Opinion
DOCKET NO. A-1828-10T1
02-17-2012
GUILLERMO ELKOUSS, Plaintiff-Respondent, v. LILIANA ELKOUSS, Defendant-Appellant.
Maria P. Imbalzano argued the cause for appellant (Stark & Stark, P.A., attorneys; Ms. Imbalzano, on the brief). Bruce P. Matez argued the cause for respondent (Borger Jones Matez & Keeley- Cain, P.A., attorneys; Mr. Matez, of counsel and on the brief; Christopher M. Emrich, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Lihotz and Waugh.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Camden County, Docket No. FM-04-1677-00.
Maria P. Imbalzano argued the cause for appellant (Stark & Stark, P.A., attorneys; Ms. Imbalzano, on the brief).
Bruce P. Matez argued the cause for respondent (Borger Jones Matez & Keeley- Cain, P.A., attorneys; Mr. Matez, of counsel and on the brief; Christopher M. Emrich, on the brief). PER CURIAM
In this post judgment matrimonial matter, defendant appeals from a Family Part order terminating plaintiff's alimony obligation upon finding that plaintiff's retirement resulted in a change of financial circumstances. Because the motion judge failed to make additional critical findings regarding defendant's needs, her income, and plaintiff's ability to pay notwithstanding his retirement, we reverse and remand for a plenary hearing to be conducted by a another judge as the matter must be reassigned.
After nearly twenty-nine years of marriage, plaintiff and defendant were divorced by a dual final judgment of divorce (JOD) entered on March 27, 2001. The parties resolved all collateral issues incident to the dissolution of their marriage, the terms of which were set forth in a Property Settlement Agreement (PSA), incorporated into the JOD.
During the marriage, defendant was principally responsible to care for the parties' three children and she performed non-compensated tasks for defendant's business. Following divorce, defendant secured a position teaching art in a private school and worked as a tutor. She recently obtained a graduate certificate in translation, but had not secured a position as an interpreter. Defendant also exhibits and at times sells her paintings.
Plaintiff worked as a urologist and was a partner in a medical practice, which we designate AUS. In 2000, he earned approximately $379,000. The PSA addressed plaintiff's obligation to pay defendant alimony, stating:
Commencing with Thursday, February 15, 2001, alimony shall increase to $1,442 per week, payable through the Probation Department via
a wage execution. The alimony will continue until the death of either party, Defendant's remarriage, her cohabitation with an unrelated individual, or a change in circumstances so as to justify a modification or elimination of alimony including Plaintiff's projected retirement at age sixty-two[.]
Plaintiff's sixty-second birthday was June 2, 2010. Noting his declining health, resulting from diabetes and a prior bout with prostate cancer, along with the changes in the nature of the health care industry, plaintiff gave notice to his employer and defendant that he would retire as planned on December 31, 2010. In 2006, AUS was acquired by a company we designate as DVU, plaintiff's employer in 2010.
Plaintiff filed a motion to terminate his alimony obligation effective January 1, 2011. He asserted he would no longer be working and would rely on income from these sources: (1) $47,900 per year for seven years of deferred compensation from DVU; (2) $46,000 per year from his IRA; (3) $26,000 per year for two years from another business venture he owned; and (4) withdrawals from his profit-sharing and 401(k) plans. According to plaintiff's filed Case Information Statement (CIS), his assets totaled $1,990,620 and he had $210,000 in liabilities; his budget was approximately $9,000 per month along with obligations for alimony, income taxes, and savings.
Defendant opposed plaintiff's motion, asserting the PSA did not "automatically" require the termination of alimony upon plaintiff's retirement. She also moved for a plenary hearing to review each party's finances and needs, and determine whether any modification in the level of support was appropriate. Defendant filed a CIS stating her assets totaled $1,257,986, she had no liabilities, and her monthly needs were approximately $9,000.
In his oral decision following argument, the Family Part judge rejected defendant's request for additional discovery, found plaintiff's intention to retire was clearly captured in the PSA, and his reasons for early retirement were valid. Regarding whether alimony should be terminated, the motion judge found:
with respect to the situation, we do have a scenario where, you know, the doctor has earned himself substantial assets. The ex-wife has substantial assets as well.An order terminating plaintiff's alimony obligation, effective January 1, 2011, was entered, from which defendant now appeals.
So, we're not in a scenario where, you know, as they move forward, you know, anybody's [sic] going to be destitute, there's going to be any issue with respect to, you know, a substantial diminution in -- in lifestyle.
. . . .
And I think that it was what was bargained for that when this [plaintiff], if he [] chose to stop working at age 62, then the elimination of alimony could occur at this time.
I won't consider it [additional discovery regarding deferred compensation] in a situation where I have the parties who have, you know, substantially more than $1 million in assets each, and they're at this stage at [sic] their lives.
And I -- I would not at that point in time, regardless of what was disclosed believe that there should be any further continuance of the alimony.
Defendant maintains plaintiff's retirement may qualify as a change in circumstances, but does not result in an automatic termination of alimony as suggested by the motion judge's findings. She argues the court erred in failing to analyze each party's income, assets, and expenses to discern whether modification should be ordered. We agree.
Courts are permitted to modify alimony awards "from time to time as circumstances may require." N.J.S.A. 2A:34-23. In Lepis v. Lepis, 83 N.J. 139 (1980), the Supreme Court set forth a two-pronged analysis to be applied when family judges examine whether an application for alimony modification or termination should be granted. Id. at 151-52. The moving party bears the burden of first showing the existence of "changed circumstances" warranting a requested decrease in the amount of alimony awarded. Id. at 157. Upon such a showing, discovery may be ordered and, as necessary, a plenary hearing held to determine whether and to what extent modification is warranted. Id. at 157-59. See also Miller v. Miller, 160 N.J. 408, 420 (1999).
Whether circumstances have really changed so as to warrant modification requires a court to take a close look at the parties' financial condition "both at the time of the original judgment [for divorce,] and [the] application for modification." Lepis, supra, 83 N.J. at 155 (footnote omitted). In its review, the court must consider "'the dependent spouse's needs, that spouse's ability to contribute to the fulfillment of those needs, [] the supporting spouse's ability to maintain the dependent spouse at the former [marital] standard [of living,]'" Miller, supra, 160 N.J. at 420 (quoting Lepis, supra, 83 N.J. at 152), whether the retirement is "likely to be continuing[,]" and whether the parties' PSA "explicitly provided for the change." See Innes v. Innes, 117 N.J. 496, 504 (1990).
Modification or termination of an alimony obligation based upon a showing of a substantial change in financial circumstances is a matter left to the sound discretion of a Family Part judge. Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006). "Each and every motion to modify an alimony obligation 'rests upon its own particular footing and [we] must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters.'" Ibid. (quoting Martindell v. Martindell, 21 N.J. 341, 355 (1956)). Thus,
[t]o vacate a trial court's findings in a proceeding modifying alimony, an appellate court must conclude that the trial court clearly abused its discretion, failed to consider all of the controlling legal principles, or it must otherwise be well satisfied that the finding[s] [were] mistaken, or that the 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) (internal quotation marks and citations omitted).]
In this matter, the Family Part judge failed to analyze the facts to assess the second prong, which requires a detailed analysis examining the impact of retirement on the obligor's continued ability to pay alimony and the needs of the dependent former spouse. In terminating alimony, it appears the motion judge merely assumed the PSA language required termination upon plaintiff's retirement and concluded the parties' respective financial positions were in parity obviating plaintiff's obligation to continue to contribute to the maintenance of defendant at the standard of living they formerly shared. Our review of the facts suggests neither of these assumptions is supported by the evidence in the record.
The PSA provision under review does nothing more than reflect the law governing this issue, that is, plaintiff's retirement serves as "a change in circumstances so as to justify a modification or elimination of alimony" (emphasis added), satisfying the first prong of the Lepis analysis. Lepis, supra, 83 N.J. at 149. The PSA clause allows plaintiff to obtain a review of whether and to what extent alimony should continue. See Deegan v. Deegan, 254 N.J. Super. 350, 358 (App. Div. 1992) (requiring courts to weigh the advantages to the retiring spouse against the disadvantages to the dependent spouse when considering modification of alimony following the supporting spouse's retirement). In fact, defendant conceded plaintiff's retirement satisfied the changed circumstances prong delineated in Lepis, supra, 83 N.J. at 149, allowing further review.
We reject plaintiff's contention that the trial court correctly "upheld the mutually agreed upon conditions for modification or termination of alimony in the [PSA]." The PSA provision does not suggest the parties agreed plaintiff's retirement would eliminate defendant's receipt of alimony. Despite the fact plaintiff announced his intended retirement date at the time of the divorce, that intention is not accompanied by a right to terminate his legal obligation to provide support. See Silvan v. Sylvan, 267 N.J. Super. 578, 582 (App. Div. 1993) (holding that voluntary retirement does not automatically trigger a reduction in alimony). As eloquently stated in the often quoted provision from Deegan:
[a]ny party is free to retire, take a vow of poverty, write poetry or hawk roses in an airport, if he or she sees fit. The only limitation is discontinuance of the financial aid the former spouse requires. The reason for this is that the duty of self-fulfillment must give way to the pre-existing duty which runs between spouses who have been in a marriage which has failed.
[Supra, 254 N.J. Super. at 358-59.]
Here, the motion judge did not consider the impact of a complete termination of support upon defendant or whether plaintiff could nonetheless continue financial support. Rather, he made a cursory comment regarding the parties' financial circumstances, apparently impressed that each had accumulated more than one million dollars in assets. This alone is insufficient to satisfy the detailed review mandated by Lepis and Deegan because it neglects review of the parties' incomes, their available assets, and needs to calculate the effect of plaintiff's retirement on his ability to support himself and pay alimony, as well as defendant's actual economic dependence. See Lepis, supra, 83 N.J. at 156-57; see also Deegan, supra, 254 N.J. Super. at 356-57. Scrutiny of all aspects of each party's financial picture must be made to reach a determination of "'what, in light of all the [circumstances] is equitable and fair.'" Lepis, supra, 83 N.J. at 158 (quoting Smith v. Smith, 72 N.J. 350, 360 (1977)). In that regard, this record presents questions overlooked or ignored by the motion judge, which require additional review upon remand.
First, as to plaintiff's income, he asserts his deferred compensation payment of almost $50,000 per year paid by DVU is derived from his interest in AUS, received at the time of divorce, which may not be considered current income when examining his ability to pay alimony. See Innes, supra, 117 N.J. at 500 (holding "that payments generated by pension benefits that were previously equitably distributed are not 'income' for purposes of reconsidering the pensioner's alimony obligations"). The PSA makes no mention of an anticipated deferred compensation payment and this record contains no evidence to suggest plaintiff received the deferred compensation award as part of the sale of his interest in AUS. Generally, "deferred compensation," by definition, is a perquisite of employment related to earned income rather than distribution of an interest in an asset. We find no support for the bald assertion that the new asset, acquired after the divorce, was derived from or part of an asset distributed to plaintiff at the time of divorce. We believe the motion judge must examine whether plaintiff's deferred compensation derives from the sale of his interest in AUS, in which case it would be exempt, or was simply deferred compensation resulting from his employment by DVU following the sale of AUS.
Second, plaintiff's post-retirement income, including income from assets accumulated following the divorce, needs to be calculated. Id. at 505. Plaintiff continued to earn substantial income following the divorce (his gross income was $661,000 in 2009). Assuming his expenses, alimony, and taxes were the same as those stated in the 2010 pleadings, he would have accumulated excess earnings annually. One example is shown on his 2009 income tax return, which evinces a contribution of $55,000 to a SEP IRA (Keogh Plan). Further, the record does not differentiate earnings from assets received as equitable distribution from earnings resulting from post-divorce contributions to those assets, which are not excluded. Ibid. Plaintiff, without documentation, merely asserts all his assets are exempt.
Related to this is the amount of plaintiff's accumulated post-divorce assets and income generated from those assets. While the parties have comparably valued homes, cars, and expenditures, plaintiff reports $360,000 in savings to defendant's $92,500, and retirement assets of $1,169,754 to defendant's $897,486. He additionally owns a stock account in excess of $104,000 and a 401(k) plan of $135,241.72 (which may be different from the Keogh Plan identified above) and unvalued business interests. Plaintiff's merits brief also includes a discussion of rental income from his foreign realty and other realty holdings, which do not appear on his CIS. On this record, we cannot discern what assets were received at the time of divorce, but can confidently state the parties' financial circumstances are not equal as suggested by the motion judge's findings.
Third, the motion judge omitted any analyses of defendant's ability to provide for herself, which is crucial when determining an alimony modification. Id. at 504. Defendant has neither an established career nor a stream of unearned income. Her 2009 income tax return reports a modest $1,311 in interest income in addition to her alimony. The motion judge looked to her savings amounting to $92,500, along with retirement assets of $897,486, to decide she could care for her needs. In arguing her continued need for support exists, defendant suggests her life expectancy is 23.8 years. If defendant used her assets to fund her annual expenses, she will exhaust these two sources of funds in slightly more than nine years, prior to reaching age seventy. Certainly, these considerations must be weighed in deciding defendant's ongoing need for support, albeit at a reduced rate.
Fourth, it cannot be forgotten that the parties were married for twenty-nine years, during which defendant was dependent, and they agreed a permanent alimony award was necessary to enable defendant to maintain the marital standard of living. Crews v. Crews, 164 N.J. 11, 35 (2000). Although it is recognized that "[s]pousal support agreements are always subject to modification pursuant to N.J.S.A. 2A:34-23[,] upon a showing of changed circumstances[,]" Deegan, supra, 254 N.J. Super. at 354, to suggest plaintiff's retirement alone automatically eliminates his obligation to aid his former wife's support is error.
Although we are not persuaded plaintiff has failed to disclose income from providing tango dance lessons, the remaining issues surrounding his post-retirement income must be explored. To achieve equity and fairness, as is required when reviewing a motion for modification of alimony, the court must examine issues such as those we have identified, and make specific findings regarding plaintiff's inability to continue to pay defendant alimony or whether plaintiff's circumstances and/or defendant's needs require a sum less than the previously agreed $75,000 per year.
Because none of these factors were apparently considered, the order is reversed and remanded to a different Family Part judge. 1:12-1(d). On remand, the judge reassigned to review the matter must determine whether defendant is entitled to additional discovery regarding plaintiff's financial circumstances and also must flesh out the extent and nature of defendant's income and alleged unnecessary expenses. The court also may find it necessary to conduct a plenary hearing to fully elucidate the entirety of the parties' financial pictures.
Reversed, remanded, and reassigned for additional proceedings, including a plenary hearing, consistent with our opinion.
I hereby certify that the foregoing
is a true copy of the original on
file in my office
CLERK OF THE APPELLATE DIVISION