As we have written before, alternate dispute resolution is a favored way to resolve divorce matters, whether it be mediation or binding arbitration.  One reason that people choose the arbitration route is that they are avoiding the courts that have mandatory reporting of tax issues (failure to report all of the income, etc.).  Another reason, particularly relevant in today’s era of long backlogs due to judicial shortages and Covid, is the ability to get a quicker trial date and resolution than if you were waiting to get on a court’s trial calendar for a divorce trial which has been the subject of a recent post on this blog.  And while I mentioned “binding” arbitration above, as I have blogged before on this site, parties can also agree to appellate arbitration so that, if they think that the arbitrator made a mistake, there would be review by an appellate arbitrator or arbitrators who would then issue a binding decision.  But what if you don’t like the appellate arbitration decision.  Do you get a do-over?  Can you then appeal to the trial court and/or the Appellate Division?  In most cases, the answer is no.

This issue was front and center in the unreported (non-precedential) case of Azzolina v. Azzolina decided on August 24, 2021.  In that case, the wife moved to appeal her unsuccessful attempt to vacate an appellate arbitration award.  Per the Appellate decision, the parties agreed to arbitrate their divorce “…in light of their concerns about potential issues under Sheridan …”   Their agreement to arbitrate gave the arbitrator the ability to hear reconsideration motions.  The parties further agreed “… to permit an appeal of the final Award to a panel of one or more private Appellate Umpires to be agreed upon by the parties …” using a standard of review used by the Appellate Division of the state of New Jersey.  In doing this, they expanded the very limited review that is found in the various arbitration acts to the type of review there would be if the matter was tried and appealed in the Court system.

The parties went through with their arbitration, after the which the husband filed a reconsideration motion and the wife filed a cross motion also seeking modifications. The husband then appealed the matter to the appellate arbitration who reversed a portion of the equitable distribution award.  As note above, the wife unsuccessfully moved to void the appellate arbitration award and Appellate Division affirmed.

As expected, the Appellate Division reiterated that the public policy of NJ favors arbitration as a means of settling disputes, including in family litigation.  The court further noted:

However, “[a]rbitration can attain its goal of providing final, speedy[,] and inexpensive settlement of disputes only if judicial
interference with the process is minimized; it is, after all, meant to be a substitute for and not a springboard for litigation.” … To that end, “[a]rbitration should spell litigation’s conclusion, rather than its beginning.” (internal citations omitted).

The court needs to analyze whether a party waived their right to contest an order compelling arbitration after the arbitration is held  In that analysis, the court must consider, “… whether the party sought to enjoin arbitration or sought interlocutory review, whether the party
challenged the jurisdiction of the arbitrator in the arbitration proceeding, and whether the party included a claim or cross-claim in the arbitration proceeding that was fully adjudicated.”  Citing prior precedent, the crux of the issue was boiled down, as follows:

it would be a great waste of judicial resources to permit defendants, after fully participating in the arbitration proceeding, to essentially have a second run of the case before a trial court. That would be contrary to a primary objective of arbitration to achieve final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner. (Emphasis added).

Here, in determining that the wife waived her right to contest the consent order compelling post-judgment arbitration, the court noted that not only did the wife file a cross motion to the initial reconsideration award, she also opposed the appeal and presented appellate argument.  The court also noted the long existing precedent that consent orders are not appealable.

The takeaway here is that is you agree to arbitration and appellate arbitration, and there is no provable reason to set aside the decision like bias, conflict, etc., you don’t get a third and fourth bite of the apple just because you don’t like the decision.

_______________________________

Eric S. Solotoff, Partner, Fox Rothschild LLP    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 is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

In a recent unpublished (non-precedential) Appellate Division decision, K.W. v. S.W., the Court addressed income, expenses and bad faith within the context of a child support calculation and ongoing custody issue post-divorce judgment. The issues before the Court, in boiled down to their root, were: (1) what to do when a party manipulates their income in a self-employed situation; (2) when to impute a party income, even if the parties stipulated as to an imputation previously; and (3) when to award a party counsel fees when the trial court determined that there was bad faith and gamesmanship. These issues arise often in the context of divorce litigation and the context of the in this case is important to recognize the greater picture:

The parties were divorced in 2013 after a 9 year marriage. They had 2 children together, born in 2002 and 2004 respectively. The parties signed their Marital Settlement Agreement (“MSA”) and were divorced on March 19, 2013. Within the MSA, the parties agreed that they would each have joint legal and physical custody of the children, with the specific final residential custody arrangement reserved pending evaluations. The MSA designated the Defendant as the parent of primary residence and the Plaintiff as the parent of alternate residence. The parties were exercising parenting time equally during the summer (50/50) and during the school year Defendant was exercising 1 extra overnight per month than Plaintiff.

From a financial standpoint, in relevant part, Plaintiff agreed to pay $33,600 per year in alimony for a limited duration of 3.5 years. He also agreed to pay $73 per week in child support, which was to be recalculated at the conclusion of the alimony term. In the MSA, the parties stipulated that the above referenced figures were based upon Plaintiff’s gross income from salary and investments of $185,000 and Defendant’s imputed income as a pharmacist of $125,000.

During the post-judgment litigation the parties retained multiple custody related experts over a 4 year span and argued vociferously as Plaintiff demanded a true shared (50/50) parenting time schedule year round. As time passed by, Plaintiff would vacillate back and forth between wanting this true, shared parenting time schedule and being amenable to the schedule outlined above. Overarching this custody battle was the fact that alimony ended and child support needed to be recalculated. On the eve of a plenary hearing (akin to a trial), after 5 years of post-judgment litigation, Plaintiff withdrew his request for equal parenting time and to be designate the parent of primary residence. The plenary hearing shifted completely and solely to child support and child related expense issues.

At trial, Plaintiff testified and evidenced that his income was $163,000 from his construction business and $12,000 from unearned income. Plaintiff took over the family construction business from his father in 2016. Prior to 2016, Plaintiff’s father controlled the business finances, but since taking over, Plaintiff had full control of the wages and salaries of all employees, including himself. To evidence this, Defendant pointed out that Plaintiff’s girlfriend, who was an employee at the construction company, had received numerous raises since 2016 based upon Plaintiff’s approval. Plaintiff further testified that he had purchased a vehicle for the parties older child and paid for the child’s auto insurance, which he wanted Defendant to contribute towards.

On the other hand, Defendant worked part-time as a pharmacist during the marriage and did not have a doctorate in pharmacy, which was more and more becoming an essential degree in the industry. Defendant testified that she struggled to find employment and evidenced 65 job applications where she applied to work in the field and was rejected from all such jobs.

TRIAL COURT DECISION

At the conclusion of the plenary hearing, the trial court issued a written decision that spans over 60 pages addressing all of the outstanding issues. The trial court utilized an average income for Defendant for the years 2017-2019 ($71,000). As to Plaintiff, the trial court found Plaintiff’s testimony “to be lacking in credibility, disingenuous, and intentionally misleading” especially regarding compensation and bonuses. The trial court was perplexed, to say the least, that Plaintiff’s income remained stagnant for many years despite other employee raises. The trial court also was deeply concerned about artificially low bonuses provided to Plaintiff which the court believed were intentional to obtain advantage over Defendant. The trial court ordered above the guidelines child support of $251 per week plus required Plaintiff to pay 100% of summer programs, camps, vehicle, auto insurance and maintenance. After reviewing the long, protracted lead up to the plenary hearing, as well as the lack of Plaintiff’s credibility, the trial court awarded Defendant counsel fees in the amount of over $102,000.

APPELLATE DIVISION DECISION

  • Self-Employed Income

The Appellate Division rejected Plaintiff’s argument that the trial court misapplied the law and abused discretion when calculating child support by including hypothetical gifts and bonuses to artificially increase his earned income. The Appellate Division cited Appendix IX-B in stating that income and expenses from self-employment or the operation of a business should be carefully reviewed to determine gross income that is available to the parent to pay a child support obligation. In most cases, this amount will differ from the determination of business income for tax purposes. Here, the Appellate Division pointed out that the trial court correctly analyzed the issue by indicating that additional imputation may also be justified when examining income reported by self-employed obligors, who control the means and methods of their earnings. Elrom v. Elrom, 439 N.J. Super 424 (App. Div. 2015).

  • Imputing Income to Defendant

The Appellate Division equally rejected Plaintiff’s claim that the trial court erred by failing to impute income to Defendant because there was an income imputed to her in the original MSA. As noted by the Appellate Division, the trial court has the discretion to impute income, but only after first finding that a party is voluntarily unemployed or underemployed. Caplan v. Caplan, 182 N.J. 250, 268 (2005). There is no bright line rule that governs the imputation of income, see Caplan, but that there must be a finding of voluntariness before considering imputation of income. Dorfman v. Dorfman, 315 N.J. Super. 511, 516 (App. Div. 1998). Here, the trial court determined Defendant was involuntarily underemployed.

  • Supplemental Child Support

The Appellate Division additionally set aside Plaintiff’s position that the trial court erroneously awarded supplemental child support to be paid by Plaintiff and improperly allocated 100% of those costs to Plaintiff. The Appellate Division noted that child support is necessary to ensure parents provide for the “basic needs” of their children. Pascale v. Pascale, 140 N.J. 583, 590 (1995). “The purpose of child support is to benefit children, not to protect or support either parent.” J.S. v. L.S., 389 N.J. Super. 200, 205 (App. Div. 2006). “In accordance with Rule 5:6A, these guidelines must be used as a rebuttable presumption to establish . . . all child support orders. The guidelines must be applied in all actions . . . .” Current N.J. Court Rules, Appendix IX-A to R. 5:6A, ¶ 2. “A rebuttable presumption means that an award based on the guidelines is assumed to be the correct amount of child support unless a party proves to the court that circumstances exist that make a guidelines-based award inappropriate in a specific case.” Ibid.

The Appellate Division has also directed that while the parties’ respective income percentages are to be considered for calculating child support under the guidelines, those percentages cannot be used to determine the supplemental child support component. The Court elaborated:

Because the income and assets of each party are only two of the many statutory factors the trial court must consider in determining a fair and just child support award, the allocation equation utilized under the guidelines-based award has little or no application to the amount of additional support determined through analyzing the N.J.S.A. 2A:34-23 factors. [Caplan, 182 N.J. at 271.]

The Appellate Division affirmed the trial court determination that the parties’ combined income levels exceed the maximum child support guidelines, and the trial court supplemented the support amount by applying the statutory factors in N.J.S.A. 2A:34-23(a).  Once again, the Appellate Division noted that the trial court adhered to the proper procedure, and engaged in a detailed analysis of the statutory factors.

  • Counsel Fees

Lastly, the Appellate Division addressed and rejected Plaintiff’s arguments that the trila court did not comply with Rule 1:7-4 by not providing factual findings to justify the counsel fee awarded to Defendant. Rule 4:42-9(a)(1) provides that “[i]n a family action, a fee allowance . . . may be made pursuant to [Rule] 5:3-5(c).”  Rule 5:3-5(c) sets forth nine factors for the court to consider in determining a fee allowance:

  • (1) the financial circumstances of the parties;
  • (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party;
  • (3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial;
  • (4) the extent of the fees incurred by both parties;
  • (5) any fees previously awarded;
  • (6) the amount of fees previously paid to counsel by each party;
  • (7) the results obtained;
  • (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and
  • (9) any other factor bearing on the fairness of an award.

The Appellate Division declined to disturb the counsel fee award as a fee award should only be modified by the Appellate Division on the “rarest occasion” and only because of “clear abuse of discretion”. Strahan v. Strahan, 402 N.J. Super 298, 317 (App. Div. 2008). The Appellate Division affirmed the trial court’s citation of Plaintiff’s pattern of “bad faith” litigation surrounding the 50/50 parenting time issue and that the trial court determined that Plaintiff’s conduct was “disingenuous [and] calculated to mislead the court and prolong the litigation.” Contrary to Plaintiff’s argument, the Appellate Division indicated that the trial court considered the lengthy, post-judgment aspect of the case, the manner in which the custody and parenting time issues were resolved, Plaintiff’s pursuit of an increase in parenting time by less than a dozen nights each year, and the parties’ abilities to pay their counsel fees.

The overall takeaways from this case should be that it generally does not pay to manipulate your income in a self-employment setting in an effort to intentionally show a low income level. While there are certainly legitimate business reasons why someone would not increase salary over a number of years, when there is a pattern of providing other employees with raises while artificially keeping your income low, it will likely backfire. Additionally, there is an interesting discussion in this case about the trial court not imputing the Defendant income despite a prior imputation in the parties’ Marital Settlement Agreement. The exact language utilized in the MSA is very important and could be the deciding or determining factor as to whether an imputation is utilized in any future review. Lastly, with an extraordinary counsel fee awarded in this case, it is extremely important to not just litigate for the sake of argument. By withdrawing his request for equal parenting time (especially considering how close to 50/50 he was already getting) at the 11th hour after almost 5 years of post-judgment litigation, it left a very sour taste in the trial court’s mouth. Whether it was done intentionally or not, the trial court believed that Plaintiff was merely litigating to delay a resolution and determined that there was a pattern of bad faith. When you combine this with the trial court’s belief that Plaintiff was intentionally deflating his income, it led to the significant counsel fee award.

Adam Wiseberg is an associate within the Firm’s family law practice. He can be reached at (973) 548-3363 or at awiseberg@foxrothschild.com.

So you are in court or maybe on a conference with a judge and you make a factual statement about the other side.  Maybe it is about some less than stellar conduct of the other party. Maybe it is about a violation of an Order.  Maybe it is about the failure to provide discovery.  Could be anything.  And rather than opposing counsel specifically responding to the statement, either by way or explanation, excuse or admission, you get the complete non-sequitur accusing your client of doing something completely unrelated.

That my friend, is “Whataboutism”  and while prevalent in politics,  I have seen it more and more in the law over the last few years.  Whataboutism has been defined by the Oxford Dictionary as follows:  the technique or practice of responding to an accusation or difficult question by making a counteraccusation or raising a different issue.

Now, to me, this is different by the common, but lame, explanation “my client is complying with this part of the order because your client isn’t complying with that part of the order.”  This is lame because there is no justification for this in the law – most famously exemplified in the family law context by the maxim that just because someone isn’t paying their child support doesn’t mean that you are permitted to withhold parenting time.

What I am talking about is the complete evasion of the statement/accusation by responding with a different accusation.  It happened to me today when I stated that documents that we had been seeking for 6 months or more was met with (1) we are waiting for documents from you and (2) but you just served a subpoena to get the documents.  See there was no response as to why the documents hadn’t been produced.  But as to (1) that wasn’t entirely true either because there were letters documenting the willingness to exchange the documents pretty much on any day.  As to (2), the serving of the subpoenas doesn’t obviate the obligation to turn over the documents.  What is worse, rather than doing the proposed exchange, in response to our subpoenas, the other side wasted money issuing subpoenas for the documents we were ready to exchange, just to not turn over their client’s documents.  It’s was silly and costly and happens all of the time.  Lawyers shouldn’t do it and neither should litigants.

What to do – be prepared to answer the question and at the same time, be prepared to bring up what the other side is deficient in – not necessarily as a tit for tat thing, but rather, to try to move the case forward when you have access to the court.  And if you are the one making the original allegation/accusation/statement, be prepared with the facts to address why the red herrings are simply that, red herrings or disingenuous.  Moreover, do whatever you can so that the judge doesn’t let the other side off the hook.  Respond to the accusation but ask the judge to require a response from the other side.

There is a difference between zealous advocacy and obfuscation or wasting time.  The system is strained enough without having to waste time on this type of nonsense.

