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Edward Curley v. Roberta Curley

May 9, 2012

EDWARD CURLEY, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
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.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.

I.

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.

II.

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 ...


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