Interspousal Agreements

They say a picture is worth a thousand words, and in the recently unpublished (not precedential) case of C.S. v. B. S., Judge Jones determined that 25-years’ worth of family pictures destroyed by a scorned ex-wife are also worth $5,000.00.

In C.S. v. B. S., the parties divorced after approximately 25 years of marriage. They had one child, who was emancipated. The parties’ entered into a Matrimonial Settlement Agreement, and agreed, among other things, that the husband would have the right to share in the family photographs and videos that were kept in the in the marital residence, where the wife continued to exclusively reside.

However, shortly after the parties’ divorce, the wife refused to allow plaintiff to have or copy any of the photos or videos of the marriage. The husband sent the wife an email requesting her cooperation to retrieve the photos and videos and she replied that she had disposed of them because he had allegedly been unfaithful during the marriage and no longer wanted to be reminded of him.

24276086 - old letters and antique family photos parents, grandfather; grandmother; children nostalgic vintage pictures from ca 1900

The husband sought enforcement of his rights and damages for the wife’s breach of the marital settlement agreement and the Court scheduled the matter for a hearing. At the hearing, the Court did not accept the wife’s testimony that she returned the husband’s childhood pictures (one torn into pieces), completely skipping over the last 25 years of the husband’s life, due to her interpretation of the parties’ agreement. Further, the wife did not indicate how or when she disposed of the photos, but testified that she believed it was before the divorce. She could not answer why, if she disposed of the photos before the divorce, the settlement agreement provided for plaintiff to share in the photographs and videos. The Court concluded that the wife’s refusal to provide the husband with the photos and videos of the marriage was a violation of the husband’s rights.

So what is the husband’s remedy? Unfortunately, the 25 years of family photographs cannot be replaced, so the Court had the task of fashioning an appropriate remedy.

First, the Court found that, in divorce proceedings, there is an implicit duty of good faith and fair dealing between parties. This means that each party has an obligation to treat the other fairly and respectfully during the divorce process, including honoring each other’s rights to marital property and adhering to terms of settlement agreements and consent orders. Thus, the wife breached the duty of good faith and fair dealing by depriving the husband of the family photos and videos.

The Court came up with three scenarios based on the Wife’s testimony: (1) she disposed of the photos and videos after the entry of the marital settlement agreement; (2) she disposed of the photos and videos before the entry of the marital settlement agreement; and (3) the photos and videos were not destroyed and still exist.

The Court opined that under scenario 1, if the wife disposed of the photos and videos after the entry of the marital settlement agreement, such action is a violation of the husband’s rights under the express terms of the document.

Under scenario 2, if the wife disposed of the photos and videos before the entry of the marital settlement agreement, such action is a violation of the implicit obligation of fair dealing, as the wife could not have possibly honored the agreement regarding the sharing of the photos and videos if they no longer existed. Under this scenario, the wife’s conduct “would constitute more than a mere breach of contract, but an actual misrepresentation”. The court also added that, when parties file divorce pleadings, the property of the marriage is deemed, in custodia legia (i.e. property under control of the court) pending resolution. Thus, the wife’s complete disposal of the marital photos and videos during the divorce process is evidence of a lack of good faith and fair dealing.

Under scenario 3, if the photos and videos were not destroyed and still exist, the wife is committing the tort of conversion (i.e. the intentional exercise of dominion or control over a property which interferes with the legal right of another to possess or control same).

39848897 - old empty photo frame with tape

Regardless as to which scenario was the truth, each entitled the husband to damages from the wife and thus the Court was next tasked with crafting a remedy for the husband. Generally, when a party wrongfully takes another’s property, the aggrieved party is entitled to damages, which are assessed under either a market value analysis or cost replacement analysis. However, in this case, due to the unique nature of the photos and videos neither of these analyses apply, since there is no market value or cost replacement value for personal family photos and videos. Therefore, financial compensation and/or reasonable sanctions are the most logical and available options in the Family Court, even though assigning an amount may prove complicated.

Prior to assessing financial compensation and/or reasonable sanctions in this type of scenario, there must be a foundation of evidence to support that:

(a)        the other party actually did take, damage or destroy the property, in violation of the aggrieved party’s rights;

(b)        the aggrieved party genuinely wanted the items in question; and

(c)        the violating party knew or should have known that the aggrieved party wanted the property and that such property had a particular personal value or significance.

Here, after a consideration of the parties’ testimony and other evidence before the Court, Judge Jones found that the wife, by disposing of or destroying the family photos and videos, met all of these factors and awarded the plaintiff $5,000.00.

Before concluding, Judge Jones reminded us that each case and each issue is fact-sensitive and that damages are to be assessed based on the specific facts of each case.

That being said, revenge comes with a price. Here, it was $5,000.00 and 25 years of lost memories, but let this be a warning: before you act, whether it be out of anger, spite, or revenge, think twice about how much it may cost you for that moment of satisfaction.

It’s a story as old as time in the New Jersey courts. Alimony is set based upon the income of parties to a divorce, but then years later, a spouse loses his or her job and is unable to continue to make the agreed upon or ordered payments. What is a Court to do?

61199328 - the word of alimony on wooden cubes

In the old days, prior to the enactment of the new alimony statute, judges had certain checklists, gathered from all the law that they typically used to assess whether to obligor would gain relief. You can find that checklist I compiled in 2013 here.

However, now that the new statute is in effect, the question becomes, how should judges treat on obligor’s loss of employment?

Mills v. Mills, an opinion by Judge Jones of Ocean County, approved for publication, provides some guidance on the issue.
In the Mills case, the parties divorced in 2013 after a 13-year marriage. At the time of the divorce, the parties agreed that the Husband would pay the Wife alimony in the amount of $330 per week for 8 years, as well as child support in the amount of $200 per week. This award was based upon the Husband’s income as a district sales manager for a company selling residential and commercial flooring services, earning $108,000 per year and the wife’s income as a teacher, earning $59,000 per year.

