November 21, 2011
JAMES R. HAPPOLD, PLAINTIFF-RESPONDENT,
JEAN HASHER HAPPOLD, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Gloucester County, Docket No. FM-08-309-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically argued October 25, 2011 -
Before Judges Axelrad and Ostrer.
Defendant Jean Happold appeals from the alimony and counsel fee award in the divorce judgment entered on December 21, 2010 after a brief trial. Defendant argues that it was error to award ten years of limited duration alimony instead of permanent alimony after the parties' long-term marriage. She also argues that the court failed to apply the required factors in considering her counsel fee request. We reverse and remand.
The parties were married in 1989. Plaintiff filed his dissolution complaint on October 14, 2008 after separating from his wife the previous July. The parties have three daughters; one was emancipated before trial. Defendant was born in 1966 and plaintiff in 1965.
Before trial, counsel reported that the parties reached agreement on all matters except: alimony, equitable distribution of an account that defendant alleged plaintiff had dissipated, and the enforceability of a prenuptial agreement. Although counsel did not mention attorney's fees, that remained an issue.
The parties agreed that defendant would have primary residential custody of the two minor children and plaintiff would exercise overnight parenting time twenty-six nights a year. The parties also agreed to divide all assets evenly, except that defendant would receive the marital home, which had $164,000 in equity after subtracting a $32,000 mortgage. Insurance cash values were allocated to pay off the house debt and defendant would reimburse plaintiff $82,000 by transferring part of her half-interest in plaintiff's 401(k) account.
At trial, plaintiff's employer testified that plaintiff was a project manager, estimator, and corporate secretary for Masonry Preservation Group, Inc., where he had worked for over twenty years. He started out as a laborer, but his income grew substantially after 2003, as he acquired new skills and responsibilities. His reported income was $101,000 in 2005 and $180,900 in 2006. The court found that plaintiff currently received a base salary of $156,000 a year, plus $8000 in automobile benefits. As plaintiff's bonus income fluctuated, his total wages including bonuses were $181,370 in 2007, $215,000 in 2008, and $238,500 in 2009. His employer testified no bonus was expected in 2010 because of business conditions.
Defendant became pregnant with the parties' first child, a daughter, when she was sixteen years old in tenth grade. Plaintiff was in eleventh grade. Defendant then dropped out of school, finishing only ninth grade. She lived with her parents after the birth in the spring of 1983.
In 1984, she and the child began living with plaintiff in his family's home. Plaintiff finished high school, and began working. Plaintiff's mother also worked. Defendant remained in the home, cleaning, washing, cooking, and caring for the child.
Defendant testified that plaintiff proposed marriage on Christmas Eve in 1987. They began looking at houses and in July 1988, plaintiff purchased in his sole name what would become the marital home. (Plaintiff testified that he bought the house in 1987 before the engagement, but he could not explain on cross-examination why the deed clearly reflected a July 1988 closing.) The parties and their child moved in after the purchase.
The parties married on December 30, 1989. However, two days before, the parties entered a prenuptial agreement in which defendant purported to waive any claim for support or equitable distribution in the event of divorce, or any claim to plaintiff's property in the event of his death. Plaintiff conceded at trial that he retained the attorney who represented both parties to the agreement.*fn1
Defendant gave birth to the parties' two other daughters in 1993 and 1995.
The parties disputed the extent of their home-making duties. Plaintiff testified that he did all the shopping, helped with cooking and house cleaning, and attended all school-related conferences, which his wife did not. As discussed below, defendant described a different allocation of roles.
The parties also differed regarding the family budget. Plaintiff testified that his wife and two teenaged daughters jointly spent $20 a month for hair care, and $25 a month for clothing, but he would give clothing as gifts and would pay for hair care and manicures around birthdays. In his case information statement (CIS), he alleged that his wife and daughters spent $5 a month for prescription drugs; and $10 a month for non-prescription drugs, cosmetics, toiletries and sundries. Plaintiff allocated zero for entertainment, lessons, sports and hobbies, school lunch, dry cleaning, medical or dental expenses, savings, and maintenance of the ten-year-old minivan defendant drove. Plaintiff budgeted monthly $70 for restaurants and $375 for vacations for his wife and children. Earlier in the marriage, the parties took annual vacations to Maine or Florida. As plaintiff's income rose, they took more expensive vacations to Hawaii, California, Las Vegas, and St. Maarten.
