Opinion
DOCKET NO. A-2035-12T2
08-28-2014
W. BRUCE OVERBAY, Plaintiff-Respondent/ Cross-Appellant, v. MARY ELLEN OVERBAY, Defendant-Appellant/ Cross-Respondent.
Mary Ellen Overbay, appellant/cross-respondent, argued the cause pro se. William C. Dodd argued the cause for respondent/cross-appellant (Schenck, Price, Smith & King, LLP, attorneys; Mr. Dodd, of counsel and on the briefs).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Grail, Waugh, and Nugent. On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Somerset County, Docket No. FM-18-1083-01. Mary Ellen Overbay, appellant/cross-respondent, argued the cause pro se. William C. Dodd argued the cause for respondent/cross-appellant (Schenck, Price, Smith & King, LLP, attorneys; Mr. Dodd, of counsel and on the briefs). PER CURIAM
Defendant Mary Ellen Overbay appeals the Family Part's January 15, 2013 order, which reduced (1) the amount of alimony payable to her by plaintiff W. Bruce Overbay and (2) the amount of life insurance he must maintain for her benefit. Bruce cross-appeals from the same order, arguing that the alimony should have been reduced further. We affirm in part, reverse in part, and remand for entry of an order implementing this decision.
Because the parties share the same last name, we refer to them by their first names for the sake of clarity.
I.
We discern the following facts and procedural history from the record on appeal. More detailed factual and procedural information can be found in Overbay v. Overbay (Overbay I) , 376 N.J. Super. 99 (App. Div. 2005), which determined the parties' initial appeal concerning the financial terms on the judgment of divorce entered on January 17, 2002, and Overbay v. Overbay (Overbay II), No. A-5989-05 (App. Div. July 21, 2009), which stemmed from Mary Ellen's appeal of the order resulting from the remand ordered in Overbay I. The present appeal concerns the order that was a consequence of the remand in Overbay II, as well as Bruce's motion for a reduction in alimony due to changed circumstances.
See also Overbay v. Overbay, No. A-0026-05 (App. Div. Aug. 23, 2007), which concerns an issue unrelated to those raised in Overbay I and Overbay II.
The parties were divorced in 2002, having been married for thirty-one years. Their three children were emancipated at the time of the divorce. Bruce is now seventy years old, and Mary Ellen is sixty seven. Both parties received M.B.A. degrees from Wharton School of Business. Mary Ellen "gave up her career at Citibank early in the marriage to become a full-time homemaker and mother, while [Bruce] functioned as the father and full-time wage earner." Overbay I, supra, 376 N.J. Super. at 102.
At the time the parties divorced, Bruce was in good health and working for ExxonMobil, earning $132,000 per year plus benefits. Mary Ellen was not in good health. The trial judge found that she had "serious health problems, suffering primarily from heart problems [that] resulted in two prior hospitalizations." She taught two classes at Seton Hall University, earning $12,000 annually, and given her "significant medical problems," the trial judge concluded that "[h]er future employability is uncertain."
The trial judge ordered equitable distribution and determined that Bruce should pay alimony at the rate of $3000 per month. In reaching that amount, the judge imputed annual income to Mary Ellen based on a 7.4% rate of return on assets she received from an inheritance. Both parties appealed. We affirmed all issues related to equitable distribution, but remanded for reconsideration of the calculation of alimony. We gave the following instruction for the remand:
If the trial court determines that [Mary Ellen's] investments provide a prudent balance between investment risk and investment return, then additional income should not be imputed even though a more aggressive investment strategy might provide additional earnings. [Mary Ellen] is not required to put her capital at risk, or to jeopardize her inheritance, by pursuing an investment strategy that is neither reasonable nor prudent. . . .
. . . .
Each of the parties raised other issues that are relevant to the alimony determination. For example, [Bruce] claims the trial court erred by overstating [his] ability to pay alimony ("the error here is in the trial court's calculation of approximately $3,000 more in available net wages to [Bruce]"), and [Bruce] also claims the trial court erred "in allowing [Mary Ellen] $2,000 more in available income per month than [Bruce] without justification." On the other hand, [Mary Ellen] contends "the court erred in ordering only $3,000 a month in alimony because it did not include all [Bruce's] earnings in his income [and] it capriciously slashed [her] budget." Because this case must be remanded for further trial proceedings, we decline to address these additional alimony arguments. On remand, the trial judge must consider all relevant facts and circumstances, including these arguments, when redetermining the appropriate amount of permanent alimony to be paid by [Bruce] to [Mary Ellen]. We do not intend to suggest the outcome of any of the disputed financial issues, but only to insure that all of the appropriate facts and
circumstances are fully considered and evaluated by the trial judge.