In January 2015, after 12 years of employment at the flooring company, the Husband lost his job. The job loss was involuntary; it stemmed from his employer’s decision to restructure its business plan and eliminate the Husband’s position.

The Husband began searching for a new job immediately. In April, 2015, he received an offer of employment form another flooring company, but at a significantly lower salary of $70,000, with a $6,000 car allowance.

At this point, the Husband was faced with a difficult decision – does he accept the job at a lower rate, or decline the opportunity and look for another job closer to his prior income? Ultimately, he decided to accept the new job.

Initially after accepting the new job, the Husband continued to pay alimony at the rate of $330 per week. He had received severance pay of $35,000 and was able to temporarily supplement his income from there. However, as the year neared its end, the Husband had depleted all reserves.

The Husband filed a motion on November 24, 2015 for a prospective modification and reduction of his support obligations based upon a substantial change in circumstances. In the meantime, he earned a performance bonus of $6,000, bringing his total compensation t $82,000, which still constituted a $26,000 from his prior income.

The Wife opposed the motion, and questioned the circumstances under which the Husband lost his prior employment, and that even if the loss was involuntary, he had not demonstrated that he could no longer earn at least $108,000. She also stated that the loss of support would create economic difficulties for her.

The parties were unable to resolve their differences and the matter proceeded to a contested hearing. The Husband testified that when he began at the flooring company, he was earning $50,000 and gradually worked his way up to a salary of $108,000. The Court found that he testified credibly that he could not simply walk into a new position at a new company and immediately command the same salary.
Interesting, the Court began its legal analysis by expounding upon a “Catch 22” in which many obligors found themselves under the old statute.

…no matter what decision he or she made in accepting or declining a new position at a lower pay, that decision might subsequently be critiqued, criticized and even legally challenged by an ex-spouse who, in resisting a reduction in alimony, might contend that the supporting spouse made an inappropriate choice and therefore should not receive a reduction in his or her support obligation   … when a supporting spouse lost his or her job and then declined an offer to take a lower paying position…and instead kept searching for a higher paying position while seeking a reduction in support, the supported spouse would often argue that the obligor unreasonably bypassed an opportunity to earn at least some income that could have been used to pay some of the ongoing support obligation…

Reciprocally, if a supporting spouse accepted the offer for new employment at a substantially lower salary and then sought a reduction in support, a supported spouse would often argue that the obligor was underemployed because he or she accepted a position at a significantly decreased level of pay or proven “income potential”…

Judge Jones rejected the suggestion that there is a “one-size-fits-all” legal analysis for approaching and analyzing these types of issues. In that regard, he stated “imputation of income was a discretionary matter not always capable of precise or exact determination”.

After citing the amended alimony statute – N.J.S.A. 2:a:34-23(k) – for guidance as to how to analyze this issue. In doing so, he specifically referenced subsection (2), which expressly references that when an obligor loses his or her employment, a judge may consider the obligor’s documented efforts to obtain replacement employment or pursue an alternative occupation, as well as subsection (3) which provides that a court may consider the obligor’s good faith effort to find remunerative employment at any level in any field.

However, the Judge noted that the amended statute does not expressly establish or provide a specific standard for statutory analysis in situations when an obligor actually obtains new employment at a significantly lower pay, then seeks to reduce his or her support obligation over the supported spouse’s objections.

The Court concluded that as a matter of equity, fairness, as well as the most reasonable, consistent and straightforward analysis would be addressed by the following two-step inquiry:

(1) Was the supporting spouse’s choice in accepting a particular replacement employment opportunity objectively reasonable under the totality of the circumstances?
(2) If so, what if any resulting support adjustment should occur that is fair and reasonable to both parties, given their respective situations?

In applying this two-step inquiry, as well as the statutory mandates, the Court concluded that the loss of income was involuntary and that the Husband made legitimate efforts to obtain new employment in the same industry in good faith.

While the salary in the new position was lower, the Court found that the Husband nonetheless made an objectively reasonable decision in responsibly trying to begin at a new place of employment. In fact, the Court found that the Husband was very fortunate in this economy to find replacement work.

Nor did the Court find any objective evidence that the Husband was deliberately underemployed or unreasonably turned down or avoided other job opportunities at higher income levels.
After considering all the evidence, the Court reduced the Husband’s alimony obligation to $250 per week and his child support obligation to $194 per week.

With this decision, Judge Jones clearly articulated what I have personally heard many obligors say to me when deciding whether to move forward with a first, second or even third motion for a reduction in alimony based upon reduced income. Whatever step an obligor took, the supported spouse had a response; and one that was well supported by case law.

Either way, the supported spouse would argue that the reduction in income constituted underemployment and that the Court should impute income consistent with the obligor’s prior income.

Judge Jones’ decision provides a clearer analysis that Court should undertake in this all-too-familiar situation.
_________________________________________________________________________________________________________________________________________

Eliana Baer, Associate, Fox Rothschild LLPEliana T. Baer is a 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.

Signed into law on January 19, 2016, New Jersey’s emancipation law is set to take effect on February 1, 2017 and will apply to all child support orders issued prior to or after its effective date.

37774117 - definition of word emancipation in dictionary

One of the highlights of the new law is that it will dramatically impact when and how child support orders will terminate. Specifically, it provides that unless otherwise indicated in a court order or judgment, the obligation to pay child support shall terminate without order on the date a child marries, dies or enters into military service.

Child support will also terminate automatically when a child reaches 19 years of age unless (a) another age for such termination is specified in a court order, which shall not extend beyond the date the child reaches 23 years of age; (b) a written request seeking the continuation of child support is submitted to the court by a custodial parent prior to the child reaching the age of 19; or (c) the child receiving support is in an out of home placement through the Division of child Protection and Permanency in the Department of Children and Families.

