In a recent published (precedential) decision, Gormley v. Gormley, the Appellate Division cleared up confusion between two prior cases that dealt with the impact of a determination of disability by the Social Security Administration upon support.

In Gormley, the parties were divorcing.  The Wife in this matter had been diagnosed with multiple sclerosis during the marriage.  Also during the marriage, the Wife was declared permanently disabled by the Social Security Administration (“SSA”) and did not work.  The trial court judge made a number of reversible errors when deciding how much alimony and child support should be awarded to the Wife (who was awarded sole custody of the minor child of the marriage).   One critical piece of the puzzle, though, was the question of whether the trial court properly imputed income to the Wife, despite the undisputed fact that she was declared permanently disabled by the SSA.

In the most simple of terms, the concept of imputation of income is used by the New Jersey family courts when there is an unjustifiable reason for a party to be out of work or earning less than they are capable of earning to support the family.  It is generally reserved for situations where a court believes the individual is intentionally or unjustifiably under-earning or under-performing in order to deflate his/her income and pay less support.

In Gormley, the Wife argued that she should not be imputed income for purposes of determining alimony and child support, because she legitimately did not work as a result of her disability, and offered the SSA disability determination as proof.  Relying on a case called Gilligan v. Gilligan, 428 N.J. Super. 69 (Ch. Div. 2012), the trial court judge found that this determination by itself was not enough to establish that the Wife legitimately was unable to work.  In the judge’s opinion,  the Wife did not appear in court to suffer from symptoms that would prevent her from working.  Therefore, the trial court judge imputed income to the Wife over her objection.

The Appellate Division has now reversed this decision, finding that the trial court judge wrongly relied on Gilligan, a trial court decision, when there is a contrary decision on this issue from a higher Court, which controls.  Under the controlling case law set forth in Golian v. Golian, 344 N.J. Super. 337, 338-43 (App. Div. 2001) – which is the case that the trial court should have relied on – it is well settled that:

[W]hen the SSA has determined a party is disabled, a presumption of disability is established and the burden shifts to the opposing party to refute that presumption.

Put another way, in a situation like the Wife’s in Gormley, she is to be presumed unable to work.  It would be up to the other side to show that she can.  For example, persuasive evidence that could rebut the presumption might include proof that the person who is declared disabled under the SSA was actually performing work “off the books,” or volunteering to do work for which they could otherwise earn money.

Not only does this published decision reaffirm the holding of Golian and reject the Gilligan case, a trial court opinion which on which the trial judge improperly relied, but it also serves as an important reminder to all of us attorneys:  before you rely on a case (especially a trial court case!), make sure to check to see if there are any more authoritative cases out there that are contradictory.


headshot_diamond_jessicaJessica C. Diamond is an attorney in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

I have written about the requirements of obtaining a domestic violence final restraining order (“FRO”) under the New Jersey Prevention Against Domestic Violence Act (“the Act”) previously on this blog.  One of the three main criteria the Court must look at when determining whether to grant a final restraining order in such cases is the nature of the relationship between the parties.  In most cases, this is the easiest call for the judge.  The parties may be married, or they may have a child in common,  or they might live together, or there is some other clear indicia that a qualifying relationship exists.

In a new published (precedential) decision, C.C. v. J.A.H., the Appellate Division examined one type of qualifying relationship under the Act, namely the “dating relationship.”  The Appellate Division found that, in an age when dating has arguably become application and text message driven – as opposed to the very traditional act of actually going out on a date  – the term “dating relationship” needs an update.

The facts of C.C. show the dire need for such an update.  In C.C., the parties met at a gym where the Plaintiff was an employee, and the Defendant a member.  They interacted flirtatiously, and eventually exchanged phone numbers.  This led to a proliferation of text messages between the parties – approximately 1100 text messages over a period of one month.  The Appellate Division described the text messages as being “exchanged at all hours of the day and night” and as “sexually explicit and suggestive in nature.”  The Appellate Division also found that the Defendant “declar[ed] his romantic interest in [the Plaintiff]” during the course of these text messages.  During this period, the parties continued to interact with one another in person (described as “flirtatious” interaction by the Plaintiff), but both sides agreed that they never went out on a date in the traditional manner.  It was this point that the Defendant emphasized, arguing that because they never went on a date, they were not in a dating relationship.  Accordingly, the Defendant argued, the Plaintiff could not obtain an FRO under the Act.

In assessing the Defendant’s argument, the trial judge referred to the case Andrews v. Rutherford, 363 N.J. Super. 252, 260 (Ch. Div. 2003), which identified several facts that the Court should look into when determining whether a relationship qualifies as a “dating relationship” under the Act.  These are:

  1. Was there a minimal social interpersonal bonding of the parties over and above a mere casual fraternization?
  2. How long did the alleged dating activities continue prior to the acts of domestic violence alleged?
  3. What were the nature and frequency of the parties’ interactions?
  4. What were the parties’ ongoing expectations with respect to the relationship, either individually or jointly?
  5. Did the parties demonstrate an affirmation of their relationship before others by statement or conduct?
  6. Are there any other reasons unique to the case that support or detract from a finding that a “dating relationship” exists?

