Opinion
DOCKET NO. A-5751-13T2
08-01-2016
LUCY MESHULAM, Plaintiff-Appellant, v. KFIR MESHULAM, Defendant-Respondent.
Howard B. Felcher argued the cause for appellant (Law Offices of Howard B. Felcher, PLLC, attorneys; Mr. Felcher, on the briefs). Lauri R. Steinberg argued the cause for respondent (Law Office of Douglas M. Pine, LLC, attorneys; Ms. Steinberg, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Ostrer and Haas. On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-1827-10. Howard B. Felcher argued the cause for appellant (Law Offices of Howard B. Felcher, PLLC, attorneys; Mr. Felcher, on the briefs). Lauri R. Steinberg argued the cause for respondent (Law Office of Douglas M. Pine, LLC, attorneys; Ms. Steinberg, of counsel and on the brief). PER CURIAM
In this post-judgment matrimonial matter, plaintiff Lucy Meshulam appeals from the Family Part's June 30, 2014 order awarding attorney's fees to defendant Kfir Meshulam and denying fees to her. The cross-applications for fees followed the parties' consent agreement resolving all other issues raised in their post-judgment motions. Having considered the parties' respective arguments in light of the record and applicable principles of law, we affirm the finding of bad faith on the part of plaintiff and remand for reconsideration of the total fee award in light of defendant's own behavior and the results obtained.
I.
We discern the following facts from the record, noting that plaintiff's omission of critical documents from the appendix has hampered our review. See R. 2:6-1(a)(1) ("The appendix . . . shall contain . . . such other parts of the record . . . as are essential to the proper consideration of the issues . . . .").
The parties were divorced December 12, 2011 after over seven years of marriage. The judgment of divorce included a property settlement agreement (PSA) dated December 9, 2011. The PSA obliged defendant to pay unallocated support of $1600 monthly from December 2011 to August 2012, and limited duration alimony of the same amount from September through November 2012. The parties agreed to equally share custody of their one child on alternating weeks. Defendant was obliged to pay $60 in weekly child support. Upon termination of alimony, child support would be subject to recalculation.
The record does not include the child support worksheet, which would reflect the parties' respective incomes upon which the $60 award was predicated. See R. 5:6A ("A completed child support guidelines worksheet . . . shall be filed with any order or judgment that includes child support that is submitted for the approval of the court.") Both parties owned and operated their own businesses — defendant, a maintenance and renovation business, and plaintiff, a cosmetics business — which likely complicated calculation of incomes. For the purpose of recalculation of child support after alimony ended, plaintiff's income was to be imputed to be no less than $31,000.
Among the equitable distribution provisions, the parties agreed to retain their respective homes and businesses.
Apparently, an issue was raised prior to the divorce about the appropriate calculation of defendant's income. The record includes a report from a court-appointed forensic accountant who examined defendant's income tax returns for 2007 through 2010. The accountant questioned various deductions and calculations, which he believed understated defendant's annual adjusted gross income by as much as roughly $25,000, and perhaps $12,000 a year more. The accountant ultimately concluded that defendant's gross personal income ranged between roughly $53,000 and $79,000 for the four years. However, both parties acknowledged in the PSA that they had "full and complete knowledge of the income and property of the other."
Although the PSA did not establish an income level for defendant, defendant agreed to be responsible for two-thirds of the child's college education. Assuming that allocation mirrored the parties' respective incomes, and plaintiff's was imputed to be no less than $31,000, defendant's income would have been at least $62,000 — within the range of the forensic accountant's calculations.
At the end of 2012, defendant's counsel sought plaintiff's tax return to recalculate child support. After several months of delay, plaintiff produced her 2011 tax return, which reflected an adjusted gross income more than $100,000 above the minimum amount to be imputed to her.
Defendant then filed a motion to set aside the property settlement agreement on the grounds that plaintiff fraudulently concealed her 2011 income. Neither defendant's notice of motion, nor any supporting certification of defendant is included in the record. However, based on the prayer for relief in defendant's proposed form of order, we understand defendant requested that the "the financial portions of the parties' Property Settlement Agreement . . . [be] set aside due to the fraudulent concealment of the Plaintiff's income"; plaintiff be compelled to refund all spousal and child support paid to her since December 2011; and plaintiff pay child support to defendant.
