March 16, 2012
ROBERT EICK, PLAINTIFF-APPELLANT,
LAURA EICK, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-651-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 7, 2012
Before Judges Fuentes, Koblitz and Haas.
This case returns to us after remand proceedings directed by our previous opinion. See Eick v. Eick, No. A-0015-09 (App. Div. August 18, 2010). Following a hearing, the remand court granted plaintiff's motion to reduce his alimony and child support obligations. Plaintiff appeals, claiming that the court erred. After reviewing the record in light of the contentions advanced on appeal, we reverse and remand the matter to the trial court for further proceedings in conformity with this opinion.
We begin by referencing the essential background facts as set forth in our earlier opinion. Plaintiff and defendant were married in February 1978 and divorced in February 2007. (slip op. at 2). They have three children, the oldest of whom was already emancipated at the time of the divorce. At that time, neither of the two younger children was in college. Ibid.
Plaintiff has been self-employed as a bookbinder since 1991. Ibid. Defendant is employed at Fairleigh Dickinson University (FDU). Ibid. At the time of the divorce, the parties used their 2005 income to set plaintiff's support obligations. Ibid. At that time, plaintiff's annual income was $117,000 and defendant's was $29,000. Ibid. The parties agreed that plaintiff would pay defendant $1,500 per month in permanent alimony and $2,000 per month in child support for the two unemancipated children. Ibid. This figure was in excess of the Child Support Guidelines and, therefore, was not subject to cost of living adjustments. Ibid.
On March 10, 2009, plaintiff filed a motion to reduce his support obligations based on a claim of changed circumstances, namely that the income he derived from his bookbinding business had drastically declined. Ibid. He asserted that his main customers were law firms, which were now using online research databases for their publication needs. Id. (slip op. at 2-3). Defendant filed a cross-motion to enforce plaintiff's support obligations. Id. (slip op. at 4).
The judge who heard oral argument on the motion ruled that plaintiff had not met his burden of proving that there had been a permanent change of circumstances in terms of his earning ability. Id. (slip op. at 4-5). Plaintiff appealed. We found that plaintiff had made a prima facie showing of changed circumstances sufficient to warrant discovery and a plenary hearing. Id. (slip op. at 8). Therefore, we reversed and remanded the matter for further proceedings. Ibid.
The remand judge conducted a three-day evidentiary hearing on March 8, 9 and 10, 2011. The parties each testified and defendant also presented the testimony of a certified public accountant, who was accepted by the court as an expert in forensic accounting and cash flow analysis.
Plaintiff explained the nature of his bookbinding business and the changes to the industry which, he asserted, were reducing his ability to earn at his prior levels. His clients were now using digital discs and online sites to meet their data storage needs. While, in the past, plaintiff would sometimes receive a "big binding job" from a law firm that would bring in up to $12,000, he had not had any such big jobs since 2009. Plaintiff had laid off his last remaining employee in 2009. He had attempted to raise his bookbinding rates to bring in more revenue, but this just priced him further out of the market.
As to his income, plaintiff provided his business records and tax returns. Based upon his tax returns, the remand judge found that plaintiff's annual income for the five years preceding the plenary hearing was as follows:
2006: $97,307 2007: $89,270 2008: $100,055, which included a $22,892 IRA withdrawal 2009: $114,761 2010: $71,770 Defendant's expert did not seriously dispute these income figures in any significant way. He performed a five-year cash flow analysis of plaintiff's bookbinding business, but he did not review any information for 2010. While the expert opined that plaintiff earned more than what was indicated on his tax returns, his overall analysis confirmed plaintiff's contention that his business had declined since 2005, the year the parties had used to determine their financial obligations at the time of their divorce.
During the period after the divorce, plaintiff admitted that he had spent money repairing a boat he owns and had taken vacations out of the country. He also acknowledged that his deposition testimony about the boat had not been completely truthful. Nevertheless, the remand judge found that plaintiff's testimony concerning the downturn of his business was "plausible" and that plaintiff's "suspicious, if not outright false," testimony about the boat was "not a factor which is determinative of the outcome of the matter." Accordingly, the remand judge found that plaintiff's income for the past five years was as set forth herein.
Defendant continues to work at FDU. Her 2010 W-2 form indicated that her annual income was now $52,909.
The older of the parties' two unemancipated children is now attending FDU. As a result of defendant's employment at the university, the child is not required to pay tuition. Her room and board is paid from a custodial account that had previously been set up by the parties. This child has a room at FDU, but she spends extensive time at defendant's home as well. The parties' youngest child is now a senior in high school.
Plaintiff submitted an updated Family Part Case Information Statement (CIS) at the remand hearing. He claimed $11,360 in monthly expenses, which included his $3,500 monthly alimony and child support obligations. Defendant did not submit an updated CIS. Her 2009 CIS from the original motion was admitted into evidence. The monthly expenses claimed in that CIS, however, were for herself and all three of the parties' children, including the emancipated child and the child who was now living at college.
In a written decision, the remand judge found that plaintiff had met his burden of proving that there had been a significant change in circumstances since the time support was originally set and that a modification of his support obligations was therefore necessary. The judge found that the decline in plaintiff's bookbinding business was permanent. While he had an income spike in 2009, the judge found that this was due to plaintiff unexpectedly obtaining three "large jobs" after his motion was filed. Plaintiff was now the sole employee of the business and his customer list was continuing to dwindle. At the same time, defendant's annual income had grown from $29,000 to $52,909, which the judge found was a significant increase.
In modifying plaintiff's support obligations, the remand judge found that it was appropriate to use the parties' 2010 income information in the support analysis, even though this information had not been available at the time of the original 2009 motion. The judge found that a significant amount of time had passed as a result of the remand and, therefore, the latest available information needed to be considered.
The remand judge determined that plaintiff's income should be averaged over the five-year period between 2006 and 2010. His average annual income over this period, based upon the income figures set forth above, was $94,632. Defendant's 2010 annual income of $52,909 was the only income information considered for her.
The remand judge then proceeded to determine a new support obligation for plaintiff. The judge's findings on this issue were as follows:
As to the adjustment in alimony, the Court must look to both Defendant's increase[d] income and Plaintiff's decrease in income. Therefore, the Court will order that the Plaintiff pay to the Defendant $1,100 per month in alimony retroactive to March 6, 2009.*fn1 Probation shall adjust its records [accordingly]. Plaintiff's alimony obligation should be paid weekly in the amount of $256.00 per week.
The Court will recalculate child support based on these figures. For purposes of running the guidelines, the Court will adjust the amount of child support owed because the children are over the age of 14 and further will provide that the Plaintiff has no overnights as there is no set visitation schedule in the PSA. Plaintiff shall pay through Probation, child support in the amount of $265.00 per week retroactive to March 6, 2009.
This appeal followed.
On appeal, the parties no longer dispute that a modification in plaintiff's support obligations was needed due to his decreased income as a result of his declining bookbinding business and due to defendant's increased income. The parties also agree that the remand judge properly considered their respective financial situations in 2010, since a period of time had passed following the motion judge's initial consideration of plaintiff's original motion to modify alimony and child support.
However, plaintiff asserts that the trial court erred in using a five-year average of his income to determine his support obligation. We disagree.
In this case, plaintiff was self-employed. His income, while now clearly moving downward, has nevertheless fluctuated since the time his support obligation was originally set. Indeed, right after he filed his motion in 2009, he was able to bring in three "big jobs," which caused an income spike. He also retains a degree of flexibility as to when he will receive his income.
Under similar circumstances, in Platt v. Platt, we held that the trial court did not abuse its discretion in averaging the husband's income from self-employment for the prior five years. 384 N.J. Super. 418 (App. Div. 2006). In Platt, the husband operated an automotive repair shop and, as here, experienced annual fluctuations in his earnings. In order to obtain a fair picture of his income, we held that it was "completely logical and reasonable" to average the husband's income over a representative five-year period. Id. at 426.
Contrary to plaintiffs' contentions, averaging his income over a five-year period does not diminish his "downward income momentum" argument. Indeed, it is because his income is decreasing that his support obligations will now be modified. At the same time, however, the remand judge recognized that there were still occasions where plaintiff's income went up, if only for a brief period of time. In order to obtain a reasonable, representative sample, the remand judge appropriately averaged plaintiff's income.
There was, however, an error in the remand judge's mathematical calculations. For 2008, the remand judge found that plaintiff's income was $100,055, based on his tax return for that year. However, that figure included a $22,892 IRA withdrawal, which should not have been used in the calculation of his income. Thus, for 2008, plaintiff's actual income was $77,163. With this correction, his average annual income between 2006 and 2010 was $90,054, not $94,632.
Plaintiff's remaining arguments have merit. He first argues that the remand judge did not adequately explain how the alimony award was determined. We agree with this contention.
"[T]he goal of a proper alimony award is to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage." Crews v. Crews, 164 N.J. 11, 16 (2000).
We review a trial court's decision on alimony for abuse of its discretionary authority. Innes v. Innes, 117 N.J. at 496, 504 (1990). In Gonzalez-Posse v. Ricciardulli, we elaborated on what our standard of review entails:
To vacate a trial court's finding concerning alimony, we must conclude that the trial court clearly abused its discretion or failed to consider all of the controlling legal principles, or we must otherwise be 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 considering all of the proofs as a whole. [410 N.J. Super. 340, 354 (App. Div. 2009).]
Here, the remand judge's opinion does not provide reasons for setting alimony beyond the change in income of both parties. Specifically, the judge's reasons do not address all of the factors relevant to setting the amount of alimony.
In this regard, N.J.S.A. 2A:34-23(c) requires that the court "make specific findings on the evidence" regarding statutory factors relevant to an award of alimony. In Carter v. Carter, we held that when ordering alimony, the court "must adhere to the statutory requirement in every case, whether contested or uncontested." 318 N.J. Super. 34, 42 (App. Div. 1999).
Here, some of the statutory factors are self-evident and do not require discussion or detailed findings. For example, the length of the marriage, the age of the parties, and defendant's primary role in caring for the unemancipated children are not in dispute. However, the remand judge did not state findings of fact pertaining to critical issues, such as defendant's need for alimony to support herself, the effect of equitable distribution on each party's financial circumstances, and the ability of the parties to approximate the marital standard of living through the financial resources now available to them. N.J.S.A. 2A:34-23(b). The judge merely made findings as to the parties' respective incomes and then concluded that alimony should be reduced to $1,100 per month.
In addition, defendant did not submit an updated CIS at the time of the remand hearing. Therefore, there could have been no analysis of her needs and whether they were being met, in whole or in part, by her own income.
The remand judge should have required both parties to provide updated financial disclosure statements prior to any modification of support. R. 5:5-4(a). As we explained in Gulya v. Gulya, this requirement "is not just window dressing. It is, on the contrary, a way for the trial judge to get a complete financial picture of the finances of the movants in a modification case." 251 N.J. Super. 250, 253 (App. Div. 1991).
Defendant's 2009 Case Information Statement was not an appropriate substitute for the updated financial information required by the Rules of Court. In addition to the fact that defendant's income had risen since the time the Statement was originally filed, her Statement continued to list expenses for all three of the children, including the parties' oldest, emancipated child. Expenses for the child who was attending FDU were also included in the CIS.
Plaintiff argues that the remand judge may have used an impermissible formula to determine the amount of alimony, rather than applying the factors required by N.J.S.A. 2A:34-23(b) to the facts shown by the evidence. He contends that the judge subtracted defendant's annual income of $52,909 from his five-year average income of $94,632*fn2 and then awarded defendant thirty-three percent of the resulting figure. This calculation appears to match the amount of alimony awarded by the judge in this case.
We decline to speculate whether the remand judge used such a formula. Nevertheless, as a general proposition, we agree with plaintiff that use of a percentage formula based only on the parties' incomes is not authorized by law. Such a formula does not weigh and balance particular factors as listed in the statute and as might affect each individual case.
Because specific findings and conclusions relevant to determining a modification of alimony were not made in accordance with all relevant factors under N.J.S.A. 2A:34-23(b), we reverse so much of the remand judge's decision as fixed alimony at $1,100 per month and remand to the Family Part to make more detailed findings of fact and reconsider the amount based on those findings. Aside from requiring the parties to each provide an updated CIS, we anticipate that the remand court will be able to make the alimony determination without further expanding the record or conducting a plenary hearing. We, of course, leave this ultimate determination to the sound discretion of the trial judge. We also do not preclude the court from determining that $1,100 per month is the appropriate amount, but require additional support in the record for its determination.
Finally, plaintiff contends that the remand judge's child support determination was flawed because the Child Support Guidelines were used to calculate support for both of the parties' unemancipated children, even though the older child was enrolled in and living at college. We agree that, on remand, child support will need to be recalculated.
Once plaintiff's alimony obligation was modified, and defendant's net income was thereby reduced, the remand judge was required to modify child support. The remand judge's calculation of child support was based upon both unemancipated children continuing to live with defendant, even though one of the children had been living at FDU since September 2010. The judge used the Child Support Guidelines to determine the new support obligation. However, the Guidelines are expressly inapplicable when determining the amount of support for a child attending college away from home, for the following reasons:
Many costs associated with college attendance (e.g. room, board, transportation) are included in the Appendix IX-F child support guidelines awards. Thus, a parent who is ordered to pay a guidelines-based child support award and part of the child's colleges expenses is forced to make duplicate expenditures for the child (i.e., the PAR [Parent of Alternate Residence] would be paying a share of the cost of food for the child to the primary household as well as a share of the cost of a meal plan or food allowance while the child is attending college). As a result, the level of total spending on the child would exceed that of intact families in a similar economic situation and the PAR's share of the total spending on the child would increase beyond his or her income share. Requiring duplicate expenditures for a child is inconsistent with spending patterns of intact families and the economic theory of the child support guidelines. [Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2513 (2012).]
In order to avoid the duplicate expenditures proscribed by the Guidelines, the remand judge should have calculated one support number for two children living at home from March 2009 to September 2010, when the older child began living at college, and a second support obligation after 2010 for the one child remaining at home. If the judge believed that additional child support should still be paid for the child who was attending FDU, that amount could be determined through a separate, non-Guidelines calculation under N.J.S.A. 2A:34-23(a), which sets forth the statutory criteria for a determination of child support.
Accordingly, we reverse and remand to the trial court with instructions to recalculate plaintiff's new child support obligation in the manner set forth herein.
Reversed and remanded for further proceedings in conformity with this opinion. We do not retain jurisdiction.