April 4, 2012
CHERYL VAUGHAN, PLAINTIFF-RESPONDENT,
THOMAS VAUGHAN, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-111-98.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 20, 2012 -
Before Judges Baxter and Nugent.
Defendant Thomas Vaughan appeals from a January 28, 2011 Family Part order that granted his motion to reduce his child support obligation to the sum of $198 per week, but made the reduction retroactive to only June 15, 2010, even though he filed his motion on July 20, 2009. We agree with defendant's contention that the judge's refusal to grant retroactive modification back to July 20, 2009, incorrectly disregarded N.J.S.A. 2A:17-56.23a, which entitles an obligor to the benefit of retroactivity back to the date the motion was filed. We also agree that the judge should not have ignored the parties' written agreement that any child support reduction would be retroactive to June 2, 2009. We reverse the order under review, and remand for further proceedings to determine the appropriate method of implementing the approximately $20,000 credit that will result.
Defendant and plaintiff Cheryl Vaughan were divorced on December 6, 1999. During the parties' marriage, defendant became a member of the New York Stock Exchange, and by 2005 earned a gross income of $405,226 per year. Based upon that income, a judge increased defendant's child support obligation to $3662 per month, or $851.63 per week, for the parties' two sons. At approximately the same time, trading on floor of the Stock Exchange changed, as the use of an electronic trading system to conduct stock trade transactions reduced the need for brokers, such as defendant, on the floor.
Due to continued downsizing, defendant lost his job on June 17, 2007 and received his last paycheck two months later. His efforts to obtain other employment over a two-year period were unsuccessful. Defendant eventually applied for, and began receiving, unemployment compensation benefits. On October 22, 2008, defendant contacted plaintiff, asking her to agree to a reduction in his child support obligation. Defendant received no response.
In May 2009, by which time plaintiff had retained counsel, the parties and their attorneys agreed to meet at a four-way conference in an effort to negotiate an amicable reduction in defendant's child support obligation. At the same time, wary of the "anti-retroactivity statute," N.J.S.A. 2A:17-56.23a, defendant's attorney contacted plaintiff's attorney proposing that any agreement the parties might reach as the result of their impending conference, would have retroactive effect to June 2, 2009. Through her attorney, plaintiff agreed. In relevant part, plaintiff's counsel's June 3, 2009 letter stated:
I consent to your proposal that any agreement to be reached would be retroactive to June 2, 2009.
Ultimately, however, the four-way conference was unsuccessful, and the parties were not able to reach an agreement. On July 20, 2009, defendant filed the motion that is the subject of this appeal. He sought a reduction in his monthly child support obligation due to changed circumstances, namely, his loss of employment. On the return date of the motion, August 28, 2009, the judge determined that defendant's motion required a plenary hearing, which was scheduled and then adjourned on two occasions. Due to the judge's heavy workload, the matter was transferred to a different judge, who scheduled a hearing for June 15, 2010. The hearing on that date was not a plenary hearing, but was instead limited to oral argument. On July 19, 2010, the judge issued an order that reduced defendant's child support obligation to $300 per week based upon imputed income to defendant of $100,000 per year and income to plaintiff of $52,900. Additionally, the judge's July 19, 2010 order vacated all then-existing child support arrears, and denied defendant's request to retroactively reduce his child support obligation back to the date he filed his motion, July 20, 2009.
On August 3, 2010, defendant moved for reconsideration of the July 19, 2010 order, arguing that the judge incorrectly applied the child support guidelines, see Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-B to R. 5:6A (2012), and incorrectly refused to give retroactive effect to the modification of child support. Defendant argued that because the parties had agreed, at the time of the June 2009 four-way conference that any relief granted by the court would be given retroactive effect, the judge was obliged to enforce the parties' agreement and retroactively reduce the child support order back to June 2, 2009.
Defendant's August 3, 2010 motion for reconsideration was not heard by the judge who issued the July 19, 2010 order. Instead, a third judge considered the matter, and on October 1, 2010 issued an order: 1) modifying defendant's child support obligation to $198 per week; 2) requiring that the reduction be retroactive to June 2, 2009, in keeping with the parties' agreement prior to the four-way conference; 3) directing the Probation Department to adjust its records to reflect "the appropriate credit based upon the retroactive nature and date of the modified support obligation"; 4) issuing defendant a credit of $20,016 resulting from his overpayment of child support; and 5) directing that the $20,016 credit for the overpayment of child support could not be used to reduce any of defendant's future child support obligations.
Less than three months later, on December 27, 2010, plaintiff moved for an increase in child support. Defendant cross-moved seeking an order directing the Probation Department to issue a credit in the amount of $22,293, which defendant asserted was the correct amount of the credit to which he was entitled, rather than the $20,016 credit the judge ordered on July 19, 2010.
At the conclusion of oral argument on January 28, 2011, the judge sua sponte reconsidered her October 1, 2010 order. The judge directed the Monmouth County Probation Department to: 1) "remove the previously awarded credit in the amount of $20,016, in light of the finding of child support . . . in the amount of $198 . . . be[ing] effective June 15, 2010, and all credits or debits from that day prior are [vacated]"; and 2) adjust its records to "reflect a zero balance as of June 15, 2010." The judge also denied plaintiff's cross-motion to restore defendant's child support obligation to the amount of $300 per week as set forth in the order of July 19, 2010.
The net effect of the judge's January 28, 2011 order was two-fold. First, the order changed the retroactivity date from June 2, 2009, as contained in the order of October 1, 2010, and instead directed that the retroactivity would not commence until June 15, 2010. Second, the order eliminated the $20,016 child support credit that had been applied as the result of the October 1, 2010 order. The reasons the judge expressed on January 28, 2011 for making such a drastic adjustment to her order of October 1, 2010 are not particularly clear. Her remarks during the January 28, 2011 motion hearing discussing her reasons for changing the retroactivity date to June 15, 2010 were as follows:
Going to [the second judge's] order [of July 19, 2010], repeatedly he says, I'm wiping everything out both ways, repeatedly. And that means any money you'd owe him, any money you'd owe her, he zeroed it out clearly. And I'm not going to change that because quite frankly, I don't know who it would benefit, but it would be a burden on both of you. It would be near impossible for you to live with any number.
And I know that you were paying a lot of that back with the reduction when times were good, at that big number, and that was a good thing. He lent you some money. I wasn't quite convinced as to why you got the fifteen [thousand dollars], why you needed it and it wasn't part of [the] E[quitable] D[istribution]. But I said, okay, I'm not even going to go there. You acknowledged it. It came right off the top. So I was okay.
But then when everything changed, I'm not going to now say, you still have that debt left, even if it's [$]7,000 or whatever, and it's going to come out of a child support number that [plaintiff is] barely surviving on as it is. I'm not going to do that. And I'm not going to burden [defendant] with crazy arrears that are inappropriate because life as [he] knew it had changed. And it would be unconscionable and certainly inequitable for the Court to say, yeah, but it was still there and you're going to pay it, especially when everybody came to a solution.
So we're going to do that which [the previous judge] did and abide by that portion, because even your reconsideration -- the reconsideration was the correct child support number and crediting it for that period, which is appropriate. And we're going to do that. But we are having a zeroed out balance both ways from the June 2nd, '09 date and then the child support number goes from that date. The reconsideration, it is appropriate to go back to that date. So we're going to have that adjusted to make sure that it's properly reflected.
The judge further stated:
That's not what [the second judge] was talking about. . . . He says, I've taken into account the medical payments and union dues and I've taken into account the retroactivity starting from June 2, 2009, the arrearages, the adjustments and the equities. And [the judge] says, "and the Court finds that a zero balance would be appropriate. It would not be appropriate for the wife to owe the husband money, certainly under these circumstances. The parties will start at a zero balance and the husband is imputed at [$]100,000."
It appears to me that [the judge's] position was effective June 15, 2010, that that's what he was talking about.
So it is effective June 15[, 2010]. [The second judge] was quite clear about that.
And I didn't have the advantage of a transcript and I'm going back to [the second judge's] order [of July 19, 2010]. Because had I had all the information, I would have made a different finding [in my order of October 1, 2010].
On appeal, defendant maintains he is entitled to reversal of the retroactivity portion of the January 28, 2011 order because: 1) the judge "erred by failing to give effect to the parties' expressed agreement to give any modification in [child] support retroactive effect to June 2, 2009, contrary to public policy of this State"; and 2) the trial court disregarded the provisions of Rule 1:7-4 "by failing to make appropriate findings of fact and conclusions of law."
Plaintiff urges us to uphold the order under review, arguing that the judge properly exercised her discretion when she held that the reduction of child support should be retroactive to June 15, 2010, rather than June 2, 2009.
