April 17, 2012
ROBERT T. GOLDMAN, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
GAIL H. MAUTNER, DEFENDANT-APPELLANT/ CROSS-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1478-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 5, 2012
Before Judges Parrillo, Grall and Hoffman.
Defendant Gail H. Mautner appeals and plaintiff Robert T. Goldman cross-appeals from an amended final judgment of divorce.
Mautner also appeals from the denial of her post-trial motion to enforce pendente lite support orders. On Mautner's prior interlocutory appeal following a trial on the custody of their two children, we affirmed an order providing for joint legal custody and a near equal sharing of residential custody - eight of every fourteen days with Mautner and six with Goldman. Goldman v. Mautner, No. A-4085-07 (App. Div. Dec. 17, 2008).*fn1
Thus, the questions before us involve only the financial matters that the Family Part resolved in dissolving this nine-year-and-four-month marriage.
The amended judgment provides for an equal division of property acquired during the marriage and identifies assets that are exempt because they were acquired before the marriage or after the complaint for divorce was filed. Goldman must pay $8500 monthly alimony for a four-year term and $1500 weekly child support. In addition, he must secure the children's health and dental insurance and pay seventy-five percent of costs not covered by that insurance. Tax exemptions for the children are to be shared. On the ground that the question was not ripe, the court denied Mautner's request to allocate responsibility for college expenses. The judgment also memorializes the court's denial of the parties' competing requests for credits on pendente lite support and Mautner's request for retroactive modification of pendente lite support.
In addition, the judgment allocates responsibility for the costs of litigating the custody and financial issues. The parties are to equally share the fees for a court-appointed financial mediator. With one exception, each party must pay all the fees and costs that party incurred. The lone exception is legal fees for the custody litigation; Mautner must pay two-thirds of Goldman's legal fees for the custody trial and all of his legal fees for the appeal of joint legal and shared residential custody.
Two issues raised at trial are not addressed in the amended judgment or the court's opinion. They are Mautner's counterclaim for divorce and her request for insurance to secure Goldman's alimony and support obligation. A third issue raised by Mautner - allocation of tax exemptions for the children - is addressed in the judgment. The court's written opinion, however, does not include any findings of fact or legal conclusions explaining its decision to have the parties share the tax exemptions, and its findings and legal conclusions on child support, alimony and counsel fees are infected by imputation of income in an amount not supported by the record and insufficient findings on other factors pertinent to those determinations.
On appeal, the parties claim numerous errors implicating nearly all of the court's rulings. We conclude that it is necessary to remand for reconsideration of the amount of child support, limited duration alimony, counsel fees and allocation of the tax exemptions for the children.
We reverse the court's decision to fix the value of Mautner's equitable share of Goldman's 401K at one-half of $223,077.88, which was the value of her share as of December 3, 2007, and to fix the value of her share of his Fidelity Investment Account at $245,371.80, which is the value of her share "at the time of trial." On remand, the judgment must be amended to correct this error by fixing value at time of distribution.
On remand, the court must also address Mautner's counterclaim for divorce and her claim for life insurance securing support.
There is a paragraph of the judgment providing for Goldman to receive a credit on his equitable distribution if the parties determine that Mautner received $10,000 more than Goldman received from the funds withdrawn from accounts pendente lite.
We remand for the court to make that determination. If the record does not permit the court to resolve the issue, the credit must be denied.
With the exceptions set forth above, we affirm the judgment, and we affirm the denial of Mautner's post-trial, prejudgment motion.
Mautner raises a preliminary question. Relying on this court's recent decision in Ducey v. Ducey, 424 N.J. Super. 68 (App. Div. 2012), she argues that the issuance of a final and amended judgment requires a new trial. Ducey involved entry of a final judgment of divorce that was followed by a written opinion stating findings and conclusions that materially differed from and abrogated, without explanation, substantive provisions of the judgment. Id. at 74, 77. While we do not approve of the course followed in this case, what happened in Ducey did not happen here.
The trial on financial issues was commenced and completed in August 2008, and the parties filed their written summations that October. The final judgment of divorce and the written opinion setting forth the court's findings and reasons for its determinations were issued on August 21, 2009.*fn2
In issuing the judgment, the court gave counsel thirty days to submit an amended judgment "incorporating the opinion and the standard language as to emancipation, cohabitation, etc." Goldman's attorney complied on November 18, 2009, and Mautner's attorney, not of the firm representing her on this appeal, filed objections on December 3. On December 11, the court entered an amended judgment and opinion.
While there are differences between the initial and amended final judgments and opinions, they are not, as Mautner suggests, comparable to those between the initial judgment and a subsequently issued contradictory opinion we addressed in Ducey.
Here, with one exception - Goldman's obligation to pay seventy-five percent of the children's extracurricular expenses which is stated in the initial judgment and not the amended judgment - these judgments and opinions are not contradictory. This inconsistency, however, is of no import, because we have concluded that a remand for reconsideration of child support is necessary based on the court's imputation of income in the amount of $450,000 to $500,000 to Mautner. In this context, there is no reason why allocation of expenses for extracurricular activities cannot be addressed along with the other expenses of the children on the record the parties made at the time of trial.
Apart from the inconsistency affecting child support, the judgments and opinions differ in two inconsequential respects. First, as the court directed and contemplated, the amended judgment incorporates determinations that the court set forth in the initial opinion but not in the initial judgment.*fn3 Second, the amended judgment and opinion differ from the initial ones in that they expressly address and reject the parties' competing requests for pendente lite credits and Mautner's request for retroactive modification of pendente lite support, matters that were litigated but not addressed in the initial opinion. The initial silence and subsequent denial are not contradictory; the initial judgment granted no relief and the amended judgment denied all relief. This difference is the nature of correction of an omission, not a substantive change.
We reject Mautner's claim that a new trial or hearing is warranted here as it was in Ducey. It is worth noting that this complaint for divorce was filed in January 2003 and that the duration of the litigation will soon exceed the duration of the marriage. A second trial will not serve the interests of justice.
For the benefit of the trial court and the parties, we have summarized the differences in the judgments in an endnote to this opinion.
In this section, we set forth the facts pertinent to the issues raised on appeal and the trial court's findings on disputed facts.
A. Contribution to the Marital Enterprise
Goldman and Mautner are both medical doctors licensed and practicing in this State. They lived together and shared expenses for about sixteen months while they were completing their respective residency programs, and they married in 1993. They have two children - a son born in 1996 and a daughter born in 1998. All members of the family are healthy, and none have special needs. When the complaint and counterclaim for divorce were filed in January 2003, the parties' son was seven and their daughter was about four-and-one-half; they are now sixteen and thirteen. Goldman was thirty-nine and Mautner was thirty-seven when this litigation commenced; they are now forty-nine and forty-six.
The parties had significant income during the marriage. Since the birth of their children, Mautner has practiced dermatology part-time, earning between $100,000 and $175,000 annually. Goldman, an orthopedic surgeon, has practiced full-time, established a practice, acquired an interest in a surgical center and annually earned close to or in excess of $1 million.
Joint tax returns filed for the five years starting with January 1998 and ending with December 2002, reflect combined total W-2 wages in the amount of $6,014,555 for that period. During those years, Goldman earned 7.3 times as much as Mautner. In tax years 1998 through 2002, he reported total W-2 earnings of $5,304,748 (1998, $828,188; 1999, $802,179; 2000, $1,031,964; 2001, $1,245,071; and 2002, $1,397,346). In the same years, Mautner reported total W-2 earnings of $709,807 (1998, $121,865; 1999, $156,674; 2000, $175,267; 2001, $143,708; and 2002, $112,293). In addition to these earnings, they had taxable and tax exempt interest, income from Goldman's business and the benefit of personal expenses paid by the business.
When the complaint was filed, the parties had assets with a value in excess of $5 million. The court determined that some of those assets were exempt from equitable distribution.
The parties had a home in Short Hills, and they stipulated that it had a value of $1,541,500 as of April 27, 2007. At the time of trial, the mortgage was $227,325. The parties' stipulation on value was qualified, however. Although they agreed not to submit additional evidence on the point, they "reserved the right to argue a different value as of the trial date." The court assigned a net value of $1,314,175.
The value of Goldman's interest in his practice was disputed. His expert assigned a value of $1,287,000, whereas Mautner's expert valued the practice at $1,970,000. The court found the opinion of Goldman's expert to be more reasonable because he derived the value by using an averaged cost of overhead, rather than the cost for a single year, and a more reasonable long-term growth rate, which the expert claimed was appropriate given the differential between growth while the practice was being established and after it was.
In addition to his practice, Goldman had an interest in a surgical center, which he sold for $75,000 during the pendente lite period. Accordingly, the value of that asset was not in dispute.
The parties also held banking and investment accounts and Goldman had a 401K plan and an IRA. The total value of those investments was approximately $2.5 million when the complaint was filed, and that total value, of course, was subject to fluctuation attributable to interest and market forces during the pendency of the litigation. In addition, the values of these accounts changed due to the parties' withdrawals of about $1.5 million prior to trial. Neither party claims any disparity or unfairness in the distribution of the funds that were withdrawn.
Included in the various accounts held on the date of the complaint were funds that Goldman claimed were exempt from equitable distribution. He sought to exempt funds he held on the date of the marriage (referenced as initial balances hereafter), money deposited in the accounts given to him by his parents, and the growth attributable to both. The court denied the exemptions sought for monetary gifts to Goldman during the marriage, finding that Goldman failed to establish that the gifts were to him rather than the family. The court granted exemptions for the initial balances and their growth as follows: the pre-marital balance $46,255.97, which the court found had grown to $122,577.91; the entire amount in a Fidelity IRA, which was solely attributable to pre-marital deposits and had a value of about $3495.81; the initial balance of a Merrill Lynch/Smith Barney account, $85,298.54, plus interest attributable to that money to be calculated by the parties in accordance with the method proposed by Goldman's accountant. According to an estimate prepared jointly by the parties' experts prior to 2007, the interest exceeded $300,000. Thus, the approximate value of these exemptions to Goldman is $426,000.
Goldman acquired additional exempt assets from post-complaint earnings. They include a residence in Short Hills he purchased for $1,850,000 with a mortgage of $1 million, and an interest in a surgical center he acquired for $60,000. In addition, he had added to his 401K plan and deposited post-complaint earnings in exempt accounts.
Taken together, Goldman's exempt pre-marital and post-complaint assets had a minimum value of $1,336,000.
C. Standard of Living During the Marriage
The parties both retained experts to quantify the annual cost of their standard of living during the last years of their marriage. The experts included taxes but excluded savings from their calculations. Mautner's expert fixed the annual cost, including taxes, at $385,850 per year, or $32,154 monthly, and Goldman's expert fixed the annual cost, including taxes, at $241,724, or $20,144 monthly.
In a joint report, the experts explained that the difference between their accountings was due to 1) Goldman's expert's exclusion and Mautner's expert's inclusion of costs of a home renovation, a landscaping project, a "one-time" purchase of art, costs of private school for the children, which they were no longer attending, the salary of a nanny, and legal fees paid in a lawsuit related to a kitchen renovation; and 2) Mautner's expert amortizing the cost of a new car over four years while Goldman's expert spread that cost over ten years. They further noted that Goldman's expert had determined the annual cost of the marital standard of living by deducting an additional $47,467 annually from shelter expense based on a refinancing of the mortgage at a lower interest rate.
By stipulation, the parties submitted supplemental certifications rather than testimony to state their respective positions on marital lifestyle. Mautner pointed out that neither of the parties' experts included in their respective calculations of the cost of the marital standard of living either expenses paid by Goldman's practice, of about $41,500 annually, or annual savings. Her expert concluded that annual savings averaged about $407,000 annually for the years 1999- 2003, a number derived by deducting expenses from net earned income. Goldman's expert calculated savings in 2003 at $200,191.
Mautner contended that to maintain the marital standard of living she would require a net monthly income of $32,391, without savings, and $59,891 if she were to save at one-half the rate the parties saved during the marriage. Her stated expenses included full-time child care in the home. Goldman challenged numerous expenses in Mautner's budget. Most significantly, he objected to her statement of child care expenses, which he deemed excessive given the custodial arrangement. He also challenged private school costs, on the ground that they were no longer incurred because the children were enrolled in public school.
In its initial opinion, the court concluded that the marital standard of living was "somewhere in the range of $25,000." That finding, however, is not included in the amended opinion or the judgment.
D. Mautner's Earning Capacity
The parties disputed Mautner's earning capacity at trial. It is an issue on appeal.
Mautner's reported wages from part-time work during the pendente lite period totaled $631,401 (2003, $109,952; 2004, $99,713; 2005, $106,140; 2006, $170,433; and 2007, $145,163). Her work schedule during 2003 and through "late" 2005 was about eleven-and-one-half hours weekly. In "late" 2005, she accepted additional hours as they became available, and by "late" September 2007, she increased her hours to twenty per week. She attributed the decrease in her income in 2007 to frequent court appearances that took her from her work. In 2008, when Mautner was regularly working twenty hours per week, she had earned $120,728.26 by July 23, 2008 - a rate of approximately $17,246 per month or $207,000 per year.
Goldman retained an "employability" expert who was of the opinion that by working full-time, Mautner could earn between $423,048 and $610,390 annually. His opinion was based on wage data reported in a national compensation survey reflecting earnings of dermatologists ranking in the seventy-fifth to ninetieth percentiles. In his view, Mautner could earn the median salary in that range, $517,000. During his testimony and in his reports, the expert explained he selected the range for Mautner's earnings with reference to her educational credentials, years of experience and treatments she rendered as well as her earnings for part-time work. In his report, he indicated that a description provided by Mautner of her hours during the years 2003 through 2006 was the source of the information he used to approximate full-time work. He did not consider information from 2007 and 2008.
When fixing child support, the court noted its reliance on Goldman's expert and imputed to Mautner annual income of $450,000 to $500,000.
In contrast, when addressing alimony, the court found that Mautner, having earned $170,433 in 2006 and $145,163 in 2007, "could easily double that amount if she worked full-time." A doubling of Mautner's highest earnings in those years would be at most $340,866. It appears that Mautner's highest earnings were in 2008, when she was earning at a rate of $17,246 monthly, or about $207,000 annually. If that amount is doubled to reflect a forty-hour week, her gross wages would be no more than $414,000.
E. Goldman's Earning Capacity
During the pendente lite period, Goldman's earnings fluctuated but were generally consistent with his earnings between January 1, 1999 and January 1, 2003 that are discussed above. He reported $5,338,983 in total wages from full-time work in those years as follows: 2003, $1,124,802; 2004, $964,655; 2005, $1,091,998; 2006, $1,105,755; and 2007, $1,051,773. There is no dispute, however, that his W-2 earnings were supplemented by interest income, taxable and tax exempt, business income and the benefits he received in the form of personal and professional expenses paid through the practice.
F. Support Sought and Awarded
Mautner sought child support and permanent alimony that together with her earnings of $175,000 annually for part-time work would leave her with a net income of $60,000 per month. She took that position before this court affirmed the shared custody arrangement.
Urging the court to assume a combined federal and state tax rate of forty percent on earnings and alimony, Mautner submitted that she would need $60,000 monthly alimony and $15,250 monthly child support, or annual support totaling $903,000.
As noted above, the court awarded $1500 weekly child support, $6450 monthly. The court denied permanent alimony, but awarded limited duration alimony of $8500 monthly for a term of four years. Thus, the total annual support during the alimony term is approximately $180,000.
In denying permanent alimony and awarding alimony for a four-year term, the court considered the duration of the marriage, the lengthy period of litigation during which Goldman paid pendente lite support, the shared custody arrangement and the ages of the children, and the fact that Mautner had never ceased practicing medicine and thus did not need additional training or education to develop or update her skills. The court also found, however, that Mautner would need time to move from part-time to full-time employment.
The court's amended opinion does not include a finding quantifying the marital standard of living or reasons explaining the amount awarded. Similarly, there are no findings as to the children's needs or the amount of support beyond the guidelines appropriate to permit the children to share in the benefits of their parents' success.
G. Retroactive Modification of Pendente Lite Support and Credits Due Under the Pendente Lite Order
As noted at the outset of this opinion, the parties litigated the question of credits due under the pendente lite orders. Between the filing of the complaint in January 2003 and entry of the final judgment there was no order setting a fixed amount of spousal or child support.
The initial pendente lite order was entered on March 18, 2003. At that time, the entire family was still living in the marital residence. Under its terms, responsibility for living expenses was allocated as follows:
Defendant's Motion to compel plaintiff to provide pendente lite support is granted, to this extent: Plaintiff shall pay and be responsible for fixed expenses for the home which are evidenced by recurring monthly invoices, e.g., mortgage, property taxes, utilities, and all insurances. Defendant shall pay and be responsible for the purchase of all food and household supplies for the family, including plaintiff. Expenses for the children shall be paid 75% by plaintiff, and 25% by defendant. Unreimbursed medical expenses, if any, for the parties and the children shall be paid 75% by plaintiff and 25% [by] defendant. Each party shall be responsible to pay for his and her own personal expenses including all expenses related to the ownership and operation of their respective motor vehicles (except that plaintiff shall continue to pay for defendant's automobile insurance).
Defendant's Motion to require defendant to pay shelter expenses, etc. is granted to the extent set forth above.
Defendant's application to require plaintiff to pay all transportation expenses as set forth in prayer for relief number 3 is denied. Plaintiff shall be responsible for the expenses set forth above.
Defendant's application to compel plaintiff to maintain health insurance and pay unreimbursed medical expenses for the plaintiff and the children is granted. Unreimbursed expenses, however, shall be paid 75% by plaintiff and 25% by defendant.
Defendant's Motion to compel plaintiff to maintain any and all life insurance policies as set forth in prayer for relief number 5 in her Motion is granted.
The parties shall be responsible for educational expenses of the children with plaintiff paying 75% and defendant paying 25% thereof.
When Goldman left the marital residence in April 2003 and rented a carriage house within blocks of it, the order was not modified. Nor was it modified when Goldman purchased his house in Short Hills in July 2004.
The second order, entered on November 21, 2003, supplements the first by addressing repairs to the marital residence. In pertinent part, it provides:
The [c]court modifies the prior pendente lite [o]rder of the [c]court in the following fashion: Household repair and maintenance expenses equal to or less than $250.00 per expense shall be the obligation of [Mautner] to pay. In the event a household repair and maintenance expense exceeds $250.00 [Goldman] shall be given reasonable notice of the expense before it is incurred, and said expense shall not be incurred without the consent of [Goldman], which consent shall not be unreasonably withheld. Household repair and maintenance expenses in excess of $250.00 are the obligation of [Goldman].
The parties managed to find ambiguity in these orders. Mautner argued that the reference to "all insurances" in the first sentence of the first paragraph of the March 18 order includes her $138 monthly bill for disability insurance and her life insurance. She also contended that the November 21 order made Goldman fully responsible for any expense in excess of $250, not just the amount over $250.
Goldman, noting that he did not and does not seek to compel Mautner to contribute to expenses incurred for the children when they are with him, disputed that his share of seventy-five percent of "expenses for the children" covered costs for movie tickets, restaurant food, wrapping paper and donations related to school for which Mautner sought reimbursement.
Mautner also argued that if the pendente lite March 18 order did not include Mautner's costs of vacations as well as the children's costs, then it should have. This was a point she made in arguing for a retroactive increase in pendente lite support.
At trial, the parties debated these points submitting, by stipulation, detailed accountings and critiques of each others' submissions. According to Goldman's accountant, Goldman paid $904,491 and owed an additional $102,303.74, but Mautner owed him $245,834.41 for expenses he paid but had no obligation to pay, such as purchases and expenses for Mautner herself and a joint tax liability. By Goldman's calculation, after the amount he owed Mautner was deducted from what she owed him, she was obligated to pay him $143,530.67.
Mautner did not dispute Goldman's payment of $904,491. She, however, did not agree that he had overpaid.
The court found that Mautner's claim for past due support was overstated, inaccurate and dependent upon her misinterpretation of the orders as requiring Goldman to pay her disability insurance and the total cost of household repairs in excess of $250. Accordingly, it was denied.
In contrast, the court found that Goldman's accounting was accurate and that he had overpaid by $143,530.67. Nevertheless, the court determined that his overpayment should be treated as additional pendente lite support and, on that basis, denied Goldman's request for a credit for overpayment. These determinations are set forth in the court's amended opinion, which was issued after Mautner filed her post-trial, prejudgment motion to enforce Goldman's obligation. In the order denying that motion, the court explained that the issues had been addressed in the judgment.
We understand that provision of the order to refer to the court's resolution of the parties' respective requests for credits and retroactive modification of support, which treats Goldman's $143,530.67 overpayment as additional support for Mautner. The total amount Mautner sought to recover with that enforcement motion was $25,241.44, far less than the amount she received as "additional" support.
H. Counsel Fees and Costs
The financial cost of this litigation, including the custody dispute, was significant and extraordinary.
Mautner was billed a total of $1,592,200.89 for legal and expert fees and litigation costs. Her legal fees and costs were $1,207,894.53. Her forensic accountant billed $228,980.36, and custody experts billed $155,326. When her written summation was filed after trial, she had paid only $607,586.25 to her attorneys, leaving a balance of $600,308.28, and she still owed her forensic accountant $65,406.92 and a custody expert $4000.
The written summation submitted on behalf of Goldman at the conclusion of trial, indicates that a certification of services would follow. We do not find that certification in the 5600 page appendix submitted by Mautner or the 418-page appendix submitted by Goldman.
The court that heard the custody case indicated that Goldman had been billed $840,000 for legal services and $140,000 for custody experts. It is not clear whether this amount includes all legal fees Goldman incurred on appeal or whether it also includes legal fees incurred during the early stages of the financial litigation.
