Opinion
DOCKET NO. A-1266-11T1
06-20-2014
MYRON M. LEVITT, Plaintiff-Appellant, v. MIRIAM JAKOBS, Defendant-Respondent.
James P. Yudes argued the cause for appellant (James P. Yudes, P.C., attorneys; Mr. Yudes and Kevin M. Mazza, on the briefs). Robert S. Raymar argued the cause for respondent (Hellring, Lindeman, Goldstein & Siegal, LLP, attorneys; Mr. Raymar, Sheryl E. Koomer, and Christy L. Saalfeld, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Waugh, Nugent and Accurso.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Union County, Docket No. FM-20-1240-08-G.
James P. Yudes argued the cause for appellant (James P. Yudes, P.C., attorneys; Mr. Yudes and Kevin M. Mazza, on the briefs).
Robert S. Raymar argued the cause for respondent (Hellring, Lindeman, Goldstein & Siegal, LLP, attorneys; Mr. Raymar, Sheryl E. Koomer, and Christy L. Saalfeld, on the brief). PER CURIAM
Physicians Myron M. Levitt and Miriam Jakobs waged a bitter and expensive divorce, settling their custody battle over their son only after the start of trial and trying their financial issues to conclusion. Following our limited remand, the parties continued to litigate several of those issues through two rounds of motions for reconsideration. Plaintiff Levitt now appeals from that portion of the final judgment valuing his interest in his medical practice for purposes of equitable distribution and the award of permanent alimony and counsel fees to defendant Jakobs. We affirm, substantially for the reasons expressed by Judge Dupuis in her thorough and thoughtful written opinions of August 10, 2011, and February 14, 2012, and her letter of March 26, 2012, correcting two clerical errors.
Jakobs withdrew her cross-appeal upon filing her responsive brief.
The parties had been married for almost nineteen years when plaintiff filed for divorce. He is a successful neuroradiologist in a large private practice. Defendant is an ophthalmologist, although she largely quit practicing about a dozen years before the divorce to devote her time to the needs of the parties' son. Much of the strife in the parties' marriage arose out of plaintiff's belief that defendant was overly involved with the boy and her refusal to resume her practice after he was enrolled in school.
The judge valued plaintiff's two percent interest in his group medical practice at $446,000, consisting of the value of his stock, his retirement compensation and his longevity bonus, and awarded defendant twenty-eight percent of that sum. Plaintiff contends that the judge erred in using the stockholder and employment agreements to value his interest in the practice instead of using the discounted cash flow approach employed by his expert. We find no error in the judge's considered decision that the practice's regularly updated corporate agreements were a better measure of value than plaintiff's expert's projection of cash flows through 2020, discounted by a rate chosen on the basis of U.S. Treasury bonds, augmented by selected risk premiums and reduced by an assumed long-term growth rate.
Valuing a closely-held corporation is a difficult, fact-sensitive task. Steneken v. Steneken, 183 N.J. 290, 297-98 (2005). There is no single prescribed, or even preferred, method. Id. at 297. The Supreme Court has endorsed the use of a trustworthy buy-sell agreement to establish value, noting that in some instances it may appropriately establish a presumptive value of a party's interest. Bowen v. Bowen, 96 N.J. 36, 45-46 (1984) (citing Stern v. Stern, 66 N.J. 340, 346-47 (1975)).
Here, the judge found that the practice's governing agreements "set forth a clear basis to determine the value of plaintiff's . . . interest" in the practice, noting that there had been thirty-two purchases or sales of stock under the formula in the stockholder's agreement in the prior ten years. A court's determination of fair value is entitled to great deference on appeal and should not be disturbed absent an abuse of discretion. Balsamides v. Protameen Chems., Inc., 160 N.J. 352, 368 (1999).
Plaintiff does not argue that the stockholder and employment agreements are in any way flawed. Rather, he contends that his expert's discounted future earnings method is "the most theoretically correct method of appraisal," largely because it is conducted on an after-tax basis. That argument, however, ignores the Court's admonition that "[t]here is no right answer" to the valuation of a closely-held corporation. Balsamides, supra, 160 N.J. at 368. His assertion that the court's valuation unfairly ignored the future tax consequences of his receipt of compensation in retirement is belied by the record. The judge did not ignore the tax consequences; she found them too speculative to serve to reduce the value of the asset, Orgler v. Orgler, 237 N.J. Super. 342, 355 (App. Div. 1989), and instead factored them into the percentage of the asset distributed to defendant, Goldman v. Goldman, 275 N.J. Super. 452, 462 (App. Div. 1994). Having considered plaintiff's arguments, we find no basis to disturb the judge's conclusions regarding the value of plaintiff's interest in his medical practice.
He does contend, however, that the judge "double-counted" his longevity bonus and stock value by adding them to the value defendant's expert assigned for all three components of plaintiff's interest in the practice. Defendant contends that the court did not err but was instead attempting to harmonize the two valuation dates offered by her expert. Plaintiff raised this issue to the trial court on reconsideration. Although adjusting several other calculations, the judge did not alter this one. We are mindful of Justice Garibaldi's caution in Balsamides that "[a]ppellate courts should take care in accepting some and rejecting other findings of the court [in valuation cases], as that may disturb the logic and equitable balance of the trial court's other conclusions." Balsamides, supra, 160 N.J. at 368. Having reviewed the record, we cannot find the judge abused her discretion in assigning a value of $446,000 to plaintiff's interest.
The parties' other assets subject to equitable distribution were evenly divided between the parties.
We likewise find no basis to disturb the judge's award of permanent alimony in this long-term marriage. The judge ordered plaintiff to pay $81,000 a year in permanent alimony after imputing income of $125,000 to defendant. The judge considered and made detailed findings on each of the statutory factors set forth in N.J.S.A. 2A:34-23b. Plaintiff's contention that the judge "ignored the credible evidence [ad]duced at trial regarding the defendant's earning capacity, educational level, employability, and willful underemployment" simply cannot be squared with the judge's careful findings.
Plaintiff does not appeal the $70,000 in rehabilitative alimony ordered until October 1, 2013 to allow defendant to update and improve her surgical skills.
The parties aggressively litigated the issue of alimony. Both parties testified at length about defendant's education, training and employment history and presented the testimony of vocational rehabilitation experts. Plaintiff contended that defendant did not need alimony as she was perfectly capable of finding employment as an ophthalmological surgeon at a salary of between $288,277 and $349,766 after a short period of retraining. Defendant contended that her responsibilities for the parties' fourteen-year-old son allowed only part-time work, that she was never comfortable performing surgery and that her surgical skills were limited and outdated. She maintained that she should be able to work part-time and earn approximately $60,000 in a non-surgical practice.
Judge Dupuis found that defendant made only "half-hearted" efforts to find work throughout the course of the litigation despite the court's continued admonitions to her. The judge found no reason why defendant could not work full-time and concluded that she was underemployed without just cause. The judge, however, rejected plaintiff's contentions as to defendant's earning capacity. Specifically, the judge rejected
[plaintiff's expert's] conclusion that defendant could earn $288,277 to $349,766. He apparently gave no weight to the fact that while she has 11 years['] experience[,] that experience took place 12 years ago and that defendant is 52 years old.[]
While defendant was exaggerating her lack of surgical skill[,] there can be no doubt that her skills are outdated and in need of improvement. Plaintiff believes she can work in the lucrative area of ophthalmological surgery. The court believes he is unduly optimistic. She has performed a minimal amount of surgery in the last few years. The court finds her testimony that she is not up to date on techniques credible.
Further, the court finds she is suffering from a genuine lack of confidence. Lack of confidence is not an inspiring trait in a surgeon. Her lack of recent experience is not the insurmountable barrier she would have the court believe. She will need to find a job opportunity where her skills can be enhanced, perhaps apply for a fellowship, seek additional hands on training and similarly apply herself to improving her surgical skills.
Defendant's employment was interrupted by health issues before the birth of the parties' child. She was diagnosed with breast cancer at age thirty-five and underwent a bilateral mastectomy. Although she worked through successive surgeries and reconstructive procedures, she testified that her employer was not satisfied with her work and did not renew her contract.
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The judge concluded that
Plaintiff seeks to highlight defendant's anxiety issues as to [the parties' son] but apparently fails to see the same traits affect her ability to perform as a surgeon. It appears to the
court that the same anxiety that caused her controlling behavior as to [the parties' son] drives her anxiety as to surgery. Defendant will have to work on a full time basis to overcome her anxiety and set a career goal of becoming more confident but the court believes she is going to be limited to procedures performed in an office environment.
The court believes that with concentrated effort she can earn $125,000 by October 2013 as a non-surgical ophthalmologist.
We reject plaintiff's argument that the judge's determination that defendant could earn $125,000 per year "was seemingly plucked out of the air, without any evidential basis whatsoever." Although a board-certified ophthalmologist, defendant never earned more than $135,000. The judge's assessment of her earning capacity is very close to the mid-range of the salary her expert testified he would expect her to earn, especially in light of his testimony that the figures would be lower because women ophthalmologists tend to earn less than their male counterparts. The judge's findings on alimony are well-supported by substantial credible evidence in the record and are entitled to substantial deference on appeal. Robertson v. Robertson, 381 N.J. Super. 199, 206 (App. Div. 2005). We find no cause to conclude that the judge abused her considerable discretion in making the alimony award. See Jacobitti v. Jacobitti, 135 N.J. 571, 575 (1994).
Finally, we reject plaintiff's argument that the judge erred in ordering him to pay $200,000 of defendant's counsel fees. It is well-settled that the award of counsel fees and costs in a matrimonial action rests in the discretion of the trial court. R. 5:3-5(c); R. 4:42-9(a)(1); Guglielmo v. Guglielmo, 253 N.J. Super. 531, 544-45 (App. Div. 1992). "An appellate court will disturb a trial court's determination on counsel fees only on the 'rarest occasions, and then only because of a clear abuse of discretion.'" J.E.V. v. K.V., 426 N.J. Super. 475, 492 (App. Div. 2012) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)). This is not one of those occasions.
The parties had spent over $1.5 million in fees at the time of the final judgment, a figure the court found "nothing short of astonishing given the issues and the assets of the parties." Plaintiff's total fees and costs, including those for experts, were $8 83,111. Defendant's were $710,315. After an extended discussion of the factors set forth in R.P.C. 1.5(a) and Rule 5:3-5(c), the judge determined that although the fees were "unreasonable and unconscionable," they were presumably incurred at the parties' direction and neither had litigated in bad faith. Finding that plaintiff had managed to almost fully fund his fees, largely from exempt assets, and that defendant had paid only thirty percent of her fees, the judge determined to require plaintiff to contribute $240,000 towards defendant's legal fees, reduced to $200,000 on plaintiff's motion for reconsideration.
Plaintiff's argument, that "it was the defendant's actions and positions" which caused the parties to incur such significant fees, is not supported by the record. He does not point us to any facts that could support his claim that the judge abused her discretion in awarding fees.
We affirm substantially for the reasons expressed by Judge Dupuis in her written opinions of August 10, 2011 and February 14, 2012.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION