Opinion
DOCKET NO. A-0956-10T1 DOCKET NO. A-2387-10T1
06-12-2012
STEVEN BURG, Plaintiff-Appellant/ Cross-Respondent, v. ADELE BURG, Defendant-Respondent/ Cross-Appellant. STEVEN BURG, Plaintiff-Appellant/ Cross-Respondent, v. ADELE BURG, Defendant-Respondent/ Cross-Appellant.
Thomas D. Baldwin argued the cause for appellant/cross-respondent in A-0956-10 (Budd Larner, P.C., attorneys; Mr. Baldwin, on the briefs). Howard A. Bachman argued the cause for appellant/cross-respondent in A-2387-10 (Goldstein and Bachman, P.A., attorneys; Mr. Bachman, of counsel and on the brief; David R. Cardamone, on the brief). Allan Weinberg argued the cause for respondent/cross-appellant in A-0956-10 and A-2387-10.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Payne, Simonelli and Hayden.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-949-03.
Thomas D. Baldwin argued the cause for appellant/cross-respondent in A-0956-10 (Budd Larner, P.C., attorneys; Mr. Baldwin, on the briefs).
Howard A. Bachman argued the cause for appellant/cross-respondent in A-2387-10 (Goldstein and Bachman, P.A., attorneys; Mr. Bachman, of counsel and on the brief; David R. Cardamone, on the brief).
Allan Weinberg argued the cause for respondent/cross-appellant in A-0956-10 and A-2387-10. PER CURIAM
In these back-to-back appeals, which we consolidate for purposes of this opinion only, plaintiff Steven Burg appeals from three Family Part orders: (1) that part of the December 15, 2009 Family Part order, which denied a reduction in his alimony and child support payments for the years 2004 to 2006, granted an allegedly insufficient reduction for the years 2007 to 2009, and denied attorney's fees; (2) that part of the October 7, 2010 order, which partially denied his motion for reconsideration; and (3) the December 17, 2010 order, which denied his motion to reduce his support payments for 2010. Defendant Adele Burg cross-appeals from those parts of all three orders that granted plaintiff a reduction in his support payments and denied her request for attorney's fees. We affirm in part, reverse in part, and remand for further proceedings.
We summarize the facts pertinent to our review. Plaintiff had been employed at Worldwide Financial Resources, Inc. (WFR), which he co-owned with David Findel (Findel). On May 1, 2001, plaintiff entered into an employment agreement to sell his fifty-percent interest in WFR (the 2001 Employment Agreement).According to plaintiff, pursuant to the agreement, he would receive $240,000 yearly for three years plus fifty percent of gross commissions on closed mortgage originations he produced as "salary." He would also receive the following "buyout" payments: (1) $50,000 monthly for twelve months; (2) additional commissions of 0.05% of WFR's gross mortgage production; and (3) an additional twenty-five percent of gross commissions on closed mortgage originations he produced (the twenty-five percent override). The agreement began on May 1, 2001, and ended on April 30, 2004.
The 2001 Employment Agreement has not been supplied on appeal.
On September 18, 2003, the parties entered into a Property Settlement Agreement (PSA) and were divorced. Pursuant to the PSA, defendant waived her right to equitable distribution of the buyout payments. In addition, the buyout payments apparently were not included for support purposes because support was calculated on plaintiff's $250,000 annual income, which was presumably based, in part, on the $240,000 yearly salary he would receive pursuant to the 2001 Employment Agreement. The PSA required plaintiff to pay defendant alimony for twelve and one-half years at $1,338.47 weekly, beginning September 19, 2003, and child support for the parties' two children of $461.53 weekly.
The PSA also imputed a $40,000 annual income to defendant for support purposes.
The PSA contemplated the change that would occur in plaintiff's income on April 30, 2004, apparently because he would no longer receive the $240,000 yearly salary pursuant to the 2001 Employment Agreement as of that date. The PSA provided that between May 1, 2004 and August 1, 2004, the parties would review plaintiff's then current earnings to determine whether to adjust his support obligations upward or downward, and apply any modification retroactively to May 1, 2004. The parties also agreed to waive a Lepis application.
