Opinion
DOCKET NO. A-5908-10T4
10-19-2012
EDWIN BICE, Plaintiff-Appellant, v. TAMMY BICE, Defendant-Respondent.
James R. Bodnar argued the cause for appellant. D. Ryan Nussey argued the cause for respondent (Klineburger and Nussey, attorneys; Mr. Nussey, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad, Sapp-Peterson and Ostrer.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, Docket No. FM-03-572-09.
James R. Bodnar argued the cause for appellant.
D. Ryan Nussey argued the cause for respondent (Klineburger and Nussey, attorneys; Mr. Nussey, on the brief). PER CURIAM
In this matrimonial matter, plaintiff Edwin Bice appeals from that portion of the May 9, 2011 dual final judgment of divorce (DFJD) that awarded defendant $6000 in monthly alimony and eighty percent of the marital home's value. Plaintiff argues the court's decision lacked evidential support in the record, and the court did not adequately consider and address the statutory factors governing alimony and equitable distribution. After considering his arguments in light of the record, and giving due deference to the trial judge's findings of fact, we are nonetheless constrained to reverse and remand for further proceedings.
I.
Plaintiff filed his complaint for divorce in November 2008, after eighteen years of marriage. Plaintiff was forty years old and his wife was forty-one. The parties have three daughters who were seven, thirteen and seventeen upon entry of the judgment. Plaintiff was a self-employed truck driver and owned his own truck. He hauled propane for a single company and received seventy percent of the transportation charges, from which he paid the costs of operating his truck, including tolls, fuel, maintenance, insurance, and licensing. Defendant managed the household.
The parties resolved among themselves issues involving child custody, and equitable distribution of retirement accounts, and personal vehicles. The two-day trial in February 2011 focused on issues related primarily to alimony and equitable distribution, although defendant also presented evidence in support of a Tevis claim and a request for attorney's fees. In particular, defendant alleged plaintiff had substantial unreported income, and hoards of cash. Defendant admitted he received $50,000 during 2007 and 2008 from a side retail propane business venture that he did not report on his tax returns.
Tevis v. Tevis, 79 N.J. 422 (1979).
Plaintiff was represented pre-trial, including when respective counsel entered a March 11, 2009 consent order on pendente lite support. The order required plaintiff to pay $500 in unallocated support, specifically stating he had the ability to pay such support, as well as paying "the bulk of [defendant's] and the children's living expenses." The order noted:
Defendant asserts that plaintiff has failed to report all of his taxable income. However, defendant is a party to the joint returns. The Court will not report these issues to the IRS at this point because the facts are not yet fully developed. However, the parties need to review the applicable case law concerning IRS issues with their counsel and their respective liabilities, or lack thereof, for not reporting all income on joint tax returns.
Regarding equitable distribution, the court valued plaintiff's business as equal to the value of his sole business asset, his truck. The court did not assign a precise value to the equity in the truck, stating it was $10,000 or $15,000 "depending on whose calculation." The court did not expressly assign a net value to the house; rather, it noted that there was an appraisal valuing the home at $336,000, plaintiff asserted there was $162,000 debt, and defendant asserted there was $175,000 in debt. With respect to other debts, the court found that there were outstanding marital bills of $12,359. The judge found there was a Sears credit card debt of "three or $4,000" for 2008 holiday gift shopping by defendant, which plaintiff authorized, although the bill in evidence totaled $2812. The court apparently rejected defendant's claim that plaintiff also withdrew $40,000 in marital funds, stating "I don't see a $40,000 withdrawal on D-4. It starts out at thirty-seven five then ends up at [$31,064.23]."
The transcript reads "3164" but the court apparently said "thirty-one-sixty-four" as short-hand for "thirty-one-thousand-sixty-four-dollars" inasmuch as the exhibit he referred to clearly states an opening balance of $37,578.84 and a closing balance of $31,064.73.
As for allocation, the court then awarded defendant eighty percent of the house equity, rejecting plaintiff's argument he was entitled to fifty percent, and defendant's argument she was entitled to one hundred percent. She claimed his equity should have been offset by her Tevis claim, which she valued at $40,000 to $45,000, her claim that she incurred $26,000 in various living expenses pendente lite for which plaintiff was responsible, and $15,000 as partial payment of her attorney's fees. The court explained:
But this is what I did. The house is going to be sold in which case there will be money . . . a corpus for both of you or it's going to be refinanced. [T]he defendant is going to keep 80 percent of the equity, okay. The plaintiff is going to get 20 percent of the equity. This . . . takes into account the request to neutralize completely his right to it which I didn't think was fair and it wasn't justified by the documents.Defendant retained possession and would receive all the benefit of any post-judgment reduction in principal, as she would be responsible for mortgage payments.