[Overbay I, supra, 376 N.J. Super. at 112-13 (ninth alteration in original).]
Following an eight-day remand hearing, the trial judge delivered an oral decision and entered an implementing order on June 15, 2006. He concluded that Mary Ellen could earn a 4.5% return on her investments. He also determined that he had overstated her needs in his August 2002 decision, so he reduced her monthly budget from $8000 to $7000. Based upon those findings, the judge recalculated alimony and increased Bruce's monthly obligation from $3000 to $3750, retroactive to the date of the judgment of divorce. He also established a schedule for payment of Bruce's arrears. Both parties appealed.
In Overbay II, we affirmed the 4.5% rate of return, but reversed the judge's decision to reduce Mary Ellen's budget. We ordered a very limited remand "to the judge who heard the matter":
Because the remand court's findings as to [Mary Ellen's] budget are inadequate to substantiate the reduction from $8000 to $7000, we reinstate the $8000 amount. 2:10-5. On remand, the court must use [Mary Ellen's] $8000 monthly budget and redetermine alimony based on her income as modified by the trial court and now affirmed by this court. We expect that the remand court will be able to make that determination without expanding the record
or requiring additional submissions by the parties.
[Overbay II, supra, No. A-5989-05 (slip op. at 11-12).]
However, in August 2006, shortly after the order from the first remand was issued, Bruce filed a motion for a reduction in alimony based on Lepis principles, specifically a reduction in his salary as of September 2005. According to Bruce's brief on this appeal, the trial judge was aware of his reduction in income at the time of the remand hearing, but declined to consider the issue until after completion of the remand. Given the subsequent procedural history, we can only characterize that decision as unfortunate.
Lepis v. Lepis, 83 N.J. 139 (1980).
In November, a different judge heard Bruce's motion. He stayed the trial judge's order that Bruce make a second payment of $17,250 for arrears on February 1, 2007, reduced alimony to $2500 per month retroactive to September 1, 2005, and scheduled discovery to be followed by a plenary hearing. According to Mary Ellen's brief, the plenary hearing was scheduled to begin on November 26, 2007, but was canceled that morning by a third judge. Following further delay, motion practice, and changes of the judge assigned to the case, the combined remand/plenary hearing finally took place. It was held on five trial days over the course of a whole year - May 2011 to May 2012 - before yet another judge.
We note that there were at least four or five judges assigned to the case at different times and, most troubling, that an issue, Bruce's changed circumstances, that could have been resolved at the time of the first remand hearing in June 2006, was not resolved at the trial level until January 2013, as part of the second remand hearing.
In his January 15, 2013 opinion, the judge reviewed the parties employment and earned-income history. He noted that, when the parties divorced, Bruce had been making $132,000 per year with ExxonMobil. He was laid off in March 2004, and received severance pay of $170,652. In September of 2005, Bruce started working at Engineering Services Network, making $85,000 per year. In March 2008, he began working at General Dynamics Information Technology, making $89,750 plus an annual bonus of $3000. Bruce's compensation was increased to $96,706 in April 2009. It was increased again in March 2010, to $99,607. Bruce received a bonus of $6000 in January 2011, and his salary was increased to $113,166 in March 2011. Bruce's work week was then reduced from five to four days in 2012, due to declining business, and his compensation was reduced to $90,533.
Mary Ellen, on the other hand, received $12,000 in part-time income from Seton Hall University at the time of the divorce in 2002. She continued her employment at Seton Hall on a part-time basis. The judge listed the following fluctuations in her income: $20,800 in 2005, $19,142 in 2006, $18,418 in 2007, $22,310 in 2008, $18,435 in 2009, and $11,285 in 2010.
With respect to the issue on remand, the judge set Bruce's alimony obligation at $4750 retroactive to September 1, 2002. Turning to Bruce's motion, the judge determined that (1) Bruce "has proven a substantial and permanent change in circumstances based upon a change in employment at a reduced salary of $85,000," and (2) Mary Ellen had "a decrease in the amount of alimony needed due to an increase in her income."
