepis clause are deemed sufficiently unreasonable to warrant some relief, but the situation does not rise to the level of an "extreme case" warranting a reduction in the ongoing level of spousal support. Id. at 246.
Having reviewed the record in this case, we conclude that there was no showing that the PSA itself was so unfair and inequitable that it should be set aside. See Carlsen, supra, 72 N.J. at 370. Loss of employment was one of the specific circumstances mentioned in the anti-Lepis clause, and Sean agreed that it would not be a basis for a reduction in his spousal support obligation. While that may have been a bad decision in retrospect, we do not believe that amounts to unconscionability.
We also conclude that there was no showing that the operation of the PSA was so "unreasonable" that it constituted the type of "extreme case" warranting modification of the limited term alimony provided for Denise in the PSA.*fn5 In our view, Sean never adequately explained the reasons for his termination, particularly whether it was voluntary or involuntary, or his decision to seek a change in career rather than pursuing other work in his prior field of employment.
As the motion judge noted, the restrictive covenant that was part of Sean's severance package had expired, so it was no longer an impediment to his seeking similar employment. Sean also pointed to surgery that had required an extended period of unemployment. He has now apparently recovered, so that should no longer be an impediment to employment. In addition, although we can take judicial notice of the recent severe economic downturn, we also note that there have been signs of an economic recovery. All of those factors suggest that Sean's reduced income may reflect a temporary, rather than a permanent, circumstance. Generally, "[t]emporary circumstances are an insufficient basis for modification." Innes v. Innes, 117 N.J. 496, 504 (1990). Consequently, we affirm the order on appeal.