Ibid.

When addressing these factors, and accounting for the State’s strong public policy against domestic violence, the Court concluded that the relationship between the parties was in fact a “dating relationship” as contemplated by the Act.  It appears to me that the critical points that swayed the Court were the sheer volume of the communications, as well as the nature of the content of the communication:

[T]he absence of what might be viewed as traditional dating activities and affirmations does not render insignificant the proliferate and exceedingly intimate communications between the parties that underscored their relationship.  Indeed, it is the nature and proliferation of those communications that constituted the parties’ “dating activities” and transformed theirs into a “dating relationship.”

Interestingly, the Court also seemed to characterize the question of whether one is engaged in a “dating relationship” under the Act as a subjective rather than an objective one.  Put another way, while the interactions between these parties may not bear any semblance to “dating” in the eyes of someone perhaps older and with a more traditional view of what it means to date somebody, for the Plaintiff (who was 22 years old), these interactions were part of a normal 21st century dating life.

This view is carried through by the Court in the manner in which it distinguished the case S.K. v. J.H., 426 N.J. Super. 230 (App. Div. 2012), wherein the Court declined to find that the parties were engaged in a “dating relationship” where it was determined that they went out on one single date and had no other interactions.  The Defendant argued that his relationship to the Plaintiff was even more attenuated because they had not even been out on one single date.  The Court dismissed this argument out of hand, finding that even though they had not been on a single traditional date, they had engaged in “prolific” “dating activities” by virtue of their text message communication and flirtatious interactions at the gym.

While the law is perhaps notorious for being behind the times, technologically speaking, this decision represents an appropriate understanding of what it means to be in a dating relationship in this day and age and goes a long way to protecting victims of domestic violence who may not have been on any traditional dates, but nevertheless were involved in a dating relationship.  It will be interesting to see how this develops, especially given the relatively recent addition of “cyber bullying” to the statute as a qualifying predicate act of domestic violence.

 


headshot_diamond_jessicaJessica C. Diamond is an attorney in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

As we have said before, the 2014 amendments to the alimony statute allegedly made it easier to terminate alimony if the recipient of the alimony was cohabiting.  The statute now provides that alimony may be terminated or suspended if cohabitation was proven.   The statute made clear that the parties didn’t even have to live together full time for their to be cohabitation and provided indicia of cohabitation that had been culled from prior case law that the court must consider:

(1) Intertwined finances such as joint bank accounts and other joint holdings or liabilities;
(2) Sharing or joint responsibility for living expenses;
(3) Recognition of the relationship in the couple’s social and family circle;
(4) Living together, the frequency of contact, the duration of the relationship, and other indicia of a mutually supportive
intimate personal relationship;
(5) Sharing household chores;
(6) Whether the recipient of alimony has received an enforceable promise of support from another person within the meaning of
subsection h. of [N.J.S.A.] 25:1-5; and
(7) All other relevant evidence.

Factors one and two are usually hard to prove, at least on an initial application, because one does not typically have access to the other person’s finance’s, absent an occasional lucky find in a “trash audit” conducted by a private investigator.  Moreover, like any other modification application, there is a two step process.  First, you need to make a prima facie showing that cohabitation exists in order to even get two the second step which is discovery, and then a hearing.   As noted in my blog on the Landau case from last year,  if you cannot make a prima facie showing, then you don’t ever get the discovery to bootstrap or prove the allegation of cohabitation.

Typically, you see these motions fail because there is not enough evidence, like in Landau.  You may have a few overnights proven by a private investigator, but not enough in a row, or the surveillance wasn’t for long enough.  Often, you see insufficient surveillance coupled with nominal anecdotal evidence, social media posts and the like.  But what happens when the the PI shows that the alleged cohabitation took place for two months straight.  Surely that would be enough, right?  Well, in the case of Wajda v. Wajda, an unreported (non-precedential) opinion released on April 23, 2020, the trial court said no.  However, the Appellate Division disagreed and said that the payor made a prima facie case.

In Wajda, the parties were divorced in February 2018.  Pursuant to their agreement, the husband was obligated pay limited duration alimony of $425 per week for twelve years with the alimony to
terminate in the event of the wife’s “remarriage or cohabitation” with another person.  In December 2018, the husband sought to terminate alimony based upon cohabitation or in the alternative, get discovery if the wife denied cohabitation.  Given Landau, the alternatively relief was perhaps inartfully drafted.  That said, motion was supported by 148 page private investigator report essentially provide that the alleged cohabitant stayed overnight at the wife’s home nearly every night from October 5 through December 12, 2018.   Moreover,  the report also indicated that alleged cohabitant remained in the home when the wife was not present and when the parties’ daughter was there, kept his car there, often drove the wife’s car, did some household chores, and kept his two dogs there.   In fact, the overnights and these facts were really not in dispute. Rather, the wife provided Certifications and some documents showing that the cohabitant maintained another home somewhere else and also, that he was at her home to convalesce from a surgery.  As note above, the trial judge denied the husband’s motion finding that he did not even make a prima facie showing.