We are reviewing rulings on equitable distribution, alimony, child support and counsel fees and ancillary rulings on pendente lite credits, retroactive modification of alimony and allocation of tax deductions for the children. These are all matters committed to the sound exercise of the trial court's discretion. Williams v. Williams, 59 N.J. 229, 233 (1971) (counsel fees); Gordon v. Rozenwald, 380 N.J. Super. 55, 76-77 (App. Div. 2005) (alimony); Tash v. Tash, 353 N.J. Super. 94, 99-100 (App. Div. 2002) (child support); Jacobitti v. Jacobitti, 263 N.J. Super. 608, 618 (App. Div. 1993), aff'd, 135 N.J. 571 (1994) (describing the judge's retroactive modification of pendente lite support as "a commendable exercise of his equitable jurisdiction"); Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-44 (App. Div. 1978) (equitable distribution). Thus, we must defer to the court's determinations unless they plainly lack support in the record, are contrary to the record or are based on a misapplication or disregard of the law. Tannen v. Tannen, 416 N.J. Super. 248, 280-81 (App. Div. 2010), aff'd o.b., 208 N.J. 409, 410 (2011). With that standard as our measure, we turn to address the numerous issues raised on this appeal.
Generally, real and personal property "legally and beneficially acquired by" one spouse or both "during the marriage" is subject to equitable distribution. N.J.S.A. 2A:34-23(h). This division of marital property "is responsive to the concept that marriage is a shared enterprise, a joint undertaking, that in many ways is akin to a partnership." Rothman v. Rothman, 65 N.J. 219, 229 (1974); see Steneken v. Steneken, 183 N.J. 290, 299 (2005) (reiterating the principles stated in Rothman). The process requires identification of the marital assets, assignment of value and division. Rothman, supra, 65 N.J. at 232. The third step, division, involves "'far more than economic factors.'" Steneken, supra, 183 N.J. at 299 (quoting Rothman, supra, 65 N.J. at 229). N.J.S.A. 2A:34-23.1 enumerates the pertinent considerations in addition to value of the assets. Among the factors included are: the age and health of the parties; income and assets each brought to the marriage; the marital standard of living; the parties' respective economic circumstances; their earning capacity in light of education, skills, work experience, absence from the job market, deferral of opportunities and custodial responsibilities; contributions to the other's earning capacity and as homemaker; and the parties' respective roles in preserving and dissipating assets. N.J.S.A. 2A:34-23.1. There is a rebuttable presumption "that each party made a substantial financial or non-financial contribution to the acquisition of income and property while the party was married." Ibid.
Mautner objects to the court's identification of marital assets. Specifically, she argues that the initial balances in accounts in Goldman's name to which marital funds were subsequently added were improperly excluded.
The party asserting that an asset is immune from equitable distribution has the burden of establishing its immunity, and if the party makes that showing then increases in value traceable to the immune asset are also immune. Sachau v. Sachau, 206 N.J. 1, 8 (2011); Painter v. Painter, 65 N.J. 196, 214 (1974). Accordingly, with respect to increases in value due to accrual of interest or fluctuation in value attributable to market forces, rather than the efforts of either party, the value at the time of distribution is generally assigned. Wadlow v. Wadlow, 200 N.J. Super. 372, 384 (App. Div. 1985).
We find no error in the court's determination to exempt the initial balances, which were undisputed, and the increases in their value from equitable distribution. The court found that Goldman met his burden of proof, and that determination is amply supported by a joint report submitted to the court by the parties' experts.
Mautner raises an additional point about distribution of accounts that held immune assets and marital assets. It is meritorious. As noted above, passive assets are generally valued as of the date of their distribution, and, absent reason for use of different dates of valuation for different assets, marital assets are generally valued as of the same date. Addesa v. Addesa, 392 N.J. Super. 58, 76-77 (App. Div. 2007).
In this case, the judgment is crafted to divide all but two of the banking and investment accounts and Goldman's 401K retirement assets as of the date of distribution. The exceptions are Goldman's 401K and his Fidelity Investment Account. The judgment assigns a value to Mautner's share of the 401K as of December 31, 2007 and to her share of the Fidelity Investment Account as of "the time of trial." Consequently, Goldman will receive the benefit of any increased value attributable to Mautner's share between the date used for valuation and the date of distribution.
There is no justification for treating these like assets differently. Accordingly, we direct the court to amend the judgment to correct this disparity.
Mautner also objects to the value the court assigned to the marital residence and Goldman's practice. These claims do not require extended discussion.
With respect to the marital residence, the parties stipulated to its value. By agreeing to condition their stipulation of value on the right to present argument, but not evidence, they could not bind the court to decide an issue without evidential support. There simply is no basis for this court to disturb this determination.
In the absence of any evidence as to a different value or some reference to a judicially noticeable source, N.J.R.E. 201(b), the court's use of the stipulated value was neither inconsistent with the record or in any way arbitrary. In fact, it appears that the parties' stipulation was an invitation to error that the court properly declined. Mautner's general request for the court to take judicial notice of the declining values in the real estate market provided no sound basis for assessing the impact of the decline in property values on this residence or for reducing Goldman's equitable share of its stipulated value.
Similarly, there is no basis for this court to disturb the value the court assigned to Goldman's business. It is supported by the testimony of Goldman's expert, and the court provided reasons, supported by the record, for her decision to accept his expert opinion and reject the opinion of Mautner's expert. See State v. M.J.K., 369 N.J. Super. 532, 549-52 (App. Div. 2004), appeal dismissed, 187 N.J. 74 (2005). Mautner argues that she is entitled to pre-judgment interest on her share of Goldman's medical practice. In civil matters other than tort actions, the award of pre-judgment interest is left to the discretion of the court and guided by equitable principles. Litton Industries v. IMO Industries, 200 N.J. 372, 390 (2009). Mautner did not raise this issue at trial or in her written summation. Seeing no reason to depart from our general practice, we decline to consider it. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).
