NJ Family Legal Blog : New Jersey Divorce and Family Lawyer & Attorney : Fox Rothschild Law Firm : Alimony, Child Support, Child Custody, Prenuptial Agreements, Essex, Morris, Mercer, Atlantic

The number of college graduates living with their parents has almost doubled since 2007. Currently, over 45% of 26-year-olds live at home with their parents. The figures highlight the difficulty that many young Americans have had in establishing careers following the longest recession this country has faced since the Great Depression. Some children, although employed, simply lack the funds to move out and may remain with their parents, even well into their twenties.

As a Matrimonial Attorney, these staggering statistics present an interesting question as to a non-custodian’s obligation to continue contributing to the support of a child, though a college graduate and/or employed, is still ostensibly supported by his or her parents; at least with regard to shelter expenses.

In New Jersey, a parent is under no duty to contribute to the support of an emancipated child. In deciding whether to emancipate a child, a Court will generally examine whether the child has “moved beyond the sphere of parental influence.” When a child moves beyond the sphere of influence and responsibility exercised by a parent and obtains an independent status on his or her own, generally he or she will be deemed emancipated. As mentioned above, a curious situation presents itself where the child should be self-supporting, but the economy prevents him or her from obtaining lucrative employment.

A similar, yet instructive, situation was the topic of a recent (unreported) decision by the Appellate Division in Gall v. Gall. In Gall, the parties’ son, Brian, lived at home and intended to enroll as a full time student in the future. He worked full time, paid for his personal expenses including gasoline, clothes and food outside the home. However, his earnings were insufficient to allow him to move out of his mother’s home.

The trial court declined to emancipate Brian and awarded child support pursuant to the Child Support Guidelines. In addition, the non-custodial father was required to contribute toward Brian’s college expenses. The non-custodial father appealed.

While the Appellate Division “agree[d] in theory that a full-time college student is not emancipated as there is no ‘fixed age’ for emancipation…” it further found that because Brian was employed full-time and was only a part-time student, he should have been deemed emancipated. As a result, the Court reversed the order of child support as to Brian. In doing so, the Appellate Division set forth a bright line (although non-precedential) rule of thumb: “…a child over the age of eighteen, working full-time, and attending school only part-time, absent some unusual circumstances…is emancipated even if residing with a parent because his or her employment income is alleged to be insufficient to allow the child to live independently.”

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Most people are aware that a supporting spouse may be entitled to modify an alimony obligation upon a showing of “changed circumstances.” However, many people do not know that the “leg-work” that they have to do to set themselves up to succeed on such a Motion begins long before the parties ever go to Court, especially if a supporting spouse is asking for relief on the basis of a purported job loss or reduction in income.

Below is a non-exhaustive list of items that a Judge will look for when a supporting spouse is requesting to reduce his or her alimony obligations:

• Has the applicant proven that his/her circumstances have changed such that he/she would be entitled to a child support or alimony reduction - Common scenarios constituting changed circumstances include:
       o A reduction in a party's income;
       o Illness;
       o Retirement;
       o The receipt of an influx of liquid assets;
       o Cohabitation of the supported spouse.

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As a continuation to last week’s post regarding what happens when trial courts fail to grant hearings to supporting spouses when they may be warranted, i.e. upon a showing of changed circumstances, this blog post will focus on those times where a hearing is deemed unnecessary based on the facts of a given case. This sometimes occurs in situations where an obligor is self-employed, has the ability to control his or her income, and is attempting to capitalize on the down economy in order to wriggle out of support obligations, sometimes only a few short years after the initial support award.

This type of issue was addressed at length in a prior blog post by Eric Solotoff, Esq. in the context of a discussion of Donnelly v. Donnelly where a self-employed attorney was denied a reduction to his alimony obligation two years following the entry of the Final Judgment of Divorce based on a purported downturn in his law practice. In these types of instances, trial courts have followed the mantra that where the supporting spouse owns his own businesses, the income of the self-employed obligor must be viewed “more expansively.”

For example, in the 2010 case of Pisciotti v. Pisciotti, the defendant-husband appealed from an Order denying his motion to reduce his alimony obligations and to pay child support. At the time of their divorce in 1999, the parties entered into a Property Settlement Agreement (“PSA”) obligating the husband to pay $3,000 per month in alimony, as well as child support in the amount of $4,207.34 per month. Ten (10) years following the parties’ divorce, the husband filed a motion to reduce his support obligations, arguing that his income had substantially declined since the time of the divorce and that his assets, which included several heavily mortgaged properties, had decreased significantly in value. The husband also asserted that the fitness center business, in which he was a co-investor and employee, had suffered during the economic downturn, thereby diminishing his compensation therefrom. The husband supplied various materials in support of his motion, including an updated Case Information Statement, his certification, and personal tax returns. The former wife opposed the motion, arguing that the husband’s motion was not adequately supported, and therefore he had not established a prima facie change of circumstances.

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In this economy, you would be surprised to see how many judges are jaded by applications brought by supporting spouses to reduce their support obligations based upon a reduction in income. After all, some judges entertain these applications on their daily docket and oftentimes see supporting spouses who are simply attempting to capitalize on the down economy and lack any actual merit to their cases. This blog post will explore one of the reactions by judges to this type of application; namely, denying the request of the supporting spouse outright without even holding a hearing, taking testimony, and making credibility findings.

Support obligations are always modifiable by the family court upon application of the supporting spouse.  Typically, this type of application requires the supporting spouse to make a threshold prima facie showing that “changed circumstances have substantially impaired the ability to support himself or herself.” Lepis v. Lepis, 83 N.J. 139, 157 (1980). When such a showing is made, the Court must next determine if a plenary hearing is warranted. This is sometimes referred to as the two-step Lepis analysis.

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With the economic downturn and slow down in the economy since 2008, there has been a lot more post-judgment litigation to reduce alimony and child support. Much of this litigation has been legitimate; other has been brought by opportunists, throwing around buzzwords and crying about the economy when there is really no substantial change of circumstance.  Moreover, there is no uniformity as to what a "substantial change of circumstance" really is and judges have been all over the map, from judge to judge and county to county.

One would think that after a 17 month job search that culminated in the alimony obligor accepting a job where he had a two hour commute to Pennsylvania and which resulted in a 22% reduction in his income from the time of the divorce would be a no-brainer substantial change of circumstances.  If you thought that, you would be wrong.  In fact, the trial judge in the case of Austin v. Austin did not find this to be a change of circumstances. The Appellate Division, in an unreported (non-precedential) decision released on December 6, 2012 reversed finding this to be "Lepis quality change of circumstance."

Even then, there may not be an automatic reduction in alimony.  The Appellate Division stated:

We do not suggest that the Family Part must reduce plaintiff's alimony obligation. The trial court should conduct an evidentiary hearing in the event further review of the record
reveals a genuine issue of material fact. We leave open to the Family Part's discretion to what extent, if any, the totality of the circumstances impels a permanent change in the alimony component of the PSA. However, that court must now treat plaintiff's current employment situation and lessened income (and defendant's present health concerns) as significant vectors affecting the ultimate determination of a fair and reasonable
alimony award.

Because there is no uniformity as to what a "Lepis quality change of circumstances" is, and because these cases are determined on a case by case basis, I suspect we will continue to see these decisions all over the map.

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Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric practices in Fox Rothschild's Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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As we know, limited duration alimony ("LDA") is alimony for a definite period of time.  Unlike rehabilitative alimony where there is a goal in mind to be reached by the end of the rehabilitation period and which can possibly be extended of the goal has not been reached, per the statute, the term of LDA is not supposed to be able to be modified except for "unusual circumstances." Of course, even limited duration alimony is subject to modification based upon "changed circumstances." Of note, however, is that retirement has been recognized as a possible change of circumstances sufficient to seek a modification. 

The issue of whether early retirement could be used by an alimony payor in order to terminate his LDA obligation was recently addressed in the case of Hendrickson v. Hendrickson, an unreported (non-precedential) opinion released on November 5, 2012.  In that case, the parties agreed to an 8 year term of LDA at the time of the divorce in 2006, in the amount of $265 per week, that actually was reduced to $145 per week to take into account that the wife's child support obligation because the husband had custody of the children.  

The husband had been working at Fort Monmouth for more than 30 years when it closed in 2011.  The husband asserted that though he had been offered a position in Aberdeen, Maryland, the net effect of the transfer would have resulted in a reduction of income and increased expenses.  Moreover, he was able to retire for health reasons and collect his retirement benefits.  As a result of a claimed inability to pay, the husband filed a motion to terminate his LDA obligation.  

The trial court denied the request finding that the early retirement was not a change of circumstances.  An unsuccessful motion for reconsideration was denied, as well.  The Appellate Division affirmed the decision, but for different reasons.

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Inflation impacts everyone, right?  As a result, one would think that alimony would routinely be subject to cost of living adjustments (COLA). In fact, we know that Rule 5:6B of the New Jersey Rules of Court states that "(a)ll orders and judgments that include child support entered, modified, or enforced on or after [the effective date of this rule] September 1, 1998 shall provide that the child support amount will be adjusted every two years to reflect the cost of living."  So if child support is subject to biennial COLA increases, alimony is similarly increased, right?  Wrong!

I have been practicing  for more than 20 years and have rarely, if ever, seen COLA clauses related to alimony in marital settlement agreements.  That said, I have also rarely seen decisions that discuss this issue until this week when the Appellate Division released the unreported (non-precedential) opinion in Eberhard v. Eberhard on November 2, 2012. 

In this case, the trial court increased alimony with little rationale provided for the increase other than plaintiff's increased cost of living. In reversing, the Appellate Division noted:

In this matter, we first note the motion judge erred as a matter of law because an increase in the cost of living unaccompanied by a demonstrated need will not satisfy a movant's burden to show the necessary substantial change in economic circumstances to warrant modification of alimony.  (Emphasis added)

So there you have it.  But doesn't the same change of circumstances standard apply to modifications of child support?  Why do we presume, by Rule, that the cost of living for children increases, yet the cost of living for the dependent spouse does not?  Of course, doesn't the payor of both child support and alimony have to face rising costs of living too?  Can we intellectually justify this?  That all said, perhaps the better practice would be to simply negotiate for COLA increases for alimony in divorce agreements.  Of course, the other side will push back and can now cite to this case as the reason why.

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Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric practices in Fox Rothschild's Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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When settling a case, the parties and their lawyers can be far more creative in settlement then a judge can be if the case is tried.  While family judges have wide discretion in their decision making, creativity is crafting the most beneficial result for both parties is rarely something they can do.  In fact, in many ways, they are constrained from the type of creativity that we see every day in divorce agreements. 

What if you are a high earner, but your income fluctuates greatly from year to year?  While a judge will likely have no choice but to determine your average income over 3 to 5 years and base support upon that as well as the rest of the statutory factors, you may want to agree on some kind of formula so that there is fairness year over year, i.e. you pay more in a better year and less in a down year. For example, if your average income is $2,500,000 but your income fluctuates between $1 million and $4 million per year.  You would really hate paying alimony in those years you only make $1 million.  If a judge decided this case using averages, you might be forced to pay your entire net income, or more, to you ex spouse in the down year.  Similarly, a judge could never say that support "automatically" is reduced or even reviewed if your income is less than $X in the future. 

This concept was reiterated again by the Appellate Division on October 29, 2012 in an unreported  (non-precedential) decision in the case of Means v. Snipes.  In this case, after a trial, the judge decided that in the event that defendant's annual income fell below $2 million, he would receive a reduction in alimony. This is the one thing that both parties agreed was in error - a rare agreement in a very contentious case.

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In a perfect world, marital settlement agreements (MSAs a/k/a Property Settlement Agreements) are crystal clear and cover every possible contingency under the sun (I say this as when first drafting this post, I was being contacted frantically by a client regarding custody provisions in the event of school closure because of hurricane.)  That perfect world rarely exists for many reasons, including the main reason that most cases would never settle and/or the cost would be outlandish if every possible contingency is contemplated and negotiated.  That said, we do our best to address to the most germane and likely issues.

If the document cannot cover every possible thing under the sun, at least the final document should be clear and include the parties' actual meeting of the minds on the included issues.  Sadly, this does not always happen either.  Sometimes, the parties meeting of the minds is really not a meeting of the minds - that is, they each believe that the settlement is something else but the language of the agreement is vague or imprecise enough where they both think that they are right.  Some people actually do this on purpose to keep an argument on a "hot button" issue alive for the future.  Other times, it is simply inartful, to put it kindly, or down right bad drafting that causes future problems.