Plaintiff responded with a series of motions that she contends were designed to establish that defendant did not rely on her alleged concealment of income in entering the PSA. Rather, she contended defendant was motivated to enter the PSA to avoid disclosure of his unreported income at a divorce trial, which would have obliged the court to make a report to tax enforcement officials pursuant to Sheridan v. Sheridan, 247 N.J. Super. 552, 565 (Ch. Div. 1990).
Plaintiff sought an order denying defendant's motion. In the alternative, she sought a plenary hearing. She also sought an order disqualifying defendant's attorney and her law firm, who had also represented him in the negotiation of the PSA, and their joinder as necessary and indispensable parties. The supporting certification is not included in the record.
By order entered July 8, 2013, the court denied without prejudice all requests for relief, except to grant a "Plenary Hearing relative to Defendant's requests to set aside the Property Settlement Agreement and recalculate Defendant's child support obligation . . . ." However, in a separate "order for plenary hearing" the court stated that the hearing would address only the "limited factual . . . issues raised in the motion and cross-motion."
Specifically, with respect to the motion to disqualify and join defense counsel, the court ordered that plaintiff's counsel "shall file a motion for leave to file and serve an amended Complaint/Third Party Complaint as to this issue. . . ." The court set a schedule for discovery, required both parties to file updated case information statements, and required the parties to contact the same accountant they used pre-judgment "to assist them with determining child support for [the child] and . . . their respective incomes." The matter was scheduled for an early settlement conference in September 2013, and a court conference on August 20, 2013. No hearing date was set. A transcript of the court's July 8, 2013 oral decision was not provided to us.
Plaintiff's counsel then filed the disqualification-joinder motion, supported by a certification of counsel that is not included in the record. However, based on the notice of motion, plaintiff sought to disqualify defendant's counsel based on an alleged conflict of interest. The court denied the motion without prejudice on August 30, 2013. The full transcript of the argument and the court's statement of reasons was not provided to us.
Defendant did not file a CIS as ordered. When the issue was raised, defendant's counsel asserted that defendant did not file one because there was no material change in his financial circumstances.
On October 8, 2013, defendant filed a motion to compel plaintiff to submit answers to interrogatories. The next day, plaintiff filed a motion seeking an order for multiple forms of relief: (1) finding that defendant had waived his attorney-client privilege as to communications that preceded his signing the PSA; (2) compelling current counsel — who also represented defendant when he entered the PSA — to submit to a deposition; (3) compelling defendant to respond to requests for discovery, which were not provided to us; and (4) compelling defendant's prior counsel to certify that she transferred her complete file to subsequent counsel, or compelling prior counsel to submit to a deposition.
By order entered November 1, 2013, the court, by a new judge assigned the case, denied without prejudice plaintiff's requests to pierce defendant's attorney-client privilege and depose defendant's counsel. The court granted in part the motion to compel defendant to respond to discovery, identifying selected items in the notice to produce; and to respond to a specific interrogatory, which is not before us. The court granted the application requiring defendant's prior counsel to certify that she turned over her file to defendant. The court reserved decision, pending the plenary hearing, on the parties' competing requests for counsel fees.
Defendant had also filed a motion returnable November 1, 2013, to compel plaintiff to respond to outstanding interrogatories.
Plaintiff then sought interlocutory review, by this court and the Supreme Court, of the court's denial of her motion for an order "deeming Defendant's attorney-client privilege to have been waived as a result of his instituting an action to set aside a Property Settlement Agreement based upon allegations of Fraud wherein he placed in issue all considerations reasonably relied upon in his agreeing to same." Plaintiff also sought a stay of the plenary hearing. This court denied the motion December 13, 2013, and the Supreme Court denied the motion on March 25, 2014.
Meanwhile, the court-appointed accountant produced a report, dated November 20, 2013, concluding that defendant's income had also increased substantially in 2011. The gross receipts of his business rose to $342,000 in 2011, dipping back to $252,000 in 2012. By contrast, it ranged between roughly $222,000 and $252,000 in 2007 to 2009. The accountant again concluded that defendant had taken unjustified deductions, including deductions for personal legal fees and other personal expenses. He concluded that defendant's gross personal income in 2011 and 2012 was $124,731 and $92,406, which was substantially above the levels disclosed pre-divorce of $64,141 (2010), $52,627 (2009), $79,311 (2008), and $73,744 (2007).
Plaintiff filed a motion in limine in advance of the plenary hearing seeking to permit introduction of (1) the accountant's report; (2) evidence that defendant entered into the PSA to avoid disclosing his "substantial under-reporting of income" and the increase in his 2011 income; and (3) evidence that defendant failed to file an updated CIS to conceal the increase in his 2011 income. The record does not include the supporting certification, or the transcript of oral argument.
In an order entered April 3, 2014, the court allowed the accountant's reports to be introduced into evidence, but denied the other requests for relief. The record does not include the judge's statement of reasons.
On April 24, 2014, the parties came before the court to enter into a consent order, resolving the issues raised by defendant's May 17, 2013 motion, except for the parties' competing claims for counsel fees. The order provided that the 2011 PSA would remain in effect, but neither party would be obliged to pay child support to the other. Allocation of college expenses would be deferred, given the child's young age. Defendant waived "with prejudice" all other claims asserted in his motion.
The court then heard argument on the counsel fee issue. Plaintiff's counsel certified that his client should be awarded over $118,000 in fees. He argued that the results of the settlement were positive for plaintiff, and she would have agreed to the consent order at the outset of the motion practice, although counsel provides no certification of plaintiff to that effect. Citing the accountant's report, counsel contended that because defendant concealed his own income increase, his unclean hands precluded him from obtaining fees. Counsel suggested the court was obliged to report defendant's case to tax authorities. He also argued that his counterpart failed to bill defendant every ninety days, disqualifying counsel from recovering fees.
Defense counsel contended that her client settled the case because plaintiff's aggressive motion practice — including efforts to disqualify her — had made litigating too costly, although counsel provides no certification of defendant to that effect. Defense counsel sought reimbursement of her fees of over $41,000, which she said was largely attributable to responding to plaintiff's motions. Counsel asserted that the matter did not settle earlier because of plaintiff's objection to paying defendant. She also refuted the argument that she had not billed her client regularly.
The judge found no basis to refer the matter to tax authorities, and stated, "the issue really had to do with the Plaintiff, it didn't have to do with the Defendant. . . ." She said the report did not show defendant "was doing anything improper, because there was no testimony about that." She noted that defense counsel argued that "there are some deductions you can take for income tax purposes that you can't for child support [purposes]." The judge stated that "[t]his plenary hearing has been exclusively focused upon your client's conduct. . . . There was never any issue and there could have been an issue raised by the Plaintiff as to what the Defendant was doing. That wasn't an issue that was ever raised." However, the court then acknowledged, "[e]ven though there were efforts on your part including the utilization of [the accountant's] report again to involve the Defendant, that's never been the reason for the plenary hearing, it's never been the focus."
The court issued a decision on June 30, 2014, denying plaintiff's fee application and granting defendant's in the amount of $25,858.76. The judge rejected plaintiff's argument that she had met the factors identified in Rule 5:3-5(c).
While Plaintiff claims that the application for counsel fees has been "necessitated by Defendant's institution of an action to set aside the parties' [PSA] based upon fraud," it is the Court's view that the majority of the legal fees engendered by Plaintiff's counsel on her behalf and incurred by Defendant arise out of Plaintiff's consistent effort to divert attention from the Court ordered Plenary Hearing issues, i.e. whether the parties' Agreement should be set aside due to Plaintiff's fraudulent concealment of her income, and attempt to focus attention on issues outside the scope of the Plenary Hearing such as Defendant's income.
The judge also reviewed the factors under R.P.C. 1.5(a). In particular, the court found that "[p]laintiff was virtually unsuccessful in any Motion made" in the trial or appellate courts, save the direction that defendant answer one interrogatory and provide four documents. See R.P.C. 1.5(a). The court also found plaintiff's counsel's fees of $575 and associate's fee of $375 to exceed the hourly rate charged by other matrimonial attorneys in the area.
