On April 13, 2009, the Appellate Division issued a decision in the case of Cadavid v. Nieto which dealt in large part with the issue of child support in high income cases. To view the full text of the case, click here.
We have previously blogged on this topic. To view links to those prior posts, click here , here, and here.
In the Cadivad matter, the father appealed an Order requiring him to pay almost $9000 per month in child support. Both parties were immigrants from Colombia. The father is the successful founder and president of eight schools that teach English as a second language located in New Jersey, New York, Florida, and Canada. He also owns interests in several commercial properties in New Jersey and Florida as well as 4 homes. In a June 2007 loan application, the father valued his various business interests at $8 million and the fair market value of his real estate holdings at $5.2 million. The trial judge calculated the father’s annual income for purposes of child support at approximately $2 million annually.
On the other hand, the mother was a full time homemaker but had an associates degree from Bergen County Community College.
The parties had 3 children under age 10 at the time of the proceedings.
The parties’ divorce in 2000. In the divorce agreement, the father agreed to pay $100,000 in support per year which included $20,000 in limited duration alimony, as well as other expenses related to the marital home where the mother continued to reside, etc. In 2003, after the parties’ third son was born, the parties amended their agreement to increase child support by $300 per month.
In 2007, prior to the expiration of her alimony, the mother filed a motion to modify support and expressed her intention to move with the children from Bergen County to Warren, New Jersey.
After a several day trial, the trial court awarded the mother $8,839 per month in child support for the three children. The court also required the father to pay for the boys’ summer camp costs and counseling expenses, but rejected the mother’s request that he also pay for their other extracurricular expenses. The trail court further ordered the father to obtain a $2 million life insurance policy for the benefit of the children, and fixed arrears in the amount of $7,716. Finally, the court awarded the mother $40,000 in counsel fees. The father filed this appeal.
The father argued that the trial court unreasonably declined to impute income to the mother and instead was obligated to allocate to the mother a defined portion of the children’s financial needs.
The Appellate Division affirmed, agreeing with the trial court that imputation was not necessary given that the limited income that could be earned by the mother would be insignificant compared to the child care expenses she would have. Specifically, the Court held:
Given the mother’s limited potential earning capacity and lack of prior work experience, as well as the benefits of the mother personally attending to the boys’ transportation and other after-school needs, there are reasonable grounds for the
judge’s decision not to impute net positive earnings to the mother. The judge essentially determined that the child-care and other expenses that the mother would incur if she were employed would substantially eviscerate her potential income.
The judge observed that the mother drives the children "wherever they have to be when they have to be there on all of the extracurricular activities," and that her efforts in that regard "lessens the financial burden on [the father]." As the judge noted, the mother is "putting in the time, the energy, and many other things in order to take care of these children, [services] that otherwise someone else would have to be paid to do." The judge’s reasoning is neither arbitrary nor an abuse of discretion, although we note that the father remains free to seek prospective relief on the imputation issue if circumstances materially change.
The fatter also objected to the shelter expenses on the mother’s CIS because she lived in the new home with her fiance and his own son. Endeavoring to remove the incidental benefit to the fiancé and his son for these shelter expenses, the mother generally applied a two-thirds (or four-sixths) fraction to the household costs for utilities, snow removal, cable access, and other
shelter items. The mother also acknowledged, both on her CIS form and in her testimony, that the two-thirds fractional share for these items should be further reduced by applying a multiplier of three-fourths, so as to segregate out the children’s portion from her own portion. The trial court and Appellate Division found this to be reasonable.
Similar analysis was given regarding mortgage expenses and real estate expenses.
The law is clear that in this case, if the other parent gets an incidental benefit of the child support, the Court is not offended. What can be taken from this case is that the CIS was crucial in setting forth the children’s expenses. Moreover, by applying reasoned proportions to shared expenses, they will be sustained.