May 9, 2012
EDWARD CURLEY, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
ROBERTA CURLEY, DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Ocean County, Docket No. FM-15-834-09-C.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: February 1, 2012
Before Judges Axelrad, Sapp-Peterson and Ostrer.
In this matrimonial matter, plaintiff Edward Curley (husband) appeals from a pre-judgment order granting the motion of defendant Roberta Curley (wife) for reconsideration of a prior order dismissing her pleadings for failure to answer interrogatories, and from the entry of partial summary judgment exempting certain assets from equitable distribution. Husband also appeals from the final judgment of divorce, challenging portions of the equitable distribution and the quantum of the counsel fee awarded to him. Wife cross-appeals from the equitable distribution, alimony, and counsel fee awards, the court's refusal to allow her to offset equitable distribution obligations, and the court's finding of dissipation of assets. We affirm in part and reverse and remand in part on both the appeal and cross-appeal.
On December 18, 2008, husband filed a no-fault complaint for divorce. On May 14, 2009, the court entered a default against wife based on her failure to accept service, and a month later husband filed a notice for equitable distribution of all assets. On July 1, 2009, the parties entered into a consent order to vacate the default against wife, and allow her to file a responsive pleading. On August 10, 2009, wife filed an answer and counterclaim,*fn1 to which husband promptly responded.
On September 29, 2009, husband filed a motion to dismiss for failure to comply with discovery. By order of October 29, 2009, the court deemed the motion unopposed and dismissed wife's pleadings without prejudice. The order directed wife to pay husband's counsel fees and costs of $1000.
On November 12, 2009, wife moved for reconsideration, dismissal of husband's pleadings, and counsel fees. Husband filed a cross-motion seeking compliance with outstanding discovery requests and counsel fees. Following oral argument on January 15, 2010, the court entered an order vacating its October 2009 order dismissing wife's pleadings, directing both parties to provide responsive interrogatory answers, and denying both parties' fee requests. The court did not vacate the October 2009 fee award to husband.
On March 31, 2010, wife filed a motion for partial summary judgment, arguing that certain property was exempt from equitable distribution, including: (1) Greenwich Street property in New York City (Greenwich Street property); (2) lifetime leases for two apartments at the Greenwich Street property (New York apartments); (3) Cedar Lane property in Teaneck (Teaneck property); and (4) all income derived from the Teaneck property. She also sought discovery from husband, counsel fees, and a protective order prohibiting him from taking her deposition due to her medical and psychiatric conditions.
Meanwhile, husband submitted a case information statement (CIS) dated February 19, 2009, and an updated CIS dated April 19, 2010. Wife submitted a CIS dated August 31, 2009, and an updated CIS dated April 27, 2010.
The court conducted the trial on various dates between April 27, 2010, and August 18, 2010. On May 26, 2010, following argument, memorialized in an order of that date, the court granted wife's motion for partial summary judgment finding the Greenwich Street property, the lifetime leases for the New York apartments, and the Teaneck property were gifts to wife and not subject to equitable distribution. It denied the motion with respect to the income derived from the Teaneck property.
On June 9, 2010, the parties consented to have the court decide the issue of counsel fees based on the trial record and counsels' certifications of services. On November 3, 2010, the court issued a written opinion and final judgment of divorce. Husband appealed and wife cross-appealed.
On appeal, husband argues the trial court erred in: (1) vacating the order dismissing wife's pleadings; (2) granting partial summary judgment to wife and finding certain property exempt from equitable distribution in violation of husband's due process; (3) the equitable distribution of marital property; and (4) not awarding him the entire counsel fee.
In her cross-appeal, wife argues error by the trial court in: (1) finding income from the Teaneck property was subject to equitable distribution; (2) directing her to make an equitable distribution payment without an offset; (3) finding she dissipated assets; (4) awarding husband permanent alimony; and (5) awarding husband $25,000 in counsel fees and denying her application for counsel fees.
Husband testified at trial; wife did not. Wife presented the testimony of her brother Paul*fn2 and two of her parents' attorneys. The parties were married in August 1984 in New Jersey. At the time, husband was fifty-three and wife was twenty-nine years old. They had no children. Before and during their marriage, wife suffered from bipolar disorder and severe depression. The parties separated on July 25, 2008. Wife subsequently filed for divorce in New York, which she dismissed. Husband then filed this action in New Jersey.
For twenty-four years, the parties lived rent-free at the Greenwich Street property in an apartment owned by wife's family. They also had a residence in Toms River and a rental property in Bloomfield, both of which husband had purchased before the marriage.
In 1990, they bought a vacation property in Cavaleiro, Portugal for approximately $90,000. Husband took out an $85,000 loan using the Toms River property as security. The parties rented the property and used the income to take annual vacations in Portugal.
The parties kept their earnings and assets separate. Husband explained that he did not want anyone to accuse him of taking his wife's family's money. Throughout the marriage, husband paid all expenses relating to the Toms River and Bloomfield properties.
Husband described the parties' standard of living as modest. During the marriage, husband worked as a packaging engineer for Sunshine Biscuits, where he earned about $60,000 annually, and later for Domino Sugar, where he initially earned $65,000 annually. At retirement in l997, husband's salary was approximately $75,000. He subsequently received social security and pension income, which, according to his updated CIS, was $1951 monthly from social security and $23.95 and $188.75 monthly from each of his two pensions.
Husband testified that his adjusted gross income in 2007, 2008, and 2009 was $19,119.70, $40,568.01, and $9,190.81, respectively. He also received income from a Fidelity IRA and from his rental property in Bloomfield. In August 2009, after three years of vacancy, he rented the Bloomfield property to a tenant who paid $1800 monthly under a one-year lease.
For about twenty-three years, wife worked as an administrative aide for the New York City Police Department and earned between $20,000 and $25,000 per year. She retired in 2004 on a disability pension and received social security disability benefits. As reflected in her updated CIS, her gross earned income in 2008 was $104,991. In 2010, she reported monthly income of approximately $1122 from her pension and $1276 from social security. Husband reported that wife used her salary, and later her pension, as "pocket money" while he paid their living expenses.
Lawrence Keiser, wife's parents' estate and tax attorney, testified that in the early 1990s, wife's father, Sidney Leshinsky, owned four properties that he wanted to convey to his children after he and his wife Gloria died, while incurring the least amount of federal and state taxes. In addition to the Greenwich Street and Teaneck properties, Sidney owned a Hudson Street property and another property. The Hudson and Greenwich Street properties were residential buildings each containing thirty-four apartments. The Teaneck property consisted of a commercial building with three stores in front, six offices above, and a large empty building in back.
In their initial estate plan, Sidney and Gloria conveyed a twenty-five percent interest in each property to their four children in return for having each child sign an interest-bearing note secured by a mortgage on the property. For gift tax purposes, these conveyances were made to appear as sales. The mortgages, however, were never recorded. According to Keiser, Sidney and Gloria intended to forgive the principal and interest on the notes using the maximum annual gift tax exclusion.
In 1993 and 1995, Sidney transferred to wife and her three brothers, Paul, Stuart, and David Leshinsky, twenty-five percent interests in the Hudson and Greenwich Street properties. In September 1996, he conveyed to each child a twenty-five percent interest in the Teaneck property in return for $168,750 from each. Neither wife nor her brothers, however, paid any money or other consideration for their partial ownership interests. Husband acknowledged he never saw any checks payable to wife's father in amounts totaling $168,750, or noticed any withdrawals on wife's bank statement around that time. He also claimed wife never received any compensation in return for her partial ownership in these properties, and they were unaware of her interests until after 1996, when she was asked to sign a mortgage for $393,000.
In 1997, it became clear the initial plan was not working and there were disputes among the children regarding their partial interests. Sidney decided that each child should own 100 percent of his or her building. Keiser arranged for "like kind" exchanges between the children. These new conveyances also provided for consideration, although it was similarly contemplated that no payments would ever be made on the mortgage debts. Sidney intended to give wife 100 percent ownership of the Teaneck property.
Nonetheless, Keiser acknowledged that the notes had not been forgiven as of December 4, 1997, when he sent a memorandum to wife's attorney that family members would begin foreclosure proceedings on her mortgage notes if they could not get her to execute the "like kind" exchanges. In February 1998, Keiser advised wife that he was commencing legal action in an attempt to get more cooperation. Meanwhile, in a letter to wife dated January 29, 1998, Keiser recognized that wife's ownership of the Teaneck property created a "management problem" and offered to have David manage the property for no fee.