As also noted above, the Appellate Division disagreed, holding:

In this case, it was undisputed that A.S. stayed overnight in defendant’s home nearly every night for almost two months. He kept his dogs there, as well as his car. The bank records defendant furnished demonstrated that A.S. was purchasing items and transacting bank business in the same town where defendant resided. A.S. remained in the home even when defendant left. The judge found that A.S. did not reside with defendant, but he did not find that A.S. resided elsewhere. The investigative report also demonstrated that A.S. and
defendant shared some social media connections. Certainly, without any discovery, plaintiff could not demonstrate that defendant and A.S. shared expenses or intertwined their finances.

We disagree with plaintiff’s assertion that he demonstrated cohabitation — that defendant and A.S. were in “a mutually supportive, intimate personal relationship in which a couple has undertaken duties and privileges that are commonly associated with marriage[,]” N.J.S.A. 2A:34-23(n) — based solely on the documents filed by both sides. The question is whether plaintiff made a sufficient showing to warrant further discovery. We think he did.

We, therefore, remand the matter to the Family Part for further proceedings. Recognizing in the first instance that plaintiff is entitled to some discovery.  we leave the scope of the discovery to the sound discretion of the remand judge, and do not necessarily require at this point that he or she order a plenary hearing. Plaintiff or defendant are certainly free to make such a request after discovery is completed. Additionally, “[i]n an abundance of caution, we direct that this matter be remanded to a different judge . . . to avoid the appearance of bias or prejudice based upon the judge’s prior involvement[.]” Entress v. Entress, 376 N.J. Super. 125, 133 (App. Div. 2005).

As stated before, maybe the request in the motion was imprecise.  Maybe the motion seemed too soon for the trial judge as it was made less than 10 months after the divorce.  Who knows why the motion was initially denied given the undisputed facts here.  But while not precedential, this case is a good barometer of what is needed to at least get discovery.


Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.

Prior to the current coronavirus pandemic and resulting shelter in place orders, in many counties, there was already serious backlogs.  What that means is that trial dates were hard to come by and even motions were scheduled to be heard months after they were filed.  While the courts are not currently closed, they aren’t exactly “open” and it is far from business as usual.  While some judges are being very active, if not proactive in managing their dockets, doing conferences and hearings via Zoom, Teams and or telephonically, others have completely shut down.  Today we learned of one judge that has adjourned all uncontested, default and Case Management Conferences until a future date even those things can be easily done remotely, if not “on the papers.”

The present situation has gone on for almost a month at this time and will, at best, go one for another 3-4 weeks if we are lucky, but it wouldn’t be crazy to see the current shelter in place/stay at home orders continue through May.  Essentially, the court could be adding several months of light activity or inactivity to an already burdened docket.  If New Jersey is anything like China, as I blogged about last week, there could be many new divorce filings not to mention domestic violence matters to adjudicate due to all of this staying at home.  This is not to mention all of the expected applications for modification and/or enforcement resulting from the layoffs and job loss caused by the pandemic, which I also blogged on last week.  Add to that, the people who were planning on filing for divorce before pandemic hit, and the usual array of pre and post judgment motion practice that would come up in the ordinary course.  Those people are going to file, if nothing else, the get themselves into the queue to have their issue resolved by a court eventually.

While I may have painted a dreary picture or what is or may become of the court system, that is not the only avenue for resolution for many, if not most of the issues issues that are out there.  While clearly, things like domestic violence and the actual granting of a judgment of divorce are within the sole province of the Court system, there are many things that can be done outside of the system (and there are some people that argue everything else should be done outside of the system but that discussion is for a blog of another day.)

We have talked many times in the past about mediation and arbitration.   While those tools are often used to try to resolve the entirety of a case, there is no reason why they cannot be used to resolve motions and other discreet issues.  Just like there are early settlement panels and sometimes, Blue Ribbon panels, within the court system, there is no reason that parties cannot privately hire one or more divorce lawyer (and perhaps even a forensic accountant), to serve as a blue ribbon panel to make settlement recommendations.  Many of the custody experts have a part of their practice that offers divorcing parents an alternative path to try to resolve their parenting/co-parenting/custody issues outside of litigation.  Even in complex financial cases where each party has a forensic accountant of their own, a third expert can be brought in to assist to reconcile the reports and/or provide an opinion on contested issues for purposes of settlement and/or future litigation.  Parties can agree to arbitrate all or part of their matters – even agreeing to an appellate arbitration process – if they are fearful of an arbitrator possibly making an incorrect decision.