Although we are bound by findings of fact issued by a Family Part judge so long as those findings are based upon substantial and credible evidence in the record, Cesare v. Cesare, 154 N.J. 394, 411-12 (1998), we owe no deference to the judge's legal conclusions, which we review de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
N.J.S.A. 2A:17-56.23a provides a limitation on the extent to which a judge is authorized to retroactively modify a child support order. The statute specifies that any such retroactive modification shall be limited to the period between the date the motion for modification was filed and the date the order of modification was issued. The statute provides:
No payment or installment of an order for child support, . . . shall be retroactively modified by the court except with respect to the period during which there is a pending application for modification, but only from the date the notice of motion was mailed either directly or through the appropriate agent. The written notice will state that a change of circumstances has occurred and a motion for modification of the order will be filed within 45 days. In the event a motion is not filed within the 45-day period, modification shall be permitted only from the date the motion is filed with the court. [N.J.S.A. 2A:17-56.23a.]
When the parties to a matrimonial dispute reach an agreement, the court is obliged to enforce its terms in the same manner as any other contract. Pacifico v. Pacifico, 190 N.J. 258, 265-66 (2007). "The basic contractual nature of matrimonial agreements has long been recognized." Id. at 265. "[C]courts should enforce contracts as the parties intended." Id. at 266.
Applying the provisions of N.J.S.A. 2A:17-56.23a and the precepts of Pacifico to the present dispute, we are satisfied that the retroactivity portion of the January 28, 2011 order cannot stand. Although the statute does not obligate the judge to give the payor the benefit of retroactivity back to the date the motion was filed, and instead permits retroactive modification back to the date the motion was filed, we have generally insisted that such retroactivity be granted, unless the judge articulates specific reasons for refusing to grant retroactive application. See Winterberg v. Lupo, 300 N.J. Super. 125, 134 (App. Div. 1997). Here, the judge's rambling remarks provide little insight into her reasons for refusing to make the reduction of child support retroactive to the date defendant filed his motion, July 20, 2009.
We discern from the judge's remarks an intention to abide by the reasoning the second judge expressed at the June 15, 2010 hearing, which resulted in the July 19, 2010 order. At the time the judge issued her October 1, 2010 order giving defendant the benefit of retroactivity back to June 2, 2009, the judge did not have the benefit of a transcript from the proceedings before the other judge on June 15, 2010, but once she reviewed that transcript, she chose to sua sponte vacate her own order of October 1, 2010 and to instead return to the June 15, 2010 retroactivity date established by her predecessor in his July 19, 2010 order. In doing so, however, the judge failed to consider, much less apply, the provisions of N.J.S.A. 2A:17-56.23a, which permits a judge to grant retroactive modification of a child support order back to the date the motion was filed.
The judge's January 28, 2011 order suffers from a second infirmity. The judge provided no reason for deviating from the parties' June 2, 2009 agreement that any modification of child support would be retroactive to that date. It is the strongly held public policy of this State to favor consensual agreements reached between matrimonial litigants. As the Court observed in Konzelman v. Konzelman, 158 N.J. 185, 193-94 (1999):
New Jersey has long espoused a policy favoring the use of consensual agreements to resolve marital controversies. Voluntary agreements that address and reconcile conflicting interests of divorcing parties support our strong public policy favoring stability of arrangements in matrimonial matters. . . . [I]t would be shortsighted and unwise for courts to reject out of hand consensual solutions to vexatious personal matrimonial problems that have been advanced by the parties themselves. For these reasons, fair and definitive arrangements arrived at by mutual consent should not be unnecessarily or lightly disturbed. [(Internal citations and quotation marks omitted).]
The parties expressly agreed that if they were unable to resolve the issue of child support at their four-way conference, any subsequent modification would be retroactive to June 2, 2009. Plaintiff never sought to repudiate that agreement, and the judge erred in her January 28, 2011 order by refusing to enforce it.
Our common experience informs us that it is a common practice among matrimonial attorneys to agree upon an effective date of any reduction in child support so that the parties will not suffer any prejudice while they negotiate in an attempt to avoid the filing of contentious motions. Absent the terms of a consensual agreement to establish a fixed retroactivity date, the payor spouse would have a strong motivation to immediately file a motion to reduce child support -- thereby refusing to engage in negotiations -- to preserve the earliest possible retroactivity date. By entering into consensual agreements to establish a mutually agreeable retroactivity date, the parties preserve their opportunity to reach an amicable resolution of their dispute, rather than incur the expense, inconvenience and risk of a court decision. By ignoring the parties' June 2, 2009 agreement that any modification would be retroactive to that date, the judge violated the precepts of Konzelman and ran roughshod over the public policy of this State favoring the enforcement of voluntary agreements. We cannot countenance such a result.
We reverse the portion of the January 28, 2011 order that established a retroactivity date of June 15, 2010, and remand for the entry of an order making the reduction to $198 per week effective June 2, 2009. On remand, the judge shall devise an equitable method for applying the child support credit that results from defendant's overpayment of child support since June 2, 2009.
Reversed and remanded.
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