June 7, 2012
VIRGINIA GORDON, PLAINTIFF-RESPONDENT,
ARTHUR J. GORDON, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-722-99C.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: March 7, 2012
Before Judges Axelrad and Sapp-Peterson.
In this post-judgment matrimonial matter, defendant Arthur Gordon (husband) appeals from the Family Part's October 18, 2010 order reducing his alimony obligation by $100 per week and the January 3, 2011 order denying his motion for reconsideration. On appeal, he argues the reduction was not sufficient, it should have been retroactive to the date of his disability, and his life insurance obligation also should have been reduced. We remand.
After nearly twenty-five years of marriage, the parties were divorced on January 31, 2000. As part of their property settlement agreement (PSA), husband agreed to pay plaintiff Virginia Gordon (wife) $300 per week in permanent alimony until their younger son, who was almost eighteen years old, was emancipated, after which husband's payment would increase to $400 per week because his $100 per week child support obligation would terminate. The parties also agreed that husband would maintain a life insurance policy for wife's benefit in the amount of $100,000.
On December 18, 2009, husband filed a motion to modify alimony by either terminating it or reducing his monthly payments. He also sought to terminate his life insurance obligation. Wife filed a cross-motion, seeking to increase her monthly alimony award.
On January 22, 2010, Judge Bryan D. Garruto denied husband's motion and wife's cross-motion without prejudice, but required husband to undergo an independent medical examination to determine whether he was permanently disabled. On January 23, 2010, the Social Security Administration (SSA) sent husband a letter, advising of its determination that he became disabled on May 20, 2009.
On or about March 3, 2010, husband filed a motion to terminate alimony, based on the SSA's disability determination. Judge Garruto entered an order on April 16, 2010, denying termination of alimony but granting husband's motion for a downward modification of his alimony obligation, finding husband's "significantly reduced earnings, as compared to his salary at the time of the parties' divorce, constitutes a permanent and substantial change of circumstances." Judge Garruto also ordered wife to provide her most recent financial information so the court could recalculate husband's alimony obligation, and denied husband's motion to terminate his obligation to maintain a life insurance policy for wife's benefit. The order provided that the court would calculate defendant's obligation on May 28, but was silent as to the date the reduction would take effect.
The parties submitted supplemental certifications and additional financial information as directed by the court, which extended beyond the anticipated May hearing date. Following a plenary hearing on October 1, another Family Part judge entered an order and letter opinion dated October 18, reducing husband's alimony obligation from $400 per week to $300 per week, retroactive to April 16, 2010. The opinion was silent as to husband's life insurance obligation and the order generally denied without prejudice "[a]ny other issues not specifically addressed." Husband moved for reconsideration, which was denied on January 3, 2011. This appeal ensued.
The parties were married in l975. At the time of their divorce in 2000, wife worked as an assistant manager for Sovereign Bank, earning approximately $25,000. Husband was employed as a Facilities Director in Credit Suisse/First Boston, earning approximately $120,000 in 1999, including about $25,000 worth of overtime pay without benefits.
After the divorce, wife's income increased to approximately $50,000, until she lost her job in June 2009, and began receiving unemployment benefits. Husband changed his employment to a lower position with Smith Barney to obtain health benefits. In 2008, he earned $114,618 working at Citigroup.
Husband experienced numerous back problems, including lumbar disc herniation, sciatica, spasms, and cervical and lumbar spine pain. As a result, he took temporary disability from Citigroup, and for the first thirteen weeks of his short-term disability, husband earned his full salary. On July 31, 2009, husband was approved for long-term disability through Met Life. He received $6128 per month in gross disability benefits from Met Life, equating to an annual income of $73,536. Husband also received New York State disability benefits in the amount of $736.67 per month, which was deducted from his Met Life check. The SSA declared husband to be fully disabled in January 2010, finding he became disabled on May 20, 2009 and his benefits were retroactive to November 1, 2009.*fn1
Following the April 16, 2010 order granting husband a reduction in alimony based on changed circumstances, a plenary hearing was held on October 1, 2010 to determine the appropriate alimony calculation. At the plenary hearing, wife testified that at the time of the divorce, she earned approximately $25,000, but in 2008 she earned approximately $56,000. She represented she had been actively seeking employment since June 2009 without success. Wife testified she received $526 a week in unemployment benefits, but was unsure if her benefits would be renewed.*fn2
Wife also testified she lived in a single-family home in Fords with her thirty-two-year-old son. According to wife, her son worked as a manager at a trucking business, but he did not contribute to household expenses because he was saving to buy his own house. Wife also stated she and husband lived in a single-family home prior to the divorce, and she purchased the Fords home after the divorce. Wife testified she would be unable to continue living in the home without her alimony payment because her unemployment "will either cover my bills or pay for my mortgage and you know, I won't have enough for both."