Despite our determination in Overbay II that $8000 should be used as Mary Ellen's monthly budget, the judge recalculated her need and estimated a monthly budget at $7845. After factoring in the income changes, he established a new alimony amount of $2050, retroactive to September 1, 2005. He reduced the amount to $1050 as of April 1, 2013, due to Mary Ellen's anticipated receipt of Social Security benefits in the amount of $1000 per month. Finally, he reduced Bruce's obligation to maintain life insurance on himself to $150,000. This appeal followed.
II.
On appeal, each of the parties contends that the most recent judge erred in his determination of the remand and Bruce's Lepis motion. As they have in the past, Bruce primarily contends that the resulting order provides excessive alimony, and Mary Ellen primarily contends that her support is and remains too low.
A.
We ordinarily accord great deference to the discretionary decisions of Family Part judges. Donnelly v. Donnelly, 405 N.J. Super. 117, 127 (App. Div. 2009) (quoting Larbiq v. Larbiq, 384 N.J. Super. 17, 21 (App. Div. 2006)). Similar deference is accorded to the factual findings of those judges following an evidentiary hearing. Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). A judge's purely legal decisions, however, are subject to our plenary review. Crespo v. Crespo, 395 N.J. Super. 190, 194 (App. Div. 2007) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)); Lobiondo v. O'Callaqhan, 357 N.J. Super. 488, 495 (App. Div.), certify denied, 177 N.J. 224 (2003).
In determining an award of alimony, N.J.S.A. 2A:34-23(b) directs that a trial court should consider the following factors:
(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.
"[T]he goal of a proper alimony award is to assist the supported spouse in achieving 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). Trial judges may award such alimony "as the circumstances of the parties and the nature of the case shall render fit, reasonable and just." N.J.S.A. 2A:34-23. Accordingly, judges possess the equitable power to set alimony at the time of a divorce, "and to monitor and revise alimony on an ongoing basis, as circumstances may require." Weishaus v. Weishaus, 180 N.J. 131, 140 (2004) (citations omitted).
A judge may modify alimony based upon a showing of changed circumstances. See N.J.S.A. 2A:34-23(c); Lepis, supra, 83 N.J. at 146. The appellate court must afford due recognition to the Family Part judge's discretion on whether a change in circumstance warrants a modification of alimony. See Larbiq, supra, 384 N.J. Super. at 21; Storey v. Storey, 373 N.J. Super. 464, 470 (App. Div. 2004).
Courts recognize several changed circumstances warranting a modification in alimony, including an "increase or decrease in a supporting spouse's income," and an "illness . . . arising after the original judgment." Lepis, supra, 83 N.J. at 151. Nonetheless, "[c]ourts have consistently rejected requests for modification based on circumstances which are only temporary." Ibid. "Determining the impact and magnitude of 'changed circumstances' necessarily entails knowing the starting point before the change, that is, the point from which the change can be measured." Foust v. Glaser, 340 N.J. Super. 312, 316 (App. Div. 2001).
"In an application brought by a supporting spouse for a downward modification in alimony . . . the central issue is the supporting spouse's ability to pay." Miller v. Miller 160 N.J. 408, 420 (1999). However, a supporting spouse's income is but one factor that is considered when determining ability to pay; other factors such as "[r]eal property, capital assets, investment portfolio, and capacity to earn by 'diligent attention to . . . business'" should all be considered by a trial judge as well. Id. at 420-21 (second alteration in original) (quoting Innes v. Innes, 117 N.J. 496, 503 (1990)).
B.
We start with the issue of the remand. In Overbay II, we found that the trial judge had correctly determined that income from Mary Ellen's investment assets should be imputed to her at a return rate of 4.5%. We remanded for recalculation of alimony because the judge had reduced Mary Ellen's monthly budget from the $8000 he had previously calculated for reasons not supported in the record. As part of the most recent hearing, the new judge set alimony at $4750, retroactive to the date of the judgment of divorce. Given our review of the record and our earlier opinions, as well as the deference generally owed to Family Part judges, we see no basis to second-guess that determination, which finds adequate support in the appellate record.
With respect to the Lepis issue, we find support in the record for the judge's finding that Bruce experienced a permanent change in circumstances sufficient to warrant an adjustment to his alimony obligation under Lepis principles. The record, however, does not support his decision to use $85,000 as Bruce's new earned income for Lepis purposes. That was his initial income upon re-employment in 2005. The record reflects a fairly steady growth in income from salary and bonuses in the years that followed, so that he was earning slightly more than $113,000 by 2011, months before his hours were reduced such that his income was $90,500 per year. From the time of his re-employment until his hours were reduced, he was earning approximately $98,000 per year, including salary and bonuses. At the time of the hearing, he was earning $90,500.