Plaintiff claimed that defendant chose not to enter the workforce. She was generally uninvolved in the family's finances, and did not have any bank accounts or credit cards in her own name. The only jointly-held asset was a savings account with roughly $2000 at the time of separation, which was intended to give defendant immediate access to money if plaintiff died.
All other marital assets, including all bank accounts, were in defendant's name. He testified that she resisted his efforts to teach her how to write a check.
Defendant painted a different picture of her role in the family, the family finances and her absence from the workforce. She testified that plaintiff discouraged her from obtaining employment, stating, "He always said I was too dumb to work." As for her lack of involvement in the family finances, she explained that her name was never put on a checking account "[b]ecause Jay said it was his money and it was his business," a position consistent with the prenuptial agreement. She said her name was never put on any of the household bills, "[b]ecause Jay thought I was too stupid to handle the bills." Although she signed the parties' joint tax returns, she said she did not read or understand them. Even after the separation, plaintiff continued to write checks to pay defendant's household bills.
As for involvement in the children's school activities, defendant stated that she was "room mother" for the parties' oldest daughter; she went to most of her conferences, and "did all her school activities." She was also involved in "[a]ll the school activities" of the two younger children, including "[c]onferences, room mother, yearbook committee, parent committee." She testified, "All the school trips, I went on.
Anything that was done at the school. Fun Day." She stated that she ceased attending parent-teacher conferences only after she and plaintiff entered a civil restraints consent order August 5, 2009 when plaintiff dismissed a harassment-based domestic violence complaint against her. She explained that plaintiff chose to attend the conferences, which she understood precluded her from attending, given the civil restraints.
She testified that during her marriage, she was "[m]ostly bullied, told what to do" and "made . . . [to] feel like I was nothing." She said that her husband did the grocery shopping "[b]ecause he said I was too dumb to do it."
She said that her husband gave her $20 a week for gas, which he later increased to $40. In the year preceding separation, he began to give her $300 a week in cash, which he then reduced to $275 a week. In other cases, she needed to ask her husband for money for a specific purchase, such as small household items or children's clothing.
Defendant claimed significantly greater living expenses in her CIS than plaintiff described, but conceded that she was "not really sure" about the accuracy of her scheduled expenses. Defendant allocated $250 a month for entertainment; $50 for children's lessons; $75 for sports and hobbies; and $130 for school lunches. Defendant testified that the parties went to a restaurant once a week; and as plaintiff's income rose, they went to more expensive restaurants.
She also testified that the house roof leaked and there were other neglected home maintenance projects. The ten-year-old Ford minivan she drove had ceased working during the separation, leaving her without a car for an extended period of time, until plaintiff agreed to pay for repairs.
Regarding counsel fees, defendant testified that she paid $1500 to her attorney from the joint savings account and plaintiff paid $4000 pursuant to court order. She said that her last bill showed a balance due of $15,000. Counsel represented that the $15,000 balance did not reflect the three trial days.
In summation, plaintiff's counsel suggested an alimony award of $800 a week for "approximately ten years." Defense counsel argued for $1200 a week for the first five to ten years, as defendant developed employment skills, which would be reduced to $900 permanent alimony thereafter.
In his decision, the trial judge addressed the three issues that the parties expressly designated for resolution at trial - alimony, the prenuptial agreement, and the disputed $55,000 account - as well as defendant's counsel fee request.
The court concluded that the prenuptial agreement was unenforceable after plaintiff presented his proofs on the subject. At the end of trial, the court also held that the contested account was not dissipated, but used for joint marital expenses. Those determinations are not before us.
The court sua sponte modified aspects of the parties' agreement on equitable distribution. He ordered transferred to the wife, for house repairs, roughly $10,000 that was expected to be left from life insurance cash values after retiring the mortgage. He also required a 70-30 split of the proceeds of common stock, without estimating their value.*fn2
Regarding alimony and plaintiff's ability to pay, N.J.S.A. 2A:34-23b(1), the court found plaintiff's base income was $164,000 - $156,000 in salary and $8000 in automobile and other benefits. He omitted plaintiff's director fee of $1300 reported on his 2009 return. He imputed $20,000 in income to defendant based on the following reasoning:
I think she should be looking for a job and I'm going to impute $20,000 to her a year on income, where that would be a basic income she should be able to get.
She's able to work physically and emotionally. I think she can take on a job to make that $20,000 a year.
I'm not imputing a great deal to her but the minimum wage in effect.
The court imputed the $20,000 immediately, notwithstanding finding that "[d]efendant should be given time to build a resume and begin her advancement in the workforce."
Regarding the marriage's duration, N.J.S.A. 2A:34-23b(2), the court viewed the term of the marriage to be "18 to 20 year[s] . . . depending on what you count from the Complaint filing or today. You're talking about a 20 year marriage." The court noted that defendant and plaintiff were relatively young at forty-four and forty-five, and in good health. See N.J.S.A. 2A:34-23b(3). The court concluded that defendant will enjoy a better standard of living "because she indicates she received very little money from the Plaintiff."
In addressing defendant's present employability, educational and vocational skills, N.J.S.A. 2A:34-23b(5), the court stated, "Again, that is taken into consideration in regard to this matter. I'm not imputing a great deal to her but the minimum wage in effect." The judge stated that he considered defendant's absence from the job market, N.J.S.A. 2A:34-23b(6), by "starting [her] at the minimal level." He addressed defendant's parental responsibilities, N.J.S.A. 2A:34-23b(7) by noting that her parental responsibilities have "way dropped off from the standpoint of small children." Regarding the time and expenses needed to acquire skills and to acquire capital assets, N.J.S.A. 2C:34-23b(8), the court simply asserted that it had considered the factor, and referred to defendant's need to "build a resume" and enter the workforce.
Addressing the history of non-financial contributions to the marriage, including child care and education, and interruption of defendant's education, N.J.S.A. 2A:34-23b(9), the court did not resolve the dispute over the extent of defendant's contributions. The court simply concluded, "Again, the same thing I just said; I take that into consideration when I look at this from the standpoint of Defendant's position as she leaves this marriage."
As for addressing equitable distribution, N.J.S.A. 2A:34-23b(10), and asset-generated income, N.J.S.A. 2A:34-23b(11), the court recognized that defendant would receive the unencumbered house and an unequal share of the stock, but he did not address whether the modest stock holdings would generate any income. The court concluded that it had considered the tax consequences of the award, N.J.S.A. 2A:34-23b(12), stating, "I'm going to basically do a straight alimony payment here. That's taken into consideration. It's what's fair." The court did not address any additional factors. N.J.S.A. 2A:34-23b(13).
Regarding defendant's need, N.J.S.A. 2A:34-23b(1), the court reviewed defendant's budget and in some respects, found costs exceeded those incurred, and in other respects, defendant simply would not be able to replicate the marital standard and would need to economize. The court found, "[S]he's going to need close to $4900 to maintain a fairly comfortable lifestyle."
The court awarded alimony of $970 a week, plus twenty-percent of plaintiff's gross bonuses. Imputing gross earned income of $384 a week (or $20,000 a year), defendant's total adjusted gross taxable weekly income, excluding any bonus-based alimony, was $1354. Using the net taxable income figure of $989 a week (or $4287 a month) generated by the child support guidelines, the alimony award plus imputed income fell short of meeting the $4900 budget found by the court.
Regarding the duration of alimony, the court stated:
I then look at the issue of the length. . . . I do take into consideration the Defendant's argument that she's been with the Plaintiff for over - since she was 16.
But I looked at the marital time period. She did live with her parents, lived with his parents during that time period, so I look at this as about a 20 year marriage.
It makes an alimony case but not a permanent alimony case. I looked at this from two different standpoints. Rehabilitative, because she needs to get into the job force and move forward.
But also, I think rehabilitative is not the only way I should look at it. I look at it as limited duration term, which would basically take care of both issues.
For an 18 or 20 year marriage, I think alimony from the point of seven to ten years or so would be appropriate.
Taking into consideration Defendant's argument of the additional time that she had spent with the Defendant, raising the one child before, I'm to put it toward the upper end.
And I'm going to do a limited term duration alimony of ten years, which is the upper range that I think is appropriate in this case. The top range, quite frankly.
So it'll be a ten year. I believe that during that - incorporated into that limited duration term alimony is the ability to rehabilitate and she's not getting - the children are older now.
She can go to job training and spend some time getting herself, over the next ten years, getting herself into the employment status where she can make some money to support herself and she's, I find capable of doing that.
The court awarded defendant $5000 in counsel fees, in addition to $4000 in fees that defendant already paid. As noted above, defendant also used a joint asset to defray $1500 in fees. However, the court did not address the amounts that the parties actually incurred - as there were no certifications of fees, or other cognizable evidence of that. In support of its ruling, the court found that plaintiff's ability to pay exceeded defendant's. On the other hand, he found that defendant maintained unreasonable positions at trial and declined plaintiff's offer to settle the case along lines similar to the court's ultimate judgment (although the record does not reflect what the offers were). "I looked at the reasonableness and good faith positions advanced by the parties. Quite frankly, . . . I found in this case that wife . . . had unreasonable positions throughout and I think that's the reason we're here doing a trial . . . ."
Finally, the court found generally that defendant's testimony was not "entirely credible," although he stated, "I'm not saying that she wasn't that she was being untruthful." He referred to defendant's lack of confidence in testifying how much money she received. He also dismissed as incredible her testimony that she had not reviewed the joint tax returns she signed. The court made no express findings regarding plaintiff's credibility or the reasonableness of his positions, including his effort to enforce the prenuptial agreement and his assertions about his wife's financial needs.
On appeal, defendant does not challenge the judge's finding as to plaintiff's base income. She argues that we should exercise original jurisdiction and convert the limited duration alimony award into a permanent award. Defendant also argues that the counsel fee award should be set aside because the court failed to apply the required factors.
We reverse the trial court's alimony decision, which ignores well settled precedent that absent exceptional circumstances not present here, permanent alimony is appropriate in the case of a long-term marriage like that of the parties. Although trial courts are vested with discretion to determine the "fair and proper quantum of alimony," Steneken v. Steneken, 183 N.J. 290, 303-04 (2004), we may vacate an alimony award if the "trial court clearly abused its discretion or failed to consider all of the controlling legal principles, or . . . the findings were mistaken or . . . the determination could not reasonably have been reached on sufficient[,] credible evidence present in the record." Gonzales-Posse v. Ricciardulli, 410 N.J. Super. 340, 354 (App. Div. 2009).
We held that permanent alimony, not limited duration alimony, is the appropriate award in the case of a long-term marriage. Cox v. Cox, 335 N.J. Super. 465, 485 (App. Div. 2000). In Cox, the parties were married nineteen years before the complaint was filed. In this case, plaintiff filed his complaint two-and-a-half months before the parties' nineteenth anniversary. "[T]he duration of the marriage marks the defining distinction between whether permanent or limited duration alimony is warranted and awarded." Id. at 483. We cautioned that, consistent with statute, limited duration alimony is appropriate only if permanent alimony is not. We held:
Limited duration alimony is . . . [designed] to address those circumstances where an economic need for alimony is established, but the marriage was of short-term duration such that permanent alimony is not appropriate. Those circumstances stand in sharp contrast to marriages of long duration where economic need is also demonstrated. In the former instance, limited duration alimony provides an equitable and proper remedy. In the latter circumstances, permanent alimony is appropriate and an award of limited duration alimony is clearly circumscribed, both by equitable considerations and by statute. [Id. at 476.]
See also N.J.S.A. 2A:34-23(c) (stating that limited duration alimony is appropriate only if permanent alimony is not).
This is not a borderline case involving a medium-length marriage. Compare Robertson v. Robertson, 381 N.J. Super. 199, 206-07 (App. Div. 2005) (affirming award of permanent alimony in case of twelve-year marriage) and Hughes v. Hughes, 311 N.J. Super. 15, 33 (App. Div. 1998) ("permanent alimony, but perhaps at some reduced rate to reflect a marriage of . . . medium length" in case of ten-year marriage before adoption of limited duration alimony statute), with Gonzalez-Posse, supra, 410 N.J. Super. at 356-57 (reversing trial court's extension of limited duration alimony after ten-year marriage).
The parties' marriage reflects even greater dependence than was present in Cox. Although the plaintiff in that case struggled to launch a legal career, she earned a college degree and law degree during the marriage. Since her child was in elementary school, she held various part-time jobs as a data entry clerk, bank teller, and cosmetics salesperson. At trial, her child-rearing responsibilities were significantly reduced, as the parties' only child was already in college. Cox, supra, 335 N.J. Super. at 470-71. By contrast, defendant has no employment experience whatsoever. She dropped out of high school three grades short of graduation. She was unfamiliar with basic family finances. Her economic dependency on plaintiff pre-dated the marriage by five years.
The court was obliged to look to the "extent of actual economic dependency, not one's status as a wife" in making its alimony decision. McGee v. McGee, 277 N.J. Super. 1, 14 (App. Div. 1994) (quoting Lynn v. Lynn, 91 N.J. 510, 517 (1982)) (court considered six-year-long pre-marital cohabitation). When viewed "from the vantage point of the shared enterprise of marriage beginning before the ceremonial act," id. at 12, defendant's case for permanent alimony is even more compelling.
The court's review of the statutory factors was conclusory, and cursory. See Carter v. Carter, 318 N.J. Super. 34, 42 (App. Div. 1999) (stating that court "must adhere to the statutory requirement in every case"). We have "[n]aked conclusions" regarding the statutory factors. Heinl v. Heinl, 287 N.J. Super. 337, 347 (App. Div. 1996); see also N.J.S.A. 2A:34-23c (requiring court to "make specific findings on the evidence about the above factors"). There also was no record evidence to support the court's conclusion that defendant could immediately commence earning $384 a week.*fn3 There was inadequate recognition of defendant's extreme dependence on plaintiff. In sum, the court provided no "clear statement of reasons," which we held in Cox, supra, 335 N.J. Super. 483 was essential, to justify denial of permanent alimony.
Although the court apparently placed significant weight on defendant's age - she was forty-four during trial - that does not outweigh the duration of the marriage and other factors supporting permanent alimony. Those factors included: defendant began her twenty-eight-year relationship with plaintiff when she was sixteen; her child-rearing responsibilities were continuing; she had contributed to plaintiff's career, by caring for the children and maintaining the household; and she remained financially dependent on a husband whose rising incomes established an ability to pay.
In sum, the award of limited duration alimony here was inappropriate. We decline to exercise original jurisdiction as further fact-finding is necessary to resolve the matter. R. 2:10-5. See Cox, supra, 335 N.J. Super. at 485. Accordingly, we reverse and remand for reconsideration of the relevant statutory factors and the alimony award in light of our opinion.
We are also compelled to vacate the trial court's decision on counsel fees. The court's power to award counsel fees derives from Rule 5:3-5 and N.J.S.A. 2A:34-23. The decision whether to award fees rests within the court's sound discretion. Williams v. Williams, 59 N.J. 229, 233 (1971). However, we will reverse a fee award where the trial court has failed to address pertinent factors set forth in the rule. Clarke v. Clarke, 359 N.J. Super. 562, 572 (App. Div. 2003). Those factors include:
1. the financial circumstances of the parties;
2. the ability of the parties to pay their own fees or to contribute to the fees of the other party;
3. the reasonableness and good faith of the positions advanced by the parties;
4. the extent of the fees incurred by both parties;
5. any fees previously paid to counsel by each party;
6. any fees previously awarded;
7. the results obtained;
8. the degree to which fees were incurred to enforce existing orders or to compel discovery; and
9. any other factors bearing on the fairness of an award.
All applications for counsel fees must also be supported by an affidavit of services. R. 4:42-9(b). In matrimonial actions, the certification must address what steps if any have been taken to pay the attorney's fees in the future. R. 4:42-9(c).
We reverse the counsel fee award foremost because the court's mistaken rejection of defendant's permanent alimony claim tainted its assessment of "the reasonableness and good faith of the positions advanced by the parties," and the "results obtained." Defendant's permanent alimony claim was reasonable and well-grounded. Had the court applied our prior decisions, defendant, not plaintiff, would have prevailed.
The court also failed to make specific findings about the extent of fees incurred by each party. No certification of fees was provided. The court also failed to assign any weight to plaintiff's insistence upon litigating his claim to enforce a patently unenforceable prenuptial agreement.
On remand, the court must engage in a two-step analysis. The court must first review the requested fees for reasonableness. Second, the court shall determine the portion of the fee recoverable after applying the factors under Rule 5:3-5(c), RPC 1.5(a), and Rule 4:42-9(b). See Yueh v. Yueh, 329 N.J. Super. 447, 464-66 (App. Div. 2000) (matrimonial court must determine lodestar fee based on the reasonable number of hours and reasonable hourly rate); Argila v. Argila, 256 N.J. Super. 484, 493 (App. Div. 1992) (noting that in matrimonial actions "'counsel must generally realize that he [or she] cannot always expect full compensation for the time so consumed'")(citation omitted).
Finally, we note that the judge who heard the case is now sitting in a different trial division. We do not question the sincerity of the court's view of the merits. However, we direct that a different judge handle the case on remand, in light of the court's characterization of defendant's positions on alimony as unreasonable, and its expressed view of defendant's credibility, coupled with the court's failure to assess plaintiff's credibility or to address plaintiff's insistence to try to enforce the prenuptial agreement question. P.T. v. M.S., 325 N.J. Super. 193, 221 (App. Div. 1999) (remand to a new judge where trial judge stated that party's attitude was chief obstacle to resolution).
Reversed and remanded as to alimony and counsel fees.