Opinion
DOCKET NO. A-4164-13T3
05-17-2016
CHARLES L. PODELL, Plaintiff-Appellant/Cross-Respondent, v. PEARL S. PODELL, Defendant-Respondent/Cross-Appellant.
Angelo Sarno argued the cause for appellant/cross-respondent (Snyder & Sarno, attorneys; Mr. Sarno, Ruth Kim and Laura Guinta Gencarelli, on the briefs). Patricia Slane Voorhees argued the cause for respondent/cross-appellant.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Rothstadt and Currier. On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-1751-13. Angelo Sarno argued the cause for appellant/cross-respondent (Snyder & Sarno, attorneys; Mr. Sarno, Ruth Kim and Laura Guinta Gencarelli, on the briefs). Patricia Slane Voorhees argued the cause for respondent/cross-appellant. PER CURIAM
Plaintiff Charles L. Podell appeals from a provision of the judgment of divorce (JOD) entered by the Family Part that awarded $120,000 to defendant Pearl S. Podell from accounts held exclusively in her name. The trial court found a portion of the funds in those accounts were exempt from equitable distribution (ED) of the parties' assets because they were inherited by defendant before the parties married. On appeal, plaintiff argues the court erred in determining that the accounts were "premarital and not commingled over the parties' 33 year marriage" based solely on defendant's testimony. Plaintiff also asserts the parties' marital standard of living did not support the court's finding that the funds at issue were exempt from ED. Defendant disagrees and contends she proved by a preponderance of the evidence that the funds were exempt, maintaining that the court did not abuse its discretion in awarding the accounts to her. She further argues, in the alternative and in support of her cross-appeal, that the court erred in barring the admission of certain documents into evidence that showed her inheritance of the disputed funds.
We have considered these arguments in light of our review of the record and applicable legal principles. We affirm the court's determination that certain accounts held by defendant were exempt from ED, but we vacate and remand for correction of the JOD to reflect the award to defendant of the accounts that were determined to be exempt.
The parties' marital history and the evidence considered at trial regarding the subject accounts are not in dispute. The parties were both previously married prior to their marriage in 1980. Before they married, the parties entered into a prenuptial agreement. Both parties had children from their prior marriages, but no children were born of their marriage to each other. On February 27, 2013, plaintiff, then eighty-two years old, filed for divorce from defendant, then seventy-nine years old.
In addition to their prenuptial agreement, the parties entered into three "mid-marriage" agreements. None of the four agreements contained a schedule of assets considered by the parties to be premarital, nor did the parties exchange discovery regarding such assets prior to executing the agreements.
The court conducted a five-day trial at which testimony was elicited from the parties, plaintiff's son Kenneth Podell, and experts in both elder law and real estate values. As noted, among the various relief granted to the parties after consideration of the evidence, the court excluded from ED $120,000 that the court found defendant inherited.
There were three accounts that held defendant's inherited funds, which contained the following amounts as of September 2013: one rollover individual retirement account (IRA) with Fidelity containing $37,596; one traditional IRA with Fidelity containing $15,393; and one rollover IRA with Morgan Stanley containing $53,892. There was also a brokerage account in defendant's name - Fidelity Brokerage Account with a balance of $36,601.43 as of September 30, 2013 that was a non-exempt marital asset.
There was no dispute at trial that defendant had inherited money and maintained those funds in accounts in her name alone. Defendant's testimony was the only evidence adduced concerning the values of the accounts when they were established and the manner in which they were managed by her during the marriage. No bank statements were presented to establish either the source of the deposited funds or the use made of any withdrawals. Further, defendant did not seek to obtain any documents from any financial institutions after she had received a subpoena from plaintiff's counsel for the production of such documents.
Plaintiff testified that he also had inherited funds, but, unlike defendant, they were not maintained separately. Rather, his inherited money was deposited into the parties' joint account and was used to pay "marital bills."
As discussed below, plaintiff did not offer any documents to refute defendant's testimony except one bank statement.
Defendant sought to admit into evidence a series of documents consisting primarily of correspondence and supporting documentation that her brother sent to her and her sister between approximately April 1975 and August 2000. The court barred their admission based on a hearsay objection. In her cross-appeal, defendant argues the documents should have been admitted as ancient documents, N.J.R.E. 803(a)(16). Because we affirm the trial court's decision, we need not address this argument.
According to defendant, she received the bulk of the funds in the accounts before the parties' marriage through an inheritance of between $120,000 and $150,000 from her parents' estates. She acknowledged that additional sums were deposited during the marriage that came from her brother's purchase of their parents' real property owned by the estate, and thus were still attributable to her inheritance and were kept separate from plaintiff in the accounts. Defendant confirmed that she never commingled those funds.