Just ahead of the effective date of the statute, Judge Jones issued an opinion on the effect of one child’s emancipation in Harrington v. Harrington. In Harrington, the parties divorced in 2012. The parties have three children, all of whom were unemancipated at the time of the divorce. As such, the parties’ settlement agreement provided that the father would pay the mother the sum of $240 per week in child support for all three children. In what would become a decisive fact in the case for Judge Jones, he noted that the child support was unallocated, rather than broken down or allocated into specific dollar amounts for each child – either on a one-third per child basis or otherwise.

Following the divorce, the father paid child support as agreed without requesting an modifications, even when their oldest child began college. In September, 2014 the parties mutually agreed to emancipate their two oldest children. Two orders were entered confirming the emancipation, but the amount of child support that the father paid remained the same. Further, neither party submitted or exchanged updated financial information or filed any motion.
In June, 2015, the last remaining unemancipated child graduated high school and decided not to proceed to college. The father continued to pay $240 per week in child support nonetheless, without any objection by either party.

In February, 2016, a year-and-a-half after the first two children were emancipated, the father filed a motion for the retroactive allocation of child support to $80 per child, and downward modification of one-third per emancipated child, effective September, 2104. He also sought to emancipate the youngest child and terminate his obligation. The mother consented to the emancipation of the youngest child, but opposed the retroactive modification that the father sought.
With regard to the issue of retroactive emancipation, the Court initially grappled with which law to apply in this situation: should it apply the anti-retroactivity statute which prohibits the retroactive modification of unallocated child support, or does the case law with regard to retroactive emancipation apply?

In reaching its decision, the Court devised a set of equitable factors that should be examined:

1) How much time has passed between the date of one child’s emancipation and the filing date of the obligor’s present motion for retroactive modification of unallocated child support for the remaining unemancipated child or children?

2) What are the specific reasons for any delay by the obligor in filing a motion to review support based upon emancipation?

3) Did the non-custodial parent continue to pay the same level of child support to the obligee, either by agreement or acquiescence, and of his or her own decision and free will, even after he/she could have filed a motion for emancipation at a prior point in time?

4) Did the custodial parent or child engage in any fraud or misrepresentation that caused the obligor’s delay in filing a motion for emancipation and support modification motion?

5) If the non-custodial parent alleges that the custodial parent failed to communicate facts that would have led to emancipation and modification of support at an earlier date, could the non-custodial parent have nonetheless otherwise easily obtained such information with a reasonable degree of parental diligence and inquiry?

6) If the obligor’s child support obligation was unallocated between multiple unemancipated children of the parties, will a proposed retroactive modification of child support over a lengthy period of time be unduly cumbersome and complicated, so as to call into question the accuracy and reliability of the process and result?

7) Did the custodial parent previously refrain from seeking to enforce or validly increase other financial obligations of the non-custodial parent, such as college contribution for any remaining unemancipated child, because during such time period, the non-custodial parent continued to maintain the same level of unallocated child support without seeking a decrease or other modification?

8) Is the non-custodial parent seeking only a credit against unpaid arrears, or rather an actual return of child support already paid to, and used by, the custodial parent toward the financial expenses of the child living in the custodial parent’s home?

9) If the non-custodial parent seeks an actual return of money previously paid to the custodial parent, what is the estimated dollar amount of child support that the non- custodial parent seeks to receive back from the custodial parent, and will such amount likely cause an inequitable financial hardship to the custodial parent who previously received such funds in good faith?

10) Are there any other factors the court deems relevant to the analysis?

In applying the above factors to the present case, the Court considered the following factors: nearly a year and a half passed between the effective date of the emancipation for the older two children and the filing of the father’s motion; there was no reason provided to explain the delay in filing; during that period, the father continued to pay the same level of child support to the mother; there was no evidence submitted that the mother or the children engaged in any type of fraud; the mother and children communicated facts that would have led to a modification of support; and, a retroactive modification of support to 2014 may be unduly complicated given the fact that no financial information was submitted for the period of time in question – 2014-2016.

The Court noted that a hearing should to be scheduled to examine these factors and weigh the comparative equities to determine whether to exercise its discretion and retroactively modify unallocated child support prior to the motion filing date, based upon a prior emancipation of one or more children. However, the Court was somber in its knowledge that this would not be an easy task – i.e. to recreate what child support *might* have looked like over a two year period of time.
____________________________________________________________________________________
Eliana Baer, Associate, Fox Rothschild LLP Eliana T. Baer is a 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.

Perhaps Kurt Cobain knew when writing the song “All Apologies” that one day his daughter would be embroiled in a nasty divorce battle.  While the lyrics, “Married, Buried, Married, Buried”, may not sound uplifting, they are undeniably classic Nirvana.  Fans of the band would largely agree that the most well known live performance of the song was the acoustic version played during the band’s “Unplugged in New York”, which took place shortly before Cobain’s death.  Now it is the guitar used by Kurt during that performance which lies at the center of Frances Bean Cobain’s divorce from her husband.

nirvana

Specifically, Frances’s husband is in possession of the guitar – thought to be worth several million dollars – and refuses to return it to her while alleging that she gave it to him as a wedding present.  Not surprisingly, Frances denies ever giving it to him at the start of their short-term marriage, and is taking the position that he has no right to any money from her fortune (Kurt’s estate is valued at approximately $450 million).

With that said, and straight from Seattle to the swamps of New Jersey, how would a court here potentially address the issue?

I Think I’m Dumb, or Maybe Just Happy:  Well, for starters, is there a prenup protecting Frances’s rights and interests in Kurt’s estate and, as part of the estate, the subject guitar?  I don’t know the answer, but even if Frances was blinded by her love for her now soon to be ex-husband, she would hopefully be smart enough to have had some sort of agreement drafted and signed protecting her from the claim now being made (unlike Paul McCartney in his divorce from Heather Mills, for example).  Such agreements often have language addressing so-called separate property and whether separate property is exempt from equitable distribution.  Language regarding interspousal gifts is also common and can be crafted in a way to ensure that even if she did gift the guitar to him during the marriage, it could still remain separate property exempt from distribution.