 

Eric S. Solotoff, Partner, Fox Rothschild LLP    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 is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

We previously blogged about the Bisbing matter with respect to the precedent-setting decision that modified the standard for a custodial parent seeking to relocate with the minor children outside of the State of New Jersey, and law that followed.  Well,  Bisbing has returned in another published (precedent-setting) decision, this time with respect to whether counsel fee awards stemming from child-related litigation are dischargeable in bankruptcy proceedings.  The answer, generally, is no.  Here’s why.

In Bisbing, the primary parent/plaintiff sought to relocate to Utah shortly after entering into the Marital Settlement Agreement and, upon remand from the Supreme Court, the request was denied and the defendant was awarded $425,000 in counsel fees.  Plaintiff did not appeal.  Of course, in a not so shocking turn of events, plaintiff likewise did not pay the counsel fee award and tried to evade the obligation.  Motion practice and bankruptcy petitions ensured, as follows:

  • October 2019 – defendant filed an enforcement application with respect to the unpaid fees, which was dismissed without prejudice (i.e.: can be filed again).
  • March 2020 – the Bankruptcy Court dismissed two Chapter 13 Petitions that plaintiff had filed during/around the time of the enforcement application.
  • June 1, 2020 – the family trial court had reinstated the dismissed enforcement application and ordered that the fees were not dischargeable in bankruptcy per 11 U.S.C. § 523(a)(15) (Section 15).  Plaintiff did not appeal.  What is Section (a)(15) – good question – it declares that certain divorce related obligations are not dischargeable in bankruptcy Section 13.  Specifically:
    • (a)A discharge … of this title does not discharge an individual debtor from any debt
      • (15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit.
  • Thereafter, the court granted defendant’s motion to have the prior fees + the fees for the June 1, 2020 Order deemed non-dischargeable under Section 5 and denied plaintiff’s cross-motion for reconsideration of the June 1, 2020 Order.
  • Plaintiff appealed the Order declaring the fees non-dischargeable under Section 5 (in all aspects of Bankruptcy, i.e.: Chapter 7, 11, 12, 13;, and thus not limited to Chapter 13).

So, now that the history is covered, what makes the counsel fee awards, both for the relocation trial and the enforcement/non-discharge Order, not dischargeable in bankruptcy?  Simply put, the fee awards stemmed from child-related litigation, causing the non-debtor spouse to expend money it could have otherwise used to support the children.

The trial court relied on prior law requiring broad interpretations when adjudicating whether an obligation qualifies as support and the substance of the liability is controlling.  This is key because the substance of the counsel fee awards are child-related because of the issues litigated that resulted in the fee award.  Despite this, the plaintiff threw out whatever arguments she could to evade the obligation.

Close up of wooden gavel isolated on white background

1. Advisory Opinion – Not So Fast

The Appellate Division rejected plaintiff’s argument that the trial court issued an advisory opinion because the plaintiff did not have a pending Bankruptcy petition at the time the fees were deemed non-dischargeable.   The trial court properly determined there there need not be a pending bankruptcy petition for the ruling.  Indeed, the Appellate Division agreed and cited to prior case law regarding non-dischargeability without a pending bankruptcy action.  Moreover, the plaintiff had previously filed two bankruptcy petitions that were dismissed; thus, the trial court determined it could rule on the issue.

Here, even though a pending action was not required, the plaintiff was in an even worse position because she had tried to discharge the obligations twice so the prospect of her doing it again was certainly a reality.  Moreover, the plaintiff’s payment of the fee awards was an ongoing dispute, thereby lending itself to a controversy over which the court could rule and issue an opinion – not an advisory one.  To add insult to injury, the plaintiff filed for reconsideration of the June 1, 2020 Order regarding dischargeability so she made it an issue, even though she later claimed the trial court’s opinion was improperly advisory.

2. Counsel Fees Are Not Qualified As Support – Think Again

The trial court relied on Orlowski v. Orlowski, which cites the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005:

[A]mended the Bankruptcy Code to clarify that a debt for a “domestic support obligation” owed to, or recoverable by, a spouse, former spouse, or child of the debtor in the nature of alimony, maintenance, or support of such spouse, former spouse, or child, established by a separation agreement, divorce decree, property settlement agreement, or court order is nondischargeable.

And Owlowski relied on In Re Gruber finding that a counsel fee award “…in matrimonial proceedings is a non-dischargeable domestic support obligation”.

Of major significance in the trial court’s decision, affirmed by the Appellate Division:

“The judge bolstered his conclusion by finding the funds defendant expended here could have been used for the children’s direct benefit by paying for tuition, child support, and other needs. He held the award had the ultimate effect of providing the parties’ children with necessary support.”

The Appellate Division turned to the definition of “domestic support obligation” not dischargeable in bankruptcy, and quoted the following

[A] debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is —
(A) owed to or recoverable by —

(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal
guardian, or responsible relative; or . . . .

(B) in the nature of alimony, maintenance, or support (including assistance provided
by a governmental unit) of such spouse, former spouse, or child of the debtor or
such child’s parent, without regard to whether such debt is expressly so designated; 

(C) established or subject to establishment before, on, or after the date of the order
for relief in a case under this title, by reason of applicable provisions of —

(i) a separation agreement, divorce decree, or property settlement
agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a
governmental unit; and

(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.

The Appellate Division reasoned that while Federal law rules as to the dischargeability of debts, New Jersey courts have jurisdiction as to whether the obligation constitutes support based on Federal law and using New Jersey law for “valuable guidance” given that the obligation was entered per New Jersey law.

The Appellate Division looked to Gruber, above, and In re Maddigan (relying on older version of Section 5 to create a 3-part test), which both found counsel fee awards stemming from child-related issues to be non-dischargeable in bankruptcy.  Simply put, as found in Gruber, the label attached to the payment does not control the qualification of that obligation (just like title to a property does not control the marital/non marital nature of it).  Here, the Appellate Division expressly found:

“We conclude that the court properly determined the counsel fee award here to be non-dischargeable under Section 5, as it was a domestic support obligation and was “in the nature of support.” This matter involved defendant’s attempt to preserve his ability to visit with his daughters regularly, despite plaintiff’s attempt to relocate them across the country. The trial court’s findings here further established that the funds in this matter could have been used for the children’s support, such that the counsel fee award was tantamount to an award of support to defendant for the benefit of the children.”

3. Economic Disparity Matters – Wrong Again

The plaintiff’s last argument reviewed by the Appellate Division, namely that the trial court needed to consider the economic disparity between the parties, also failed.  The plaintiff cited to a case (In Re Gianakas) wherein the debtor had agreed to make mortgage payments in the divorce agreement, which he was ultimately unable to make.  The trial court created a three-part test that applies to agreed upon obligations: “(i) the language and substance of the agreement in the context of surrounding circumstances: (ii) “the parties’ financial circumstances at the time of the settlement; and (iii) the function served by the obligation at the time of the divorce or settlement.”

Here, as the long history of this case proves, the counsel fee award was not an agreed upon obligation.  Additionally, the Appellate Division noted that the trial court did review the parties’ finances in a prior decision.

Takeaway

This case is an important one.  Time and time again counsel fee orders are entered against recalcitrant parties and they sit while the party evades payment and the party who incurred the fees remains obligated to pay the balance with the promise of being reimbursed later should the award be paid.  We do whatever we can to enforce the fees and chase the payment, and the non-debtor spouse incurs the related fees.  Now we have another case further clarifying that the debtor cannot use the last resort of bankruptcy to evade the obligation when the fees stem from child-related litigation and could have otherwise been used by the non-debtor spouse to pay toward the children’s support.

Remember, the plaintiff in this case is a recalcitrant party who demonstrated bad faith from her efforts to relocate to Utah at the outset of this litigation, through failure to pay the counsel fee award.  I don’t think the case will result in every single counsel fee award being deemed as non-dischargeable from an initial request for fees (and bearing in mind that family court is one of equity), and there ostensibly must be a violation (or more) of a court-ordered payment and/or egregious custody issue at play to soundly make the request, but I do think that we will see a lot more successful applications in this regard, particularly when dealing with bad faith litigants.  Only time will tell.

