August 8, 2011
FRANK FALKOWSKI, PLAINTIFF-RESPONDENT,
CHARLENE FALKOWSKI, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Union County, Docket No. FM-20-0673-09B.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 23, 2011
Before Judges Fuentes and Ashrafi.
Defendant Charlene Falkowski appeals from equitable distribution provisions in a final judgment of divorce by which the court awarded a greater percentage of marital property to plaintiff Frank Falkowski than to her. We affirm.
The parties were married in 1982. At the time of the divorce in 2009, the marital property subject to equitable distribution was valued at about $1.5 million. After a seven-day trial, the court determined by oral decision that the marital property would be divided equally except for two jointly-owned homes. The marital home in Clark, which was appraised at $430,000, was distributed fifty-five percent to husband and forty-five percent to wife.*fn1 The parties' Manahawkin vacation home, which had stipulated equity of $342,000 and which husband would continue to occupy, was distributed sixty-five percent to husband and thirty-five percent to wife. The court justified the unequal allocation of the two homes because of husband's personal labor in renovating both homes during the marriage, which the judge referred to as "sweat equity."
On other financial matters, the judge ruled that the parties would share equally in the college costs of their daughter, and that husband would pay wife rehabilitative alimony of $3,000 per year for two years in addition to permanent alimony of $33,000 per year.
The court entered a dual final judgment of divorce on March 17, 2010, incorporating its financial rulings. Wife filed a motion for reconsideration of the unequal distributions of the two homes. The trial judge denied the motion by order dated April 30, 2010. This appeal followed.
The evidence at trial showed the following facts relevant to equitable distribution of the two homes. At the time of the divorce, husband was sixty years old and wife was fifty-six. They had been married for twenty-six years. The marriage was the husband's second. After his prior divorce, husband purchased his ex-wife's share of their marital home located in Stanhope, but he still owed her for that purchase at the time of his second marriage. The parties in this case lived in the Stanhope home when they first married, and wife used part of her employment income to help pay the debt owed to husband's first wife. In addition, wife's income helped to pay for renovations to that first marital home. At some point, wife's name was added to the title.
In 1986, the parties sold the Stanhope home and used the proceeds toward the purchase of their Clark marital home. The Clark home was "very dated" with "a lot of work to be done." According to husband's testimony, to which wife's attorney objected on discovery grounds, husband essentially "gutted the . . . house and replaced everything" over the course of about three years. Husband claimed that wife did not do any of the renovation work. Wife testified that many people were involved in the renovations, including husband, herself, and a relative.
When the parties' daughter was born in 1991, wife quit her seventeen-year job from which she was earning an estimated $50,000 per year. She took care of the day-to-day duties of maintaining the marital home and caring for the child. After the child began school, wife took a job as a substitute school secretary and later worked part-time in a school library. She also volunteered at a dance studio. Throughout that time, husband continued his full-time job. At home, husband also performed household chores including laundry, cooking, cleaning, and grocery shopping.
In 2001, the parties bought their second home in Manahawkin, which also needed a great deal of rehabilitation work. Husband testified as follows regarding his personal undertaking in renovating that home:
That one I gutted right down to the beams throughout the whole house, that you could see from one end through the other and moved walls. Ripped up the floors down to the plywood. There was no ceiling, so I put two-by-sixes, insulation, sheet rock. All new walls. I did all the spackling. Gutted the bathroom, kitchen, moved everything around.
Husband went to Manahawkin on his days off to work on the renovations. If the weather and his schedule permitted, he would stay there overnight and continue working the next morning. With the exception of a few friends who helped him put sheetrock on the ceiling, he performed the work himself.
Wife estimated that the renovations to the Manahawkin house took approximately five years to complete. She testified that she "wasn't involved in [the renovations] as much as Clark" because she was at home with their daughter. She claimed, however, that she was involved in "jacking up the corner of the house and rebuilding [the child's] room."
The parties separated in September 2008. Wife remained in the Clark home and husband moved into the Manahawkin house. Husband continued his employment, earning a base salary of $116,000 per year plus bonuses at the time of the parties' separation. Wife was not working outside the home at the time they separated or at the time of trial.
The appraisal report for the Clark home noted it was in "above average condition and exhibits proper maintenance." There was no mortgage debt on that home at the time of trial. The Manahawkin house, in which both parties wanted to reside, was appraised at $380,000 by the "sales comparison approach." Another section of the appraisal report contained a "cost approach" and appears to have placed a value of $275,000 on the lot without improvements. The house and other improvements had a depreciated value of $107,865 under the cost approach. Regarding the condition of the Manahawkin home, the appraisal report stated:
Subject is well maintained. No improvements or repairs are suggested. The dwelling was completely updated in the past 5 years. New sheet rock throughout, floors, new kitchen and bathroom and a new dock among the items updated. A 1 car garage was also added and the home was raised 20 inches above the flood plain.
The Manahawkin house had a mortgage balance of approximately $38,000 at the time of trial.
In awarding husband fifty-five percent and wife forty-five percent of the value of the Clark home, the trial court reasoned as follows:
[I]t was purchased and $120,000 of the purchase price was paid by [husband] from his prior marriage.
. . . . I still think he's entitled to a small excess distribution because of the sweat equity he put into that property.
And while the marriage is a joint enterprise, and while the marriage is both parties working together for the benefit of each other, it is clear to me that [husband] did, above and beyond the call of duty, enhanced the value of that house. The testimony was he gutted the house. He replaced everything: doors, windows, molding, light switches, outlets. He gutted the kitchen to the beams. He put in new oak floors. He put in new walls. He retiled. He put in new commodes and sinks. And he did that work for three years, from 1986 to 1989.
That sweat equity, in my mind, is worth a five percent bump in equitable distribution.
In awarding husband a greater share of the Manahawkin house, the court reasoned as follows:
[Husband] worked for five years to build that house into what it is, I gather, today. The testimony was pretty clear. Aside from the fact that [wife] had no say in it, and [husband] did all this with his friends, over five years he gutted everything to the frame. And he replaced everything. And he was fairly passionate when he testified about it too, all the work he did.
. . . . [I]t was a monumental amount of work. I was impressed with the fact that he basically took the house down to its bare frame and bare rafters and built the entire thing over. For those reasons I am not splitting this asset equally either. I believe it's fairer to recognize that sweat equity and give him 65% of the net value and give [wife] 35% of the net value.
Wife argues that these two decisions of the court were erroneous because husband did not produce any documents or expert testimony supporting a finding that his personal efforts increased the value of the properties by some specific amount. She asserts further that the court placed undue emphasis on husband's "sweat equity" and disregarded her "substantial non-financial contribution to the acquisition of property" during the marriage. Finally, she contends that the court erred in denying her objection to husband's testimony about the renovation work he had done because he failed to provide notice of this claim in pretrial discovery.
Appellate review of a trial court's division of marital assets is limited to determining whether the court abused its broad discretionary authority. La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001); see also Valentino v. Valentino, 309 N.J. Super. 334, 339 (App. Div. 1998) (appellate court reviews whether the trial court's decision on equitable distribution is clearly unfair or unjust or contrary to the evidence); Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985) (referencing trial court's "broad authority" in dividing marital property). An award of equitable distribution will be affirmed "as long as the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." La Sala, supra, 335 N.J. Super. at 6 (citing Perkins v. Perkins, 159 N.J. Super. 243, 247-48 (App. Div. 1978)). Our Supreme Court has set forth a three-step process for trial courts to follow in equitably distributing marital assets. The court "must first decide what specific property of each spouse is eligible for distribution. Secondly, [the court] must determine its value for purposes of such distribution. Thirdly, [it] must decide how such allocation can most equitably be made." Rothman v. Rothman, 65 N.J. 219, 232 (1974). The process of equitable distribution is "not simply a mechanical division of marital assets. The concept requires much more than that. The word 'equitable' itself implies the weighing of the many considerations and circumstances that are presented in each case." Stout v. Stout, 155 N.J. Super. 196, 205 (App. Div. 1977) (internal citations omitted). By statute, the trial court must consider the following factors:
a. The duration of the marriage . . .;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage . . . by each party;
d. The standard of living established during the marriage . . .;
e. Any written agreement made by the parties before or during the marriage . . . concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party . . . ;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property . . . as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence . . . and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse . . . or children;
o. The extent to which a party deferred achieving career goals; and
p. Any other factors which the court may deem relevant. [N.J.S.A. 2A:34-23.1.]
In applying these statutory factors, the trial court relied on the last open-ended provision of the statute to justify the unequal distribution of the two homes because of the husband's personal labor in making improvements in the homes.
We have noted that "the distribution rights of the former spouses to the marital residence need not be equal if allocation of sole ownership or allocation of a major share to one of them is warranted by all the financial and personal considerations underlying the equitable distribution plan." Daeschler v. Daeschler, 214 N.J. Super. 545, 553 (App. Div. 1986).
In arguing that the court lacked documentary and expert evidence that husband's personal labor added to the value of the homes, wife mistakenly assumes that the court should have started with a presumption of a fifty-fifty split of all marital assets. Such an approach was expressly disapproved by the Supreme Court in Rothman, supra, 65 N.J. at 232 n.6.
In addition, there was no dispute that both homes were in need of rehabilitation when they were acquired and both benefited substantially from husband's renovation work. The appraisal reports for both homes noted that both were in good condition at the time of the divorce. An expert was not needed to establish that husband's unusual efforts in renovating the homes added to their value. Husband was not required to present evidence of a dollar figure by which his efforts increased the value of the properties. Equitable distribution is not intended to be a precise division of marital property according to mathematical calculations or formulas.
Wife also argues that the court over-emphasized husband's work because she and several others participated in the renovations. In contrast to husband's testimony, she did not offer specifics of the contribution made by her and others. The trial court reasonably found husband's testimony in that regard more reliable and placed greater weight on his description of the work and who performed it. We grant deference to a family court's credibility and fact finding determinations. See Cesare v. Cesare, 154 N.J. 394, 412 (1998).
We also find no merit in wife's argument that the trial court should have considered separately the value of the land in Manahawkin as compared to the value of the dwelling and other improvements when assessing husband's unusual contribution. The court acted within its discretionary authority in assessing the particularly extensive work husband did on the Manahawkin home in his time away from his permanent job over a period of five years. There was no evidence that wife participated in any significant way in performing those tasks or had other significant involvement in adding to the value of the Manahawkin house. The court was not required to adopt the cost approach as opposed to the sales comparison approach in valuing the property as a whole.
Wife's argument that the court's unequal distribution disregarded her substantial non-financial contributions is belied by the fifty-fifty split of other assets of the marriage and the permanent alimony award of $33,000 per year. If the court had split all marital assets evenly, each party would have received assets valued at about $750,000. Wife's share of equitable distribution as ordered by the court was approximately $677,000, and she will continue to benefit from husband's employment income after the divorce. The unequal distribution of the homes meant that she received about $73,000 less than she now seeks, but that imbalance did not deprive her of a fair allocation of the marital assets or of future income through alimony.
In sum, we find no abuse of discretion in the court's decision dividing unequally the value of the two homes.
Finally, we reject wife's argument that the court should have barred husband from testifying about the renovation work he did on the homes because his pretrial interrogatory answers were deceptive in that regard. Specifically, husband's interrogatory answer that he was not claiming any immunity from equitable distribution was not inconsistent with his trial testimony that he did extensive work on the homes and therefore should receive a greater share. Nor did husband provide a false answer to an interrogatory seeking bills for work done on real property by answering "not applicable." He had no such bills and did not present any in evidence at trial. He was not seeking the costs of materials used in the renovations as his personal property but a greater share of the value of the homes because of his personal labor, for which there was obviously no billing.
A trial court's rulings on discovery matters are also subject to the abuse of discretion standard of review. Abtrax Pharms., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 513 (1995); Allis-Chalmers Corp. Prod. Liab. Trust v. Liberty Mut. Ins. Co., 305 N.J. Super. 550, 557 (App. Div. 1997). We discern no abuse of discretion in the record before us.