In the recent unpublished Appellate Division matter of McDermott v. McDermott, A-0631-07T1, Decided February 20, 2009, the Appellate Division remanded the matter to the trial court for further proceedings on the amount of loans taken during the marriage from plaintiff’s family and the distribution of responsibility for repayment of those loans.

The parties were married for nearly 30 years.  Plaintiff/husband was an attorney with a solo practice and defendant worked at his office for many years, helping to raise their five children and eventually finding employment outside the home with a local school district.  During the marriage, the parties primarily relied upon the income earned from plaintiff’s law practice.  This income fluctuated throughout the years, in part due to the economy and in part due to plaintiffs bouts of depression.

During the 15 day trial in this matter, testimony was offered that during the course of the marriage, plaintiff made some unilateral decisions with regards to the parties’ finances, including taking loans from his family and purchasing property without notifying defendant, who only found out during trial.  Defendant claimed that she only knew of very few of the loans given by plaintiff’s family, however evidence submitted at trial indicated otherwise.  Plaintiff’s sister offered credible testimony that the total amount of loans given was $283, 398.50 of which only $6,300 was repaid.

After the trial, the trial judge issued a written decision, which in part, obligated defendant to repay plaintiff’s sister the amount of $57,165.31 as her share of loans made to the marital partnership; valued plaintiff’s law practice at $100,000 of which defendant was entitled to half; compelled plaintiff to pay $2,000 per month in limited duration alimony for a period of 6 years; and ordered plaintiff to pay $49,000 of the $80,202.70 counsel fees incurred by defendant in the divorce litigation.

Plaintiff appealed claiming that the trial court abused its discretion in requiring defendant to only repay 18% of the loans received from plaintiff’s sister considering that defendant received almost 50% of the marital assets the loans preserved; the finding that plaintiff’s law practice was valued at $100,000 was contrary to evidence and an abuse of discretion; the alimony award was contrary to evidence and an abuse of discretion; the counsel fee award was not based upon credible evidence, contrary to law and should be vacated; and the trial court’s naked conclusions failed to explain many of its decisions therefore the plaintiff requested that the Appellate Division exercise original jurisdiction to decide the issues it reverses.

The Appellate Division affirmed the trial court’s findings as to the value of plaintiff’s law practice and its distribution, the alimony award and the counsel fee award.

As for the distribution of the loans made by plaintiff’s family, the Appellate Division reversed and remanded the trial court’s finding of the amount of loans subject to distribution for further proceedings on whether the marital partnership received and was benefited by other loans from plaintiff’s family other than those specifically found by the judge. The trial judge found plaintiff’s sister’s testimony to be credible, however only specifically discussed distribution of two loans, totaling $120,000. Although the trial court’s written opinion may be interpreted to have rejected plaintiff’s arguments as to the remaining amount of loans taken, the Appellate Division would not base its decision upon such a loose interpretation and remanded for clear findings on this point.

On remand, the trial judge should consider principles established in the Appellate Division case of Monte v. Monte, 212 N.J. Super. 557 (App. Div. 1986) for dealing with marital debt. In Monte, the Appellate Division considered the equitable distribution of marital debt when “[t]he parties’ affluent standard of living continued not only during periods of time when earned income was meager but also …when plaintiff had no income because he was unable to work for over a year.” Id. at 566. The amount of debt accrued during that time to sustain the family shall also be considered. The trial judge must consider whether, under the circumstances, defendant must have been aware that there were other loans, assuming there were, and whether they were used to preserve marital assets for her later benefit at the time of equitable distribution.

Lastly, the Appellate Division refused to accept original jurisdiction over the issues remanded. Plaintiff argued that because the trial judge had been moved out of the family division, the Appellate Division should retain original jurisdiction to prevent a new judge, unfamiliar with the case, from hearing the issues on remand. The Appellate Division has held that the transfer of a judge should not “interfere[] with what was required for a fair and just resolution of” a family court matter. O’Brien v. O’Brien, 259 N.J. Super. 401, 405-406 (App. Div. 1992). Despite being transferred from the family division, the trial judge has an obligation to decide the issues on remand and has been instructed to do just that.

Leave a Reply

Your email address will not be published.