If a party can convince a court that the terms of the agreement represent a mutual mistake, perhaps there is some relief and the agreement can be re-formed.  That said, more often then not, one of the parties gets really hurt by virtue of the poor drafting. 

This appears to be what happened in the case of Rozier v. Byrd, an unreported (non-precedential) opinion released by the Appellate Division on October 26, 2012.  In this case, either someone was trying to be cute and the law of unintended consequences jumped up to bite him, or he was the apparent victim of a poorly drafted agreement.

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The Simkin v. Blank case in New York has been a frequent topic on this blog.  It was game over for Mr. Simkin today when the NY Court of Appeals ruled that this Madoff victim could not revise his divorce deal.

 We first wrote when the case was filed.  In this case, in June 2006, the parties agreed to evenly split the $5.4 million in an account they had with Madoff Securities. As a result, the husband gave the wife $2.7 million in cash, and retained the account. As a result of the alleged Madoff Ponzi scheme that has essentially rendered the account worthless, the husband filed suit seeking the $2.7 million that he paid the wife. The husband alleges that because the account turned out to be valueless, the spirit of the agreement was broken.

We next wrote when the trial court first ruled, dismissing the matter.   I even participated in a podcast about this ruling. Acting New York State Supreme Court acting Justice Saralee Evans decided that the husband is stuck with his decision to keep the account instead of withdrawing his money before the December 2008 collapse of Bernard L. Madoff Investment Securities LLC. The Justice noted that while the husband claimed the Madoff account held no assets, he did not allege it had no value. Key to the decision was that in 2006 and "the several years after that plaintiff maintained this investment," the account "could have been redeemed for cash, presumably significantly in excess of its 2004 value." In addition, the Justice held that "An investor's ability to redeem an account for value, was the assumption on which the parties relied in dividing their property and in doing so they made no mistake."

The next installment was about the Appellate Division's decision which reversed the trial court decision and reinstated the Complaint.  The Appellate Court found that dismissal was improper and the husband had the right to try to pursue both the issues of mutual mistake (i.e. there never really was an account) and that the wife was unjustly enriched. In coming to its decision, the majority of the court held:

The dissent states: “[a]t the time of the agreement, Steven had an account in his name with [Madoff].” Untrue. Steven never had an account in his name with Madoff; on Madoff's own admission there were no accounts within which trades were made on behalf of investors.

The dissent then states, “Steven liquidated part of the account to fund his payments to Laura.” Untrue. In Madoff's Ponzi scheme what appeared to Steven and Laura to be a partial liquidation of an account was simply a payment to Steven that came from funds deposited by a more recent “investor” in what the “investor” believed was his own account.

The dissent further observes, “[Steven] did not liquidate the rest of the Madoff account ... and he continued to invest in it.” Untrue. There was no account which could be liquidated, as became apparent when Madoff received $7 billion worth of “liquidation” calls from investors in 2008. Nor was Steven “investing” in an account; his further contributions went directly to pay other “investors” in the scheme.

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While decisions from the Appellate Division addressing a former professional athlete's motion to reduce his support obligations do not come around all that often, we have, in fact, previously blogged on the issue.  Now from the Appellate Division comes the unpublished (not precedential) matter of Villone v. Villone, where the Appellate Division strictly relied on "triggering" language in the parties' Marital Settlement Agreement in reversing and remanding a trial court's decision that a former Major League Baseball pitcher was not entitled to a modification of support. 

The matter involved that of former pitcher Ron Villone, who has played for more franchises than almost anyone else in the history of the game (an interesting record that was recently broken) - 12 to be exact as of Spring Training 2011, when he was released by the Washington Nationals and signed with the Somerset Patriots (an independent, minor league baseball club).  He became well known for his travels, earning the nickname "Suitcase" Villone from teammates.  Also interesting is that his current wife is on the reality show "Baseball Wives", which, in the context of asking for a support reduction could provide potential evidence for his former spouse to use against him in opposing such request at the trial level.

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In these uncertain times, it seems as though everyone is talking about the impact of the economy.  We've posted many blogs about proving changed circumstances for an increase or decrease in child support and/or alimony as well as a modification of parenting time.  You can read a few of those blogs here, here or here.

The trend continues.  In the recent unpublished Appellate Division decision of Rosenthal v. Whyte, A-1776-10T4, decided December 5, 2011, stemming from two Orders from the Cape May County trial court, the Court affirmed the lower court's Orders denying Ms. Whyte's motions to modify custody and child support.  To put it simply, Ms. Whyte failed to meet her burden that enough of a change had occurred to warrant a modification of the parties' 2008 Property Settlement Agreement ("PSA").

The parties' 2008 PSA provided for an anticipated move by Ms. Whyte with the minor child to upstate NY, more than 500 miles from Mr. Rosenthal's Cape May county residence.  It also provided that Ms. Whyte was leaving her job as a school teacher to pursue a business opportunity in NY state.  Child support was set with these facts in mind.  Mr. Rosenthal's parenting time was set forth as one weekend each month and one continuous month every summer with an additional week over the summer.

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As we have blogged before, perhaps the most critical document in the New Jersey family law landscape is the Case Information Statement.  A document designed to provide the court, parties and legal counsel with a complete economic picture - income, expenses, assets and liabilities - the CIS, which is signed by the party under oath, can be used to address several issues including, but not limited to, alimony, child support and equitable distribution. 

Rule 5:5-2(a) requires the filing of a CIS in "all contested family actions, except summary actions" where there exists any issue as to custody, support, alimony or equitable distribution.  The rule also provides that a CIS may otherwise be required by Court Order or on motion of the court or other party. 

For the more specific purpose of this blog entry, Rule 5:5-4(a) provides that, when filing a motion in the family part for "the entry or modification of an order or judgment for alimony or child support based on changed circumstances", the motion must be accompanied by a copy of the prior filed CIS/statement(s) upon which support was originally determined and now sought to be modified, and a newly updated CIS.  This subsection of 5:5-4 concludes by providing that if the party seeking the modification establishes a "substantial change in circumstances", the court will then order the other party to file a copy of a current CIS.

Bringing us to the Appellate Division's newly unreported decision in Livingstone v. Daniel, wherein the Court found that the trial judge did not properly state a basis for his decision to modify child support after he terminated alimony following a plenary hearing.  As part of the alimony termination decision, the trial court directed the parties to submit their last 3 pay stubs, medical insurance information, and work related child care expenses for a child support calculation to be made.  After such information was submitted, the trial court issued a new order, without further briefing or oral argument, increasing child support based on the parties' gross weekly incomes, mom's net annual work-related child care expense, and the children's health insurance premiums.  Importantly, the Appellate Division found that the trial court's reliance on pay stubs in lieu of Case Information Statements was improper, since there was the full financial picture for both parties was lacking.  As a result, the trial court was directed to conduct further proceedings upon review of the parties' CISs.

Interestingly, the court also remanded as to whether dad was required to contribute to the children's private school expense, even though the parties' settlement agreement only referenced such contributions in relation to college.  The alimony termination was deemed a change in circumstances meriting new review on this issue, to which the trial court failed to perform the proper analysis/consideration of several factors in deciding that the settlement agreement controlled.  In addition to determining whether a child support modification was warranted based on CISs to be filed, the trial court, thus, was also required to consider private school contributions.

The scenario in Livingstone only serves to reiterate just how important filing that CIS for several reasons, as it is the complete financial picture that is critical to rendering a proper determination on issues of support, education contributions, and the like.

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Robert Epstein is a contributor to the New Jersey Family Legal Blog and a member of Fox Rothschild's Family Law Practice Group. Robert practices throughout New Jersey in all areas of family law and family law litigation. You can reach Robert at (973)994-7526, or repstein@foxrothschild.com.

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An interesting issue was recently considered by the Court in the case of Muller v. Muller. Specifically, the Appellate Division examined whether a husband could compel the sale of the marital home when he had conveyed his interest by way of deed about ten years earlier, but the parties’ Property Settlement Agreement (“PSA”) had provided for the husband’s continued ownership.

The parties in Muller were married for 17 years. When they divorced in 1990, they entered into a PSA, which, in part, provided as follows:

EQUITABLE DISTRIBUTION
A. Husband and Wife agree to divide equally the personalty . . . upon sale of the premises or child's emancipation, whichever shall first occur.
B. Upon execution of contract of sale of the above premises, Husband agrees to put his interest in the marital home in trust for Child.
. . . .

REAL ESTATE
A. Husband agrees to pay the mortgage payments [on the marital home] . . . until the time that child graduates from college, or reaches the age of 22, whichever shall first occur[.]

The husband paid the mortgage from the time of the divorce until around 1999 when he defaulted on the payments. The mortgagee instituted foreclosure proceedings in or around July of 2000. In order to avoid foreclosure, the wife borrowed about $60,000 and refinanced the property. The husband executed a deed and conveyed the wife his ownership interest in the property for consideration of $50,000. As a result, the wife exonerated him of the debt the he had incurred by defaulting on the mortgage payments. At the point, the child was 21 years old and had graduated from college.

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An interesting decision on the issue of support modifications came down last week from the Appellate Division in the unpublished (not precedential) matter of Schechter v. Shechter.  There, the husband in 2004 agreed via settlement to pay child support and 12 years of limited duration alimony.  In July 2010, he filed a motion to modify his support obligations on the basis of a substantial and continuing change in circumstances (he had been unemployed since March 2009).  

The motion judge denied the parties' request for oral argument and, in ruling "on the papers," added several paragraphs to the husband's proposed form of order.  As part of the order, the judge, among other forms of relief, temporarily reduced the husband's child support obligation due to a finding of changed circumstances, but then denied his request to modify his alimony obligation. 

The husband appealed, arguing that the trial judge erred by (1) denying his request to modify alimony despite finding that changed circumstances warranted a temporary reduction in child support; (2) denying the parties' request for oral argument; (3) failing to make requisite findings of fact and conclusions of law; and (4) failing to conduct a plenary hearing. 

The Appellate Division reversed and remanded the matter because the motion judge failed to make proper findings of fact and conclusions of law.  As a result, the Appellate Division was unable to reconcile why the motion judge modified child support based upon a finding of changed circumstances, while also denying a modification of alimony.

Notably, while the husband was successful on having the matter reversed and remanded, it was a hollow victory because the motion judge had since retired.  The matter, as a result, was remanded to an entirely new trial judge for a "fresh look," especially in light of the parties' "possibly evolving financial circumstances."  Thus, while the prior motion judge had made a finding of changed circumstances (at least as it applied to child support), the new motion judge would no longer be bound by such a finding.  The husband, by unfortunate result, was essentially left with no choice but to start over.  While we have discussed on several occasions the issues raised by denying oral argument and failing to make proper findings of fact and conclusions of law, the result in this matter seemed particularly inequitable to one party under somewhat unique circumstances beyond his control.

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You have read here before that when filing for a modification in support in New Jersey, the movant must establish a substantial and continuing change in circumstances to fulfill the initial burden of proof, which will then  lead to an intervening period of discovery and eventual plenary hearing.  The Appellate Division issues dozens of opinions on a yearly basis addressing modification applications, each with its own specific set of facts and nuances. 

Many of those decisions note that a substantial and continuing change must be more than merely "temporary" in nature.  What constitutes a temporary change cannot be narrowed to a precise definition or description, since there is no firm standard of how long the change has to occur for it to move beyond the temporary phase.  Notably, each trial judge also has their own view on what constitutes a temporary change.  For instance, we have had judges determine that a mere couple of months is more than a temporary change, while other judges under similar factual scenarios will conclude that even a year is not enough.  On occasion, a given trial judge will helpfully instruct that, while a given length of time under the facts before him or her is insufficient to establish more than a temporary change, if the situation continues for another year or so, that will be enough.

It is with that background where the Appellate Division's recently unpublished (not precedential) decision in Snyder v. Snyder comes into play.  There, the husband alleged that he had experienced a substantial and continuing change in circumstances meriting a reduction in his support obligation.  While the evidence detailed by the Appellate Division was insufficient for the husband to fulfill his initial burden (a relevant tax return, for instance, showed income sufficient to meet his agreed upon support obligation), it was a letter submitted by the husband's employer on his behalf that I found noteworthy.

Specifically, in confirming that the husband's salary had been reduced, the letter provided:

Over the past year, Vernon Daniel Associates has been negatively impacted by the downturn
in the economy. Since the product we provide to our clients is considered a luxury item, we do not anticipate business improving until sometime in 2010. 

Due to the poor economy and continuing losses experienced by the New Jersey office, Vernon Daniel Associates has decided to terminate the lease of our New Jersey office and warehouse. Kurt Snyder will remain in New Jersey as branch manager but will work from an office in his home. 