The point is, parties are not stuck waiting for the courts to move forward.  Our group at Fox Rothschild has used many of the above methods in trying to resolve our own cases, both before and now during the pandemic.  In addition, many of us have completed mediation training, serve as early settlement panelists, serve as blue ribbon panelists and can serve as an arbitrator too.  In fact, if we expect to give some relief to the court system, both now and until it gets back to “normal”, whenever that may be, it makes sense to consider every available tool towards resolution.  And while all of these tools come with an added cost, what is the cost of delay, both on a financial and/or emotional level?


Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.

There has been much news coverage about how China’s divorce filings spiked after their periods of quarantine and lock down ended including in articles and Bloomberg,   the Daily Mail and many other publications.  In fact, in response to our own stay at home orders/working from home/shut down of the courts in large part, in a bit of gallows humor, I have joked that this is the divorce lawyer’s silver lining of corona virus.  As I previously blogged, whether or not the pandemic leads to new divorces, it will likely lead to many motions to modify and/or enforce support orders.

Perhaps this phenomenon has something to do with the old expression “familiarity breeds contempt, the first recorded use of which was in Chaucer’s Tale of Melibee (c. 1386).   Obviously, it is more than that.  We are in unprecedented (that word again) times containing real fears of illness and death;  real sorrow from the loss of acquaintances, friends and family; real fears of economic pain that will no doubt hit everyone in one way or another, while cooped up in a home for day after day, week after week;  and the stress of having to home school your children and try to work from home at the same time.  In a time where even getting groceries now requires wearing a mask and one of the most valuable commodities is toilet paper (though some might say alcohol), despite the bad attempts at humor, there is no downplaying the real stress the people are under.

But sadly, marital discord and divorce are not the only side effects of the pandemic.  Domestic violence is too and I have seen numerous articles about this including an April 6, 2019 New York Times article by Amanda Taub entitled A New Covid-19 Crisis: Domestic Abuse Rises Worldwide.    Like a sledgehammer, her article starts:

Add another public health crisis to the toll of the new coronavirus: Mounting data suggests that domestic abuse is acting like an opportunistic infection, flourishing in the conditions created by the pandemic.

An article by Scott Neuman on NPR entitled, Global Lockdowns Resulting in ‘Horrifying Surge’ in Domestic Violence, U.N. Warns, states:

United Nations Secretary-General António Guterres, citing a sharp rise in domestic violence amid global coronavirus lockdowns, called on governments around the world to make addressing the issue a key part of their response to the pandemic.

Aside from the abuse, because people are with their abuser hour after hour, day after day, the ability to seek help or even confide in friends in family members is all that much more difficult. That said, victims should protect themselves and call the police if necessary to seek a restraining order.  There are also resources such as the New Jersey Domestic Violence Hotline (1 (800) 572-SAFE (7233)available 24/7 and many others.  If a Temporary Restraining Order is granted, the Order can contain other provisions for temporary financial relief, parenting time, etc.  While there was and is a fear that false or flimsy domestic violence complaints could be made to get a leg up in a divorce proceeding where the parties remain in the same home, especially where final hearings were pushed off indefinitely, courts are starting to set up for virtual domestic violence hearings via Zoom.  Also, anecdotally, I have heard that court’s have been hearing emergency applications to, at the very least, address parenting time for a parent put out of a home on a Temporary Restraining Order.

In any event, even though these times are difficult, no one has to accept real domestic violence and resources exist to protect true victims in cases where domestic violence is occuring.


Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.

An all too familiar, if not overused, term to describe all thing Covid 19/Corona virus is “unprecedented.”  In an attempt to avoid politics, whether any of this was foreseeable or not, there is no dispute of the absolute financial devastation that the world wide pandemic as created.  The stock market has cratered, many people are out of work, businesses are closed and some may never re-open, etc.  Legislation has been passed to help businesses and citizens alike, but no one knows at this point what the damage will ultimately be.  (And for more information on Corona Virus Resources, our firm has a information packed resource page.  One of the resources is an article written by Jessica Diamond of our group entitled “Family Support Obligations and the Covid-19 Economic Crisis. “

It seems clear that the courts are going to soon be flooded with modification motions by people who have been laid off and/or lost their jobs and/or enforcement motions by people not receiving the full amount (or any) support because their ex has had a reduction and/or elimination of income.  How the courts treat this “unprecedented” catastrophe remains to be seen.  Hopefully, for these people that are affected in this way, this will be short term set-back and that, when the economy re-starts and and life as we knew it resumes, they will go back to work, if not be busier than ever making up for lost time.  That all remains to be seen.  It will be interesting to see if Courts share the pain between both parties are just fervently enforce orders because a litigant may be able to show a substantial but not a continuing change of circumstances.

But what about people who receive alimony and child support in the form of a base amount and then additional support based upon a proportion of income?  This is a not uncommon scenario for someone who is on Wall Street or otherwise has variable income based upon company performance, stock prices, values of deferred compensation, etc.  In many of these cases, the bonuses and/or deferred compensation for the prior year pays out in February or March of the following year.  One would expect that, given the market highs in 2019 and early 2020, people using these types of formulas, in many cases, were very happy to receive their share of the additional support in early 2020.