Her parents died after her divorce from her first husband in 1972 and before the parties' marriage in 1980.
Defendant testified as to the accounts that she established when she first received the inherited funds. She explained that, at the time of the marriage, she maintained investment accounts with Apple Bank, Advest Bank, Royal Bank of Canada, and "[m]aybe Fidelity," into which the inherited funds were deposited. She confessed that as to Fidelity, she was "not sure" and "d[id not] remember the exact details of 1980." However, all of the accounts were maintained initially in the name of "Pearl Stein" and later in the name of "Pearl Podell" only. In addition, defendant repeatedly confirmed that she never deposited any funds from any other source into the accounts. Income she received from her employment was deposited into her checking account and used to pay bills. The funds she withdrew from her separate accounts were used to pay her expenses, such as her share of her children's college expenses.
Defendant testified that the parties borrowed money together to pay their respective children's college loans but that the bulk of the money was used for the benefit of plaintiff's children.
A bank statement that was introduced at trial revealed a single fifty-dollar deposit in August 1996, contradicting defendant's testimony. The statement indicated that the deposit was made into the Advest account, and defendant provided no explanation for this.
Plaintiff testified that he knew defendant "maintain[ed] individual accounts in her name alone." In fact, plaintiff, an accountant, prepared the parties' tax returns and was given information annually throughout the marriage about defendant's accounts. He also knew that funds from defendant's accounts were not used to pay the marital bills, while his investment and retirement accounts supplemented the parties' shortfall in the amount needed to pay their monthly expenses. As a result, plaintiff's personal assets were reduced by approximately two-thirds of their value between 1998 and 2013.
Kenneth Podell testified that he too was aware that defendant had inherited funds prior to her marriage to his father.
On April 3, 2014, after considering the evidence, the court entered the JOD, which addressed the disputed funds. It stated in pertinent part:
Defendant will retain the amount of $120,000 from the accounts solely in her name as of February 27, 2013. Any funds in excess of that amount as of February 27, 2013 shall be divided equally between the parties.
The court explained its reasons for exempting the funds from ED in its comprehensive fifteen-page written decision. The court cited to N.J.S.A. 2A:34-23.1 and identified the statutory factors it considered in determining ED. As to defendant's accounts, the court explained:
The Defendant had funds in her sole name totaling $163,833 in 2013. All of the financial information relating to these accounts was provided by the Plaintiff. The Defendant contends that she had pre-marital inherited funds that should remain solely in her possession. However, she provided no credible evidence as to the exact amount of the inherited money. Nevertheless, the Court found her testimony to the fact that she inherited the money as being truthful. She was consistent in that assertion, the Plaintiff made no affirmative denial of the inheritance (indicating merely that he did not remember that occurring), and the interest generated from funds were included in the joint income tax returns that the Plaintiff prepare[d] (so he had to be aware of same). The problem for [ED] purposes remains — how much did she inherit? The
only fixed amount she testified to was $120,000.
This amount included all of her accounts, including the one that was not separate property. --------
After the entry of the JOD, the parties filed their timely appeal and cross-appeal.
Our review of a trial court's division of marital assets is limited to determining whether the court abused its broad discretionary authority. La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001). We review whether the trial court's decision on ED "is clearly unfair or unjustly distorted by a misconception of law or findings of fact that are contrary to the evidence." Valentino v. Valentino, 309 N.J. Super. 334, 339 (App. Div. 1998) (quoting Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985)). Because a trial court has "broad authority" in dividing marital property, Wadlow, supra, 200 N.J. Super. at 377, its award of ED will be affirmed "as long as the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." La Sala, supra, 335 N.J. Super. at 6. Accordingly, our review is limited to determining whether the court abused its broad discretion, or reached a result "bottomed on a misconception of law or findings of fact that are contrary to the evidence." Sauro v. Sauro, 425 N.J. Super. 555, 573 (App. Div. 2012) (quoting Genovese v. Genovese, 392 N.J. Super. 215, 223 (App. Div. 2007)), certif. denied, 213 N.J. 389 (2013).