Contrary to the court's conclusion, counsel addressed the results at length below a subheading entitled "RESULTS."
In granting in part defendant's request for counsel fees, the court found that "Plaintiff acted in bad faith by filing unnecessary motions against Defendant which unsuccessfully attempted to divert the Court from the limited and exclusive [issue] before the Plenary Hearing Court which was to evaluate
. plaintiff's fraudulent concealment of her income." The court cited plaintiff's disqualification and joinder motion; the motion to pierce the attorney-client privilege; and the motion in limine, in which plaintiff sought to introduce evidence about defendant's motivation to settle the divorce. She concluded the motions were an effort to distract the court from "the sole and undisputed issue, i.e. whether the parties' Agreement should be set aside due to Plaintiff's fraudulent concealment of her income." As for the amount awarded, the court found that defense counsel's hourly rate of $250 was reasonable, and defendant "has been successful on virtually all motions in this matter." The court excluded fees incurred by defendant in preparing for the hearing to set aside the PSA, engaging in settlement discussions, and responding to discovery, as "[t]he time devoted in these areas cannot be attributed to Plaintiff's 'bad faith' conduct."
On appeal, plaintiff presents the following issues:
POINT I
THE STANDARD OF REVIEW WHERE NO HEARING HAS BEEN CONDUCTED AND WHERE THE CREDIBILITY OF WITNESSES ARE NOT IN ISSUE.
POINT II
DEFENDANT DOES NOT RECEIVE "IMMUNITY" FOR SHERIDAN VIOLATIONS.
A. Plaintiff is Entitled to Explore All Motivations Occasioning a Settlement.
B. Sheridan Violations Must be Reported and "Unclean Hands" Precludes an Award of Legal Fees.
POINT III
PLAINTIFF'S APPLICATION ASSERTING THAT DEFENDANT WAIVED HIS ATTORNEY-CLIENT PRIVILEGE WAS PROPER.
A. The Attorney-Client Privilege is Waived in Actions for Fraud.
B. A Finding of Waiver Was Warranted Under the In Re Kozlov Tripartite Test.
POINT IV
DEFENDANT'S INCOME IS RELEVANT TO THE ISSUE OF LEGAL FEES.
POINT V
FAILURE TO COMPLY WITH APPLICABLE RULES, PRECLUDE[S] AN AWARD OF LEGAL FEES TO THE DEFENDANT.
POINT VI
THE RESULTS OBTAINED.
POINT VII
THE LOWER COURT FAILED TO ARTICULATE HOW IT ARRIVED AT THE SPECIFIC DOLLAR AMOUNT IN THE LEGAL FEE AWARD.
POINT VIII
PLAINTIFF'S APPLICATION FOR LEGAL FEES SHOULD HAVE BEEN GRANTED.
II.
A.
We generally accord deference to the family court based on its special jurisdiction and expertise. Cesare v. Cesare, 154 N.J. 394, 411-13 (1998). We defer to the court's factual findings if "supported by adequate, substantial, and credible evidence in the record." D.A. v. R.C., 438 N.J. Super. 431, 451 (App. Div. 2014) (citing Cesare, supra, 154 N.J. at 411-13). However, we owe no deference to factfindings that are not based on witness testimony or credibility findings. Yueh v. Yueh, 329 N.J. Super. 447, 461 (App. Div. 2000). We review de novo the trial judge's interpretation of the law and legal conclusions. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
We review for an abuse of discretion a trial judge's award of attorney's fees, Strahan v. Strahan, 402 N.J. Super. 298, 317 (App. Div. 2008). While this standard "defies precise definition," we may find an abuse of discretion when a decision "rest[s] on an impermissible basis" or is "based upon a consideration of irrelevant or inappropriate factors. Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002).
Under Rule 5:3-5(c), a trial court has discretion to award counsel fees in matrimonial actions. Tannen v. Tannen, 416 N.J. Super. 248, 285 (App. Div. 2010), aff'd, 208 N.J. 409 (2011). In calculating the amount of a fee award, the court should consider
(1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.The court must also determine the "lodestar" amount, "which equals the number of hours reasonably expended multiplied by a reasonable hourly rate." J.E.V. v. K.V., 426 N.J. Super. 475, 493 (App. Div. 2012). The application for fees must be supported by an affidavit of services that addresses the factors enumerated in RPC 1.5(a), states how much has been paid, and what provision has been made for future payments. R. 4:42-9(b). We will reverse a fee award where the trial court has failed to address the pertinent factors under the rules. Clarke v. Clarke ex rel. Costine, 359 N.J. Super. 562, 572 (App. Div. 2003).
[R. 5:3-5.]
"Fees in family actions are normally awarded to permit parties with unequal financial positions to litigate (in good faith) on an equal footing." J.E.V., supra, 426 N.J. Super. at 493 (quoting Kelly v. Kelly, 262 N.J. Super. 303, 307 (Ch. Div. 1992)). Success in the litigation, while a factor, is not "a prerequisite for an award of counsel fees." Id. at 492. A party requesting fees must have acted in good faith in the litigation and have a financial need, and the party paying fees must be able to pay. Id. at 493. To assess financial need and ability to pay, the court requires current financial information. See Roberts v. Roberts, 388 N.J. Super. 442, 453 (Ch. Div. 2006).
However, "'where one party acts in bad faith, the relative economic position of the parties has little relevance' because the purpose of the award is to protect the innocent party from unnecessary costs and to punish the guilty party." Yueh, supra, 329 N.J. Super. at 461 (quoting Kelly, supra, 262 N.J. Super. at 307). Bad faith may consist of a party's "constant disregard . . . of court orders and discovery rules," id. at 460; the use of motion practice as a form of intimidation, see Kozak v. Kozak, 280 N.J. Super. 272, 275-76, 279-80 (Ch. Div. 1994), certif. denied, 151 N.J. 73 (1997); "[t]he intentional misrepresentation of facts," Borzillo v. Borzillo, 259 N.J. Super. 286, 294 (Ch. Div. 1992); or unnecessarily prolonging litigation, Marx v. Marx, 265 N.J. Super. 418, 429 (Ch. Div. 1993).
B.
Applying these principles, we discern the principal issue to be whether plaintiff engaged in motion practice in bad faith. We discern no error in the trial court's finding of bad faith in plaintiff's efforts to disqualify defense counsel, join her as a party, pierce the attorney-client privilege, and establish that defendant entered into the PSA to avoid a "Sheridan issue." Plaintiff contends that her motion practice was justified, because defendant waived the attorney-client privilege by placing in issue his reliance on plaintiff's pre-judgment income information, and because he was motivated by a desire to shield his income information.
We disagree. We recognize that a party may, under certain circumstances, implicitly waive the attorney-client privilege when asserting that he or she was fraudulently induced to settle litigation. Weingarten v. Weingarten, 234 N.J. Super. 318, 372 (App. Div. 1989); United Jersey Bank v. Wolosoff, 196 N.J. Super. 553, 564-65 (App. Div. 1984). Reasonable reliance is an essential element of a claim of fraudulent inducement. United Jersey Bank, supra, 196 N.J. Super. at 564.
In United Jersey Bank, the bank sought to undo a settlement of a borrower's debt on the grounds that the borrower, Wolosoff, had misrepresented his financial condition. Id. at 558-59. Wolosoff contended that the bank's actual knowledge of his financial condition at the time of settlement would be pertinent to whether it relied on his alleged misrepresentations. Id. at 559-60. Furthermore, the bank's counsel played a key role in negotiating the settlement. Id. at 558. The trial court granted Wolosoff's application to discover all pre-settlement attorney-client privileged communications with the bank's counsel to explore the issue of the bank's reliance on the alleged misrepresentation. Id. at 560.
We held that "when confidential communications are made a material issue in a judicial proceeding, fairness demands waiver of the privilege." Id. at 567 (citation omitted). However, the trial court should have limited discovery to those confidential communications related to the reasonable reliance. Id. at 567-68. We ordered that the trial judge conduct an in camera review of all documents. Id. at 568.
In Weingarten, supra, 234 N.J. Super. at 321, a matrimonial case, the wife alleged she was misled into entering into equitable distribution provisions of a property settlement agreement based on her husband's misrepresentations of his assets. In the certification filed in support of her motion, she referred to conversations with her counsel. Id. at 321-22. She stated he encouraged her to engage in further discovery of her husband's assets, but her husband ultimately persuaded her to accept his representations. Ibid. We held the wife waived her privilege by instituting the proceedings "and by her disclosure of the confidential communications with her attorney." Id. at 327. We concluded, "the husband would be entitled to explore the existence of such evidence as may enable him to demonstrate that she did not rely on that information. . . ." Ibid.
Relying on United Jersey Bank and Weingarten, plaintiff contends that by filing his motion to set aside the PSA, defendant placed in issue his reliance on her income information. She contends that it was therefore reasonable for her to seek to disqualify his attorney, make the attorney a party, pierce the privilege, and try to establish that he entered the PSA to avoid a Sheridan issue. We are unpersuaded.
As a threshold matter, we are hampered in our ability to determine what facts defendant placed in issue because plaintiff has presented us with an incomplete record. The court in Weingarten relied substantially upon the movant's disclosures of attorney-client communications in her own certification. We do not have defendant's certification. His original motion papers were not placed before us, except for the form of order. We are not "obliged to attempt review of an issue when the relevant portions of the record are not included." Cmty. Hosp. v. Blume Goldfaden, 381 N.J. Super. 119, 127 (App. Div. 2005). We cannot fairly assess the reasonableness of plaintiff's response to defendant's motion without the benefit of defendant's motion.
Plaintiff may also have provided us with the briefs on the motions, to the extent they demonstrated "whether an issue was raised in the trial court," R. 2:6-1(a)(2), specifically defendant's reliance.
In any event, neither Weingarten nor United Jersey Bank justified plaintiff's blunderbuss response to defendant's motion. Defendant was apparently prompted by the discovery that plaintiff's 2011 income was over $100,000 above her minimum imputed income. As we held in Weingarten and United Jersey Bank, a claim of fraudulent inducement does not impliedly waive all attorney-client communications. At most, the implied waiver pertains to communications relevant to reliance. However, plaintiff sought "all communications" between defendant and counsel prior to entering the PSA. Plaintiff then pursued this overbroad position in unsuccessful motions for interlocutory review by this court and the Supreme Court.
Plaintiff also sought disqualification of counsel and joinder of her as a party. Neither in the record provided to us of filings and argument before the trial court, nor in her submissions to us, does plaintiff provide a reasonable basis for seeking such disproportionate forms of relief. Rare indeed is the case in which a party may have a legitimate claim against his opposing party's attorney. The litigation privilege protects attorneys from a range of tort-related claims, to assure fearless representation of clients. Loigman v. Twp. Comm. of Middletown, 185 N.J. 566, 583-84 (2006). Absent any proffered basis for filing suit against defense counsel, the trial court was justified in concluding that the frontal assault on defense counsel was brought in bad faith.
Plaintiff's effort to disqualify counsel fares no better. The Court has recognized that disqualification motions "are often made for tactical reasons. . . ." Dewey v. R.J. Reynolds Tobacco Co., 109 N.J. 201, 218 (1988). The United States Supreme Court has likewise expressed concern about the "'tactical use of disqualification motions' to harass opposing counsel." Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 436, 105 S. Ct. 2757, 2763, 86 L. Ed. 2d 340, 350 (1985); see also Alexander v. Primerica Holdings, Inc., 822 F. Supp. 1099, 1114 (D.N.J. 1993) ("Motions to disqualify are viewed with 'disfavor' and disqualification is considered a 'drastic measure which courts should hesitate to impose except when absolutely necessary.'") (quoting Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir. 1983)). We discern no good faith basis for plaintiff's motion to disqualify defendant's counsel.
Even assuming, for argument's sake, that plaintiff sought disqualification because she contemplated that defense counsel would be a witness, the relief sought was plainly unjustified. Plaintiff has not presented evidence sufficient to establish a likelihood that defense counsel would be a necessary witness. See J.G. Ries & Sons, Inc. v. Spectraserv, Inc., 384 N.J. Super. 216, 230 (App. Div. 2006). Even an attorney who will be a necessary witness "need not be disqualified from participating in pre-trial matters." Main Event Prods. v. Lacy, 220 F. Supp. 2d 353, 356 (D.N.J. 2002) (interpreting R.P.C. 3.7(a)). Further, even if an individual attorney may not serve as an advocate at a trial where she will be a necessary witness, her law firm may generally remain in the case to represent the client. R.P.C. 3.7(b). In sum, plaintiff's disqualification motion was premature, overbroad, and unsupported by the record.