But what about 2021?  If things continue as they have been and the economy does not fully recover, it is not inconceivable that bonuses in 2021 for 2020, will be less.  What about doctors and dentists that have not been able to work because of the shut down orders?  What about lawyers who cannot litigate because courts for all intents and purposes are closed (not actually closed but not open for trials, etc.)?  Whether or not they pay support based upon a formula, their income picture for 2020 may look markedly different than their 2019 income.  Business owners that had to close their business and/or whose businesses involved  hospitality, conventions, travel, will likely have much different financial statements in 2020 than in 2019.   And what of things like college and unreimbursed expenses divided in proportion to income.  Will there be a need to adjust percentages based upon the financial crisis created by the corona virus

In any event, the pain regarding the financial impact of the corona virus will likely be felt in 2020, 2021 and beyond.  How people negotiate their divorces will likely also be impacted too.  Will people negotiate and litigate based upon economic reality or be opportunistic if the law associated with the “old normal” benefits them?  Will the business owner in a so-so marriage decide to get out now while their income and value of their business may be lower?  This all remains to be seen, but our Family Law Practice Group at Fox Rothschild can assist navigate this “new normal” (another overused phrase.)


Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.

 

It is not unusual for deferred compensation (eg. stock options, restricted shares, RSU, REUs, and a whole host of others) to  be addressed in marital settlement agreements, either as assets divided in equitable distribution, for purposes of computing income for support, or both.  Often the language is complicated and in some agreements it is incomprehensible.  A proper goal and something that you often see is the attempt to avoid the double dip – that is, if deferred compensation is divided in equitable distribution, that same deferred compensation should not be used in the calculation of the payor’s income for support purposes in cases where there is some type of support formula based upon income.  Given that deferred compensation often vests over three or four years, when using a formula, it would not be unusual if the support is lower in the first 3-4 years because it will take the old deferred comp that was divided that long to pay out, and that long for newer, post-divorce deferred comp to start paying out.

But as I said, sometimes the Agreements are not clear and that can lead to both confusion, and future litigation over exactly what was intended at the time of the Agreement.  A perfect example of this is the case of Molloy v. Molloy , a unreported (non-precedential) Appellate Division decision released on February 7, 2020.  In this case, the parties divorced after a 26 year marriage.  In their Marital Settlement Agreement (MSA), plaintiff agreed to pay a base alimony of $66,667 per year, and an additional lump sum alimony of 33.3% of the gross pretax amount of “compensation for
lump sum alimony purposes[, ]” . . . defined as any salary above $220,000 gross per year and any incentive award, stock, restricted stock award, stock option award, bonus, commission, or other compensation that would be characterized as W-2 or 1099 income paid to [plaintiff] by his employer(s).  In addition, with regard to equitable distribution of deferred compensation, the MSA provided the defendant 200 of an 1122 award of RSUs from plaintiff’s employer, with the plaintiff retaining the rest.  Yet another paragraph of the MSA contained typical boilerplate language, as follows:

Except as provided in this [a]greement, each party may dispose of his or her property in any way. Each party waives and relinquishes any and all rights he or she may
now have or hereafter acquire under the present or future law of any jurisdiction to share in the property or the estate of the other as a result of the marital
relationship.

As one would expect, in 2018, the parties disputed whether the additional lump-sum alimony plaintiff calculated and paid to defendant was accurate for 2015 through 2017.  When the parties could not resolve their dispute amongst themselves, defendant filed a motion for enforcement claiming she was underpaid.  she included the 1122 RSUs in her calculation of plaintiff’s gross 2015 earnings and calculated his income to be $429,609.69.  Also not surprisingly, Plaintiff’s calculations differed as  he subtracted the total value of the 1122 RSUs,  The motion judge sided with the defendant, including all of the 1122 RSUs in the formula and the plaintiff appealed.

The Appellate Division rejected plaintiff’s argument the lump sum alimony calculation required the motion judge to include defendant’s share of the RSUs noting that the MSA clearly stated that  [i]ncreases in [defendant’s] earned income shall reduce [plaintiff’s] alimony obligation.” Therefore, the Appellate Division held that the liquidation of defendant’s share of the RSUs constituted a realization of unearned income and did not affect alimony.  The Appellate Division also rejected plaintiff’s argument the MSA created an “impermissible double-dipping” pursuant to Innes v. Innes because the RSUs were not a retirement benefit but earned income (though I believe that this misses the point of Innes).

