On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-949-03.
Before Judges Payne, Simonelli and Hayden.
In these back-to-back appeals, which we consolidate for purposes of this opinion only, plaintiff Steven Burg appeals from three Family Part orders: (1) that part of the December 15, 2009 Family Part order, which denied a reduction in his alimony and child support payments for the years 2004 to 2006, granted an allegedly insufficient reduction for the years 2007 to 2009, and denied attorney's fees; (2) that part of the October 7, 2010 order, which partially denied his motion for reconsideration; and (3) the December 17, 2010 order, which denied his motion to reduce his support payments for 2010. Defendant Adele Burg cross-appeals from those parts of all three orders that granted plaintiff a reduction in his support payments and denied her request for attorney's fees. We affirm in part, reverse in part, and remand for further proceedings.
We summarize the facts pertinent to our review. Plaintiff had been employed at Worldwide Financial Resources, Inc. (WFR), which he co-owned with David Findel (Findel). On May 1, 2001, plaintiff entered into an employment agreement to sell his fifty-percent interest in WFR (the 2001 Employment Agreement).*fn1
According to plaintiff, pursuant to the agreement, he would receive $240,000 yearly for three years plus fifty percent of gross commissions on closed mortgage originations he produced as "salary." He would also receive the following "buyout" payments: (1) $50,000 monthly for twelve months; (2) additional commissions of 0.05% of WFR's gross mortgage production; and (3) an additional twenty-five percent of gross commissions on closed mortgage originations he produced (the twenty-five percent override). The agreement began on May 1, 2001, and ended on April 30, 2004.
On September 18, 2003, the parties entered into a Property Settlement Agreement (PSA) and were divorced. Pursuant to the PSA, defendant waived her right to equitable distribution of the buyout payments. In addition, the buyout payments apparently were not included for support purposes because support was calculated on plaintiff's $250,000 annual income,*fn2 which was presumably based, in part, on the $240,000 yearly salary he would receive pursuant to the 2001 Employment Agreement. The PSA required plaintiff to pay defendant alimony for twelve and one-half years at $1,338.47 weekly, beginning September 19, 2003, and child support for the parties' two children of $461.53 weekly.
The PSA contemplated the change that would occur in plaintiff's income on April 30, 2004, apparently because he would no longer receive the $240,000 yearly salary pursuant to the 2001 Employment Agreement as of that date. The PSA provided that between May 1, 2004 and August 1, 2004, the parties would review plaintiff's then current earnings to determine whether to adjust his support obligations upward or downward, and apply any modification retroactively to May 1, 2004. The parties also agreed to waive a Lepis*fn3 application.
In 2004, defendant filed an enforcement motion, and plaintiff filed a cross-motion to reduce his support obligations. He certified that the payments under the 2001 Employment Agreement had ceased, thereby triggering an adjustment to his income and support obligations. He claimed that after April 30, 2004, he derived his income solely from his fifty percent commissions, on which his support obligations should now be calculated. He also claimed that his commission income had decreased steadily since 2004 due to the declining mortgage industry. The trial judge denied plaintiff's cross-motion, and instructed the parties to exchange a Case Information Statement (CIS) and tax returns.
In February 2005, plaintiff again moved to reduce his support obligations. The judge calculated plaintiff's then current earnings by deducting the buyout payments, which defendant had waived, from plaintiff's total 2004 earnings, and concluded that plaintiff had earned $105,617 for the remainder of 2004. The judge then adjusted plaintiff's income from $250,000 to $105,617, and reduced alimony from $1,338.47 to $609 weekly, and child support from $461.53 to $313 weekly, retroactive to May 1, 2004. A March 21, 2005 order memorialized this decision.
The judge subsequently granted defendant's motion for reconsideration, concluding that plaintiff had failed to address his efforts to seek other employment and his potential to earn more money. In a May 13, 2005 order, the judge vacated the March 21, 2005 order, and reinstated plaintiff's original support obligations.
Plaintiff appealed. We reversed and remanded for a plenary hearing to determine the amount of plaintiff's current income and ability to earn income commensurate with his education and professional background, and whether he was entitled to a reduction based on the changed circumstances contemplated in the PSA. Burg v. Burg, No. A-6378-04 (App. Div. November 20, 2006) (slip op. at 11). We specifically directed plaintiff to explain why the commission income he had presented to the trial judge declined "in a period of booming real estate sales and refinancing of existing mortgages." Id. at 10.
During the remand hearing, which began on February 22, 2008, plaintiff testified for the first time that he had not received all of the buyout payments due to him under the 2001 Employment Agreement, specifically, the additional commissions of 0.05% of WFR's gross mortgage production and the additional twenty-five percent override. He produced an agreement with WFR, dated January 1, 2007, entitled "Agreement for Settlement of Gross Production Payment" (the 2007 Settlement Agreement), and made effective September 18, 2006. The 2007 Settlement Agreement stated that plaintiff had not received these buyout payments, and that he had received only $35,450 in buyout payments in 2006. Pursuant to the 2007 Settlement Agreement, plaintiff would receive buyout payments of $2500 weekly and $1000 monthly from September 18, 2006 to March 19, 2009, and would continue working for WFR and receive increased commissions. Plaintiff formed a limited liability company to receive the payments from WFR as 1099 income. Plaintiff claimed that pursuant to the 2007 Settlement Agreement, he had received a total of $142,000 in buyout payments in 2007.
At the remand hearing, plaintiff testified that the mortgage industry dramatically changed in 2007 due to the sub-prime mortgage crisis,*fn4 which negatively impacted his commission income and forced him to tap into his savings and the buyout payments he was still receiving to help support himself. He produced no corroborating documents supporting his testimony about the mortgage industry. He conceded that his prior attorney had represented to defendant's attorney that the buyout payments had ceased on July 16, 2004, that plaintiff was only entitled to receive commissions thereafter, and that this information accurately reflected plaintiff's financial circumstances as of August 23, 2004. Plaintiff also conceded that he had never previously advised the court that he was still owed buyout money, and that his December 2004 CIS did not indicate that WFR owed him buyout money.
Plaintiff also testified that he had "explored alternative employment," but two available employment opportunities were "far less lucrative" than his present employment. Plaintiff conceded, however, that there was nothing preventing him from obtaining employment with another company.
Findel testified that plaintiff had not received all of the buyout money due to him under the 2001 Employment Agreement. However, Findel conceded that he had confirmed in an October 2004 letter to plaintiff that the payments due under the 2001 Employment Agreement ceased on April 30, 2004, and the letter did not state that any money was still owed to plaintiff. Findel also conceded that there were no documents establishing the amount allegedly owed to plaintiff under the 2001 Employment Agreement, and how much plaintiff was paid.
Defendant's expert forensic accountant, John Ibex, analyzed plaintiff's income tax returns and other financial information for the years 2004 to 2007 to determine plaintiff's income for each of those years. He also performed a preliminary lifestyle analysis for the period July 2006 to July 2007 to determine plaintiff's spending habits. Ibex concluded that plaintiff's after-tax cash flow available income averaged $236,000 for 2004 to 2007, which supported the $250,000 annual income stated in the PSA. Plaintiff did not cross-examine Ibex or produce contrary expert evidence. Instead, he testified that Ibex's expert report contained mathematical errors and included assets that could not be considered "income" for support purposes.
Defendant, who is a licensed chiropractor, testified that except for brief periods of employment during 2005 and 2006, she had not worked in recent years, and had recently searched the internet, unsuccessfully, for employment.
The plenary hearing concluded on December 11, 2008. Prior to rendering a decision, on September 21, 2009, the trial judge contacted the parties after learning that WFR was no longer in business and Findel had "been implicated in a criminal matter involving his use of WFR." At plaintiff's request, and over defendant's objection, the court re-opened the record ...