Plaintiff's motion in limine to establish that defendant entered the PSA to avoid a Sheridan issue also appeared designed to intimidate defendant, rather than pursue relevant areas of inquiry. The issue before the court was not what induced defendant to settle his divorce case at all, but what induced him to settle on the specific terms embodied in the PSA. Defendant may well have chosen to avoid trial to avoid public disclosure of his finances. He may have been motivated as well to avoid the expense and time of a trial, and the uncertainty of result. However, he surely agreed to pay alimony and child support to plaintiff in the amounts and terms provided in reliance on her income, which at that time was imputed to be no less than $31,000. It is implausible that defendant would have accepted the PSA's terms, even if he knew plaintiff substantially out-earned him, to avoid disclosure of his income. The PSA's terms are not so one-sided. Notably, the record is barren of any competent evidence to suggest that defendant was aware of plaintiff's actual 2011 income when he entered the PSA.
In sum, plaintiff engaged in bad faith motion practice that may justify a shift in fees.
C.
Although we conclude that plaintiff engaged in bad faith motion practice, we do not agree with the trial court's view that the sole issue to be explored at the plenary hearing was plaintiff's alleged fraudulent concealment of her income. Plaintiff was entitled to raise the issue of whether defendant concealed or understated his income in advance of the PSA. Although it did not match the magnitude of plaintiff's increase, the increase in defendant's gross personal income between 2010 and 2011 was nonetheless almost $60,000. Defendant was free to contend that he accepted the terms of the PSA based on his understanding of plaintiff's allegedly understated income. But plaintiff should have also been allowed to contend that defendant had unclean hands, given that at the time of his motion, his income was also significantly higher than plaintiff knew.
We note that defendant sought not only the reimbursement of all support he paid to plaintiff, but also an order compelling plaintiff to pay child support to him going forward. Thus, a predicate of his initial motion was the fact that plaintiff's 2011 income — which had been disclosed at that point — significantly exceeded his own. The forensic accountant's report undermined defendant's child support claim, as plaintiff's 2011 personal gross income was $131,000 and defendant's 2011 personal gross income was $125,000.
In assessing the parties' respective positions, the trial court should have considered whether defendant engaged in bad faith litigation of his own. According to the forensic accountant's report, defendant's 2011 income was almost $60,000 higher than the previous year's. Defendant's counsel erred in stating there was no material change in defendant's finances to justify his failure to serve an updated case information statement. Although defense counsel asserted that defendant settled to avoid the burden of litigation, we note that he also settled after the forensic accountant demonstrated that his own income had risen as well.
We do not intend to imply that defense counsel did so knowingly. --------
We also part company with the court in its view that the results obtained through the settlement overwhelmingly favored defendant. The ultimate settlement did not disproportionately favor either side. Defendant sought, but did not obtain, reimbursement of all alimony and child support he paid, plus the payment of child support to him. That result favored plaintiff, rather than defendant. However, defendant secured an agreement that neither party would pay the other for child support. In so doing, he obtained a result that favored him, rather than plaintiff. Furthermore, he successfully rebuffed plaintiff's efforts, which we have discussed at length above, to disqualify his attorney, join her as a party, pierce the attorney-client privilege, and explore the alleged Sheridan issue.
We are therefore constrained to remand for reconsideration. Plaintiff did engage in bad faith motion practice. Nevertheless, the court should consider that (1) plaintiff was justified in exploring increases in defendant's 2011 and 2012 income; (2) defendant failed to disclose his own increased income and refused to submit an updated CIS; and (3) the results obtained. We leave it to the trial court, in the exercise of its discretion, to weigh these additional factors in determining whether to reduce the award of fees to defendant, and the amount of such reduction.
Plaintiff's remaining points lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Remanded for reconsideration. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION