October 29, 2012
CHRISTINA MANTEY F/K/A CHRISTINA MANTEY-SCHWARTZ, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
ERIC SCHWARTZ, DEFENDANT-RESPONDENT/ CROSS-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Somerset County, Docket No. FM-18-000955-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 9, 2012
Before Judges Sabatino and Maven.
In this matrimonial case, plaintiff Christina Mantey, formerly known as Christina Mantey-Schwartz ("Mantey"), and defendant Eric Schwartz ("Schwartz") respectively appeal and cross-appeal certain aspects of the Family Part's November 17, 2011 Amended Dual Judgment of Divorce relating to the equitable distribution of the parties' assets. In particular, the parties each contest discrete terms of equitable distribution ordered by the trial court relating to: (1) the marital residence; and (2) a Morgan Stanley investment account (the "Morgan Stanley account"). Because the trial judge's oral decision and written findings do not sufficiently address all of the relevant statutory criteria for equitable distribution prescribed by N.J.S.A. 2A:34-23.1, and, in some respects, lack sufficient evidential and legal support, we remand this matter to the Family Part for a reexamination of the contested issues and for a more complete statement of reasons.
The parties were married in July 1997. They separated in November 2007 when Mantey moved out of the marital residence. They have no children together. In May 2010, Mantey filed a complaint for divorce, and Schwartz thereafter filed a counterclaim for divorce.
Following certain stipulations by the parties, the two unresolved issues in the divorce action related to equitable distribution. These issues were the subject of a one-day trial conducted in the Family Part in November 2011. Both spouses were represented by counsel and they were the only witnesses who testified.
As to the marital residence, the record indicates that the parties jointly purchased it in July 1995, approximately two years before they married. Schwartz testified that he paid the entire $36,000 down payment for the purchase from his personal account. Mantey testified, however, that she funded approximately $6,000 of the down payment from her own savings. The parties lived in the house together from July 1995 until November 2007, when Mantey vacated the premises. Up to the time of trial, Schwartz continued to reside in the house. The record indicates, however, that the parties anticipate selling the home.
At trial, Schwartz contended that the $36,000 he allegedly contributed to the home should not be included within the marital assets subject to equitable distribution. Mantey, on the other hand, argued that both parties had contributed to the down payment, that the house was purchased in contemplation of marriage, and consequently the entire net proceeds of any sale of the residence should be available for equitable distribution without any offset.
The other disputed asset during the divorce action was the Morgan Stanley account, which was opened in the parties' joint names in December 2002. Prior to that time, the parties had a joint investment account with Putnam, which was initially funded in 1999 with approximately $30,000 they received as wedding gifts. In November 2001, Schwartz's mother died, leaving him with an inheritance of approximately $300,000. The parties do not dispute that $100,000 of the inheritance remained segregated in a separate IRA account and is therefore not a martial asset subject to equitable distribution. The remaining $200,000 of inheritance, which is at issue, was deposited into the joint Morgan Stanley account in three deposits between December 2002 and June 2003. A fourth deposit was made in May 2003 from the couple's joint Putnam account.
As of September 2006, the approximate value of the Morgan Stanley account was $295,000. That same month, the parties signed a document authorizing the transfer of the funds in the Morgan Stanley account into an account (also with Morgan Stanley) that was solely in Schwartz's name. Schwartz testified that this transfer was intended to insulate the funds from potential creditors of Mantey. He further testified that Mantey acknowledged that those funds came from his inheritance, and, allegedly, "she wanted no part of them." Mantey, however, disputed this claim, contending that she understood the funds to be marital assets and that she had signed the transfer documentation unwittingly because Schwartz had typically handled the parties' investments.
Between October 2006 and October 2010, several withdrawals were made
from the new Morgan Stanley account. In addition, the value of the
investments in the account were decreased by market forces.*fn1
By October 2010, the value of the Morgan Stanley account had
dropped to $123,000. Schwartz lost his job in 2006 and thereafter had
made only limited earnings as a real estate agent. He testified that
the funds withdrawn from the Morgan Stanley account were used to help
pay the parties' joint expenses through the time of the wife's
departure in November 2007. According to Schwartz, the account was
thereafter used to pay the mortgage and otherwise maintain the
property. Schwartz acknowledged on cross-examination, however, that
some of the funds withdrawn from the account were used for his
personal food, clothing, and utilities.
After considering the parties' testimony concerning these two disputed assets, the trial judge made the following determinations. With respect to the marital residence, the judge concluded that Schwartz's contribution to the down payment was a gift, and thus declined to grant the $36,000 credit sought by Schwartz. The judge divided the equity in the house in equal (50/50) shares to each spouse. With respect to the Morgan Stanley account, the judge rejected Schwartz's argument that the account was his personal asset and instead found it eligible for equitable distribution. The judge apportioned eighty percent of the then-current value of the Morgan Stanley account to Schwartz and twenty percent to Mantey. Over Mantey's objection, the judge ordered that the account be valued as of the time of trial and not as of some earlier date.
On appeal, the parties now each raise divergent reasons for overturning these rulings on equitable distribution. As to the marital residence, Schwartz challenges the court's finding that his contribution to the down payment was a gift. He also challenges the fairness of the 50/50 division of the equity in the house, because he was not given a $36,000 credit. Mantey argues that we should affirm the trial court's finding of a gift, and to leave the 50/50 allocation undisturbed.
As to the Morgan Stanley account, Schwartz argues that the judge erred in not treating those funds as his exclusive asset because the account was substantially funded by his inheritance and also because the funds were in an account that was solely in his name at the time of Mantey's divorce complaint, filed in May 2010. Meanwhile, Mantey argues that the judge correctly treated the Morgan Stanley account as a marital asset, but the judge erred in: (1) unfairly awarding Schwartz eighty percent of the account balance; and (2) utilizing the time of trial as the account valuation date rather than either September 2006 (when the funds were transferred into Schwartz's personal account), or alternatively, November 2007 (when the parties separated).
In evaluating the competing contentions on the appeal and cross-appeal, we must consider the operative language of the equitable distribution statute, N.J.S.A. 2A:34-23.1. Pursuant to that statute, the Legislature has instructed that the court must consider the following factors in its equitable distribution findings:
In making an equitable distribution of property, the court shall consider, but not be limited to, the following factors:
a. The duration of the marriage or civil union;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage or civil union by each party;
d. The standard of living established during the marriage or civil union;
e. Any written agreement made by the parties before or during the marriage or civil union concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage or civil union;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union couple or children;
o. The extent to which a party deferred achieving their career goals; and
p. Any other factors which the court may deem relevant. [N.J.S.A. 2A:34-23.1 (emphasis added).]
In McGee v. McGee, 277 N.J. Super. 1, 10 (App. Div. 1994), we noted that N.J.S.A. 2A:34-23.1 "requires" trial judges to apply the enumerated statutory criteria for equitable distribution. Moreover, N.J.S.A. 2A:34-23.1 mandates that "[i]n every case" in which an award of equitable distribution is made: 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, including specifically, but not limited to, the factors set forth in this section. [N.J.S.A. 2A:34-23.1 (emphasis added).]
The statute also provides for "a rebuttable presumption that each party made a substantial financial or non-financial contribution to the acquisition of income and property while the party was married." Ibid.
We also are guided by the distinctive standards of review that apply to a trial court's rulings on matters of equitable distribution. A trial court's conclusions in identifying the relevant assets eligible for distribution and in ascertaining their total value must be supported by "adequate credible evidence" in the record. Rothman v. Rothman, 65 N.J. 219, 233 (1974); see also Addesa v. Addesa, 392 N.J. Super. 58, 75 (App. Div. 2007). On the other hand, a trial court's allocation of assets is instead reviewed as to whether such allocation "constituted an abuse of the trial judge's discretion." Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-44 (App. Div. 1978); see also Genovese v. Genovese, 392 N.J. Super. 215, 222 (App. Div. 2007).
Guided by these principles, we now consider, in turn, the judge's respective determinations as to the marital residence and as to the Morgan Stanley account.
We first address the treatment of Schwartz's contribution (whether it be $36,000 or, if Mantey's testimony were credited, some lesser amount) to the down payment for the 1995 purchase of what later became the marital residence. In his oral decision at the end of the trial on November 16, 2011, the judge found that "the $36,000 used by the parties to purchase the marital home assumed the nature of a gift because of the length of time that has passed since the purchase of the home to the present time . . . ." (Emphasis added). However, in the Amended Dual Judgment of Divorce issued the next day on November 17, 2011, the judge provided a different reason for denying a credit to Schwartz:
When the monies were used to purchase a home, which was put in joint names, those funds lost their exempt status. By placing the home in joint names, the [c]court considers that half of the deposit monies were given to the Defendant's [ex-husband's] then fiance. [Emphasis added.]
Notably, the Amended Dual Judgment of Divorce does not rely on the passage of time as a basis to deny Schwartz's claim for an offset. Nor does it explain the apparent discrepancy in the court's rationale presented orally and thereafter in writing. Additionally, neither the oral nor the written decision discusses the statutory factors for equitable distribution under N.J.S.A. 2A:34-23.1 with respect to the marital residence.
The trial court's oral and written rulings concerning the down payment and the residence also do not discuss any applicable case law relating to those issues. Even so, there are several reported cases that provide some guidance on this issue.
In Perkins v. Perkins, 159 N.J. Super. 243, 246 (App. Div. 1978), we upheld a trial judge's determination that a husband's conveyance of property to himself and his wife which the husband had owned personally before the marriage, constituted a gift, thereby creating a tenancy by the entirety. Similar findings of a gift were reached in Pascarella v. Pascarella, 165 N.J. Super. 558, 564 (App. Div. 1979) and in Canova v. Canova, 146 N.J. Super. 58, 81-82 (Ch. Div. 1976), both of which also involved a spouse's conveyance of a home, during the marriage, that the spouse had exclusively owned before the marriage. Moreover, in Weiss v. Weiss, 226 N.J. Super. 281, 286-87 (App. Div. 1988), a home purchased in a husband's name two months prior to the marriage was held to be a marital asset subject to equitable distribution because a "marital partnership" had been created prior to the marriage ceremony. We noted this result was appropriate "where the parties have adequately expressed that intention and have acquired assets in specific contemplation of their marriage." Id. at 287.
The present case factually differs from Perkins, Pascarella, Canova, and Weiss, because here the parties purchased the home in their joint names before the marriage. Nevertheless, that leaves unresolved whether the parties actually intended at the time of the purchase to have Schwartz's contribution to the down payment treated as a gift in contemplation of the marriage. The trial court made no specific findings as to the intent of the parties on this discrete and important question. Instead, it appears the court's decision was founded upon the passage of time, or on the fact that the house had been purchased in the parties' joint names, or upon both considerations, neither of which is dispositive under the case law. See, e.g., Wadlow v. Wadlow, 200 N.J. Super. 372, 380-81 (App. Div. 1985) (reversing the trial judge's decision to include $20,000 in the marital estate because of the "clearly manifested and unequivocal intent that [the money] belonged to the [ex-wife]" (emphasis added)). In addition, the court did not explicitly reject or address Mantey's contention that she had also contributed to the $36,000 down payment.
The trial court also gave no specific reasons why a 50/50 division of the equity in the marital home was appropriate under the statutory factors, although we recognize that such an even division is not uncommon in matrimonial cases. Such reasons are required under Rule 1:7-4, which states "[t]he court shall . . . find the facts and state its conclusion of law thereupon . . . ." See also Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 1:7-4 (2013) (emphasizing the "critical importance" of a detailed statement of reasons for appellate review).
In light of these gaps and apparent inconsistencies in the trial court's analysis regarding the down payment and the marital residence, it is preferable to remand this issue to the Family Part for reexamination under the applicable statutory factors and case law, and for the generation of a more detailed statement of reasons as required by Rule 1:7-4.
The trial court's analysis concerning the disposition of the Morgan Stanley account hinged upon a finding, expressed in both the bench ruling and in the Amended Dual Judgment of Divorce, that the funds deposited by Schwartz into that account were marital property because the account had joint ownership. The court rejected Schwartz's argument that he had a continuing right to the deposited funds because he inherited them from his mother's estate, finding that those funds lost their exempt status once Schwartz placed them into a joint account. Even so, the court decided to award Schwartz the bulk, i.e., eighty percent, of the remaining value of that account because he had been the source (or at least the primary source) of the deposited funds. Furthermore, the court designated the time of trial for the date of valuation of the account because Schwartz had used funds in the account since the parties' separation "toward the upkeep of the home."
Although the court's written determination with respect to the Morgan Stanley account alluded to five*fn2 of the sixteen factors enumerated in N.J.S.A. 2A:34-23.1, it did not analyze those factors with specificity or indicate in whose direction they weighed in this particular case. Nor did the court's decision discuss the other relevant statutory factors.*fn3 Although in some instances such an omission may be harmless, cf. Winer v. Winer, 241 N.J. Super. 510, 524 (App. Div. 1990), we discern in this case that the omissions could be significant. For example, the parties' relative economic circumstances at the time of their divorce, N.J.S.A. 2A:34-23.1(f), and the contributions that Mantey presumably made in kind as a homemaker, N.J.S.A. 2A:34-23.1(i), are factors that could weigh in Mantey's favor as to the fairness of the 80/20 division. Therefore, the court's focus on its finding that the Morgan Stanley account was largely funded from Schwartz's inheritance may not necessarily be dispositive in light of the other relevant statutory factors.
On the other hand, the court's treatment of the entire Morgan Stanley account as marital property simply because Schwartz had deposited inheritance monies into the account overlooks what the intentions of the parties may have been concerning those deposits. For example, in Dutsko v. Dutsko, 244 N.J. Super. 668, 671 (App. Div. 1990), we reversed a trial court's ruling to treat as eligible for equitable distribution a gift to the husband, which was deposited into the couple's joint bank account, because the funds had only been deposited temporarily over an eighteen-day holiday period and there was no proof that the husband had intended to make an inter-spousal gift. Similarly, in Wadlow, supra, 200 N.J. Super. at 380-81, we reversed a trial court's decision to include, as marital assets subject to equitable distribution, funds from the wife's savings, gifts, and inheritances that she had commingled with other joint assets where she had clearly manifested an unequivocal intent that those funds belonged to her individually and ultimately would be returned to her or her family. See also Pascale v. Pascale, 113 N.J. 20, 29 (1988) (noting the importance of evaluating whether there was an intention to make an inter-spousal gift).
The trial court's decision -- which treats Schwartz's deposits into the joint Morgan Stanley account as gifts, but then relies heavily on Schwartz's status as the source of those funds in arriving at the 80/20 equitable allocation -- is inherently conflicting and not sufficiently reconciled to enable our review.
The court also did not address the admitted fact that Schwartz utilized some of the Morgan Stanley account for his own personal needs after the parties separated, nor how that personal dissipation affects the 80/20 calculus. This also requires further analysis and a detailed statement of reasons.
The trial court's reasoning is similarly insufficient with respect to the selection of the time of trial as the operative date for valuation of the Morgan Stanley account for distributional purposes. The rulings below do not squarely address Mantey's contention that it is unfair to require her to equally absorb the loss of the funds in the account that were used for Schwartz's own personal expenses while the parties were separated. See Bednar v. Bednar, 193 N.J. Super. 330, 332 (App. Div. 1984) (explaining that, although the date of evaluation is normally the filing of the divorce complaint, "there is no absolutely iron-clad role" and the appropriate date may "depend on the nature of the asset and any compelling equitable considerations"); see also N.J.S.A. 2A:34-23.1 ("[T]he court shall make specific findings of fact on the evidence relevant to all issues pertaining to . . . asset valuation . ."). The parties' Case Information Statements, which were marked into evidence at trial, do not clearly support the court's unqualified finding that the funds in question were dissipated for the "upkeep" of the marital residence while the parties were separated. This likewise is an issue warranting closer scrutiny and a more detailed statement of reasons, with an appropriate quantification of the relevant expenditures used to preserve the marital asset.
For these numerous reasons, we remand this matter to the Family Part for further examination on these contested issues. The trial court must clearly address all of the applicable criteria under N.J.S.A. 2A:34-23.1 and the relevant case law.
Our direction for such a remand should not be construed as a conclusive assessment that the trial court's original decision, as a whole, was patently unfair or was too favorable to either party. Rather, we are constrained to remand the matter so that necessary findings are made and grounded appropriately in the record and in the law, so that the parties have a fuller and more detailed adjudication of their rights. The trial court also shall have the discretion to re-open the evidentiary record if it finds it necessary to address the applicable factors or any other issues.
Reversed and remanded. We do not retain jurisdiction.