As a continuation to last week’s post regarding what happens when trial courts fail to grant hearings to supporting spouses when they may be warranted, i.e. upon a showing of changed circumstances, this blog post will focus on those times where a hearing is deemed unnecessary based on the facts of a given case. This sometimes occurs in situations where an obligor is self-employed, has the ability to control his or her income, and is attempting to capitalize on the down economy in order to wriggle out of support obligations, sometimes only a few short years after the initial support award.

This type of issue was addressed at length in a prior blog post by Eric Solotoff, Esq. in the context of a discussion of Donnelly v. Donnelly where a self-employed attorney was denied a reduction to his alimony obligation two years following the entry of the Final Judgment of Divorce based on a purported downturn in his law practice. In these types of instances, trial courts have followed the mantra that where the supporting spouse owns his own businesses, the income of the self-employed obligor must be viewed “more expansively.”

For example, in the 2010 case of Pisciotti v. Pisciotti, the defendant-husband appealed from an Order denying his motion to reduce his alimony obligations and to pay child support. At the time of their divorce in 1999, the parties entered into a Property Settlement Agreement (“PSA”) obligating the husband to pay $3,000 per month in alimony, as well as child support in the amount of $4,207.34 per month. Ten (10) years following the parties’ divorce, the husband filed a motion to reduce his support obligations, arguing that his income had substantially declined since the time of the divorce and that his assets, which included several heavily mortgaged properties, had decreased significantly in value. The husband also asserted that the fitness center business, in which he was a co-investor and employee, had suffered during the economic downturn, thereby diminishing his compensation therefrom. The husband supplied various materials in support of his motion, including an updated Case Information Statement, his certification, and personal tax returns. The former wife opposed the motion, arguing that the husband’s motion was not adequately supported, and therefore he had not established a prima facie change of circumstances.

The trial court agreed, and denied the husband’s motion. The Appellate Division affirmed the trial court’s decision finding:

We particularly concur with the judge’s observation that the ex-husband’s motion papers were deficient in failing to provide a detailed forensic analysis of his various business ventures and real estate holdings by a certified public accountant or some other qualified expert. Without such expert proof, the assertions of severe financial hardship advanced by the ex-husband are exceedingly difficult to evaluate. For example, the record does not contain complete and certified financial statements of the fitness center business, nor complete tax returns for that business. The financial documentation regarding the real estate investments, and the associated rental stream from those businesses, has not been corroborated by a competent expert. There are also gaps in documentation concerning the precise sources and amounts of funds used for the down payment on a residence that the ex-husband jointly purchased with another individual in April 2009 and that is presently listed for sale. There are also lingering issues concerning the financing of the vehicles presently used by the ex-husband. These and other relevant financial matters warrant a comprehensive expert analysis by an accountant or some other qualified expert.

While the Court made clear that “a financial expert is required in every case where a support obligor seeks to have the Family Part modify his or her payments” the Court deemed the retention of such an expert necessary in Pisciotti as a result of the husband’s self-employment status which rendered him able to manipulate his income. Consequently, the Appellate Division affirmed the trial court’s denial of modification relief, based upon the inadequate showing made in the husband’s motion papers.

It seems that this case law, along with Donnelly, sets forth a higher standard for an initial showing for a modification of a support obligation of a self-employed litigant versus a regular W-2 wage earner.  Is this fair?  What is a Court to do with a supporting spouse is who is in a position to paint an unrealistic picture of his or her actual income?  I am sure we will see more cases of this sort in the future.

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Eliana T. Baer is a frequent contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Eliana practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, adoption, domestic violence, premarital agreements and Appellate Practice. You can reach Eliana at (609) 895-3344, or etbaer@foxrothschild.com.

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