January 12, 2012
JOHN ROMANO, IV, PLAINTIFF-APPELLANT,
DANA ROMANO, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Gloucester County, Docket No. FM-08-955-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 10, 2011
Before Judges Fuentes, Graves and Koblitz.
Plaintiff John Romano, IV (John*fn1 ), appeals from the January 3, 2011 judgment of divorce, which divided the marital assets disproportionately in favor of defendant Dana Romano (Dana) and awarded her $50,000 in counsel fees and permanent alimony of $190 a week. The judgment also imposed on John a $250,000 life insurance obligation to secure the alimony. At oral argument, we were advised that Dana remarried on October 23, 2011, thereby limiting her alimony entitlement to forty-two weeks and eliminating John's $250,000 life insurance obligation. After reviewing the record in light of the contentions advanced on appeal, we affirm substantially for the reasons expressed in Judge Robert P. Becker's oral decision of December 17, 2010, and written decision of January 3, 2011. We offer some additional comments.
The parties were married on June 27, 1999. Dana worked for a pharmaceutical company earning over $100,000 annually when she was diagnosed with a brain tumor in early 2008. After her brain surgery, both parties agree that she was permanently disabled. Although she required continuing costly medical treatment, John allowed their medical insurance to lapse during the pendency of the divorce complaint, which he filed on June 16, 2008. John was thirty-three and Dana thirty-eight at the time of the divorce. No children were born of the marriage.
Prior to the divorce trial, a final restraining order was entered against John after a contested hearing on November 20, 2008. At the hearing, John testified that he was named on the deed of the marital home, although the trial court determined that only Dana's name was on the deed.
John filed a certified Chapter 13 bankruptcy petition on March 8, 2010, in which he estimated the value of his assets at no more than $50,000. In addition, he answered "none" in response to the following instruction at "SCHEDULE A - REAL PROPERTY":
List all real property in which the debtor has any legal, equitable, or future interest, including all property owned as a cotenant, community property, or in which the debtor has a life estate. Include any property in which the debtor holds rights and powers exercisable for the debtor's own benefit. If the debtor is married, state whether the husband, wife, both, or the marital community own the property by placing an "H," "W," "J," or "C" in the column labeled "Husband, Wife, Joint, or Community." If the debtor holds no interest in real property, write "None" under "Description and Location of Property."
John certified to an estimated annual income of $54,000 in both 2008 and 2009. On September 21, 2010, he filed an amendment to his bankruptcy petition, but did not modify the information concerning real property or estimated income. John's Chapter 13 repayment plan was accepted, although he did not receive a final discharge order, which is scheduled to occur in 2013.
On November 3, 2010, John filed a certified Family Case Information Statement (CIS), which indicated the marital home was a joint asset with a value of $494,000, subject to a mortgage of approximately $110,250. He further indicated his construction business had a value to be determined. Without considering the business, he estimated the parties' net worth subject to equitable distribution to be $511,132. John certified in the CIS that he earned $22,350 in 2009.*fn2
The marital home was purchased in 2001 for $324,545. Although John testified that he provided the funds for the down payment, Judge Becker found more credible Dana's testimony that she paid the down payment of $132,000 by cashing in her stock options.
The parties agreed that the home contained equity of $383,000 after subtracting the mortgage from the market value. Judge Becker awarded the home to Dana based on John's representation to the bankruptcy court that he had no interest in the property.
Dana's expert accountant, Michael Saccomanno, concluded that the operating value of John's kitchen remodeling business was $76,203 and that he received a yearly economic benefit of approximately $83,000. John's expert criticized Saccomanno's methodology. Judge Becker, however, found Saccomanno to be credible and accepted his conclusions.
Judge Becker determined John receives $82,000 in income and, due to his tax reporting methods, does not pay taxes on that income. He found that Dana receives $54,000 in non-taxable disability and social security payments. He accepted Saccomanno's valuation of the business and awarded Dana 30% of its $76,203 operating value, as well as $9880 in annual alimony.