Lindsay A. Heller is a partner in the firm’s Family Law practice, based in its Morristown, NJ office. You can reach Lindsay at 973.548.3318 or lheller@foxrothschild.com.

Lindsay A. Heller, Associate, Fox Rothschild LLP

The Appellate Division’s July 6, 2021 decision follows nearly a decade of post-judgment divorce litigation between the parties. Defendant appealed three (3) Family Part orders which (1) denied his motion to reopen an arbitration award; (2) denied his motion for reconsideration; and, (3) denied his motion to modify his child support obligation. Plaintiff’s cross-appeal similarly challenged three (3) Family Part orders that denied multiple prayers for relief contained in various motions. As the Appellate Division noted at the outset: there was “no basis to disturb any of the challenged decisions, with one exception.” This exception, although part of an unpublished Appellate Division decision and therefore non-binding on lower courts, offers clarification regarding child support modification for a child residing away from home—particularly at boarding school.

As the Supreme Court of New Jersey opined in Faherty v. Faherty, 97 N.J. 99, 222 (1984): “child support [is] always subject to modification for changed circumstances…” Pursuant to Lepis v. Lepis, 83 N.J. 139 (1980), the moving party bears the burden of demonstrating a change in circumstances warranting modification. On review by the Appellate Division, denials of requests to modify child support are examined to determine whether, given the facts, the trial court abused its discretion. In any event, “an award will not be disturbed unless it is manifestly unreasonable, arbitrary, or clearly contrary to reason or to other evidence, or the result of whim or caprice.” Foust v. Glaser, 340 N.J. Super 312, 315-16 (App. Div. 2001). It is well settled law in the State of New Jersey that a child living at college—that is, away from home—is a change in circumstances warranting review of a child support obligation. Jacoby v. Jacoby, 427 N.J. Super. 109, 118 (App. Div. 2012).

In Baeszler v. Baeszler, the parties were married in September 1994. They had two children together: a daughter, born in 1999, and a son, born in 2003. The parties were divorced in August 2008 by way of a Dual Judgment of Divorce, which incorporated their Memorandum of Understanding. The parties almost immediately engaged in post-judgment litigation regarding Defendant’s child support obligation and educational expenses relating to the parties’ daughter. As a result of Defendant’s refusal to cooperate with paying the daughter’s tuition and related expenses, Plaintiff was awarded sole custody of both children in August 2015.

Fast forward three (3) years later, Plaintiff’s request to enroll the parties’ son in a Pennsylvania boarding school was granted. In response, Defendant moved to modify his child support obligation based upon a material change in circumstances given their son would be living away from home for the school year. Defendant’s motion was denied because the trial court determined that disturbing the award of child support would disrupt the other aspects of arbitration award.

The Appellate Division’s “one exception” was its clear agreement with Defendant that the trial court erred in not permitting a review and modification of his child support obligation. In agreeing with Defendant, the Appellate Division extended the well settled law (that a child residing at college was a change in circumstances warranting review and possible modification of a child support obligation) to the realm of boarding school. By this extension, the law has not changed. Rather, the Appellate Division remarked that same analysis is required: “courts faced with the question of settling child support for children living away from home must assess all applicable facts and circumstances, weighing the factors in N.J.S.A. 2A:34-23a.” Jacoby, supra at 113. The factors of that statute are as follows:

  • Needs of the child;
  • Standard of living and economic circumstances of each parent;
  • All sources of income and assets of each parent;
  • Earning ability of each parent, including educational background, training, employment skills, work experience, custodial responsibility for children including the cost of providing child care and the length of time and cost of each parent to obtain training or experience for appropriate employment;
  • Need and capacity of the child for education, including higher education;
  • Age and health of the child and each parent;
  • Income, assets and earning ability of the child;
  • Responsibility of the parents for the court-ordered support of others;
  • Reasonable debts and liabilities of each child and parent; and
  • Any other factors the court may deem relevant.

The trial court simply missed the mark. Its reasoning for denying Defendant’s request to review and modify child support was insufficient as it rested solely on the following quote: “[the] Arbitration Award so ingrains child support with other payments and expenses that to disturb that figure would disrupt many other aspects of the award.” The trial court gave this reason without a thorough analysis of the parties’ entire submissions on the issue. Indeed, it did so without the benefit of a plenary hearing. The Appellate Division vacated this portion of the Order and remanded the issue to the trial court for further review with a pointed directive: “the trial court must state its reasons on the record to support its decision to grant or deny the defendant’s motion to modify child support.”

While boarding school is an extremely niche situation, the global message is quite clear by the Appellate Division. It’s decision to extend the well settled law was prefaced by the word “logically”.  What other alternative living situations for children could see this well settled law “logically” extended? The ripple effects of this extension to boarding school are unknown given the recent decision and the fact that it is unpublished. Undoubtedly, parties moving to modify child support based upon children residing away from home, wherever that may be, will rely upon the Appellate Division’s “logical” extension of the law. However, in such a mobile society where children often reside elsewhere for extended periods of time—whether it be with grandparents, college, boarding school, camp, or the like—it is difficult to determine just how far the well settled law may be “logically” extended.

It would seem that the Appellate Division is, at least in this instance, directing the trial court to not adopt a per se approach to these situations. Rather, a child residing away from home requires review of the totality of the circumstances irrespective of whether it is college, boarding school or elsewhere.

Vaccinations will likely become a hot topic in matters of divorced or separated parents in a post-pandemic world with vaccines now available to children ages 12 and up, and possible younger children in the future. Although not COVID-19 related, it’s pretty timely that an unpublished (non-precedential) decision was just issued regarding divorced parents who disputed whether their child should be vaccinated.

Briefly, in the matter of M.A. v. A.A., the Appellate Division affirmed the trial court’s decision awarding the plaintiff/father, in favor of vaccinations, sole authority to make vaccination decisions for the minor child, based largely on the best interests standard.  The defendant/mother, who opposed vaccinations, argued that the best interests standard should not have been applied because it does not outweigh her fundamental right to freedom of religion, in addition to other arguments.  In similar fashion to previous blogs that I have authored, credibility was key.  Given that the mother was not a credible witness with respect to her religious beliefs, or really about much of anything, her religion/freedom of religion arguments failed.  Had she been credible, would there be a different result? The decision is a long one, so bear with me.

FACTS

The parties married in 2005, had one child (Adele) born in 2013, separated in September 2015 and divorced in 2018.  During their marriage, they did not have  Adele vaccinated.  In June 2015, the parties submitted a letter to Adele’s pre-school asking that she be exempt from the vaccination requirement because of their religious beliefs in a strongly worded letter that quoted the Bible, and they submitted a similar letter post-divorce in August 2018 to Adele’s kindergarten,  The initial letter, which is similar to the Kindergarten letter, said:

Our child’s body is the Temple of God. Our family’s religious beliefs prohibit the injection of foreign substances into our bodies. To inject into our child any substance which would alter the state into which she was born would be to criticize our Lord and question His divine omnipotence. Our faith will not allow us to question our Lord and God, nor challenge His divine power.

…

Our personal religious beliefs include our obedience to God’s law, the Holy Bible, and we believe that we are responsible before God for the life and safety of our child, created by God.

Despite their strong letters pre- and post-divorce regarding vaccinations, the parties did not include language in their Marital Settlement Agreement (divorce agreement) about whether to vaccinate Adele and/or religious beliefs concerning Adele.  Rather, with pretty form language, they agreed to share joint legal custody of their child with neither parent designated as the Parent of Primary Residence.

The Appellate Division found particular importance in the following language: they “...further agree that their daughter’s best interest is paramount” and  they “...shall conduct themselves in a manner that shall be best for the interest, welfare, and happiness of [Adele].”

During the trial discussed below, the mother testified that the parties did not reference vaccinations in their agreement because they  agreed to not vaccinate Adele and the father had  prepared the above letters to the schools, for which she did not know the source of the language.

Following their divorce, Adele stepped on a rusty nail while with her father, who then brought her to the hospital where she was given a diptheria, tetanus and DTap vaccination.  Adele did not have an adverse reaction.  He made her mother aware of the vaccinations.

A few weeks later, the father unsuccessfully filed an emergent application seeking to prevent the mother from traveling with Adele to Bulgaria, claiming that she could not go because she did not have all of her vaccinations, which was denied as Adele had vacationed in Bulgaria before without vaccinations.

Upon their return, the father, without pre- or post-disclosure to the mother, brought Adele for the MMR vaccine.  A few days later, Adele developed a rash that her pediatrician diagnosed as being caused by something she touched – i.e.: unrelated to the vaccine.

Meanwhile, the day before Adele’s appointment with her pediatrician, the mother filed a Motion seeking sole custody of Adele and restraining the father from having further vaccines administered to Adele, claiming that the parties agreed to not vaccinate Adele and previously submitted religious exemption letters to Adele’s schools.  The father cross-moved for sole decision making authority on medical decisions for Adele or for a plenary (evidentiary) hearing on the issue.  He claimed that he supported vaccinations and that the mother’s objections were based on conspiracy theories rather than religion and, in fact, the mother is an Atheist.

TRIAL

The trial court held a three day trial, during which each party testified, along with an expert presented by the mother and Adele’s pediatrician.

The mother’s expert met with the mother and examined Adele, but he did not meet or speak with the father or Adele’s pediatrician, nor did he review her prior medical records or order any further testing.  The expert diagnosed the above rash as resulting from the vaccine, based solely on a picture, rather than an examination.  he expert testified that because Adele previously had an autoimmune condition, she is at risk for illness were she to receive additional vaccinations and, thus, she should not get another vaccine.  Rather, she should just contract whatever viral infection she may in the future.  However, he also testified about the great benefit of vaccines preventing many infectious diseases, or “dreaded diseases” per his direct quote, and that few people have adverse reactions.

On the other hand, the pediatrician testified that Adele’s autoimmune disease was no longer present as of September 2017, although at his earlier deposition he testified that she had a 3-5% greater risk to contract it.  He further testified that he had discussed vaccinations with the mother on two or three occasions and she never raised a religious objection.  The pediatrician cleared Adele to receive vaccinations.  Notably, like the above expert, the pediatrician testified to the benefits of vaccinations and few cases of adverse reactions.

The mother testified that her moral and religious views against vaccinations are intertwined and she has had such religious anti-vaccination views since she was a child; however, she did not seek religious exemption when she immigrated to the United States at age 20, when she went to college and she received breast implantation surgery in 2011 – prior to Adele’s birth but seemingly while she held such views per her own testimony.

On the other hand, the father testified that they never discussed vaccines until the mother was pregnant (note that they were married for about 8 years before Adele was born), that the mother was anti-vaccination and he obliged her, and the language in the above letters was suggested by a realtor they knew because it would be a sure way to have Adele attend her schools without vaccinations.  He also testified that he is Catholic and the mother is an Atheist.

As to best interests, the father testified that vaccines are in Adele’s best interests which is why he wants her vaccinated, and the mother testified that the father did not act in Adele’s best interests by getting her vaccinated without disclosing same.

DECISION

Close up of wooden gavel isolated on white background

Ultimately, the trial court awarded the father as limited medical guardian for immunization purposes only, and denied the mother’s request to restrain further vaccinations.

The trial court did not rely on either expert (the mother’s expert’s methodology was lacking and the pediatrician did not have the expertise about vaccine related issues), but for the fact that they both testified about the benefits of vaccinations and that most people are not adversely effected.  Using a best interests analysis, the benefits of the vaccine outweighed the risks and, thus, the order set forth above was entered.

Notably, the trial court found that the mother was not at all a credible witness – she was combative, changed her testimony and outright lied; while she claimed religious beliefs against vaccinations since childhood, her actions demonstrated otherwise. “The court concluded that its decision ‘results from [d]efendant’s shear [sic] lack of credibility.'”

Moreover, the trial court also addressed defendant’s sincerity as to her claimed religious exemption, required by Federal case law based on her claimed religious objection and, because the best interests analysis required the court to make a full fact finding, doing so included the mother’s claimed religious exemption that opened the door into whether same was sincere.  Given the mother’s lack of credibility, and failure to assert religious exemptions for vaccines on her own behalf, the court found that she was not sincere.

The Appellate Division upheld the trial court’s use of the best interests standard, and it’s conclusion based upon a best interests analysis.  The Appellate Division cited to the best interests/custody statute, N.J.S.A. 9:2-4, as authority for the court’s order.  Indeed, per section (c) of the statute,  although parents have equal rights to start, a court can order that one parent has sole custody or “[a]ny other custody arrangement as the court may determine to be in the best interests of the child.”

The Appellate Division disagreed with the mother’s claim that the trial court erred when reviewing the mother’s sincerity with respect to her religious exemption because doing so is precluded by statute, namely  N.J.S.A. 26:1A-9.1 ; however, as confirmed by the Appellate Division, this applies to schools only and not to the issue of parents with co-equal rights disputing whether to vaccinate their child.  In fact, the Appellate Division specifically separated the Department of Health memorandum, cited by the mother, suggesting that sincerity should not be tested for religious exemptions for school purposes, as compared to a best interests analysis when two parents with equal rights dispute vaccinations.  Moreover, the Appellate Division provided that the trial court resolved the conflict between the mother’s First Amendment Rights and freedom of religion by applying  the federal sincerity test and then the best interest standard.

Notably, the decision was also based on the fact that the parties agreed in their MSA that the child’s best interests are paramount.  In other words, their agreement provided for the best interests analysis in this case.  They did not provide for any other methodology to resolve disputes related to Adele.  Coupled with the mother’s lack of credibility, she didn’t stand a chance.  In fact, the Appellate Division stated: “The trial court’s order, appointing plaintiff as the sole parent for vaccination decisions, was rooted in its determination that defendant’s testimony lacked credibility.”

Takeaway

This case is long for a reason; there are a bunch of takeaways – from drafting of agreements to crafting arguments:

  • Be cognizant of your MSA language.  Most agreements recite the best interests of the child as part of the decision making for the ultimate custody/parenting time arrangement, and some cite to consideration of same for future decisions.  Here, the language was used to further support the appropriate best interests analysis.
  • Joint legal custody does not mean an absolute preclusion on one parent having sole decision making authority on issues related to the children in the future, even if limited as it was here.  Custody arrangements in New Jersey are never permanent; they are modifiable based upon substantial changed circumstances and in the best interests of the children.
  • Statutes/case law on religious exemptions does not apply, on point, to a child-related dispute between parents with co-equal rights.
  • Even if you think that you and your co-parent are on the same page about a topic, i.e.: vaccinations or religious upbringing, include language in your agreement referencing such decisions.  Parents, like anyone else, are allowed to change their mind and, absent an agreement otherwise, could seek to change course of a prior child-related decision.
  • Credibility is ALWAYS key.  Many of family law cases thrive on “he said/she said”.  The only want to get to the bottom of who is more likely to be telling the truth is to judge credibility.  Here, it won the day.

Lindsay A. Heller is a partner in the firm’s Family Law practice, based in its Morristown, NJ office. You can reach Lindsay at 973.548.3318 or lheller@foxrothschild.com.

Lindsay A. Heller, Associate, Fox Rothschild LLP

 

Six years, nine months and 7 days following the enactment of New Jersey’s amended alimony statute’s cohabitation provision on September 10, 2014 (N.J.S.A. 2A:32-23n) the New Jersey Appellate Division provided long awaited and much needed guidance on what a movant must now present to the trial court to demonstrate a prima facie case of cohabitation warranting discovery and ultimately a plenary hearing.

