May 17, 2011
ANDREA MAGALHAES, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
THOMAS RUSSO, DEFENDANT-APPELLANT/CROSS-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FD-13-0439-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 30, 2011
Before Judges Fuentes, Nugent and Newman.
Defendant Thomas Russo appeals from provisions in an order of September 18, 2009 on a motion for reconsideration, resetting child support for one child at $191 per week and the underlying order of July 6, 2009. Plaintiff Andrea Magalhaes cross-appeals from that portion of the same order requiring her to reimburse defendant $6800 for credits due for funds advanced, but not utilized for the education of another son, and also to reimburse defendant $1128 for the amount of a tax exemption in 2007 to which plaintiff was obligated to defendant. We reverse and remand on the direct appeal and affirm on the cross-appeal.
The relevant background was summarized by the trial court, which had reviewed the matter on prior occasions and was familiar with the history of the case, describing it as follows:
The father Thomas Russo and the mother, Andrea Magalhaes were never married and have two children together, Nico, age 19 and Marcello, age 21. On February 2nd, 2006, Judge McGann entered an order setting child support at $302 a week for both children, payable by Thomas Russo. On March 23rd, , the parties entered into a consent order requiring Thomas Russo to pay $225 a week to support Nico. The order also stated that Russo would pay $8200 to Andrea Magalhaes to contribute towards Marcello's child support and college expenses at the Motorcycle Mechanic Institute. The order also stated that both parties would be entitled to claim one child as a dependent for federal and state taxes beginning in the tax year 2007.
On April 21st, , I entered an order which emanicipated Marcello and stated that Thomas Russo had no obligation towards costs associated with Nico's college education. On July 6th, , I entered an order which established Thomas Russo's child support for Nico at $198 per week plus $15 a week in arrears for a total of $223.
The father Thomas Russo brings this motion for reconsideration and modification based on several factors. He alleges one, the [c]court made an error when calculating his new child support amount. Two, that he had a substantial change in income. Three, that the [c]court erred by using the child support guidelines to determine his support obligation for Nico as a child over 17. And four, that the plaintiff has failed to provide sufficient financial information to allow the [c]court to determine her yearly income.
The defendant believes that the [c]court mistakenly listed the plaintiff as single for filing purposes instead of head of household. Further, the defendant's income has decreased from [$]93,000 to [$]78,000. And the incorrect figure was used in calculating the child support guidelines. Additionally, the defendant argues that the Court should have used his year to date income figure as the New Jersey Court Rules require after the June 30th calendar year. Finally, the defendant argues that the support guidelines should not be used at all to calculate the child support obligation since Nico is over age 17.
Defendant further abided by the consent order and provided the plaintiff with a check for $8200 on April 6th,  for Marcello's education expenses. The defendant subsequently learned Marcello was no longer enrolled in school. Plaintiff has not provided the defendant with any educational records to ascertain when Marcello ended school. The consent order requires the defendant be reimbursed $200 per week that the child does not attend school, not to exceed the initial amount. Marcello had been expelled from the Motorcycle Mechanic Institute due to drug charges and academic reasons on July 27th, . The defendant believes he is owed $6,657.14 as a credit for the $200 per week Marcello was not enrolled in school from July 27th through March 15th,  when Marcello was due to complete his studies.
Further, under the March 2007 consent order, each party was entitled to claim one child as a dependent on the federal and state taxes. Defendant was entitled to receive from the plaintiff the amount he would have saved by having one exemption in  and in the future if he yielded the exemption to plaintiff so he could maximize financial aid for the children. The defendant would have saved [$1045] on his federal taxes and $83 on his state taxes for a total of [$1128].
Moving to the mother's opposition. The mother opposes defendant's motion for reconsideration, holding the [c]court correctly used the defendant's tax return from the previous years to calculate gross income. Plaintiff filed on April 21st, , but the case was not heard until July 6th,  due to a problem with the computer system. The mother also argues Nico will be living at home and commuting to Montclair State University and the defendant has no obligation for college expenses. As a result, the child support guidelines still apply to Nico even though he is over age 17.
In deciding the motion to reset child support, the trial court indicated that the guidelines had to be recalculated because there was a mistake in defendant's tax classification by using a single taxpayer, rather than head of household taxpayer classification. The court denied defendant's motion to modify his support obligation based on a change of income because "defendant works in car sales and he frequently receives year [-]end bonuses." While defendant had pay stubs to indicate his salary decreased by $15,000, the court found that was not "substantial enough to justify a support modification at this point."
With regard to defendant's motion for reimbursement of educational expenses, the court ruled that defendant had paid plaintiff in full for Marcello's educational expense and was entitled to a credit of $200 a week when he no longer was in school. The computation was fixed at $200 a week times thirty-four weeks for a $6800 credit. Regarding the tax exemption, that was agreed to in a consent order of March 23, 2007, and defendant was entitled to be repaid for that exemption, which was calculated to be $1128.