In addition to closing our New Jersey office and warehouse, expenses have been aggressively reduced wherever possible.  Effective January 2009, all branch manager salaries were reduced. In the case of Kurt Snyder, his annual salary draw was reduced from $80,000.00 to $67,000.00 and will remain so until business improves.

I highlight the last portion of the letter because it was the very language, "will remain so until business improves" that proved, in part (other than a tax return presented to the court) to be the husband's undoing because it essentially gift-wrapped the notion that the alleged change in circumstance was nothing more than temporary and subject to a future increase.  Without knowing the details of the other evidence before the trial court and in the record on appeal, perhaps this language alone was sufficient to render fatal the husband's application.

Thus, while one usually cannot predict when a court will deem an alleged change to be more than merely temporary, in this situation the key evidence was pretty clear that the change at issue was anything but permanent.

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We have previously blogged on the "rule of thumb", a dirty little secret used by judges and lawyers in New Jersey to come up with a "ball park" as to what alimony should be.  This "rule of thumb" does not take into account all of the statutory factors.  Rather, the formula simply subtracts the lower income (real or imputed) from the and multiplies the difference by a percentage.  I have been told that that percentage is 30% or one-third in the northern part of the state and 25% in the southern part.  Of course, judges really cannot use this formula and must make findings considering the law and all of the statutory factors which are:

(1) The actual need and ability of the parties to pay;
(2) The duration of the marriage or civil union;
(3) The age, physical and emotional health of the parties;
(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living;
(5) The earning capacities, educational levels, vocational skills, and employability
of the parties;
(6) The length of absence from the job market of the party seeking maintenance;
(7) The parental responsibilities for the children;
(8) The time and expense necessary to acquire sufficient education or training to
enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;
(9) The history of the financial or nonfinancial contributions to the marriage or
civil union by each party including contributions to the care and education of
the children and interruption of personal careers or educational opportunities;
(10) The equitable distribution of property ordered and any payouts on equitable
distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;
(11) The income available to either party through investment of any assets held by
that party;
(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and
(13) Any other factors which the court may deem relevant.

While these factors are supposed to be consider and the "rule of thumb" is not, we hear judge's recommending settlements using this rule of thumb all of the time.

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There have been countless occasions when a client, or potential client, asks me - "how can I modify my support?"  In these tough economic times, the question usually comes from the person paying support who can no longer afford to pay at the previous level.

My answer to this question is always the same - "It depends.  SHOW ME why you can't afford to pay it anymore."

The case law is illustrative.  A party seeking to modify support must "demonstrate that changed circumstances have substantially impaired" the payor's ability to meet the previously set obligation (Lepis v. Lepis).  The party seeking the modification must file a motion in court, attaching proof of these "changed circumstances."  Thereafter, the court must conduct a hearing if: (1) the party proves a "prima facie" case (translation: case at first blush) of changed circumstances; and (2) there are genuine and substantial issues in dispute.

I recently won an appeal in the Appellate Division, where the trial court denied my client's request to modify his child support.  In Palardy v. Prata, the parties were divorced in 2004.  My client agreed to pay $413 per week in child support, which was based upon him earning an optimistic $175,000 per year.  Unfortunately, by 2008, he was in arrears.  He simply could not find a job that would allow him to meet his own basic expenses, let alone pay $22,000 per year in child support.  In December 2009, we filed a cross motion to reduce his child support.  We attached tax returns showing that his income from 2004-2007 was substantially less than $175,000 as well as evidence documenting his efforts to obtain better employment. 

So, was this enough?  The trial court said NO.  The Appellate Division said YES.  My client should have at least been entitled to a hearing.  According to the Appellate Division, the $175,000 per year in income that was the basis of the support award was a "fiction".  Moreover, it was undisputed that my client never earned this amount. 

What we take from this case is that documented proof is the key to modifying support - more so than a "fictitious" (or imputed) income figure used to calculate the initial support order.  If you are seeking to modify your support, you must be prepared to provide proof of what you claim to be the actual circumstances.  Your word isn't enough.

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What happens when an asset divided in equitable distribution really isn't worth what you think it was?  That was an issue in the Simkin case that I have blogged about in the past about involving the Madoff investment account.  I even participated in a pod cast on this case. It was also an issue in the Andrews v. Andrews case that was decided by the Appellate Division on July 15, 2011.

In that case, involving parties with a reported net worth of $19 million and a husband with a several million dollar a year income, the parties settled the case dividing their assets and as a result of the asset division, the husband had no direct alimony or child support obligation.  One of the assets that the wife was supposed to receive was approximately $1.1 million from the sale of stock in a private bank.  However, for whatever reason, the stock was never sold, the value of the shares because worthless and the wife never got her money.  It is no surprise that the parties wound up back in court. 

The trial judge found that there was mutual mistake made by the parties and re-formed their agreement by requiring the husband to pay the wife half of the value that the parties previously believed the stock to be worth, plus interest.  The husband, of course, appealed, arguing that he never guaranteed that the wife was going to get the amount that parties believed the stock to be valued at. 

The Appellate Division affirmed the decision.  Of note, in response to the husband's argument that wife waiting too long (more than one year) to raise the issue of mistake, the Appellate Division interestingly noted that the agreement regarding equitable distribution was a substitute for child support and alimony and as such, since child support cannot be waived, the waiver/delay argument must fail as to child support.  Similarly, alimony and child support are both subject to modification based upon changed circumstances.

In this case, the lesson, if any to be learned, is that distributions of property in lieu of support could possibly be modified after the support was prepaid.  However, if you want a chance at making the agreement enforceable, you have to make sure that the property actually gets distributed.

__________

Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric practices in Fox Rothschild's Roseland, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.

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Oftentimes, issues of custody and parenting time are the most difficult and sensitive decisions that a judge in the family part must make. It involves deliberation of the ever-elusive “best interests of the child” – a question with no right or wrong answers. While the standard is ostensibly subjective, there are certain guideposts that a judge must look to in order make the difficult determinations that come along with issues of custody. Those factors, as set forth in N.J.S.A. 9:2-4(c), include: 

1. The parents' ability to agree, communicate and cooperate in matters relating to the child;
2. The parents' willingness to accept custody and any history of unwillingness to allow visitation that is not based upon substantiated abuse;
3. The interactions and relationship of the child with its parents and siblings;
4. Any history of domestic violence;
5. The safety of the child and the safety of either parent from physical abuse by the other parent;
6. The preference of the child if the child is of sufficient age and capacity to reason so as to make an intelligent decision;
7. The needs of the child;
8. The stability of the home environment offered;
9. The quality and continuity of the child's education;
10. The fitness of the parents;
11. The geographical proximity of the parents' homes;
12. The extent and quality of the time spent with child prior to or subsequent to the separation;
13. The parents' employment responsibilities;
14. The age and number of children.

As can be seen in the recent case of Vidal v. Gelak (an unreported/non-precedential decision), when judges do not examine these all-important factors, their decisions face reversal and remand on appeal. 

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 Virtually every interspousal agreement contains a modification clause whereby the parties set forth procedures for subsequent enforceable modification. Many are constructed as follows:

No modification or waiver of any of the terms of this Agreement shall be valid unless: (1) in writing and executed by the party to be charged; or (2) ordered by a court of competent jurisdiction upon appropriate notice and upon an appropriate showing of changed circumstances as and if allowed under New Jersey law. The failure of either party to insist upon strict performance of any of the provisions of this Agreement shall not be deemed a waiver of any subsequent breach or default of any provision contained in this Agreement.

Note that there are two ways under this clause in which an agreement may be modified: (1) a subsequent writing; or (2) ordered by a court. As to the second, a court, generally, has the inherent power to modify support provisions of an agreement. Where an agreement restricts this power (such as would be the case in an agreement which contains a “non-modifiable” alimony obligation), the restriction will be upheld as long as it does not violate public policy.

However, for the purposes of this article, it is the first – modification by writing – as to which this article is addressed. Let’s take a look at the elements of the writing methodology:

(a)         A writing; and

(b)         Executed by the party to be charged.

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We have blogged countless times about a payor spouse's efforts to modify his alimony obligation post-divorce by claiming that he has suffered a substantial and continuing change in his financial circumstances.  When a court concludes that a change has occurred meriting modification, and implements a new modified support obligation, at what point should the modification become effective?  When the payor spouse first filed for a modification?  When a plenary hearing is held?  At the conclusion of the entire matter? 

Oftentimes, the payor spouse will claim that he has established a change in circumstances and, if the Court determines a plenary hearing is necessary and an intervening period of discovery, that a reduction be made in the interim pending the outcome of the hearing.  Why is such a request appropriate?  First, if the payor has established his initial burden of proving a change in circumstances, requiring him to continue paying at the current amount until completion of a hearing will likely ensure the ongoing accrual of arrears at the higher number.  A Court's refusal to grant such relief also incentivizes the payee spouse to drag out the matter indefinitely, since only the payor suffers without some form of interim relief. To that end, we recently had a matter where the Court declined our payor client's request for interim relief pending the plenary hearing but later granted such relief because the payee spouse had deliberately dragged on the matter for months beyond that envisioned by the Court. 

This issue was also recently addressed by the Appellate Division in its unpublished (not precedential) decision in Baker v. Baker.  There, the payor spouse argued that the trial court erred by only retroactively reducing his alimony by one month - to August 1, 2010 - as opposed to either March 25, 2008 when payor filed his original motion to reduce alimony, or May 2, 2005 when he was involuntarily terminated from his position of employment precipitating his economic downward spiral.

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 It is well-settled law in New Jersey that prior to the relocation of a child from the this state by a custodial parent on a permanent basis, the parent first must formally request leave from the Court. The court will then examine the move under the factors set forth in the seminal case Baures v. Lewis, which guides the court's relocation inquiry. In Baures, the Court recognized three now-established legal principals:

1. The relocation standard is based upon a custodial parent’s right to seek happiness and fulfillment, which in turn, benefits the child.
2. Upon relocation, the non-custodial parent’s communication and exposure to the child must be sufficient to sustain that relationship.
3. Finally, the custodial parent must provide proof that the child would not suffer as a result of the move.

While Baures is proverbial gospel when it comes to relocation from the State of New Jersey, an interesting question arose in the Ocean County trial Court in McKinley v. Naters, which was approved for publication (binding opinion) on April 13, 2011. Namely, the McKinley case examined whether the court should grant a contested application for a temporary removal of a child to another state for “extended vacation purposes” prior to a formal relocation hearing under Baures?

The parties in McKinley were divorced on December 10, 2002. They share one child together, whom the Court referred to as H.M. At the time of the divorce, the parties agreed to share residential (physical) custody of H.M.

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As a follow up to my blog post of last week, this week the Appellate Division came down with yet another cohabitation decision. The case of Pizzuti v. Proctor was decided on March 31, 2011. In Pizzuti, the wife appealed from a decision wherein the trial court terminated her former husband’s alimony obligation of $100 per week on a finding of changed circumstances based on the wife’s cohabitation with an unrelated male.

At the trial level the husband submitted a myriad of proofs that the wife was cohabitating in support of his obligation to terminate alimony. His efforts were for naught however, because the fact that she was cohabitating went completely uncontested. Indeed, in response to the husband’s allegations, the wife stated as follows: "I will spare the Court the trouble of scheduling a plenary hearing because I admit that I do cohabitate with Mr. Argenzio at his home, located [in] Ramsey, New Jersey and have been since 1999." However, as I stated in my previous blog, proof of cohabitation is only half the battle. The next inquiry is whether, by virtue of the cohabitation, the wife was economically dependant on her new paramour. In New Jersey, the fact of economic dependence is presumed upon a showing of cohabitation, and it is incumbent the cohabitating spouse to prove otherwise.

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As a matrimonial lawyer, I often get the question "how old does a child have to be to decide who they get to live with?"  There is a perception out there that there is a magic age where a child is empowered to decide which parent they get to live with.  This simply is not the case. 

Rather, a child's preference is only one factor a court must consider when deciding custody.  Why is the child's preference not absolutely determinative?  Because it is not always reliable and may not be in their best interests.  Maybe the child is too young or too immature for their preference to be relied upon alone.  Maybe one parent is improperly influencing or pressuring a child to express a preference that is not their true preference.  Maybe the child feels bad for and/or feels the need to take care of the parent because of some physical or mental infirmity of the parent or a feeling that the parent is the victim of the other parent.  Perhaps the child has been promised something by the other parent or is trying to play one parent against the other.  Perhaps the child (maybe a teen) feels that the other parent will give them more freedom. 

This issue becomes even more difficult after an initial custody determination is made or agreed to and then a child expresses a preference to live with the other parent.  That was the issue in the unreported (non-precedential) decision in the case of Traynor n/k/a Dallara v. Traynor decided on March 29, 2011.  In this case, the father appealed the denial of his motion to change the custody of his 11 year old daughter who allegedly decided that she wanted to live with him.

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It seems as though a wave of cohabitation cases has recently swept across the Appellate Division in New Jersey. And for good reason. While well-settled is the concept that a supported spouse’s cohabitation typically will constitute a change of circumstances sufficient to justify end of a supporting spouse’s alimony obligation, the nuances of the law can be quite involved. This can been seen from the Appellate Division’s February decision in the case of Wonderlin v. Wonderlin, on which Sandra Fava blogged. That holding came down to evidence of the times and frequency that an unrelated male came and went from a former wife’s home, which, the Appellate Division ruled, entitled a former husband to discovery on the issue of whether the wife was cohabitating.

While the comings and goings of an unrelated male can be one indicia of cohabitation, in the case of Okoshi-Wilson v. Wilson, the Appellate Division examined a different source to prove cohabitation: the wife’s earnings as compared to her expenditures. There, the husband moved for a termination of his alimony obligation on the basis of the wife’s cohabitation with an unrelated male.

It seemed, based on the proofs submitted, that the husband had always earned a significantly greater salary than the wife, with the wife only earning about $47,000 in 2008 after her alimony of $22,500 per year was considered, as compared to the husband’s $164,164 the year prior. Despite this fact, the wife was apparently living in a posh, three-bedroom Upper East Side apartment, which she clearly was unable to afford on her salary alone. As it turned out, also a tenant of the same apartment was an unrelated male by the name of Steven Macy. This revelation led to the husband’s application for a termination of his alimony obligations. During the hearing at the trial level, Okoshi admitted that she had been able to maintain her New York City residence, because she was Macy’s tenant, allegedly paying him only $135 per week in rent and household work such as watering the plants, purchasing food, and collecting the mail. She further testified that Macy and his daughter only stay at the apartment about five times per month. Okoshi had documents to support some of her assertions — a lease signed by her and Macy and receipts for rent she paid in cash. She denied any romantic involvement with Macy and said he does not support her in any way.

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It is well-settled law in New Jersey that child support and alimony awards are always modifiable. While there is an abundance of case law in the area of post-judgment modifications of support obligations, particularly in this economic climate, the most often cited case for modification is the seminal New Jersey case of Lepis v. Lepis, 83 N.J. 139 (1980). Indeed, the Lepis Court was the first in holding that when changed circumstances substantially impinge upon the supporting spouse’s ability to pay support at the level ordered, a modification of the support order might be necessary. The burden to prove this change in circumstances falls upon the supporting spouse when such a downward modification is sought.

A reduction in the supporting spouse’s income has long been recognized as a changed circumstance warranting a support modification, so long as it is not temporary in nature. In addition, the recent Appellate Division case of Angelastro v. Angelastro, recently solidified the notion that a support modification may be sought when the supported spouse’s economic circumstances change for the better.

In Angelastro, the parties’ property settlement agreement, executed in September of 2008, awarded the wife alimony as follows:

The [h]usband shall pay to the [w]ife[,] starting at the sale of the marital home[,] the sum of $350[] a week in [a]limony commencing for a period of six (6) years. Upon the completion of aforementioned six (6) years[,] the [h]usband's [a]limony obligation shall reduce to that of $200[] and continue for a period of eight (8) years thereafter representing a total payment period of fourteen (14) years.

In addition, child support in the amount of $200 per week was provided for. The parties’ property settlement agreement specifically predicated the above support awards upon the wife’s imputed income of approximately $25,000.

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Though you don't see them much anymore, some times Marital Settlement Agreement contained escalator clauses which, in effect, provided for automatic increases in alimony or child support.  Some times they were a fixed percentage per year. Other times they were tied to the cost of living/Consumer Price Index. 

In the unreported (non-precedential) case of Burroughs v. Burroughs released on August 9, 2010, the effects of a 5% annual increase on alimony escalator clause was at issue.  In this case, the agreed upon alimony was $200 per week and based upon the husband's income of $60,000 at the time (1994).  The husband had comparable income until the year 2000 when he could no longer find same and went to work at Home Depot earning about half of what he made in the past.  In 2006, the alimony was increased to $337 per week, not due to a change of circumstances, but rather, by implementation of the escalator clause.  As an example why not to use such an escalator clause this reflects a 68.5% increase in support in about 10 years.

The husband's income continued at the less than time of the divorce levels until about 2007, when he established a business with a friend to try to increase his income from what he was earning at Home Depot.  This was not a success.  He ultimately filed a motion to terminate or reduce his alimony.  The motion was denied.

The Appellate Division reversed holding that the husband had made a showing of a change of circumstances by virtue of his Social Security statement showing far lower wages post-2000 than his alimony was based upon.  The effect of the escalator clause was also impacted on the showing of a change of circumstances (though this is curious because it certainly is a foreseeable event.)

The matter was remanded for discovery and a plenary hearing.

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We have recently blogged on the requirement that there be oral argument on substantive motions if it is requested.  Another requirement is that court's should hold plenary hearings (i.e. trials) when there are conflicting certifications regarding a material fact in dispute.  That requirement was made clear again in the unreported (non-precedential) decision in Marquez v. Cabrera released on July 15, 2010. 

In this case, the Property Settlement Agreement provided that the wife got to keep two pieces of real estate owned by the parties, seemingly their largest assets, while the husband remained responsible for some debt associated with the properties.  This does not seem to pass the smell test on its face, a fact not lost on the Appellate Division in its decision.  The husband moved to set aside the agreement, alleging fraud - essentially that a signature page from a different agreement was appended to the one filed with the court on the day of the divorce hearing.  Of course, the wife denied this.  There was some credence on its face to the husband's arguments given that there were two page sevens of the agreement. 

In any event, the trial court  denied the motion finding the wife more credible.  The problem there is that court are not supposed to make credibility determinations on mere certifications alone.  Rather, as noted above, if there are competing certifications, a plenary hearing must be held.  As such, the matter was reversed for a plenary hearing.  In addition, the Appellate Division held, "because the motion judge made credibility determinations and "may have a commitment to [her] findings," the plenary hearing must be conducted before a different judge." 

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In an unreported (non-precedential) decision in the case of Brown v. Brown  released on May 25, 2010, the Appellate Division determined that veterans disability benefits and social security benefits are income for purposes of determining alimony.  In this appeal of an Order that granted some alimony reduction but not as much as the former husband sought, the facts are not particularly interesting.  That said, what was interesting was that the reduction was not as much sought (and in actuality, the ex-husband sought an elimination of alimony, because the court considered the veteran's disability pension and Social Security over his objection.  In fact, he tried to argue that the spendthrift provisions (provisions that prevent creditors from attacking certain assets/benefits) in the relevant federal laws prevent such consideration but the Court noted that a spouse seeking support was not a creditor within the meaning of the law.

The matter was, however, remanded because the trial court did not analyze the statutory factors when reducing the support.  As noted in my blog last week about the Walsh case, when dealing with a motion to modify alimony, once the Court determines ta ht there is a change of circumstances, they have to look at the needs of both parties.  In fact, if the Court makes an initial finding of a change of circumstances, the court must analyze how much the alimony should be in a modification application the same way it would in an initial alimony application.   

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On May 21, 2010, the Appellate Division issued a reported (precedential) opinion in Colca v. Anson involving different aspects of child support and college support.  This case reinforces several principles regarding child support and payment of college expenses that we already knew (which makes it somewhat surprising that it was reported) but nevertheless is a good reminder of certain basic principles. 

The first of these principles is that child support belongs to the child and thus cannot be waived by a parent or for that matter, by a court.  This comes up in two contexts in this case.  First, in a 2005 Order, for whatever reason, the trial court denied the father's request for child support for the parties' daughter who was in college.  In another motion in 2008, the father sought child support again.  Thinking that the matter had previously been decided by the court and that there were no changes of circumstances, the mother did not even file a Case Information Statement. 

The trial court disagreed with the mother's position that the prior Order was forever binding and required a showing of changed circumstances, pointing out that the duty to support a child continues until emancipation.

In addition, the Appellate Division affirmed the trial court's decision that the child's inheritance could not be considered with regard to support.  While perhaps correct as to child support, there are not enough facts given in this opinion about how much was really in dispute. That said, the Child Support Guidelines suggest an adjustment to child support may be required if a child has an extraordinarily high income.  Also, in the famous NJ case on college expenses, Newburgh v. Arrigo, which we have blogged on many times before, a child's assets are a factor to be considered.  Since the college was at issue in this case, one wonders why the inheritance was not considered here.

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On May 13, 2010, the Appellate Division issued yet another unreported decision in the matter of Walsh v. Walsh.  This is yet another interesting decision in a matter that has been appealed several times.  In one of the prior opinions, the trial court employed an 11 year average of the husband's income for support purposes given the historic variability of his income.

In the present appeal, at issue was a modification of alimony.  In this instance, while the court found that the husband's 2008 income was $58,000, the court essentially imputed twice as much to the husband.  The Appellate Division, however, did not disturb this finding.  They did, however, reverse the decision for several interesting reasons and remanded the matter for a new hearing.

In the trial judge's decision, he found that with the reduced alimony that he ordered, that each party would have a similar monthly shortfall in their budget.  The husband argued and the Appellate Division agreed that there was no basis for this decision.  In fact, the court made no specific findings as to the husband's needs.  In failing to do so, the Appellate Division held that: "As a result, the court did not sufficiently address the central issue in any alimony modification case, the supporting spouse's ability to pay."

The case also highlights the fact that the same standards apply to an initial determination of alimony and a modification.  In fact, the Court held that:

As a final observation, we note that the trial court recognized in its bench opinion that the $2,000 award  "is probably more than [it] would find if this were an initial hearing." Because the same standards apply to an initial alimony proceeding as to a modification proceeding, the court needs to explain its decision in that respect as well.

In the day and age of financial crisis and reduced incomes for many, this case cogently reminds us of the standards to apply and the notion that once a court decides to review an alimony award, while consideration of the marital lifestyle is clearly important, the review is a fresh review based upon all of the alimony factors.  Strict adherence to the prior award is not the standard.

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In February 2009, I posted a blog entry entitled "The Madoff Mess Hits the DIvorce Court."  In this case, in June 2006, the parties agreed to evenly split the $5.4 million in an account they had with Madoff Securities. As a result, the husband gave the wife $2.7 million in cash, and retained the account. As a result of the Madoff Ponzi scheme that has essentially rendered the account worthless, the husband filed suit seeking the $2.7 million that he paid the wife. The husband (a prominent attorney with a large NY law firm) alleged that because the account turned out to be valueless, the spirit of the agreement was broken. The wife's position was that the husband withdrew probably $3 million to pay the wife, so the asset did exist at the time of the settlement agreement. In December 2009, I blogged on the decision  which was in the wife's favor, essentially because the husband could have redeemed the account for the agreed upon value from the time of the divorce up to the Madoff collapse. 

Based upon this blog entry, I was interviewed about this case by Mark S. Gottlieb, CPA for a podcast on his website.  Mark is a forensic accountant and business valuation expert with offices in Great Neck, New York, Stamford, Connecticut and Roseland, New Jersey.

To listen to the podcast, click here.

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In February, I wrote a blog entitled Madoff Mess Hits Divorce Court..  In this case, in June 2006, the parties agreed to evenly split the $5.4 million in an account they had with Madoff Securities. As a result, the husband gave the wife $2.7 million in cash, and retained the account. As a result of the Madoff Ponzi scheme that has essentially rendered the account worthless, the husband has filed suit seeking the $2.7 million that he paid the wife. The husband (a prominent attorney with a large NY law firm) alleged that because the account turned out to be valueless, the spirit of the agreement was broken.  The wife's position was the husband withdrew probably $3 million to pay the wife, so the asset did exist at the time of the settlement agreement.

The decision was reported last week and the husband lost.  Acting New York State Supreme Court acting Justice Saralee Evans decided that the husband is stuck with his decision to keep the account instead of withdrawing his money before the December 2008 collapse of Bernard L. Madoff Investment Securities LLC.  The Justice noted that while the husband claimed the Madoff account held no assets, he did not allege it had no value.  Key to the decision was that in 2006 and "the several years after that plaintiff maintained this investment," the account "could have been redeemed for cash, presumably significantly in excess of its 2004 value." In addition, the Justice held that "An investor's ability to redeem an account for value, was the assumption on which the parties relied in dividing their property and in doing so they made no mistake."