And For This Gift, I Feel Blessed:  At the heart-shaped box of this matter is whether the guitar was an interspousal gift from Frances to husband during the marriage.  This is essentially what husband is claiming.  In New Jersey, an interspousal gift is subject to equitable distribution.  Husband can take the position that even if the guitar was originally a non-marital asset exempt from equitable distribution (for instance, as an inheritance or gift to Frances, or by agreement), it lost that exempt status and became marital property subject to distribution once she gifted it to him.  If proven, Frances loses the right to claim that the guitar is exempt from equitable distribution at the time of the divorce.  With a guitar worth several million dollars, husband may look at his share of the guitar as the proverbial meal ticket in a short-term marriage where his rights are likely otherwise limited.

Hey!  Wait!  I’ve Got a New Complaint:  To rebut husband’s claim and supporting evidence/testimony that Frances gifted him the guitar, Frances would have to establish that there never was any gift.  In other words, there was no intent by Frances to gift him the guitar – a fact that perhaps she could establish by testifying about how she told husband at the time, and/or at other times during the marriage, that it was her/her family’s guitar, rather than husband’s guitar.  Maybe husband simply took it from the home and is now fabricating the entire story.  Credibility and the surrounding factual circumstances will play a large part in the final result.  Also, even if the guitar was ultimately deemed to be an interspousal gift, Frances may be aided in the actual allocation of the asset by New Jersey’s equitable distribution factors, especially that regarding who brought the subject property to the marriage.  Keeping the guitar in the Cobain family would seemingly be an important consideration for a family court judge, and may sway any determination regarding whether Frances could ever have intended it to be a gift.

It will be interesting to see how this matter unfolds and ultimately concludes.  Whether the litigant is Frances or anyone else similarly in her shoes, learning the law regarding gifts and equitable distribution may leave the litigant forever in debt to such priceless advice.

______________________________________________________

Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

*image courtesy of google free images.

If I’ve heard it once, I’ve heard it a million times: “why don’t judges enforce their own orders or take hard lines against obstructers?” Many times, litigants feel powerless. Powerless to change anything; powerless to have courts take a firm position in favor of those aggrieved; and, powerless to be heard. Clients and attorneys alike feel this frustration.

This is despite the fact that there are specific rules in New Jersey that apply to non-compliance in the family part. Rule 5:3-7 provides for very specific types of relief in specific actions:

Non-Compliance with Custody or Parenting Time Orders:

(1) compensatory time with the children;
(2) economic sanctions, including but not limited to the award of monetary compensation for the costs resulting from a parents failure to appear for scheduled parenting time or visitation such as child care expenses incurred by the other parent;
(3) modification of transportation arrangements;
(4) pick-up and return of the children in a public place;
(5) counseling for the children or parents or any of them at the expense of the parent in violation of the order;
(6) temporary or permanent modification of the custodial arrangement provided such relief is in the best interest of the children;
(7) participation by the parent in violation of the order in an approved community service program;
(8) incarceration, with or without work release;
(9) issuance of a warrant to be executed upon the further violation of the judgment or order; and
(10) any other appropriate equitable remedy.

Non-Compliance with Alimony or Child Support Orders:

(1) fixing the amount of arrearages and entering a judgment upon which interest accrues;
(2) requiring payment of arrearages on a periodic basis;
(3) suspension of an occupational license or drivers license consistent with law;
(4) economic sanctions;
(5) participation by the party in violation of the order in an approved community service program;
(6) incarceration, with or without work release;
(7) issuance of a warrant to be executed upon the further violation of the judgment or order; and
(8) any other appropriate equitable remedy.

27249354 - symbol of sanctions as a clamps

In other words, with most family part actions, the sky is the limit in terms of what remedies can be utilized to secure compliance. Moreover, in other instances of non-compliance not covered by the family part rules, for instance, filing frivolous motions to harass the other party, or failing to make discovery, other rules apply that should serve to get a litigant to do the right thing.

So why the disconnect?

Well, it appears that some judges are beginning to take a hard stance against people who just feel like marching to the beat of their own drums, people without any regard for Orders of the Court, or resultant victimization to the other party.

For example, in August, a New Jersey couple was hit with a $543,000 sanction by a Manhattan judge for interfering with their son’s divorce. Justice Ellen Gesmer said that the couple “orchestrated the litigation” between their son and his wife, caused extensive delays, and launched a legal battle designed to “intimidate” their daughter in law.

The parties were married in 2005, and had one child in 2007. Tragically, the husband suffered a brain aneurysm in 2008, rendering him disabled. The wife initially cared for the husband, but was ultimately pushed out of the picture by his parents, who actually took him to a facility and hid him from the wife for several months in 2009.

When the divorce was filed in 2010, the grandparents ran the show on behalf of the son, and directed the son’s lawyers to delay the custody hearing for as long as possible so that they could pursue 50% custody of their grandchild, based upon the pretense that it was on their son’s behalf. By the end of the litigation, the wife’s legal bills were in excess of $928,000.

The judge ultimately found that the parents “willfully interfered with (their granddaughter’s) development of a positive and loving relationship with her father…(and) purposefully engaged in frivolous litigation.”

The judge also came down hard on the father’s lawyers, ruling that they engaged “in frivolous conduct by repeatedly making misrepresentations and knowingly false statements and claims to the court.” She ordered the lawyers to contribute $317,480.67 toward the wife’s legal bills.
The in-laws were ordered to pay, in total, a whopping $543,000.

Back on the other side of the river, in a recent Somerset County case, two opposing litigants were both ordered to perform community service for what the judge found was their willful non-compliance with their marital settlement agreement. The judge also warned them that they were to comply or face the possibility of sanctions.

It appears that judges are “getting real” about compliance. Whether it means the imposition of counsel fees against an overly litigious party or community service, a more clear message is being sent by these judges that non-compliance will not be tolerated.
______________________________________________________________________________________________

Eliana Baer, Associate, Fox Rothschild LLP Eliana T. Baer is a 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.

The Appellate Division’s newly published (precedential) decision in Avelino-Catabran v. Catabran provides another lesson to practitioners and litigants about the language used in settlement agreements and how such language, if unambiguous and without basis to modify, will likely be upheld in matrimonial matters.  The specific dispute involved college payments for the parties’ older child and child support, but the importance of this decision stems from the enforceable nature of the settlement agreement itself rather than what portion of the agreement was at issue.

Contract pic

Here are the relevant facts that you need to know:

  • The parties were married on June 18, 1993 and divorced on August 14, 2002.  A settlement agreement addressing custody and support of the children – 21 and 17 at the time of the appeal – were addressed therein.
  • The agreement provided that the parties shared joint legal and physical custody of the kids, with mom being designated as the parent of primary residence during the school year and dad during the summer.
  • The agreement also required dad to pay $137 per week in child support, and the parties seemingly agreed to increase the obligation to $800 per month in 2009.
  • As to college, the agreement provided that the parties would be equally responsible for “net college expenses – those remaining after the children applied for financial assistance.”  The agreement provided:
  • The minor children shall have an obligation to apply for any and all scholarships, student loans, grants and financial aid that may be available to help defray the cost of each child’s attendance at college.  After deductions for scholarships, student loans, grants and financial aid, the parties agree to be responsible for the net college educational costs of the minor children.  Net college cost[s] will be split equally by the parties.  (language was deleted providing that the parties respective obligations were to be determined pursuant to their respective abilities to pay at that time).

  • In June 2004, the parties agreed to change the custody and parenting time arrangement, eliminating alternating weekends with the kids living full-time with mom during the school year and with dad during the summer.
  • In May 2011, the custody and parenting time arrangement was again changed when mom and her new husband moved to Switzerland with the kids.  To facilitate the move, dad signed a letter at the time providing that mom had sole custody of the kids “[f]or the duration of, and subject to, their residing in Switzerland.”
  • After graduating from high school, the oldest child decided to attend NYU starting in Fall 2012.  Total cost of attendance was approximately $62,000, but the school offered substantial financial aid (including a large scholarship, a work study offer, and student loans), the total value of which came to approximately $23,000.  The package also included PLUS loans worth approximately $39,000, which were defined by the award letter as “the maximum amount . . . . [a] parent may borrow.”
  • The child accepted the full scholarship, work study, and student loans offered to her.  In an email sent at that time, dad asked mom, “how much Parent PLUS Loan should we borrow?” and suggested they borrow approximately $13,000 to cover mom’s share of the balance owed for college.  Mom responded by telling dad to “Please borrow this money on behalf of Catherine (the older child)”.  As a result, dad accepted the available PLUS loan.
  • In October, 2012, dad filed a motion seeking to modify child support to reflect a split-parenting arrangement, an order requiring mom to pay half of the child’s net college expenses, and judgment against mom for the amounts due on the PLUS loan and owed to NYU for the Spring 2013 semester.
  • Mom argued that no funds were owed by her for college costs because NYU provided the child enough financial aid to cover the total expense.  Financial documents submitted showed that mom’s gross income was approximately $225,000 annually and dad’s was $113,000 (they each earned $73,000 at the time of the divorce).
  • In May, 2013, the court entered an order directing mom to contribute to college expenses, but required the parties to submit their financial documents to determine what said contribution should be.  It also directed the parties to submit pay stubs and tax returns to determine child support moving forward.  In so doing, the court found that the financial aid package did not cover the full college cost, the PLUS loans were available only to mom and dad, and dad had established changed circumstances warranting a child support modification.
  • Notably, the court found that, based on the above-described emails, mom was aware of the financial aid package and that the loans dad was taking were to cover her share of the college costs.  NYU was also deemed an appropriate college choice by the child because of the “employment opportunities offered to NYU graduates” instead of another school preferred by mom.
  • Mom moved for reconsideration of the trial court’s order.  The motions were denied in January 2014.
  • During the next series of months, the parties submitted various financial disclosures to the court.  Mom claimed she could not afford to pay for college, and she had filed for Chapter 11 relief in bankruptcy court approximately six months prior.
  • In May 2014, the court ordered mom to contribute 50% of the net college expenses.  It also modified child support, directing dad to pay $186 per week for the younger child, and mom to pay $281 per week for the older child (resulting in a net payment of $95 per week to dad).  In so doing, the court found mom had sufficient resources to contribute to college, considering the requisite legal factors (the Newburgh factors) in so doing, and relied on the language of the original settlement agreement calling for an equal payment obligation.
  • As for child support, the court, in that same order, found that the children’s respective living arrangements (older child at college and younger child in Switzerland) merited a modification.  In so doing, the court relied upon the Child Support Guidelines, Rule 5:6A, and dad’s support proposal (not included in the order).  In so doing, the court also attached a Child Support Guidelines Sole Parenting Worksheet for two children in a “split-parenting situation” (for multi-child families where one parent has custody of one or more children, and the other parent has custody of the other children).  Support was modified retroactive to October 2012 when dad first filed his motion.
  • Mom appealed the relevant order.

i.     Decision on College Expenses

In affirming the trial court’s finding as to college, the Appellate Court found that the lower court properly enforced the unambiguously written original settlement agreement requiring mom to be equally responsible for the kids’ college expenses because there was insufficient evidence of unconscionability, fraud, or changed circumstances (despite mom’s bankruptcy filing) that would merit a deviation from the agreement.  The Court reiterated the obligation of divorced parents to contribute to the higher education of children who are qualified students (notably, the court referenced a general parental obligation to pay – not just for divorced parents, which has been a hot topic of discussion in recent years).

