NANCY G. SLUTSKY, Plaintiff-Respondent/ Cross-Appellant,
KENNETH J. SLUTSKY, Defendant-Appellant/ Cross-Respondent. NANCY G. SLUTSKY, Plaintiff-Respondent,
KENNETH J. SLUTSKY, Defendant-Appellant. DONAHUE, HAGAN, KLEIN & WEISBERG, LLC, Respondent.
December 1, 2016
appeal from Superior Court of New Jersey, Chancery Division,
Family Part, Morris County, Docket No. FM-14-1535-08.
S. Snyder argued the cause for appellant/cross-respondent in
A-5829-13 and appellant in A-2813-14 (Snyder, Sarno,
D'Aniello, Maceri & DaCosta, LLC, attorneys; Mr.
Snyder, of counsel and on the briefs; Scott D. Danaher, on
M. Abramson argued the cause for respondent/cross-appellant
in A-5829-13 (Winne, Banta, Basralian & Kahn, PC,
attorneys; Mr. Abramson, of counsel and on the brief).
Donahue, Hagan, Klein & Weisberg, LLC, pro se respondent
in A-2813-14 (Francis W. Donahue, of counsel and on the
Judges Lihotz, Hoffman and Whipple.
two appeals arise from the parties' matrimonial
litigation. The court scheduled the matters back-to-back
before the same panel to address all issues in a single
Docket No. A-5829-13, defendant Kenneth J. Slutsky appeals
from a May 30, 2014 final judgment of divorce (final
judgment). He challenges various aspects of final judgment;
most significantly, the rejection of evidence regarding the
need to repay family loans and the valuation and equitable
distribution of his interest as an equity partner in a large
New Jersey law firm. Additionally, defendant appeals from the
ordered equitable distribution of what he asserts were
premarital IRAs and the awarded counsel fees and expert costs
to plaintiff Nancy Slutsky. Defendant further challenges a
July 28, 2014 order denying his motion for reconsideration,
and a second order filed the same date, which implemented a
payment schedule for the ordered amount of equitable
distribution and fees.
cross-appeals, challenging the final judgment and the July
28, 2014 orders. She argues the judge improperly denied her
claim for financial adjustments to account for insufficient
pendente lite support, and maintains the trial judge abused
his discretion in not ordering defendant to satisfy the
entirety of her counsel fees and expert costs, by allowing
defendant to satisfy ordered obligations over time.
second matter, Docket No. A-2813-14, defendant appeals from a
January 9, 2015 order denying his motion to dismiss for lack
of standing, a petition filed by plaintiff's former
counsel to enforce the order mandating defendant remit
payment to satisfy obligations owed to plaintiff. Defendant
argues counsel no longer represented plaintiff in the
application, making counsel adverse to her interests.
this court, defendant moved to supplement the record with
subsequent orders relating to the amount of plaintiff's
counsel fee obligation. The reviewing motion panel deferred
the matter for consideration in this opinion. We grant the
reasons discussed in our opinion, we affirm the order
rejecting defendant's request to require plaintiff to
contribute to the repayment of monies transferred from
various family trusts; we reverse the evaluation of the
goodwill attached to defendant's interest in his law
firm, as well as the percentage interest in this asset,
granted to plaintiff; we reverse the July 28, 2014 order
subjecting defendant's Union Central and Wells Fargo IRAs
to equitable distribution; we reverse the award of counsel
fees, but affirm defendant's ordered payment of expert
costs. Additionally, we affirm the final judgment provision
denying plaintiff's request for an allocation of
additional support based on the pendente lite award and
reject as unavailing her claim for an award of additional
various provisions in the final judgment are vacated, the
order under review in A-2813-14 is reversed. The matter must
be reviewed on remand by a different Family Part judge.
thirty years of marriage, plaintiff filed a complaint for
dissolution of the parties' marriage and review of her
related requests for alimony, equitable distribution, and
satisfaction of debts, counsel fees, and costs. The
litigation was difficult and protracted. Some delays in the
final disposition occurred from June 2009 to April 2013, to
abide the conclusion of a guardianship proceeding and another
delay resulted in 2011, to accommodate one party's
medical concerns. Ultimately, trial commenced on January 6,
2014, and was conducted over nineteen days. The judge issued
a written opinion, addressing all disputed issues. Final
judgment was filed on May 30, 2014.
cross-motions sought to modify certain provisions of the
final judgment and the judge issued an amended final
judgment, correcting clerical errors. On the same date, two
other orders were filed. These orders effectuated provisions
of the amended final judgment, and included a payment
schedule for defendant's satisfaction of the ordered
obligations. Motion practice continued. Subsequent orders
denied defendant's request to stay pending appeal the
financial obligations set forth in the final judgment; denied
defendant's request for additional findings of fact and
conclusions of law; and granted a limited stay to allow
defendant to request this court stay execution of the amended
final judgment. We denied defendant's stay motion.
parties challenged various provisions of the final judgment
arguing the judge's insufficient factual findings could
not sustain the legal conclusions reached, and contended
legal error and abuse of discretion require reversal. We
recite the well-settled standards guiding our review of
Family Part orders and judgments.
review of a non-jury trial, we defer to a trial judge's
factfinding "when supported by adequate, substantial,
credible evidence." Cesare v. Cesare, 154 N.J.
394, 412 (1998). We also note proper factfinding in divorce
litigation involves the Family Part's "special
jurisdiction and expertise in family matters, " which
often requires the exercise of reasoned discretion.
Id. at 413. In our review, "[w]e do not weigh
the evidence, assess the credibility of witnesses, or make
conclusions about the evidence." Mountain Hill, LLC
v. Twp. of Middletown, 399 N.J.Super. 486, 498 (App.
Div. 2008) (alteration in original) (quoting State v.
Barone, 147 N.J. 599, 615 (1997)), certif.
denied, 199 N.J. 129 (2009). Consequently, when this
court concludes there is satisfactory evidentiary support for
the trial court's findings, "its task is complete
and it should not disturb the result." Beck v.
Beck, 86 N.J. 480, 496 (1981) (quoting State v.
Johnson, 42 N.J. 146, 161-62 (1964)).
bench trials, our "[d]eference is especially appropriate
when the evidence is largely testimonial and involves
questions of credibility." Cesare,
supra, 154 N.J. at 412 (quoting In re Return of
Weapons to J.W.D., 149 N.J. 108, 117 (1997)). We
recognize a trial judge who observes witnesses and listens to
their testimony, develops "a feel of the case" and
is in the best position to "make first-hand credibility
judgments about the witnesses who appear on the stand."
N.J. Div. of Youth & Family Servs. v. E.P., 196
N.J. 88, 104 (2008). In contrast, review of the cold record
on appeal "can never adequately convey the actual
happenings in a courtroom." N.J. Div. of Youth &
Family Servs. v. F.M., 211 N.J. 420, 448 (2012).
is warranted when the trial court's factual findings are
"so manifestly unsupported by or inconsistent with the
competent, relevant and reasonably credible evidence as to
offend the interests of justice." Rova Farms Resort,
Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 484
(1974) (quoting Fagliarone v. Twp. of N. Bergen, 78
N.J.Super. 154, 155 (App. Div.), certif. denied, 40
N.J. 221 (1963)). All "legal conclusions, and the
application of those conclusions to the facts, are subject to
our plenary review." Reese v. Weis, 430
N.J.Super. 552, 568 (App. Div. 2013).
matter, the trial judge issued a written opinion, identified
the undisputed facts, related aspects of expert testimony,
and stated his conclusions. Noting not all decisions set
forth in the final judgment are challenged on appeal, we
limit our discussion to facts underlying discrete challenges,
which we include in the discussion of each individual issue.
start with the nine issues raised by defendant on appeal.
Where appropriate, we have combined arguments directed to
defendant argues he was denied a fair trial because plaintiff
engaged in "willful, contumacious behavior that made a
mockery of justice, " for which the judge declined to
sanction her. Defendant contends, "no reported case in
New Jersey has recited facts demonstrating more of an affront
to the justice system than the actions of this
plaintiff" during the pendency of this case. Review of
defendant's argument recites plaintiff's obstreperous
behavior "effectively precluded [him] from
cross-examining plaintiff . . . the key witness on the issue
of family loans." Defendant maintains the judge should
have sanctioned plaintiff, followed through on his threats to
strike her pleadings, and, at the very least, draw an adverse
inference on the loan issue "instead of placating
plaintiff" and treating her in a solicitous manner.
Defendant's argument in Point I strikes only at his
request to equitably allocate monies borrowed from several
family trusts; a related issue is raised in Point V.
testified regarding the nature and amount of the loans from
various family trusts. He explained plaintiff's spending
resulted in a "tsunami" of credit card debt, which
could only be met by borrowing, and asserted approximately
$1.9 million was loaned by the trusts to maintain the marital
lifestyle, between the years 1987 and 2008. When received,
the monies were deposited into a joint account with plaintiff
and all must be repaid. The trustees did not intervene in the
litigation to seek repayment.
into evidence was a "revolving promissory note, "
dated June 15, 1998, executed by defendant and issued to the
June Slutsky Trust. June Slutsky is defendant's mother
and this testamentary trust was created by her mother, Rose
Gross. The trust granted a lifetime interest to June and her
sisters. The remainder of June's interest passes to
defendant. The note contained a grid of blank boxes, which
were to be completed with amounts borrowed on stated dates. A
similar note, also dated June 15, 1998, was executed by
defendant to borrow money from a credit shelter trust
established by his late father. June Slutsky was the sole trustee
and defendant held her power of attorney. The third trust was
an inter vivos insurance trust. The insurance policy pays a
death benefit to the named beneficiary, defendant, upon the
death of both insureds, defendant's parents. Defendant is
the trustee and borrowed against the cash value of the
insurance policy. There was no documentation for borrowings
from the life insurance trust.
testified he received permission for each trust withdrawal
and insisted he must repay the obligations. Defendant's
testimony differentiated these borrowed sums from gifts made
addition, defendant presented a legal pad containing his and
plaintiff's handwriting, which he explained was prepared
while they engaged in estate planning. Defendant urged
plaintiff falsely testified she knew nothing about the loans
because he told her each time he borrowed money and the notes
demonstrated her knowledge of the debts and the requirement
for repayment. The legal pad notes purportedly calculated
additional life insurance purchased to assure plaintiff's
financial security in the event defendant predeceased June,
who required the debts be repaid and essentially "pull
the rug out from her [plaintiff] right away."
scattered testimony, plaintiff did not agree she knew of the
obligation for repayment of the monies borrowed. She also
denied understanding the debts were accounted for during
estate planning discussions. In fact, in the course of her
cross-examination on this subject, plaintiff was
non-responsive, ignored questions asked, as well as the
judge's instructions to answer "yes" or
expert, Gary Phillips, analyzed the documents and opined the
facts raised risks these trust transfers triggered tax
consequences and would not be considered loans, but rather a
trust distribution to June, which were followed by a gift to
defendant. Phillips acknowledged the trustees of all three
trusts were empowered to engage in loans; however, he stated
the notes executed by defendant lacked an interest component,
the instruments' grids were not completed when borrowings
were made, so amounts stated on the notes were significantly
less than totals claimed by defendant. For example, the June
Slutsky Trust note reflected borrowing of $56, 000, yet
defendant claimed the actual amount loaned was $256, 000; the
credit shelter trust note reflected loans of $275, 500, yet
defendant claimed $700, 000 was borrowed. Phillips further
challenged the claimed loan status for all trust borrowings
because he found no record defendant made repayments.
also presented de bene esse deposition testimony of a bank
loan officer responsible for reviewing documentation
submitted to obtain mortgage loans secured by the marital
home. The loan officer testified the family trust debts were
not disclosed on the loan applications completed by defendant
appeal, defendant asserts plaintiff's failure to respond
to questions regarding her handwritten notes, showing she
understood the debts, required the judge to draw an adverse
inference. He highlights plaintiff's extensive higher
education, which includes a bachelor's degree in
economics from an Ivy League institution, a master's
degree in finance from New York University, and
certifications as a public accountant and a financial
planner, as belying her claims of ignorance and lack of
understanding. He also argues the judge erroneously
misapplied the law.
speaking, in dividing marital assets the court must take into
account the liabilities as well as the assets of the
parties." Monte v. Monte, 212 N.J.Super. 557,
567 (App. Div. 1986); see also N.J.S.A.
2A:34-23.1(m) (requiring "debts and liabilities of the
parties" to be considered when determining equitable
distribution). Where marital debts are proven, courts should
deduct marital debts from the total value of the estate, or
allocate the obligations between the parties. See
Pascarella v. Pascarella, 165 N.J.Super. 558, 563 (App.
Div. 1979) (holding the trial judge was required to deduct
debt incurred during the marriage between husband and his
mother); Ionno v. Ionno, 148 N.J.Super. 259, 262
(App. Div. 1977) (holding obligations should be allocated
between the husband and wife).
matters are fact sensitive. When a particular debt is claimed
to be owed to a member of one spouse's family, the burden
of proof rests on the claiming spouse to establishing a bona
fide obligation to repay the monies asserted as loans.
Monte, supra, 212 N.J. Super, at 567-68.
Monte, the defendant questioned whether the loans to
the plaintiff's family were "bona fide."
Id. at 568. This court stated:
Under these circumstances it would not be equitable to
require [the] defendant to be charged with any portion of the
loans if [the] plaintiff is not likewise required to pay.
Moreover, absent a finding as to whether the debts to [the]
plaintiff's relatives did or did not exist, it may be
necessary for those relatives to establish the basis and
amount of the debts.
review of the facts at hand, we are not persuaded defendant
suffered prejudice by plaintiff's non-responsiveness
during cross-examination or her disruptive behavior tolerated
by the trial judge warranted a new trial. We are hard-pressed
to criticize the trial judge's attempts to control the
courtroom. In hindsight, one reading the trial transcripts
might suggest things should have been done differently.
However, we are not convinced possible errors when dealing
with plaintiff prevented defendant from presenting his case.
understand defendant argues plaintiff's claimed lack of
understanding of family finances and estate planning is
incompatible with her extensive financial and tax educational
achievements. This may be true. In the trial judge's
words, plaintiff's testimony was scattered and,
"tenuous at best." His credibility findings imply
some of plaintiff's conduct aligned with her "fixed
agenda, " which included among other things
"'getting back' at [d]efendant."The judge
further characterized plaintiff as "belligerent"
said, we also cannot overlook plaintiff suffered health and
emotional problems. Early in the litigation defendant
asserted the necessity to appoint a guardian ad litem for
plaintiff. In the companion guardianship matter a different
judge conducted a trial and concluded plaintiff was
view, the trial judge is in the best position to discern
whether plaintiff feigned ignorance. He did not make such a
finding. Rather, his opinion conveys plaintiff was fixated on
a given set of results on somewhat specific issues, and
"she clearly was stressed beyond her limits."
despite his general finding defendant was credible,
although there is no serious challenge to the fact the
parties' living expenses exceeded defendant's
earnings necessitating supplemental funds unquestionably
provided by the family trusts, the judge rejected
defendant's position seeking plaintiff to share in the
obligation to repay the loans. This decision turned on a
conclusion defendant did not satisfactorily meet his
obligation to prove he must repay the debts. This conclusion
is supported by the record.
finding defendant's proofs deficient, the judge noted:
the notes contained no specific terms for interest or
repayment; the trust did not intervene in the litigation to
protect its interest; documents produced lacked specificity
as to the total amounts distributed, which were asserted only
by defendant; and defendant generally held a beneficial
interest in the trusts. Most significant among the
judge's findings was the absence of disclosure of the
debts on the 2002 and 2004 mortgage loan applications and the
loan officer's lack of recollection to corroborate
defendant's testimony he orally revealed the debts.
plaintiff were aware of the borrowings, as defendant now
argues, the judge determined defendant's claim of
required repayment was neither binding nor determinative.
Rather, he scrutinized the evidence and found defendant's
assertions of necessary repayment was "not
credible." We defer to these supported factual findings,
including this credibility assessment. Cesare,
supra, 154 N.J. at 412. Accordingly, ...