March 29, 2011
LORETTA ROMITO, PLAINTIFF-RESPONDENT,
NICHOLAS ROMITO, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1435-99.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 14, 2011
Before Judges Reisner and Alvarez.
Defendant Nicholas Romito appeals from an August 14, 2009 Family Part order denying his application to modify his alimony and child support obligation. We remand this matter to the trial court for further proceedings pursuant to Lepis v. Lepis, 83 N.J. 139 (1980).
This case has a lengthy history, although the record presented to us is somewhat sparse. The parties were divorced in 2002. Their property settlement agreement (PSA) provided that defendant would pay plaintiff $6000 a month in alimony and $3000 per month in child support. At the time he agreed to the PSA, defendant had a successful business, recruiting and training bartenders. According to his 2002 tax returns, defendant's income was approximately $158,000. However, defendant quickly fell into arrears on his support payments, and the court entered several enforcement orders. There appears to be no dispute that in 2004, the court conducted an ability to pay hearing and determined that defendant had the ability to pay support at the level agreed to in the PSA. A March 4, 2005 order denied defendant's motion to modify alimony and child support. According to plaintiff, at some point, the court attempted to enforce the PSA by ordering defendant to turn over a portion of his business in North Jersey to plaintiff, and ordering him to limit his remaining business to an area at least forty miles away from plaintiff's business.*fn1
In July of 2009, defendant filed a motion to modify his support obligations, due to an alleged significant decrease in his income. Defendant supported the motion with a certification attesting that his remaining businesses had failed and that he was currently earning only about $52,000 working for a friend who operated a similar business to the one defendant had previously operated. Defendant submitted a current case information statement and copies of his income tax returns. His 2007 tax return showed income of about $25,000. His 2008 return showed income of about $43,000. Defendant asked for a hearing pursuant to Lepis v. Lepis, supra, 83 N.J. at 146, to prove his changed circumstances.
In response to defendant's motion, plaintiff filed a cross-motion, opposing defendant's motion and seeking additional economic and other relief. Her notice of cross-motion recited that plaintiff was "prepared to show complete documentation and witnesses if necessary" in support of the cross-motion. The cross-motion was supported by plaintiff's certification attesting that she and her children were in desperate financial straits due to defendant's failure to pay child support and alimony, and his unfair competition with her business.
In particular, plaintiff attested that defendant owned the business of which he claimed only to be an employee, as well as owning another business. She further contended that he was concealing income and living a lifestyle inconsistent with his claim of reduced economic circumstances. Among other things, plaintiff attested that defendant "owns and operates National Association of Bartenders AND National Career Consultants, located in Rahway;" that defendant accepted only cash payments for those businesses; and that he was living in a "lavish 'beach front' condo." She also asserted that defendant was conducting his business "within a 40 mile radius" of her business, contrary to prior court orders, and was responsible for the failure of her business. Specifically, she contended that her "business in Montclair is completely failing." She further alleged that defendant "constantly attempts to make 'deals' with me to take over Montclair, knowing fully well we have no money and always holding it over my head." Plaintiff also submitted a current CIS and current income tax returns showing her decreased income, as well as proof of expenses for which she contended defendant was responsible but had not paid.
In a reply certification, defendant explained his view that plaintiff was ineffective in running her business. He contended that when she let him work for a short time in the New Brunswick office, he was able to generate $10,000 worth of business for her in a short time. Defendant also proposed that if plaintiff would agree to turn the Montclair office over to him to run, he would pay her $2000 a month in alimony in addition to $2000 a month in child support.
In an oral opinion placed on the record on August 14, 2009, the trial judge denied defendant's application for a Lepis hearing on the grounds the defendant had "unclean hands." The judge based this finding in part on defendant's history of failing to pay support, and in part on defendant's offer to pay plaintiff $4000 a month if she turned over the Montclair office to him. The judge inferred that this proposal was in effect defendant's attempt to extract concessions from plaintiff; in other words, the judge believed defendant to be saying that he would only exercise his superior earning power if plaintiff gave him back the business the court previously took from him. Otherwise he would voluntarily remain underemployed or under-earning.
In their motion submissions, the parties accused each other of earning unreported cash from their respective businesses. During the oral argument of the motion, the judge also noted that during the divorce settlement, defendant represented that he could pay $9000 a month in support, although his tax returns did not show that he earned enough to pay that amount. However, the judge did not make any specific finding of fact that defendant was earning unreported cash at the time he signed the PSA. Nor did the judge make such a finding of fact as to defendant's current income.
On this appeal, defendant contends that he provided sufficient proof of changed circumstances to warrant a Lepis hearing. He also contends that the trial judge failed to make findings of fact justifying denying his motion. We agree.
Ordinarily we defer to decisions of the Family Part in light of its recognized expertise in matrimonial matters. Cesare v. Cesare, 154 N.J. 394, 412 (1998). However, we cannot defer to a trial court's decision in the absence of proper findings of fact. In this case, the court's oral opinion simply does not provide sufficient factual findings to enable us to exercise that deference. For example, the court alluded to a 2004 ability to pay hearing. But the court did not explain what factual findings were made in 2004, how those findings might still be relevant today, or how they could overcome defendant's current evidence of his limited income.
Defendant submitted enough evidence, in the form of a current CIS and current tax returns, to show at least a prima facie case that his income has significantly declined and that the decline is more than temporary. See Lepis, supra, 83 N.J. at 157-59. We appreciate that defendant has a long history of non-payment and under-payment of support and is currently more than $500,000 in arrears. We also acknowledge that a self-employed person has a greater ability to conceal income than an employee does. Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006). But, in light of defendant's prima facie proofs, the court must consider defendant's current ability to pay $9000 a month in support.
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. [Miller v. Miller, 160 N.J. 408, 420 (1999).]
We recognize the court's concern that defendant may have the ability to earn more than he currently does. However, we do not construe defendant's reply certification as an attempt to coerce concessions from plaintiff by threatening to withhold his earning power. In his submissions, defendant asserted that he was a better business person than plaintiff and that the Montclair business was potentially more lucrative than the South Jersey business he had been trying to operate. In that context, he contended that if he were allowed to operate the Montclair business, he could make it turn a decent profit and would share the profits with plaintiff. We do not find that defendant's offer necessarily demonstrated unclean hands justifying the denial of his motion. Further, there appear to be material factual disputes as to whether defendant owns the business of which he claims to be only an employee, and whether he is concealing income, by taking cash payments or otherwise.
We conclude that because defendant made a prima facie showing of changed circumstances, the trial judge must order discovery on defendant's current assets and income and, if there is a claim of voluntary underemployment, defendant's ability to earn more income. If, after discovery, there are still disputed issues of material fact, the court must conduct a plenary hearing. Lepis, supra, 83 N.J. at 157-59. Therefore, we remand this matter to the trial court for those further proceedings.