The court awarded plaintiff the truck used in his business. The court held plaintiff responsible for the Sears credit card debt. The court distributed all other personalty to defendant except plaintiff's tools, truck, pressure washer, snow-blower, arcade game, and Jeep hardtop.
Plaintiff was also responsible for IRS debt on the parties' joint 2008 and 2009 income tax returns, which the court did not quantify. Defendant refused to sign the 2008 return, stating she could not confirm its accuracy. But, the court found the evidence insufficient to require indemnification for the 2007 return, stating, "They both benefited from what he made in 2007. . . . I am not precluding her from articulating a defense she would take should there be IRS exposure."
After concluding its decision on equitable distribution, the court made findings regarding the parties' income. The court imputed income of $25,000 a year to defendant, a high school graduate, who had earned at most $20,000 a year in the early 1990s, before the parties' youngest child was born. After that, she had stayed at home, rearing the children.
The court then determined plaintiff's income was $180,000 based on its consideration of plaintiff's total bank deposits, and the total monthly expenses reported in his own case information statement. Regarding total deposits, the court stated:
What I've relied on to a very large extent were documents that were provided to me, the CIS February 2009 from the plaintiff, from the defendant. 2008 was his best year, even under his scenario, and I attribute that to the extra $50,000 that he talked about in his testimony. [For] 2009[,] I went to D-15 which are all his deposits. I added them up and I came to $183,120.80Based on plaintiff's 2009 case information statement, the court noted the parties' monthly spending was $12,960, or "something in the $155,000 range which would give you a higher income than $180,000." The court explained that it did not set income higher because it found plaintiff's income in 2008 was exceptionally high; "he had a better year in 2008 than nine or ten."
D-16 is for a little longer period of time, it was 12/26/09 to 1/25/11 so maybe an extra month, 13 months. That total was 176,149. And these were deposits that he made.
On an annualized basis, the thirteen months of deposits would yield deposits of $162,599 a year.
The court declined to find that plaintiff earned unreported cash income over and above the $50,000 in 2008 that plaintiff had confirmed. Defendant had introduced into evidence a photograph of an open duffle bag that depicted stacks of what appear to be $5 bills; she said one of her daughters took the photograph at plaintiff's apartment post-separation. Defendant also testified that plaintiff maintained $40,000 in cash in the house and had counted it in her presence. Plaintiff had tried to explain the $40,000 was from a savings account. Regarding the photographed duffle bag, the court found, "There is no way I could figure out what that cash was, how much, what it was, when it was." However, during argument on a motion for reconsideration, the court stated, "I believed that that photograph was of money he secreted, but I had no idea how to measure it."
The court set alimony at $6000 a month:
We now get to a couple other things. We get to alimony. What should it be? Again, this is [where] the budgets come into play and I must say that the defendant's budget is much higher than I think it should be. What I did was indicate that alimony should be $6,000 a month, okay. Now, the — I just want to see one thing here for a second.The court explained the basis for its $6,000 figure by stating the following:
This is a 20 year marriage. That's permanent alimony.
Now, the way . . . that I arrived at my number for alimony, just so the record is clear, D-7 is the defendant's January 28, 2011 case information statement. We didn't have a 2011 case information statement from . . . the plaintiff that was marked. But the plaintiff says he pays $1200 a month to his girlfriend and he has other bills too.The court stated that it reduced the total budget. On the other hand, the court stated that it inflated defendant's need in order to account for her custody of the children, notwithstanding that she would also receive child support for the children:
I used D-6 to some extent, which is the defendant's January 19, 2009 case information statement and D-22 which is the plaintiff's . . . February 12, 2009 case information statement. In that case information statement he indicated that the joint budget, family budget was $12,960, this is his own document, was $12,960 a month joint and that would be without . . . the defendant working. So if that was his joint budget that he put out, that would, if you just multiply that by 12, you get something in the $155,000 range[.] . . .
I did, as I indicated, slice the budget to some extent on the defendant. But what I tried to do is come up with numbers that, quite frankly, give the defendant a little bit more money to live on than the plaintiff because the defendant has three kids. The
alimony is tax deductible to the plaintiff and income to the defendant.
Utilizing the child support guidelines, the court calculated weekly child support of $244. The guidelines included no credit for health insurance payments for the children. After adding child support and alimony, defendant's total receipts were set at $7,049 a month, or $84,588 per year. After tax payments as calculated in the child support worksheet, along with her imputed annual income of $25,000, defendant's net weekly income (before child support) totaled $1438, and plaintiff's weekly income totaled $1391. The court declined to address allocation of college expenses and reserved its decision on attorneys' fees.
In his motion for reconsideration, plaintiff certified that health insurance costs for the children were $270 a week.
Plaintiff retained counsel and moved for reconsideration of the court's judgment. He asserted that the court had failed to provide sufficient basis for the 80-20 division of the house equity, miscalculated plaintiff's income by treating the gross receipts of his trucking business as gross taxable personal income, and did not consider his payment of $270 a week for the children's health insurance.
Defendant opposed plaintiff's motion and cross-moved for an order in aid of her litigant's rights, as plaintiff had not made payments as ordered in the DFJD, and awarding attorney's fees. Defendant argued plaintiff had unreported income, the court correctly calculated income and alimony, and plaintiff had not presented proof of health insurance payments. The court denied plaintiff's motion, and granted defendant's cross-motion in part.
Plaintiff presents the following points for our consideration:
POINT I
THE TRIAL COURT FAILED TO MAKE MEANINGFUL FACTUAL FINDINGS AND/OR AS REQUIRED UNDER N.J.S.[A.] 2A:34-23.1(a)-(p) EQUITABLE DISTRIBUTION CRITERIA THEREBY COMMITTING REVERSIBLE ERROR.
POINT II
THE 20-80 EQUITABLE DISTRIBUTION OF THE MARITAL HOME WAS AN ABUSE OF DISCRETION, CLEARLY UNREASONABLE UNDER THE CIRCUMSTANCES REQUIRING REVERSAL.
POINT III
THE TRIAL COURT IN SETTING ALIMONY AT $6,000 PER MONTH FAILED TO MAKE FACTUAL FINDINGS ON THE 13 FACTORS, AS REQUIRED BY N.J.S.[A.] 2A:34-23b ALIMONY WHICH REQUIRES REVERSAL, VACATION AND REMAND.
POINT IV
THE $6,000 PER MONTH ALIMONY ORDER WAS CLEARLY UNREASONABLE, AN ABUSE OF DISCRETION WHICH SHOULD BE REVERSED AND REHEARD BELOW BY A DIFFERENT JUDGE.
POINT V
THE TRIAL COURT ERRED IN DENYING THE MOTION FOR RECONSIDERATION AS TO ALIMONY AND EQUITABLE DISTRIBUTION OF THE MARITAL HOME.
II.
A.
We are compelled to reverse and remand, as the court did not expressly consider statutory factors, nor adequately set forth its findings of fact and conclusions of law. We must defer to the trial court's findings of fact if "'supported by adequate, substantial and credible evidence.'" Rolnick v. Rolnick, 290 N.J. Super. 35, 42 (App. Div. 1996) (quoting Rova Farms Resort, Ins. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). We are also particularly deferential to the Family Part's judge's decisions, based on his or her expertise. Cesare v. Cesare, 154 N.J. 394, 413 (1998). A trial court is also invested with broad discretion to determine both alimony and equitable distribution. See, e.g., Cox v. Cox, 335 N.J. Super. 465, 473 (App. Div. 2000) (alimony); La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000) (equitable distribution).
On the other hand, we may vacate the award if the "trial court clearly abused its discretion or failed to consider all of the controlling legal principles, or . . . the findings were mistaken or . . . the determination could not reasonably have been reached on sufficient[,] credible evidence present in the record." Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340, 354 (App. Div. 2009). If the "court ignores applicable standards, we are compelled to reverse and remand for further proceedings." Gotlib v. Gotlib, 399 N.J. Super. 295, 309 (App. Div. 2008) (reversing and remanding for new determination of allocation of college expenses where court fails to consider all the required factors); Boardman v. Boardman, 314 N.J. Super. 340, 345 (App. Div. 1998) (reversing alimony award and remanding where trial court failed to take account for, or correctly assess, tax consequences of alimony, standard of living, medical expenses, and future earning capacity of supported spouse).
We have also stated that an articulation of reasons is essential to the fair resolution of a case, and the failure to perform this duty "constitutes a disservice to the litigants, the attorneys and the appellate court." O'Brien v. O'Brien, 259 N.J. Super. 402, 407 (App. Div. 1992) (quoting Curtis v. Finneran, 83 N.J. 563, 569-70 (1980)). See also Italiano v. Rudkin, 294 N.J. Super. 502, 505-07 (App. Div. 1996) (reversing and remanding where trial court failed to articulate reasons for denying post-judgment motion to modify child support and for fees); R. 1:7-4 (requiring court in non-jury trial to "find the facts and state its conclusions of law thereon").
B.
The statute authorizing equitable distribution mandates explicit consideration of the factors set forth in the statute. "[T]he court shall make specific findings of fact on the evidence relevant to all issues pertaining to asset eligibility or ineligibility, asset valuation, and equitable distribution, including specifically, but not limited to, the factors set forth in this section." N.J.S.A. 2A:34-23.1. The alimony statute requires the same. "In any case in which there is a request for an award of permanent alimony, the court shall consider and make specific findings on the evidence about the above factors." N.J.S.A. 2A:34-23(c). See also N.J.S.A. 2A:34-23(b) (stating that, in setting alimony, "the court shall consider, but not be limited to the . . . factors" set forth in statute).
Turning to equitable distribution, a court initially must identify the assets and debts subject to distribution and assign values; only then can the court allocate the assets consistent with the statutory factors. Rothman v. Rothman, 65 N.J. 219, 232 (1974). See also Ionno v. Ionno, 148 N.J. Super. 259, 262 (App. Div. 1977) ("Proper allocation of the responsibility for the debts as between husband and wife does not necessarily track legal responsibility therefor to a third party."). Without assigning definite values, the court distributed IRS debts entirely to plaintiff, eighty percent of the house's net equity to defendant, most of the personalty to defendant, the business truck to plaintiff, and the Sears credit card debt to plaintiff.
Once a court values assets, it must equitably distribute them after considering the statutory factors.
In making an equitable distribution of property, the court shall consider, but not be limited to, the following factors:The court here simply failed to address and consider all these factors.
a. The duration of the marriage or civil union;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage or civil union by each party;
d. The standard of living established during the marriage or civil union;
e. Any written agreement made by the parties before or during the marriage or civil union concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living
reasonably comparable to that enjoyed during the marriage or civil union;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union couple or children;
o. The extent to which a party deferred achieving their career goals; and
p. Any other factors which the court may deem relevant.
[N.J.S.A. 2A:34-23.1.]
We express no view on the correctness of the court's distribution of eighty percent of the home equity, as our review is hampered by the absence of sufficient findings. However, we restate governing principles. A court must avoid a mechanistic division of the assets. See Rothman, supra, 65 N.J. at 232 n.6 (rejecting suggestion that court presumptively assign fifty percent of assets to one spouse); Gibbons v. Gibbons, 174 N.J. Super. 107, 114 (App. Div. 1980) (stating that trial judge "does not fulfill his heavy judgmental obligation by routinely or mechanistically dividing the marital assets equally"), rev'd on other grounds, 86 N.J. 515 (1981). Equal division of assets or debts may be appropriate in many cases. See, e.g., Overbay v. Overbay, 376 N.J. Super. 99, 114 (App. Div. 2005) (affirming trial court's finding that there was no basis for any division other than fifty-fifty distribution of both assets and liabilities). Unequal distribution may be error in some cases. See, e.g., Robertson v. Robertson, 381 N.J. Super. 199, 210 (App. Div. 2005) (reversing trial court's unequal allocation of certain marital debt based on spouse's greater ability to pay, where all other assets and liabilities distributed equally); Gemignani v. Gemignani, 146 N.J. Super. 278, 282 (App. Div. 1977) (reversing trial judge's unequal division of assets). However, unequal distribution may be appropriate in other cases. Clark v. Clark, 324 N.J. Super. 587, 596-97 (Ch. Div. 1999) (stating that debts may be unequally allocated even where assets are not).
We conclude the court here did not sufficiently articulate the basis for its decision. Even after accounting for the court's award to plaintiff of the $10,000 to $15,000 in equity in his business truck, and the court's allocation to plaintiff of the Sears credit card debt of $3,000 to $4,000, the net distribution of the home equity was a significant departure from an equal division. However, since the court reserved on defendant's claim of $15,000 in attorney's fees, and denied defendant's Tevis claim that she valued at $40,000 to $45,000, the court rejected $55,000 to $60,000 of offsets upon which defendant relied in seeking elimination of plaintiff's equity.
C.
Turning to alimony, the court likewise failed to consider the prescribed factors, many of which mirror those applied in the equitable distribution analysis.
The statutory scheme impliedly requires the court to determine equitable distribution first, as the distribution of property is a factor in determining alimony, but alimony is not a factor in determining equitable distribution. Compare N.J.S.A. 2A:34-23(b)(10) (equitable distribution factor in determining alimony) with N.J.S.A. 2A:34-23.1 (factors for determining equitable distribution).
(1) The actual need and ability of the parties to pay;
(2) The duration of the marriage or civil union;
(3) The age, physical and emotional health of the parties;
(4) 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;
(5) The earning capacities, educational levels, vocational skills, and employability of the parties;
(6) The length of absence from the job market of the party seeking maintenance;
(7) The parental responsibilities for the children;
(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;
(9) The history of the financial or non-financial contributions to the marriage or civil union by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;
(10) The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;
(11) The income available to either party through investment of any assets held by that party;
(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and
(13) Any other factors which the court may deem relevant.
[N.J.S.A. 2A:34-23(b).]
In applying the factors, the court must be mindful that alimony is designed to enable the supported spouse to "achiev[e] a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage." Crews v. Crews, 164 N.J. 11, 16 (2000). However, the court must strive to maintain the marital lifestyle of the payor as well. Id. at 26 ("The court should state whether the support authorized will enable each party to live a lifestyle 'reasonably comparable' to the marital standard of living.") Ibid. (emphasis added) (citation omitted). Often, the parties will be unable to enjoy the marital standard of living post-divorce, once the parties lose the economies of scale of a single household, especially when their marital spending has consumed all their incomes. Ibid. Finally, even after the court has applied the statutory factors and reached an alimony amount that achieves a reasonably comparable lifestyle, the court of equity must review the result to assure that it is fair. Steneken v. Steneken, 183 N.J. 290, 302 (2005).
The court's analysis in this case fell short of that required by statute and our caselaw. The court set alimony at $6000 a month without addressing most of the statutory factors. At $72,000, the figure roughly equaled half of the parties' total annual spending, according to plaintiff's own February 2009 CIS, which estimated monthly expenditures at an annual rate of $155,000.
However, the court did not adequately address and resolve disputes over plaintiff's gross taxable income. The court recognized that plaintiff's income in 2008 was exceptionally high, because it was "his best year" and was inflated by a one-time infusion of $50,000, which he conceded he did not report on his taxes. Defendant's February 2009 calculation of marital spending came on the heels of that high point in income.
On appeal, plaintiff argues it was not taxable as it was simply a return of investment. However, plaintiff stated at trial that "I wouldn't say I had $50,000 into it, but that was what was paid back over the time, over the period of time."
In estimating plaintiff's income, the court also relied on plaintiff's total bank deposits of $183,120.80 in 2009, and deposits of $176,149 over thirteen months including all of 2010, which converted to $162,599 a year, or a ten percent drop from 2009. It is unclear why the court nonetheless apparently relied on the $180,000 figure, which was closer to the 2009 deposits as opposed to the $162,599 in annualized deposits in 2010.
The court also failed to adequately address the fact that plaintiff was a sole proprietor as a truck driver. Record evidence at least raised questions regarding whether the gross total deposits were a fair or accurate indication of plaintiff's gross taxable personal income. For example, debits against those deposits included those apparently attributable to plaintiff's trucking business, including, for example, debits to EZ Pass of $1000 in the span of two weeks. Plaintiff's 2009 tax return indicated gross business receipts of $126,543, and his 2008 tax return indicated gross business receipts of $181,591.
Defendant introduced into evidence the parties' joint checking account statements for the period December 19, 2007 through November 24, 2008, which reflected direct deposits from plaintiff's employer of slightly over $140,000; $31,000 in transfers from savings and another checking account; and over $51,000 in other deposits. Also, we recognize that a court must carefully scrutinize a self-employed person's tax return, as "[i]n most cases," the amount available for support "will differ from the determination of business income for tax purposes." Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-B at 2567 (2013).
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Nor did the court make adequate findings regarding the allegation that plaintiff earned significant income that was unreported to the IRS, including but not limited to the $50,000 received in 2008, but was reflected in the marital spending. Defendant testified she saw her husband bring home cash during the marriage, and explained to her "that he did extra deliveries and made extra money." Defendant's allegation, and the evidence offered in support of it, raised important issues regarding the alimony decision.
Reversed and remanded for further proceedings. 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