The public policy of the finality of settlements was upheld.  Whether is is ultimately fair since the asset may not have really existed is another story.  It is different than retaining a stock account and then the market goes up or down because in that instance, there really was an asset as opposed to a fictional asset.  It is also different than holding on to a home whose value has decreased, as I have blogged on before.  

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During the course of a litigation where children are involved, the parties will often come to an agreement as to custody and parenting time.  By settling on this understandably emotional issue, the parties avoid having to go to trial, where the trial judge would have decided for them who has custody and what the parenting time schedule will be.  Depending on when settlement occurs during the course of the litigation, the time and expense of obtaining a custody evaluation, which involves the children in the process as well, may also be avoided. 

However, oftentimes after settling the issue and coming to an agreement, one or both parents will change their minds about what they just entered into for whatever the reason may be.  He or she wants to change the agreement or simple rescind on its terms.  We are actually involved in a litigation where the parties agreed to a holiday parenting time schedule with a parenting coordinator, the Court subsequently entered the terms of the Agreement in an Order, and the husband is still trying to back away from the agreement, having just filed a motion with the Court and leaving our client with no choice but to incur legal fees to respond.

The question then becomes, can they change the schedule so easily if they want to?  The simple answer is no.  A parent seeking a modification of a custody and parenting time agreement must show changed circumstances from when the agreement was made that the agreement is now not in the best interests of the children.

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We have blogged many times about cases dealing with motions for reductions of child support and alimony.  Obviously, that has been a hot topic given the economic downturn that our country has experienced over the last year or so.  Another interesting unreported (non-precedential) case was released on November 2, 2009.

That case was Miele v. Miele.  In this case, the parties divorced in 2005.  In their Agreement, the husband's support was based upon anticipated gross income of $165,000 per year.  The reason for this was because he involuntarily changed employment in 2005.   In 2004 he earned more than $331,000.  Because of these circumstances, the parties agreement required them to exchange W-2 and 1099 forms for 2006, 2007 2008.

The husband's post divorce income did not approach even the $165,000 level.  As a result, he made a motion to reduce his alimony in 2007 which was denied.   He filed another motion in 2008 which also was denied.  This time, he appealed. 

The Appellate Division reversed.  The Appellate Court found that the parties agreement recognized that there was an involuntary reduction in income and that the $165,000 number was a projection of future income that did not come to fruition.  Given that the husband had shown two, if not three straight years of income that was substantially below the anticipated gross income, he was entitled to, at the very least, entitled to a hearing. 

This case is instructive because I would anticipate that many current divorces will be faced with a similar situation of someone who lost their job and their new income is speculative.  The parties should attempt to include protections in the agreement that take into account that the income could go back to historical levels, as well as what should happen if it does not. 

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In a reported (precedential) trial court decision, Martin v. Martin, released on July 31, 2009, Judge Haas, in Burlington County ruled that there no longer is an automatic review of child support every three years.  Rather, for child support to be reviewed, the mere passage of time is not enough, and there has to be a showing of a change of circumstances.

The Court went on to point out that the three year review relates back to a prior version of a particular statute and has essentially been replaced by a Cost of Living Increase (COLA) every two years. 

While this is an interesting opinion and makes logical sense, since it is a trial court opinion, other trial court judges are not required to follow it.  Moreover, there is precedential decisional law that states that passage of time can be a change of circumstances as to child support because it is well known that as children get older, certain expenses increase.

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At the time of divorce proceedings, many of my clients ask if they can “lock” the other party to whatever support amount is rendered. If the person asking is going to be paying support, they are asking because they do not want to have to pay more in the future. If the person asking is going to be receiving the support, they are asking because they intend to rely upon the amount indefinitely. My response in most circumstances is that it can be done but it should only be done with great caution and only done by way of agreement. For example, while a litigant’s intent may be to “lock” the support amount because they are anticipating earning more in the future and do not wish to pay more in the future, once locked and the litigant is faced with unanticipated detrimental financial circumstances, they may be unable to obtain a decrease of their support obligation. In other words, it goes both ways - being bound to a specific number regardless of changed circumstances can be very beneficial in some circumstances and in other circumstances very disastrous.

N.J.S.A. 2A:34-23 recognizes the equitable power of the Courts of the State of New Jersey to modify alimony and support orders at any time. Specifically, N.J.S.A. 2A:34-23 states:

Pending any matrimonial action brought in this State or elsewhere, or after judgment of divorce or maintenance, whether obtained in this State or elsewhere, the Court may make such order as to the alimony or maintenance of the parties . . . as the circumstances of the parties and the nature of the case shall render fit, reasonable and just, and require reasonable security for the due observance of such orders. . . . Orders so made may be revised and altered by the court from time to time as circumstances may require. 

Based upon the mandates of the statute, “alimony and support orders define only the present obligations of the former spouses.” Lepis v. Lepis, 83 N.J. 139, 146 (1980). Alimony and support obligations are always subject to judicial review and modification upon a showing of a change in circumstances. Id.    A type of “‘changed circumstance” that warrants modification of a support order is an increase or decrease in the supporting spouse’s income.” Innes v. Innes, 117 N.J. 496, 504 (1990). However, what happens when the parties agree at the time of the divorce that the support provisions cannot be modified?

The Appellate Division decision discussed whether or not a non-modifiable clause (also called an “anti-Lepis” clause) is enforceable in the decision of Morris v. Morris, 263 N.J. Super. 237 (App.Div. 1993). The Morris Court did find that an anti-Lepis clause could be found unenforceable in some circumstances, although the particular anti-Lepis clause in Morriswas upheld. In Morris, the defendant husband sought a reduction in alimony payments despite an anti-Lepis clause in the alimony agreement stating that the agreement was not modifiable for any reason except for the husband's physical disability. The husband based his request for reduction on a claim that the his annual income was $49,000 while his annual alimony payment was $35,000. The wife argued that husband kept all of the assets pursuant to the parties agreement and in exchanged for non-modifiable alimony, she agreed to a support amount of much less than the amount needed to sustain the marital standard of living. In holding that the husband was not entitled to a reduction in alimony payments, the court addressed a conflict between two chancery court decisions. In Smith v. Smith, 261 N.J. Super. 198, 199-200 (Ch. Div. 1992), the court determined that “an ‘anti- Lepis’ clause, which seeks to preclude the exercise of [the] Court's equitable responsibility to review and, if warranted, to modify support obligations in response to changed circumstances, is contrary to the public policy of this State as reflected in its Legislative Acts and its judicial decisions.” In Finckin v. Finckin, 240 N.J. Super. 204, 206 (Ch. Div. 1990), the court concluded that public policy did not prohibit the use of an anti- Lepis clause.
 

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Last week we blogged about a recent unreported Appellate Division case where I was the attorney for the winning party at trial and on appeal.  To view the prior post, click here - to view the Appellate Division opinion, click here.  In last week's post, I blogged about the importance of credibility.  There were other interesting parts of the decision.

In this case, the parties agreed that they would have joint legal custody but that the wife would have the children about 60% of the overnights.  The husband, however, in what we deemed a game of semantics, would not agree that the wife was the Parent of Primary Residence (PPR), though by definition, since she had the children more than 50% of the time, she was the PPR.  There is case law that says that the PPR has final say if parents deadlock on major decisions for the children.  Despite this being the law, this was an unresolved issue at trial.  The trial court essentially acknowledged the law.  The husband appealed claiming that the custody agreement was modified.

The Appellate Division held:

Defendant initially argues that the trial court erred in "setting aside material portions of the Consent Judgment to elevate plaintiff's decision-making authority" respecting the parties' two children. We disagree.
This was a bitterly contested divorce as evidenced by the extent of the record and the expense of the litigation. The court recognized that the parties "dispute[d] how to make decisions related to their children" and "recognized the parent of primary residence to be the parent in the better position to make those decisions." The court held that as "primary caretaker," plaintiff "shall decide in the best interest of the children their medical needs and treatment, schooling, expenses, and even religious instruction" because it was not in the children's interest to "be in the middle of parental conflict" when decisions concerning their welfare needed to be made. The court left intact the parties' agreement to "confer on all important matters concerning the children's health, education and general well being" and to use a mediator to resolve disputes that might arise concerning the children. The court concluded that "[t]he parties shall be bound by the terms of their consent judgment fixing custody and parenting time subject to the plaintiff's authority as parent of primary residence." With respect to extraordinary medical treatment, the parties were to consult each other in advance, except in cases of emergency, and "[n]either party shall unreasonably withhold consent."

We agree that the trial court's modification of the parties' consent judgment is in the children's best interest, considering the hostility between the parties. Kinsella v. Kinsella, 150 N.J. 276, 317 (1997). Should the parties come to a resolution of their hostilities and be able to deal reasonably with each other regarding the children, they may seek to amend the judgment in respect of the custody provisions pursuant to N.J.S.A. 2A:34-23. In the meantime, irrespective of the parties' agreement, the court properly exercised its "supervisory jurisdiction as parens patriae," in the children's best interests. Sheehan v. Sheehan, 38 N.J. Super. 120, 125 (App. Div. 1955).

To the extent that parenting agreements are unclear, or there is a dispute as to what joint legal custody means, this case provides some guidance.

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An opinion issued by Judge McGann in Monmouth County in December 2008 was released for publication in June 8, 2009.   In the case of Centanni v. Centanni, the Court held again that child support could be modified retroactively in limited circumstances.

In this tragic case, one of the parties' children died in a car accident in October 2007.  The father did not file a motion to modify his child support per the parties' 2004 Property Settlement Agreement until January 2008. 

While typically the law is that child support cannot be retroactively modified, there are limited circumstances where it is possible.  However, prior to this case, there were no reported decisions dealing with the death of a child.  Judge McGann held that:

Upon the tragic death of the parties’ daughter, the duty to pay support for her ceased. Nothing within the four corners of the statute evinces an intent on the part of the legislature to bar retroactive modification upon such an occurrence. Moreover, there are other equities at work here. To bar retroactive modification would be to punish financially an obligor who has thoughtfully, and in good faith, allowed an appropriate period of grieving and healing to take place before seeking redress in court. Consequently, a bar on retroactive modifications would encourage an inopportunely-timed filing while families are still in the midst of coping with the tragedy.

Given the previous reported decisions allowing retroactive modification in certain circumstances, for instance, upon emancipation, one has to wonder why the mother fought the retroactive termination of support. Certainly, the legal fees that she expended were going to substantially cut into if not exceed the support at issue. 

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In an interesting unreported Appellate Division decision released on May 20, 2009, in the case of Williams v. Williams the appellate court affirmed a finding by the trial court that the former husband had not shown a change of circumstances and therefore was not entitled to eliminate his alimony obligation.  The case is also a primer of what not to do when seeking a reduction.

In this case, the husband was a long time employee at JP Morgan Chase making $185,000 per year.  His alimony obligation was $1,000 per month.  When he lost his job in August 2006, he immediately stopped paying alimony despite receiving one year of severance pay.

The husband asserted that he had tried but failed to find comparable work.  The opinion was not clear but given the final outcome, one can surmise that overwhelming proof of an unsuccessful job search was not supplied to the Court.  The husband further alleged that he had attempted unsuccessfully to establish a consultant business focusing on information technology. He claimed, however, that the only employment he could obtain was a position in a florist shop. It was not disputed that the florist shop was operated by his girlfriend.  Though the issue was ultimately decided for other reasons, these facts could also lead to a conclusion the he had not made an initial showing of a change of circumstances.

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We have previously posted many blog entries regarding modifying alimony and child support based upon job loss and/or reductions in income in light of the historic, current economic down turn.  To see some of my prior posts, click here, here, here, here, and here.

In our practice we have seen many clients coming in to address these issues and have heard anecdotally from judges that the increase in these kind of motions has hit the courts.

That said, there is still little consensus on how these cases are being handled.  There is no consensus amount the courts regarding how long you have to wait to come to Court.  There is no consensus amount the court's regarding how much of your assets you have to go through, or whether you have to incur debt before you can file.

There seems to be a focus on the lifestyle of the support payor, i.e. has he or she reduced their lifestyle.  While that is an appropriate consideration, it may be too simplistic.  Looking at the house someone lives on or the car that they drive likely does not tell the whole story.  Can the person reasonably sell their home in this market without facing a deficit?  How long would it take to sell the house anyway?  Maybe the car is leased or if financed, there is negative equity and they cant rid of it to reduce their expenses. 

The bigger question is whether despite a clear loss or reduction of income, whether the payor has to strip their lifestyle to bare bones, or whether the undisputed reduction of income should be enough. 

Court's also have to beware the opportunist who is using the bad economy in general to try to reduce or limit their support obligation when there is no real credible evidence that they have or will be affected. Scrutiny in this regard is particularly difficult when the payor is a business owner and has the ability to control their income in various ways.  The skepticism and scrutiny in these cases is heightened.  I have two cases now represented service providers - one of whom has lost many long term clients because they have simply gone out of business - and the other, who has received less than half of the orders and deposits then have historically been received by this time of year (and it is a seasonal business). 

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New Jersey has upheld the long standing principle that permanent alimony awards are subject to review, modification and possibly termination based upon changed circumstances.  (Lepis v. Lepis, 83 N.J. 139 (1980).  However, it is not enough to paint a bleak picture of a payor's financial circumstances in order to succeed in a downward modification or termination of alimony.  The applicant must also show the Court that the financial difficulties being encountered are not temporary and/or subject to contingent circumstances.  Innes v. Innes, 117 N.J. 496 (1990).

In the recent unreported Appellate Division decision of Norych v. Norych (A-2633-07T1 decided April 16, 2009), while the payor applicant provided the court with very grim descriptions of his personal financial situation and the financial affairs of his law firm, the applicant miserably failed to substantiate his professed circumstances.

In the Norych matter, the parties were divorced in 1992 and at the time of the divorce, the ex-wife received a permanent alimony award of $1,000 per month partly based on ex-husband's law firm income of $70,000 per year and ex-wife's income as a teacher of $25,000 per year.  Ten years later, the alimony increased to $1,100 per month.  In October 2007, ex-husband filed a Motion seeking to terminate his alimony obligation based upon  what he characterized as two devastating and shocking events. 

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As April 15h quickly approaches and the pressure to get those tax returns completed and filed grows, the issue of which parent can claim a child or children as a dependency deduction for tax purposes becomes more and more relevant.

All Property Settlement Agreements ("PSA") or Final Judgments of Divorce should address this issue to avoid future complications.  What about when the issue is appropriately addressed but one parent seeks to modify the terms so as to receive a benefit  perhaps previously given up in lieu of some other benefit?

Recently, the Appellate Division heard the matter of Mitchell v. Mitchell, A-4856-07T1, decided March 11, 2009 (unpublished decision).  In this case, the parties have been divorced since 2002 resolving their issues by entering into a negotiated Property Settlement Agreement.  At the time of the divorce, husband was earning over $100,000 and wife was imputed income of $17,000.  The two children were given as tax exemptions to the husband but resided primarily with the wife.

Both parties remarried.  In 2008, wife filed a motion seeking, among other things, to amend the terms of the parties' PSA to allow each party to claim one child as a dependency deduction on their tax returns.  Her argument was based on the fact that husband now had twins with his current spouse and would receive that tax benefit.  The trial court granted this request stating that there had been "numerous changes in circumstances" since the parties entered into the agreement and that such a request was "fair".

The Appellate Division vacated and remanded this aspect of the trial court's Order.  In doing so, it noted that husband didn't argue that the trial court was powerless to change or modify the terms of the PSA but rather that the judge's conclusory determination of what was "fair" was insufficient to support the Order.  The Appellate Division agreed stating that the "record does not disclose the tax effect if one of the child tax exemptions was taken from" the husband.  Id. at pg. 6.  The court must ascertain whether its fair and equitable to take from husband a right for which he had previously bargained and which  may need to be determined with an evidentiary hearing.

In 2008, the IRS amended Section 152(e), which deals with dependency exemptions.  The changes to the tax code can be summarized as follows:

The custodial parent, for 2009 and forward, is the one with whom the child resides the greater number of nights during the year, regardless of the terms of the divorce decree. 

 The custodial parent can unilaterally revoke the release of a child exemption for calendar years 2009 and forward, even if the release was made prior to 2009.  As a result, it is important to make sure that there is a procedure in place to have the custodial parent file IRS form 8332 in a timely manner so that the non-custodial parent can claim the exemption that they are entitled to claim by reason of the parties' agreement or a Court Order. Put another way, the change in the IRS section does not preclude a non-custodial parent from claiming the exemption, it just requires more care to make sure that this is accomplished.

As a further note, the individual claiming a dependency exemption is entitled to benefit from a Child Tax Credit and any allowable Hope and/or Lifetime Learning Educational Tax Credits.

For more information on the tax benefits/ramifications of these issues, you should consult a tax professional.

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Given the current economy, a major issue being discussed by family law attorneys and judges is how to handle the issue of support modification where due to the current economy, someones income is eliminated or greatly decreased.  The standard for modification of support is that there has to be a showing of a substantial and continuing change of circumstances.  One of the major issues being discussed is how long does one have to be out of work before making an application to the Court. 

The second issue is even if the change is temporary - whatever that now means - should there still not be some temporary relief because if the existing Order or Agreement is not fair.  A general proposition of law is that Agreements can only be enforced to the extent that they are fair.

Earlier this week, the Appellate Division decided the case of Baker v. Baker which leads me to believe that help may be on the way. To view the case, click here.

In Baker, the parties were divorced in 1998.  At the time, the husband worked was a Managing Director at Pershing Trading Company and earning nearly $800,000 per year, the great
bulk of which came in the form of an annual bonus.  The parties agreed that he would pay alimony in the amount of $10,000 per month.

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On February 3, 2009, my colleague, Katherine R. Sookhoo, an associate in or Philadelphia office,  wrote a very interesting article on cohabitation in our Pennsylvania Family Blog entitled For Love or Money.  I found the blog interesting for two reasons.  First, the rule of law between Pennsylvania and New Jersey are significantly different.  Second, although different, the difficulty litigants have in either jurisdiction in proving that their ex-spouses are cohabiting is the same. 

Pursuant to the Pennsylvania Divorce Code, divorce litigants are not entitled to alimony if they cohabit after they have been divorced.   However, in Pennsylvania, in cases resolved by way of Property Settlement Agreement, the Pennsylvania Divorce Code provision applies only if the agreement specifically states that cohabitation terminates alimony.

Unlike Pennsylvania, New Jersey statutory law does not prohibit receipt of alimony payments based upon cohabitation.  In New Jersey, while cohabitation may be considered a change in financial circumstances that permits a review and/or a modification of alimony, the fact that an ex-spouse cohabits does not necessarily mean that alimony will be terminated.  Konzelman v. Konzelman, 158 N.J. 185 (1999). 

While Pennsylvania and New Jersey have differing laws regarding cohabitation, both jurisdictions are plagued with the uncertainty of how the Court's define "cohabitation".  In Pennsylvania, there has to be a showing of a financial, social and sexual link, by sharing the same residences.  Miller v. Miller, 508 A.2d 550 (1986).  In New Jersey, the New Jersey Supreme Court  noted that “to constitute cohabitation, the relationship must be shown to be serious and lasting” and that  “a mere romantic, casual or social relationship is not sufficient to justify enforcement of settlement agreement provision terminating alimony upon dependent spouse's cohabitation; such a provision must be predicated on a relationship of cohabitation that can be shown to have stability, permanency, and mutual interdependence” Id.  

Therefore, does cohabitation exist if your ex-spouse and her paramour switch back and forth in sleeping in their respective residences?  If they stay together only on weekends?  If they have resided together for a month?  How about a year?  What if their finances are totally separate? In either Pennsylvania or New Jersey, the answers to those questions are not entirely clear and Courts determine the issues on a case-by-case basis.

Because there is no exact definition of "cohabitation", proving that cohabitation exists may be tricky and requires a thorough analysis of the circumstances before raising the issue in Court.  If a litigant is going to allege cohabitation, before doing so, they should make sure that factually and legally, they have enough to get beyond the "grey" area because (1) if you are going to proceed in Court, you want to prevail; and (2) you don't want to go to Court, lose, and give your ex-spouse the ability to further avoid termination of alimony now that they know your on to the cohabitation.   

 EDITOR'S NOTE:  Apple is absolutely correct regarding the grey areas. That said, there have been a number of unreported Appellate Division decisions over the last year or so that have been more permissive in what amounts to cohabitation.  Specifically, many of the cases suggest that staying together every single night may not be required, and that the location is not entirely important (ie. some nights at her house and some nights at his house.) 

However, once some semblance of cohabitation is shown, unless the divorce Agreement specifically calls for the termination of alimony, and most don't, the next issue to address is the financial interdependence between the former spouse and cohabitant.  Put another way, cohabitation is not enough to terminate alimony in the typical case.  You have to look at the financial impact of the cohabitation.  Eric S. Solotoff

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For many, litigation after a final judgment of divorce is a well known reality.  Oftentimes, especially when children are involved, issues arise regarding child support, other expenses for the children, enforcing terms of a judgment or agreement. 

In the matter of Warmke v. Warmke, Appellate Division, decided January 26, 2009, the Court faced such issues as noted above in what stemmed from post judgment motion practice.  Ms. Warmke filed an application with the trial court seeking to fix the amount of childcare arrears owed by Mr. Warmke, modify and enforce child support payments, modify parenting time, modify the amount of life insurance required by their agreement and for counsel fees.  Mr. Warmke filed a cross application requesting that Ms. Warmke contribute to summer camp expenses, a hearing aid for the older child, medical expenses, requiring her to share the transportation reimbursement from the public school and for counsel fees.

The Warmke's had been divorced since 1996 and had entered into an Agreement resolving the outstanding issues in their marriage.  They had two children, the eldest of which suffers from Down Syndrome, Pervasive Developmental Disorder, anxiety disorder, seizures, and hearing and vision impairments.

The parties' agreement provides for joint legal custody. Ms. Warmke has primary physical custody and Mr. Warmke receives liberal parenting time.  At some point after the agreement was entered into, the parties modified their parenting time arrangement, allowing Mr. Warmke primary physical custody during the school summer holiday.

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On February 13, 2009, the Appellate Division issued an interesting unreported decision in the case of Chopoorian v. Chopoorian dealing with a topic that we have blogged about frequently as of late - modification of support obligations. To review the full text of the opinion, click here.

The parties were divorced in 2005.  During the marriage, the husband operated a highly  successful advertising business which provided him with an annual income of over $900,000 in 2003. The parties also owned several valuable pieces of real estate.  The divorce agreement required the husband to pay $187,500 per year in permanent alimony and $50,000 per year in child support.  Of note, the Agreement stated:

Husband’s earned income as defined herein may increase to $650,000 gross per year (before taxes) before Wife is entitled to file a Motion to modify/increase alimony
based on an increase in Husband’s earned income. Husband’s earned income must decline to $400,000 gross per year (before taxes) or below before he is entitled to file a Motion to modify/decrease alimony based on a decrease in earned income.

The husband was also supposed to pay the wife $1.3 million over time for her share of the business interests.

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Last week, I published a blog post entitled "No Hearing Required for Serial Modification Motions." To view that post, click here.  However, released on February 9th was the unreported decision in the case of Cordero v. Mora with a different result. To view the full text of the case, click here.

This case involves the former Major League baseball player, Will Cordero, who was seeking, once again, to reduce his child support obligation for the child of his first marriage.  He played with the Boston Red Sox, Cleveland Indians, Pittsburgh Pirates, Montreal Expos, Florida Marlins and Washington Nationals in the major league for fourteen years. He made a substantial amount
of money during his career. In some seasons he made as much as $6,000,000.  He now claims to be out of baseball, having last played in the Major Leagues in 2005.  He participated in spring training in 2007 with the Mets in their minor league camp but was cut.

Over the years, Mr. Cordero has filed many application to reduce his support. In 2005 resulted in a reduction of child support from $1300 to $800 weekly. The  following year, he sought and obtained another reduction based on a substantial salary reduction.  from $800 to $500 weekly. On appeal,
he argued he should have received a greater reduction.  In June 2007, that argument was rejected by the Appellate DIvision.  However, just prior thereto, the ex-wife filed an enforcement motion and Mr. Cordero filed another motion seeking a reduction.  The judge granted the motion to enforce the existing order. In addition, the judge ordered him to pay $11,999 in arrears within thirty days and denied his motion for a further reduction. The judge noted that plaintiff provided limited and spotty financial information. Based on the information before the court, the judge concluded that plaintiff had the ability to pay the arrears. He also found that plaintiff produced extremely limited information about his efforts to obtain employment and incomplete information about assets that may generate unearned income or can be liquidated to meet his on-going child support obligation. The judge was particularly concerned that plaintiff had not provided an accounting of the millions of dollars he had earned during his professional baseball career.

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Litigants who get caught lying about their income in their filed submissions to the Court subject themselves not only to denial of their request for relief from the Family Part Judge but they also open the door for problems with the IRS, the State of New Jersey Division of Taxation, the Prosecutor’s office and the Social Security Administration. 