On May 26, 1998, wife entered an agreement with her father and brothers in which she would receive "fee simple title free and clear" for the Teaneck property in exchange for signing quitclaim deeds on the Greenwich and Hudson Street properties (exchange agreement). The agreement provided:
All prior mortgages and/or previous purchase price payment obligations on the [Teaneck property] issued by any entity involving Sidney, Paul, Stuart or David, their heirs, distributees, executors, administrators, legal representatives, successors or assigns shall be declared by them in writing at Closing to be fully paid or null and void.
It further provided that wife's father and brothers would pay any "back taxes" owed on the building, and any transfer or "boot" taxes arising from the exchange of properties. Moreover, it relieved wife "of all responsibility and liability for any mortgages, purchase prices or any other legal or financial obligations" relating to the other properties involved in the exchange. It also acknowledged that wife never received any income from the Teaneck, Greenwich or Hudson Street properties, and that she never received any money in exchange for mortgage notes issued by her father or brothers. Additionally, it provided:
Sidney, Paul, Stuart and David and their heirs, distributees, executors, administrators, legal representatives, successors and assigns promise never again to offer Roberta any documents to sign without prior review of said documents by independent legal counsel retained by her. Any documents presented to her otherwise will be automatically legally null and void.
The exchange agreement also gave wife lifetime leases for two apartments at the Greenwich Street property. The leases entitled her to use and live rent-free in the apartment she occupied with plaintiff (4R) and a smaller one below it (2R).*fn3
Until their separation ten years later, the parties used this second apartment for rentals or guests, or for extra room, and continued to occupy apartment 4R. Husband testified wife received these lifetime leases as a result of negotiations with her family in which he participated.
On August 5, 1998, Paul and Stuart separately conveyed to wife their twenty-five percent interests in the Teaneck property in return for $147,000 to each. The next day, David conveyed his fractional interest in the same property for the identical sum. Also on August 6, 1998, wife signed the lease agreement for the two New York apartments. In exchange for acquiring 100 percent ownership of the Teaneck property and the lifetime leases, wife relinquished her interests in the Greenwich and Hudson Street properties. Stuart became sole owner of the Greenwich Street property.
In a certification dated March 18, 2010, Stuart stated that no money or other consideration was given or received in connection with the exchange agreement. Keiser confirmed that neither wife nor her brothers paid any money or other consideration in return for their twenty-five percent interests in the Teaneck property. He also testified that no payments or consideration of any kind were conveyed in connection with any of these transactions, and that the exchange agreement relieved wife of liability for any mortgage with respect to the Teaneck property. Wife's parents filed separate 1998 gift tax returns reflecting the forgiveness of indebtedness on the Teaneck property.
Husband testified he performed various tasks with respect to the Teaneck property from 1998 until July 2008. He handled maintenance, improvements, and upgrades. He redesigned the roofs and window wells, upgraded plumbing or saw that it was upgraded, and painted over graffiti. He also handled bookkeeping, collected rent sometimes, addressed tenant concerns, hired contractors, and found new tenants. Husband performed this work without any compensation except out-of-pocket reimbursements.
Husband testified that the total annual rental income from the Teaneck property increased from $159,954.63 in 2000, to $230,000 in 2006 or 2007. He estimated the yearly net income (rent minus expenses) from 2000 to 2008 at $120,000. All profits went into accounts or funds in wife's name.
In 2004, Stuart attempted to evict wife from the Greenwich Street apartments. Around this time, wife signed a general power of attorney giving husband broad powers to handle her property. Husband hired an attorney to commence litigation in New York on behalf of himself and wife against members of the Leshinsky family to undo portions of the exchange agreement, and to recover $5 million in damages. After the New York court dismissed the parties' lawsuit, they filed an appeal. Husband acknowledged wife's medical condition deteriorated during the two years of litigation, and she attempted suicide in January 2006. At wife's request, husband withdrew the appeal after spending $80,000 in legal expenses. He denied as untrue wife's statement at her deposition that he "psychologically and emotionally" had forced her into the litigation.
Paul testified that his sister had a difficult time making decisions and dealing with everyday life. He stated that in the summer of 2008 when he visited wife's apartment, he observed bags of unopened new clothing, a bicycle, and new computers that she appeared to have purchased "on the spur of the moment." He was concerned she seemed to be spending "an exorbitant amount of money."
Husband similarly testified that wife had a tendency to spend large sums during the manic phases of her illness. At a June 2005 deposition in connection with the parties' lawsuit against wife's family, he said that wife could "blow a substantial amount" in "a spending spree."
Meanwhile, within weeks of the parties' separation in July 2008, wife asked Paul to manage the Teaneck property. Paul testified he spent approximately two hours each week handling tenant concerns, balancing the checkbook, and visiting the property "to make sure everything [was] going well."
In September 2008, wife's family contacted an attorney, George Bruckman, to help manage wife's affairs. Paul and Stuart met with Bruckman and told him that wife had spent between $80,000 and $100,000 the previous summer. Bruckman testified that after speaking with wife, he believed she was incapable of handling her financial affairs and needed a trust. He explained that she had no knowledge of her assets, no ability to write checks or understand invoices, and was incapable of managing the Teaneck property. At the direction of Paul, Stuart, and wife, Bruckman prepared a revocable trust to manage wife's finances and prevent further dissipation of her assets.
On November 26, 2008, wife executed the Roberta D. Curley Trust (Curley trust), naming Paul and Bruckman as trustees.
Bruckman, who met with wife alone, testified that she was competent to understand and execute the document. The Curley trust included the Teaneck property and most of wife's other assets, except for an IRA account and an annuity. Wife maintained a separate bank account in her name, into which she deposited her pension and social security disability checks. Bruckman used the trust funds to pay wife's bills, and her insurance premiums. He received a trustee commission. Paul was paid $1500 each month from the Curley trust for serving as trustee and manager of the Teaneck property. Wife's other assets were transferred to a Smith Barney Retirement Account.
Husband, who was seventy-nine years old at the time of trial and in good health, acknowledged that wife, who was fifty-five years old, had severe depression and bipolar disorder, that she experienced "extreme" highs and lows, and that she had been under the care of a doctor and therapist for many years.
Bruckman testified that wife paid "nothing" for her medical expenses, that her former psychiatrist had moved out-of-state and she was not seeing anyone else, and that she and her family decided to defer "a new track of care" until there was "some definition" as to her assets and income. He believed wife was receptive to the idea of moving into a senior residence at the conclusion of this proceeding.
Husband claimed his income was about $50,000, derived from social security, a pension, a small stipend for Medicare from Domino Sugar, and rent on his Bloomfield property. He estimated the value of the Toms River property at $350,000, the Bloomfield property at $280,000, and the Portugal property as between $330,000 and $355,000. The Toms River and Bloomfield properties were mortgage-free, except for a loan he had taken on the Toms River property to fund this litigation. Husband had not rented the Portugal property for a "couple of years" to avoid additional expenditures and the difficulty of dealing with the country's recent laws.
Wife's updated CIS listed her gross earned income for 2008 as $104,991. Bruckman testified that $70,746 was rental income from the Teaneck property. At her deposition, and in her updated CIS, wife placed the value of the Teaneck property at $1,700,000. Husband, however, estimated the value of the Teaneck property, as of the date of separation, at $2,300,000.
In its opinion, the court identified the assets subject to equitable distribution, and reviewed the statutory factors articulated in N.J.S.A. 2A:34-23.1. It reiterated the finding on summary judgment that the Teaneck property and lifetime apartment leases were not subject to equitable distribution, and added that the Toms River and Bloomfield properties were also exempt. It found the following properties were subject to equitable distribution: all accounts produced from the Teaneck property, husband's Fidelity IRA and Wachovia checking account, and the Portugal property.
The court also found that, between the parties' separation in July 2008 and the filing of the New Jersey complaint in December 2008, there was a dissipation of assets by wife in the amount of $89,606.58. The court awarded husband twenty percent of the $738,592.96 in the accounts produced from the Teaneck property, and twenty percent of the $89,606.58 in dissipated assets, for a total of $165,639.90. It awarded wife twenty percent of $190,000 in husband's Fidelity IRA, which amounted to $38,000, and twenty percent of $850 in his Wachovia checking account, which amounted to $170.
The court determined that the distributable value of the Portugal property was $350,000. It based the value entirely on husband's estimates, and noted there was no independent documentation as to market value and the property was no longer income-generating. It, therefore, directed husband to immediately sell the Portugal property "in a commercially reasonabl[e] fashion." It awarded sixty percent of the net proceeds to husband, and forty percent to wife, noting that husband had been paying the carrying expenses since the rental income had ceased. To implement the division of assets aside from the Portugal property, the court ordered wife to make a lump-sum payment to husband of $127,469.90.
