December 14, 2011
LAURIE SOLOMON, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
RANDY SOLOMON, DEFENDANT-APPELLANT/ CROSS-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-0174-06D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted November 14, 2011
Before Judges Ashrafi and Fasciale.
In this post-divorce action, defendant-father appeals from a May 7, 2010 order reducing his alimony obligation and denying his motion for downward modification of his child support and life insurance obligations. Plaintiff-mother cross-appeals from the same order, arguing that changed circumstances warranting alimony modification did not exist and, in any case, the judge miscalculated the reduction. We affirm the order to modify alimony and not to modify child support, but remand for recalculation of the new alimony obligation. Further, the court made insufficient findings to deny defendant's motion to modify his life insurance obligation, and we therefore remand and instruct the court to re-examine the record.
The parties married in 1988, had two children together,*fn1
and divorced in 2006. On October 20, 2006, the court entered
a supplemental judgment of divorce, incorporating the parties'
property settlement agreement (PSA).
The PSA sets defendant's alimony obligation at $100,000 per year based on defendant's 2002, 2003, and 2004 average gross income of $400,000 per year and plaintiff's imputed income of $25,000 per year. It sets child support at $650 per week based on defendant's 2003, 2004, and 2005 average gross income of $340,700 per year; plaintiff's imputed income; defendant's anticipated payments toward the children's health insurance; and his alimony obligation. The PSA also requires defendant to maintain a $1,000,000 life insurance policy to secure alimony and a $468,000 life insurance policy to secure child support.
In May 2009, defendant filed a motion to modify his alimony, child support, and life insurance obligations.*fn2
Plaintiff cross-moved for discovery and a plenary hearing on the parties' finances. On July 17, 2009, the court denied without prejudice defendant's requested modifications and scheduled forty-five days of discovery followed by a plenary hearing.
A plenary hearing occurred on four nonconsecutive days in February and March 2010.*fn3 Both parties and defendant's employment supervisor testified. The parties produced extensive financial documentation. Defendant established that after the divorce, his salary and commissions as a computer software and license salesperson decreased to $248,000 per year through no fault of his own.
On May 7, 2010, the court entered an order and issued a written decision, granting defendant's motion for alimony modification and setting his new obligation at $80,000 per year. The order denied downward modification of defendant's child support and life insurance obligations.
On appeal, the parties raise an array of issues. Plaintiff argues that because defendant bears the blame for his decreased income, the judge erred in finding changed circumstances warranting alimony modification, and both parties challenge the judge's calculation of the modified alimony obligation. Next, defendant argues that because he established decreased income warranting alimony modification, the judge erred in not likewise modifying child support. Finally, defendant contends that the judge erred in not reducing his life insurance obligation securing plaintiff's alimony.
"Our review of the amount of an alimony award is limited." Gordon v. Rozenwald, 380 N.J. Super. 55, 76 (App. Div. 2005).
To vacate a trial court's findings in a proceeding modifying alimony, an appellate court must conclude that the trial court clearly abused its discretion, failed to consider all of the controlling legal principles, or it must otherwise be well satisfied that the findings were mistaken, or that the determination could not reasonably have been reached on sufficient credible evidence present in the record after consideration of the proofs as a whole. [Rolnick v. Rolnick, 262 N.J. Super. 343, 360 (App. Div. 1993) (citations, internal quotation marks, and alterations omitted).]
Generally, we will not disturb a trial court's factual findings when "supported by adequate, substantial, credible evidence."
Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (citing Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974)).
We begin by addressing plaintiff's contention that the judge erred in finding changed circumstances warranting alimony modification. She argues that the judge ignored defendant's spending habits and did not ascribe "blame or culpability to [him] with respect to his own financial mismanagement." We disagree.
The goal of alimony is to "assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed . . . during the marriage." Crews v. Crews, 164 N.J. 11, 16 (2000). Nonetheless, courts retain equitable power to modify alimony obligations at any time on a showing of changed circumstances. Lepis v. Lepis, 83 N.J. 139, 145-46 (1980); N.J.S.A. 2A:34-23. In such cases, courts should consider whether the alleged change is "continuing" or merely "temporary," Innes v. Innes, 117 N.J. 496, 504 (1990), and "whether the agreement or decree has made explicit provision for the change." Lepis, supra, 83 N.J. at 152. One well-recognized ground for changed circumstances is a decrease in the supporting spouse's income. Id. at 151; Innes, supra, 117 N.J. at 504.
Here, the judge concluded that defendant demonstrated changed circumstances based on permanent decreased income. He found that defendant is not self-employed and has no control over his assignments. Defendant's supervisor, whom the judge found "a credible witness," confirmed "an overall decline in business." As such, the judge concluded that the decreased income was not merely temporary.
Furthermore, the judge found that defendant provided "a credible demonstration" of his diminished income, and that his lifestyle has been "curtailed commensurately." The judge stated that defendant "has not engaged in lavish living"; has "basically maintained the same level of spending"; and "has not contributed to the reduction by any negative business practice, nor . . . engaged in any 'work slow down' that caused the decrease." The judge concluded that the decreased income was "a reality, and . . . no fault of [defendant's]."
The judge also found defendant "credible in informing the [c]court that he had no other income-producing assets that he could tap into to make up the shortfall caused by his reduced employment compensation," and that he did "not expect to obtain any assets in the foreseeable future that would lead to a positive change in his economic situation." The judge observed that in order to pay his support obligations, defendant had taken loans against his 401(k) plan, sold a portion of his securities, and assumed credit card debt, and that he could "methodically demonstrate the monetary transactions in and out of his financial accounts."
Furthermore, the judge properly compared the parties' marital standard of living of $9,357 per month to their current standards of living. See Crews v. Crews, 164 N.J. 11, 16 (2000) (stating that the marital standard of living "serves as the touchstone . . . for adjudicating later motions for modification of the alimony award when 'changed circumstances' are asserted."). The judge found that plaintiff's current expenses are $15,583 per month; that she "is able to live within her means"; that "she has not depleted any of her assets to meet her monthly expenses, except for paying her quarterly tax payments"; but that she "has increased her standard of living by $6,227 per month in additional expenses"; and that "[t]he vast majority of that difference ($5,684) falls within her personal expenses." For defendant, the court found that his current expenses are $10,234 per month, up from $8,365 per month at the time of divorce, but that the "bulk of the $1,869 difference is attributable to a $1,312 increase in his shelter expenses."
Plaintiff offers nothing to convince us that the judge did not thoroughly review the evidence and make well-grounded findings supporting his conclusions. We are mindful that "[e]ach and every motion to modify an alimony obligation 'rests upon its own particular footing and the appellate court must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters.'" Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006) (quoting Martindell v. Martindell, 21 N.J. 341, 355 (1956)). Accordingly, we conclude that substantial credible evidence supports the court's determination of changed circumstances.
Next, we consider whether the judge correctly calculated defendant's modified alimony obligation. Defendant contends that the judge did not "provide an explanation as to why a $20,000 [(20%)] reduction was appropriate," given that he established "a reduction bordering on 50% of the income he had previously been earning." Plaintiff also submits that the calculation is incorrect. She argues that the judge used inconsistent figures and Medicare wages instead of gross pay.
When establishing or modifying an alimony obligation, a court must consider N.J.S.A. 2A:34-23(b), which sets forth thirteen factors:
(1) The actual need and ability of the parties to pay;
(2) The duration of the marriage or civil union;
(3) The age, physical and emotional health of the parties;
(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living;
(5) The earning capacities, educational levels, vocational skills, and employability of the parties;
(6) The length of absence from the job market of the party seeking maintenance;
(7) The parental responsibilities for the children;
(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;
(9) The history of the financial or non-financial contributions to the marriage or civil union by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;
(10) The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;
(11) The income available to either party through investment of any assets held by that party;
(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and
(13) Any other factors which the court may deem relevant.
Here, the judge analyzed the thirteen statutory factors and found that defendant's income "decreased from the $400,000 level established in the Supplemental Final Judgment of Divorce to $246,878 in 2009." The judge stated that "[s]ince the divorce, [defendant's] income has been as follows: 2006 - $176,737; 2007 - $392,330; 2008 - $261,289; 2009 - $246,878," and that "the 2007 income was an aberration." The judge rejected defendant's proposal to apply the PSA's alimony percentage (25%) to his current income, explaining:
[D]etermining appropriate modification of alimony is not merely a function of mathematics. The standard to be used in determining what the appropriate amount of alimony should be is what amount will allow [plaintiff] to live a comparable lifestyle in line with that she enjoyed during the marriage. In 2006 the marital lifestyle was fueled by monthly expenses in the amount of $9,357. What is a comparable amount at this time? The [d]efendant's monthly expenses have risen from $8,365 at the time of the divorce to $10,234 now. Using that same percentage of increase, the sum of $11,447 now meets the marital standard of living. For the reasons set forth above, taking into consideration the factors, law, and circumstances of the parties, the [c]court is of the opinion that the [d]efendant is entitled to a modification of his permanent alimony obligation from the current $100,000 per year to $80,000 per year.
Although the judge did not set forth a formula or precise calculation to arrive at the figure of $80,000, he applied the relevant statutory factors in reaching that determination. His objective was to maintain the marital standard of living for both parties in accordance with Crews, supra, 164 N.J. at 16, and he took into account "the dependent spouse's needs, that spouse's ability to contribute to the fulfillment of those needs, and the supporting spouse's ability to maintain the dependent spouse at the former standard," Lepis, supra, 83 N.J. at 152. The resultant modification of alimony still leaves defendant with income greater than or at least equal to plaintiff's income while the monthly expenses reported by defendant are slightly less than those the judge accepted for plaintiff. We defer to the trial court's determination as to alimony where, as here, his findings are supported by substantial credible evidence. See, e.g., Cox v. Cox 335 N.J. Super. 465, 473 (App. Div. 2000); Reid v. Reid, 310 N.J. Super. 12, 22 (App. Div.), certif. denied, 154 N.J. 608 (1998).
Next, defendant argues that the judge erred in not modifying child support. Defendant contends that the changed circumstances on which the court based modification of alimony should have warranted a corresponding modification of child support, and that the court improperly considered the children's higher education needs in its analysis. We disagree.
"[U]nlike modification of an alimony award, '[w]hen the movant is seeking modification of child support, the guiding principle is the best interests of the children.'" Dolce v. Dolce, 383 N.J. Super. 11, 19 (App. Div. 2006) (quoting Lepis, supra, 83 N.J. at 157) (internal quotation marks omitted). Although the parties' agreement "should be given great weight, it may be modified, after considering all factors, if the best interests of the child require it." Clayton v. Muth, 144 N.J. Super. 491, 496 (App. Div. 1976). "The question is always what is in the best interests of the children no matter what the parties may have agreed to." Hallberg v. Hallberg, 113 N.J. Super. 205, 209 (App. Div. 1971).
To determine whether to modify child support, then, a court must consider the factors under N.J.S.A. 2A:34-23(a):*fn4
(1) the needs of the child;
(2) the standard of living and economic circumstances of each parent;
(3) all sources of income and assets of each parent;
(4) earning ability of each parent, including educational background, training, employment skills, work experience, custodial responsibility for children including the cost of providing child care and the length of time and cost of each parent to obtain training or experience for appropriate employment;
(5) need and capacity of the child for education, including higher education;
(6) age and health of the child and each parent;
(7) income, assets and earning ability of the child;
(8) responsibility of the parents for the court-ordered support of others;
(9) reasonable debts and liabilities of each child and parent; and
(10) any other factors the court may deem relevant.
Here, the judge properly analyzed each factor and made well-grounded findings supporting his decision not to modify child support. Defendant argues, however, that "by sheer fact of the significant reduction in defendant's income, he should have been afforded a reduction[.]" He contends that "[i]t is axiomatic that, where there is a substantial change of circumstances . . . to warrant a reduction of alimony, that same change should be sufficient to warrant reduction of child support[.]" Defendant provides no authority to sustain this proposition, and our case law reflects no such rigid test controlling a judge's consideration of whether to modify child support. Moreover, the parties' economic circumstances and sources of income and assets are just two among ten statutory factors to be considered.
Defendant also argues that the judge should not have considered the children's higher education needs, N.J.S.A. 2A:34-23(a)(5), because the PSA states that "[w]hen the time comes for a child to attend college, the parties shall confer with a view to arriving at the choice of college and such education expenses consistent with . . . the financial ability of the parties at that time[.]" This argument is unconvincing, as the PSA language does not restrict the court's consideration of N.J.S.A. 2A:34-23(a)(5) (higher education); nor does such consideration prevent the parties from conferring about their children's college expenses when the time comes. Moreover, "both [the New Jersey Supreme] Court and the Legislature have confirmed a child's need for higher education as an appropriate consideration in determining the parental obligation of support." Kiken v. Kiken, 149 N.J. 441, 450 (1997).*fn5
In sum, we conclude that the judge correctly reviewed the factors of N.J.S.A. 2A:34-23(a), and that the record reflects adequate credible evidence to support the court's findings and its decision not to modify child support.
Next, we consider whether the judge erred in not modifying defendant's life insurance obligation to plaintiff. Defendant contends that he "is entitled to reduce his life insurance coverage to a lesser amount which would appropriately secure his present alimony obligation." He argues that the PSA requires "a 'declining balance' life insurance policy . . . on the premise that the amount of insurance needed to secure defendant's alimony obligation would reduce over time."
The judge concluded that a reduction in defendant's life insurance obligation was not warranted because the child support was not modified and defendant's alimony obligation was not significantly different after reduction from $100,000 to $80,000 per year. That conclusion was within the discretionary authority of the trial judge to determine an appropriate amount of life insurance to protect plaintiff's support expectations.