July 12, 2013
AIMEE E. DeROSA, Plaintiff-Respondent,
ALEXANDER G. DeROSA, Defendant-Appellant.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 24, 2013
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1529-07B.
Drazin and Warshaw, P.C., attorneys for appellant (Vincent L. Stripto, on the brief).
Aimee E. DeRosa, respondent pro se.
Before Judges Grall, Koblitz and Accurso.
Defendant, Alexander G. DeRosa, appeals from the November 3, 2011 denial of a motion to reduce alimony and child support. The order was entered without oral argument, discovery, or a hearing. Because we conclude that defendant made a prima facie showing of changed circumstances, we reverse and remand for the court to follow the procedures set forth in Lepis v. Lepis, 83 N.J. 139, 157-59 (1980).
The parties were married on September 27, 1986, and divorced on August 11, 2008. They have three children, now 26, 23, and 18 years of age, only the eldest of whom has been emancipated. The judgment of divorce incorporated the parties' property settlement agreement (PSA). The PSA required defendant to pay plaintiff $750 per week permanent alimony and $365 per week child support based upon defendant's projected gross annual income of $160, 000 and plaintiff's imputed income of $45, 000.Defendant's child support obligation was to be almost immediately reduced to $307 per week on September 1, 2008, when their two eldest children would be living away at college.
Defendant is the self-employed owner of a lawn sprinkler installation business he started the same year the parties were married. The business has been maintained as a sole-proprietorship. At the time of the divorce, the parties jointly employed a forensic accountant to value the business for purposes of equitable distribution and prepare a cash flow analysis for defendant from 2004 through 2006 and projected cash flow for 2007. The accountant calculated defendant's 2006 pretax income from the business as $169, 525, and after-tax income as $143, 430 on gross sales of $748, 255. She projected defendant's 2007 pre-tax income as $160, 700, and after-tax income as $136, 100. Defendant's alimony and child support obligation was premised on defendant's projected 2007 pre-tax income of $160, 000.
Prior to the motion at issue here, defendant had successfully moved pro se to have the couple's eldest child declared emancipated as of February 9, 2011. Despite that, however, the court declined to recalculate child support at that time because neither party had submitted the necessary case information statements, tax returns, and pay stubs.
In October 2011, defendant, now represented by counsel, filed a motion to reduce his alimony and recalculate child support retroactive to the emancipation order. Defendant contended that the revenues from his business, which had previously moved up steadily, peaked in 2006. He claimed that the bulk of his business was based on the installation of sprinkler systems for residential developers and that the slowdown in new home construction had greatly affected his sales. Defendant presented several years of recent tax returns showing that his gross sales had declined from $748, 255 in 2006 to $273, 069 in 2010, a decrease of well over fifty percent. He certified that his pre-tax income for 2011 averaged $7647 per month, and he expected to earn less than $100, 000 for the year. Defendant claimed that he owed the Internal Revenue Service approximately $75, 000 in back taxes, and that he could not continue to pay alimony and child support based on his former income.
Plaintiff, self-represented, cross-moved to increase alimony and child support and for other ancillary relief not at issue on this appeal. She acknowledged defendant's "financial situation" and tax debt and described efforts she had made to assist in collecting his outstanding receivables and refinance her home to ease his financial woes. She had even given defendant back her engagement and wedding rings to help with "the financial dilemma." She also, however, detailed her own financial hardships and the children's basic needs that were going unmet. She asserted that she had sought employment but, having not worked as a nurse for twenty years, could not become employed as an R.N. without taking refresher courses she could not afford.
Although defendant had requested oral argument, the judge denied his motion on the papers. Upon comparing defendant's case information statement (CIS) from 2007 to the one filed in 2011, the judge found that defendant's
net income from the business has not declined at all. Defendant's 2007 CIS indicates that he earned $1, 177.16 per week and now in 2011, he earns $1, 770.00 per week. Regarding the decline in his business income it should be noted that defendant reduces his business net income by having his business pay for several of his personal expenses . . . e.g., clothing, educational and insurance expenses.
She denied defendant's request for a plenary hearing and declared his request to recalculate child support moot based on an order entered by another judge not provided to the court. The judge also denied the cross-motion to increase alimony and child support.
After defendant appealed from that order, the court filed an amplified opinion "intended to correct and supplement" the prior order. Pointing out apparent discrepancies between defendant's stated gross and net income on his most recent CIS, the court concluded that defendant's 2011 net income was "higher than his 2007 income at the time of the divorce" and thus he could not demonstrate a substantial and permanent change of circumstances based on a reduction in his take home pay. With regard to recalculating defendant's child support obligation, the judge wrote
In its November 4, 2011 [order], the court noted that NJKids' records indicated that [the eldest child] had been emancipated. The court was under the misapprehension that child support had been set by the Honorable Michael A. Guadagno, in an Order, dated February 3, 2011, which defendant had not provided in accordance with R. 5:5-4(a) . . . . The trial court has obtained a copy of Judge Guadagno's February 3, 2011 order and has verified that child support was not recalculated therein. Rather, that order was an "Order for Relief to Litigant Enforcement of Litigant's Rights, " which noted that defendant's child support obligation for three children was $310 per week, spousal support was $750 per week, and payment towards arrears of $14, 502.00 was $35.00 per week.
Once the trial court emancipated [the eldest child] as of February 9, 2011, NJKids allocated the $310.00 between the two remaining unemancipated children which made the child support appear unallocated. In any event, child support should be recalculated in light of [the eldest child's] emancipation. But defendant must submit a complete and accurate CIS which the trial court found that defendant had not done. Any recalculation of child support can relate back to February 9, 2011, which was the date of [the eldest child's] emancipation.
A modification of support obligations based on changed circumstances is committed to the trial court's sound discretion. N.J.S.A. 2A:34-23; Lepis, supra, 83 N.J. at 145; Storey v. Storey, 373 N.J.Super. 464, 470 (App. Div. 2004). The moving party must make a prima facie showing of changed circumstances before a court will order discovery of the financial circumstances of each party. Lepis, supra, 83 N.J. at 157-59.
Although we acknowledge the errors and inconsistencies in defendant's 2011 CIS, which make fine distinctions as to his net income very difficult, it is clear to us that defendant's showing met the Lepis standard warranting discovery. At the time of their divorce, the parties employed a joint expert who opined that defendant's 2006 pre-tax income from the business was $169, 525 on gross sales of $748, 255. Defendant's alimony and child support obligation was premised on the expert's projection that defendant's 2007 pre-tax income would be $160, 000.
On the motion, defendant submitted four years of tax returns demonstrating that his gross sales had fallen to $560, 098 in 2007 and to $273, 069 in 2010. That represents over a fifty-percent reduction in gross sales for this sole-proprietorship. Defendant's tax returns showed a concomitant decline in his gross income, which fell from $129, 258 in 2007 to $115, 444 in 2010. Defendant certified that he estimated his gross sales would not exceed $250, 000 in 2011, and that he was unlikely to gross $100, 000 from the business.
While there is no mathematical formula for determining what constitutes a significant change in circumstances, we have no doubt that defendant's dramatic drop in revenues coupled with his tax debt qualifies. See Walles v. Walles, 295 N.J.Super. 498, 513 (App. Div. 1996) (affirming modification where payor's gross income dropped almost fifty percent); Beck v. Beck, 239 N.J.Super. 183, 186-87 (App. Div. 1990) (finding changed circumstances where payor's documented income had "declined dramatically" over last several years). Our conclusion is buttressed by defendant's reasons for the decline in his business and plaintiff's acknowledgement of the seriousness of the problem.
Oral argument would have likely cleared up a number of misconceptions the court drew from the motion papers. While Rule 5:5-4 permits the court discretion in determining whether to honor a request for oral argument where the motion is frivolous, repetitive, or based on unsubstantiated allegations, Filippone v. Lee, 304 N.J.Super. 301, 306 (App. Div. 1997), experience teaches that it is often the most efficient way to address apparent inconsistencies in the papers, resulting in a faster and more just resolution of the issues. Here, oral argument may have helped to clarify the confusion over the gross and net income figures in defendant's case information statements as well as the extent of certain personal expenses the court concluded were being charged to the business It would have certainly alerted the court that defendant's child support obligation had not been recalculated in the ten months since the eldest child's emancipation
Although discovery is mandated because defendant made a prima facie case of changed circumstances whether a plenary hearing will be required must await the outcome of that discovery Lepis, supra, 83 N.J. at 159 (holding that following discovery a party must demonstrate a genuine dispute over a material fact before a hearing will be ordered)
Accordingly we reverse the denial of defendant's motion to modify his alimony and child support obligation and remand the case to the trial court for further proceedings in accordance with Lepis, supra, 83 N.J. at 157-59, and this opinion We do not retain jurisdiction.
Reversed and remanded.