Posted on February 13, 2009 by Eric S. Solotoff

SUPPORT MODIFICATION - ANOTHER DAY ANOTHER DECISION

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.

In late 2006, the wife filed an enforcement motion because the husband stopped making payments.  The husband cross moved seeking a temporary suspension of paying his alimony and equitable distribution obligations and for a reduction in his child support obligation.

The trial judge questioned the validity of the husband's motion given the lifestyle that he claimed on his Case Information Statement and the fact one month after ceasing his alimony payments, the husband entered into a $465,000 mortgage.  In addition, for 2005, the year of the agreement, despite the aforementioned language in the agreement, the husband claimed a negative income on his tax returns.  Notwithstanding, the judge suspended the husband's equitable distribution obligations for six months and temporarily reduced his alimony obligation by fifty percent for six months. He indicated in his oral decision that if, after six months, defendant continued to contend that his economic situation had not improved, the court
would be inclined to hold an evidentiary hearing.

Approximately three months before the court was to reconsider the husband's ability to pay, he filed another motion seeking a second six-month reduction to his support obligations.  The motion was denied. 

The Appellate Division determined that it notably missing from husband's proofs in support of his
motion is any certified statement from an accountant concerning the finances of his business.  All that were provided were self created documents and his tax returns which were suspect.  The Court noted:

In short, it is not possible to draw meaningful conclusions based on defendant's submissions, without a detailed report from an accountant explaining the earnings and losses of the business and what income as well as other financial benefits defendant obtained from the business. As we indicated in Larbig, supra:


[I]t is the self-employed obligor who is in a better position to present an unrealistic
picture of his or her actual income than a W-2 earner. In light of this self-evident
fact, it would seem, as a general proposition, that what constitutes a temporary change in income should be viewed more expansively when urged by a selfemployed obligor. [Larbig, supra, 384 N.J. Super. at 23.]

The record also raises questions about defendant's personal finances as well as those of his business.

In this case, the proofs were just inadequate.  One may assume that there were substantial personal expenses paid by the business.  The refusal to get an accountant is telling.

The bottom line to those that are self-employed, if your income is down, you will need to open your books and records and get an accountant to certify to his or her review to be credible to a court.

 

 
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Posted on February 10, 2009 by Eric S. Solotoff

HEARING FOR SERIAL FILER OF SUPPORT MODIFICATION MOTIONS - ANOTHER RESULT

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.

 

 

Notwithstanding all of the above, the Appellate Division reversed finding that Mr. Cordero was entitled to a hearing because he no longer had his earned income as a professional baseball player.  The Court held:

Any consideration of a request to reduce a child support award cannot focus solely on the amount of income earned in the past. The judge must also consider the type of work performed by the obligor that produced the income. This is particularly
true when the obligor is a professional athlete. At the height of a career, a professional athlete may earn vast sums of money. The ability to earn such an income is almost always transitory. Here, there is no question that plaintiff has not played professional baseball since 2005, when he was cut by the Washington Nationals. He obtained a minor league contract with the New York Mets organization but did not make the team. While a court may impute income, Caplan v. Caplan, 182 N.J. 250, 268- 69 (2005), a judge cannot assume that the obligor will continue
to earn income at the same level as an active professional athlete unless the athlete has other exceptional attributes. There is nothing in this record to suggest that is the case. Admittedly, current income is not the sole focus of an analysis of a request to reduce child support. The judge must consider the moving party's ability to earn income in the future. Such an inquiry must consider the education and other
abilities demonstrated by the moving party. N.J.S.A. 2A:34-23. The judge must also consider the assets of the moving party and the ability of those assets to produce income to meet the moving party's obligations.

The Court, however, reiterated that Mr. Cordero has the burden of proof  to demonstrate that he is entitled to a further reduction of his child support obligation. He was required to fully disclose his financial condition, including the value of his major league baseball and the the terms and conditions of this pension,.  He also was required to disclose the obligations he has assumed in the course of the dissolution of his 2 subsequent marriages.

However, can the case in this post and the one in last week's post be reconciled.  In both cases, the disclosures were lacking.  The difference here is that, unlike the self employed lawyer who can manipulate his income, Mr. Cordero's status as a major league ball player was easy to discern and the loss of income from that pursuit virtually impossible to dispute. 
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Posted on February 2, 2009 by Eric S. Solotoff

NO HEARING REQUIRED FOR SERIAL MODIFICATION MOTIONS

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.

 

In addition, the judge found no proof to support the husband's claims about his practice's "deteriorating case load." He held that the husband's testimony, which was the only evidence provided  "unconvincing" and his testimony that  he was unable to support the marital
standard of living was "incredulous."   Further, while  unpersuaded that his level of income had substantially deteriorated, the judge also referred to the Appellate Division decision in Larbig v. Larbig,  and held he was "not convinced" that the husband's alleged decline in business "is of [a]
permanent nature which inhibits his ability to sustain himself as well as child support and alimony payments" in the amount set forth in the PSA.

Nine months after the January 2007 Order denying the first motion, the husband filed a second motion for essentially the same relief.  On this occasion, the motion was denied after oral argument without a plenary hearing.  The Court found that since the original motion was filed in 2004, the husband took on greater obligations that were reasonable if his income were actually dwindling.  The husband appealed.

The husband argued that the trial judge was in error because he was committed to his prior findings.  The Appellate Division agreed that this was no doubt true but not error and as such, the case should not be assigned to another judge.  The Court further held:

As we have already indicated, the judge was not required to wipe the slate clean and consider a similar contention regarding Gregory's earnings less than one year after the prior order as if the earlier hearing had never occurred. To the contrary, the judge was required to consider not whether there was a substantial change since the 2003 PSA but whether there was a substantial change since he rendered his fact findings in December 2006. Admittedly, a sworn assertion that the obligor's income had fallen to $50,000 strongly suggests a substantial change in circumstances -- if that is all that is considered.   The judge correctly observed, however, that the focus must also be on the length of time that had elapsed since the last milepost in these post-judgment proceedings. In Larbig, for example, we affirmed a trial judge's determination that a motion for a reduction in support filed "a mere twenty months after the parties' execution of the PSA," 384 N.J. Super. at 22, alleged only a temporary change. See also Lepis, supra, 83 N.J. at 151 ("Courts have consistently rejected requests for modification based on circumstances which are only temporary . . . .").

The Court further found that given that this motion was filed 9 months after the last one, the husband had not demonstrated a change of circumstances.

Not surprisingly, there was skepticism regarding the husband's income which was enhanced because he was self employed and thus could manipulate his income.  In fact, the Appellate Division stated:

As we also observed in Larbig, "what constitutes a temporary change in income should be viewed more expansively when urged by a self-employed obligor," as here, who is "in a better position to present an unrealistic picture of his or her
actual income than a W-2 earner." 384 N.J. Super. at 23. The judge recognized this in denying Gregory's motion; indeed, the judge's decision on Gregory's first Lepis motion reflects a determination that Gregory's actual income was greater than what
was urged.

This case demonstrates a problem that is often seen in the cases, post-judgment, to wit, repeated motions for the same relief without providing competent evidence, and then re-filing the motion over and over without really providing more.  The Court correctly determined that it need not expend the wife's money in counsel fees or the Court's resources to have another trial less than one year later. 
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