  • Notably, because the parties agreed on how to pay for college in the settlement agreement, the trial court was not required to apply all of the Newburgh factors in rendering a determination and was simply required to enforce the agreement/contract as written.
  • As to the PLUS loan, the Appellate Division disagreed with mom’s position that the loan was secured for the child because the child was not eligible to apply for or receive the loan herself.  “Therefore, the PLUS Loans cannot be considered a student loan or financial aid available to [the child] for which she had to apply, as contemplated by the parties.  The court correctly determined that [mom] authorized the loan and she was responsible for same.

ii.     Decision on Child Support Modification

The Appellate Court affirmed the trial court’s determination (without a hearing) that the older child living at college and spending her time off with dad instead of with mom in Switzerland was a sufficient changed circumstance to merit a support modification.  There was also no dispute that the parties’ incomes had substantially changed since the divorce.  The Appellate Court, however, agreed with mom’s position that the trial court erred in calculating child support by:

  • Failing to consider the statutory child support factors as required by Jacoby v. Jacoby when a child lives away from home while attending college (at which point the Guidelines no longer apply);
  • Failing to properly calculate the support award and issue a clear statement of reasons for same; and
  • Relying on dad’s use of the Guidelines and its incorporation by reference of dad’s proposed calculation.

Primarily, the trial court failed to calculate the Guidelines-based amount and specifically provide why it was deviating from same in the best interests of the child.  “[A] court cannot simply attach a guidelines worksheet in lieu of providing a statement of reasons.”  In so holding, the Appellate Court noted, “The court’s statement regarding its abdication to [dad] of its obligation to calculate support did not satisfy its obligation to provide a statement of reasons for its decision.”

Avelino-Catabran provides a useful analysis for practitioners and litigants when it comes to drafting agreements and, in this particular instance, what will and should be included in the college expense portion of same.  Most of the agreements I have seen and drafted are largely similar on this topic and, by excluding the PLUS loans (which were not identified in the agreement) from the equation, the Court ensured that divorced parents cannot essentially abdicate their responsibility to provide for a child’s college expenses.

______________________________________________________

Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

*image courtesy of freedigitalphotos.net

When we all think of insurance, we often think of medical insurance, car insurance and homeowner’s insurance as these seem to be the necessary and everyday types of insurance. Life insurance, which for some can be synonymous with high premiums, is one of the first costs to go when seeking to reduce your budget. I often find that the issue of life insurance is something that typically does not cross a person’s mind when they are getting divorced, whether they are the supporting spouse or the supported spouse, especially if the parties did not maintain life insurance during the marriage.

life

Often times however, when a supporting party has an ongoing alimony and/or child support obligation, a court may order (or the parties will agree) that a life insurance policy will continue (or be implemented) as a method of financially protecting a dependent party and/or child in the event of the supporting party’s premature death.

In other words, the same reasons an intact family would procure life insurance, remain after the divorce. All too often however, an obligation to maintain life insurance is the forgotten provision of a divorce settlement agreement in that either 1) it is noticeably absent from the agreement, or 2) it is not being maintained. Obviously, either of these scenarios is troublesome for the supported spouse and could ultimately cause substantial financial ruin should a situation that life insurance seeks to protect against come to fruition.

In the recent case of Ashmont v. Ashmont, Judge Lawrence Jones recently released an unpublished (non-precedential) yet persuasive opinion on how to deal with the issue of life insurance between divorced parties. In Ashmont, the parties’ Marital Settlement Agreement required that the wife would receive permanent alimony and child support for the parties’ children. In order to secure same, the parties agreed that the husband would carry life insurance as a means to protect against the loss of financial support in the event of an untimely death.

Several years after the parties were divorced, wife brought an enforcement action against the husband for a breach of their agreement for his failure to provide proof that he was maintaining life insurance as well as for sanctions for his past and alleged ongoing violations of his life insurance obligations. At the time of the hearing, husband admitted that he had been in violation of this obligation, but had recently brought himself into compliance by securing a new policy, consistent with the terms of the parties’ agreement.

Although wife acknowledged that husband was now compliant, she still sought sanctions against the husband for his prior failure to maintain the policy and for allowing his dependents to go uninsured for such a long period of time. It was clear that husband only complied with the obligation after wife was forced to bring litigation and wife feared that husband would simply fail to pay the next scheduled premium.

In his opinion, Judge Jones lays out four tips regarding life insurance and divorce:

• The court may direct that the supported spouse or other parent be named as the owner of the policy, if permitted by the insurance company. This option is particularly relevant when the supporting spouse has a history of failing to adhere to his or her court-ordered life insurance obligations. Being the “owner” of the policy, rather than the “beneficiary” or the “insured”, allows for the party to receive any and all notices and communications from the insurance company regarding the status of the policy, including invoices, notices of proposed cancellation, change in policy terms and renewal dates;

• When a party willfully breaches a court-ordered obligation to carry life insurance, the court may issue multiple forms of relief, including but not limited to ongoing financial sanctions, until such time as the defaulting party complies with the obligation;

• When a party violates a court order, but ultimately complies prior to the conclusion of enforcement litigation, such compliance does not completely erase or negate the violation. Nonetheless, remedial and corrective conduct is equitably relevant on the issue of mitigating sanctions and penalties which might otherwise be imposed under the circumstances. In this case, the wife had asked for a sanction of $7,440.00, the amount of money that husband had saved over the years by failing to comply with his obligation. Finding it a mitigating factor that husband ultimately did cure the defect and that wife was not financially harmed, husband was sanctioned $2,500.00 and was ordered to reimburse wife her $50.00 filing fee for the enforcement motion; and

• As life insurance is an ongoing financial obligation intrinsically related to spousal and/or child support, an insurance provision in a judgment of divorce or settlement agreement is potentially subject to post-judgment modification upon a showing of a substantial change of circumstances, pursuant to Lepis v. Lepis 83 N.J. 139, 145-46 (1980). This situation may occur when a term policy naturally expires and the insurance is either much older or less healthy than at the time of divorce, meaning the cost of the policy could be substantially increased and thus revisited by the Court.

While no one wants to think about the consequences associated with an untimely death, the takeaway from this case is that as the supported spouse/parent, it is imperative that you are “in the know” regarding the insurance policies that could very well dictate your financial security (and your children’s) for the rest of your life. If your ex-spouse has an obligation to secure their support payments with life insurance and you have not seen recently seen a copy of the policy, it might be time to reach out and connect with them to ensure the policy is current.

__________________
LLauren Koster Beaver, Associate, Fox Rothschild LLP
Lauren K. Beaver is a contributor to the New Jersey Family Law Blog and an attorney in Fox Rothschild LLP’s Family Law Practice Group. Lauren practices out of the firm’s Princeton, New Jersey office representing clients on issues relating to divorce, support, equitable distribution, custody, and parenting time. Lauren also offers mediation services to those looking to procure a more amicable divorce. Lauren can be reached at (609) 844-3027 or lbeaver@foxrothschild.com.

Lawyers and litigants alike have long understood the importance of maintaining a good credit rating before, during, and after the divorce. As the parties, particularly one who has not had significant employment during the marriage know, a positive credit rating is critical to establish a new residence, purchase vehicles, and start a new, single life. Often however, the actions of one party can have the effect of damaging irreparably the credit rating of the other. This often happens in the context of one party failing to pay the mortgage on a former marital home or refinancing the mortgage to remove the other party as obligor. Recently, this issue was examined by the court in the case of LH v. DH.

In that case, the parties’ settlement agreement at the time of divorce provided that:

…it is the intent of the parties that the wife shall maintain and keep the marital home… Husband shall execute a quit claim deed transferring his interest in the former marital home to wife, and husband’s attorney shall hold the same in escrow pending wife’s refinance of the mortgage in her name. Wife will have nine months from the date of this agreement to obtain refinance of the mortgage in her name.

This is a very common provision which is found in many settlement agreements. In this case, however, the wife failed to refinance the mortgage removing the husband as an obligor. The husband did not take any action to enforce this obligation initially. However, a couple of years after the divorce, he went to purchase a new home of his own. When he applied for a mortgage, he discovered that his credit rating had been negatively impacted, and he was unable to obtain a favorable rate for a mortgage as a result of the fact that his name was still on the mortgage for the former marital home. He then made an application in court seeking enforcement of the settlement agreement and to appoint him as attorney-in-fact to sign any documents to list the home for sale and sell it.

The court agreed with the husband and granted his request. Importantly, however, the court’s decision took notice of the fact that “as a matter of indisputable knowledge, a positive credit rating and score is one of the most valuable and important assets a party may presently possess. Simply put, a strong credit report and score can enable one with relatively limited assets or income to make substantial purchase is which he or she could not otherwise afford…. Reciprocally, a negative credit rating and score can have a detrimental and sometimes disastrous effect on the party’s financial health, often crippling the party’s ability to obtain a loan, either at a favorable rate or at all, for significant purchases such as a house, car, school tuition, or other expensive items, will potentially and simultaneously limiting the individuals healthy financial growth for years.”

This acknowledgment by the court is very significant. As a practical matter, when an agreement provides time to a party refinance a mortgage or loan, it is important for the other party to regularly check his or her credit score. Additionally, when deadlines pass under the terms of an agreement, it may be critical to take appropriate action to enforce its provisions. While this can be sometimes emotionally difficult given the fact that former spouses and often children are living in the house, the repercussions can be devastating.

_____________________________________________________________________________________

MillnerJennifer_twitterJennifer Weisberg Millner is a partner in Fox Rothschild LLP’s Family Law Practice Group. Jennifer is resident in the firm’s Princeton Office, although she practices throughout the state. Jennifer can be reached at 609-895-7612 or jmillner@foxrothschild.com.

As a matter of public policy, New Jersey Courts favor the enforcement of agreements reached between parties. Since Marital Settlement Agreements (“MSA”) are entered into consensually and voluntarily, they are often approached with a predisposition in favor of their validity and enforceability.  That notwithstanding, these agreements are enforceable only if they are fair and equitable. A bedrock principle of New Jersey divorce jurisprudence is that parties may be able to modify support provisions within their divorce agreements if they are able to show a continuing change of circumstances.

Although the ability to modify agreements based on a change of circumstances is essentially the default so to speak, parties are free to contract around same. Often times in exchange for additional financial considerations, such as unequal asset division or a “discount” on alimony, parties will agree that the amount of years alimony is paid and/or the actual amount of alimony paid each year is non-modifiable regardless of a change of circumstances, foreseeable or otherwise.

Unfortunately all too often parties are entering into agreements that are “non-modifiable” without really thinking through the consequences of same in an effort to “get the deal done” only to have it come back to haunt them.  This is exactly what happened to Mr. Fiorenza in the recent unpublished (non-precedential) case of Fiorenza v. Fiorenza.

In Fiorenza, the parties were married for 24 years and had three children. At the time of their divorce, they were able to come to a resolution regarding the Husband’s alimony and child support payments and agreed that Husband would pay $100,000 per year in alimony ($8,333/per month) and $833.00 per month in child support. Shortly after the divorce however, Husband stopped paying support and Wife filed an application to enforce the support provisions of the parties’ divorce agreement.

The parties were able to resolve their differences and entered into a Consent Order, which lowered Husband’s total support obligation to $5,000 per month ($833.00 of which would be considered child support), included an escalation clause that support would go up if his income did and vacated $10,000 in support arrears.  The parties also agreed however that the new support amount would be non-modifiable and included that if there was a default on this new payment structure, that the total support amount would revert back the original amount under the parties initial MSA. Specifically, the parties agreed:

No matter defendant’s annual gross income, at no time shall monthly support be lower than $5,000, except after the emancipation of [the parties’ youngest child] when the child support component may be reduced”.

After the entry of the Consent Order, Husband made the new support payments for a period of one year but then again stop paying altogether.  Wife immediately filed an application to enforce the terms of the Consent Order and asked that the initial amount of support be reinstated.  In response, Husband cross-moved for a reduction in alimony.