The court also ordered wife to pay permanent alimony of $100 per week, and counsel fees of $25,000 plus the $1000 previously owed husband. In determining husband's monthly budget for alimony purposes, the court did not consider expenses for the Portugal property or the expense of his home equity loan, secured by the Toms River property, which he used to pay his legal fees.
We first address husband's challenge to the January 15, 2010 order vacating dismissal of wife's pleadings. In July 2009 the parties, through counsel, exchanged interrogatories and notices to produce. On September 4, 2009, wife served her answers to interrogatories and documents. On September 29, 2009, husband filed a motion to dismiss wife's pleadings, alleging her responses to discovery were procedurally and substantively deficient. The following month, the court granted the motion and dismissed wife's pleadings without prejudice, noting on the order that the motion was unopposed.
According to wife's counsel's certification filed with her prompt motion for reconsideration, his certification opposing the initial motion was deemed by the court to have been filed out of time and thus had not been considered. He reiterated the difficulty he was having in responding to the voluminous requests based on the severity of wife's illnesses and her "fragile condition," attached a letter from her psychiatrist, and represented he had been working with Paul and Bruckman to obtain the information and documentation. Wife's counsel further explained that although he had advised his adversary that he would respond to husband's objections to wife's discovery responses upon his return from a vacation out of the country, upon his return he was served with husband's motion to dismiss. He then discussed the particulars of many of the questions and wife's responses, and the alleged deficiencies in husband's discovery responses. Husband filed a lengthy certification in opposition.
Following oral argument, the court granted wife's motion, noting the prior order had been "without prejudice" and explaining, this case is not going to get decided by somebody's pleadings being thrown out for failure to make the discovery unless I find it to be [a] continuing serious refusal to do what needs to be done. We've gone through today all of the discovery that both sides are seeking. I've made my rulings on that. So now everybody knows what they're obligated to provide, and I will certainly permit [wife's] pleadings to be reinstated.
In its accompanying order, the court directed the parties to provide responsive answers to specific interrogatories. The parties evidently complied, as no further discovery motions were filed.
In support of his claim of error, husband primarily argues that wife served her answers to interrogatories untimely, they were deficient and not certified, and although she claimed delay was due to her health problems, husband urges that Bruckman could have provided the answers on wife's behalf.
We reject the arguments advanced by husband and conclude the court appropriately exercised its discretion in granting wife's motion for reconsideration and in reinstating her pleadings so the matter could proceed to trial. See Fusco v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 462 (App. Div.) (holding that appellate courts review a motion for reconsideration for an abuse of discretion), certif. denied, 174 N.J. 544 (2002). Though not expressly articulated by the court as such, it presumably realized it had failed to consider and appreciate the facts as certified by wife's counsel. See R. 4:49-2; Cummings v. Bahr, 295 N.J. Super. 374, 384-85 (App. Div. l996).
The court struck wife's pleadings without prejudice. "A dismissal without prejudice means that there has been no adjudication on the merits and that a subsequent complaint alleging the same cause of action will not be barred by reason of its prior dismissal." Czepas v. Schenk, 362 N.J. Super. 216, 228 (App. Div.), certif. denied, 178 N.J. 374 (2003). It also awarded husband a $1000 counsel fee.
Courts are reluctant to impose the sanction of dismissal or the striking of a pleading for failure to answer interrogatories. See Aujero v. Cirelli, 110 N.J. 566, 579-80 (1988) (stating that "[j]udges, no less than lawyers, strain to avoid the ultimate sanction of dismissal of an affirmative claim or striking of a responsive pleading").
Here, there is no evidence wife intentionally disregarded discovery rules. The circumstances of wife's mental condition and her inability to assist in the preparation of her case, defense counsel's vacation, and his untimely submission of a response to the initial motion were certified to the court by defense counsel. At oral argument, defense counsel further acknowledged that wife's answers to interrogatories were not certified, but he had stated in the cover letter that he had to get his client's certification page signed separately, which he did ultimately. In fact, at trial, husband confirmed he received the signed certification. Rather than slam the courthouse door on a litigant for a minor discovery infraction, the judge correctly recognized that the objective is to complete discovery so the claims can be determined on the merits. Accordingly, the judge reinstated wife's pleadings, painstakingly addressed each party's objections to the respective voluminous interrogatory responses, and provided a roadmap for completion of discovery. Weighing the equities, however, he declined to rescind the $1000 counsel fee award made to husband in the initial order. These rulings were well within the judge's broad discretion.
The court granted partial summary judgment to wife after determining husband had failed to raise a genuinely disputed issue of material fact as to the distributable nature of the Teaneck property and apartment leases on the New York properties. Wife's motion was supported by certifications of her brother Stuart and Bruckman, with documentation. The court also heard three days of testimony by husband, as well as testimony from Keiser.
Husband contends the court violated his due process rights by prematurely granting partial summary judgment before discovery was completed and both sides were fully heard. We disagree.
The United States and New Jersey Constitutions provide that every person is guaranteed due process of law. Div. of Youth & Family Servs. v. M.Y.J.P., 360 N.J. Super. 426, 464 (App. Div.), certif. denied, 177 N.J. 575 (2003), cert. denied, 540 U.S. 1162, 124 S. Ct. 1176, 157 L. Ed. 2d 1207 (2004). Due process requires adequate notice and a fair opportunity to be heard at a meaningful time and in a meaningful manner. Ibid.; Doe v. Poritz, 142 N.J. 1, 106 (1995). It is "a flexible [concept] that depends on the particular circumstances." Doe, supra, 142 N.J. at 106.
Every litigant with a bona fide cause of action or defense should have the opportunity for full exposure of his or her case. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 193 (1988). Generally, a trial court should not grant summary judgment when discovery on material issues is incomplete. See Mohamed v. De Salvacion, 424 N.J. Super. 489, 499-500 (App. Div. 2012) (reversing the grant of summary judgment because the plaintiff should have been given the opportunity to complete discovery when a key witness whose testimony would help to illuminate the issue had not as yet been deposed). See also Laidlow v. Hariton Mach. Co., 170 N.J. 602, 619 (2002); Minoia v. Kushner, 365 N.J. Super. 304, 307 (App. Div.), certif. denied, 180 N.J. 354 (2004); Wellington v. Estate of Wellington, 359 N.J. Super. 484, 496 (App. Div.), certif. denied, 177 N.J. 493 (2003). Discovery, however, "need not be undertaken or completed if it will patently not change the outcome." Minoia, supra, 365 N.J. Super. at 307. See Wellington, supra, 359 N.J. Super. at 496 (holding summary judgment was proper without additional discovery on circumstances surrounding the divorce because the settlement agreement was clear, the plaintiff had failed to explain what additional discovery was available and pertinent, and no facts were in dispute).
Here, the decision to grant partial summary judgment was not premature. The court issued its ruling more than four months after it had ordered the parties to provide responsive answers to interrogatories, and approximately one month after the trial commenced. There is no indication husband objected at trial to proceeding without additional discovery.
Moreover, prior to the court's summary judgment ruling, husband had the opportunity to testify and to cross-examine Keiser about the exchange agreement with respect to the Teaneck property and apartment leases. He also had the opportunity to submit certifications in support of his opposition to wife's motion. In fact, at his March 2010 deposition, husband stated his intention to rely on witnesses to support his position about the Teaneck property. Nevertheless, he did not submit a certification from anyone other than himself, and called no other witnesses to testify on his behalf. Nor does husband explain how further discovery would have changed the outcome, given the absence of any material issues of fact in dispute.
In addition to his due process challenge, husband argues the court erred substantively by granting partial summary judgment to wife with respect to the equitable distribution of the Teaneck property and the lifetime leases for the New York apartments. We are not persuaded by his arguments.
The court first found wife received the lifetime interests in the New York apartments as a gift during the marriage. Because the apartment leases were not the result of any consideration paid by either husband or wife, the court concluded they were exempt gifts under the statute and not subject to equitable distribution.
The court discussed wife's parents' estate plan and wife's father's initial conveyance to her and each of her brothers of a twenty-five percent interest in the various properties, including the Teaneck property. While recognizing the plan was to forgive the consideration at various times in the future, the court found no record of any "forgiveness" occurring during the time wife had a partial interest. However, the court found the 1998 exchange agreement, "which [husband] has testified that he was instrumental in negotiating," then gave the Teaneck property to wife as a "restructured" gift. After citing various provisions in the agreement, the court determined wife did not pay any consideration in return for her 100 percent interest in the property, and she "wound up after '98 with no outstanding [m]ortgage, liens, or obligations on the property[.]"
The court also found husband had no claim of marital consideration in any of the properties involved in the exchange agreement. It cited husband's testimony that he did not know until after 1996 that wife had received an interest in at least two of the properties, and found husband failed to demonstrate the properties had increased in value or any increase was the result of some marital effort.
Absent any consideration or marital investment, the court found the Teaneck property was exempt from equitable distribution and there were no material facts in dispute. The court, however, denied summary judgment with respect to the income from the Teaneck property, citing husband's testimony about his role in its operation and management. Giving deference to husband's evidence, the court concluded that any income generated from the Teaneck property as a result of husband's involvement was subject to equitable distribution.
An appellate court reviews a grant of summary judgment de novo, using the same standard as the trial court. Turner v. Wong, 363 N.J. Super. 186, 198-99 (App. Div. 2003). Giving the non-moving party the benefit of all favorable inferences, the appellate court must determine whether there is a genuine issue as to any material fact and, if not, whether the trial court's ruling on the law was correct. Id. at 199; R. 4:46-2(c). An opposing party who offers no substantial or material facts in opposition to the motion cannot complain if the court accepts the uncontradicted facts in the movant's papers. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 75 (1954).
A trial court in an action for divorce may "effectuate an equitable distribution of the property, both real and personal, which was legally and beneficially acquired by [the parties] or either of them during the marriage[.]" N.J.S.A. 2A:34-23(h). Property owned by a party at the time of marriage and held separately, however, is generally considered immune from equitable distribution. Painter v. Painter, 65 N.J. 196, 214 (1974); Valentino v. Valentino, 309 N.J. Super. 334, 338 (App. Div. 1998). "[T]he income or other usufruct derived from such property, as well as any asset for which the original property may be exchanged or into which it, or the proceeds of its sale, may be traceable shall similarly be considered the separate property of the particular spouse." Painter, supra, 65 N.J. at 214.
Property acquired "by either party by way of gift, devise, or intestate succession" is also not subject to equitable distribution. N.J.S.A. 2A:34-23(h). "Proof of a gift requires evidence of unequivocal donative intent on the donor's part, actual or symbolic delivery of the gift's subject matter, and the donor's absolute and irrevocable relinquishment of ownership." Dotsko v. Dotsko, 244 N.J. Super. 668, 674 (App. Div. 1990). A party, therefore, must be able to independently corroborate his claim of a gift exemption. Tannen v. Tannen, 416 N.J. Super. 248, 283 (App. Div. 2010), aff'd o.b., 208 N.J. 409 (2011). A gift will be subject to distribution if it was used to finance the marital lifestyle, or it was placed in an account which regularly received deposits of income and earnings from the party's employment or received deposits of other non-exempt monies. Ibid. The burden of establishing that an asset is exempt from equitable distribution rests with the party who seeks to exclude it. Pascale v. Pascale, 140 N.J. 583, 609 (1995); Dotsko, supra, 244 N.J. Super. at 676.
On appeal, husband has not presented any factual or legal basis to disturb the court's finding that the Teaneck property and New York lifetime apartment leases were not marital assets. The certifications and documentary evidence clearly evidence an estate plan by wife's parents and support the court's finding that these properties were gifts made to wife, exempt from equitable distribution.
As specified in the exchange agreement, wife received "fee simple title free and clear" for the Teaneck property in exchange for signing quitclaim deeds on the Greenwich and Hudson Street properties. This agreement provided that prior to closing, all loans or mortgages would be fully paid or null and void, and that wife's father and brothers would pay any taxes, including interest on back taxes, as well as "boot" or "transfer" taxes owed on the Teaneck property. It also relieved wife of any liability for mortgages, purchase prices or other legal or financial obligations relating to the properties involved in the exchange. Additionally, the exchange agreement gave wife leases for two apartments, which she could use or occupy rent free, without reference to any exchange of money or other consideration.
In his certification in support of wife's summary judgment motion, Stuart explained he was fully involved in all aspects of the gift transactions. In l998, his family engaged in like-kind gift transfers of certain of the previously-gifted partial interests in various properties that had been owned by his parents so that each sibling would own a "full, gifted, 100% interest" in one property; the income-producing Teaneck property was given to wife to "help her meet her financial needs, particularly in light of her severe depression and bipolar disorder." Stuart explained that to effectuate the transaction, wife's siblings each made a gift to her of their respective twenty-five percent interests in the Teaneck property; therefore, wife owned 100 percent of the property by gift of the other seventy-five percent by her siblings. Similarly, wife and her other two siblings gifted to Stuart their twenty-five percent interests in the Greenwich Street properties. As part of the exchange agreement, however, Stuart gifted to wife the lifetime right to remain rent-free at her residence at the Greenwich property that was by that time wholly owned by Stuart. Thus, Stuart certified that all the 1998 inter-family transfers were gifts, and that none of the siblings paid any money or gave any consideration to the parents or each other in connection with them.
Keiser testified that, in effectuating Sidney's estate tax plan that each of his children would wholly own a single property, he prepared documents for like-kind exchanges between the siblings. Wife received an additional seventy-five percent interest in the Teaneck property from her three brothers. He explained that although the deed reflected consideration and a mortgage was prepared reflecting a debt and monthly payment, no consideration was paid and no payments would ever be made on the mortgage debt, as reflected in the exchange agreement.
Husband's testimony that he never saw his wife execute a mortgage in connection with the Teaneck property also supports the court's findings. While the donative intent is explicit in the exchange agreement, the August 1998 deeds were contingent on wife's paying her brothers $147,000. Husband, however, also testified that he never saw any money "pass hands." Such a statement is insightful, given his deposition testimony that he helped his wife handle her finances and showed her when to sign checks. It is also consistent with Stuart's statement that none of the siblings paid any money in connection with the property transfers. Moreover, there was no claim at trial that this money was still owed. Thus, when read together with the exchange agreement, the intent of these conveyances was, in effect, to "gift" the Teaneck property to wife.
Husband also generally asserts that the Teaneck property and lifetime leases were marital assets because he was involved in the negotiations that took place in 1997 and 1998 with members of wife's family regarding the exchange agreement. Our Supreme Court recognizes that "a spouse may acquire an interest in marital property by virtue of the mutuality of efforts during marriage that contribute to the creation, acquisition, and preservation of such property." Carr v. Carr, 120 N.J. 336, 349 (1990). The record, however, does not support the finding that these efforts entitled husband to an interest in the properties because he was aware of the nature of these exchanges as gifts. Moreover, husband failed to quantify the extent of his efforts in this regard. The income generated from the Teaneck property is another issue and will be discussed later in this opinion.
Both parties argue the court erred in dividing their assets. Husband contends the court improperly assessed the value of the Portugal property at $350,000, it failed to award him forty percent of the increase in value of the Teaneck property between 1998 and 2008, and it wrongly assessed his share of the rental income from the Teaneck property at $165,640. Wife contends the income from the Teaneck property was immune to equitable distribution.
In determining how to distribute the marital assets, the court analyzed all of the statutory factors set forth in N.J.S.A. 2A:34-23.1, and placed particular significance on husband's age and wife's disability. It recognized that the distribution must be consistent with the unique needs of the parties.
Briefly summarized, the court found: the parties had been married for approximately twenty-four years, wife was permanently and totally disabled, husband received social security retirement income and owned three properties, wife received social security disability and owned the Teaneck property, husband's sole debt was a home equity loan to cover his litigation costs, wife had no liabilities or debt, husband actively participated in the management of the Teaneck property, wife never made substantial contributions as a homemaker, and wife's father had paid all of her medical expenses at least since the parties' marriage.
The court then divided the marital property as follows:
(1) husband was entitled to twenty percent of the accounts produced from the Teaneck property, and twenty percent of assets that wife had dissipated following their separation; (2) wife was entitled to twenty percent of husband's Fidelity IRA and Wachovia checking account; and (3) husband and wife were entitled to sixty and forty percent, respectively, from the sale of the Portugal property.*fn4 The court directed wife to immediately pay husband $127,469.90.
The goal of equitable distribution is to bring about a fair and just division of marital assets. Steneken v. Steneken, 183 N.J. 290, 299 (2005). When distributing marital assets, a court must: (1) identify the property subject to equitable distribution; (2) determine the value of each asset; and (3) decide how to allocate each asset most equitably. Rothman v. Rothman, 65 N.J. 219, 232 (1974). "In every case, . . . the court shall make specific findings of fact on the evidence relevant to all issues pertaining to asset eligibility or ineligibility, asset valuation, and equitable distribution[.]" N.J.S.A. 2A:34-23.1. A court should apply all the factors set forth in N.J.S.A. 2A:34-23.1, and distribute marital assets consistent with the parties' unique needs. DeVane v. DeVane, 280 N.J. Super. 488, 493 (App. Div. 1995).
Appellate review is narrow and determines whether the trial court mistakenly exercised its broad discretion to divide the parties' property. Valentino, supra, 309 N.J. Super. at 339. An appellate court will affirm an equitable distribution provided "the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001).
(1) Portugal Property (Appeal)
The court determined the Portugal property was subject to equitable distribution. It found that: the property was acquired during the marriage, husband used the Toms River property as collateral for the $85,000 loan, the loan was paid off and the lien removed in fewer than seven years, the rental income generated from this property covered all expenses and allowed the parties to take annual vacations in Portugal, there was no showing husband used exempt assets to cover carrying costs until he discontinued renting the property two or three years ago, and husband admitted several times during the trial that the property was subject to equitable distribution. The court found there were no proofs presented as to the source of funds used to pay off the $85,000 loan.
The court valued the Portugal property at $350,000 based entirely on husband's estimates with "no independent documentation as to market value." The court directed forty percent of the net proceeds to wife and sixty percent to husband, explaining that husband had been paying the carrying expenses on the property since rental income ceased.
Husband neither challenges the finding that the Portugal property was subject to equitable distribution nor the forty/sixty percent allocation. Instead, he argues that the court improperly assessed the value of the property at $350,000 based solely on husband's opinion and without any appraisal.
The doctrine of invited error, however, bars a litigant from arguing on appeal that a position he advocated below and the judge adopted at trial was error. Brett v. Great Am. Recreation, Inc., 144 N.J. 479, 503 (1996); Donofry v. Autotote Sys., Inc., 350 N.J. Super. 276, 296 (App. Div. 2001). Thus, husband cannot assert on appeal that the court committed error when he testified under oath that the property's value was $350,000, and chose not to produce an expert to support his claim.
Moreover, husband admitted at trial that he had obtained an appraisal of the property in 2009 or 2010, which placed its value at 245,000 euros, or $355,000. He explained that the exchange rate had "plummeted in the last several weeks[,]" which might explain why he testified at other times that the property was worth $330,000 or $350,000. While the court reasonably adopted the middle estimate, it ordered the immediate sale and division of the property without regard to the actual sale price. As we are satisfied the court provided adequate findings to support its equitable distribution of the Portugal property, we affirm this ruling.
(2) Teaneck Proceeds (Appeal and Cross-appeal)
Noting his ruling on summary judgment that the Teaneck shopping center was not subject to equitable distribution, the court then addressed the profits that arose from its operation, which, undisputedly, husband transferred into accounts in wife's name. The court rejected wife's claim that the accounts were exempt from equitable distribution as the "income or usufruct of immune property." Instead, the court determined the profits or retained rental income were the equivalent of an active immune pre-marital asset, in which husband was entitled to share based on his marital contributions and efforts towards its growth and development, citing, in part, Valentino, supra, 309 N.J. Super. at 338.
The court found husband "actively participated in the management of the Teaneck property, and that his work effort contributed to the production of the income generated" from 1998 to 2008. It found wife was never capable of managing the property, explaining that she was bipolar and had "a difficult time making decisions and dealing with everyday life." The court also found no evidence that anyone other than husband attended to the property during this time.
The court relied on husband's uncontradicted testimony that he handled all the bookkeeping, prepared spreadsheets and other reports for the accountant, wrote checks, and reconciled the checkbook for the shopping center complex, consisting of three major stores and six offices above the stores. The judge explained:
[H]e collected the rents sometimes, (although they were frequently mailed in), he fielded phone calls from tenants, he responded to problems by calling contractors or going to the building himself. He sent out letters on behalf of [wife] identifying himself as Rental Manager.  He did maintenance, plumbing and painting. He made many improvements to the building and redesigned the roofs and window wells. [Husband] upgraded plumbing or saw that it was upgraded.
The court also found husband had obtained two major tenants for the shopping center, who were still located there, although one former tenant had moved to another location. Husband also "negotiated a ten or fifteen year lease for [a] gymnasium" in "empty space in the shopping center" that "included the tenant making substantial upgrades and improvements to the building." Additionally, husband "rented out a store as a boutique."
The court recognized that husband received no compensation for managing the shopping center, but was reimbursed for some of his out-of-pocket expenses. It further noted the acknowledgement of wife's brother Paul that the property was in "very good" condition when it was turned over to him as building manager, and that he devoted a "couple hours per week" to the job and was paid $1500 monthly as trustee of wife's assets and as building manager.
The court thus found all of the accounts produced from the Teaneck
property were subject to equitable distribution, itemizing eleven
accounts with their balances as of December 31, 2008, the date of
filing of the divorce complaint, totaling $738,592.96.*fn5
Based on husband's "significant efforts" in "producing" and
"investing" the income, the court concluded husband was entitled to
twenty percent of these funds or $147,718.59.
New Jersey has rejected the fifty/fifty mechanical division of marital assets in favor of the division of marital property based on the application of equitable principles. Painter, supra, 65 N.J. at 211-12; Chalmers v. Chalmers, 65 N.J. 186, 193-95 (1974); Rothman, supra, 65 N.J. at 232 n.6; DeVane, supra, 280 N.J. Super. at 493. Our courts view marriage as a partnership, and give recognition to the contributions of each party. Rothman, supra, 65 N.J. at 229.
In Painter, supra, 65 N.J. at 214, which the trial judge cited, the Court held that any property owned by a spouse at the time of marriage remains the separate property of such spouse and is considered an immune asset ineligible for distribution. Under some circumstances, however, the appreciation of a pre-owned asset during the marriage will be subject to distribution depending on whether it is passive or active. Valentino, supra, 309 N.J. Super. at 338. A passive asset fluctuates in value based exclusively on market conditions, while an active asset "involves contributions and efforts by one or both spouses toward the asset's growth and development which directly increase its value." Ibid. When the increase, in part or in whole, derives from the efforts of the non-owner, the appreciation is subject to distribution. Ibid. The inquiry then focuses on the extent to which the original investment has been enhanced by contributions of either spouse. Id. at 338-39 (holding that premarital property purchased by the husband was an active asset that increased in value due to contributions the wife made to the home and children, which allowed him to pay down the mortgage).
Here, there is ample evidence to support the court's findings with respect to husband's active management of the Teaneck shopping center and his contribution to the income it generated. As the court stated, it is undisputed that when husband managed the property from 1998 to 2008, the commercial enterprise earned profits. It also is undisputed that wife lacked the ability to manage the property from the time she received it in 1998.
Moreover, there is no dispute over the work performed by husband as manager. Paul, who became manager after the parties' separation, similarly testified that he handled tenant concerns, balanced the checkbook, and visited the property, spending approximately two hours a week as building manager, "depending upon what's going on." He also did not dispute husband's testimony that he found two new tenants. Thus, the Teaneck property was an active asset, whose increase in value was due, in large part to the efforts expended by husband during the parties' marriage, and its profits were subject to equitable distribution.
Neither party challenges the court's identification of eleven accounts produced from the Teaneck property and their balances as of specific dates, or its determination that the total value of defendant's assets subject to equitable distribution as of the filing of the divorce complaint was $738,592.96. Thus, the final step in making an equitable distribution is to decide the most equitable allocation. See Rothman, supra, 65 N.J. at 232.
Husband argues the court erred by awarding him only twenty percent of these "liquid assets." He seeks forty percent of the increase in value between 1998 and 2008 ($240,000). He alternatively sought $680,000 (40% of $1,700,000) if the Teaneck property was deemed a marital asset, which we have rejected. Husband's rationale for the forty percent was based on wife's equitable distribution interest in the Portugal property, for which he claimed she did nothing.
Wife argues on cross-appeal that the court's analysis and conclusion that husband was entitled to a share of wife's retained income from the exempt commercial property was flawed because the court ignored husband's lack of documentary evidence of repairs and improvements to substantiate his "bare" allegations, the inconsistencies in husband's claims, and his overall lack of credibility. She further contends the court incorrectly concluded the property, which was in very good condition when it was gifted to wife in l998, with tenants and an income stream already in place and requiring "little ongoing effort" to manage, was an active asset. According to wife, the gift included a largely sustaining stream of income that existed regardless of whether or not husband did any of the tasks he claimed to have done. Wife also asserts as error the court's refusal to permit her deposition testimony that husband's management was limited to calling a repair person.