The trial court found that plaintiff had acted in bad faith and ordered that plaintiff pay $1000 toward defendant's counsel fees. The September 18, 2009 order incorporated the court's rulings.
Defendant first argues that the trial court erred in applying the child support guidelines to determine defendant's child support obligation for his son, Nico, who was over the age of eighteen, and attending college. Defendant asserts that the statutory factors set forth under N.J.S.A. 2A:34-23 should have been utilized.
Under the Child Support Guidelines - Appendix IX-A 18, the "guidelines may be applied in the court's discretion to support for students over 18 years of age who commute to college." Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2447-48 (2011). Here, plaintiff indicated that Nico was commuting to Montclair State University. That being the case, the trial court could utilize the child support guidelines in its discretion. The trial court was not obliged to use the guidelines under N.J.S.A. 2A:34-23. Since we are remanding the issue of calculating the amount of child support, the court may ascertain if Nico is still commuting to college. If he remains a commuter, it would still be up to the court whether to exercise its discretion to apply the child support guidelines or to utilize the statutory factors under N.J.S.A. 2A:34-23.
Defendant next argues that the trial court erred in not using the year-to-date income to determine the child support obligations since the calculation took place after June 30. Of course, the determination was made on July 6, 2009, with the income information having been provided before June 30. Nonetheless, we cannot say that the court should not have used the year-to-date income when Appendix IX-B calls for a determination of gross income after June 30 using year-to-date income from "all documented sources," including a case information statement (CIS). Child Support Guidelines, Pressler & Verniero, supra, Appendix IX-B to R. 5:6A at 2457. The court is then directed to divide the total gross income from all sources by the number of employed weeks to determine the weekly gross income. Defendant had provided weekly pay stubs to reflect his income for most of the first half of 2009. We recognize that the calculation was made within a week after the June 30 deadline; however, that should not have resulted in dispensing with what was required to make the proper calculation.
Defendant next contends that the trial court should not have used the income imputed to plaintiff in 2006 in lieu of receiving a current complete CIS and tax returns so that accurate and complete financial information would be available. We recognize that the court is permitted to impute income to a parent whose income cannot be determined. Ibrahim v. Aziz, 402 N.J. Super. 205, 210 (App. Div. 2008). Indeed, the court imputed yearly income of $46,720 or $898 per week in 2006, utilizing the average income of a massage therapist for the Monmouth/Ocean County area based on New Jersey Department of Labor and Workforce Development statistics. There, plaintiff failed to provide sufficient financial documents so that income could not be accurately determined, and the court had to resort to imputed income.
Because three years passed between that hearing and the hearing at issue now, it is incumbent upon plaintiff to produce a current CIS, along with recent tax returns for the years 2008, 2009, and 2010, if available, so that the court could more accurately determine plaintiff's income.
Defendant points out that there is a significant disparity with plaintiff's reported income, which is less than half of what her expenses are in the CIS that was provided to the trial court in this proceeding. This CIS did not even include on the Schedule C Expenses monthly contributions toward credit card expense, nor payments towards any medical insurance. Plaintiff also failed to include any expenses toward lawn, pool, or home maintenance for a house that has an in-ground pool. Needless to say, plaintiff is obliged to provide current documents as described, along with tax returns so that the court can accurately determine her income.
Defendant also contends that there was a significant change of circumstances in his income from $93,000 to $78,000 because of the economic climate suppressing the demand to purchase trucks. Lepis v. Lepis,*fn1 recognized that support orders can be modified at any time and are "always subject to review and modification on a showing of changed circumstances." Id. at 146. Here, the trial court considered the economic downturn to be temporary and also relied upon the fact that defendant could very well be the recipient of a year-end bonus, which defendant had earned in past years.
Defendant's income was reduced by nearly twenty percent. The trial court's implication that he would receive a bonus was a matter of speculation. Nonetheless, we cannot conclude that the trial court abused its discretion in not finding a substantial change of circumstances to warrant relief under Lepis. However, since we are remanding the matter for a recalculation of child support, we consider it appropriate for the trial court to revisit this issue on current data which could reflect whether defendant continued to receive a year-end bonus or whether his income level has risen due to a turnaround in the sale of trucks.
We, therefore, vacate the child support award on September 18, 2009 of $191 and remand for further proceedings, including a plenary hearing. We leave it to the trial court to determine what, if any, discovery should be pursued, in addition to the filing of the parties' completed current CIS and tax returns for recent and current years, if available.
With regard to the cross-appeal, plaintiff raises the following issue:
THE TRIAL COURT FAILED TO WEIGH THE EQUITIES IN REQUIRING PLAINTIFF TO REFUND $1,128 $6,800 TO DEFENDANT PLUS PAY $1,000 IN COUNSEL FEES TO DEFENDANT, GIVEN DEFENDANT'S FAILURE TO PAY ANY CHILD SUPPORT FOR A DECADE AND ONE-HALF.
Plaintiff's equitable argument is bottomed on the contention that the court did not consider that defendant did not provide child support to either child for a decade and one-half in requiring plaintiff to refund $6800 in unused college expenses for Marcello and $1128 in tax exemption to defendant that was not yielded by plaintiff.
The issue plaintiff raises relates to prior proceedings which produced a consent order of March 23, 2007, voluntarily entered into where both parties were represented by counsel. Paragraph 3 of the consent order referenced defendant's child support and college contribution for his son Marcello and provided, in relevant part, as follows:
Marcello child support and college expenses: Within 45 days, defendant shall pay plaintiff the sum of [$8200.00], representing his contribution to Marcello's child support and college expenses at Motorcycle Mechanics Institute. This will represent defendant's full and complete contribution to the child's college expenses and support while the child is attending college. Both parties have compromised their views, recognizing that they could have tried this matter. This amount, [$8200.00], which represents contribution to the Motorcycle Mechanics Institute and support while Marcello is in attendance there, shall not be modifiable despite any change in circumstances, each party having carefully considered and having changed their positions with regard to college expenses. If defendant fails to pay the [$8200.00] within 45 days, it shall be listed as an arrears with Probation and paid at $200.00 per week. Plaintiff shall forward correspondence to the Probation Department carbon copied to defendant, advising it of the non payment and debit towards arrears.
In the event Marcello fails to complete Motorcycle Mechanic Institute, and defendant has paid the [$8200.00] defendant shall be entitled to credit of $200.00 per week for each week the child does not go to school not to exceed the full reimbursement of [$8200.00]. The anticipated school term is October 16, 2006 through March 15, 2008, when child will graduate.
Defendant paid the full $8200 in accordance with the consent order. A few months later, defendant discovered that Marcello had only attended school for a few months and failed to complete his studies. He was terminated from the institute on July 27, 2007 because of academic reasons and criminal charges.
The trial court noted that defendant had abided by the terms of the consent order and paid in full for Marcello's educational expenses but "once Marcello was no longer enrolled in school, [defendant] was entitled a credit for each week of non-schooling at $200 a week. This consent order should have been complied with, and the plaintiff is ordered to reimburse the defendant [$6800]."
In connection with the tax exemption, paragraph 2 of the consent order of March 23, 2007 stated:
Tax Exemption: Each party shall be entitled to claim one child as a dependent for federal and state taxes starting in tax year 2007. Plaintiff claimed both children in 2006. Effective tax year 2007, defendant shall have his taxes prepared by an accountant and shall be entitled to receive from plaintiff the amount he would have saved by having one exemption in 2007 and so on, if he yields the exemption to the plaintiff for the purpose of maximizing the financial aid.
For example, if defendant would have received a refund of [$1000.00] with the child and $500.00 without the child, plaintiff shall pay defendant $500.00 and be able to utilize the exemption for that tax year, provided defendant is current on all support.
When one child remains unemancipated, the parties shall alternate the exemption, again with defendant being entitled to reimbursement from plaintiff if he yields the exemption to her for a year in which he is entitled.
Defendant did not receive the tax exemption. His accountant advised him that if he had "added another dependent to your income tax return, the savings would be [$1045] federally and $83 New Jersey for a total savings of [$1128]."
In keeping with that agreement, the trial court found that plaintiff should be reimbursed the $1128 he would have received had plaintiff complied with the consent order.
Defendant maintains that plaintiff, with the assistance of counsel, entered into the consent order and should be bound by its terms. We discern no basis for any relief.
To the extent that plaintiff still insists that she should not be required to make any reimbursement because defendant did not pay child support for seventeen years for the older son and fifteen years for the younger son, the trial court addressed the issues in an order entered on February 2, 2006. There, child support in the amount of $302 per week for both children was entered along with $50 payable toward an arrears of $5757. The order of child support was retroactive to September 4, 2005, the date plaintiff filed her complaint for support. Plaintiff did not move for reconsideration of this order, nor did she take an appeal. Indeed, she entered into the March 23, 2007 order, which pertained both to issues of child support and defendant's college obligation towards the party's son, Marcello. We conclude that the determinations at that time effectively dealt with the equitable issue plaintiff continues to raise to avoid reimbursement required by the breach of the two paragraphs in the consent order previously described. We therefore reject plaintiff's argument on the cross-appeal.
Reversed and remanded for further proceedings consistent with this opinion on the direct appeal. Affirmed on the cross-appeal.