With respect to Mary Ellen's income, the initial alimony calculation was based on annual earned income of $12,000 per year. The record reflects that her earnings thereafter rose as high as $22,310 and then fell to a little over $11,000 prior to the most recent hearing. The judge attributed $20,800 in earned income for the purposes of the Lepis motion. We find that the judge's determination in that regard is supported in the record, but only as to the period prior to 2010. By the time of the remand hearing, her earned income was back to a level consistent with the $12,000 used at the time of the divorce.
Despite our directive in Overbay II, the judge also undertook a recalculation of Mary Ellen's needs and lowered the $8000 budget to $7845. That decision runs afoul of the "law of the case" doctrine, which embodies "the principle that where there is an unreversed decision of a question of law or fact made during the course of litigation, such decision settles that question for all subsequent stages of the suit." Slowinski v. Valley Nat'l Bank, 264 N.J. Super. 172, 179 (App. Div. 1993) (citations and internal quotation marks omitted).
The judge made the Lepis reduction effective as of the time of Bruce's re-employment, rather than the date of his Lepis motion. Such decisions are generally within the discretion of the judge. Reese v. Weis, 430 N.J. Super. 552, 584 (App. Div. 2013); Walles v. Walles, 295 N.J. Super. 498, 514 (App. Div. 1996). We find no abuse of discretion as to this issue, under the circumstances of this case.
While it would, quite clearly, have been the better practice for the trial judge to have combined the first remand and the issue of the Lepis reduction, we accept the representation by Bruce's counsel that the trial judge was unwilling to do so.
In order to avoid a third substantive remand, we exercise our original jurisdiction to recalculate alimony to the extent necessary based on our review of the order on appeal. R. 2:10-5. For the purposes of our recalculation, we use a monthly budget of $8000. For the period between September 1, 2005 and March 31, 2011, we use $98,000 as Bruce's annual income and $20,000 as Mary Ellen's earned income, plus $48,000 as investment income. We determine that Mary Ellen's monthly additional need is $2350, which we establish as her entitlement to alimony from Bruce. For the period April 1, 2011 to March 31, 2013, we recalculate the amount of alimony to reflect both the drop in income resulting from the reduction in Bruce's employment from five to four days per week and the drop in Mary Ellen's earned income as reflected in the record. For the specified period, Bruce's support obligation will increase to $2750 per month. Finally, from April 1, 2013 forward, we reduce the amount of monthly alimony to $2000, to reflect some, but not all, of Mary Ellen's receipt of Social Security benefits.
We are satisfied that Bruce can contribute these amounts to support his former wife during the periods at issue. In addition to his earned income, he has other sources of actual or potential income. For example, had Bruce not used his assets for other purposes, he would have been able to generate additional income from some of them. While we disagree with Mary Ellen's assertion that Bruce's supposedly "lavish" lifestyle, funded by his sale of assets and funds available through his second wife, warrants no reduction in his alimony obligation, we are nevertheless persuaded that Bruce is as subject to the imputation of income from assets as was Mary Ellen, and that his decision to use his capital assets for current expenses cannot excuse his ongoing obligation to support his former wife. See Miller, supra, 160 N.J. at 420-21.
As we have stated in the context of a child support obligation and college expenses, "a current spouse's income may be relevant in determining a [party's] ability to contribute" to alimony payments. Hudson v. Hudson, 315 N.J. Super. 577, 582 (App. Div. 1998) .
--------
Having reviewed the remaining arguments made by the parties in light of the record and applicable law, we conclude that they are without merit and do not warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
We remand to the Family Part for the exclusive purpose of entering an order implementing our decision, which is that monthly alimony will be payable as follows: (1) September 17, 2002 to August 31, 2005 - $4750; (2) September 1, 2005 to March 31, 2011 - $2350; (3) April 1, 2011 to March 31, 2013 - $2750; and (4) from April 1, 2013 forward - $2000. The order shall also calculate arrears and establish a reasonable, but not drawn out schedule for payment of the arrears to Mary Ellen.
Affirmed in part, reversed in part, and remanded solely for entry of an implementing order consistent with this opinion. I hereby certify that the foregoing is a true copy of the original on file in my office. CLERK OF THE APPELLATE DIVISION