Opinion
DOCKET NO. A-5943-12T3
07-23-2015
Robert S. Dorkin argued the cause for appellant/cross-respondent (Schwartz, Barkin & Mitchell, attorneys; Mr. Dorkin, on the briefs). Bonnie C. Frost argued the cause for respondent/cross-appellant (Einhorn, Harris, Ascher, Barbarito & Frost, attorneys; Ms. Frost, on the briefs).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Accurso and Manahan. On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Union County, Docket No. FM-20-433-09B. Robert S. Dorkin argued the cause for appellant/cross-respondent (Schwartz, Barkin & Mitchell, attorneys; Mr. Dorkin, on the briefs). Bonnie C. Frost argued the cause for respondent/cross-appellant (Einhorn, Harris, Ascher, Barbarito & Frost, attorneys; Ms. Frost, on the briefs). PER CURIAM
Defendant Dominick Fiorenza appeals from the denial of a post-judgment motion to modify his alimony obligation. Judge DuPuis ruled the alimony not modifiable based on anti-Lepis language in a negotiated consent order that set a floor below which defendant's alimony obligation could not be reduced. Plaintiff Maria Fiorenza cross-appeals from a subsequent order Judge DuPuis entered after a plenary hearing that reduced defendant's monthly payment for alimony and child support while accruing arrears in accordance with that same consent order. We affirm both orders.
Lepis v. Lepis, 83 N.J. 139 (1980).
The parties were married in 1986 and divorced in 2010. They have three children. The two older children are attending college or graduate school. The youngest is sixteen and resides with her mother. During the parties' marriage, defendant, an accountant, owned in addition to his interest in his accounting practice a lucrative MRI facility with two partners that generated the bulk of his income. He sold his interest in that facility during the pendency of the divorce, not for cash but for a stream of monthly payments. By the time the judgment of divorce was entered, the buyer had defaulted on the monthly payments and defendant was already aware of other problems threatening the continued viability of the MRI business.
In the marital settlement agreement incorporated into the judgment, the parties acknowledged "the husband is self-employed and has average earnings of $250,000 per year" and that plaintiff, although not having worked outside the home, "can reasonably earn $25,000 per year." The parties agreed that beginning August 1, 2011, defendant would pay plaintiff permanent alimony of $100,000 per year in monthly installments of $8333. The parties also agreed defendant would pay plaintiff child support of $833 per month.
The parties agreed that defendant would pay plaintiff $110,000 in alimony during the first year following their divorce.
Within a few months after entry of the divorce, defendant stopped paying support. Plaintiff moved to enforce the parties' agreement, resulting in orders reducing defendant's six months' arrears to judgment and sending the parties to mediation. Mediation was unsuccessful. Shortly thereafter, defendant, through counsel, filed a motion to reduce his support and plaintiff cross-moved to enforce litigant's rights. Those motions were resolved by the August 2011 consent order at the center of their current dispute. The operative provision of that order reads as follows:
Defendant was self-represented at that time.
Support shall be modified to defendant paying plaintiff $5,000 per month. Support shall not be taxable to the plaintiff. $833 per month of support shall be for child support and child support shall not be reduced until the parties' daughter . . . isThe consent order also provided that plaintiff would waive $10,000 in support arrears not already reduced to judgment and stated that "[s]hould defendant default in any obligation set forth in this Consent Order and fail to cure the same within thirty (30) days of default, support shall revert back to the original support set forth in the Marital Settlement Agreement as if this amendment never occurred."
emancipated. Support over [and] above the child support ($4,167) is based on forty percent (40%) of defendant's imputed annual gross income of $125,000 (40% of $125,000 = $50,000; $50,000 ÷ 12 = $4,167.). The parties agree that support over and above the child support shall be annually modified beginning October 15, 2012 and every October 15 thereafter to equate to forty percent (40%) of defendant's gross annual income. Defendant shall provide plaintiff with his annual tax returns prepared by and certified to by [defendant's former accounting partner] by October 15 of every year starting October 15, 2012 until defendant earns $250,000 gross, at which time support shall revert back to the original amount agreed to in the parties Marital Settlement Agreement. No matter defendant's annual gross income, at no time shall monthly support be lower than $5,000, except after the emancipation of [the parties' youngest child] when the child support component may be reduced. Any non[-]child support amount paid by defendant to plaintiff above $5,000 shall be deemed as alimony and income to the plaintiff and thus taxable to plaintiff and deductible by defendant.
[(Emphasis added).]
Defendant made $5000 monthly payments in accordance with the consent order for one year, until September 2012 when he unilaterally reduced his payment to $2000. The following month, he paid nothing. Plaintiff immediately moved to enforce the consent order by reinstating support of $8333, the amount negotiated in the marital settlement agreement. Defendant cross-moved to reduce his alimony in accordance with Lepis, or in the alternative, with Morris v. Morris, 263 N.J. Super. 237 (App. Div. 1993).
After hearing argument, Judge DuPuis enforced the consent order finding the critical clause to operate as an anti-Lepis provision in accordance with Morris. The judge found the parties' circumstances nearly identical to the facts presented in that case. In Morris, the wife gave up rights to the marital assets (all of which were heavily encumbered and had little or no equity) in exchange for a set sum of alimony, which the parties agreed could not be modified regardless of changed circumstances. 263 N.J. Super. at 238-40. By the time of the motion, the husband's net worth had declined from a positive $3,000,000 to a negative $3,000,000, and his income had declined from $359,000 to $47,000. Id. at 240. He claimed that the parties' agreement was inequitable from inception and that payment of the agreed alimony amount "plus the additional alimony promised for arrearages, would require defendant to pay plaintiff more than his total income" in his depressed circumstances with no capital assets to liquidate. Id. at 240-41.