Dana had an IRA of $46,676, of which a portion was premarital. John's IRA was worth $11,000. Judge Becker allowed each to keep their own IRA, indicating that this unequal distribution in Dana's favor was fair in light of her disability and her consequent needs. John, who will discharge $25,000 of his own counsel fees in the bankruptcy, was directed to pay $50,000 of Dana's counsel fees in light of his bad faith litigation. In particular, Judge Becker took issue with John's inconsistent sworn statements and the conflict between the sworn financial representations on his bankruptcy petition and his divorce filings.
John maintains that Judge Becker erred in applying the doctrine of judicial estoppel because a Chapter 13 bankruptcy plan is subject to modification and because the bankruptcy attorney advised him to make such representations in his bankruptcy complaint. Notably, however, at no time did John amend his complaint or seek to amend the plan to conform to his expectation of receiving a portion of the equity in the marital home.
John seeks one-half of the entire equity in the marital home, including the down payment, or approximately $190,000. At the same time, he seeks to discharge $77,422 of debt in his bankruptcy action. Importantly, John does not explain why he would file a good faith bankruptcy petition asserting no interest in the marital home if he anticipated such an award of equitable distribution.
Judicial estoppel is intended to protect the integrity of the judicial process. Cummings v. Bahr, 295 N.J. Super. 374, 387 (App. Div. 1996) (citing Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 599 (6th Cir. 1982)). It "operates to 'bar a party to a legal proceeding from arguing a position inconsistent with one previously asserted.'" Id. at 385 (quoting N.M. v. J.G., 255 N.J. Super. 423, 429 (App. Div. 1992)). The doctrine "prevents litigants from 'playing fast and loose' with, or otherwise manipulating, the judicial process." State v. Jenkins, 178 N.J. 347, 359 (2004) (quoting N.J. Dep't. of Law & Pub. Safety v. Gonzalez, 142 N.J. 618, 632 (1995)). "Central to that concern is the principle that a litigant should not be allowed to mislead courts by having one tribunal rely on his or her initial position while a subsequent body is led in a different direction." Ibid.
The applicability of judicial estoppel as a complete bar to a subsequent inconsistent claim arises "when a party advocates a position contrary to a position it successfully asserted in the same or a prior proceeding." Ali v. Rutgers, 166 N.J. 280, 287 (2000) (internal citations and quotations omitted). A prior successful assertion of a contrary position is required because "[a] party is not bound to a position it unsuccessfully maintained" in a prior lawsuit. Id. at 288 (internal citations and quotations omitted). As with most judicially crafted remedies, judicial estoppel should be invoked only to prevent a miscarriage of justice. Ibid.
Here, John's conduct provides almost a textbook example of facts calling for the application of judicial estoppel. By his own admission, John advanced inconsistent positions regarding his interest in the marital home. John failed to disclose his alleged interest in the home in the petition he filed under oath before the federal bankruptcy court. In addition, John filed an amendment to his bankruptcy petition in September 2010, but did not alter this critical detail. A bankruptcy plan was subsequently approved based on John's financial representations.
John's testimony that his bankruptcy lawyer advised him to deny any ownership interest in the marital home does not absolve him of responsibility for his certification. John did not call his bankruptcy attorney to testify as support for his assertion. Certainly, a witness should not be permitted to hide behind the unsubstantiated excuse that his lawyer told him to lie on a sworn document.
John's assertions in support of this action before Judge Becker are materially irreconcilable with the position he adopted before the federal bankruptcy court. The judge did not abuse his discretion in finding that John was attempting to manipulate the legal system to his advantage and to the disadvantage of his creditors and Dana. The application of judicial estoppel is warranted under such circumstances.
John also argues that Judge Becker should not have accepted that the down payment on the home was paid solely by Dana because her stock options were joint marital assets. See Pascale v. Pascale, 140 N.J. 583, 607 (1995); Robertson v. Robertson, 381 N.J. Super. 199, 204-05 (App. Div. 2005).
At trial, however, John failed to argue that the stock options were not immune from equitable distribution for the reasons he now advances on appeal. Rather, he called his mother to testify that she gave him the money for the down payment.*fn3 An issue not raised at the trial level will ordinarily not be considered on appeal unless the issue is jurisdictional in nature or substantially implicates "matters of great public interest." Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973); see Triffin v. Am. Intern. Group, Inc., 372 N.J. Super. 517, 520 (App. Div. 2004). This issue satisfies neither criteria.
