Opinion
DOCKET NO. A-2798-12T3
10-07-2014
ANN BUSCHER, Plaintiff-Respondent v. STEVEN TULLY, Defendant-Appellant.
Daly & Associates, LLC, attorneys for appellant (Jason B. Levoy and Carolyn N. Daly, on the briefs). Celli & Schlossberg, L.L.C., attorneys for respondent (Vincent P. Celli, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Ostrer and Carroll. On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-356-06. Daly & Associates, LLC, attorneys for appellant (Jason B. Levoy and Carolyn N. Daly, on the briefs). Celli & Schlossberg, L.L.C., attorneys for respondent (Vincent P. Celli, on the brief). PER CURIAM
In this post-judgment matrimonial matter, defendant Steven Tully appeals from the trial court's order granting plaintiff Ann Buscher's motion to extend the period of limited duration alimony. He also challenges as insufficient the court's reduction in the amount of alimony based on changed circumstances, specifically, plaintiff's increased income.
Having considered defendant's arguments in light of the record and applicable legal principles, we are constrained to reverse and remand. The court's extension of the period of limited duration alimony was contrary to the parties' agreement. Also, although the court correctly found that the parties' increased incomes constituted a change in circumstances, the court failed to provide a sufficient statement of reasons, grounded in the statutory factors, for its alimony calculation.
I.
The parties were divorced on February 5, 2007, after over eighteen years of marriage. The dual final judgment of divorce incorporated the parties' December 2006 Support and Property Settlement Agreement (PSA). The parties had three children. At the time of the divorce, one was almost seventeen years old, another was eleven, and a third child was emancipated.
Defendant agreed in the PSA to pay limited duration alimony, starting after the parties sold the marital home, and ending on December 31, 2016. However, until the marital home was sold, the parties agreed to live there together, and defendant agreed to defray most of plaintiff's living expenses. The amount of alimony was set in the PSA at $11,800 annually for the first three years, and $11,000 thereafter.
In their respective pre-divorce case information statements (CIS), the parties valued their modest marital home at $300,000. It was encumbered with $222,323 in debt as of May 2005. The parties each had over $20,000 in credit card debt in their respective names. They agreed in the PSA to make repairs to the home, sharing the costs equally, and then list it for sale in April 2007. However, the parties also agreed to attempt to borrow an additional $50,000 against the house; each would receive $20,000 to reduce their personal debts, and the remainder would be used to defray various shared debts.
While the parties lived together post-divorce, defendant agreed to place virtually all his income in a joint account, to defray most living expenses. The PSA stated:
[T]he parties have agreed to continue living in the marital home together with their children until such time as the marital home is sold. . . . The parties have agreed to the manner in which they will share household and personal finances and expenses for themselves and the minor children pending the closing on the sale of the marital home as set forth herein.According to plaintiff's pre-divorce CIS, the monthly housing expenses assumed by defendant totaled $2614; and the monthly automobile insurance costs were $330. Defendant's share of the $2530 in schedule C personal costs is not as readily calculable. However, it appears to have been substantial.
[T]he Husband's income from [t]he . . . School will continue to be deposited into the parties' joint checking account. The funds in the joint checking account will be utilized toward all of the carrying expenses for the marital home including the mortgage, electric, gas, water, sewer, garbage removal, monthly sewer assessment fee, home telephone, cellular telephones, cable television, and internet charges. The
balance of the monies will be utilized toward the parties' automobile insurance, Schedule C expenses for the family, and food for the household (excluding his credit card debt).
Defendant was allowed to retain what amounted to $85 00 in annual income for his personal use:
The Husband's additional income earned from . . . doing computer work, estimated at approximately $2,000.00 per year, can be deposited by the Husband into his own personal account and utilized at his discretion. Any income earned by the Husband during the Summer can also be deposited into his own personal account and utilized at his discretion toward his credit card debt and any other discretionary items as he sees fit and appropriate. The Husband shall also support his dog from this income.
Plaintiff was entitled to control all her earnings, and agreed to bear some of her Schedule B and C expenses.
Any income earned by the Wife can be deposited into an account in the Wife's name alone. The Wife shall be responsible for the payment of her credit card debt, medical insurance, gasoline expenses, tuition expenses, and her own personal Schedule C expenses. The Wife will also use any additional funds in her account toward joint family expenses.
The PSA expressly provided that defendant's obligation to pay alimony would begin only after the house was sold, and end on December 31, 2016:
Upon the closing on the sale of the marital home, the Husband shall pay alimony to the Wife in the amount of $11,80 0.00 per year . . . . The Husband's alimony obligation shall be reduced after the first three (3) years for a total payment for the remainder of the term of $11,000.00 per year . . . .Consistent with the alimony provision, defendant was obliged to pay child support to plaintiff "[u]pon the closing on the sale of the marital home," consistent with a Child Support Guidelines calculation.
The alimony set forth . . . herein shall be paid for a fixed a [sic] term (terminable and/or modifiable only as may be applicable pursuant to paragraphs 10, 11, and/or 12 herein and/or relevant New Jersey law) . Specifically, alimony shall be paid until December 31, 2016.
Paragraphs 10 and 11 provided for an earlier termination of alimony because of death or remarriage. Paragraph 12 noted that neither party would be able to maintain a lifestyle reasonably comparable to the one enjoyed during the marriage.
It is undisputed that the parties did not list the house for sale in April 2007. Plaintiff remained there until May 13, 2011, when she vacated with the parties' youngest child. Defendant remained with the other unemancipated child, finally vacating the home in April 2012. While plaintiff lived in the house, she worked part-time, completed her undergraduate education, and obtained a master's degree.
Defendant earned $66,500 in 2005 and plaintiff was imputed to earn $20,800. The child support guidelines calculation, attached to the divorce judgment, set defendant's income at $65,000. By the time the post-judgment motions were heard in 2013, plaintiff's income rose to $52,988. The trial court found that defendant's income rose more modestly, from $66,500 to $77,000.
While the parties lived together post-divorce, they refinanced the house, and increased their mortgage debt. As of March 2012, the parties owed $267,000 on the home mortgage, roughly $45,000 more than they owed in 2005. Plaintiff alleged she "received no value from the refinance," and defendant "badgered" her into consenting to the transaction. Defendant responded that the transaction was voluntary, and plaintiff received "half of the proceeds ($20,000) to consolidate her bills." Plaintiff did not dispute defendant's claim in her reply certification. Although neither party provided closing documents reflecting the disposition of the proceeds, plaintiff's 2012 CIS appears to support defendant's assertion, as it shows only $18 00 in credit card debt. Moreover, the transaction was contemplated by the PSA.
Although the lender in the post-divorce refinancing apparently valued the house at over the amount borrowed — $267,000 or more — plaintiff alleged, without an expert's appraisal, that the house's fair market value had dropped to $230,000 by May 2012. Defendant asserted — also without an expert — that the house's value had dropped to $135,000 as of September 2012, following two damaging floods. The house was listed for sale in September 2012.
Plaintiff alleged that defendant refused to list the house in 2007 and blocked her efforts to list it thereafter. However, she provided no written objections to his alleged obstructions, and sought no relief from the court until her motion in May 2012. Defendant responded that plaintiff willingly remained in the home, and postponed a sale, because living together was economical; defendant was contributing to plaintiff's support while she attended college and graduate school; and the parties could not afford to live separately in their current school district, where they wanted their children to remain. To justify her decision to vacate the house on May 13, 2011, plaintiff cited a variety of domestic contretemps. She rented an apartment with financial help from her family.
Defendant alleged that his personal debt, and the burden of defraying the carrying costs of the home, led him to declare personal bankruptcy. He was granted a discharge in September 14, 2012. Although he provided no other details of the filing and the discharge, his December 26, 2012 CIS reflected a $10,000 car loan as his only debt. Defendant alleged he paid the mortgage, taxes, and utilities until April 2012. Post-discharge, he claimed that he still paid $277 a month for utilities on the marital home.
Plaintiff asserted that the parties intended in the PSA to sell the house shortly after listing it in April 2007. She recognized "it would not have been fair or equitable for Defendant to pay all of the expenses related to the house and family and provide me with alimony while we were still living together." However, she asserted that the parties did not intend that "if the house never sells" then defendant would never have to pay alimony. She argued his alimony obligation should commence from the date she vacated the home in 2011, and continue until 2020.
Defendant argued that the court should enforce the plain language of the PSA, which provided that alimony would not commence until the house was sold. He argued that when the parties entered the PSA, they did not know when the house would sell, and the agreement assured that defendant would not have to pay both alimony and the carrying costs of the marital home.
The trial court granted plaintiff's motion to compel payment of alimony through 2020. The court concluded that the parties intended that plaintiff would receive nine years of alimony. "It was clear that the parties anticipated the sale of the home and then a nine-year term. It doesn't say nine years but that's the only reasonable interpretation I can see." The court also concluded the enforcement of the plain language of the PSA — delaying alimony until sale — would be inequitable. The court ordered that alimony begin April 2011 — mistakenly concluding that plaintiff vacated the home that month. The court did not award defendant any credit for his support before then. Additionally, the court did not expressly address or resolve the parties' dispute over whether defendant prevented the sale of the house, or plaintiff willingly remained there until 2011.
On defendant's cross-motion, the court agreed that plaintiff's increased income constituted a change in circumstances. The court set plaintiff's annual income at $52,988 and defendant's at $77,000. Referring generally to the statutory factors set forth in N.J.S.A. 2A:34-23, but without considering them individually, the court reduced the amount of alimony to $9932 annually ($191 weekly).
We note that in memorializing the order, the trial court utilized competing forms from the parties, making substantial changes to each. So that the order is easier to read, the preferred practice is for the court to direct one party "to draft a single conforming order memorializing all of the dispositions." Filippone v. Lee, 304 N.J. Super. 301, 307 (App. Div. 1997).
On appeal, defendant argues that the court erred in awarding nine years of alimony beginning April 1, 2011. He asserts that (1) the court ignored the PSA's plain language, in concluding the parties intended to award plaintiff nine years of alimony; (2) to the extent the parties differed about their intentions, a plenary hearing was required; (3) extension of limited duration alimony violated N.J.S.A. 2A:34-23; (4) the PSA was not unfair or inequitable; and (5) plaintiff herself conceded she moved out on May 13, 2011. Defendant also argues that the court failed to make essential findings of fact and conclusions of law in support of its recalculation of alimony. He asserts that based on plaintiff's budget set forth in her CIS, the reduced alimony amount was still excessive.
II.
A.
We review de novo the trial court's interpretation of a contract. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998). "Voluntary accommodations regarding matrimonial differences are highly desirable and make a major contribution to the fulfillment of 'the strong public policy favoring stability of arrangements.'" Petersen v. Petersen, 85 N.J. 638, 645 (1981) (quoting Smith v. Smith, 72 N.J. 350, 360 ( 1977)). We apply principles of equity to assure that a matrimonial settlement agreement is fair and just. See, e.g., J.B. v. W.B., 215 N.J. 305, 326 (2013); Petersen, supra, 85 N.J. at 642. "[T]he law grants particular leniency to agreements made in the domestic arena, thus allowing judges greater discretion when interpreting such agreements." Sachau v. Sachau, 206 N.J. 1, 5 (2011) (internal quotation marks and citation omitted).
Nonetheless, we apply contract principles to ascertain an agreement's meaning. See Pacifico v. Pacifico, 190 N.J. 258, 266 (2007) (applying to property settlement agreement the "basic rule of contractual interpretation that a court must discern and implement the common intention of the parties"). Generally, a trial court may not reform a couple's property settlement agreement "'absen[t] . . . unconscionability, fraud, or overreaching in [] negotiations of the settlement.'" J.B., supra, 215 N.J. at 326 (quoting Miller v. Miller, 160 N.J. 408, 419 (1999)); see also Miller, supra, 160 N.J. at 419 (stating that matrimonial agreements may be reformed in cases of mutual mistake, or unilateral mistake accompanied by concealment). "As contracts, PSAs should be enforced according to the original intent of the parties." J.B., supra, 215 N.J. at 326; see also Sachau, supra, 206 N.J. at 5-6.
The "polestar" of contract construction is "the intention of the parties . . . as revealed by the language used, taken as an entirety." Atl. N. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301 (1953). "[I]n the quest for the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded." Id. at 301. Extrinsic evidence may include the structure of the contract, the bargaining history, and the conduct of the parties that reflects their understanding of the contract's meaning. Subsequent dealings of the parties under the contract may also be considered to illuminate the parties' understanding. Michaels v. Brookchester, Inc., 26 N.J. 379, 388 (1958). The court looks to the parties' objective manifestations of intent. Friedman v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956) ("It is not the real intent but the intent expressed or apparent in the writing that controls."); Cohn v. Fisher, 118 N.J. Super. 286, 291 (Law Div. 1972).
B.
Applying these principles, we discern no basis in the language of the PSA or extrinsic circumstances for the trial court's conclusion that the parties intended to award plaintiff nine years of alimony, commencing after the marital house was sold, and without any credit for the defendant's expenditures before then. Consequently, we discern no basis in equity to commence such a nine-year term of alimony when plaintiff vacated the marital home before its sale. Cf. N.J.S.A. 2A:34-23(c) (stating that a court "shall not modify the length of the term [of limited duration alimony] except in unusual circumstances").
The parties agreed to remain in the home for an indefinite period after the divorce, until the house was sold. During that interim period, defendant agreed to bear not only the roof expenses, but also a significant portion of the Schedule B and C expenses. These expenditures were, unmistakably, a form of spousal support or alimony. We look to the essential nature and purpose of an obligation, in order to characterize it as alimony or equitable distribution. See Schorr v. Schorr, 341 N.J. Super. 132, 139 (App. Div. 2001); Mendell v. Mendell, 162 N.J. Super. 469, 475-76 (App. Div. 1978).
Our courts have found that an agreement to pay mortgage, insurance and taxes on a former-spouse's residence post-divorce is in the nature of support or alimony. See Winegarden v. Winegarden, 316 N.J. Super. 52, 60-61 (App. Div. 1998) (finding former spouse's assumption of mortgage payments to be non-dischargeable alimony); Loyko v. Loyko, 200 N.J. Super. 152, 157-58 (App. Div. 1985) (same); Burstein v. Burstein, 182 N.J. Super. 586, 595-96 (App. Div. 1982) ("It has heretofore been held that an obligation to pay mortgage payments comes within the broad definition of support."); Colucci v. Colucci, 251 N.J. Super. 73, 83-84 (Ch. Div. 1991) (holding that obligation to pay mortgage, taxes and insurance for the marital home was a support obligation that terminated, pursuant to the agreement's express terms, upon the wife's remarriage). Thus, defendant's obligation was part and parcel of his alimony obligation, which would terminate at the end of 2016.
Although plaintiff baldly asserted that defendant obstructed the sale of the home and forced her to remain there, she has failed to create a genuine issue of material fact on the issue. Looming large over her claim is the absence of any documented protest or request for relief from the court; her continued residence in the home for over four years; and her unqualified acceptance of defendant's support. Her trial counsel all but conceded that, although the parties initially agreed to list the house in April 2007, "[t]he most generous reading is they decided otherwise." Her claim that she consented to refinance the home under a form of duress also lacks essential support, particularly given the undisputed assertion by defendant that she utilized $20,000 of the refinancing's proceeds to reduce her personal credit card debt.
However, we also reject defendant's argument that his alimony obligation should remain suspended because the house remains unsold. The parties intended to remain in the house together until they sold the house. Consistent with that intent, until the sale, defendant agreed to support plaintiff by paying roof and selected Schedule B and C expenses; and then, after the sale, he would shift to the payment of monthly alimony. Contrary to the expressed plan to list the house for sale in April 2007, the parties agreed to live together for an extended period of time, for the sake of economies and school registration. Their subsequent behavior reflected that agreement.
The parties clearly did not contemplate that there would be a significant period of time in which plaintiff would live outside the marital home, in need of support, while the house remained unsold. This conclusion is bolstered by the defendant's agreement to pay not only those costs essential to preserve the asset, but he also agreed to pay various Schedule B and C expenses. The parties thus omitted an essential term from their agreement, regarding how to reconcile plaintiff's need and entitlement to support until December 2016, and the necessity to maintain their common asset until it was sold, the responsibility for which was assigned to defendant. Where parties omit a term "essential to a determination of their rights and duties," the court shall supply a term "which is reasonable in the circumstances." Restatement (Second) of Contracts § 204 (1981); see also Sachau, supra, 206 N.J. at 9.
It is not surprising that eventually, the parties' incompatibility made it intolerable for plaintiff to remain in the home with defendant. Moreover, it would be inequitable to have required plaintiff to remain in the marital home with defendant, more than four years after entry of the divorce judgment. Plaintiff was entitled to vacate the marital home. As of May 13, 2011, monetary support should have begun, until the end date of December 31, 2016.
If defendant continued to bear certain Schedule B or C expenses for plaintiff's benefit after she moved out — such as automobile insurance — he should receive an appropriate credit against alimony.
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That does not end our analysis. Defendant continued to expend funds for the preservation of the parties' common asset. He paid the mortgage and taxes until April 2012. Even after he vacated the home himself, he allegedly continued to pay $277 a month for utilities. Once plaintiff vacated the home, these expenditures were no longer in the nature of support. Nonetheless, inasmuch as the parties shared an equal interest in the marital home, the court on remand should equitably allocate between the parties responsibility for these expenses, to the extent the court finds that they were reasonably and justifiably incurred. In so doing, the court should consider the equitable distribution factors set forth in N.J.S.A. 2A:34-23(a).
C.
Finally, we turn to the court's recalculation of the alimony amount. The court correctly determined that the parties' increased incomes — particularly plaintiff's more than doubling of her income — constituted a change in circumstances warranting review. Reese v. Weis, 430 N.J. Super. 552, 574 (App. Div. 2013) ("[A]n increase in a dependent spouse's income . . . may be so dramatic as to warrant modification or elimination of an alimony obligation."). However, the court did not expressly consider the alimony factors, N.J.S.A. 2A:34-23(b), nor adequately explain the basis for its alimony determination.
A trial court is invested with broad discretion to determine alimony. See, e.g., Cox v. Cox, 335 N.J. Super. 4 65, 473 (App. Div. 2000). However, if the "court ignores applicable standards, we are compelled to reverse and remand for further proceedings." Gotlib v. Gotlib, 399 N.J. Super. 295, 309 (App. Div. 2008); Boardman v. Boardman, 314 N.J. Super. 340, 345 (App. Div. 1998). An articulation of reasons is essential to the fair resolution of a case. O'Brien v. O'Brien, 259 N.J. Super. 402, 407 (App. Div. 1992); see also Italiano v. Rudkin, 294 N.J. Super. 502, 505-07 (App. Div. 1996) (reversing and remanding where trial court failed to articulate reasons for denying post-judgment motion to modify child support and for fees); R. 1:7-4 (requiring court in non-jury trial to "find the facts and state its conclusions of law thereon").
In applying the factors, the court must be mindful that alimony is designed to enable the supported spouse to "achiev[e] 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). However, the court must strive to maintain the marital lifestyle of the payor as well. Id. at 26. Often, the parties will be unable to enjoy the marital standard of living post-divorce, once the parties lose the economies of scale of a single household, especially when their marital spending has consumed all their incomes. Ibid. The court's analysis in this case fell short of that required by statute and our caselaw. On remand, the court shall "make specific findings on the evidence about all the . . . factors" as required. N.J.S.A. 2A:34-23(c).
Reversed and remanded for further proceedings. 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