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Elizabeth Fenske v. Karl Fenske

April 27, 2011


On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-411-07.

Per curiam.


Argued March 8, 2011

Before Judges Wefing, Payne and Koblitz.

Defendant Karl Fenske appeals from a judgment of divorce following a bench trial. He alleges that the court erred in finding that he earned an annual income of $72,000 as an attorney in Morristown in 2005, in determining equitable distribution and in assessing counsel fees. After reviewing the record in light of the contentions advanced on appeal, we affirm the court's decisions as modified herein and remand to the trial court to consider whether or not the pendente lite support order should have been retroactively modified in light of the proofs presented at trial.

The parties were married in 1982 and had three children. Plaintiff Elizabeth Fenske filed a complaint for divorce on September 21, 2006. At the time of their divorce, one child was emancipated, and the other two children were attending college.

Plaintiff has a master's degree in counselor education and was employed as a manager in human resources for AT&T until her first child was born. She then stayed home for eight years as a full-time homemaker. In 1992, as the youngest child reached school age, plaintiff began working for defendant part-time in his law office. In addition, she began working part-time at a church in Morristown in 1999. She phased out her work in defendant's office and began to work full-time for the church in 2006. At the time of trial, she received an annual salary of $42,000 and health benefits for the family as the church director of children's ministries. Defendant's employability expert opined that she could earn more money in her field if she relocated to a larger church in a southern state. Plaintiff, however, had no desire to leave her home state.

Defendant obtained a law degree in 1977 and maintained a solo practice throughout the marriage. Since 1987, he has leased a spacious but modest third-floor office in a building in a prime location on the Green in Morristown. He renovated this space following the parties' separation to provide him with a residence in addition to an office.

At trial, defendant maintained that plaintiff was the primary wage earner, claiming that he never earned more than $30,000 in any year. He attributed his lack of financial success to his battle with alcoholism. He argued that he has remained sober since 1994 only because of the extensive time and energy he devotes to Alcoholics Anonymous (A.A.) and athletic activities, which his therapist testified were necessary to cope with his "adjustment disorder."

Defendant also indicated that he bartered with many clients whom he met socially. They performed repair or maintenance work at his office in exchange for his legal services. He charged other clients a reduced fee of $150 to $200 per hour. He also testified that many of his more time-intensive cases were not profitable.

Daniel Schreck, a certified public accountant for more than twenty-five years, testified as plaintiff's forensic accountant that defendant did not keep accurate records of his business income. He consistently commingled with his law practice accounting income and expenses relating to the parties' rental property located next door to the marital home, as well as personal family expenses. Schreck analyzed only records for 2005 because he found those to be the most complete. Defendant used the "Quicken" program that year to keep track of his finances. Schreck adjusted the $20,162 total income reported on defendant's tax return for 2005 by nearly $49,000 on the basis of excessive business deductions alone. Schreck did not include in defendant's income any portion of the approximately $200,000 that defendant received in compensation for a shoulder injury he sustained in 1999 when an automobile collided with his bicycle.

In 1989, the parties purchased rental property with defendant's parents, which included an improved lot as well as a vacant, unimproved lot. The improved lot was purchased for approximately $244,000. The unimproved lot, which had a steep slope preventing improvement, was purchased for approximately $20,000. Defendant's parents provided half of the down payment on the rental property, approximately $40,000. Defendant managed the property, with some assistance from his father.

Defendant used any income generated from the property for his family and business expenses, reporting a net loss from the property to the taxing authorities. In 2001, the parties refinanced the marital home, obtaining a mortgage for $180,000, which they used almost exclusively to pay off completely the mortgage on the rental property.*fn1 The parties agreed at trial that the market value of the improved lot was $525,000. The court found the current value of the vacant lot to be $10,000, consistent with the defense expert's testimony.

After trial, but prior to the trial court's decision, the parties sold the marital home. The trial court divided the proceeds equally between them, after deducting various credits. The court allowed plaintiff to keep her pension and IRA. Both parties agreed that ...

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