With the economic downturn and slow down in the economy since 2008, there has been a lot more post-judgment litigation to reduce alimony and child support. Much of this litigation has been legitimate; other has been brought by opportunists, throwing around buzzwords and crying about the economy when there is really no substantial change of
As we know, limited duration alimony ("LDA") is alimony for a definite period of time. Unlike rehabilitative alimony where there is a goal in mind to be reached by the end of the rehabilitation period and which can possibly be extended of the goal has not been reached, per the statute, the term of LDA is not supposed to be able to be modified except for "unusual circumstances." Of course, even limited duration alimony is subject to modification based upon "changed circumstances." Of note, however, is that retirement has been recognized as a possible change of circumstances sufficient to seek a modification.
The issue of whether early retirement could be used by an alimony payor in order to terminate his LDA obligation was recently addressed in the case of Hendrickson v. Hendrickson, an unreported (non-precedential) opinion released on November 5, 2012. In that case, the parties agreed to an 8 year term of LDA at the time of the divorce in 2006, in the amount of $265 per week, that actually was reduced to $145 per week to take into account that the wife’s child support obligation because the husband had custody of the children.
The husband had been working at Fort Monmouth for more than 30 years when it closed in 2011. The husband asserted that though he had been offered a position in Aberdeen, Maryland, the net effect of the transfer would have resulted in a reduction of income and increased expenses. Moreover, he was able to retire for health reasons and collect his retirement benefits. As a result of a claimed inability to pay, the husband filed a motion to terminate his LDA obligation.
The trial court denied the request finding that the early retirement was not a change of circumstances. An unsuccessful motion for reconsideration was denied, as well. The Appellate Division affirmed the decision, but for different reasons.
Inflation impacts everyone, right? As a result, one would think that alimony would routinely be subject to cost of living adjustments (COLA). In fact, we know that Rule 5:6B of the New Jersey Rules of Court states that "(a)ll orders and judgments that include child support entered, modified, or enforced on or after [the …
When settling a case, the parties and their lawyers can be far more creative in settlement then a judge can be if the case is tried. While family judges have wide discretion in their decision making, creativity is crafting the most beneficial result for both parties is rarely something they can do. In fact, in many ways, they are constrained from the type of creativity that we see every day in divorce agreements.
What if you are a high earner, but your income fluctuates greatly from year to year? While a judge will likely have no choice but to determine your average income over 3 to 5 years and base support upon that as well as the rest of the statutory factors, you may want to agree on some kind of formula so that there is fairness year over year, i.e. you pay more in a better year and less in a down year. For example, if your average income is $2,500,000 but your income fluctuates between $1 million and $4 million per year. You would really hate paying alimony in those years you only make $1 million. If a judge decided this case using averages, you might be forced to pay your entire net income, or more, to you ex spouse in the down year. Similarly, a judge could never say that support "automatically" is reduced or even reviewed if your income is less than $X in the future.
This concept was reiterated again by the Appellate Division on October 29, 2012 in an unreported (non-precedential) decision in the case of Means v. Snipes. In this case, after a trial, the judge decided that in the event that defendant’s annual income fell below $2 million, he would receive a reduction in alimony. This is the one thing that both parties agreed was in error – a rare agreement in a very contentious case.
In a perfect world, marital settlement agreements (MSAs a/k/a Property Settlement Agreements) are crystal clear and cover every possible contingency under the sun (I say this as when first drafting this post, I was being contacted frantically by a client regarding custody provisions in the event of school closure because of hurricane.) That perfect world rarely exists for many reasons, including the main reason that most cases would never settle and/or the cost would be outlandish if every possible contingency is contemplated and negotiated. That said, we do our best to address to the most germane and likely issues.
If the document cannot cover every possible thing under the sun, at least the final document should be clear and include the parties’ actual meeting of the minds on the included issues. Sadly, this does not always happen either. Sometimes, the parties meeting of the minds is really not a meeting of the minds – that is, they each believe that the settlement is something else but the language of the agreement is vague or imprecise enough where they both think that they are right. Some people actually do this on purpose to keep an argument on a "hot button" issue alive for the future. Other times, it is simply inartful, to put it kindly, or down right bad drafting that causes future problems.
If a party can convince a court that the terms of the agreement represent a mutual mistake, perhaps there is some relief and the agreement can be re-formed. That said, more often then not, one of the parties gets really hurt by virtue of the poor drafting.
This appears to be what happened in the case of Rozier v. Byrd, an unreported (non-precedential) opinion released by the Appellate Division on October 26, 2012. In this case, either someone was trying to be cute and the law of unintended consequences jumped up to bite him, or he was the apparent victim of a poorly drafted agreement.
The Simkin v. Blank case in New York has been a frequent topic on this blog. It was game over for Mr. Simkin today when the NY Court of Appeals ruled that this Madoff victim could not revise his divorce deal.
We first wrote when the case was filed. In this case, in June 2006, the parties agreed to evenly split the $5.4 million in an account they had with Madoff Securities. As a result, the husband gave the wife $2.7 million in cash, and retained the account. As a result of the alleged Madoff Ponzi scheme that has essentially rendered the account worthless, the husband filed suit seeking the $2.7 million that he paid the wife. The husband alleges that because the account turned out to be valueless, the spirit of the agreement was broken.