Notwithstanding, the Appellate Division was constrained to  remand the matter for a plenary hearing because the parties’ common intent respecting the treatment of the 1122 RSU tranche is not
readily discernable. The Court noted that:

Indeed, it is possible to read the additional lump sum alimony language consistent with defendant’s argument the parties intended to include plaintiff’s share of the 1122 tranche in the calculation of the additional lump sum alimony. However, when the provision is read in conjunction with the parties’ mutual express waiver of any interest in the other’s equitable distribution, plaintiff’s argument the 1122 tranche was not a part of the lump sum alimony calculation is equally plausible. Moreover, the “[e]xcept as provided in this [a]greement”
language contained in the waiver paragraph did not resolve whether plaintiff’s share of the RSUs were excluded from the alimony calculation because the parties had opposite explanations regarding the reason for the disproportionate distribution of the RSUs in question. The motion judge’s findings did not resolve these issues. Therefore, a plenary hearing was necessary to determine the parties’ common intention regarding the 1122 RSUs.

The point again is that when you are dividing deferred compensation and/or using a formula for alimony and/or child support that is based upon a percentage of income, the language of the agreement must reflect that parties’ intent.  In fact, the language is critical.  For instance, in the 2004 reported decision Heller-Loren v. Apuzzio, the parties’ MSA included a provision that the child support would be enhanced by 11.6% of the father’s gross income over $180,000.  Seems clear enough, right?  However,  Property Settlement Agreement specifically defined gross earned income as “all gross wages, commissions, salaries, bonuses and income from bonuses.”   Elsewhere in the Agreement stock options are mentioned but the specific phrase “stock options” does not appear within the definition “income[.]”   In that case, despite clearly being part of the father’s earned income, the stock options were excluded by the trial court and Appellate Division because they were not included in the definition of gross income.  It seems like a simple “including but not limited to” and/or some reference to all income from employment in whatever form could have resolved the issue but because the definition was specific, the stock option income was excluded, to the detriment of the children.

The bottom line is that care must be taken in the agreement to flesh out the intent when dealing with deferred compensation so you don’t run into a situation where there is a double dip – i.e. the same asset is being both divided and used in the support calculation.  Otherwise, the parties may buy themselves the costs of litigation that exceed the amount in dispute.


Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.

 

I received an email earlier this week containing guidelines for parents who are sharing custody and parenting time of their children during the Coronavirus Pandemic which was prepared by the American Academy of Matrimonial Lawyers (AAML) and the Association of Family and Conciliation Courts (AFCC).   It is reproduced, in full, below.  Obviously, we are all experiencing a “new normal”, at least for the next several weeks, if not longer.  Their guidelines certainly provide good for for thought on how to minimize, to the extent possible, added stress on children of divorce.  Stay safe.

1. BE HEALTHY
Comply with all CDC and local and state guidelines and model good behavior for your children with intensive hand washing, wiping down surfaces and other objects that are frequently touched, and maintaining social distancing. This also means BE INFORMED. Stay in touch with the most reliable media sources and avoid the rumor mill on social media.

2. BE MINDFUL
Be honest about the seriousness of the pandemic but maintain a calm attitude and convey to your children your belief that everything will return to normal in time. Avoid making careless comments in front of the children and exposing them to endless media coverage intended for adults. Don’t leave the news on 24/7, for instance. But, at the same time, encourage your children to ask questions and express their concerns and answer them truthfully at a level that is age-appropriate.

3. BE COMPLIANT with court orders and custody agreements.
As much as possible, try to avoid reinventing the wheel despite the unusual circumstances. The custody agreement or court order exists to prevent endless haggling over the details of timesharing. In some jurisdictions, there are even standing orders mandating that, if schools are closed, custody agreements should remain in force as though school were still in session.

4. BE CREATIVE
At the same time, it would be foolish to expect that nothing will change when people are being advised not to fly and vacation attractions such as amusement parks, museums, and entertainment venues are closing all over the US and the world. In addition, some parents will have to work extra hours to help deal with the crisis and other parents may be out of work or working reduced hours for a time. Plans will inevitably have to change. Encourage closeness with the parent who is not going to see the child through shared books, movies, games and FaceTime or Skype.

5. BE TRANSPARENT
Provide honest information to your co-parent about any suspected or confirmed exposure to the virus, and try to agree on what steps each of you will take to protect the child from exposure. Certainly, both parents should be informed at once if the child is exhibiting any possible symptoms of the virus.

6. BE GENEROUS
Try to provide makeup time to the parent who missed out, if at all possible. Family law judges expect reasonable accommodations when they can be made and will take seriously concerns raised in later filings about parents who are inflexible in highly unusual circumstances.

7. BE UNDERSTANDING
There is no doubt that the pandemic will pose an economic hardship and lead to lost earnings for many, many parents, both those who are paying child support and those who are receiving child support. The parent who is paying should try to provide something, even if it can’t be the full amount. The parent who is receiving payments should try to be accommodating under these challenging and temporary circumstances.

Adversity can become an opportunity for parents to come together and focus on what is best for the child. For many children, the strange days of the pandemic will leave vivid memories. It’s important for every child to know and remember that both parents did everything they could to explain what was happening and to keep their child safe.

____________________________________________

 

Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.

 

Yesterday, I blogged on the S.W. v. G.M. case in a post entitled More from the Appellate Division on Lifestyle, Foulas and the Concept of Income Equalization.  In that blog, I noted that the S.W. court also addressed the issue of life insurance to secure alimony.

It is not necessary to get into the facts of S.W. further to address this issue here, other than to point out that in an open durational alimony case, the trial  judge relied on N.J.S.A. 2A:34-23(j)(1), which states: “There shall be a rebuttable
presumption that alimony shall terminate upon the obligor spouse or partner
attaining full retirement age.” Accordingly, given the age of the husband/payor, the judge multiplied the alimony by five years, at which point husband
would reach the full social security age.  As the alimony was reversed again, so too was the life insurance obligation.

That said, Judge Mawla went further, reminding us of the purpose of life insurance to secure alimony, as follows:

A determination of the proper amount of life insurance coverage for a support obligation requires a consideration of many variables. Where a party is insurable and able to pay the necessary premiums, a life insurance death benefit should neither only meet a beneficiary’s bare needs, nor be a windfall. In the former case, unexpected changes in circumstances can leave a beneficiary with unmet needs, whereas the latter condition exposes a payor’s estate to obligations he or she never had during the marriage.

Judge Mawla then gave guidance as to how the amount should be calculated:

In the alimony context, “once the amount of the obligation is established, the present value (or more correctly, the continuing present value as the obligation decreases) should be determined.” (citation omitted)… The present-day value methodology is appropriate where there is a “known future quantity” of an obligation. Ibid. Where the alimony obligation is not readily  quantifiable because the duration of the obligation is unknown, a
trial judge may utilize an obligor’s life expectancy to determine the duration of the obligation if it is reasonable to do so.  (citation omitted)…

Additionally, a reduction in the amount of security as the obligation is satisfied is an appropriate means of assuring alimony is secured but not subject to a windfall. See Claffey v. Claffey, 360 N.J. Super. 240, 264-65 (App. Div. 2003) (stating “it is perfectly reasonable to provide for the periodic reduction or review of the amount of . . . required security to reflect the diminishing need for it as the parties age, or circumstances otherwise change.”); (citation omitted)… In some cases, where the obligation has the potential to extend beyond an assumed end date because of a change in circumstances, or where a presumption of termination has been rebutted, it may be appropriate to decrease the death benefit in smaller increments or not at all.

In alimony contexts, determining whether to use life expectancy or the presumptive retirement age, and a fixed or declining amount of security will depend on the circumstances of each case and is a matter of judicial discretion.

In S.W., the issue was reversed and remanded because there was no testimony, and only a disputed assertion regarding the husband’s potential retirement at the full  social security age. Moreover, the Appellate Division noted that because the alimony award is of an open duration and may not necessarily
terminate when plaintiff reaches the full social security age, the methodology
that the Appellate Division set forth, as noted above,  will provide the trial judge with enough flexibility to determine the extent and amount of life insurance needed.

While not much of this states anything new, what is of note is that in open durational alimony cases, calculation of the security should not necessarily end at retirement age, in recognition that alimony could continue thereafter.


Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.

 

A few weeks ago, I authored a post on this blog entitled Debunking the Myth That the Percentage Used in the So-Called “Alimony Rule of Thumb” Should Go Down as the Payer’s Income Goes Up.   That post reiterated that the Court’s cannot use formulas, but that they are often used and that people have posited a theory that when incomes go up, the percentages should go down. Therein, I showed the ramifications of that theory and juxtaposed it against the part of the alimony statute that says, “…the standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other.

Yesterday, in a reported (precedent setting) opinion in the case of S.W. v. G.M., the Appellate Division weighed in on the use of formulas (there are none), the theory of income equalization (the aforementioned portion of the statute doesn’t mean that), and required that marital lifestyle be quantified.  It also gave guidance on what should not be included in a recipient needs.  There was also an interesting discussion regarding life insurance to secure alimony which will be part of a separate post on this blog.

In this case, the parties divorced after a long term marriage.  The matter was tried to conclusion, previously appealed, and remanded back to the trial court to address the issue of alimony.  At the original trial, the court found that the five year average of the husband’s net after tax income was $1,313,000 – a finding that the Appellate Division accepted in the original appeal.  The Appellate Division also accepted the prior finding that the parties lived a wealthy lifestyle but did not save.  The Appellate Division reversed the prior alimony award of $450,000 per year because the trial judge never quantified the parties lifestyle, and thus, could not determine how the figure was derived.

On the remand, the trial judge increased the alimony to $477,504 per year net, based largely on her pendente lite budget, but again never quantified lifestyle.  Accordingly, the wife appealed again and the court reversed again.

In addressing the issue of lifestyle, the Judge Mawla reiterated the importance of quantifying the marital lifestyle, stating:

The importance of finding the marital lifestyle cannot be overstated. It is at once the fixed foundation upon which alimony is first calculated and the fulcrum by which it may be adjusted when there are changed circumstances in the years following the initial award. …

In Hughes, the parties spent more than they earned and relied on borrowing and parental support to meet the marital lifestyle. 311 N.J. Super. at 34. The trial judge discounted these additional funds and determined the lifestyle using only the family’s earned income, which the judge termed the “real” standard of living. Ibid. We held “[t]he judge . . . confused two concepts. The standard of living during the marriage is the way the couple actually lived, whether they resorted to borrowing and parental support, or if they limited themselves to their earned income.” Ibid.

In many cases, parties live above their means or spend their earnings and assets to meet expenses. In such instances, a finding of the marital lifestyle must consider what the parties spent during the marriage and not merely offer a nod to a bygone, unattainable lifestyle. In this case, the trial judge overlooked the lessons from Crews and Hughes and our instruction to find, numerically, the marital lifestyle. To the extent Crews and Hughes implicitly required that marital lifestyle be determined numerically, we now explicitly state a finding of marital lifestyle must be made by explaining the characteristics of the lifestyle and quantifying it.

In determining the marital lifestyle, trial courts were directed to consider the following:

In a contested case, a trial judge may calculate the marital lifestyle utilizing the testimony, the CISs required by Rule 5:5-2, expert analysis, if it is available, and other evidence in the record. The judge is free to accept or reject any portion of the marital lifestyle presented by a party or an expert, or calculate the lifestyle utilizing any combination of the presentations.

In this case, the Appellate Division noted that the trial court disregarded the marital budget altogether and instead supplemented the wife’s current budget with some expenses she once enjoyed during the marriage.  The Appellate Division found this methodology to be:

…problematic because it ignored the judge’s own findings that the marital lifestyle “subsumed” the entirety of plaintiff’s earnings. By application of this logic, if the judge determined the net yearly income was $1,520,268 or $126,689 per month, the alimony award allotted defendant disposable income of $36,7925 and plaintiff $89,897 per month without explanation. This was a misapplication of law because it ignored Crews and N.J.S.A. 2A:34-23(b)(4), which requires a judge consider “[t]he standard of living established in the marriage . . . and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other.”

As an interesting aside, it appears as though the Court is espousing the theory that the parties’ net income equaled their marital lifestyle.  I suspect that this will be  fertile ground for future litigation regarding the issue of lifestyle.

In rejecting the notion of either income equalization or the use of formulas to calculate alimony, Judge Mawla held:

To be clear, N.J.S.A. 2A:34-23(b)(4) does not signal the Legislature intended income equalization or a formulaic application in alimony cases, even where the parties spent the entirety of their income. Had the Legislature intended alimony be calculated through use of a formula, there would be no need for the statutory requirement that the trial court address all the statutory factors. The Legislature declined to adopt a formulaic approach to the calculation of alimony. See Assemb. 845, 216th Leg., 2014 Sess. (N.J. 2014) (declining to enact legislation computing the duration of alimony based upon a set percentage).

The Court then gave instruction regarding what should be considered, and more importantly, not considered, regarding the recipient’s need.  The court made clear that it should be the expenses related to that party, as opposed to expenses solely related to the other spouse of the children.  Specifically, the Court held:

The portion of the marital budget attributable to a party is likewise not subject to a formula. Contained in most marital budgets are expenses, which may not be associated with either the alimony payor or payee, including those associated with children who have since emancipated or whose expenses are met by an asset or a third-party source having no bearing on alimony. There are also circumstances where an expense is unrelated to either the payor or the payee but is met by that party on behalf of a child. And, as is the case here with defendant’s photography hobby, there are expenses which only one party incurred during the marriage. Therefore, after finding the marital lifestyle, a judge must attribute the expenses that pertain to the supported spouse. Only then may the judge consider the supported spouse’s ability to contribute to his or her own expenses and the amount of alimony necessary to meet the uncovered sum. Crews, 164 N.J. at 32-33.

This is interesting as it makes clear that you cannot bootstrap the expenses of the other party or the children to come to need.  On the other hand, there was no guidance as to how to deal with this added cash flow, at least with regard to child expenses that are no longer in existence.  I recently had a case where the parties while living in the same household, lived two completely difference lifestyles – one extravagant (the payer) and the other ultra conservative in terms of spending.  Had this case been decided at the time of the trial in that matter, my guess is that it would not have settled because the court may have had to fix the alimony based upon the wife’s actual expenses, as opposed to the husband’s spending- whether or not it seemed fair or squared with the part of the statute that said that neither party is entitled to a greater lifestyle than the other.

In any event, the S.W. case gives trial judges and practitioners more guidance as to how to deal with marital lifestyle.  It may also require more work of the forensic accountants who prepare lifestyle analyses as they try to parse out expenses of the payer and the children.


Eric S. Solotoff, Partner, Fox Rothschild LLPEric 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.