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Lori Gabriel-Petschauer v. Roderick Petschauer

September 19, 2011

LORI GABRIEL-PETSCHAUER, PLAINTIFF-RESPONDENT,
v.
RODERICK PETSCHAUER, DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1359-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 1, 2011

Before Judges Carchman and Graves.

In this post-judgment matrimonial matter, defendant Roderick Petschauer appeals from an order dated April 22, 2010, holding him responsible for an income tax liability due to early withdrawals from a retirement account. For the reasons that follow, we affirm.

Plaintiff Lori Gabriel-Petschauer and defendant were married on November 14, 1982. Plaintiff filed for divorce on March 19, 2007, and defendant counter-claimed two days later. Thereafter, the parties attended mediation sessions in an effort to resolve equitable distribution issues.

The parties were divorced on April 2, 2008, and their dual judgment of divorce incorporated a comprehensive property settlement agreement (the Agreement). In Article 10.9 of the Agreement, the parties acknowledged that defendant had received a monetary settlement from his prior employer, T&M Associates, and that some of the settlement funds remained in defendant's attorney's trust account. In Article 8.1, the parties agreed they would file joint state and federal tax returns for the year 2007 and, if taxes were owed, they would "be equally responsible in light of the monies received for the T&M settlement." The parties further agreed in Article 10.2, that their retirement accounts and stocks were to be equally divided, and they would equally share any tax liability resulting from the redemption of stock:

B. Husband has provided his 2007 Merrill Lynch Retirement Account year end statement. The net portfolio value is in the amount of $163,602 and shows debits of $83,953. For the purposes of equalizing the parties' respective accounts, Husband's Merrill Lynch Retirement Account will be valued at $247,555.

C. Husband [also] has a Merrill Lynch Retirement Account with his current employer, Brennan Beer Gorman/ Architects. The value is $5,596.

D. Wife's retirement account equals $76,204. Husband's retirement account[s] [total] $253,151. Therefore, husband will roll-over $88,474 from his Merrill Lynch Retirement Account into Wife's ING retirement account.

F.*fn1 Husband also has employee stock with Simat, Helliesen & Eichner, Inc. [(SH&E).] The stock is valued at $39,455. It appears that the full value of the stock has vested. Husband agrees to redeem this stock in full, in accordance with the plan, and give Wife fifty percent of the value or $19,727. The parties will share in the tax liability associated with this redemption on their 2007 return if it is a taxable event. . . .

When defendant prepared the parties' federal and state tax returns for 2007, he determined that his early IRA distributions resulted in a significant tax liability. However, plaintiff claimed that defendant's withdrawals were only used to pay his personal expenses, and that she never agreed to pay taxes resulting from the early withdrawals. Consequently, plaintiff sought an order compelling defendant to pay the tax liability, and defendant filed a cross-motion to compel plaintiff to pay one-half of the taxes.

The court initially granted plaintiff's motion. But defendant filed a motion for reconsideration, and the court determined the tax provisions in the Agreement were ambiguous. Accordingly, the court vacated the order it had entered and scheduled the matter for a plenary hearing.

After several adjournments, the hearing was held on April 21 and 22, 2010. Plaintiff testified that she agreed to file joint tax returns in 2007 because she was willing to share the tax liability incurred as a result of the parties' joint income, the T&M settlement, and the redemption of the SH&E stock. According to plaintiff, the parties never ...


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