Mautner objects to a provision of the judgment that entitles Goldman to a $10,000 credit against equitable distribution, in the event that the parties determine that she, in fact, received $10,000 more than Goldman from money withdrawn from marital assets pendente lite. There is no explanation in the court's opinion for this provision of the judgment.
The court abused its discretion in leaving the parties to resolve a question that the court apparently concluded could not be resolved on the record. Goldman, as the party apparently seeking this credit, had the burden of establishing his entitlement to it. Accordingly, on remand, if the court cannot resolve the issue on the record as it stands, this provision must be eliminated from the judgment.
Goldman contends the court erred in awarding Mautner fifty percent of the value of his practice. We have considered that argument in light of the statutory presumption regarding each party's contribution to marital enterprise and the evidence on the parties' respective contributions to this marital enterprise, which we have set forth in Section II.A of this opinion. Based on our review of the record, there is no basis for disturbing the court's determination to divide Goldman's practice equally between the parties, and Goldman's argument lacks sufficient merit to warrant any further discussion in a written opinion. R. 2:11-3(e)(1)(E).
We turn to consider the imputation of income to Mautner. Because support orders are based on capacity to earn, imputation of income is appropriate when a party could be and is not earning at his or her capacity. Bonanno v. Bonanno, 4 N.J. 268, 275 (1950); Strahan v. Strahan, 402 N.J. Super. 298, 313 (App. Div. 2008); Storey v. Storey, 373 N.J. Super. 464, 474 (App. Div. 2004). Imputation of income is not "capable of precise or exact determination"; it requires a "trial judge to realistically appraise capacity to earn and job availability." Storey, supra, 373 N.J. Super. at 474.
Substantially for the reasons stated by the trial court, we affirm the determination that imputation of earnings for full-time work is appropriate because Mautner could be but is not working full-time. It is well-supported by the record. Mautner is in her forties, healthy, educated and experienced in her field and has continuously practiced dermatology. The parties share residential custody of their children, who were of school age at the time of trial. In short, there is nothing in this record that indicates that Mautner cannot work full-time or that such work in her field is unavailable.
We cannot conclude, however, that Mautner has the capacity to earn between $450,000 and $500,000 from full-time employment. The court relied, in part, on Goldman's expert. But that expert repeatedly related his opinion on Mautner's earning capacity to her history of earnings, without ever correlating precisely her hours worked and earnings in any given year. Undisputed evidence demonstrated that in the year in which Mautner's earnings were at their highest level, 2008, she would not have earned more than $414,000 working a forty-hour week. An expert opinion based on assumptions that are contradicted by the record has no evidential value. Wilsey v. Reisinger, 76 N.J. Super. 20, 25 (App. Div.) ("[I]t is well settled that expert opinion is valueless unless it is rested upon facts admitted or proved"), certif. denied, 38 N.J. 610 (1962).
Second, the court never articulated findings that supported this imputation and apparently lacked confidence in it. In discussing Mautner's capacity to earn in the context of alimony, the court did not refer to this imputation of income. Instead, the court assessed Mautner's earning capacity by noting that she could earn double the amount she earned working part-time. Taking that approach, Mautner's highest year of earnings, working twenty hours weekly, was 2008. In that year, she was earning at a rate that would yield approximately $414,000 if she worked forty hours a week and fifty-two weeks a year.
We must assume that this erroneous imputation, stated in the context of a discussion of the child support award, affects the amount of child support, alimony and the court's determination on counsel fees, which is also dependent, in part, on the ability to pay. See R. 5:3-5. The court included the amount of imputed income in the amended judgment.
On this record, we arguably could exercise original jurisdiction and conclude that the record supports an imputation of income to Mautner in an amount of no more than $414,000 annually. R. 2:10-5. That figure is based on Mautner's undisputed testimony about her hours and her pay stubs.
Nevertheless, because Mautner's pay stubs do not reflect hours worked, the $414,000 amount we suggest is dependent upon the credibility of Mautner's testimony. This court rightly declines to exercise original jurisdiction when a finding of fact turns on the credibility of a witness. State in re J.D.H., 336 N.J. Super. 614, 628 (App. Div. 2001), rev'd on other grounds, 171 N.J. 475 (2002). Moreover, we generally do not exercise that authority where, as here, a remand for further fact-finding would be necessary in any event. Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 301 (App. Div. 2009).
Mautner argues that the court erred in rejecting her request for permanent alimony and awarding her alimony for a term of four years. Finding no abuse of the court's discretion, lack of support in the record or misapplication of the law, we affirm that determination.
Courts are authorized to award such alimony "as the circumstances of the parties and the nature of the case shall render fit, reasonable and just . . . ." N.J.S.A. 2A:34-23. The Legislature's recognition of limited duration alimony and the distinctions between permanent and limited duration alimony are discussed in Cox v. Cox, 335 N.J. Super. 465, 473-76 (App. Div. 2000), Gordon, supra, 380 N.J. Super. at 65-70, and most recently in Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340, 355 (App. Div. 2009). Those opinions make it clear that 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.'" Gonzalez-Posse, supra, 410 N.J. Super. at 353-54 (quoting Cox, supra, 335 N.J. Super. at 476). The Legislature provided limited duration alimony "'to be used in those cases involving shorter-term marriages where permanent or rehabilitative alimony would be inappropriate or inapplicable but where, nonetheless, economic assistance for a limited period of time would be just.'" Cox, supra, 335 N.J. Super. at 477 (quoting S. No. 54, at 6-7, 208th Leg. (N.J. 1998) (statement of Sens. Kavanaugh & Martin)).