We reject wife's cross-appeal on this issue as without merit. The court's evidentiary rulings are discretionary; regardless, considering wife's lack of involvement in managing her affairs, such comments would have carried little weight. The record is replete with credible testimony of husband's efforts in managing this large commercial property over the decade, with corroborating testimony by wife's brother Paul. As the court noted, it is undisputed wife was unable to manage the property and no one other than husband attended to it until their separation, handling a variety of rental managerial duties ranging from collecting rents and dealing with tenants, performing maintenance, repairs, and improvements to the buildings, and obtaining tenants. Paul then similarly handled tenant concerns, visited the property, and balanced the checkbook, for which he was paid $1500 monthly. We are also satisfied this record supports the court's legal analysis and conclusion that the retained income was an active asset subject to equitable distribution.
We affirm the court's decision to equitably distribute the income generated from the Teaneck property. Having found husband's testimony credible, the court has the discretion to determine husband's share of these proceeds. We reject husband's argument that the court erred in not awarding him a percentage in the increase in the value of the property. In awarding husband twenty percent of the profits, the court generally considered all relevant statutory elements for equitable distribution under N.J.S.A. 2A:34.23-1, and placed significance on husband's age, wife's disability, and husband's contribution to the acquisition of substantial income from the Teaneck property.
Nonetheless, it is unclear how the court arrived at the twenty/eighty percent allocation. We discern no error with the court basing its equitable distribution on a percentage allocation of the accounts produced from the Teaneck property; however, because there is no explanation for the percentage chosen by the court, we are unable to assess the court's rationale and determine whether it was equitable under the circumstances. See R. 1:7-4(a) (requiring the motion judge to state the factual findings and correlate them with the relevant legal conclusions); Monte v. Monte, 212 N.J. Super. 557, 565 (App. Div. 1986) (holding that the rule requiring findings of fact and conclusions of law is "particularly applicable to matrimonial cases" because without such findings, we are unable to decide whether the trial court's determination was based on substantial credible proof). We query, for example, why husband's share equated to less than the rental management fee paid to Paul when he assumed the position in July 2008.*fn6
Accordingly, we remand to the trial court for additional fact findings on the twenty/eighty percent allocation.
(3) Offset of Wife's Equity in Portugal Property (Cross-Appeal) In her cross-appeal, wife asserts error in the court's order that she make an immediate equitable distribution payment to husband, without offering her the opportunity to offset this amount by her equity in the Portugal property. According to wife, if the court had permitted an offset, husband could have retained the Portugal property for his own use, which she contends was husband's repeatedly-stated desire, and she could have discharged her obligations to husband by making a modest payment. She further contends that having imposed an "immediate sale" order on the Portugal property, the court compounded its error by directing only husband, and not both parties together as co-owners, to do so, claiming that husband has demonstrated by his actions that he will never cooperate in good faith in selling the property. We are not persuaded by wife's arguments.
An offset serves to balance the benefits accrued by each party during a marriage. Panetta v. Panetta, 370 N.J. Super. 486, 500 (App. Div. 2004) (addressing offset in context of retirement benefits), certif. denied, 182 N.J. 427 (2005). We discern no abuse of discretion by the judge who declined to do so based on his knowledge of the parties and "feel of the case" based on numerous motions and a lengthy trial. The judge found husband was retired, lived on social security, owned three properties, one of which he rented, and had been paying the carrying expenses for the Portugal property since rental income had ceased.*fn7 As addressed in his discussion of the alimony award, the judge also found husband was incurring a budget shortfall every month. The record belies wife's claim of hardship. As found by the judge, in contrast to husband, wife lived rent-free in the Greenwich Street property, owned the Teaneck property valued at $1,700,000, and had no liabilities. Although wife expresses an "urgent need" to retain her assets to meet her special needs, the record reflects that her father paid her medical and psychiatric expenses during the marriage, and that, at the time of trial, she paid "nothing" for her medical care. Accordingly, the judge's declination of an offset and decision to require both parties to abide sale of the Portugal property for realization of their respective proceeds was reasonable.
As to wife's claim of bad faith by husband in failing to cooperate in the sale of the Portugal property, that can be addressed in motions following this appeal with appropriate submissions. We leave to the court's discretion whether it wishes to address that issue during the remand.
(4) Dissipation of Assets (Cross-Appeal)
In her cross-appeal, wife contends the court erred in finding there to be a "chargeable" dissipation of assets by wife based solely on evidence presented by husband of reduction in the balances in wife's accounts that contained retained earnings from the Teaneck property between July 2008, when the parties separated, and December 2008, when the divorce complaint was filed. According to wife, the court could not properly conclude on the record that she dissipated marital assets with the intent to diminish husband's share of the marital estate, as required by the case law. We agree the court did not make this finding and remand on this issue.
The court found a reduction of $117,856.58 during the four-and-a-half months, consisting of $69,609.49 from wife's Wachovia checking account and $48,247.09 from her Chase checking and savings accounts. From these transactions, the court found $20,000 was paid to her New York divorce attorney and $6000 was paid to Paul as management fees for the Teaneck property for August through November. The court also found it was reasonable for wife to spend $500 per month, "over and above" her social security and pension income, for her living expenses during the months in question. The court, therefore, determined the total amount of dissipated assets subject to equitable distribution was $89,606.58, of which husband was entitled to twenty percent.
When making an equitable distribution of marital property, a court must consider, among other things, "[t]he contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property. . . ." N.J.S.A. 2A:34-23.1(i). Although the Legislature did not define "dissipation" of marital property, in Kothari v. Kothari, 255 N.J. Super. 500, 506 (App. Div. 1992), we described the concept as a "plastic one, suited to fit the demands of the individual case."
Dissipation of marital assets "'may be found where a spouse uses marital property for his or her own benefit and for a purpose unrelated to the marriage at a time when the marriage relationship was in serious jeopardy.'" Kothari, supra, 255 N.J. Super. at 506 (quoting Head v. Head, 523 N.E.2d 17, 20 (Ill. App. Ct. 1988)). Courts generally deem the distributable marital estate to include the assets diverted by a spouse in contemplation of divorce and for the purpose of diminishing the other spouse's share. Vander Weert v. Vander Weert, 304 N.J. Super. 339, 349 (App. Div. 1997).
To determine whether a spouse has dissipated assets, courts consider various factors, including:
"(1) the proximity of the expenditure to the parties' separation, (2) whether the expenditure was typical of expenditures made by the parties prior to the breakdown of the marriage, (3) whether the expenditure benefited the 'joint' marital enterprise or was for the benefit of one spouse to the exclusion of the other, and (4) the need for, and amount of, the expenditure." [Kothari, supra, 255 N.J. Super. at 507 (quoting Annotation, Spouse's Dissipation of Marital Assets Prior to the Divorce As A Factor in Divorce Court's Determination of Property Division, 41 A.L.R.4th 416, 421 (1985)).]
The ultimate question is whether the assets were expended by one spouse with the intent of diminishing the other spouse's share of the marital estate. See Kothari, supra, 255 N.J. Super. at 507, 509 (affirming the decision to compensate the wife for her interest in marital assets dissipated by her husband while he was "thinking about and planning for a divorce" where the expenditures were not made to benefit the marriage); see also Monte, supra, 212 N.J. Super. at 567-68 (holding that intentional dissipation of marital assets by one spouse constituted a fraud on the court, and that the other spouse would not be charged with the debt); Siegel v. Siegel, 241 N.J. Super. 12, 13 (Ch. Div. 1990) (finding that the defendant's gambling losses which occurred "pre-complaint, but when the marriage was irreparably fractured," were dissipation of funds).
In a matrimonial matter, "dissipated funds are subject to equitable distribution, as if the funds were not dissipated at all." Wasserman v. Schwartz, 364 N.J. Super. 399, 414 (Law Div. 2001). A trial court has sole discretion to determine the dissipation of assets, and its decision will not be reversed absent an abuse of discretion. Kothari, supra, 255 N.J. Super. at 506 (citing Head, supra, 523 N.E.2d at 21).
Here, it is undisputed the funds, consisting of retained earnings from the Teaneck property, were acquired during the marriage. There also does not appear to be a dispute that the funds were taken from the account by wife after the parties' separation. Wife's general suggestion in her brief that some of the reductions in the account balances might be attributable to "fluctuat[ions] based on market forces[,]" is undermined by her failure to present such evidence at trial, which would have been very easy to obtain.
The court, however, apparently found there was dissipation based solely on the withdrawal of funds by wife. The court did not analyze, for example, the reason for the withdrawals and whether the expenditures were typical of wife's spending pattern prior to the breakdown of the marriage, nor make any finding that wife took the money with the intent to diminish husband's share of the marital assets.
This type of analysis is particularly critical here, where there was significant testimony about wife's disability, depression, and spending habits. For example, husband acknowledged that wife tended to spend large amounts of money during the manic phases of her illness, stating, she "wanted her own credit card. I was not for it because of the manic-depressive condition where she could go out and spend or blow $100,000." He further explained that they discussed the matter, and he told her "'Hon, if that's what you want to do, you've got plenty of money. Twenty-five thousand if you lose it is not a big problem to you.' So she put a limit on the credit card of $25,000." Similarly, at his June 2005 deposition in connection with the lawsuit against wife's family, portions of which were read into the record, husband stated wife could "blow a substantial amount" of money because when "a manic depressive becomes manic, they can go on a spending spree." He added that wife did not have "the ability to handle legal affairs," and that "even at her best, [she] needed help thinking anything with depth[.]"
Paul testified that his sister had spent "an exorbitant amount of money" after the separation on items such as a computer and a bicycle that she appeared to purchase on the "spur of the moment" and similarly reported that she had a difficult time making decisions. Similarly, Bruckman testified that wife was incapable of managing money or handling her financial affairs, and she could not write checks or understand invoices, necessitating creation of the Curley trust to prevent further dissipation of her assets.
In contrast, husband cites Paul's testimony that he started managing wife's finances in August 2008 and was added as a signatory on the subject accounts, and Paul's acknowledgement, for example, that he wrote a $500 check on November 10, 2008 from wife's account to King Range, Inc., a company owned by their brother Stuart. Husband also notes the testimony about large sum withdrawals that could not be accounted for and significant fees incurred by Bruckman for services rendered in "sorting out" wife's financial papers, drawing up wife's power of attorney, and setting up the Curley trust. Husband further argues the credible evidence demonstrated that during this five- month period wife was not in a manic state, pointing out she was sufficiently competent to evict him from their New York apartment in July 2008, appoint Paul as manager of the Teaneck commercial property within days of the eviction, execute authorizations to add Paul as a signatory on her bank accounts, retain an attorney to assist her in filing a divorce in New York, and have discussions about and execute the power of attorney and Curley trust. Husband posits that it is "inconceivable" wife did not pay for these services out of the subject marital funds and contends the use of marital funds for personal matters in this fashion, with the assistance of her family in raiding the account, constitutes a dissipation of assets under the case law.
We remand on this issue for the court to consider and make findings respecting wife's intent to diminish or dissipate husband's share of these marital funds.
In her cross-appeal, wife argues the court erred by awarding husband permanent alimony in light of her severe and permanent disabilities, her reasonably foreseeable future medical and care needs, and husband's lack of a need for alimony. She notes that husband's complaint for divorce did not include a specific prayer for alimony relief and he lived without assistance for nearly three years during which time he renovated the Bloomfield property and took numerous vacations. Wife further contends that while the court determined husband to have a gross income of $39,564.40 for alimony purposes, he testified that his income from all sources was "about $50,000" annually, and thus the difference of about $10,500 more than accounts for the $100 per week alimony obligation. She also objects to the amount of the award, claiming that from an economic and health standpoint she cannot afford to support husband, emphasizing that her ever-deteriorating health requires her, among other things, to now pay individuals to manage her assets. We are not persuaded by wife's arguments.
The court reviewed each party's updated CIS and tax returns. It then analyzed the statutory factors outlined in N.J.S.A. 2A:34-23(b)*fn8 before awarding permanent alimony to husband. With regard to the parties' actual needs and ability to pay, factor one, the court found: (1) husband's reasonable expectation of need, based upon the standard of living during the marriage, was $3263 monthly, excluding his home equity loan used to pay for this litigation; (2) notwithstanding wife's incomplete and speculative CIS, wife's monthly need was $2850; 3) husband's annual gross income, consisting of social security, pension, and net income from Bloomfield property rental (before taxes) was $35,564.40, and including estimated investment income after implementation of equitable distribution would be $39,564.40, resulting in an annual net income of $37,464.40, or $3122.03 monthly; (4) after implementation of equitable distribution, wife's net monthly income would be $8,234.75 ($98,817 annually);*fn9 and (5) husband had a monthly shortfall of $140.97 ($3263 minus $3,122.03), while wife's net monthly income far exceeded her monthly needs.
As to factor two, the parties had a long term marriage of twenty-four years. The court noted it addressed the third, fifth, and ninth factors in its discussion of equitable distribution. As to the fourth factor, the court found the parties had "more than enough combined income to allow them to continue reasonably comparable lifestyles." As to the eighth factor, the court found it likely wife would "be able to accumulate future capital assets and income" based on her income from the Teaneck shopping center, considering she had accumulated over $700,000 in assets derived from its operation since 1998.
The remaining factors were considered by the court in analyzing the income and needs of the parties. The court concluded that although it found wife's proofs "substantially deficient" regarding her contentions as to future medical needs and possible assisted living, it could not ignore those considerations as to either or both parties because of wife's emotional and psychological problems and husband's advanced age. Although the court found both parties would leave the marriage with substantial assets available for unanticipated future needs, the court was convinced a permanent alimony award to husband of $100 per week was appropriate in view of all the statutory factors.
In divorce actions, a court may award 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 goal of alimony "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). A court should set the supporting spouse's obligation at a level that will maintain that standard. Innes v. Innes, 117 N.J. 496, 503 (1990).
Courts may award one or more of four types of alimony: permanent; rehabilitative; limited duration; or reimbursement. N.J.S.A. 2A:34-23(b). Permanent alimony "is awarded after a lengthy marriage for unlimited duration in recognition of prolonged economic dependence and sustained contribution to a marital enterprise." Gordon v. Rozenwald, 380 N.J. Super. 55, 66 (App. Div. 2005). To determine the type, amount, and duration of an alimony award, courts must consider the non-exclusive list of factors enumerated in N.J.S.A. 2A:34-23(b).
A court has substantial discretion in determining whether to grant alimony, and in setting the amount. Jacobitti v. Jacobitti, 135 N.J. 571, 575 (1994). We defer to a trial court's findings regarding alimony if they are supported by substantial credible evidence in the record. Cox v. Cox, 335 N.J. Super. 465, 473 (App. Div. 2000). An award of support will not be disturbed "unless it is 'manifestly unreasonable, arbitrary, or clearly contrary to reason or to the evidence, or the result of whim or caprice.'" Raynor v. Raynor, 319 N.J. Super. 591, 605 (App. Div. 1999) (quoting DeVita v. DeVita, 145 N.J. Super. 120, 123 (App. Div. 1976)).
Here, the court's decision to award permanent alimony is amply supported by the record and is entitled to deference. It is not fatal that the relief was not specifically requested in husband's complaint; wife's counsel acknowledged at oral argument that husband had requested it during trial, it is apparent from the testimony that alimony was an issue in the case, and the court expressly directed the parties to address the statutory factors in their written submissions.
We discern no error in the court's decision to award husband permanent alimony or in the quantum of the award. The court properly considered the length of the marriage, as well as the parties' ages, health, standards of living, and projected budgets. The court also considered the disparity in their incomes. It found that husband had little chance of increasing his income, which is comprised primarily of social security and pensions, while wife had the potential to accumulate future capital assets and income from the Teaneck property.
The court also explained the mathematical calculations used to arrive at the amount of wife's alimony obligation. Contrary to wife's assertion, the court did not base alimony on an incorrect calculation of husband's gross annual income contrary to husband's testimony. Both numbers included husband's social security, pension and investment income. The difference was that husband's estimate included the entire rental income from the Bloomfield property of $1800 per month, while the court analyzed the expenses for that property with a tenant in possession based on husband's tax return and CIS to be $1000 per month and thus only included $800 per month as actual income (before taxes).
The court provided ample explanation for ignoring as speculative wife's undocumented projected expenses for moving to a senior citizen facility and for finding her proofs deficient regarding her claim that she would be unable to pay alimony because of her future health needs. As noted by the court, wife's father had paid her medical expenses throughout the marriage and there was no suggestion in the record that he did not continue to do so after the parties' separation. Moreover, as further noted by the court, the Teaneck property generated substantial income, and even if wife moved to a senior residence, she would be able to rent out the New York apartments under the terms of her lifetime leases.
On appeal, husband challenges the court's failure to award him all of his counsel fees and costs. In support, he argues that wife and her attorney engaged in such criminal acts as perjury, conspiracy to commit perjury, subornation of perjury, obstruction of justice, conspiracy to obstruct justice, false swearing, concealment of evidence, harassment, intentional infliction of emotional distress, and malicious abuse of process. On cross-appeal, wife argues the court erred by requiring her to pay counsel fees of $25,000 to husband, and denying her fee application. We affirm.