We next wrote when the trial court first ruled, dismissing the matter. I even participated in a podcast about this ruling. Acting New York State Supreme Court acting Justice Saralee Evans decided that the husband is stuck with his decision to keep the account instead of withdrawing his money before the December 2008 collapse of Bernard L. Madoff Investment Securities LLC. The Justice noted that while the husband claimed the Madoff account held no assets, he did not allege it had no value. Key to the decision was that in 2006 and "the several years after that plaintiff maintained this investment," the account "could have been redeemed for cash, presumably significantly in excess of its 2004 value." In addition, the Justice held that "An investor’s ability to redeem an account for value, was the assumption on which the parties relied in dividing their property and in doing so they made no mistake."
The next installment was about the Appellate Division’s decision which reversed the trial court decision and reinstated the Complaint. The Appellate Court found that dismissal was improper and the husband had the right to try to pursue both the issues of mutual mistake (i.e. there never really was an account) and that the wife was unjustly enriched. In coming to its decision, the majority of the court held:
The dissent states: “[a]t the time of the agreement, Steven had an account in his name with [Madoff].” Untrue. Steven never had an account in his name with Madoff; on Madoff’s own admission there were no accounts within which trades were made on behalf of investors.
The dissent then states, “Steven liquidated part of the account to fund his payments to Laura.” Untrue. In Madoff’s Ponzi scheme what appeared to Steven and Laura to be a partial liquidation of an account was simply a payment to Steven that came from funds deposited by a more recent “investor” in what the “investor” believed was his own account.
The dissent further observes, “[Steven] did not liquidate the rest of the Madoff account … and he continued to invest in it.” Untrue. There was no account which could be liquidated, as became apparent when Madoff received $7 billion worth of “liquidation” calls from investors in 2008. Nor was Steven “investing” in an account; his further contributions went directly to pay other “investors” in the scheme.
While decisions from the Appellate Division addressing a former professional athlete’s motion to reduce his support obligations do not come around all that often, we have, in fact, previously blogged on the issue. Now from the Appellate Division comes the unpublished (not precedential) matter of Villone v. Villone, where the Appellate Division strictly relied on “triggering” language in the parties’ Marital Settlement Agreement in reversing and remanding a trial court’s decision that a former Major League Baseball pitcher was not entitled to a modification of support.
The matter involved that of former pitcher Ron Villone, who has played for more franchises than almost anyone else in the history of the game (an interesting record that was recently broken) – 12 to be exact as of Spring Training 2011, when he was released by the Washington Nationals and signed with the Somerset Patriots (an independent, minor league baseball club). He became well known for his travels, earning the nickname “Suitcase” Villone from teammates. Also interesting is that his current wife is on the reality show “Baseball Wives”, which, in the context of asking for a support reduction could provide potential evidence for his former spouse to use against him in opposing such request at the trial level.
In these uncertain times, it seems as though everyone is talking about the impact of the economy. We’ve posted many blogs about proving changed circumstances for an increase or decrease in child support and/or alimony as well as a modification of parenting time. You can read a few of those blogs here, here or here.
The trend continues. In the recent unpublished Appellate Division decision of Rosenthal v. Whyte, A-1776-10T4, decided December 5, 2011, stemming from two Orders from the Cape May County trial court, the Court affirmed the lower court’s Orders denying Ms. Whyte’s motions to modify custody and child support. To put it simply, Ms. Whyte failed to meet her burden that enough of a change had occurred to warrant a modification of the parties’ 2008 Property Settlement Agreement (“PSA”).
The parties’ 2008 PSA provided for an anticipated move by Ms. Whyte with the minor child to upstate NY, more than 500 miles from Mr. Rosenthal’s Cape May county residence. It also provided that Ms. Whyte was leaving her job as a school teacher to pursue a business opportunity in NY state. Child support was set with these facts in mind. Mr. Rosenthal’s parenting time was set forth as one weekend each month and one continuous month every summer with an additional week over the summer.
An interesting issue was recently considered by the Court in the case of Muller v. Muller. Specifically, the Appellate Division examined whether a husband could compel the sale of the marital home when he had conveyed his interest by way of deed about ten years earlier, but the parties’ Property Settlement Agreement (“PSA”) had provided for the husband’s continued ownership.
The parties in Muller were married for 17 years. When they divorced in 1990, they entered into a PSA, which, in part, provided as follows:
A. Husband and Wife agree to divide equally the personalty . . . upon sale of the premises or child’s emancipation, whichever shall first occur.
B. Upon execution of contract of sale of the above premises, Husband agrees to put his interest in the marital home in trust for Child.
. . . .
A. Husband agrees to pay the mortgage payments [on the marital home] . . . until the time that child graduates from college, or reaches the age of 22, whichever shall first occur[.]
The husband paid the mortgage from the time of the divorce until around 1999 when he defaulted on the payments. The mortgagee instituted foreclosure proceedings in or around July of 2000. In order to avoid foreclosure, the wife borrowed about $60,000 and refinanced the property. The husband executed a deed and conveyed the wife his ownership interest in the property for consideration of $50,000. As a result, the wife exonerated him of the debt the he had incurred by defaulting on the mortgage payments. At the point, the child was 21 years old and had graduated from college.
An interesting decision on the issue of support modifications came down last week from the Appellate Division in the unpublished (not precedential) matter of Schechter v. Shechter. There, the husband in 2004 agreed via settlement to pay child support and 12 years of limited duration alimony. In July 2010, he filed a motion to modify his support…