In our review of the Family Part's decisions regarding ED of property, we must defer to that court's findings. Given the Family Part's special expertise, appellate courts must accord particular deference to fact-finding in family cases and to the conclusions that logically flow from those findings. Cesare v. Cesare, 154 N.J. 394, 412-13 (1998); see also D.N. v. K.M., 429 N.J. Super. 592, 596 (App. Div. 2013), certif. denied, 216 N.J. 587 (2014). "[W]e do not second-guess the[] findings and the exercise of . . . sound discretion" by family judges. Hand v. Hand, 391 N.J. Super. 102, 111 (App. Div. 2007) (citing Cesare, supra, 154 N.J. at 413); see also Pascale v. Pascale, 113 N.J. 20, 33 (1988). "The general rule is that findings by a trial court are binding on appeal when supported by adequate, substantial, credible evidence." Gnall v. Gnall, 222 N.J. 414, 428 (2015); see also Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974).
The trial judge's factual findings are entitled to enhanced deference because they are based on the credibility of witnesses that appeared before him. See Rova Farms, supra, 65 N.J. at 484. We give due regard to the trial judge's credibility determinations and feel for the case based upon the opportunity of the judge to see and hear the witnesses. N.J. Div. of Youth & Fam. Servs. v. G.M., 198 N.J. 382, 396 (2009); see also Cesare, supra, 154 N.J. at 412.
The goal of ED "is to effect a fair and just division of marital [property]." Elrom v. Elrom, 439 N.J. Super. 424, 444 (App. Div. 2015) (alteration in original) (quoting Steneken v. Steneken, 183 N.J. 290, 299 (2005)). In fashioning an ED award, the trial court "must identify the marital assets, determine the value of each asset, and then decide 'how such allocation can most equitably be made.'" Ibid. (quoting Rothman v. Rothman, 65 N.J. 219, 232 (1974)). Additionally,
the judge must consider, but is not limited to, the sixteen statutory factors set forth in N.J.S.A. 2A:34-23.1. Fashioning an [ED] of marital assets and debts requires more than simply "mechanical division"; it requires a "weighing of the many considerations and circumstances . . . presented in each case."
[Ibid. (final alteration in original) (quoting Stout v. Stout, 155 N.J. Super. 196, 205 (App. Div. 1977)).]
Property acquired during the marriage is subject to ED. N.J.S.A. 2A:34-23. Property "acquired during the marriage by either party by way of gift, devise, or intestate succession shall not be subject to [ED]." N.J.S.A. 2A:34-23. Premarital property which was owned at the time of the marriage also remains separate and is not eligible for ED. Painter v. Painter, 65 N.J. 196, 214 (1974). Any separate "property owned . . . at the time of marriage will remain [] separate property of such spouse and . . . will not qualify as an asset eligible for distribution," Elrom, supra, 439 N.J. Super. at 444 (alterations in original) (quoting Painter v. Painter, 65 N.J. 196, 214 (1974)), provided it has not been commingled, meaning "[i]t was segregated throughout the marriage and clearly was never intended to benefit the" other spouse. Wadlow, supra, 200 N.J. Super. at 381.
An asset initially exempt from ED may become subject to ED if the parties intended it to be a marital asset. See Weiss v. Weiss, 226 N.J. Super. 281, 287 (App. Div.), certif. denied, 114 N.J. 287 (1988). However, even if an exempt asset becomes commingled, it can continue to be a spouse's separate property if there is no evidence that the parties intended the asset to be marital property. See Wadlow, supra, 200 N.J. Super. at 380 (holding "the trial judge erred when he failed to exclude from the marital estate [funds] in the form of savings, gifts and inheritances acquired by plaintiff prior to the marriage" even though "these funds were commingled during the parties' cohabitation [because] we perceive[d] a clearly manifested and unequivocal intent that they belonged to [the] plaintiff and would ultimately be returned to her or her family").
In his argument to this court, plaintiff contends that the issue here is not whether or when defendant received the funds through an inheritance, but rather "[t]he issue is the amount received, when it was actually received, and whether the inheritance was commingled with marital funds." He correctly claims that defendant, as the spouse asserting an asset's immunity from ED, had the burden of establishing such immunity. Pacifico v. Pacifico, 190 N.J. 258, 269 (2007); see also Weiss, supra, 226 N.J. Super. at 291. He contends she failed to satisfy her burden. We disagree.
As noted, the court made specific credibility determinations and relied on defendant's unrefuted testimony when reaching its decision. We conclude from our review of the record that the court's decision was supported by substantial credible evidence that satisfied the requirements for establishing the funds' exemption from ED, see Weiss, supra, 226 N.J. Super. at 287, as there was no evidence that the parties intended defendant's inherited funds to become a marital asset.
We find no merit to defendant's argument that in order for plaintiff's testimony to be accepted by the court, it must be supported by documents admitted into evidence. The inability to "trace" premarital funds with documents does not prevent their exclusion from ED where the testimonial evidence demonstrated an intent to keep the disputed premarital funds segregated. See Wadlow, supra, 200 N.J. Super. at 380 (holding that although "the exact fate of the [disputed funds] could not be traced by the parties[,] . . . the record evince[d] a clear intention to return that sum to [the] plaintiff or her family"). Here, the testimony deemed credible by the judge supported his conclusion that defendant inherited funds before the marriage and kept them segregated. The unrefuted testimony equally supported the judge's finding that the amount owned before the marriage was at least $120,000. Supporting that conclusion was plaintiff's and his son's knowledge about the funds on deposit from the beginning of the parties' marriage. Indeed, because plaintiff prepared the parties' tax returns each year, he necessarily knew the amounts she had on deposit by the nature of her earnings in her accounts that were reported as income. Also, if documents existed to confirm or dispute that testimony, they were equally available to plaintiff and defendant. Ultimately, plaintiff neither confronted nor successfully challenged defendant's testimony with any documentation or contradictory testimony.
Equally without merit is plaintiff's reliance on his challenge to defendant's testimony with the Advest Bank statement from 1996 that indicated a single fifty-dollar deposit into one of her accounts. Plaintiff's over-reliance on this one deposit and his seventy-nine-year-old former spouse's inability to recall the one transaction is without any legal support. If fifty dollars of marital funds were in fact commingled into defendant's account, such a minor event without more does not constitute a commingling of assets. See Dotsko v. Dotsko, 244 N.J. Super. 668, 675 (App. Div. 1990) (holding that a gift from plaintiff's father was not subject to ED, even though it was deposited into a joint account for approximately eighteen days before having been withdrawn and deposited into the plaintiff's individual account, because it was done with the clear intention throughout that the gift was to the plaintiff only).
In addition, the confrontation of defendant with the one transaction did not require the court to reject defendant's entire testimony. It would be unusual for a witness to recount numerous financial aspects of his or her thirty-year marriage with perfect clarity and to express every detail with precision. Moreover, it would be a poor system for adjudicating cases to call for a rejection of that witness's entire testimony — despite its ring of truth — because of a few errors or exaggerations. Cf. N.J. Div. of Child Prot. & Permanency v. B.O., 438 N.J. Super. 373, 384 (App. Div. 2014). Furthermore, defendant did not testify untruthfully about the one transaction, but simply could not recall the details. A failure of recollection is not tantamount to a willful lie warranting the rejection of the totality of a witness's testimony. See Capell v. Capell, 358 N.J. Super. 107, 111 n.1 (App. Div.), certif. denied, 177 N.J. 220 (2003).
Finally, we find without any legal basis plaintiff's argument that because the parties relied on his segregated funds during the marriage to meet their shortfall, it was inequitable to allow defendant to retain her segregated funds. The fact that the parties chose to handle their finances in that fashion did not give rise to an intention that defendant's funds would become marital property subject to ED.
We are thoroughly convinced from our careful review of the record that the trial court's findings as to defendant's inherited funds being exempt from equitable distribution were supported by the evidence presented.
We part company with the trial court judge's treatment of the exempt assets. As noted, the judge found that defendant inherited $120,000 and deposited the inheritance in separate accounts that she maintained throughout the marriage. Yet, the judge did not exempt those accounts, but rather deducted from the total balance of all her accounts — exempt or not — the $120,000 she originally inherited, without regard for the accounts' values as reflected on the statements admitted into evidence. The judge's approach, however, was inconsistent with the manner in which courts should determine the value of divorcing parties' assets.
The value of defendant's separate account at the time she inherited from her parents is not relevant to determining the value of the exempt assets. Absent extraordinary circumstances, assets should generally be valued at the time of the complaint, depending on the "nature of the asset and any compelling equitable considerations." Bednar v. Bednar, 193 N.J. Super. 330, 332 (App. Div. 1984) For example, "passive assets, the value of which fluctuate after the filing of the complaint by virtue of market forces, should be valued as of the date of trial or distribution, not the date of the filing of the divorce complaint." Platt v. Platt, 384 N.J. Super. 418, 427 (App. Div. 2006). However, where the accounts have always remained segregated in one spouse's name, the appropriate treatment of them is simply to award the identified accounts to that spouse, regardless of their value.
We therefore remand and direct the trial court to amend the JOD to identify the segregated accounts and award them to defendant as exempt assets.
Affirmed in part; vacated and remanded in part. 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