The Morris court noted the obvious inequity of not enforcing an agreement in which the parties expressly "provided for defendant's future decreased ability to pay" — "[i]f defendant's income increased, he could hold plaintiff to her agreement; if it decreased, he inequitably could claim an inability to pay and avoid his debt to her." Id. at 242, 244. The panel held that defendant was required to pay the agreed-upon alimony if he had the means to do so, and, if not, the unpaid balance would accrue until his fortunes improved. Id. at 244. If defendant's fortunes did not quickly improve and he was left with a large debt, that was the result he bargained for when plaintiff gave up her claim to equitable distribution "and substantially higher alimony." Ibid. We reasoned there could be "no great inequity" even in that circumstance because "each party has the expected benefit and burden of the contract." Ibid.
Judge DuPuis found that defendant "has presented near identical circumstances as that of the husband in [Morris]. His fortunes have declined and he seeks relief. He does not dispute that both parties bargained for the agreement. Here as in [Morris], each party got the expected benefit and burden of the contract."
Although holding defendant to his agreement, the judge set the matter down for a plenary hearing to determine his ability to pay both current support and arrears. After considering defendant's testimony that he expected to net $100,000 in income, Judge DuPuis found it likely defendant's average monthly net income would be $7271. Based on the expenses to which he testified, she found reasonable monthly expenses of $5118. The judge ordered defendant to pay $2500 in alimony and child support with the difference between that sum and the $8333 required by the parties' agreement to accrue. The court ordered "a nominal arrears payment" of $100 per month. Although acknowledging that the support ordered and defendant's expenses exceeded his income, the court observed that there were savings to be had from optional expenses, noting that "[u]nfortunately when the main wage earner suffers a 60% decline in income and the parties are maintaining two households[,] everyone must adjust their budgets accordingly."
"Each and every motion to modify an alimony obligation 'rests upon its own particular footing and the appellate court must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters.'" Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006) (quoting Martindell v. Martindell, 21 N.J. 341, 355 (1956)). We do not overturn such discretionary decisions "unless the court abused its discretion, failed to consider controlling legal principles or made findings inconsistent with or unsupported by competent evidence." Storey v. Storey, 373 N.J. Super. 464, 479 (App. Div. 2004).
Although it is well established that matrimonial agreements represent enforceable contracts, "[a]t the same time, 'the law grants particular leniency to agreements made in the domestic arena,' thus allowing 'judges greater discretion when interpreting such agreements.'" Pacifico v. Pacifico, 190 N.J. 258, 265-66 (2007) (quoting Guglielmo v. Guglielmo, 253 N.J. Super. 531, 542 (App. Div. 1992)). "The court's role is to consider what is written in the context of the circumstances at the time of drafting and to apply a rational meaning in keeping with the 'expressed general purpose.'" Id. at 266 (quoting Atlantic Northern Airlines, Inc. v. Schwimmer, 12 N.J. 293, 302 (1953)).
Applying those standards here, we agree the trial court was correct in finding the parties had anticipated the decline in defendant's income when they negotiated the consent order and agreed that notwithstanding any such decline, his alimony obligation to plaintiff would never drop below $5000 except upon emancipation of the parties' youngest child when the child support component could be reduced. It is obvious from the parties' agreements that plaintiff gave up $40,000 a year in future alimony as well as $10,000 in arrears in order to protect her downside risk by agreeing that her alimony would never drop below $5000 per month.
We agree with Judge DuPuis that the case is very similar to the facts in Morris, and that defendant's circumstances were not so extreme as to warrant relief under that case. Reviewing the plain language of the consent order de novo, see Crespo v. Crespo, 395 N.J. Super. 190, 194 (App. Div. 2007), we agree with Judge DuPuis that the parties clearly intended that plaintiff's alimony would not be reduced below $5000 before emancipation of the parties' youngest child notwithstanding any decline in defendant's income, and that in the event of default, support would revert to the sum originally negotiated. No explicit reference to Lepis was required. See Savarese v. Corcoran, 311 N.J. Super. 240, 243 (Ch. Div. 1997), aff'd, 311 N.J. Super. 182 (App. Div. 1998).
The unpublished authority on which defendant relies to argue the court incorrectly interpreted the consent order is clearly distinguishable. In that case we found the settlement placed on the record made no mention of a prohibition against modification of alimony, that the subsequent written agreement expressly prohibited the supported spouse from seeking an increase in alimony but was silent as to whether the payor spouse could seek reduction, that the record was unclear as to the consideration for such waivers as existed and the parties' intent was not manifest from a review of the terms, even after applying the general rules regarding the construction of contracts.
Plaintiff agreed at oral argument that should defendant make monthly payments of $5000, no balance would accrue. --------
We reject plaintiff's argument that having upheld the anti-Lepis clause of the parties' post judgment consent order, the court erred in reducing defendant's monthly payment below $5000. As we noted in Morris, a finding that the parties intended their matrimonial settlement agreement not be subject to modification for changed circumstances does not end the inquiry. Morris, supra, 263 N.J. Super. at 244. The trial judge "has both the power and duty to establish a reasonable level of current payment based upon defendant's income, assets, and reasonable resort to credit." Ibid.; N.J.S.A. 2A:34-23. Plaintiff did not establish in the trial court that defendant was earning more than $100,000. Judge DuPuis conducted a careful review of defendant's earnings and expenses. Her finding that defendant could not reasonably pay more than $2500 in current support is supported by competent evidence in the record. Plaintiff has provided us no basis to overturn that exercise of discretion. See Storey, supra, 373 N.J. Super. at 479.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION