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Gnall v. Gnall

Superior Court of New Jersey, Appellate Division

August 8, 2013

ELIZABETH GNALL, Plaintiff-Appellant/ Cross-Respondent,
v.
JAMES GNALL, Defendant-Respondent/ Cross-Appellant.

Argued January 29, 2013

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-2021-08.

Dale E. Console argued the cause for appellant/cross-respondent.

Barry L. Baime argued the cause for respondent/cross-appellant (Budd Larner, PC, attorneys; Mr. Baime, of counsel; Donald P. Jacobs, on the briefs).

Before Judges Messano, Lihotz and Kennedy.

LIHOTZ, J.A.D.

These matrimonial cross-appeals challenge several provisions in a final judgment of divorce entered following a seventeen-day trial, including the propriety of awarding limited duration alimony following the parties' fifteen-year marriage. Plaintiff Elizabeth Gnall attacks the award of limited duration alimony, suggesting she should have been awarded permanent alimony. She also argues the judge abused his discretion in restricting her access to the awarded supplemental child support in this high income case, and in allocating her equitable entitlement to defendant's 2007 and 2008 bonus income. Defendant James Gnall has abandoned his cross-appeal challenging the amount of alimony, but continues to maintain the child support calculations were erroneous. He also contends the judge abused his discretion when ordering him to pay plaintiff's attorney's fees, and mistakenly set the amount of life insurance he must obtain to guarantee the ordered support obligations. We affirm in part and reverse in part.

I.

The facts are taken from the trial record. Our limited recital is tailored to address only those issues raised on appeal, rather than all issues addressed at trial.

The parties married on June 5, 1993, and have three children, who are now ages fourteen, thirteen, and eleven. In 2008, plaintiff filed a complaint and defendant filed a counterclaim for divorce, each alleging irreconcilable differences. At the time trial commenced on April 8, 2009, both parties were forty-two years old.

The trial focused on factors necessary to discern the appropriate nature and amount of alimony. The parties presented factual and expert testimony regarding plaintiff's past employment and future employability prospects once she returned to the workforce; defendant's current and anticipated future earnings; and the needs of plaintiff and the children. The parties and their experts testified.

Prior to the parties' marriage, plaintiff received a bachelor's degree in electrical engineering and, while working full-time as an engineer for IBM, obtained a master's degree in computer science. At the time of the marriage, she was employed as a software programmer and systems analyst for the foreign exchange sales group of Goldman Sachs, earning approximately $62, 000 per year. She later worked as a senior programmer and analyst for the Government Securities Clearing Corporation, and then as Assistant Vice President at Bankers Trust Corporation, performing computer programing, creating web sites, and developing web interfaces. In 1999, while pregnant with the parties' second child, she left her corporate position to join a friend's start-up company, known as "Visual Tonic." Her salary in 1997 was $115, 048. She earned $94, 000 for part of 1998 and $52, 202 for part of 1999, the years the two older children were born. Thereafter, with defendant's assent, she stopped working outside the home to principally care for the children. The parties' third child was born in 2002.

At trial, plaintiff explained she believed her programming skills were "obsolete" and needed to be "totally retrained" prior to reentry into the rapidly changing computer field. Moreover, she assumed she would be competing with younger candidates for available entry-level positions. Consequently, she was dissuaded from returning to computer programing and, instead, proposed to pursue a career as a math teacher. She chose teaching based on a perception there existed a "high demand" for such professionals and, more important, because her prospective work schedule would coincide with the children's school day, thereby minimizing childcare costs and any disruption to the children's routine. Plaintiff had investigated the requirements to obtain a teaching certification and believed she could acquire the necessary training through part-time study in four years or less, depending upon the acceptance of previously earned college credits. She initially intended to obtain the necessary degree from William Paterson University, which was proximate to her home, but ultimately enrolled in a three-year online program sponsored by Western Governors University in Utah. Plaintiff estimated the cost to obtain her degree, excluding books, was approximately $18, 610, representing tuition for six semesters at $2935 per block, plus a $1000 student teaching fee.

Plaintiff described her health concerns. She underwent skull-based neurosurgery to remove a mass in November 2006. Resultant nerve damage caused her to experience facial numbness, occasional eye pain, and intermittent noises in one ear. She returns for annual medical reviews of her condition and undergoes an MRI every year. She attended counseling to address stress caused by the divorce and the accompanying litigation. Plaintiff did not believe her medical conditions impeded her ability to resume employment.

Prior to trial, plaintiff participated in employment evaluations, during which she expressed her interest was "raising her children." Elaborating, she said she "had absolutely no interest . . . and ha[d]n't given much thought to her career[, ]" although she had taken a community college course providing an overview of veterinary technician careers. She did not desire that job and suggested to defendant's expert she was interested in culinary arts. She expressed a similar sentiment when evaluated by her own expert, stating she might like to work "at some point in the future, " but presently was concerned about the care of the children.

Each party presented expert testimony addressing plaintiff's employment prospects. Defendant offered the opinion of David B. Stein, Ph.D., of Vocational Consulting Group, Inc. Plaintiff then offered the opinion of Charles Kincaid, Ph.D., of Kincaid Vocational & Rehabilitation Services.

Dr. Stein obtained plaintiff's work history and educational background, and developed a "worker trade profile" to identify available jobs matching plaintiff's qualifications or positions she could reasonably become qualified to perform based on her past education and experience. Using United States Department of Labor categories of employment, Dr. Stein opined plaintiff was "very qualified" for and would be "best suited" to continue as a computer programmer or computer software engineer because she had a "very high level of training." He believed plaintiff could readily "update her skills" by obtaining necessary retraining, either online or at universities in the geographic area, in approximately six to twelve weeks, at a cost of $1, 000 to $4, 000, depending on the type of skills she developed.

Dr. Stein observed computer programming and software engineering positions "exist[ed] in large numbers" and, according to recent projections from the Department of Labor, were among the occupations expected to grow the fastest over the upcoming decade. He noted computer programmers earned less than software engineers. Nationally, positions in these fields carried an annual salary of between $80, 000 and $93, 740, with even higher wages, on average, in Bergen County. Because she possessed a "very strong academic, as well as job performance background, " Dr. Stein did not view plaintiff's absence from the job market as having a "preclusive" effect on her ability to obtain employment. Dr. Stein opined plaintiff could expect an initial annual salary of between $58, 000 and $69, 000, but, judging by her past performance, she could anticipate rapid wage growth and, within two or three years, perhaps earn an annual salary in excess of $115, 000.

Plaintiff's expert, Dr. Kincaid, similarly focused on plaintiff's return to employment in the computer field, even though he noted she expressed disinterest in such work and "wanted a change[.]" He disagreed with Dr. Stein's conclusions regarding plaintiff's employability, as well as the probable length and cost of retraining, noting hiring trends for computer programmers did not show anticipated growth over the ensuing decade. He agreed, however, "faster than average growth" and "very good prospects" of employment were predicted for computer systems analysts, a position similar to plaintiff's IBM position, and also for computer software engineers, a field in which plaintiff's skills and educational background were compatible, despite her lack of direct experience.

Using the reported requirements and salaries found in local job advertisements, Dr. Kincaid concluded plaintiff needed to engage in approximately one to two years of retraining to upgrade her skills, at a cost of $10, 000 to $15, 000. He too discussed plaintiff's possible employment as a software engineer, for which entry level positions included an estimated annual salary of $56, 764, and a mean salary of $67, 763.

Next, defendant testified as to his employment and income. A certified public accountant, he was working as Chief Financial Officer for the America Financial Group of Deutsche Bank. Defendant's annual compensation included his fixed annual salary and a discretionary bonus paid in February following the close of the calendar year. His bonus payment included cash and deferred equity units, or stock options, restricted by a three-to five-year period of vesting. The following chart sets forth defendant's remuneration from employment as paid in calendar years 2005 through 2010, understanding cash bonuses and equity units were paid in the February following the close of the actual compensation year on which they were based.

YEAR

SALARY

CASH BONUS

EQUITY UNITS

TOTAL COMPENSATION

2005

$185, 000.00

$325, 000.00

$510, 000.00

2006

$185, 000.00

$481, 100.00

$84, 900.00

$751, 000.00

2007

$200, 000.00

$718, 702.00

$97, 298.00

$1, 016, 000.00

2008

$200, 000.00

$766, 507.00

$108, 493.00

$1, 075, 000.00

2009

$200, 000.00

$1, 296, 806.00

$303, 194.00

$1, 800, 000.00

2010

$400, 000.00

$788, 899.00

$683, 326 & $227, 775[1]

$2, 100, 000

Defendant specifically addressed his 2008 bonus. He stated the terms of the bonus were negotiated in July 2008, as part of his promotion, which post-dated plaintiff's complaint for divorce. The 2008 bonus check (received in February 2009) was not directly deposited into the parties' joint checking account, as was the custom with prior bonuses. Rather, defendant deposited the check into an account titled solely in his name. Although a portion of the cash bonus may have been used for pendente lite support, defendant argued plaintiff was not entitled to an equitable share of the funds because he received the money as part of his promotion, not as a result of his past performance.

Evidence of the parties' expenses and the marital lifestyle was also presented. Both parties marked into evidence their respective original and revised Case Information Statements (CIS), and plaintiff presented expert testimony from Rufino Fernandez, Jr., CPA, a forensic accountant.

At the time of trial, the parties' Ridgewood marital home had been sold, plaintiff and the children were renting a smaller residence in Ridgewood, and defendant had moved to an apartment in Manhattan's upper west side. Plaintiff's initial CIS was based on the costs of the marital home and listed monthly expenses totaling approximately $35, 000. Her budget was revised to $21, 041 per month to reflect her change in residence.[2] On the other hand, defendant reported the family's joint marital lifestyle while living in Ridgewood was $23, 664 per month, of which he allocated $10, 906 for his needs. He too modified his budget after moving to New York City, claiming monthly expenditures of $19, 803.

During the marriage, plaintiff handled the family's finances. Defendant's paycheck was directly deposited into the joint checking account, from which plaintiff paid utilities, food, and smaller landscaping bills. Similarly, the cash portion of defendant's bonus was directly deposited into the joint checking account and disbursed by plaintiff to cover current and future anticipated expenses. For example, in 2007, a portion of the bonus remuneration was placed in savings; $10, 000 was placed in each of the children's uniform gift to minor's accounts (UGMA); $10, 000 was used to reduce the principal balance of the mortgages; a sum was set aside to satisfy the resultant tax obligations; and the remainder was used to pay credit card bills, car expenses, the monthly mortgages, real estate taxes and insurances, large landscaping bills, and the like.

Defendant drove a 2008 Infiniti M45 after trading in a 1998 Nissan Maxima. His monthly car payment was $1, 039. Plaintiff drove a 2007 Cadillac Escalade, which was encumbered by a loan requiring a monthly payment of $1, 583. Plaintiff explained groceries were purchased from Whole Foods or Kings, clothing was bought from Talbots, Nordstrom, Macy's, Ann Taylor, Victoria's Secret, Lilly Pulitzer, and the Gap, and defendant's suits were purchased from Barney's in New York City. The family enjoyed multiple vacations each year, which had included ski trips to Aspen and Switzerland, stays at Disney World, ocean front rentals in the Outer Banks, North Carolina, and shorter trips to Rhode Island and Boston. Plaintiff insisted the parties always had money to buy whatever they wanted and never worried; they always paid their expenses when incurred; and other than the mortgages and car loans, they had no debts. The children attended public school and were involved in several other extracurricular activities, such as sports and music lessons. Each child was engaged in counseling to address issues arising from their parents' divorce.

Plaintiff's expert, Fernandez, prepared a lifestyle analysis after interviewing plaintiff and reviewing the historic Quicken checking expenses, other bank account records, and investment documentation for the period from 2004 to 2007. Fernandez admitted plaintiff reviewed his preliminary drafts to verify the accuracy of his proposed expense allocations, he did not consult with defendant. In order for plaintiff and the children to maintain the marital lifestyle, Fernandez opined she would need $24, 252 per month, plus additional monies for savings and income tax obligations resulting from the alimony receipts.[3]

On cross-examination, the accuracy of Fernandez's report was attacked. Defendant showed Fernandez had artificially inflated the total needs of plaintiff and the children by: including miscellaneous expenses that were actually transfers between accounts, not expenses; including costs expended for the benefit of defendant; and doubling actual vacation costs and a portion of the cash expenditures.

Defendant's testimony emphasized his financial success was recent and not representative of the marital lifestyle. He also argued the parties had recently increased their household expenditures by using a home equity loan to build an addition to the home, and by buying newer cars. He asserted these expenses should not be considered when calculating the standard of living enjoyed during the marriage.

Reviewing the evidence submitted, the trial judge concluded the parties enjoyed "an upper middle class" lifestyle that was more modest than what could be afforded on defendant's more recent remuneration. He fixed the monthly needs of plaintiff and the three children at $18, 000. After concluding plaintiff could return to the computer field and earn "between $61, 200 and $94, 000, " he considered the alimony factors, understanding his obligation to make statutory findings. He found the parties' fifteen-year marital relationship was "not short term[.]" Nevertheless, when he weighed the "relatively young" age of the parties, and their good health and education, which allowed them to obtain employment "at good salaries" and thereby support "excellent lifestyles for themselves and their children[, ]" the judge concluded "the parties were not married long enough and are not old enough for [defendant] to be responsible to maintain that lifestyle permanently for [plaintiff]." He therefore concluded, "this is not a permanent alimony case."

The judge also rejected an award for rehabilitative alimony. Even though he acknowledged plaintiff needed retraining, he found plaintiff could take classes online at her own pace. The judge also noted plaintiff had failed to work toward obtaining employment during the two years the case was pending. Consequently, he imputed $65, 000 annual income to her, effective immediately, and awarded $18, 000 per month limited duration alimony for eleven years. The alimony award was to terminate on September 1, 2021, coincident with the youngest child's anticipated departure for college. Further, the award would not be subject to modification based on plaintiff's future earnings; rather, modification would be permitted only upon either party's death or plaintiff's remarriage.

The initial child support calculations made following trial were challenged in post-judgment motions. At that time, the judge corrected an error and re-calculated child support under the guidelines as $997 per week. He added a supplemental support award of $1600 per month per child, requiring the maximum gift tax amount (currently, $13, 000 per year) be deposited into the children's UGMA accounts, unless the parties agreed otherwise. Any remaining sums would be paid monthly to plaintiff to use as she saw fit.

The judge concluded the marital portion of defendant's 2008 bonus (paid in February 2009) was limited to the proportionate amount represented by the period prior to the filing date of the complaint, that is January 1, to March 10, 2009. The judge calculated the total marital portion as $216, 700 and concluded, "at best plaintiff's share would be fifty percent, or $108, 300." However, the judge determined plaintiff's interest was offset by her past receipt of tax-free pendente lite support and other lump sum payments made during the two-year litigation.

Defendant was ordered to maintain $3 million in life insurance during the limited duration alimony term. When alimony ended, he was permitted to reduce the life insurance to $1 million until the emancipation of the children. Finally, defendant was ordered to satisfy the outstanding $105, 423.86 balance plaintiff owed to her attorney.

Motions were filed for reconsideration of some determinations and for clarification of others. As noted, the amount of child support was adjusted. Also, the judge denied defendant's cross-motion to reduce the life insurance obligation to the actual amount of alimony due. Thereafter, plaintiff appealed and defendant cross-appealed from designated provisions of the judgment.

II.

Our review of a trial court's factual findings is limited. N.J. Div. of Youth & Family Servs. v. M.M., 189 N.J. 261, 278-79 (2007) (citation omitted). "The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (citing Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). We defer to credibility determinations because a trial court "'hears the case, sees and observes the witnesses, [and] hears them testify, '" affording it "'a better perspective than a reviewing court in evaluating the veracity of witnesses.'" Id. at 412 (quoting Pascale v. Pascale, 113 N.J. 20, 33 (1988) (internal quotation marks and citations omitted)).

Further, we recognize the "special expertise" of judges in addressing discretionary matters in the Family Part. Therefore, if the trial judge's conclusions are evidentially supported, we are inclined to accept them. Ibid. Consequently, we do "not disturb the 'factual findings and legal conclusions of the trial judge unless . . . convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Ibid. (internal quotation marks and citations omitted). "Only when the [trial] court's conclusions are so 'clearly mistaken' or 'wide of the mark'" that the judge was obviously mistaken, should we interfere and make our own findings to "ensure that there is not a denial of ...


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