December 18, 2012
KRISTIN GREELEY, PLAINTIFF-RESPONDENT,
SEAN GREELEY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1601-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: November 28, 2012 -
Before Judges Axelrad, Sapp-Peterson and Nugent.
In this matrimonial matter, defendant Sean Greeley appeals from the order denying his motion to vacate a default final judgment of divorce (FJD), filed eight months later, alleging there was excusable neglect under Rule 4:50-1(a), and in the alternative, contending Rule 4:50-1(f) provides relief because the judgment was unconscionable and unfair. He also argues the court failed to make factual and legal findings as to the reasonableness and fairness of the judgment, inappropriately denied him the child dependency tax exemption, and awarded plaintiff excessive counsel fees. We affirm in part and remand in part.
The parties were married in l987. They have four children, born in 1988, 1991, 1995, and 2001. They separated in 2006, and the children resided primarily with plaintiff Kristen Greeley, staying at the home the parties had rented for the past twenty years in Rumson. Defendant has been residing with his in-laws, also located in Rumson. The parties unsuccessfully saw two mediators within a three-year period.
Plaintiff filed a complaint for divorce on April 28, 2010. On May 5, 2010, her attorney mailed defendant a copy of the complaint with an acknowledgement of service. Defendant refused to acknowledge service, thus on May 29, 2010, he was personally served with the complaint.
On June 15, 2010, plaintiff served defendant with interrogatories and a notice to produce, which he also ignored. On July 30, 2010, plaintiff filed a request to enter default. On August 31, 2010, a notice of application for equitable distribution was successfully served upon defendant. The first default hearing was scheduled for September 22, 2010. However, defendant sought an adjournment of six weeks stating, because of "constraints at work and sending two children off to college, I have not finalized an attorney and need to postpone the date."
Plaintiff's attorney sent defendant a letter on September 21, 2010, confirming the rescheduled hearing date, and attached a second notice of application for equitable distribution. The hearing proceeded on October 6, 2010.
At the onset, the judge informed defendant she was not going to take testimony from him, although she permitted him to sit at counsel table. Plaintiff answered questions pertaining to her marriage, children, and application for equitable distribution. She testified that defendant is a vice president of JP Morgan Chase, where he has been employed for twenty years. Based on defendant's 2007 and 2009 W-2 forms, plaintiff represented that defendant's average income is approximately $240,000 annually. Plaintiff testified that she does not currently work but was employed as an aide at an elementary school one summer in which she earned $15,000.
Plaintiff agreed to have primary residential custody of her children and joint legal custody. Her requested equitable distribution notice also included a provision for child support for the two youngest children at $425 per week calculated under the child support guidelines based upon defendant's above- referenced income. At the time of the hearing, defendant paid the college tuitions of the two older children, and the equitable distribution provided that he would continue to pay 100% of the costs. It further provided that defendant would continue to maintain medical insurance for the children and pay for 80% of unreimbursed medical expenses, with plaintiff paying the remaining 20%.
The proposed equitable distribution also provided for permanent spousal support in the amount of $6250 per month. Plaintiff believed this amount represented sufficient funds "to live a lifestyle comparable to that which [she] lived during the marriage." Defendant was currently providing plaintiff with a "similar level of support by way of direct payment and by paying [her] rent and [her] utilities."*fn1 However, plaintiff felt this arrangement was inadequate because she was "falling short" of funds.
Plaintiff did not have "any specific information about [defendant's] various bank accounts, stocks, investments, [or] retirement accounts," which she was proposing be divided evenly. She advised that defendant had refused to provide her attorney with any financial information. She also proposed that both parties keep their respective cars. She proposed, however, that defendant satisfy her credit card debt of about $18,000, which she accumulated over the last thirty years, and maintain his existing life-insurance policy.
The judge was satisfied that plaintiff understood the terms of the equitable distribution and cause of action. She then expressed that she was not going to determine the fairness or reasonableness of the equitable distribution and the other requested services. Consistent with the proofs presented, she entered a judgment dissolving the marriage and incorporating the proposed equitable distribution. After a brief recess, the judge permitted defendant an opportunity to cross-examine plaintiff.
Defendant advised he was "in agreement with everything" except for some of the financial aspects. Defendant stated the amount plaintiff was requesting was more than he could provide. The judge responded:
Perhaps you should have been involved in the process all along. You cannot sit back and do nothing and think that nothing is going to continue. She has been doing her best to do numbers based on whatever little information she could gather. You have clearly been withholding the information that you're required to provide through this process. So the simple fact is, the numbers sound correct to this Court.
And I know that her attorney, Ms. Hall, worked very hard at averaging out the last numbers of years' income and to have any other response at this point, sir, is really unfair, to walk in here and insinuate that the numbers don't add up, when quite frankly, based on everything I'm hearing, they sound quite reasonable.
Defendant then asserted that he understood he would be heard. The judge replied, "I don't know why you understood that," and explained "[t]his is going by way of default. You did not respond at any stage of this proceeding." She added: the Court system would crumble if we allowed people to just hold it up and bring it to a grinding halt because they refused to participate. My understanding is, you refused to respond in any papers. You refused to provide any financial documents.
Quite frankly, Ms. Hall could have come into this Court at any point, filed a motion for support, and demanded that you provide these documents. She went another route because you had every opportunity.
And it is very proper and appropriate for [plaintiff], through her attorney, to apply the statute, to apply the rules, to apply the case law, and take from that information they have, and put out those numbers.
This is not done in a vacuum. Ms. Hall has done this based on all of the legal availabilities that she has, and put this together. It looked very appropriate to this Court.
Now again, I'm not making a finding.
You had every opportunity, and that you did not exercise it.
Pursuant to plaintiff's notice of application for equitable distribution, the judge also ordered defendant to pay three years of rehabilitative alimony at $1000 per month to allow her to return to school, and a $2500 counsel fee. The FJD was entered on October 6, 2010.
On June 7, 2011, defendant, through counsel, filed a notice of motion to vacate the FJD. He also sought discovery and a dependency exemption for federal and state income tax purposes.
Plaintiff filed a cross-motion opposing defendant's motion and seeking to enforce her rights for defendant's failure to comply with the FJD, and set forth a list of demands including: to set defendant's child support arrears at $37,657.58 as of June 17, 2011, require defendant to bring his arrears current within thirty days, enter judgment against defendant for the support arrears, require defendant to turn over all information concerning his bank and retirement accounts within seven days in compliance with the FJD, sanction defendant daily if he fails to turn over all this information, require proof that defendant paid 100% of her credit cards, require defendant to provide copies of his annual bonus each year, require defendant to pay $2500 towards her counsel feels in compliance with the FJD within seven days or issue a bench warrant for his arrest, require defendant to turn over all information regarding plaintiff's life insurance and provide proof that he has maintained his own life insurance within seven days, and require defendant to pay an additional $5000 to plaintiff's counsel.
According to defendant, during the week of July 11, 2011, his counsel was advised by the judge's law clerk that the judge would not be hearing oral argument because she was sick. Therefore, defendant's motion was heard on the papers. On October 12, 2011, the judge issued an order denying defendant's application in its entirety and granting plaintiff's application in its entirety under Rule 1:10-3. She attached a statement of reasons to the order.
The judge explained that pursuant to Rule 5:5-10, the entry of default was proper. Plaintiff's notice of application for equitable distribution was served on August 31, 2010, which was more than twenty days before the default hearing, which was originally scheduled for September 22, 2010. Additionally, the notice properly included all of the Rule's requirements. R. 5:5-10.
The judge held that pursuant to Rule 4:43-3, defendant was not entitled to relief from the parties' FJD because there was no "good cause." She explained that defendant had received the complaint, interrogatories, notice to produce, request for default, two copies of the notice of application for equitable distribution, and multiple documents regarding court dates. However, defendant failed to retain counsel, file responsive pleadings, or comply with financial discovery requests. She elaborated that defendant's "unwillingness to acknowledge the pending divorce and reluctance to participate in the proceedings for approximately six months shall not be overcome by his new desires to negotiate the terms of the parties' divorce."
The judge also gave no credence to defendant's argument that he was entitled to relief under Rule 4:50-1(a) because his failure to respond was "excusable neglect." She determined that "defendant's failure to retain counsel and to file responsive pleadings was not 'attributable to an honest mistake.'" She noted that defendant was properly served and was aware of the applications for default and equitable distribution. The judge also discounted defendant's mistaken belief that he could secure an adjournment by appearing in court the day of the default hearing because he had "requested an adjournment in the days leading up to the default hearing and the Court denied that request."
Similarly, the judge rejected defendant's argument that he was entitled to relief under Rule 4:50-1(f) because the FJD was inequitable, unfair, and unjust for the court to continue to enforce. She noted that defendant "failed to cooperate with discovery," and accordingly the FJD was "based upon minimal financial information within the plaintiff's possession," and held that "[a]ny discrepancy in his income that could result from varied valuation of the defendant's average income does not warrant vacation of the Final Judgment of Divorce." The judge also found noteworthy that defendant's certification omitted the $106,560 bonus he received in 2010.
The judge denied without prejudice defendant's application to claim his children as dependents, finding he was "currently $49,808.84 in arrears on his child support obligation." She explained that if defendant had been current on his child support obligations, she would have been inclined to grant him the exemptions. This appeal ensued.
Defendant then moved before the trial court for reconsideration and other relief, and plaintiff filed a cross-motion. By order of January 24, 2012, another Family Part judge granted defendant's motion to stay the October 6, 2010 FJD and enforcement of the October 12, 2011 order pending appeal, and granted defendant's request permitting him to claim the parties' four children as dependency exemptions for federal and state income tax purposes.*fn2
On appeal, defendant argues:
THE TRIAL COURT ERRED BY FAILING TO RELIEVE THE DEFENDANT FROM THE DEFAULT FINAL JUDGMENT OF DIVORCE.
A. The Default Final Judgment of Divorce was entered as the result of the Defendant's excusable neglect therefore entitling the Defendant to relief from that Judgment in accordance with Rule 4:50-1(a).
B. The Defendant showed reason justifying relief from the operation of the DFJD in accordance with Rule 4:50-1(f).
THE TRIAL COURT ABUSED ITS DISCRETION AND IGNORED RELEVANT LAW WHEN ENTERING THE FINAL JUDGMENT OF DIVORCE WITHOUT MAKING ANY FINDINGS OF FACT OR CONCLUSIONS OF LAW AS TO THE REASONABLENESS AND FAIRNESS OF THE VARIOUS FORMS OF RELIEF.
i. Paragraph 2.1 of the parties' Final Judgment of Divorce improperly sets the Defendants' child support obligation at $425.00 per week because it ignores the Defendant's average income, contribution towards the children's health insurance and overnight parenting time.
ii. Paragraph 2.3 of the parties' Final Judgment of Divorce improperly required the Defendant to be 100% responsible for the costs of the children's college costs.
iii. The parties' Final Judgment of Divorce improperly required the Defendant to be 100% responsible for the costs of the children's extracurricular activities and medical insurance.
iv. The Judgment of Divorce improperly allowed the Plaintiff to retain sole possession of the contents of the former marital home, fifty percent of the husband's retirement assets, and assessed no liability to the Plaintiff for the marital debt, without making any determinations regarding their various eligibility, valuation, and proper percentage of equitable distribution.
v. Paragraph 5.2 of the parties' Final Judgment of Divorce improperly required the Defendant to be responsible for 80% of the costs for the children's unreimbursed medical expenses, beyond the first $250.00 per year, when the parties' respective percentages of income is 60/40.
vi. Paragraph 6.2 of the parties' Final Judgment of Divorce improperly required the Defendant to be 100% responsible for the costs of the children's auto insurance.
vii. Paragraph 7.1 of the parties' Final Judgment of Divorce improperly sets the Defendant's permanent alimony obligation at $6,250.00 per month.
viii. Paragraph 12 of the parties' Final Judgment of Divorce improperly required the Defendant to pay $2,500 towards the Plaintiff's counsel fees.
THE TRIAL COURT ERRED BY FAILING TO AWARD THE DEFENDANT THE DEPENDENCY EXEMPTIONS FOR INCOME TAX PURPOSES FOR THE PARTIES' CHILDREN.
A. The Defendant has met the criteria required to allow the Trial Court to exercise its equitable power to grant the Defendant any and all dependency exemptions as the non-custodial parent of the parties' children.
B. The Trial Court improperly determined that the Defendant currently owed significant arrears, pursuant to the parties' Probation Department account, wherein his outstanding arrears are unallocated and more properly attributed to the Defendant's excessive alimony obligation and not the Defendant's child support obligation.
THE TRIAL COURT ERRED BY REQUIRING THE DEFENDANT TO PAY THE SUM OF $5000 TOWARDS THE PLAINTIFF'S COUNSEL FEES WITH REGARDS TO THE MOTION HEARING, AS THE COURT FAILED TO ANALYZE ANY OF THE NECESSARY FACTORS ENUMERATED IN THE APPLICABLE STATUTE OR WILLIAMS CASE, AND BECAUSE THE AWARD WAS ARBITRARY AND IN EXCESS OF THE ACTUAL FEES EXPENDED ON THE MOTION.
An application to vacate a default judgment is "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Marder v. Realty Const. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964). However, a motion to vacate a judgment under either Rule 4:50-1(a) or (f) "should be granted sparingly, and is addressed to the sound discretion of the trial court, whose determination will be left undisturbed unless it results from a clear abuse of discretion." Fineberg v. Fineberg, 309 N.J. Super. 205, 215 (App. Div. 1998) (citing Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283-84 (1994)). There is an abuse of discretion "when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007) (internal quotation marks and citation omitted).
Defendant contends his extensive travel itinerary and inability to afford counsel, due to his financial obligations to plaintiff and his children, which included two college tuitions, qualifies as excusable neglect pursuant to Rule 4:50-1(a), and therefore he is entitled to relief from the default FJD. We are not persuaded by this argument.
Rule 4:50-1 is "designed to reconcile the strong interest in finality of judgments and judicial efficiency with the equitable notion that courts should have the authority to avoid an unjust result in any given case." Mancini v. EDS, 132 N.J. 330, 334 (1993) (internal quotation marks omitted). The New Jersey Supreme Court held that "[c]arelessness may be excusable when attributable to an honest mistake that is compatible with due diligence or reasonable prudence." Id. at 335.
Moreover, "a defendant seeking to reopen a default judgment [because of excusable neglect] must show that the neglect to answer was excusable under the circumstances and that he has a meritorious defense." Id. at 334 (alteration in original) (internal quotation marks and citation omitted). See Reg'l Const. Corp. v. Ray, 364 N.J. Super. 534, 541 (App. Div. 2003) (holding a client's mistaken assumption that his attorney in other actions was addressing matter at issue qualified as excusable neglect); Goldhaber v. Kohlenberg, 395 N.J. Super. 380, 391-92 (App. Div. 2007) (holding reliance on mistaken advice of attorney that New Jersey was without jurisdiction constituted excusable neglect requiring relief from entry of default); but see US Bank Nat. Ass'n v. Guillaume, 209 N.J. 449, 468-69 (2012) (finding "excusable neglect" does not include confusion over communications, especially when there were repeated notices regarding the action that was underway).
Pursuant to Rule 4:50-2, a motion to reopen a default judgment "shall be made within a reasonable time," and for subsection (a), it must be made no more than "one year after the judgment, order or proceeding was entered or taken." We have held that "the one-year period represents only the outermost time limit for the filing of a motion based on Rule 4:50-1(a), (b) or (c) [but that] [a]ll Rule 4:50 motions must be filed within a reasonable time, which, in some circumstances, may be less than one year from entry of the order in question." Orner v. Liu, 419 N.J. Super. 431, 437 (App. Div.), certif. denied, 208 N.J. 369 (2011).
We are satisfied the trial judge did not abuse her discretion in rejecting defendant's argument that he did not respond to pleadings and discovery due to excusable neglect. Defendant has failed to demonstrate due diligence in seeking to defend the divorce action. To the contrary, defendant's attempt to delay the proceedings was evident from the outset -- he refused to acknowledge service of the complaint and ignored the notice to produce. Defendant had ample time to respond to the complaint and plaintiff's application for equitable distribution despite his travel itinerary. Moreover, he was granted an adjournment from the initial default hearing and still failed to retain counsel. Additionally, plaintiff certified that defendant told her he did not want to retain an attorney because he did not want a divorce, which is consistent with defendant's behavior.
We further note that defendant was present and heard the terms of the divorce default judgment in October 2010. Nevertheless, he waited eight months to file his motion to vacate the default judgment, and provided no explanation for the delay. We do not deem this to be a reasonable time under the circumstances. See Orner, supra, 439 N.J. Super. at 436-37.
Furthermore, defendant did not support his claim that he could not afford to retain counsel. Defendant provided virtually no information about his financial assets, but what he did provide significantly undermines this claim. Defendant's June 2011 case information statement reflects that he had a net annual income of $152,299.98 in 2010, was receiving gross average weekly income of $3010.42 and net average weekly income of $1799.62, and received a $106,560 bonus in January 2011.
Defendant next argues the FJD "is so inequitable and one-sided, on its face, that in the interests of justice, equity and fairness," it should be set aside. More specifically, defendant argues the court improperly calculated his average gross annual income, and it is inequitable to require him to pay for 100% of the children's college costs, extracurricular activities, and medical and automobile insurance, since plaintiff holds 40% of the income before child support; that his alimony and child support payments represents nearly 57% of his average annual gross income; that he has to pay for all of the marital debt incurred by the parties; and that he has to pay $2500 towards plaintiff's counsel fees, despite plaintiff not incurring that amount in fees.
Since finality is important to judgments, "relief under Rule 4:50-1(f) is available only when truly exceptional circumstances are present." Guillaume, supra, 209 N.J. at 484 (internal quotation marks and citation omitted). Moreover, Rule 4:50-1(f) is "limited to situations in which, were it not applied, a grave injustice would occur." Ibid. Additionally, subsection (f) does not provide relief for trial errors. Hodgson v. Applegate, 31 N.J. 29, 40 (1959). But see DiPietro v. DiPietro, 193 N.J. Super. 533, 540 (App. Div. 1984) (holding a trial judge's mathematical error in entering an equitable distribution judgment qualified for relief under subsection (f)).
As the trial judge noted, the FJD was based upon minimal financial information within plaintiff's possession because defendant failed to cooperate with discovery. Plaintiff relied mainly on defendant's 2007 and 2009 tax information in her possession. As she testified at trial, defendant's failure to provide his financial information was also the primary roadblock for a resolution during mediation. The judge advised defendant that he should have been involved in the process from its outset if he thought the equitable distribution was unfair.
It would have been preferable for the court to have acknowledged the factors and made findings based on plaintiff's testimony regarding her proposed equitable distribution, N.J.S.A. 2A:34-23.1, and permanent alimony, N.J.S.A. 2A:34-23, while emphasizing that its findings were limited due to defendant's failure to make full financial disclosure. Nevertheless, based on our review of the record, we are satisfied the record appears adequate to support the FJD. See Kolczycki v. City of East Orange, 317 N.J. Super. 505, 514-15 (App. Div. 1999) (holding that in the context of a default judgment, "the court should ordinarily apply the prima facie standard to [the] plaintiff's proof, thus not weighing evidence or finding facts but only determining bare sufficiency") (citation omitted).
Defendant has not convinced us that the equitable distribution is a "grave injustice" or a "truly exceptional circumstance" that calls for relief. Guillaume, supra, 209 N.J. at 484. To the contrary, as noted by the trial judge, based on the record, it appears to be "quite reasonable." Moreover, defendant was the sole wage earner of the family, and prior to the FJD, he was responsible for all expenses, including his children's college costs, extracurricular activities, and insurance. This was also a long-term marriage with a significant income disparity for which permanent alimony was clearly in order. The amount proposed by plaintiff and ordered by the court appears to be consistent with the parties' marital lifestyle.
The $2500 counsel fee award, however, is a slightly different situation. In determining whether a counsel fee award is merited, courts consider several factors, including the requesting party's need, the other party's financial ability to pay, and the requesting party's good faith in instituting or defending the action. Williams v. Williams, 59 N.J. 229, 233 (1971).
Similarly, Rule 5:3-5(c) permits a court to award counsel fees after careful consideration of the following factors:
(1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.
We will not reverse a counsel fee ruling unless the parties can show an abuse of discretion involving a clear error in judgment. Tannen v. Tannen, 416 N.J. Super. 248, 285 (App. Div. 2010), aff'd o.b., 208 N.J. 409 (2011).
Facially it appears that the $2500 fee was reasonable, and it was proper for the court to require defendant to pay it, particularly considering his obstreperous behavior in failing to acknowledge service of the complaint and ignoring the discovery request. Nevertheless, the record contains no evidence of the actual counsel fee incurred by plaintiff as of the FJD. Accordingly, we affirm the FJD in all respects, except that we direct plaintiff to provide the court with a copy of that bill to review and analyze on remand. The court, within its discretion as guided by legal principles, shall determine whether plaintiff's $2500 counsel fee request is reasonable and appropriate, or whether to award a lesser amount.
We note that the judge found defendant's application for federal and state tax dependency exemptions for the parties' four children was legally correct but denied it without prejudice based on the assumption that he was almost $50,000 in arrears on child support. That assumption was mistaken and presumably stemmed from plaintiff's June 23, 2011 certification in opposition to defendant's motion to vacate the FJD and in support of her cross-motion for enforcement, which advised that defendant's "support" arrears was $37,657.58, which was unallocated child and spousal support. Defendant responded that he paid the child support obligation in full since the FJD was entered, explaining that his "wages have consistently been garnished since his November 30, 2010 pay check . . . in the amount of approximately $2421.97 per paycheck." He calculated that from October 6, 2010 through July 6, 2011 (a total of 39 weeks), a total of $16,575.00 had been owed and paid in child support. For argument sake, even if defendant had missed every child support payment for two years, his arrears would only be approximately $44,200.
It appears defendant already obtained recourse in the January 24, 2012 order, which granted him the federal and state income tax dependency exemptions. To the extent it is relevant at this time, we note that the basis for the court's denial of the exemptions was in error.
Lastly, defendant challenges the $5000 counsel fee awarded by the court to plaintiff for defending against defendant's motion to vacate the FJD as arbitrary and an abuse of discretion. He notes that in plaintiff's counsel's June 28, 2011 certification of services, she requested only $1430 for actually incurred legal services (receipt and review of motion, preparation of cross motion - 2 hours, preparation of motion and cross motion - 2 hours, at $350 per hour, and filing fees). The total amount sought originally was $2305, but included an "anticipated court appearance" of 2.5 hours ($875), which never took place because the motions were heard on the papers by the court. Defendant emphasizes that the court placed no reasons on the record for the award, let alone any explanation for more than doubling the amount that plaintiff's attorney certified was even incurred in defending the motion.
"Trial judges are under a duty to make findings of fact and to state reasons in support of their conclusions." Heinl v. Heinl, 287 N.J. Super. 337, 347 (App. Div. 1996). This is because "[m]eaningful appellate review is inhibited unless the judge sets forth the reasons for his or her opinion." Strahan v. Strahan, 402 N.J. Super. 298, 310 (App. Div. 2008) (quoting Salch v. Salch, 240 N.J. Super. 441, 443 (App. Div. l990)). The record appears to support a counsel fee award to plaintiff for having to defend against the challenge to the FJD filed eight months later but, nevertheless, it also appears that the $5000 award was excessive. We remand the counsel fee award to the trial court to perform the appropriate analysis under Williams and Rule 5:3-5(c), and to enter a new order with detailed factual findings.
The FJD is affirmed as modified; the October 12, 2011 order is affirmed as modified. We remand for review and analysis of the counsel fee awards under both orders. We do not retain jurisdiction.