Wife further testified that her uncle's house in North Hempsted was in her name, but he lived there and paid the bills and costs. She also inherited $60,000 to $80,000 from her mother several years prior, but that money was no longer available.
Wife then testified regarding her expenses, specifically that she paid $1149 monthly for her mortgage and $563 for her home equity loan. She testified her COBRA payments were close to $500 per month for health insurance and would increase by several hundred dollars when she obtained her own insurance. She also testified regarding her daily living expenses, including water and sewer, snow removal, electric and gas, lawn care, maintenance and repairs, pest control, telephone, cable, cell phone, internet, equipment and furnishing, groceries, cosmetics, hair care, and medical co-payments. The judge questioned wife regarding the accuracy of her listed expenses, which added up to $5500 per month, and she conceded that some of her estimates were not necessarily accurate.
Husband testified he earned approximately $120,000 at the time of the divorce, but then became disabled due to "multiple herniated and bulging disks in my cervical, lower lumbar, arthritis of the spine and sciatica." The SSA determined he was disabled, retroactive to November 2009, and husband earned about $6000 a month, $72,000 annually, through Social Security and Met Life. Husband testified his health insurance costs increased from $200 to $800 per month. He further testified he paid $400 weekly in alimony and $50 monthly for life insurance pursuant to the PSA.
At the time of the hearing, husband lived in Staten Island, but he testified the home was listed for sale and settlement was imminent. Husband testified he paid $1400 monthly in a mortgage and $150 in a home equity loan. Although husband testified he expected to make $20,000 on the sale of the home, he had $48,000 in credit card debt and paid a minimum of $650 monthly, he was still paying on a student loan, he borrowed $15,000 from his 401K, and he was "about [$]8000 in the red" with his checking account.
Husband testified his girlfriend lived with him, and after the sale they planned to move to Florida, where he had an ownership interest in a home. He represented they would split the monthly $995 mortgage payment, which she had been paying, in addition to splitting other expenses. Generally, husband's monthly expenses included $200 in groceries, a $515 car payment, car and flood insurance, doctor's costs, and utilities.
Following the plenary hearing and review of the parties' case information statements (CIS), the court issued a letter opinion reducing husband's alimony obligation from $400 to $300 per week. The court noted wife earned $25,000 at the time of the divorce, was earning $50,000 when she was laid off in June 2009, and thereafter began collecting $584 per week in unemployment benefits.
The court found wife's son was the beneficiary of her household expenses, including groceries, internet and cable service, lawn care, snow removal, pest control, and separate landline telephone service, but "he made no monetary contributions whatsoever to the expenses of the home." The court also found wife listed inaccurate expenses on her CIS, including that repairs and maintenance of the home were closer to $1500 a year, not $4800 a year; she reported a monthly expense of $600 for groceries, non-prescription drugs, cosmetics, toiletries, and sundries, "a substantial number for a two person household"; and the $140 a month for lawn care, $118 a month for pest control, and $150 a month for snow removal "were either overstated or appeared to be inaccurate[.]"
The court found husband was declared disabled by the SSA and received total monthly benefits of $6128. The court noted that although husband's CIS, which was submitted after the plenary hearing, reported $6,953.79 in monthly expenses, he testified his expenses added up to only about $3300 per month. The court found husband contributed to the monthly mortgage payment of his residence, paid a share of the monthly utilities, out-of-pocket medical expenses, life insurance premiums, and lease payments for his automobile, and had credit card debt in excess of $30,000.
The court concluded that husband's disability and inability to work was involuntary, and thus, under Deegan v. Deegan, 254 N.J. Super. 350, 355 (App. Div. 1992), "all that is required is an analysis of the alterations in the parties' financial circumstances." In examining the financial circumstances, the court found husband's income was "substantially reduced[,]" but that wife depended on the $400 alimony payment to support herself. As neither party submitted copies of their original CIS forms or testified as to their marital standard of living, the court used their earnings, assets and obligations under the PSA to establish the standard, concluding there was no evidence indicating "the numbers set forth in the PSA prevented the parties from living a lifestyle comparable to the one they enjoyed while living together."
The court concluded that husband "clearly established that his income has had a substantial reduction" due to his disability, and wife "clearly overstated" her monthly expenses. Noting that the PSA set $300 a week as the "reasonable amount of alimony," the court used that figure as the appropriate reduced alimony figure retroactive to Judge Garruto's April l6, 2010 order. The court denied husband's motion for reconsideration by order of January 3, 2011. This appeal ensued.
On appeal, husband asserts error by the court in insufficiently reducing his alimony payments, failing to proportionally reduce his life insurance obligation, and failing to set the retroactive date for the reduction of alimony to the date the SSA deemed him disabled.
Modification of an alimony award based on a claim of changed circumstances is a matter within the sound discretion of the family court judge. Innes v. Innes, 117 N.J. 496, 504 (1990); Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006). Every motion to modify an alimony obligation "'rests upon its own particular footing and the appellate court must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters.'" Larbig, supra, 384 N.J. Super. at 21 (quoting Martindell v. Martindell, 21 N.J. 341, 355 (1956)).
We grant substantial deference to a trial court's findings of fact and conclusions of law, particularly Family Part judges because of their special jurisdiction and expertise, "which will only be disturbed if they are 'manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence.'" Crespo v. Crespo, 395 N.J. Super. 190, 193-94 (App. Div. 2007) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). See also Cesare v. Cesare, 154 N.J. 394, 413 (1998).
Consistent with the case law, Judge Garruto found husband demonstrated a prima facie showing of changed circumstances, directed discovery, and scheduled a plenary hearing for the recalculation of alimony. See Crews v. Crews, 164 N.J. 11, 28 (2000); Lepis v. Lepis, 83 N.J. 139, 157 (1980). Wife did not appeal this order.
The standard that governs an application for modification of a PSA is the same standard that applies at the time of the original judgment of divorce. Miller v. Miller, 160 N.J. 408, 420 (1999). When support of an economically dependant spouse is at issue, "the general considerations are the dependant spouse's needs, that spouse's ability to contribute to the fulfillment of those needs, and the supporting spouse's ability to maintain the dependent spouse at the former standard." Crews, supra, 164 N.J. at 24 (quoting Lepis, supra, 83 N.J. at 152). When the change in circumstances is involuntary, "all that is required is an analysis of the alterations in the parties' financial circumstances." Deegan, supra, 254 N.J. Super. at 355.
In an application brought by a supporting spouse for a downward modification in alimony, "the central issue is the supporting spouse's ability to pay." Miller, supra, 160 N.J. at 420. The court should consider the supporting spouse's ability to contribute to his or her own maintenance, both when the agreement was made, and during the application for modification. Lepis, supra, 83 N.J. at 155. In calculating the alimony award, a court should take into account not only the supporting spouse's income, but also his or her assets. Miller, supra, 160 N.J. at 422.
Here, it is undisputed that husband demonstrated an involuntary change in circumstances based on his disability. Husband's income decreased from approximately $120,000 at the time of divorce to approximately $73,000 in disability benefits at the time of the hearing. Husband argues the court erred in determining the modified alimony amount, essentially basing it on an arbitrary step-up provision in the PSA, and failing to consider that husband's annual income was reduced by forty-two percent, while wife's income increased by 125 percent. Husband further argues the court failed to consider the actual need and ability of the parties to pay and the income available to them through investments and assets.
We agree that the court did not explain how it reached the $300 weekly alimony payment and performed no analysis of the three-part Crews and Lepis test for modifying a support obligation, i.e., (1) wife's needs, (2) wife's ability to contribute to her own expenses, and (3) husband's ability to help maintain the marital standard of living. Crews, supra, 164 N.J. at 24; Lepis, supra, 83 N.J. at 152.