The Legislature has identified factors courts should consider in determining whether permanent, limited duration or another form of alimony is appropriate. N.J.S.A. 2A:34-23(b). The non-exhaustive list includes matters such as need and ability to pay; duration of the marriage; age and health of the parties; the marital standard of living and the likelihood of the party maintaining "a reasonably comparable" standard of living; earning capacity; absence from the job market; parental responsibilities; future opportunity for acquisition of assets and income; contributions to the marriage; interruption of career; and equitable distribution. Ibid.
Addressing these factors, the court concluded that permanent alimony was inappropriate and explained why, as required by N.J.S.A. 2A:34-23(c). The court properly determined that this marriage was not relatively long. When the complaint was filed, the parties had been married for nine years and four months. While the parties had lived together for about fifteen or sixteen months prior to their marriage, they did so under an arrangement involving a sharing of expenses from separate income, lacking the attributes of a joint enterprise. In our view the court did not abuse its discretion or go wide of the mark in disregarding the period of pre-marital cohabitation.
There are other factors that weigh in favor of the conclusion that permanent alimony would not be just in this case. The divorce complaint did not come late in the parties' lives; they were both in their thirties. They had disparate but significant earning capacity and could expect to draw on that capacity for many more years. They both had the skills, education, training and experience to practice in their chosen fields of medicine. And, although Mautner practiced medicine only part-time during most of the marriage, the record does not include any evidence that her part-time work in any way limits her opportunities to earn at the highest levels in her field. Moreover, because of her part-time work she presumably does not need additional training or education to update her skills or knowledge, and there is no evidence suggesting otherwise.
With respect to the marital standard of living, Mautner's expert calculated the cost of the family's standard of living during the marriage, including taxes but excluding savings, at $32,154 monthly. Because Mautner's expert included taxes, her gross earnings need not be adjusted for taxes to fairly conclude that if she earns at or near the level of $414,000 annually, she will have $34,500 monthly. That amount is reasonably comparable to the marital standard as calculated by her expert whose accounting included not only expenses for Mautner but also expenses for Goldman and all, not a portion, of the expenses for the children, who now divide their time between their separate homes with Mautner and Goldman.
In short, with the exception of the disparity in the parties' income and assets, a weighty factor in this case, the factors did not favor permanent alimony. "All other statutory factors being in equipoise, the duration of the marriage marks the defining distinction between whether permanent alimony or limited duration alimony is warranted and awarded." Cox, supra, 335 N.J. Super. at 483. In this case, the duration of the marriage, the extraordinarily prolonged pendente lite period, and the age of the parties, which is obviously relevant to the justness and fairness of permanent alimony in this case, indicate the court did not abuse its discretion or misapply the law. Accordingly, we affirm the denial of permanent alimony and affirm the award of limited duration alimony.
We also affirm the duration of the limited alimony award. The court concluded that within four years Mautner could be expected to return to the practice of medicine full-time. This approach is consistent with the law. The Legislature has directed courts to set the term of this type of alimony by considering "the length of time it would reasonably take for the recipient to improve his or her earning capacity to a level where limited duration alimony is no longer appropriate."
N.J.S.A. 2A:34-23(c). Accordingly, we affirm.
As noted above, we cannot be certain whether the trial court fixed the amount of this limited duration alimony using the excessive imputation of income or some other basis. Accordingly, we remand the question of alimony for the limited purpose of reconsideration of the amount of the award. On remand, the court should clarify its findings with respect to the marital standard of living as well.
In this section of the opinion, we address issues related to child support.
For several reasons, we reverse the court's determination on child support. First, in addressing child support, the court imputed excessive income to Mautner. Second, the trial court must make findings and provide reasons explaining how and why it determined that child support should be in the amount of $1500 weekly. This analysis must be undertaken in light of the numerous published decisions addressing child support for children whose parents' income greatly exceeds the maximum net income under the child support guidelines. Third, the initial and amended judgment are inconsistent on the question whether the child support amount of $1500 weekly includes an amount for extracurricular activities or whether those expenses are to be allocated, seventy-five percent to Goldman and twenty-five percent to Mautner. The court must address that question and other allocation of costs on a percentage of income basis, giving full recognition to the disparity in income and assets and the fact that shared custody results in some duplicate expenditures. If the court concludes that some expenses should be shared in proportion to income, then the court should clarify the method it expects the parties to employ in order to accomplish that sharing. Such clarity is obviously necessary to avoid continuation of the petty disputes about credits due and amounts owed that undoubtedly contributed to the extraordinay cost of the financial litigation.
There are two additional matters related to support of the children that must be addressed on remand. First, the court must provide findings and conclusions of law relevant to the sharing of tax exemptions stated in the judgment. Second, Mautner requested an order obligating Goldman to maintain life insurance to secure alimony and child support. That request was not addressed, and it must be.
Conversely, we conclude that the court properly denied Mautner's request to allocate expenses for college education. Given the ages of the children at the time of trial, adjudication of that point was not warranted.
As noted at the outset of this opinion, on remand we expect the court to make the essential findings and explain the reasons for the ultimate determination of the foregoing issues on the basis of the record as it stands.
We now consider the award of counsel fees and costs. The final judgment requires the parties to pay their own legal fees for litigating the financial issues, but Mautner must pay two- thirds of the legal fees Goldman incurred in the custody trial and one-hundred percent of the legal fees he incurred in successfully defending against her interlocutory appeal of the shared custody arrangement. Each party must pay all of his or her own financial expert fees, and they are each responsible for one-half of the fee for the court-appointed financial mediator.