In the recent unpublished Appellate Division decision of Lucci v. Lucci, Defendant ex-husband filed an application in 2008 to permanently terminate his alimony obligation on the basis that his income significantly decreased. Notably, between the time of the divorce in 2000 and the time of the application, Ex-Husband had been successful in reducing his alimony obligation on two separate occasions. First, by consent in 2004, he was able to reduce alimony from $300 to $150 per week. Then, by consent in 2005, he was able to suspend his alimony because he was “unemployed”.  In 2008, he was seeking to permanently terminate his alimony obligation.

Ex-husband stated in sworn Certifications filed with the Court in the 2005 and the 2008 proceedings that he was laid-off of work, went through periods of unemployment and was finally able to obtain employment with much lower compensation. The Ex-Husband also certified that during his periods of unemployment, he received unemployment benefits. 

In opposition to the application, Ex-Wife presented the Court with a sworn Certification from a Company that was never disclosed by Ex-Husband.  The Company stated that it had employed Ex-Husband including the period during which Ex-Husband received unemployment benefits, that Ex-Husband misrepresented his employment status to the Court, and that he had earned income in an amount comparable to that which he earned when the Order of support subject to the Motion was filed. The Company further advised the Court that Ex-Husband provided two conflicting Social Security numbers to the Company. Finally, the Company advised that the income reported on Ex-Husband’s tax returns did not include his income from the Company.

Ex-Husband’s attorney did not know about Ex-Husband’s employment with the Company.

Not only did the Court deny Ex-Husband’s request to terminate alimony but the Court also wrote a letter to the IRS, State Division of Taxation, the Sussex County Prosecutor and the Social Security Administration.   Moreover, the Court granted Ex-Wife’s request to reinstate alimony at $300 per week effective in 2004 and granted her counsel fees. Despite the fact that Ex-husband was reported to the authorities for what the Court perceived to be intentionally wrongful conduct, the Ex-Husband had the gall to appeal the decision to the Appellate Division.

The Appellate Division affirmed the trial Court’s decision with the exception of the effective date of the reinstatement of alimony. The Appellate Division noted that while it was clear from Ex-Husband’s filed submissions to the Court in 2005 that he had provided misleading information, it was unclear whether he provided misleading information in 2004. If Ex-Husband did not provide misleading information in 2004, the Appellate Division noted that the effective date of the reinstatement should be in 2005 when Ex-Husband was required to pay $150 per week in alimony. The Appellate Division directed the trial court to determine the issue after further Court proceedings.

The moral of the story is if you get caught lying in submissions to the Court for which you certified under oath that your statements were true, be prepared to not only pay the consequences to the other litigant but you may also have to pay a hefty price to authorities. 

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On February 2, 2009, the Appellate Division released a reported (precedential) decision that affirmed a decision of the trial court denying the former husband's motion for a downward modification of his alimony and child support obligations.  The Appellate Division found that the trial judge properly exercised his discretion particularly when viewed against his findings from a multi-day plenary hearing (trial) that occurred less than one year prior. To see the full text of this case, click here.

The parties were divorced in 2003 and entered a Property Settlement Agreement (PSA) where he agreed to pay $1,000 per week in alimony and $350 per week in child support for the parties' 3 children.  In addition, based upon the joint accountant's finding of the five year average of the husband's income, he agreed that support was based upon $185,000 for him. 

In 2005, the husband moved for a reduction in his support obligation claiming a downturn in his law practice.  The plenary hearing on this motion was held over several days in December 2006.  After the hearing, the judge denied the husband's motion finding that during the time that the husband's income had supposedly decreased, he obtained a new $58,000 Lexus and bought a home for $785,000 with a $600,000 mortgage.  The judge also found that based upon the evidence at trial and his CIS, that the husband's income was more in the $140,000 range and not $100,000.  The judge also rejected the husband's claim that he was indebted to the Internal Revenue Service in the amount of $55,000 because Gregory failed to provide any documentation to
support that assertion.

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My clients often ask “will I get the same thing that my neighbor received in his divorce” or “why can’t my ex share in transportation-- my cousin has to share with her ex” or “my friend earns so much more than me and his support is much lower than mine”. I always tell my clients that as a rule, don’t compare your situation with the situation of someone else. 

While the same laws concerning family law actions are applied to each case, each case is different and therefore, the outcomes are different. It is true that many cases have similar factual patterns but most of the time they are not exactly the same. Using one of the examples above, while someone may be earning more but paying less in support than another litigant, it could be that the ex-spouse of the litigant had other available resources generating income like an inheritance or the ex-spouse could have received more of the family assets as a trade-off for less support. While it is very tempting to compare your situation with that of another person, keep in mind that more likely than not, you are not getting the full story from that person. Also, sometimes misery loves company and it could be that the only part of the story you are getting is what the other person painfully remembers the most.

Also important to note is that in New Jersey, the statutory factors for an award of support or for a custody determination are numerous. The Courts apply each factor to the given situation and then completes a balancing of all of the factors prior to rendering a determination. It is in this application of the facts that results in different determinations among cases. Moreover, litigants should also recognize that Judges are vested with a certain level of discretion in weighing the factors which is yet another reason why the outcome of cases differ. 

Notably, if one was to review a significant amount of family law decisions published by the Court concerning the same exact issue (child support, alimony, custody, etc.), it is very unlikely that a person would find a decision with the same exact fact pattern as their given situation. 

In short, save yourself some frustration and make it a rule not to compare your family situation with that of someone else during a litigation and focus on your facts with your attorney.   After all, as I tell my clients, it is your facts that we will be presenting to the Court and not the facts of your neighbor, cousin or friend.

EDITOR'S NOTE:  i once had a client who used to say that no one could believe how much temporary support he was paying and that it was the most anyone ever heard of.  My answer was, "Do they make a million dollars a year like you? No.  Do they make a half a million a year?  No  Do they make $250,000 per year?  No.  The moral is that he was talking to people whose finances had no similarity to his and reacting to their shock.   That goes exactly to Apple's point - while friends and relatives are good for support and a shoulder to lean/cry on, they are not usually a good source of legal advice or information.           ERIC S. SOLOTOFF

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In many divorce matters, attorneys, clients and judges alike must determine how to deal with the issue of support for children, oftentimes which includes the divvying up responsibility for payment of college expenses.

There is a large body of case law in New Jersey that deals with this very issue and provides guidance as to how a court should decide the issue of payment of towards college, if parties cannot come to an agreement on their own.  However, each case is fact sensitive and must be considered on its own merits.

In a recent unpublished Appellate Division decision entitled Novy v. Novy, A-4207-07T2, decided January 12, 2009, the Court remanded the issue of whether a child was in fact emancipated and not entitled to financial support from her parents towards the cost of her college education.

Mother and father were divorced in 2001.  Incorporated in their Property Settlement Agreement was the requirement for father to pay child support to mother until the children were emancipated.  The Agreement went on to state what would be deemed an emancipation event such that same would trigger the termination of father's support obligation for that child.

The parties' daughter has experienced mental health and personal adjustment problems for many years. She didn't graduate high school but later earned her GED. She has been attending Ocean County Community College since fall 2006.  At the same time she began college, she moved out of her mother's home and into the home of a friend's family.

In July 2007, father filed a motion with the court seeking to have daughter emancipated based on her residence away from her mother and her failure to attend college as is delineated in the Agreement reached by the parties.  That application was denied, however the court did rule that if daughter failed to make continuous progress toward the completion of her college education, including registering and completing not less than 12 credits/semester, father's obligation to support her would terminate.

Some 6 months later, father and mother entered into a Consent Order, which declared that both parties agreed daughter was emancipated and father's support obligation was terminated.  Shortly after this agreement was reached, daughter filed her own motion with the court seeking to intervene and vacate the Order declaring her emancipated.

Father was the only one who opposed this application and in his Certification he set forth several allegations upon which he determined daughter to be emancipated.  Daughter, in her responding Certification denied these allegations.  The trial court granted daughter's motion to intervene and vacated the Consent Order into which her parents entered and agreed that she was emancipated.

Father appealed that Order.  On appeal, the Appellate Division noted that the determination of whether a child was emancipated depended on the facts of each case.  Furthermore,it has already been determined by the Appellate Division that "merely because both parents are united in their determination to declare the child emancipated" may not defeat the child's right to support.  Johnson v. Bradbury, 233 N.J. Super. 129, 136 (App. Div. 1989).  The Court noted that the essential question to be answered is whether the child has "moved beyond the sphere of influence and responsibility exercised by a parent and obtains an independent status of his or her own."  Fillipone v. Lee, 304 N.J. Super. 301, 308 (App. Div. 1997).

Because the trial court heard no testimony about the disputed facts relevant to daughter, the Appellate Division held that the trial court erred in failing to conduct an evidentiary hearing to resolve those contested facts and remanded to the trial court to conduct such a hearing. 

Despite the agreement reached by and between mother and father that daughter is now emancipated, father may still have a duty to provide financial support for daughter, to be determined by the outcome of the plenary hearing.  While daughter had no say in the original agreement reached by her parents and in the Consent Order they later entered into, she did have the right to file an application with the court on her own behalf seeking relief from the obligation that arises out of the parent-child relationship.  A child's right to support cannot simply be contracted away by that child's parents.  Parents have an obligation to support their children and in NJ this duty of support may include payment for college.

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I was reading an unreported Appellate Division case released today and gasped when I read the following sentence, " ...Moreover, the permanent alimony figure was negotiated and presumably contemplated defendant's retirement since he was fifty-three years old when he appeared before Judge Piscal on September 19, 2000."  To read the full case, click here.

While the facts in this case may have justified the denial of the former husband's motion to modify alimony, that statement struck a chord.  In this case, the parties were married for 32 years, a long term marriage by any standards.  However, by current standards, we often start talking about long term marriages being 15 years or more and if alimony is appropriate, the discussion is about permanent alimony begins.  Moreover, although there is a well known Appellate Division case authored by Judge (now Supreme Court Justice) Long suggesting that it is better practice to negotiate the issue of retirement, the reality in practice is that it is rare that the party receiving alimony will concede the issue of retirement in the agreement.  Often it is just too speculative.  At best, you may get a recognition that there can be an application for a review upon retirement.

Given that you typically cannot get any concession about retirement and there is no doubt that this was a permanent alimony case, is the above quoted statement a fair or a realistic view?  I don't think so. 

Assume a long term marriage where all assets, including retirement assets are equally divided.  The law is clear that you cannot look to assets divided in equitable distribution for support.  Post-divorce assets can be considered.  If in the 8 or 10 or 12 years after the divorce, after paying alimony and perhaps child support, the payor does not accumulate substantial assets, then what.  What if he bought a new house with his equitable distribution and did contribute the max to his 401k during the post divorce years.  In this economy , the value of the home and the 401k could be down substantially.

More importantly, one would think by this sentence that someone who agrees to permanent alimony can never retire.  This, however, is wrong as a matter of law.  Thus, for a court to determine that a retirement by a person who was age 53 when he agreed to permanent alimony was contemplated in the agreement, is both practically unrealistic and legally incorrect in my opinion. 

That said, as noted above, the denial of the motion to modify under the specific facts in that case made perfect sense.

However, I think it is essential, if possible, to at least get recognition in a Marital Settlement Agreement, that, if nothing else, the issue of retirement was discussed but unresolved to best preserve the issue for another day.

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While state courts in matrimonial actions are often asked by an ex-spouse to modify an existing child support obligation under Lepis v. Lepis, 83 N.J. 139 (1980), based on the existence of "changed circumstances" and an inability to pay the ordered support, it is not often that a decision so thoroughly recaps situations in which courts have previously found such changed circumstances.  The Appellate Division recently accomplished detailed same in Ferraro v. Ferraro, wherein the facts of the case themselves are noteworthy unto themselves and detailed below.

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Can a prior judicial determination regarding an ex-spouse’s employment situation preclude the other party from subsequently making an issue out of it when faced with a motion to modify child support? That was the unique issue taken on by the Appellate Division in Simon v. Simon, where the Appellate Division gave preclusive effect to a prior judicial holding regarding the reason why the ex-spouse husband left his job and his resulting subsequent income in deciding a motion to reduce child support.

The parties entered into a Property Settlement Agreement in 2001, wherein the husband agreed to pay child support for their three children at a set amount through the end of 2005, at which point his support obligation would be reevaluated pursuant to the Child Support Guidelines. In 2006, the husband left his employer and obtained a job in Florida because he was allegedly unable to find suitable work in the Princeton, New Jersey area where he lived. As his new job was in Florida, the husband initially lived there with his father, thereby substantially reducing his parenting time with his biological children. 

In spring 2006, the wife moved for a child support increase, alleging that the husband provided no justification for his relocation to Florida, that her parenting time and related expenses increased due to the husband’s reduced parenting time attributable to the move, and because such expenses would only increase as her alimony was ending. The husband cross-moved to modify his support obligation, arguing that he involuntarily left his employer and was forced to take a substantial salary reduction in Florida because he was unable to obtain a position in New Jersey at a salary higher than that he received from his Florida employer. Responding to the husband’s claims, the wife asserted that he left his employment voluntarily so that he could commence his retirement in Florida and, as a result, the Court should use his 2004 and 2005 income to determine support. She submitted no evidence, however, of the husband’s ability to earn a higher salary in the metropolitan area. Ultimately, the Court found that the husband’s 2006 income should apply.

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Pursuant to the statute, the general rule is that the tern of limited duration alimony cannot be extended without unusual circumstances.  A recent Appellate Division decision shed some light on what those circumstances could be.

Jane and Samuel had been married for less than seven years when they got divorced.  They had two children, ages 6 and 4 at the time of the divorce.  Both parties were attorneys although Jane stopped practicing law after the birth of their first child, within the first year of the marriage.  The parties negotiated and entered into an agreement designating Jane with residential custody of the minor children subject to Samuel's visitation and limited duration alimony in the amount of $500 per week for a period of four (4) years.  In addition, Samuel paid $500 per week in child support and child care related expenses to be paid 80% by Samuel, 20% by Jane.

At the time the parties negotiated their agreement, it was assumed that Jane would be able to obtain per diem employment in the law field.  Also, at that time, the oldest child was having difficulties with school and may have had ADD.  Since the time of the divorce, he has been diagnosed with ADD, Asperger's, Obsessive Compulsive disorder and Bi-Polar disorder.  As a result of these diagnosis, Jane argued that she was unable to obtain significant employment such that was contemplated at the time of the divorce.  Jane filed a motion seeking a continuation of her limited duration alimony, an increase in the amount of alimony, the production of financial information or in the alternative an increase in child support, and to establish a fund for their son's medical care.

The trial court denied Jane's application in its entirety.  She appealed and the Appellate Division reversed and remanded. the matter back to the trial court.  The Appellate Court held that an award of limited duration alimony may be modified based either upon changed circumstances or upon the non-occurrence of circumstances that the court found would occur at the time of the award.  A court may modify the amount of such an award but shall not modify the length of the terms except in unusual circumstances.  N.J.S.A. 2A:34-23(c).

In this case, the Court found that Jane had established a change of circumstance for an increase in the amount of the limited duration alimony as well as an increase in the term based upon unusual circumstances, i.e. the health of the parties' eldest child.

The court was careful to explain in it's unpublished opinion that a modification to the time for payment of limited duration alimony as well as the amount would only be based upon an ability to prove changed circumstances or upon the non-occurrence of circumstances that the court found would occur at the time of the award.  Thus, the burden is upon the party making the application (i.e. the recipient spouse) that circumstances have changed such that a modification is necessary and just.  Here, the child's condition was far worse than anyone anticipated at the time of the divorce and Jane simply could not work as contemplated when the matter was settled. 

To read the entire case, click here.

EDITOR'S NOTE:  This case in interesting because there is little law on extending limited duration alimony.  What  is also interesting is that the Appellate Division applied a similar analysis that is used when someone seeks to either extend rehabilitative alimony or convert it to permanent alimony.  Rehabilitative alimony is meant to provide a person with the opportunity to improve their earning ability in order to become self-sufficient, without the need for alimony.                                       Eric S. Solotoff

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One need only pick up any newspaper, turn on any radio or television or even have water cooler conversation, even with those who never used to speak about the economy, to know of the serious economic crisis that this country and the world appear to be facing.  Even today, we read that the stock markets took yet another tumble based upon the news of increased jobless rates.

These realities will no doubt start hitting the family court system if they have not already begun to hit. Specifically, there will be motions by people paying alimony and child support to reduce their support because they have lost their job or have suffered a significant decrease in income.

In the seminal NJ Supreme Court case of Lepis v. Lepis, the historical standard for a modification of support is the showing of a substantial and continuing change of circumstances.  We also know that temporary changes do not form the basis for a modification. 

In fact, in order to get relief, a litigant usually had to show that they have made a significant, diligent job search and despite their best efforts, they could not obtain comparable employment.  How long this had to be depended on the circumstances, but it was probably more than 90 days, or even more than 6 months. 

The question during these times is have we entered a brave new world.  Will someone who worked on Wall Street earning $500,000 per year who has lost their job be expected to get comparable employment?  Should they?  What about the financial professional whose income is based in large part on either commissions or a large yearly bonus that they always used to carry them for the entire year who wont be getting a bonus this year or their commissions are 50% less than last year? 

In the past, when someones income was sporadic, the case law and Child Support Guidelines require that you take an average of 3 or maybe 5 years.  Is that fair now when doom and gloom about the economy is being predicted?  Put another way, is the 3 or 5 year average indicative of what the payor can really earn in this economy? Will the earn at historical levels during the foreseeable future? 

If we use an average now, or impute the last income earned, is that fair?  Is only the payor being forced to sacrifice in that case (assuming for the moment that they even have the ability to pay the prior support which may be unlikely)? If they are forced to pay support based upon passed income, will they ever get the money back when then show in a year or two or three that their income has not and may never be the same> The answer is that this is doubtful. Is this fair?

While representing the recipient, what choice will attorneys have to argue that the laws of imputation and averaging, as the case may be, must be followed by the Courts?  I do not think that we can argue a deviation from the law, to the detriment of our clients.

On the other hand, attorneys for the payor's have to be bold in their arguments that the existing law is distinguishable based upon the current circumstances.  I also think that Judge's must be courageous in their decisions so that the reflect the economic realities.

If the current economic circumstances are ignored, then I foresee a lot more enforcement proceedings, if not a lot more arrest warrants issue for failure to pay support.  In the end, if things continue as they are economically, attorneys and judges should try to work together, creatively, to strive for fairness for all of the parties based upon the economic realities of today.

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A recent article published in the June 17, 2008 edition of the New Jersey Star-Ledger entitled State roundup results in 1,600 arrests, detailed State efforts to capture not only violent fugitives, sexual predators, and alleged gangsters and crooked businessmen, but also parents who are months behind on their child support obligations. 

Considering how violent fugitives, gangsters and sexual predators generally consist of the worst of the worst when it comes to the criminal population, the inclusion of parents delinquent in their child support not so subtlety underscores the importance to which the State attaches to a parent’s obligations to their children. While one arrest detailed in the article involved a real estate investor accused of defrauding 43 buyers and 15 banks out of $4.6 million, another arrest discussed involved a man arrested for falling two months behind on his child support payments – a total of $3,000.

The article informs readers that, on a statewide level, $12.6 million is owed in child support and that the State will make a concerted effort twice per year to round up delinquent parents behind on their payments. The penalty for such delinquency can even include jail time until outstanding payments are made.

Parents behind on their child support payments can generally be placed into two groups: those who do not pay because they do not want to or do not care; and (2) those who simply cannot afford to do so for a variety of reasons. While it is easy to say that those parents who fall into the former category get what they deserve, the same cannot be said about the latter. 

With the economy spiraling towards a downturn, many parents are losing their jobs and finding it difficult to not only pay for child support, but also to make their own ends meet. That does not mean, however, that a parent can avoid their obligation.  

One option for the delinquent parent is to try to amicably work out a revised payment plan or support level with his ex-spouse. While this method is no guarantee that the ex-spouse will simply agree to a reduction or revised payment plan, it is an option that could potentially avoid legal expenses and costs associated with filing a court motion for a support reduction.  Of course, any resolution should be in writing and preferably reduced to a Consent Order.

A parent who cannot afford their support obligation can also file a motion in court for a reduction in support based on a substantial and continuing change in circumstances. This, however, is not easy to establish.  While evidence of recent involuntary unemployment could aid in seeking a support reduction, courts will not grant a reduction where the unemployment was voluntarily incurred or the delinquent parent relies on a prediction that his income will decline due to market forces. In addition, the parent that lost his job must show a good faith effort to seek new employment.  A person in this predicament should keep excellent records of their job search as evidence of their good faith. 

Recently, this office was able to preclude a support reduction sought by an ex-spouse who, while not delinquent in his payments, had habitually sought to reduce his payment obligations. While he was able to show that his income had slightly decreased, he was still earning annually in excess of $1 million. Recognizing this defect in his motion papers, the parent also tried to assert that market volatility would further cause his income to decline. Having previously been rebuked for attempting to employ such a strategy, this spouse was not only denied a support reduction, but was also ordered to pay our client’s legal fees and costs. 

The lesson to learn here is simple – your child’s well-being is at stake, so make your child support payments in a timely manner. If you fail to do so, it will not only be your ex-spouse who comes after you, but possibly law enforcement as well. The penalty may even include jail time until the outstanding payments are made. If it simply becomes infeasible for you to make your payments, talk to your ex-spouse about a reduction or revised payment plan. If that does not work, file a motion for a support reduction. Be aware, however, that you will need to establish a substantial and continuous change in circumstances.

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This week in an opinion published by the Appellate Division, the Court  held that parties in a matrimonial action cannot agree to binding, non-appealable arbitration of child custody and parenting time issues.  Any such agreement would violate the Court's parens patriae obligation to protect the best interests of the children.

In the matter of Fawzy v. Fawzy,  the parties were scheduled for a trial date in early 2007.  When they appeared in Court on this date, after several hours of discussion, they agreed to submit all issues in contest to an arbitrator for binding, final, non-appealable arbitration pursuant to this state's statute governing arbitration (N.J.S.A. 2A:23B1 to 32).  They went before the judge that same day and placed this agreement on the record.  The judge advised them that the arbitrator's decision would be final and could not be changed.  The parties agreed and went forward.

The parties selected an arbitrator and began the process.  After several days into the proceeding, Mr. Fawzy sensed things were not going well for him and filed an emergent application with the Court to restrain the arbitrator from making a custody and parenting time award.  His argument was that these issues could not be arbitrated as a matter of law.  The trial judge denied his application.

Shortly thereafter the arbitrator issued a custody and parenting time award in Ms. Fawzy's favor.  Mr. Fawzy retained new counsel and filed a second emergent application seeking to vacate the arbitration award, disqualify the arbitrator, restrain the arbitrator from any further participation, require a de novo review of the reward and stay the award pending appeal.  The trial judge once again denied his application and entered an amended judgment of divorce confirming the arbitrator's award.  Mr. Fawzy then filed his appeal.

On appeal, Mr. Fawzy argued that as a matter of law, parties cannot bargain away the Court's obligation to review the best interests of the children by agreeing to binding arbitration of custody issues.  The Court noted that it was troubled by the fact that Mr. Fawzy did not make any claims that the award would cause harm to his children or in any way endanger their health, safety or welfare.  Despite that concern, the Court agrees that parties to a matrimonial matter cannot enter into an agreement to submit custody issues to final, binding, non-appealable arbitration.

While our courts have endorsed arbitration as a favored remedy and have encouraged the use of various alternative dispute resolution devices, the question of whether child custody could be submitted to final, binding arbitration has not before been addressed by the Court.  The Court has favored the use of final, binding arbitration for alimony disputes as seen in the 1984 opinion of Faherty v. Faherty, however they did not address the issue of custody directly at that time.

In conclusion, the opinion notes that while the development of a more workable custody arbitration process may be more beneficial to both the parties and the children involved in a matrimonial action, the Court ultimately must defer to their traditional parens patriae role.  That role requires the trial court to determine the best interests of the children regardless of any agreement for arbitration as to custody and parenting time.

While binding arbitration is a viable and useful alternative to litigation for the purpose of resolving financial issues related to equitable distribution and alimony, issues concerning and relating to the best interests of a child cannot be submitted to binding, final arbitration.  When considering arbitration as an alternative to traditional litigation, make mental note of its restrictions.

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In an interesting unpublished Appellate Division decision dated May 23, 2008 in the matter of Pechinka v. Pechinka, A-6089-06T3, the court affirmed a trial court decision that denied an ex-husband's motion to terminate his limited duration alimony. 

At the time of the divorce in 2002, the wife was earning $46,000.  The husband earned $116,000 per year.  They stipulated that there marital lifestyle was $7,000 to $7,500 per month for a family of four  "... in an average month on living expenses." 

In 2006, the wife earned almost $91,000 and with her alimony, she had $6,100 per month in net after tax funds.  This amounts to about 81% to 87% of the joint family net income/lifestyle before the divorce. 

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