As to the first two prongs, the court noted wife's concession at the plenary hearing that she overstated her expenses on her CIS. However, it then performed no analysis as to wife's current needs and made no findings as to how much wife accurately spends monthly on daily living expenses. Furthermore, wife testified as to covering the daily expenses for a two-person home, consisting of her and her adult son, who was employed and saving to buy his own house. The court found the adult son was the beneficiary of many of wife's household expenses but performed no analysis of how that affected wife's lifestyle and actual needs. We take no position as to whether $300 per week was the correct alimony figure. It was imperative for the court to perform an independent analysis of these factors and explain its findings rather than short-cut and accept the step-down figure established under the PSA that was unrelated to the reduction in husband's income and change in wife's status. We thus remand for further findings on these issues.
Wife presented sufficient evidence with respect to uncle's home that was in her name and the inheritance from her mother that it was appropriate for the court not to consider those assets in connection with recalculating alimony.
Husband next argues the court erred in setting the retroactive date for the reduction of alimony to April 16, 2010, the date Judge Garruto determined he met his burden of changed circumstances, rather than setting the retroactive date to the date the SSA deemed him disabled, May 20, 2009, or at the latest, when he first filed his motion for modification on December 18, 2009. We disagree that the date of disability was the appropriate date under the circumstances of the case, but on remand direct the court to consider whether to utilize as the effective date of the reduction the filing date of defendant's first motion in December 2009, or March 3, 2010, the filing date after he received notice of disability from the SSA.
Husband does not provide anything to demonstrate that he originally asked the court to make the date retroactive to his disability determination, although it appears he challenged the retroactive date in his motion for reconsideration. However, husband does not provide us any information as to what he submitted to the trial court and what specific arguments he made. Husband did not request that Judge Garruto set the retroactive date at May 20, 2009, or any specific day. Nor was there any discussion at the plenary hearing about retroactivity. The judge whose order is under appeal appeared to have simply chosen the date of Judge Garruto's order, April 16, 2010, as the effective date, and the issue first arose in the motion for reconsideration.
The retroactivity of alimony payments "is left to the sound discretion of the trial judge." Walles v. Walles, 295 N.J. Super. 498, 514 (App. Div. 1996). Although N.J.S.A. 2A:17-56.23a provides that the retroactivity of child support modification is limited to the date the moving party filed the notice of motion, "[t]here is no analogous statutory provision that prohibits retroactive reduction of alimony payments." Walles, supra, 295 N.J. Super. at 514.
In Walles, the trial court reduced the husband's child support and alimony obligations based on changed circumstances, retroactive to the beginning of the year. Id. at 511-12. The wife challenged the retroactive date. Id. at 513-14. We found the child support date violated N.J.S.A. 2A:17-56.23a, but the retroactivity date for the alimony decision was purely discretionary for the trial judge. Id. at 514.
Husband argues that under Golian v. Golian, 344 N.J. Super. 337 (App. Div. 2001), the court should use the date the SSA determined he was disabled as the retroactive date. However, Golian does not support that proposition. We held in Golian that "the SSA adjudication of disability constitutes a prima facie showing that plaintiff is disabled, and therefore unable to be gainfully employed, and the burden shifts to defendant to refute that presumption." Id. at 342-43. This holding makes the SSA's determination of disability presumptively binding on courts, but it does not require courts to use that date for retroactivity purposes. Instead, the date of retroactivity remains within the trial court's discretion.
Turning to husband's last argument, he represented he was paying $50 monthly for the $100,000 life insurance policy as required under the PSA as security for alimony. He did not actually make a motion to reduce his life insurance obligation but to terminate it, which was denied, along with his motion to terminate alimony. On appeal, husband argues the court should have reduced the life insurance obligation proportionately to the reduction in alimony.
A trial court has the discretion to order a supporting spouse to purchase life insurance to secure alimony payments in the event of the supporting spouse's death. Jacobitti v. Jacobitti, 135 N.J. 571, 580-83 (1994); Davis v. Davis, 184 N.J. Super. 430, 438-39 (App. Div. 1982). An agreement regarding a life insurance policy is modifiable when changed circumstances exist. Schwarz v. Schwarz, 328 N.J. Super. 275, 286-87 (App. Div. 2000).
Considering our remand respecting alimony, the court should consider the amount of husband's premiums and determine, within its discretion, whether a reduction in the amount of the mandated life insurance policy is warranted under the circumstances.
Remanded for further factual findings and a recalculation of alimony, and determination of the effective date of reduction of alimony and whether to reduce husband's life insurance obligation. We do not retain jurisdiction.