Lepis v. Lepis, 83 N.J. 139 (1980).
In 2004, defendant filed an enforcement motion, and plaintiff filed a cross-motion to reduce his support obligations. He certified that the payments under the 2001 Employment Agreement had ceased, thereby triggering an adjustment to his income and support obligations. He claimed that after April 30, 2004, he derived his income solely from his fifty percent commissions, on which his support obligations should now be calculated. He also claimed that his commission income had decreased steadily since 2004 due to the declining mortgage industry. The trial judge denied plaintiff's cross-motion, and instructed the parties to exchange a Case Information Statement (CIS) and tax returns.
In February 2005, plaintiff again moved to reduce his support obligations. The judge calculated plaintiff's then current earnings by deducting the buyout payments, which defendant had waived, from plaintiff's total 2004 earnings, and concluded that plaintiff had earned $105,617 for the remainder of 2004. The judge then adjusted plaintiff's income from $250,000 to $105,617, and reduced alimony from $1,338.47 to $609 weekly, and child support from $461.53 to $313 weekly, retroactive to May 1, 2004. A March 21, 2005 order memorialized this decision.
The judge subsequently granted defendant's motion for reconsideration, concluding that plaintiff had failed to address his efforts to seek other employment and his potential to earn more money. In a May 13, 2005 order, the judge vacated the March 21, 2005 order, and reinstated plaintiff's original support obligations.
Plaintiff appealed. We reversed and remanded for a plenary hearing to determine the amount of plaintiff's current income and ability to earn income commensurate with his education and professional background, and whether he was entitled to a reduction based on the changed circumstances contemplated in the PSA. Burg v. Burg, No. A-6378-04 (App. Div. November 20, 2006) (slip op. at 11). We specifically directed plaintiff to explain why the commission income he had presented to the trial judge declined "in a period of booming real estate sales and refinancing of existing mortgages." Id. at 10.
During the remand hearing, which began on February 22, 2008, plaintiff testified for the first time that he had not received all of the buyout payments due to him under the 2001 Employment Agreement, specifically, the additional commissions of 0.05% of WFR's gross mortgage production and the additional twenty-five percent override. He produced an agreement with WFR, dated January 1, 2007, entitled "Agreement for Settlement of Gross Production Payment" (the 2007 Settlement Agreement), and made effective September 18, 2006. The 2007 Settlement Agreement stated that plaintiff had not received these buyout payments, and that he had received only $35,450 in buyout payments in 2006. Pursuant to the 2007 Settlement Agreement, plaintiff would receive buyout payments of $2500 weekly and $1000 monthly from September 18, 2006 to March 19, 2009, and would continue working for WFR and receive increased commissions. Plaintiff formed a limited liability company to receive the payments from WFR as 1099 income. Plaintiff claimed that pursuant to the 2007 Settlement Agreement, he had received a total of $142,000 in buyout payments in 2007.
At the remand hearing, plaintiff testified that the mortgage industry dramatically changed in 2007 due to the sub-prime mortgage crisis, which negatively impacted his commission income and forced him to tap into his savings and the buyout payments he was still receiving to help support himself. He produced no corroborating documents supporting his testimony about the mortgage industry. He conceded that his prior attorney had represented to defendant's attorney that the buyout payments had ceased on July 16, 2004, that plaintiff was only entitled to receive commissions thereafter, and that this information accurately reflected plaintiff's financial circumstances as of August 23, 2004. Plaintiff also conceded that he had never previously advised the court that he was still owed buyout money, and that his December 2004 CIS did not indicate that WFR owed him buyout money.
Plaintiff was still working for WFR in 2007.
Plaintiff also testified that he had "explored alternative employment," but two available employment opportunities were "far less lucrative" than his present employment. Plaintiff conceded, however, that there was nothing preventing him from obtaining employment with another company.
Findel testified that plaintiff had not received all of the buyout money due to him under the 2001 Employment Agreement. However, Findel conceded that he had confirmed in an October 2004 letter to plaintiff that the payments due under the 2001 Employment Agreement ceased on April 30, 2004, and the letter did not state that any money was still owed to plaintiff. Findel also conceded that there were no documents establishing the amount allegedly owed to plaintiff under the 2001 Employment Agreement, and how much plaintiff was paid.
Defendant's expert forensic accountant, John Ibex, analyzed plaintiff's income tax returns and other financial information for the years 2004 to 2007 to determine plaintiff's income for each of those years. He also performed a preliminary lifestyle analysis for the period July 2006 to July 2007 to determine plaintiff's spending habits. Ibex concluded that plaintiff's after-tax cash flow available income averaged $236,000 for 2004 to 2007, which supported the $250,000 annual income stated in the PSA. Plaintiff did not cross-examine Ibex or produce contrary expert evidence. Instead, he testified that Ibex's expert report contained mathematical errors and included assets that could not be considered "income" for support purposes.
Defendant, who is a licensed chiropractor, testified that except for brief periods of employment during 2005 and 2006, she had not worked in recent years, and had recently searched the internet, unsuccessfully, for employment.
The plenary hearing concluded on December 11, 2008. Prior to rendering a decision, on September 21, 2009, the trial judge contacted the parties after learning that WFR was no longer in business and Findel had "been implicated in a criminal matter involving his use of WFR." At plaintiff's request, and over defendant's objection, the court re-opened the record and held a supplemental hearing to address changed circumstances since December 11, 2008.
Defendant filed a motion for leave to appeal, which we denied with instruction to complete the supplemental hearing and render a decision no later than December 15, 2009.
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Plaintiff testified at the supplemental hearing that in August 2009, Findel notified him and other employees of WFR that he "was closing the doors [to WFR] immediately" due to his inability to meet the company's financial obligations. At that time, plaintiff had a signed employment agreement with another mortgage company; however, it was terminated because of plaintiff's association with Findel and WFR. Plaintiff claimed he was still actively seeking employment in the residential mortgage industry.
In a December 15, 2009 written opinion and order, the trial judge made detailed factual and credibility findings. The judge concluded that plaintiff did not sufficiently explain the decline in his commission income to effect a change in support for the years 2004 to 2006. The judge noted that plaintiff rendered a "net opinion" with respect to the alleged dramatic decline in the mortgage industry, which was "unsupported by any facts or data whatsoever," and WFR's financial statements for 2005 and 2006 only showed a five to six percent decline in gross revenues, which did not explain plaintiff's alleged seventy percent decline in commissions. The judge reviewed plaintiff's income figures for 2004 to 2006 reported in plaintiff's CIS and W-2s. He then compared plaintiff's income for those years with that of the New Jersey Labor Department surveys for "a mortgage loan officer in the 75th percentile for Monmouth County in 2007," who would earn $77,157, and concluded that based on plaintiff's years of experience in the mortgage industry, he was "capable of earning far more than the average loan officer."
The judge also found that the undisputed expert evidence established that plaintiff's "after tax cash flow available income averaged $236,000 from 2004 through 2007," which "support[ed] the PSA['s] imputed income of $250,000" for plaintiff.
Finally, the judge found "unconvincing and incredible" Findel's testimony that the parties entered into the 2007 Settlement Agreement because plaintiff was still owed buyout payments after April 2004. The judge emphasized that Findel produced no documents to establish plaintiff's commission earnings from 2001 to 2004, or what amounts were paid and due to plaintiff under the 2001 Employment Agreement. The judge concluded that "this unbelievable evidence tends to support [defendant's] claim that the buyout had in fact been paid by 2004 and these further payments [under the 2007 Settlement Agreement] were actually commissions earned by plaintiff[.]"
The judge also noted the inconsistency between plaintiff's prior certifications, wherein plaintiff stated that the buyout had been completed in 2004, and plaintiff's remand hearing testimony. The judge concluded that "[t]he combination of these factors used to evaluate [plaintiff's] claims support the conclusion that [plaintiff] has failed to establish by a preponderance of believable, credible evidence that he is entitled to a reduction in his support obligations for 2004, 2005 and 2006."
The judge granted a reduction for the years 2007 to 2009. He found that plaintiff's commission income declined to $18,873 in 2007 because the "booming" times in the real estate market had come to an end, and plaintiff was no longer receiving the additional twenty-five percent override. The judge also found from 2001 to 2003, plaintiff consistently averaged $138,919 in yearly commissions, and he used that number to determine plaintiff's earning capacity in 2007. Based on that number, the judge reduced alimony from $1,338.47 to $743.65 weekly, and child support from $461.53 to $267 weekly, effective May 1, 2007. The judge also declined to award either party attorney's fees, finding that neither party was "in a sufficient financial position to pay any portion of the [other's] counsel fees[,]" and both defendant and plaintiff failed to show that the other acted in bad faith.
Plaintiff filed a motion for reconsideration. In an October 7, 2010 written opinion and order, the judge denied reconsideration for the years 2004 to 2006, holding that plaintiff presented no new evidence or arguments to warrant reconsideration. The judge noted that one purpose of the plenary hearing was for plaintiff to demonstrate not merely that his income decreased, but why it decreased; however, plaintiff failed to establish that WFR suffered a dramatic decline in business that decreased his commission earnings by seventy percent, as plaintiff claimed. The judge also found that plaintiff failed to show that the PSA's $250,000 imputed income to him was arbitrary, and failed to "provide any credible basis to alter" it.
Realizing that he had miscalculated plaintiff's average earnings for 2001 to 2003, the judge granted reconsideration for plaintiff's support obligations for the years 2007 to 2009. The judge found that from 2001 to 2003, plaintiff consistently averaged $130,953 in yearly commissions, not $138,919. Accordingly, he reduced alimony from $743.65 to $701.09 weekly, and child support from $267 to $258 weekly. The judge again declined to award attorney's fees to either party for the reasons he had expressed in his prior decision.
Plaintiff appealed and defendant cross-appealed. Plaintiff also filed a motion in the trial court for a stay pending appeal, and a cross-motion, seeking a finding of changed circumstances and reduction in his support obligations for 2010. Defendant filed a cross-motion, seeking various relief, including an award of attorney's fees. In a December 17, 2010 written decision and order, the judge granted plaintiff's motion for a stay, and denied all other relief requested by both parties. The judge specifically found that he lacked jurisdiction to consider the motions due to the pending appeal.
On appeal from the December 15, 2009 and October 7, 2010 orders, plaintiff raises the following contentions:
POINT I
THE COURT'S DECISION IS NOT SUPPORTED BY COMPETENT CREDIBLE EVIDENCE AND REPRESENTS SUCH A SHARP DEPARTURE FROM REASONABLENESS THAT REVERSAL IS REQUIRED.
POINT II
THE COURT ERRED AS A MATTER OF LAW BY IMPUTING TO [PLAINTIFF] HIS STIPULATED $250,000 A YEAR PSA INCOME DESPITE THE OCCURRENCE OF SPECIFICALLY CONTEMPLATED CHANGED CIRCUMSTANCES AND, IN ANY EVENT, BY AVERAGING [PLAINTIFF'S] COMMISSION INCOME EARNED DURING THE YEARS OF HIS EMPLOYMENT AGREEMENT, 2001, 2002, AND 2003, TO DETERMINE HIS INCOME FOR SUPPORT PURPOSES EFFECTIVE MAY 1, 2007.
POINT III
THE COURT ERRED BY CALCULATING [PLAINTIFF'S] MODIFIED ALIMONY OBLIGATION AS A FUNCTION OF THE PERCENTAGE DIFFERENTIAL BETWEEN HIS STIPULATED INCOME OF $250,000 A YEAR CONTAINED IN THE PSA AND THE COURT'S MODIFIED INCOME OF $130,953 A YEAR, WHICH NEITHER CONSIDERS [DEFENDANT'S] STIPULATED $40,000 INCOME IN THE EQUATION NOR THE PARTIES' PSA METHOD FOR DETERMINING ALIMONY.
POINT IV
THE COURT'S EXPRESSED CONCERN WITH THE POSSIBLE APPLICATION OF A "UNITARY THEORY" OF SETTLEMENT IS INAPPLICABLE TO THE FACTS OF THIS CASE, AND IT WAS ERROR TO THE EXTENT
IT WAS CONSIDERED BY THE COURT IN REACHING ITS DECISION.
POINT V
THE COURT ERRED BY DENYING [PLAINTIFF] AN AWARD OF COUNSEL FEES AS A RESULT OF [DEFENDANT'S] BREACH OF THE PARTIES' PSA.
On cross-appeal, defendant contends that the judge erred in granting plaintiff a reduction for 2007 through 2009, and denying her request for counsel fees.
On appeal from the December 17, 2010 order, plaintiff raises the following contentions:
POINT IOn cross-appeal, defendant contends that the judge erred in granting a stay.
I. THE TRIAL COURT ERRED BY ASSERTING LACK OF JURISDICTION TO HEAR [PLAINTIFF'S] MOTION FOR MODIFICATION OF ALIMONY BASED ON PERMANENT CHANGED CIRCUMSTANCES.
POINT II
II. THE [PLAINTIFF] IS ENTITLED TO A LEPIS REVIEW BASED ON PERMANENT CHANGED CIRCUMSTANCES FOR 2009 AND 2010 CONCERNING HIS SUPPORT OBLIGATIONS GOING FORWARD AND SUCH REVIEW WILL NOT [A]FFECT THE PRECEDING APPEAL CONCERNING THE APPROPRIATE LEVEL OF APPELLANT'S SUPPORT OBLIGATIONS FROM 2004 THROUGH 2009.
"The findings of a trial judge are entitled to great deference and will be overturned only if 'we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Platt v. Platt, 384 N.J. Super. 418, 425 (App. Div. 2006) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). "'Deference is especially appropriate when the evidence is largely testimonial and involves questions of credibility.'" Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)).
A reduction in support obligations based upon a claim of changed circumstances rests within a Family Part judge's sound discretion. Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006). Thus, reversal is not proper unless the trial court abused its discretion or its "determination could not 'reasonably have been reached on sufficient credible evidence present in the record after consideration of the proofs as a whole.'" Rolnick v. Rolnick, 262 N.J. Super. 343, 360 (App. Div. 1993) (quoting Gugliotta v. Gugliotta, 164 N.J. Super. 139, 141 (App. Div. 1978)). "Moreover, 'substantial weight' must be given to the judge's observations of the parties' 'demeanor, comprehension and speech' when they appeared before the court." Ibid. (quoting Barrie v. Barrie, 154 N.J. Super. 301, 307 (App. Div. 1977), certif. denied, 75 N.J. 601 (1978)).
Ordinarily, "[w]hen considering an application to modify support, the moving party has the burden to make a prima facie showing of changed circumstances warranting relief prior to the court ordering discovery of the full financial circumstances of each party." Dorfman v. Dorfman, 315 N.J. Super. 511, 515 (App. Div. 1998) (citing Lepis, supra, 83 N.J. at 157-59). Once that showing is made and discovery is undertaken, "the judge then determines whether the changed circumstances justify modification." Ibid. The party seeking modification has the burden of proving that modification based on changed circumstances is warranted. See Lepis, supra, 83 N.J. at 157-58. When the parties have an agreement that specifically contemplates that alimony would be renegotiated when a particular event occurred, and that negotiation fails, "the trial court's obligation [is] to determine the amount of alimony which would be fair, just and reasonable in light of all the circumstances as of the date of the hearing." Weber v. Weber, 211 N.J. Super. 533, 535 (App. Div. 1986). "This requires not only an examination of the parties' earnings but also how they have expended their income and utilized their assets." Donnelly v. Donnelly, 405 N.J. Super. 117, 130 (App. Div. 2009).
A party's current income "is the primary fund" for the support of the other spouse. Bonanno v. Bonanno, 4 N.J. 268, 275 (1950). "[N]evertheless, the [supporting spouse's] property and capital assets and his capacity to earn the support awarded by diligent attention to business - his earning capacity or prospective earnings - are all proper elements for the court's consideration in fixing the amount of the award." Ibid. In seeking a reduction of support, "it is not enough that an obligor demonstrate a reduction in income; the obligor must also demonstrate how he or she has attempted to improve the diminishing circumstances." Donnelly, supra, 405 N.J. Super. at 130 n.5.
Applying these standards, we discern no abuse of discretion and are satisfied that the record amply supports the judge's decision for the years 2004 to 2006. Plaintiff's arguments to the contrary lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We defer to the judge's sound factual and credibility findings, especially his credibility findings relating to the buyout payments allegedly due after April 2004, and the 2007 Settlement Agreement. We affirm substantially for the reasons the judge expressed in his thorough and well-reasoned written opinions rendered on December 15, 2009, and October 7, 2010.
We reach a different conclusion as to the years 2007 to 2009. We find no fault with the judge's decision to reduce plaintiff's support obligations for 2007, 2008 and 2009, as the record establishes that plaintiff's income declined in those years. Plaintiff no longer worked for WFR during this time period, and thus, there was no question that his W-2 income did not include any buyout money. Nor do we find fault with the method the judge used to calculate the modified alimony amount. However, the judge erred in determining plaintiff's earning capacity in 2007 for support purposes for the years 2006 to 2009.
When determining alimony payments, the court must consider, among other things, the parties' needs and their respective ability to pay, the duration of the marriage, the age and health of the parties, the standard of living established during the marriage, the earning capacities and employability of the parties, the equitable distribution the parties received after the divorce, and "[a]ny other factors which the court may deem relevant." N.J.S.A. 2A:34-23(b). In New Jersey, divorcing spouses are given the opportunity to discuss issues of alimony and craft a PSA. See Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div.), certif. denied, 180 N.J. 354 (2004). A PSA is subject to general contract law, and will be binding on both parties if they assent to its terms. Pacifico v. Pacifico, 190 N.J. 258, 265-66 (2007); Eaton v. Grau, 368 N.J. Super. 215, 224 (App. Div. 2004); Brawer v. Brawer, 329 N.J. Super. 273, 283 (App. Div.), certif. denied, 165 N.J. 138 (2000); Pressler & Verniero, Current N.J. Court Rules, comment 5.1 on R. 5:7-4 (2012). "The Superior Court may exercise its highly flexible remedial powers to enforce the terms of an interspousal support agreement to the extent that they are just and equitable, and such an agreement is enforceable only if it is fair and just." Dunne v. Dunne, 209 N.J. Super. 559, 565 (App. Div. 1986) (internal quotation marks and citations omitted).
The PSA in this case specifically provided for a review of plaintiff's alimony obligation after the expiration of the 2001 Employment Agreement. The PSA states, "In computing alimony, the parties have agreed to use $250,000.00 as annual income for [plaintiff] and $40,000.00 as annual imputed income for [defendant]." The PSA does not calculate how, using these numbers, the parties reached the alimony and child support amounts.
Plaintiff contends that in determining the alimony amount, "[t]he parties calculated alimony at roughly 33.33% of the difference between the parties' respective stipulated gross incomes (i.e., $250,000 - $40,000 = $210,000 x 33.33% = $69,993 ÷ 52 wks. = $1,339.67/wk.)." Defendant contends that the parties derived the alimony amount by multiplying plaintiff's income by 27.8%. The PSA does not contain either of these formulas to calculate alimony; thus, the judge did not err in failing to apply either of them.
In his October 7, 2010 decision, the judge specified how he arrived at the modified alimony payments for 2007 to 2009. First, he determined plaintiff's average income, and then calculated the percentage of the PSA's stipulated $250,000 that this average income represented. The judge multiplied that percentage by the original PSA alimony figure to arrive at the modified amount, which, after correcting a mathematical error, he found was $701.09 weekly. Aside from an error in determining plaintiff's earning capacity in 2007, which we will shortly address, the judge used a well-reasoned approach to arrive at the alimony figure, an approach that was grounded in the amounts provided by the PSA. Thus, there was no error in the method the judge used to arrive at plaintiff's alimony obligation.
However, in reducing the amount of plaintiff's support obligations, the judge erroneously averaged plaintiff's income from 2001, 2002 and 2003 to establish his earning capacity in 2007 for support purposes. "In appropriate cases, . . . income averaging should be favorably considered in determining proper support levels." Lanza v. Lanza, 268 N.J. Super. 603, 606-07 (Ch. Div. 1993) (stating that income averaging would be appropriate "[w]hen gross income is subject to fluctuation"). In situations where an individual's income fluctuates, regardless of whether there are extreme "peaks and valleys" of fluctuation, a trial court may properly average the individual's income over a three- to five-year period to establish a steady amount for support purposes. See Platt, supra, 384 N.J. Super. at 426-27. "[A]veraging is normally done, in appropriate cases, over a three-year period." Id. at 427.
The judge found that the decrease in plaintiff's income in 2007 "was precipitous, falling to $18,873." The judge did not refer to the buyout payments. Plaintiff claimed he received a total of $142,000 in buyout payments pursuant to the 2007 Settlement Agreement. The judge never explicitly determined that the buyout payments were actually commissions, although he stated that defendant's claim to this effect "was not without some evidential support." The judge also found that "[a]t that time, the clear inference was that the 'booming' times had come to an end." The judge found that prior and up to 2003, plaintiff had consistently earned $130,953, on average, and this figure was a fair measure of plaintiff's earning capacity. The judge opted to use this figure in calculating plaintiff's support obligation for 2007 to 2009.
The judge did not explain why he chose to only average income from the years leading up to 2003 to determine plaintiff's earning capacity in 2007, after concluding that the "booming" times in the real estate market had ended. It seems somewhat illogical to find that because the "booming" times had ceased by 2007, plaintiff's support level should still be judged by the standard of the presumably "booming" times.
Although there is no explicit guideline for determining alimony payments, the Child Support Guidelines permit income averaging when a parent's income is "sporadic" or not consistent. Pressler & Verniero, Current N.J. Court Rules, Appendix IX-B to R. 5:6A at 2521 (2012). However, the Guidelines specify that this averaging is for the income over the previous thirty-six months. Ibid. The average time period can be expanded to five years in proper circumstances, such as when the previous three years contain a time period in which a party "chose to drastically reduce his personal income." See Platt, supra, 384 N.J. Super. at 426. The benchmark for modification of alimony obligations is that the award must be "fit, reasonable and just." See N.J.S.A. 2A:34-23. A decision that simultaneously determines that "booming" times were over by 2007, but holds plaintiff to a support level in 2007 determined by his average income earned during the indisputably "booming" times is not reasonable or just. While it may have been proper for the judge to hold plaintiff to an average income rather than an income found in any one W-2, that average should at least have included the years immediately preceding 2007. For this reason, we reverse the judge's decision as to 2007, 2008 and 2009, and remand for a plenary hearing to properly calculate plaintiff's alimony and child support obligations for those years. The remand hearing shall include the year 2010.
The parties' remaining contentions lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). However, we make these brief comments.
The judge never explicitly referenced a "unitary theory" of settlement in his December 15, 2009, and October 7, 2010 decisions, as plaintiff asserts. Nonetheless, the record supports the judge's conclusion that plaintiff failed to meet his burden of showing a reduction in earning that would effect a change in his support obligations for the years 2004 to 2006. The judge, thus, properly exercised his discretion to uphold the PSA's $250,000 imputed income to plaintiff.
There was no abuse of discretion in the denial of attorney's fees to either party. R. 4:42-9(a)(1); R. 5:3-5(c); Williams v. Williams, 59 N.J. 229, 233 (1971). The judge found, and we agree, that neither party proved the other acted in bad faith, and neither party can afford to pay the other's sizeable fees.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. 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