Opinion
DOCKET NO. A-2089-14T2
10-24-2016
DAVID SCHWARTZ, Plaintiff-Appellant, v. ALISON SCHWARTZ, Defendant-Respondent.
Leonard S. Miller, attorney for appellant. Pashman Stein, P.C., attorneys for respondent (Tadd J. Yearing, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is only binding on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Sabatino and Haas. On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-1964-13. Leonard S. Miller, attorney for appellant. Pashman Stein, P.C., attorneys for respondent (Tadd J. Yearing, on the brief). PER CURIAM
Plaintiff David Schwartz appeals from an alimony provision in the parties' September 15, 2014 Amended Final Judgment of Divorce ("AFJOD"), and from the trial court's December 5, 2014 denial of his motion for reconsideration. For the reasons that follow, we order that the alimony provision at issue be modified, and we remand for further proceedings.
The parties were married in September 1997 and have one child. The parties divorced on June 23, 2014, following a trial on the issues of alimony and child support.
Prior to trial, the parties resolved the issues of custody, parenting time, and equitable distribution.
At the conclusion of the trial on June 23, 2014, the judge, who was going to be retiring from the judiciary the next day, placed his oral decision on the record. The judge found that plaintiff earned $85,000 per year in base salary, and he imputed $22,500 in annual income to defendant. The judge also noted that plaintiff earned monthly commissions that fluctuated throughout the year. The judge determined to calculate alimony separately, based on both the salary and commission sources of plaintiff's income.
With regard to plaintiff's base salary, the trial judge ordered defendant to pay plaintiff permanent alimony of $396.64 per week. Turning to the issue of the calculation of additional alimony based upon plaintiff's monthly commissions, the following colloquy occurred between the judge and defendant's attorney:
The parties agreed they would share joint custody of their child and that plaintiff would serve as the parent of primary residence. Based upon this arrangement, the judge ordered defendant to pay plaintiff $153 per week in child support. That sum is not contested on appeal.
[THE COURT]: I don't know how we can do something that's going to be fair to both
parties without taking into account the plaintiff's reduced compensation package. So, the only way that we can work this is take that number and figure that each month, because he gets paid on a monthly basis, he will pass on to the defendant 30 percent of his gross compensation. Well, it has to be net; right? Because he's taking the taxes out of it. He's paying the taxes. It probably has to be in reconciliation. Because, generally, what they do is they -- they take out more than 30 percent; right?
[DEFENDANT'S ATTORNEY]: Well, net of what? There's a lot of deductions in there.
THE COURT: Well, just take the gross, not -- what he's making contributions for. And, if you take his gross compensation, less taxes . . . he's going to give 30 percent of the balance to the defendant.
[DEFENDANT'S ATTORNEY]: She had 30 percent of his net income then?
THE COURT: Of his net.
[(emphasis added).]
Defendant's attorney continued to question the trial judge's decision to base the additional alimony award on plaintiff's net commissions. In response, the judge gave the following example that again made clear that net, rather than gross, commissions were to be used to determine the amount of the additional monthly alimony payment:
[DEFENDANT'S ATTORNEY]: But based on what? . . .
THE COURT: Well, we're going to do it . . . monthly. And, then, we have to make a reconciliation; right?
[DEFENDANT'S ATTORNEY]: Isn't it tax deductible, the alimony, though?
THE COURT: Yeah.
[DEFENDANT'S ATTORNEY]: So, then, why would it be a percentage of the net? Because he'll be taking off the gross --
THE COURT: Well, he's got to pay -- he's not going to have those dollars . . . he's going to -- if he gets $5,000, he's going to pay a tax of $1,500. So, he doesn't have to give her -- the only thing he can give her is the balance . . . Thirty percent goes to Uncle Sam. Thirty percent goes to the defendant. And 30 percent will go to the plaintiff.
The trial judge then entered a short-form Dual Judgment of Divorce ("DJOD") dissolving the parties' marriage. The DJOD provided that "[a]limony and [c]hild [s]upport[] will be incorporated pursuant [to the] [j]udge's [d]ecision as set forth on the record." The judge also directed the attorneys to prepare an AFJOD setting forth those terms, as well as those that were included in the parties' written agreements concerning the matters they resolved prior to the trial.
Due to the trial judge's retirement, the matter was reassigned to a different judge ("the motion judge") to shepherd through the filing of the AFJOD. On July 11, 2014, plaintiff's attorney submitted a draft AFJOD to the motion judge for review. With regard to the portion of the alimony that was based on plaintiff's commission, the draft AFJOD stated:
We avoid confusion, we hereinafter refer to the trial judge as "the retired judge."
Plaintiff's commissions are presently paid him on a monthly basis at the end of each month. In the event the [p]laintiff shall earn a commission payment for the month, then, in such event, the [d]efendant shall receive a sum equal [to] thirty (30%) percent of the net monthly commissions (i.e.[,] after taxes are subtracted) earned by [p]laintiff, if any as an alimony payment.
[(emphasis added).]
Defendant's attorney objected to this provision. In an August 8, 2014 letter to the motion judge, the attorney argued that if the additional alimony is based on plaintiff's net commissions, defendant would be "unnecessarily doubly impacted by way of a reduced post-tax percentage and then by having to pay taxes on that reduced amount." To address this concern, the attorney submitted a revised draft of the AFJOD to the motion judge, which stated:
Plaintiff's commissions are presently paid to him on a monthly basis at the end of each month. For any month the [p]laintiff earns and/or receives a commission(s) payment, the [d]efendant shall receive thirty percent (30%) of the gross monthly commission(s) as an additional alimony payment.
[(emphasis added).]
On September 15, 2014, the motion judge sent the parties a letter stating she had executed defendant's version of the AFJOD. The judge explained that, based "upon the review of the transcript[,] it is clear that [the retired judge] ordered that [defendant] is entitled to 30% of [plaintiff's] gross commission." (emphasis in original).
Plaintiff filed a motion for reconsideration, pointing out the portions of the transcript where the retired judge stated that the additional alimony was to be based on plaintiff's net, not gross, commissions. Defendant opposed the motion.
At the beginning of oral argument on December 5, 2014, the motion judge explained she had again reviewed the transcript of the retired judge's decision. Based upon that review, the judge stated, "it is clear . . . to me that I was in error in my initial review of this proceeding. [The] transcript makes clear to me . . . that [the retired judge] based the additional alimony on 30 percent of net."
Defendant's attorney interjected and urged the motion judge not to base the additional alimony on plaintiff's net commissions because of the after-tax consequences that would result. After a further review of these consequences, the motion judge determined that basing the additional alimony on plaintiff's gross commissions would be more equitable because of the after-tax impact on defendant. Therefore, the judge denied plaintiff's motion for reconsideration.
In the December 5, 2014 order reflecting this decision, the judge included a lengthy footnote explaining the mathematical calculations the judge used to determine that relying upon plaintiff's net commissions "would allow [p]laintiff a double tax benefit and would improperly reduce [d]efendant's percentage to well below the 30% articulated by [the retired judge] throughout his opinion." This appeal followed.
The motion judge provided several examples illustrating her point. There are some minor computation mistakes in this portion of the judge's order, which we note in the event either party seeks to refer to these examples on the remand.
On appeal, plaintiff contends the retired judge clearly stated that the additional alimony should be based on plaintiff's net commissions. Once that determination was made, plaintiff argues the motion judge's role in finalizing the AFJOD was only ministerial. Therefore, the motion judge should not have made any substantive changes to the retired judge's decision based on defendant's assertion that using plaintiff's gross commissions as the basis for the calculation would be more equitable to her. We agree.
At the outset, we are mindful of the difficult circumstances the motion judge faced in this case. The alimony determination was made by a different judge whose retirement prevented him from finalizing the AFJOD himself. Thereafter, when the parties could not agree on the language to be used in the AFJOD, the motion judge stepped into the void in an attempt to resolve the dispute and achieve a result the motion judge believed was equitable to both parties.
However, "it is well settled that the oral pronouncement of a judgment in open court on the record constitutes the jural act and that entry of the written judgment is merely a ministerial memorialization thereof." Mahonchak v. Mahonchak, 189 N.J. Super. 253, 256 (App. Div. 1983) (citing Parker v. Parker, 128 N.J. Super. 230, 232-33 (App. Div. 1974)). Here, the retired judge repeatedly stated during his oral decision that the additional alimony was to be based on plaintiff's net commissions. Thus, the motion judge was required to include that term in the AFJOD. Accordingly, we remand this matter and order the trial court to modify the AFJOD to reflect that the additional alimony amount is to be calculated using plaintiff's net commissions.
At the same time, however, we recognize the unique procedural posture of this case. Had the motion judge included the retired judge's determination without change in the AFJOD as required, defendant would have had the opportunity to file an appropriate motion challenging the retired judge's determination based upon her contention that the judge may have overlooked or not been cognizant of the actual tax impact of using defendant's net commissions to calculate the additional alimony. In addition, defendant could have filed a notice of appeal to this court.
Under these unique circumstances, we simultaneously stay the implementation of the modified AFJOD, and allow defendant thirty days to file a motion under Rule 4:50-1 in the Family Part to seek relief from the new order based upon the arguments she raised to the motion judge, as well as any other points she may wish to present on the remand. Plaintiff may oppose that motion and, thereafter, the trial court shall conduct such proceedings as are necessary to enable it to expeditiously resolve the matter. We intimate no preference concerning the outcome on remand and we expressly defer to the trial court's discretion as to whether any retroactive adjustments are warranted.
Thus, plaintiff will continue to pay defendant the additional alimony based on his gross commissions pending the completion of the remand proceedings. --------
Modified and remanded. 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