The new unpublished case of Nabbie v. O’Connor is a good review of above-the-guidelines child support, income imputation and counsel fees. Child support guidelines are only applicable for the total support award when parents earn combined net income of $187,200 per year. What happens to the remainder of support? It’s reviewed based upon the child’s best interest and the factors under N.J.S.A. 2A:34-23 as to child support. What does this mean? There is a discretion, as compared to the guidelines that are a formula derived within a computer program based on set factors, and the party with the more credible explanation of expenses and proofs to back it up will prevail.
In this matter, the parties had a child together but were not in a relationship at the time of their son’s birth or thereafter. Plaintiff/mom lived in Bergen County and Defendant/dad lived in New York City. Defendant stayed with Plaintiff for few months when their son was first born. They then operated under an informal “every other weekend” schedule for Defendant, and also alternated holidays and the like. In 2009, when their son was entering grade school, Defendant purchased and renovated a home in the school district in which Plaintiff resided with their son until 2013 when she moved into a condo. Defendant lived there for a few months when the home was first purchased and then moved back into the home in 2013. The parties then began to share equal parenting time, again with an informal schedule.
Throughout the above period, Defendant, a chartered financial analyst, earned significantly more income than Plaintiff, a lawyer (part-time until their son went to school and then full-time). The parties had an informal child support arrangement but never litigated the issue. During this time, Plaintiff also borrowed $110,000 from Defendant due to her financial difficulties.
In 2014, Defendant lost his job. In 2016, still unemployed, Defendant moved back to New York City. In February 2017, when Defendant sought to collect on the loan to Plaintiff, Plaintiff requested to resolve child support but to no avail. Thus, Plaintiff filed a complaint in the non-dissolution unit.
In two (2) Case Information Statements, Plaintiff listed child-related expenses of $4,880 per month and then $5,349 per month. The trial court ordered an interim support amount of $1,750 per month. Defendant argued for a lesser amount, claiming that his income totaled $57,500 per his 2016 tax return and his imputation should not total more than $91,000 per year – hundreds of thousands of dollars less than what he earned when laid off in September 2014. The trial court reconsidered its award, increasing it to $3,000 per month. Defendant filed a separate suit against Plaintiff to collect on the loan.
The court held a plenary hearing for which Plaintiff submitted another Case Information Statement – this time with child-related expenses of $3,278 per month, allocating 45% of shelter and transportation expenses to the child based on the parenting time arrangement. Plaintiff’s total 2016 income was approximately $170,000 and her net worth was ($4,000) before considering the loan to Defendant. On the other hand, Defendant’s income totaled $833,614 in 2014, which included a $347,638.13 severance package; $535,267 in 2013; $569,291 in 2012; and $564,757 in 2011; and, he had an investment account with a balance of approximately $1,271,000. Defendant’s 2016 income of $57,538 was comprised of investment income and deferred compensation, which was about half of that amount the following year. However, Defendant did not produce any credible evidence of a modified lifestyle since losing his job in 2014 (continuing to dine out in New York City and enjoy his country club membership), nor did he present credible evidence of job search efforts from when he lost his job until the litigation commenced, which decreased as the litigation was coming to a close. The parties’ testimony differed as to the “cordial” relationship and the manner in which child support was paid prior to litigation.
Ultimately, the Court awarded Plaintiff child support in the amount of $2,909.20 per month, comprised of base support in the amount of $1,909.20, plus $1,000 for the supplemental discretionary amount. Plaintiff was also awarded counsel fees. Defendant appealed.
Above the Guidelines Support
Given that the support is above the guidelines in light of the high income, the Court first reviewed the minimum award (which is the maximum guidelines award) to be apportioned between the parties, which is $2,474. The Court apportioned the amount as $1,909.20 to Defendant and the remainder to Plaintiff. The Court affirmed this method. Likewise, the Court affirmed the additional $1,000, notwithstanding Defendant’s complaints, including alleging that Plaintiff inflated expenses and did not produce proof that expenses would increase when their son entered high school.
The Appellate Division reiterated that the reasonable needs of the child is the most material factor for an above-the-guidelines award, and the reasonable needs are relative to the parties’ standard of living. Also, if the child is 12-years-old when the order is first entered, then it should be adjusted upward. This is material because, while the case doesn’t delve into it, if the initial award is entered before the child is 12-years-old and its based on the guidelines then the adjustment does not occur when support is revisited and the child is over 12-years-old.
The Appellate Division ultimately found that the child support award was reasonable and supported by the record. Earlier in the decision, the Division noted that Plaintiff produced credit card statements and receipts as attachment to her Certification, to which she testified, in opposition to Defendant challenging expenses. This is material because the more proofs, the more credible the witness. Had Plaintiff not produced such documentation the results may have varied.
Defendant also appealed his income imputation of $500,000 gross per year, claiming that he was desperately searching for employment and the imputation was speculative. Again, the trial court applied the proper law and, specifically, imputed income under Appendix IX-A to the child support Court Rule. Defendant was unemployed since 2014 – over two years before the litigation commenced – yet did not have proof of a job search until after it commenced and then his efforts reduced as the litigation neared its end. Ultimately, the Appellate Division found that Defendant was voluntarily unemployed by this point even if his initial job loss was involuntary termination given his lack of effort between 2014 and the litigation, as well as high earning potential and credentials that enable him to earn income consistent with the imputation.
Also important is that Defendant was in his 40’s and not disabled; thus, there is no reason for him to remain out of the workforce. The Court appropriately considered Defendant’s income prior to his job loss, as well as “work history, occupational qualifications, educational background, and prevailing job opportunities in the region, noting defendant had an extensive employment history in financial portfolio management and investing from 2001 until 2014.” The Court also noted some difficulty in Defendant gaining employment that may be due to limited high paying positions.
Moreover, Defendant as the obligor had the burden to prove that his actual earnings were consistent with his current earnings. Defendant failed to do so. He could have produced an expert report but did not. He could have produced proofs other than applications/emails from his job search, but did not.
Thus, the decision was far from discretionary as Defendant argued.
Both parties requested fees but only Plaintiff’s request was granted. Plaintiff filed the requisite Affidavit of Services, while Defendant did not. Considering Plaintiff’s actual income and Defendant’s imputed income, as well as each party’s net worth, Defendant had a greater ability to pay the fees. Moreover, despite not finding that Defendant demanded a hearing in “bad faith”, the Court did find that his position was wrong and not based in law. Thus, the counsel fee award was affirmed.
Defendant, in part, failed on each of the above issues because of his lack of proofs and submissions. Plaintiff had account statements and receipts to back up her charges. Plaintiff presented proof and testimony of Defendant’s earning potential. Plaintiff submitted a Certification of Services. Defendant did none of the foregoing. The proofs that Defendant did submit regarding his imputation called into question his intentions, i.e.: creating an illusion that he was searching for employment when in fact he only did so after Plaintiff filed the complaint and his efforts dwindled as the litigation came to a close. Simply put, from Defendant we learn what not to do. On the other hand, Plaintiff’s position in this case shows the importance of being able to substantiate Case Information Statement expenses particularly when the case falls on the expenses in order to calculate an above-the-guidelines award and other support issues. Finally, Certification of Services are absolutely required for counsel fees requests and imputed income can be used when considering ability to pay.
Finally, while it sometimes feels simpler and more cost effective to resolve custody and child support issues without counsel and a formal Consent Order, this is a good lesson that years down the road that you can nonetheless find yourself embroiled in protracted litigation years down the road that could have been avoided if the issues were formally addressed head on.