The award of fees and costs in matrimonial cases is a matter committed to the discretion of the trial court; reversal is appropriate only when the trial court has abused its discretion, exceeded its authority or made a determination that is not supported by the record. Williams, supra, 59 N.J. at 233; Handelman v. Handelman, 17 N.J. 1, 7 (1954). In exercising that discretion, however, the court must comply with N.J.S.A. 2A:34-23, which requires consideration of "'the factors set forth in the court rule on counsel fees, the financial circumstances of the parties, and the good or bad faith of either party.'" Mani v. Mani, 183 N.J. 70, 93 (2005) (quoting N.J.S.A. 2A:34-23). The following factors are enumerated in Rule 5:3-5(c):
(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 both during and prior to trial; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; [and] (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.
Need and ability to pay are factors that are critical to the inquiry. Mani, supra, 183 N.J. at 94-95. For that reason, our rejection of the court's imputation of income to Mautner requires reconsideration of counsel fees. We have no confidence that the court did not rely on that excessive imputation in assessing Mautner's ability to pay her fees and a large share of Goldman's as well.
We further note, that the trial court failed to address several of the factors that must be considered in awarding legal fees and costs. Apart from the court's assessment of reasonableness and bad faith, we have no findings of fact.
The court must state findings on the other factors implicated in this case. For example, the court did not quantify the fees the parties incurred, paid and owed. To the extent the record provided on appeal permitted, we have set forth the fees claimed above. In addition, the court's opinion includes no discussion of the parties' respective financial circumstances, including not only Goldman's superior income but also his separate assets, which are also discussed above. On our review of the record, it appears that Mautner has no comparable separate assets and will likely be required to invade, if not exhaust, her share of the marital assets to pay her own litigation expenses. Finally, we note that the court has not discussed the reasonableness of legal fees awarded to Goldman or fixed the amount. That must be done.
If Goldman failed to provide the necessary certifications attesting to the fees and costs he incurred, the court should direct him to do so.
The court must address Mautner's counterclaim for divorce. At trial, Goldman testified as to the veracity of the allegations in his complaint and Mautner did the same with respect to the allegations in her counterclaim. The court must rule on the counterclaim.
We have considered the parties' objections to the court's rulings on their respective claims for credits due under the pendente lite support order, and we have considered Mautner's claim that the court erred in denying retroactive modification of pendente lite support and her post-trial motion to enforce the March 18 and November 21, 2003 support orders. Those claims lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We perceive no injustice in the court's resolution of these competing claims.
Affirmed in part; reversed in part and remanded for further proceedings in conformity with this opinion.
For the convenience of the trial court and the parties, we describe the differences between the initial and amended judgments and opinions.
I. Child Support The amended judgment:
a. Omits a provision of the initial judgment giving Goldman responsibility for seventy-five percent and Mautner responsibility for twenty-five percent of children's extracurricular expenses, which was included in the initial judgment but not discussed in the initial opinion;
b. Precludes invasion of the children's college accounts prior to their attendance at college, and requires Goldman to maintain those accounts, which was addressed in the initial opinion but not referenced in the initial judgment;
c. Allocates one dependent tax deduction to each parent and alternates the deduction for the last-emancipated child, an allocation made, but not explained, in the initial opinion and not included in the initial judgment.
II. Equitable Distribution The amended judgment supplements the initial judgment as follows:
a. A statement of the balance of the mortgage on the marital residence as of the date of trial; the issue was addressed in the initial opinion without reference to the balance;
b. Includes in equitable distribution a $50,000 deposit in Goldman's Fidelity Investment Account, which was a gift from his father, as stated in the initial opinion but not referenced in the initial judgment;
c. Includes a reference to three of Mautner's accounts that are not specifically addressed in the initial opinion or judgment, but it is consistent with the initial opinion and judgment in that they provide for an equal division of marital assets;
d. Consistent with the initial opinion, the amended judgment provides for an equal division of furniture and furnishings and specifically provides for each party to keep his or her own vehicle, jewelry and an equal division of any remaining personal property;
e. Exempts Goldman's interest in Cedar Knolls, which he acquired post-complaint, from equitable distribution, an exemption not discussed in the initial opinion or judgment;
f. Omits reference to the exemption for Goldman's post-complaint interest in his new residence, which was specified as exempt in the initial judgment and is not a matter in dispute;
g. Credits Goldman with his share of $10,000 in the event that Mautner, in fact, received $10,000 more than Goldman as an advance on equitable distribution, a matter not discussed in the initial opinion or judgment and addressed without findings or determination in the amended opinion and judgment.
III. Pendente Lite Credits The amended judgment supplements the initial judgment as follows:
a. Rejecting Mautner's claims for pendente lite credits, included in the initial opinion but not in the initial judgment;
b. Rejecting Goldman's claims for pendente lite credits and concluding that his overpayment ($142,530.67) will be treated as additional pendente lite support.
IV. Counsel Fees and Costs The amended judgment supplements the initial judgment as follows:
a. An equal division of the court-appointed financial mediator's fees;
b. Requires Mautner to pay fees as required by an order entered on July 22, 2004;
c. Requires Goldman's counsel to submit a certification of services to permit calculation of a fee awarded Goldman by order of April 13, 2007.
The amended judgment and opinion supplement the initial judgment and opinion to state additional reasons for the income imputed to Mautner, and the amended opinion includes an additional discussion of marital lifestyle and imputation of income. These alterations expand on the court's findings and reasons but do not alter the determination. There is another difference: the amended opinion omits the court's finding on the marital standard of living stated in the initial opinion.