Both the trial Court and Appellate Court upheld the parties’ agreement and increased the support payment back to the original amount in the parties’ MSA (due to Husband’s default on the new support payments) noting that each party got the “expected benefit and burden of the contract”. Because of Husband’s current inability to pay the full support amount however, the Court set a reduced alimony and child support figure of $2,500 per month and allowed the difference between the MSA support award of $8,333 and the $2,500 to accrue as arrears.

The take away from this case is that you should think long and hard before you include any non-modifiable provision in your divorce agreements and consult with an experienced attorney to discuss the ramifications of same. Although you might feel you are getting a tangible benefit in the present by agreeing to a non-modifiable provision, it is important to think through all the circumstances that may occur in the future that would complicate your ability to comply with same (such as loss of income/employment) as you cannot expect a Court to simply invalidate the terms of your settlement agreement because you now view them as unfair with the benefit of hindsight.

_____________________________________________________________________________

Lauren Koster Beaver is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Lauren 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, premarital agreements and Appellate Practice. You can reach Lauren at (609) 844-3027, or lbeaver@foxrothschild.com.

Romeo and Juliet, Sir Lancelot and Guinevere, Katniss Everdeen and Peeta Mellark – for some of these star-crossed lovers, their journeys ended with hemlock, in exile, or…well…no spoilers.  For Easton and Mercer, their romance ended with an annulment on the grounds of equitable fraud in a lengthy decision delivered by Judge Jones in Ocean County New Jersey in Easton v. Mercer.

The union between Easton and Mercer began like many others.  The parties met in 2008 as young twenty-somethings, and began a dating relationship that lasted 2 years.  At the time, each were still living in their parents’ homes.

In 2010, Easton proposed to Mercer and she initially accepted.  Her parents, however, objected, disapproving of Easton as a “suitable husband” for their daughter.

Even so, over the elder Mercers’ objections, their marriage plans went full steam ahead and the parties planned a small ceremony to take place in 3 months’ time.

In October, 2010, the parties formally applied for a marriage license and the next month they went ahead with their small ceremony, which took place in the home of Easton’s parents.  Mercer’s parents were not invited.

While Easton and Mercer had planned to begin their lives together under the same roof, those plans never came to fruition.  Mercer advised Easton that she intended to remain residing with her parents until she could “break the news of the marriage to her mother and father after the fact.”

Well, the “after the fact” news was not taken well.  Mercer’s parents insisted that she renounce the marriage and remain living with them.  While Eason tried to convince Mercer to resume their relationship, his efforts were unsuccessful, and Mercer remained at her parents’ home, “never returning to [Easton] again.”

Yet, for the next 4 years, the parties stayed married and never took any steps to formally dissolve their marriage.  Finally, in 2014, Easton filed for an annulment of the marriage on the grounds of fraud as to the essentials of the marriage “by bowing to parental pressure and abandoning both him and her marital vows.”

Many people are unfamiliar with the particulars of annulments.  That is for the simple reason that they are not often applied for in our courts, namely because of the limited circumstances that it covers.  Instead, divorce is a far more common cause of action for the dissolution of a marriage.

39160919_s
Copyright: pockygallery / 123RF Stock Photo

The major difference between an annulment and a divorce is that in an annulment, the facts giving rise to grounds for the dissolution of the marriage typically precede the marriage itself, whereas the causes for divorce arise during the marriage.  Annulment also differs radically from divorce in that an annulment legally declares a prior marriage retroactively null and void, as if having never happened in the first place.

The grounds for annulment have historically been very limited; among them are:

(a) Already existing, concurrent marriage of one of the parties

(b) Prohibited degrees of relation

(c) Impotence

(d) Incapacity to Consent, Duress or Fraud

(e) One of the parties was underage at the time of the marriage

In a case of an allegation of fraud, as was the allegation in the Easton case, New Jersey courts have held that there needed to have been some intention to deceive the other party.

For example, marriages have been annulled where there was premarital fraudulent representation of intent to have children; insistence of having children where the party previously indicated they did not wish to have children; belief that other party would practice Orthodox Judaism but really have no intention of doing so; a history of undisclosed hereditary chronic tuberculosis; and, concealment of a severe heroin addiction.

The common thread among all of the above example is that there was clear intent by one party to deceive the other.  However, in the Easton case, such intent could not be found – “on its surface, the evidence does not reasonably support a finding that defendant knowingly intended to deceive plaintiff before the marriage by purposely supplying him with false information.”

But, on the other hand, the Court found that even without this previously required intent to deceive, there was never any real marriage of substance between the parties; the marriage both started and ended with the ceremony itself.

After setting forth the history of equitable fraud as a cause of action, Judge Jones ruled that the marriage could be annulled on the grounds of equitable fraud, even where there is no evidence to suggest that Mercer purposefully sought to lie to or deceive Easton.

He reasoned: “In the present matter, while defendant may not have actually intended to deceive plaintiff, an objectively reasonable analysis of the facts and evidence in this case reflects the undeniable reality that deep down, defendant never truly had a genuine commitment to a marital relationship with plaintiff in the first place.”

While Judge Jones went on to hypothesize at length as to the reasons Mercer could have chosen not to pursue the marriage, he concluded that Easton was deserving of the annulment – “‘I do’ does not mean ‘I do’ after I go home for a few weeks and talk with my parents some more.'”

While this case was one of first impression, Judge Jones reasoned his decision using existing case law and equitable doctrine. This couple never lived together, they were not financially dependent on one another and they never held themselves out as husband and wife. It is important to remember that had these parties undertaken any of the privileges or duties of marriage, the result likely would have been different. However, the facts of the case certainly justified an annulment on equitable grounds.

Judge Jones has been known for his lengthy and well-reasoned decisions, often pioneering areas of family law, and frankly, saying what others are too afraid to put into words, let alone in 20-30 page decisions. In fact, I blogged on 2 such decision in the past: one on college contribution for families with multiple children and another on overseas travel. Easton v. Mercer is yet another decision that may be often cited by practitioners when similar issues arise. It will be interesting to see what Judge Jones has in store next.

_____________________________________________________________________________

head_BaerEliana Eliana T. Baer is a 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.