John also maintains that Judge Becker should not have accepted Dana's expert testimony with regard to the value of his business and the income it generates. John did not provide sufficient reliable information to allow Dana's expert to use valuation techniques based on tax reporting, so the expert was forced to consider the family expenses as a means to gauge the income generated by the business.
This scenario is not uncommon in divorce matters where a sole proprietor provides neither complete business records nor reliable Internal Revenue Service filings. We defer to Judge Becker's fact-findings concerning the value of the business and its revenue. Johnson v. Scaccetti, 192 N.J. 256, 282 (2007) (citing Baxter v. Fairmont Food Co., 74 N.J. 588, 600 (1977)). We find no abuse of discretion in his decision to accept the expertise and opinion of Dana's expert over the critique provided by John's expert.
John contends that Judge Becker erred in determining that only $18,000 of Dana's $46,676 retirement account was subject to equitable distribution. Dana testified that she determined the premarital portion of her IRA by subtracting the contributions made after the couple married.
Contrary to plaintiff's assertion, Judge Becker did not endorse the wife's methodology. Rather, the judge indicated he was dividing the parties retirement accounts unequally based on Dana's greater needs. See N.J.S.A. 2A:34-23.1(b). We emphasize "the narrow contours of appellate review pertaining to the division of marital assets." Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985). "[I]n making these delicate and difficult judgments," we rely heavily on the discretion of the trial judge. Ibid. (citations omitted). A trial judge "does not fulfill his heavy judgmental obligation by routinely or mechanistically dividing the marital assets equally." Ibid. Judge Becker operated within his discretion by allowing each party to retain their respective retirement accounts, thereby "leav[ing] both parties where they are." Thus, we perceive no valid basis on which to disturb this conclusion.
John also argues that Judge Becker erred in not determining the tax consequences of his permanent alimony award. Although John had not paid income taxes in previous years and paid only $2,270 in taxes on his $22,350 reported income in 2009, he complains that Judge Becker failed to consider the diminution to the $82,000 imputed to him that would be caused by his payment of income taxes.
Judge Becker's ruling did not suggest that the income imputed to John for the alimony determination was equivalent to taxable income for IRS purposes. Rather, the judge determined that John derived a financial benefit of that amount from his business. John did not argue at trial that the judge should tax-effect his income determination. See N.J.S.A. 2A:34-23(b)(12). Furthermore, John offered no credible evidence of his business' taxable income and the attendant tax consequences, nor did his testimony convey an intent to pay taxes on any imputed income. As Judge Becker was given no evidence from which to accurately estimate John's future tax obligation, he did not abuse his discretion by assuming that John would continue to avoid paying annual income taxes on the economic value received from his business.
Finally, John argues that Judge Becker abused his discretion in awarding Dana $50,000 in counsel fees. Rule 4:42-9(a)(1) authorizes the award of counsel fees in a family action on a final determination pursuant to Rule 5:3-5(c). Gotlib v. Gotlib, 399 N.J. Super. 295, 314 (App. Div. 2008). In determining the award of fees, the court should consider the following factors:
(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 awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.
"'The application of these factors and the ultimate decision to award counsel fees rests within the sound discretion of the trial judge.'" Gotlib, supra, 399 N.J. Super. at 314-15 (quoting Loro v. Colliano, 354 N.J. Super. 212, 227 (App. Div.), certif. denied, 174 N.J. 544 (2002)) (citations omitted). We reverse only for an abuse of discretion. Eaton v. Grau, 368 N.J. Super. 215, 225 (2004).
Judge Becker found John's position at trial was unreasonable and his testimony not credible. The judge determined that John's attempt to manipulate the legal system and his lack of candor with the court merited a counsel fee award on Dana's behalf. As we have previously held, "[b]ad faith and assertion of an unreasonable position is properly considered in awarding a counsel fee[.]" Diehl v. Diehl, 389 N.J. Super. 443, 455 (App. Div. 2006). In light of Judge Becker's findings, we find no abuse of discretion as to this issue.