Back on September 13, 2019 as noted by Eric S. Solotoff, Esq. blogging on the case Landau v. Landau the Appellate Division reversed the trial court after granting discovery as the movant failed to make a showing of changed circumstances based upon cohabitation.  In this case, the trial court held although the husband fell short in making a prima facie showing of cohabitation, the husband was permitted to conduct discovery to attempt to make a prima facie case of cohabitation.  The Appellate Division initially stayed and then ultimately reversed the trial court’s Order permitting discovery stating:

There is no question but that a prima facie showing of cohabitation can  be difficult to establish, see Konzelman, 158 N.J. at 191-92 (describing the seven days a week, 127 days of surveillance of Mrs. Konzelman’s residence), precisely for the reason the trial court identified, that the readily available evidence is often “consistent with either a dating relationship or a cohabitation relationship.” But that is hardly a new problem and it cannot justify the invasion of defendant’s privacy represented by the order entered here. We are confident the Lepis paradigm requiring the party seeking modification to establish “[a] prima facie showing of changed circumstances . . . before a court will order discovery of an ex-spouse’s financial status,” 83 N.J. at 157, continues to strike a fair and workable balance between the parties’ competing interests, which was not altered by the 2014 amendments to the alimony statute.

The Appellate Division’s decision in Landau, made it clear that a movant could not use a back-door approach to make a prima facie showing of cohabitation by requesting a suspension or termination of alimony due to cohabitation, or in the alternative, requesting to conduct discovery in an attempt to carry his or her burden.  Unfortunately, the court in Landau did not take the next step and define what exactly constitutes a prima facie case of cohabitation despite acknowledging the difficulty a movant faces in successfully making such an application.

On April 23, 2020, approximately seven months later, the Appellate Division decided the case Wajda v. Wajda, an unreported (non-precedential) opinion addressing this same issue of what a movant must provide to the trial court in order to make a prima facie showing of cohabitation.  In this case, the Appellate Division in Wajda reversed the trial court’s decision finding the movant did not make a prima facie showing of cohabitation despite the movants undisputed Certification that the alleged cohabitant stayed overnight at the wife’s home nearly every night from October 5 through December 12, 2018, the alleged cohabitant often stayed in the wife’s home without the wife present, often used the wife’s car, handled chores around the wife’s house as if it were his and housed his two dogs in the wife’s house.  While the Appellate Division disagreed with the husband’s position that he successfully demonstrated cohabitation through his pleadings filed with the court as the wife was in “a mutually supportive, intimate personal relationship in which a couple has undertaken duties and privileges that are commonly associated with marriage” pursuant to N.J.S.A. 2A:34-23(n), the court did agree he made a sufficient showing to warrant further discovery.  Although this case yet another opportunity for the court to clarify what exactly a movant must provide to establish a prima facie showing of cohabitation, the court did not address this long standing issue – that is until June 17, 2021.

Finally, the Appellate Division in Temple v. Temple, currently an unreported (non-precedential) opinion released on June 17, 2021, cleared up any confusion how the trial court when presented with an application for cohabitation must define the elements necessary to make a prima facie case of cohabitation and further explained that the court’s decision in Landau as a guide for this analysis is limited.

In Temple, the parties were married in 1986 and were divorced in 2004.  Pursuant to their agreement, the husband was obligated to pay $5,200 per month in permanent alimony.  In July 2020, sixteen years later, the husband filed an application to terminate his alimony obligation alleging the ex-wife was either remarried or was cohabitating with a man she was in a relationship for at least fourteen years.  The parties agreement provided cohabitation as a reason for the husband’s termination or modification of his alimony obligation.

Relying heavily on Landau, the court denied the husband’s application finding he did not make a prima facie showing of cohabitation notwithstanding the husband’s application supported by an abundance of evidence whether his ex-wife had re-married but also whether she was or have been cohabitating pursuant to N.J.S.A. 2A:34-23(n), including social media posts confirming their long term relationship, information from family members, how she and her long term boyfriend presented themselves to the public, that they were or had lived together during their ongoing fourteen year relationship, the alleged cohabitants car regularly parked outside the former marital home and the “scrubbing” of their social media accounts of any information regarding their continuing relationship.

The Appellate Division reversed the trial court and remanded for discovery and an evidentiary hearing finding the trial court’s reliance on Landau was misplaced.  Moreover, the court acknowledged that while a movant must present a prima facie case of cohabitation before the court may order discovery, the court in Landau did not define what exactly constitutes a prima facie case of cohabitation.  The court also found that the trial court incorrectly weighed the parties’ Certifications and without a hearing determined that the wife’s account of the facts set forth in the husband’s application were true when the proper course should have been to entitle the husband to an assumption of the truth, the benefit of all reasonable inferences and allow for discovery when presented with Certifications that create a genuine dispute about the material facts.

While the Appellate Division confirmed the husband in Temple was required to make a prima facie case of cohabitation (which until now has yet to be defined), he was not required to present evidence favorable on all six statutory factors in N.J.S.A. 2A:34-23(n):

(1) Intertwined finances such as joint bank accounts and other joint holdings or liabilities;

(2) Sharing or joint responsibility for living expenses;

(3) Recognition of the relationship in the couple’s social and family circle;

(4) Living together, the frequency of contact, the duration of the relationship, and other indicia of a mutually supportive intimate personal relationship;

(5) Sharing household chores;

(6) Whether the recipient of alimony has received an enforceable promise of support from another person within the meaning of subsection h. of [N.J.S.A.] 25:1-5; and

(7) All other relevant evidence.

Fortunately, the Appellate Division provided some well needed clarity as far as what a movant must show in order to clear the prima facie hurdle for a case of cohabitation allowing for discovery and a hearing.  The court in Temple held:

[W]e reject the argument that evidence of all these circumstances must be presented for a movant to establish a prima facie case of cohabitation.  The statute contains a seventh item, which allows a court’s consideration of “[a]ll other relevant evidence,” N.J.S.A. 2A:34-23(n)(7), thereby demonstrating the statute does not contain the alpha and omega of what ultimately persuade a court that a support spouse is cohabiting.

Reasonably so, the court also found that it is unfair to the movant if he or she is required to present evidence on all six factors before establishing a prima facie case of cohabitation.  For example, how is a movant able to obtain evidence of a former spouse’s “intertwined finances” to show the sharing of “living expenses” prior to completion of discovery?  Other than running a “trash audit”, the answer is he or she will likely be unable to obtain this information to present to a court in an application for cohabitation.  Requiring the movant to run down the six factors to make a threshold prima facie showing of cohabitation is, as the Appellate Division aptly stated, “…will be as rare as a unicorn.”  All a movant must demonstrate through evidence is that the supported spouse and another are in a mutually supportive, intimate personal relationship in which they have undertaken duties and privileges that are commonly associated with marriage or civil union.

Within the last few days, a written request was made by the American Academy of Matrimonial Lawyers (“AAML”) to the Administrative Office of the Courts, Committee on Opinions to publish the Appellate Division’s decision in Temple in efforts to avoid any future misapplications of Landau and hopefully create on some level of consistency in future cohabitation cases.

                                                                                 

Joseph Murphy

Joseph M. “Bud” Murphy is a member of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer, Bud is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Bud at (973) 548-3353 , or JMMurphy@foxrothschild.com.

You see it all of the time.  Someone file a motion with the court regarding discovery and/or asking for various pendente lite relief, like temporary support, temporary parenting time and other things that come up during the pendency of a case.  Judges are human and sometimes they just get it wrong, either because they get the law wrong, misunderstand the facts, miss certain things that are in the paper or for any other reason.  When that occurs, it is common for one or both sides to file a “motion for reconsideration” to correct the mistake.  Some people just file motions for reconsideration because they don’t like the result and want a “second bit of the apple” as is referenced in the case law.  That said, often there is a legitimate mistake that one side will take advantage off, often to prolong a case and/or negotiate in bad faith, because they have the so called “bird in the hand.”

Judges seem to hate motions for reconsideration, either because they are overworked and don’t want to have to deal with the motion again, or because they don’t want to have to admit that they may have made a mistake, or for any other reason that a human being may not like to be accused of being wrong.  In these cases, even when the error is clear, motions are often denied and the defendant party is awarded counsel fees – even though there is no bad faith in the simple filing of a motion for reconsideration.

That said, an interesting reported (precedential) decision was released by the Appellate Division today that suggests that maybe, just maybe, many, if not most trial court judges were getting the standard for reconsideration wrong all along.  Specifically, the case of Alfred Lawson v. Officer Jeff Dewar, Et. Al., Judge Fisher starts the opinion, as follows, “In summarily deciding this interlocutory appeal and vacating the order under review, we write chiefly to point out commonly misunderstood distinctions between motions seeking reconsideration of final orders and motions seeking reconsideration of interlocutory orders.”  Later in the decision, when addressing the order before the court on appeal, Judge Fisher noted:

The problem with the judge’s disposition lies with his application of principles relevant only when a judge is asked to reconsider a final order; these standards are incompatible with a request that an interlocutory order be reconsidered. The approach to those requests is significantly different .

While this isn’t a family law case, as the same Rules of Court are implicated, it applies equally to family law cases.

Now typically, when a motion to reconsider a pendente lite Order is filed more than 20 days after the entry of an Order, often the defending party opposes it as being filed out of time even though the Rules and case law are pretty clear.  I have even seen judges agree with this and refuse to even hear the motion.  Judge Fisher definitively rejected this approach and held:

We start with a frequent misconception about the time within which a motion for reconsideration of an interlocutory order can be filed. Defendants have argued that plaintiff was obligated to move for reconsideration within twenty days of the May 14, 2020 order. That is plainly wrong. Rule 4:49-2 sets a twenty-day time bar for filing motions to alter or amend “a judgment or order,” a phrase that encompasses only final orders, as Judge Pressler long ago observed in Johnson v. Cyklop Strapping Corp., 220 N.J. Super. 250, 258-59 (App. Div. 1987). No one has or could possibly argue the May 14, 2020 order is a final
order. Rule 4:49-2 has no application here.

Now often – if not all of the time – court’s apply the standard set forth in Cummings v. Bahr to pendente lite reconsideration motions.  That standard requires a showing that the challenged order was the result of a “palpably incorrect or irrational” analysis or of the judge’s failure to “consider” or “appreciate” competent and probative evidence.  Judge Fisher made clear that that is not the proper standard to evaluate motions for reconsideration of non-final, pendente lite Orders and held:

Because Rule 4:49-2 applies only to motions to alter or amend final judgments and final orders, and doesn’t apply when an interlocutory order is challenged, so too the standard described in Cummings v. Bahr … did not apply to the motion before the trial judge. Instead, in ruling on the motion at hand, the judge should have been guided only by Rule 4:42-2 and its far more liberal approach to reconsideration, not the methodology employed when a motion is based on Rule 4:49-2.

Rather, Judge Fisher noted that the proper standard was as follows:

Rule 4:42-2 declares that interlocutory orders “shall be subject to revision at any time before the entry of final judgment in the sound discretion of the court in the interest of justice.” A motion for reconsideration does not require a showing that the challenged order was “palpably incorrect,” “irrational,” or based on a misapprehension or overlooking of significant material presented on the earlier application. Until entry of final judgment, only “sound discretion” and the “interest of justice” guides the trial court, as Rule 4:42-2 expressly states. Nearly forty years ago, Judge Michels said for this court in Ford v. Weisman,
188 N.J. Super. 614, 619 (App. Div. 1983) that, until the suit ends, a trial court “has complete power over its interlocutory orders and may revise them when it would be consonant with the interests of justice to do so.”  (internal citations omitted).  By invoking Cummings, the trial judge applied the wrong standard in denying plaintiff’s motion.

But Judge Fisher went even further and stated:

We observe as well there is nothing in our jurisprudence to suggest reconsideration of an interlocutory order is prohibited unless the movant can provide something “new” or unless the prior judge acted in an “arbitrary, capricious or unreasonable” manner.” …

In the final analysis, we urge judges not to view reconsideration motions as hostile gestures. To be sure, some are frivolous, vexatious or merely repetitious, and some constitute an unwarranted attempt to reverse matters previously decided solely because the prior judge is no longer available. But some reconsideration motions – those that argue in good faith a prior mistake, a change in circumstances, or the court’s misappreciation of what was previously argued – present the court with an opportunity to either reinforce and better explain why the prior order was appropriate or correct a prior erroneous order. Judges should view well-reasoned motions based on Rule 4:42-2 as an invitation to apply Cromwell’s rule: “I beseech you . . . think it possible you may be mistaken.” The fair and efficient administration of justice is better served when reconsideration motions are viewed in that spirit and not as nuisances to be swatted aside.  (Emphasis added)

Moreover, it is not uncommon for more than one judge to be assigned to a case prior to trial, especially, the longer a case goes on.  In fact, every year, a new General Assignment Order is entered by the Chief Justice, and it is not uncommon for judges to move between divisions.  Sometimes, judges move within a division and no longer have the same docket.  Other times, judges retire or some conflict requires the judge handling the case to change.  When this happens, what usually occurs is that the new judge gives absolute deference to the prior judge’s rulings – even when the first judge is no longer assigned and cannot hear the reconsideration motion.  Often times, I have heard judges say “I am not Judge X’s Appellate Division.”  Put another way, deference would preclude getting an order right. Turns out, that approach and attitude is not correct either.

In Alfred Lawson, Judge Fisher stated:

The judge further erred by giving undue deference to the interlocutory rulings of the Somerset judge. If a prior judge has erred or entered an order that has ceased to promote a fair and efficient processing of a particular case, the new judge owes respect but not deference and should correct the error. See McBride v. Minstar, Inc., 283 N.J. Super. 471, 481 (Law Div. 1994), aff’d o.b., McBride v. Raichle Molitor, USA, 283 N.J. Super. 422 (App. Div. 1995). The polestar is always what is best for the pending suit; it is better to risk giving offense to a colleague than to allow a case to veer off course.

Similarly, the law of the case doctrine has no bearing when a party seeks reconsideration of interlocutory discovery orders. In writing for the Supreme Court, Justice Long recognized the law of the case doctrine “is only triggered when one court is faced with a ruling on the merits by a different and co-equal court on an identical issue.” Lombardi, 207 N.J. at 539 (emphasis added). In support, Lombardi cited Gonzalez v. Ideal Tile Importing Co., Inc., 371 N.J. Super. 349, 356 (App. Div. 2004), aff’d o.b., 184 N.J. 415 (2005), where we held in similar circumstances that the law of the case doctrine does not obligate a court to “slavishly follow an erroneous or uncertain interlocutory ruling.”Interlocutory rulings are “not considered ‘law of the case'” and are “always subject to reconsideration up until final judgment is entered.” Lombardi, 207 N.J. at 539 (citing Johnson, 220 N.J. Super. at 257).  (Emphasis added).

While this ruling may lead to a rash of new reconsideration motions – and maybe rightly so – perhaps more importantly, trial judges will heed Judge Fisher’s words and correct mistaken Orders as opposed to swatting aside reconsideration motions on principle.

                                                                 

Eric S. Solotoff, Partner, Fox Rothschild LLP    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 is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

Last week, I blogged on the  A.J.V. v. M.M.V.  case, specifically, regarding the retroactive application of a savings component.  As noted in the post, there was an interesting treatment of deferred compensation in the case.

Specifically, the husband received RSUs as part of his annual compensation which serially vested over 3 years.  In this case, the Complaint was filed in 2014.  At issue were the RSUs granted in 2012, 2013 and 2014.  As is sometimes the case, in recognition for the fact that the husband had to continue to work post-complaint for the RSUs to vest, the parties attempted resolve the issue using a coverture fraction and “agreed” that the wife would receive thirty-nine percent of the net shares in the tranche that vested in 2015, twenty-two percent of the net shares in the tranche that vested in 2016, and six percent of the net shares in the tranche that vested in 2017.  What they never could agree on was how to determine the net based upon a disagreement of the tax rate to use.

In his decision, the trial judge came to the conclusion that the parties’ inability to agree on the tax rates meant they had no agreement at all . The judge then went on to make detailed findings as to the sixteen statutory factors in the equitable distribution statute and determined that the wife was  “entitled to 50% of all net RSU[s]” granted prior to the date of Complaint.

The Appellate Division affirmed and agreed that in absence of a complete stipulation, he could divide the RSUs and allocate the tax consequences in the way that he found most equitable.  The Appellate Division noted that a stipulation of settlement should not be enforced “where there appears to have been an absence of mutuality of accord between the parties or their attorneys in some
substantial particulars, or the stipulated agreement is incomplete in some of its material and essential terms.”

The Appellate Division noted that the trial judge properly considered all of the statutory factors.  Moreover, the Court addressed the 2018 M.G. v. S.M. case dealing precisely with this issue that we previously blogged on.  The Appellate Division noted that the trial court relied on an quoted that holding, specifically:

(1) “[w]here an award is made [by an employer] during the marriage for work performed during the marriage, but becomes vested after the date of complaint, it too is subject to equitable distribution”; (2) “there is a rebuttable presumption the award is subject to equitable distribution unless there is a material dispute of fact regarding whether the stock, either in whole or in part, is for future performance”; and (3) “[t]he party seeking to exclude such assets . . . bears the burden to prove the stock award was made for services performed outside the marriage.”

The court further noted that:

Applying these principles, the judge found the RSUs at issue were subject to equitable distribution because they were awarded for Alan’s “pre-complaint work performance” as “compensation” during times when he was working and traveling extensively and Martha was supporting those efforts by caring for their home and child. The judge also found that, “[u]nlike the plaintiff in M.G.,” Alan “provided no material, objective or credible testimony or evidence, including stock plan information or testimony from corporate representatives, that the RSUs were compensation for or contingent upon future work performance.” The judge, therefore, found Alan “failed to meet his burden of proof to exclude the RSUs from equitable distribution.” The judge added that he “generally did not find [Alan] to be credible,” and so rejected his “unsupported position that the RSUs are contingent or related to future performance.

This is often the when these issues arise – either the proofs are not put in or the plans are somewhat nebulous because when they claim to reward future performance, there are cases noted in my prior blog post on M.G. where the court disregarded that language because the employee would still get the deferred compensation, even if their was future disability, death, lay offs, etc.

The take away here is that if want to divide these assets on a less than 50-50 basis, you either need to formalize the stipulation regarding the issue and/or prove the necessary requirements of M.G. at trial.

                                                                  

Eric S. Solotoff, Partner, Fox Rothschild LLP

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 is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.

While the issue of savings being a component of alimony has been around for decades, since the Lombardi case in 2016 (which we previously blogged about), the issue of a savings component, especially where parties live reasonably frugally, but save a lot, have become more of a front burner issue.

In Lombardi, the Appellate Division discussed the concept of marital lifestyle and how savings fit into the lifestyle.  Specifically, the Court held:

Overall, “[t]he goal of alimony is to assist the supported spouse in achieving a lifestyle ‘reasonably comparable’ to the one enjoyed during the marriage.” Lombardi v. Lombardi, 447 N.J. Super. 26, 37 (App. Div. 2016) (quoting Steneken, 183 N.J. at 299). Establishing the standard of living experienced during the marriage “serves as the touchstone” in the analysis. Crews, 164 N.J. at 16. Marital lifestyle is ascertained by considering “the marital residence, vacation home, cars owned or leased, typical travel and vacations for each year, schools, special lessons, and camps for [the] children, entertainment . . ., household help, and other personal services.” Weishaus v.Weishaus, 360 N.J. Super. 281, 290-91 (App. Div. 2003), rev’d in part on other
grounds, 180 N.J. 131 (2004). A marital lifestyle finding must be based not just on the amounts expended but ultimately what is equitable. Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div. 2004).  ….

– – – – – –

“The most ‘appropriate case’ in which to include a savings component is where the parties’ lifestyle included regular savings  [b]ecause it is the manner in which the parties use their income that is determinative when establishing a martial lifestyle.” Lombardi, 447 N.J. Super. at 39. The fact that “the payment of the support ultimately is protected by life insurance or other financial tools, does not make the consideration of the savings component any less appropriate.” Ibid. Indeed, “[t]he Supreme Court has recognized the need to consider regular savings in determining a marital lifestyle by including a line item for monthly savings in Schedule C of the case information statement parties must file in family matters.” Id. at 40-41.

Notwithstanding Lombardi this issue still comes up often in high net worth and high income cases, as it did in the unreported (non-precedential) Appellate Division case decided on May 14, 2021, of A.J.V. v. M.M.V.      In this case, the trial judge included $5,000 as a savings component in his 11 year limited duration alimony award of $11,500 per month.  In addition, the Court awarded the savings component retroactively 52 months representing $260,000 due from the husband to the wife in the judgment of divorce.

In this case, the parties had amassed over $8 million in assets during the marriage.  The court found that the husband’s income fluctuated in the last 7 years (2012-2018) between $1,022,923 in the first of the years and $633,606 in the last.  The trial judge fixed support using $700,000 in earned income for the  husband and approximately $74,000 for the wife based on her earnings history.  The parties lived frugally (in fact the judge specifically found that they had a “frugal lifestyle”, vacationed off-season and/or in connection with work trips covered mostly by the husband’s employer.  The drove company cars and then Fords because they were able to use the husband’s father’s executive discount.  Both parties agreed that savings was a large component of their lifestyle.  Even the husband conceded that they saved $12,800 per month in 2012 and $21,250 per month in 2013. The trial judge concluded that the parties’ monthly marital lifestyle was approximately $10,588, and they had an additional monthly savings component of $19,087.  Based upon that lifestyle, the trial judge reasoned that “it will not be possible for both parties to maintain the marital lifestyle based upon their combined annual gross income of $776,415.”  Taking into account their incomes, need to downsize and income from their equitable distribution, the trial judge concluded that $6,500 per month in alimony as supplemented by the wife’s imputed net income of approximately $4,000 per month “equates to and reasonably supports the prior $10,588 per month” marital lifestyle”

As to the savings component, the judge found that:

… the $5,000 monthly savings component was “reasonable and appropriate based upon the history of the parties’ marriage” during which they saved approximately $19,087 per month. He recognized that “[w]hile 50 percent of the monthly marital savings component would be $9543.50 for each party . . . the savings component must decrease dramatically as a result of [Alan’s] alimony obligation and his having to maintain two households.”

The Appellate Division agreed and affirmed the decision and stated:  “In short, we agree with the trial judge and conclude that the $5,000 monthly savings component is reasonable under the circumstances – particularly given the couple’s joint emphasis on regular savings as part of the marital lifestyle.

The Appellate Division also affirmed the Mallamo credit to make up for the the absence of a savings component in the support  paid during the pendente lite stage.  Mallamo is the case that stands for the proposition that pendente lite support orders are subject to modification at any time prior to entry of final judgment and credits may be awarded to adjust the support paid prior to final judgment.  Further,

… When,as here, it is the latter, a judge may consider awarding the supported spouse a credit to equalize the fact that the supported spouse was short-changed during the pendente lite stage …

This decision reeks of equity and justice – something that is often elusive in litigated cases.  Moreover, when cases drag on, it is often very easy to sweep credits under the rug.  In fact, some people use that as a strategy, knowing that the cost of a trial may exceed the amount at issue.  When here, there was a small pendente lite aware yet the income remained substantial, a windfall on the part of the husband was a possible outcome that the court corrected by this retroactive adjustment.

The case was also interesting for how the court handled deferred compensation that was granted pre-complaint but vested post-complaint.  Stay tuned for another post on that issue.

                                                                                     

Eric S. Solotoff, Partner, Fox Rothschild LLP

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 is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.