Posted on May 22, 2009 by Eric S. Solotoff

LOSS OF JOB - ANOTHER DAY ANOTHER DECISION

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.

 

The point to be reiterated again is that when you make a motion to reduce support, give the judge as much information as possible regarding why you lost your job, whether you were the only one or whether there was a reduction in force, what efforts have you made to find a new job (including voluminous and painstaking records regarding each inquiry and response), if you took a new job for lower than your historical pay, why you did this as opposed to holding out, what you have done to reduce your own expenses, what your current finances are, etc?

In any event, our firm is keenly able to assist those seeking a reduction and those opposing it.
 

To see a recent blog post addressing this issue in greater detail click here.

 

In addition, the husband disclosed a savings account with a balance of $90,000, three vehicles valued at $33,000, and an Individual Retirement Account valued at approximately $676,000 and liabilities totaling $10,000. 

The husband never distinguished which of these assets had been divided in the divorce, and therefore would be exempt from consideration now, and which were post divorce assets available to pay support.The Court relied upon this as the reason to deny the application, finding that he he had sufficient assets to continue to pay his support. 

In affirming, the Appellate Division succinctly restated the law on support modification, as follows:

Orders for support "may be revised and altered by the court from time to time as circumstances may require." N.J.S.A. 2A:34-23. The moving party bears the burden to make a prima facie showing of changed circumstances. Isaacson v. Isaacson,
348 N.J. Super. 560, 579 (App. Div.), certif. denied, 174 N.J. 364 (2002). A decrease in the obligor's income may be a changed circumstance warranting a revision of a support obligation. Lepis v. Lepis, 83 N.J. 139, 151 (1980). In Lepis, the Supreme Court addressed the changed circumstances standard. Id. at 157-59. Although expressed in the context of an application to reduce child support, the basic showing for a reduction in alimony is similar. The obligor must establish a diminution in income, earned and unearned, or a substantial increase in the financial circumstances of the former spouse or a combination of changes for both parties. Id. at 151; Stamberg v. Stamberg, 302 N.J. Super. 35, 42 (App. Div.
1997).


A reduction in salary has long been recognized as a change in circumstances. See, e.g., Martindell v. Martindell, 21 N.J. 341, 355 (1956) (a decrease in resources, standing alone, justifies a reduction in alimony). However, a reduction in salary, even the  loss of a large income, may not warrant a reduction in a support obligation if the reduction is temporary. Larbig v. Larbig, 384 N.J. Super. 17, 22-23 (App. Div. 2006).  If the obligor has assets that produce or have the potential to produce unearned income to meet on-going support obligations, the loss of earned income may not create a changed circumstance. See Connell v. Connell, 313 N.J. Super. 426, 432-33 (App. Div. 1998) (inherited assets and the income produced by such assets are factors to be considered in calculation of a support award).
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Posted on April 6, 2009 by Eric S. Solotoff

WHAT TO DO WHEN YOU LOSE YOUR JOB

Though we have blogged about this issue in the past, as it is particularly topical given the article in today's NJ Biz that New Jersey area (including the New York Metropolitan area) job losses are outpacing the national addresses. 

As noted on prior job posts. the standard for modifying support is that there has to be a substantial and continuing change of circumstances.  Moreover, in order to get relief, you must document your job search efforts to show the court that you have made a good faith effort to find a new job.

When a client loses their job, the following things should be done:

  1. Retain all documentation from the employer showing that the job loss was involuntary.  If there is a severance agreement and any other documentation, that should be maintained as well as the final paycheck showing the severance received (if paid in a lump sum).
  2. Keep a detailed log of all efforts made to find new employment with as much information as possible (who you contacted, when you contacted them, what they said, etc.)  If the communications were in writing, keep copies of all emails, resume's, cover letters, rejection letters, if you applied for a job on lie (i.e. Monster.com), confirmation that you applied for work.
  3. If the problem is industry wide, any newspaper, trade or other articles or documentation showing that the industry has contracted or is having problems.

The question arises regarding what you do when offered a job that is not consistent with your prior earnings.  If you have been out or work for a short time, this creates a tough decision about whether to take this job or wait.  If you do take this job, my suggestion early after losing a job, my suggestion would be to continue your job search if at all possible.

If you have been out or work for some time and you have made a good faith job search, while possible, I find it hard to believe that a court would penalize someone for taking work - especially in this economy.

What happens if you take a job in another field?  There is a reported decision that found that someone who was in computers and then took a job in massage therapy was not entitled to relief.  I think that whether relief will be granted in this case will be based upon, how long you were out of work, and the good faith nature of the job search. 

I think people who could have a harder time are those who, after losing a job, have decided to start their own business, in a related field or perhaps in some other field.  The choice to become en entrepreneur will present difficult problems for a court, especially when the income is nominal, as is often the case in a start up business.  In these cases, the good faith nature of the job search may come in to play, however, I suspect that a court will impute income to that person.  If the imputation is consistent with prior employment, which very well may be the case, because what other information will a Court have, that is probably not fair if we are dealing with a job loss caused by the current catastrophic economy.  If not that number, what is fair.

In these cases, lawyers and judges are going to have to be more creative.  I think that the concept of income averaging, as previously blogged about, may very well be unfair given these trying times.  Perhaps the remedy is for parties to "ride along" together, sharing income information yearly, if support is going to be reduced (or set a a level based upon income lower that was earned historically).  Traditionally, court's were reluctant to Order the yearly exchange of income information post divorce.  However, given the current times, that may be the most fair way to deal with support where income is reduced. When the income gets back to prior levels, or perhaps as it increases, maybe there can be reviews and self-executing increases.  There are many ways to to this, and these are only examples. 

Family law issues involve complex choices and decisions, and alimony and child support in these trying times is no exception. For more information regarding this issue  or guidance on other family law issues, contact an attorney in Fox Rothschild's an attorney in Fox’s Family Law Practice or visit us on the web at www.foxrothschild.com. 
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