More and more, we have seen medical practices bought up by hospitals, large medical groups and venture capitalists who combine the practices into mega-practices or networks.  In those cases, often one doctor in a group has no power to stop the sale, even if they wanted to, so the issue as to whether this is a really voluntary sale is a real one (even if the doctor ultimately signs off on it. ) But what if, a solo or small practice gets voluntarily sold reducing the professional’s ability to pay alimony and child support.  Can that professional come to court to get a reduction in his support obligations?

This is exactly the scenario that took place in the case of  Oshidar v. Oshidar, an unreported (non-precedential) Appellate Division decision released on October 26, 2021.  In this case, the parties were divorced in 2012, after almost 20 years of marriage.  At the time, the husband, a dentist in his own practice, earned $428,127 per year. Just two years after the divorce, the husband sold his practice for $570,000 (receiving a down payment and then $96,300 per year for 5 years.)  Thereafter, he took a job as a dentist (employee) at a dental clinic earning roughly half of what he was previously earning. Not long after, he filed a motion to reduce his support obligations. In February 2015, “the trial court denied defendant’s motion to reduce alimony, rejecting his change in circumstance argument and finding that his switch in employment was “both voluntary and temporary.””

Husband worked at the clinic for 2 years, before opening a new private dental practice in 2016 (sounds like there must have been a non-compete agreement in the terms of the sale – though it is not referenced in the opinion.)  In late 2019, he filed another motion seeking to reduce his alimony which the wife opposed.  On the papers submitted, the trial court found that Husband had shown a change of circumstances and ordered a plenary hearing.  At the outset of the plenary hearing, the trial judge precluded testimony about whether there was a change of circumstances, stating “…that it had “already determined that there has been a change of
circumstance warranting a review of the support obligation, so we shouldn’t have to talk about that.””  When wife, who was self represented, tried to cross examine the Husband about “… whether the defendant had “voluntarily” decided to “sell [his] lucrative practice to start a new one[]”, the trial court precluded that line of questioning.  At the conclusion of hearing, the trial judge reduced the alimony from $12,500 per month to $8,000 per month.

The Wife appealed and the Appellate Division reversed the finding that the Husband even proven a change of circumstances. The case contains a good discussion, if not primer, regarding the law governing applications to modify alimony, especially by a self-employed obligor.  The Appellate Division agreed with the Wife’s arguments as to the issue of the ability to challenge the voluntariness of the sale of the business.  The Court noted:

Plaintiff argues that the trial court overlooked important legal principles in failing to conduct a searching analysis of  defendant’s motivations, reasonableness, and good faith in selling his dental practice, and then sustaining defendant’s objection when plaintiff attempted to address the issue herself by crossing defendant at the plenary hearing. We agree.

The record, including the trial court’s January 2020 order, shows the court did not sufficiently explore the motivations, reasonableness, and good faith of defendant’s career choices after the divorce. The court made no meaningful attempt to distinguish between the 2015 and the 2020 modification motions on these important issues, even though the 2015 motion was denied and the 2020 motion was granted.

The Appellate Division liked the voluntary sale to someone voluntarily leaving a job.  The law is pretty clear that, in most cases, obligors cannot voluntarily change their jobs or their careers and then get a reduction in support, even if the change is made in good faith.  Here the Appellate Division held:

We conclude that the trial court’s finding that defendant met his burden of proof as to changed circumstances was “manifestly unsupported” by the record. Though not an exact fit with “quitting a job,” because defendant sold his business, and although he did not technically “change careers” because he remained a dentist, the changes in defendant’s  employment status in the years following the divorce fell within the range of what the trial court found to be a voluntary change in circumstances. Given its finding, the trial court was obligated to make further inquiry into defendant’s motivation, reasonableness and good faith while making those critical life decisions. This preliminary inquiry was necessary to determine whether defendant truly met his burden by a preponderance of the credible evidence to show changed circumstances. Only then would a second prong Lepis analysis be in order to determine if a reduction in alimony was justified. Additionally, the trial court should have allowed plaintiff to elicit testimony from defendant on cross-examination to meet the issues of defendant’s motivation, reasonableness, and good faith. Without the steps outlined above, the trial court cannot support its judgment, and its decision represents a mistaken exercise of discretion.

This is not the end of the story because the matter was remanded for a new plenary hearing.

Now, perhaps husband’s reason for the sale were legitimate.  It just weren’t addressed in the opinion and possibly not in the motion papers below.  There could be lots of business, personal or health reasons why such a change made sense.  Maybe there was an anticipation that income wasn’t going to change in any meaningful way, that did not come to fruition.  Maybe there was more competition, lower insurance reimbursements, or any other reasons why, with or without the sale, the income for that type of practice might be down.  Who practicing family law has not representing a doctor or surgeon who made high six figures or seven figures in the past, only to be making much less now because the practice has changed?  One of these changes is what I noted in the first paragraph which has caused many doctors to lose their jobs and/or have their incomes significantly reduced.

Moreover, though not mentioned in this opinion, prima facie (initial) showings of a change of circumstances are not determinative, but rather are essentially rebuttable presumptions.  The reason for this is obviously, there is no discovery or an ability to cross examine a party at a motion.  Either way, how this case ultimately ends will be interesting.

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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.

 

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