Husband's counsel certified that as of June 10, 2010, husband incurred counsel fees and costs of $144,074.74, with anticipated fees for an additional twenty to thirty hours (at $225 to $380 per hour) for preparation of the certification of fees, written summation, and post-summation oral argument, of which he paid $110,665.21. Husband's counsel requested a seventy-five percent counsel fee award based on wife's bad faith, claiming she "repeatedly prolonged and delayed the matter."
Defense counsel certified that wife's legal fees through July 27, 2010 totaled $150,643, which included $3733 to Keiser,*fn10 and costs totaled $6,261.38. She paid Keiser in full and defense counsel $62,556.88. Defense counsel also represented that wife paid legal fees to Bruckman of $69,109.59, but was not making a fee-shifting request in connection with them.
The court reviewed the certifications of services prepared on behalf of both parties, and analyzed each of the factors set forth in Rule 5:3-5(c), explaining in detail each of the parties' positions and its findings.*fn11 Among other things, the court found that wife's failure to file a timely responsive pleading in the New Jersey action "clearly necessitated" husband's attorney having to move for default and prepare a Notice of Application for Equitable Distribution, and husband's "position challenging the fact that the Teaneck shopping center was gifted to [wife]," though unsuccessful, was not "espoused in bad faith." On the other hand, husband's "insistence" upon obtaining equitable distribution of the Greenwich Street apartment building was done "in bad faith" because he knew very well that wife only had life estates in the two apartments and husband's claim for an equitable distribution interest in the increased value of the Teaneck shopping center, though posited in "good faith," "caused both sides extraordinary additional counsel fees" and could not have been sustained without husband obtaining appraisals.
The court noted the results were "mixed" with regard to major positions in that husband was unsuccessful in obtaining equitable distribution of the Teaneck shopping center and two New York apartments or equitable distribution of the alleged increased value of the shopping center during the marriage. Husband was successful, however, in his claim for equitable distribution of the proceeds derived from the shopping center, and for alimony, though to a "rather limited extent."
Noting examples, the court also found "both parties were less than forthcoming with their discovery responses," explaining that husband's responses were "evasive and inconclusive," and wife's responses "to a large extent, were absent and not certified." Additionally, the court found that wife's mental health was an extremely significant factor with respect to counsel fees incurred by both parties. The court believed discovery was delayed and frustrated by wife's inability to handle her own affairs, or to assist her attorney or trustee in assembling factual information concerning her assets. However, because "this circumstance" was the result of wife's mental health and not the result of voluntary interference, the court concluded it should not impact the counsel fee determination.
The court noted as additionally compelling that both parties could afford to pay their own counsel fees, having also concluded each was financially able to contribute to the other party's fee, but that wife's future excess income would far exceed husband's future excess income. Based on the totality of the findings, the court ordered wife to contribute $25,000 to husband's counsel fees and, if she had not already done so, to pay the $1000 ordered in October 2009.
An award of counsel fees and costs in a matrimonial action rests in the discretion of the trial court. Williams v. Williams, 59 N.J. 229, 233 (1971); Strahan v. Strahan, 402 N.J. Super. 298, 316-17 (App. Div. 2008). Where a judge follows the law and "makes appropriate findings of fact, a fee award is accorded substantial deference and will be disturbed only in the clearest case of abuse of discretion." Yueh v. Yueh, 329 N.J. Super. 447, 466 (App. Div. 2000). A court may award counsel fees on any claim for divorce, subject to the provisions of Rule 4:42-9. R. 5:3-5(c).
In Mani v. Mani, 183 N.J. 70 (2005), the Court summarized Rules 5:3-5(c) and 4:42-9(b) as follows:
In a nutshell, in awarding counsel fees, the court must consider whether the party requesting the fees is in financial need; whether the party against whom the fees are sought has the ability to pay; the good or bad faith of either party in pursuing or defending the action; the nature and extent of the services rendered; and the reasonableness of the fees. [Id. at 94-95 (emphasis omitted).]
We first address wife's arguments that the court erred in assessing counsel fees against her as opposed to awarding her fees based on its finding of bad faith on husband's part and no bad faith on her part. Although the court did not discuss how it weighted the most compelling considerations, it evidently found significant its findings that both parties could pay their own attorney fees, that both parties could contribute to the fees of the other party, and that wife's future income would far exceed husband's.
Bad faith for purposes of counsel fees relates only to the conduct of the litigation, not the underlying issue of marital fault. Id. at 95. Examples of bad faith include: (1) an unwillingness or intransigence during litigation to fairly negotiate an equitable distribution of marital property; (2) the pursuit of relief when one knows or should know that there is no support under the facts or law; (3) the intentional misrepresentation of facts or law to avoid or limit equitable distribution; and (4) acts of a losing party that are vexatious or wanton, or carried out for oppressive reasons. Borzillo v. Borzillo, 259 N.J. Super. 286, 293-94 (Ch. Div. 1992).
We are not persuaded by this argument and discern no error in the court's analysis and award of counsel fees to husband, not wife, under the circumstances of this litigation. We are satisfied the court assessed the proper factors and provided ample explanation for its findings. After weighing the factors, both positive and negative, the court determined the overall conduct of the parties justified a minor counsel fee award to husband. The court did not double count in the final award the conduct for which it assessed the $1000 fee against wife in October 2009; that was for husband's motion to dismiss for wife's failure to comply with discovery, not for failing to accept service, necessitating husband's motion for default, notice for equitable distribution, and subsequent consent order to vacate default and permit her to file responsive pleadings. Based on our review of the record we are satisfied the court was cognizant of wife's mental health in its counsel fee analysis and, as noted, did not penalize wife for circumstances relating thereto. However, for example, considering the extent of involvement of her family and counsel in her financial matters following the parties' separation in July 2008 and the fact she had been represented by counsel when she filed the New York divorce action immediately prior to the present litigation, there was no reason for a default in this proceeding, and for wife's August 2009 CIS to be "substantially lacking in information" as to her monthly budget, assets or income and to be unsigned by anyone on her behalf.
We also reject wife's argument that she was entitled to fees under Rule 4:23-3, because husband refused to admit matters in her requests for admissions. This Rule provides in relevant part:
If a party fails to admit the genuineness of any document or the truth of any matter as requested under R. 4:22, and if the party requesting the admission thereafter proves the genuineness of the document or the truth of the matter, that party may apply to the court for an order requiring the other party to pay the reasonable expenses incurred in making that proof, including reasonable attorney's fees.
The court addressed this issue at the May 2010 hearing, at which time it found that husband did not intend for his responses to obstruct or interfere with the discovery process, and that some of the requests also asked for legal conclusions. It, therefore, denied without prejudice the motion to deem all the requests admitted but stated it would consider the issue of counsel fees as to those answers where wife had to present unnecessary proofs to establish a specific fact. Wife cites no examples in her brief, and we find no instance, where she later asked the court to reconsider this issue with respect to a particular request for admission, or filed a motion for counsel fees as a sanction to this alleged discovery violation. Nonetheless, we are not convinced that wife incurred any significant fees on this issue and, indeed, she does not request a specific amount of compensation.
Finally, wife argues that the court erred by rejecting her counsel's initial ninety-three-page certification for legal services, and limiting the amended submission for fees to "an articulation of the services performed and costs incurred, the identity of individual(s) performing the work, how much had been paid to the attorney, how much was owed to the attorney, and the qualifications of the attorney." We discern no abuse of discretion by the court under Rule 4:42-9 in directing the parties to submit amended certifications.
Turning to husband's appeal, we reject as without substantiation and merit husband's argument that he is entitled to all counsel fees based on his claims that wife and her attorney engaged in criminal acts. R. 2:11-3(e)(1)(E). We are satisfied the quantum of the counsel fee award was well within the court's discretion and amply supported by the record.
In summary, on husband's appeal, we affirm the January 15, 2010 order reinstating wife's pleadings and May 26, 2010 order for partial summary judgment that the Teaneck property and lifetime leases in the New York apartments were gifts to wife and not subject to equitable distribution. As to the November 3, 2010 final judgment of divorce, we affirm the ruling regarding the Portugal property; we also affirm the finding that husband has an equitable distribution interest in the retained income from the Teaneck shopping center but remand for additional fact finding on the court's eighty/twenty allocation.
On wife's cross-appeal, we remand for additional fact finding on the issue of intent to deprive with respect to the dissipation of assets, affirm the court's declination to award her an offset against the Portugal property, and affirm the award of permanent alimony and counsel fees to husband. We do not retain jurisdiction.