Opinion
DOCKET NO. A-1197-12T1
06-26-2014
TRACY A. D'ALESSANDRO, Plaintiff-Appellant, v. MICHAEL J. D'ALESSANDRO, Defendant-Respondent.
Celli & Schlossberg, attorneys for appellant (Katherine E. Giusti, on the brief). Newsome O'Donnell, attorneys for respondent (Edward J. O'Donnell and Carmen Diaz-Duncan, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges St. John and Leone.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-1000-08.
Celli & Schlossberg, attorneys for appellant (Katherine E. Giusti, on the brief).
Newsome O'Donnell, attorneys for respondent (Edward J. O'Donnell and Carmen Diaz-Duncan, on the brief). PER CURIAM
Plaintiff Tracy A. D'Alessandro appeals an order reducing the alimony and child support obligations of defendant Michael J. D'Alessandro. Plaintiff contends that defendant did not show a change of circumstances, that discovery and an evidentiary hearing were required, and that child support was miscalculated. We affirm.
I.
The parties were married in 1985. They had a son in 1989 and a daughter in 1993, and separated in 2007. On May 18, 2009, they entered into a Property Settlement Agreement (PSA) which they incorporated into a Final Judgment of Divorce.
The PSA acknowledged that, at the time of the agreement, plaintiff was a school cafeteria worker earning $15,000. Defendant had a 50% ownership interest, valued at $1,250,000, in Print Communications Group, Inc. (PCG). His annual income from all sources, including his PCG salary and perquisites of employment, was $240,000.
Based on those incomes, the parties deviated upward slightly from the Child Support Guidelines. They agreed in the PSA that defendant would pay child support of $192.31 per week for their unemancipated daughter, and pay 75% of her college expenses and unreimbursed medical expenses.
The PSA obligated defendant to make three more types of weekly payments to plaintiff. First, defendant would pay weekly alimony of $1,442, totaling $75,000 annually, for nineteen years. Second, defendant would pay supplemental spousal support of $289 per week, totaling $15,000 annually, for nineteen years (supplemental payment). Third, as partial consideration for plaintiff's waiver of her interest in PCG, he would make aftertax payments of $289 per week, totaling $15,000 annually, for ten years (PCG payment).
As further consideration for plaintiff's waiver, she received the marital home, valued at $440,000 but subject to a mortgage.
The PSA provided that defendant could seek to modify the alimony payment only if plaintiff cohabitated or if there was "a decrease in the Husband's income from all sources, including perquisites of employment, to an amount less than $175,000." The parties agreed that the supplemental and PCG payments were non-modifiable, even if defendant had a "substantial change in income" or "ceas[ed] to operate, be employed by, or maintain an ownership interest in [PCG], its successors or assigns."
In July 2012, plaintiff filed a motion to enforce the PSA. She certified that, even though defendant was obligated to make weekly payments to plaintiff totaling $2,212.31, he had recently unilaterally reduced his payments to $1,712 per week. On August 13, 2012, defendant filed a cross-motion to reduce his alimony and supplemental payments, to impose a moratorium on his PCG payments, and to recalculate child support. He claimed a change in his financial circumstances.
Defendant certified as follows. Just after the PSA was signed, PCG was on the verge of financial collapse and was surviving on a Bank of America (BOA) loan he had personally guaranteed with the other shareholder, Gene A. Palecco. In August 2009, to obtain more capital and avoid bankruptcy, PCG merged with Gator Media Group (GMG) to form Gator Communications Group (GCG), which had four shareholders. The merger resulted in defendant, Palecco, and the two former owners of GMG each having a 25% ownership share in GCC and a reduction in defendant's salary. Defendant hoped that the merger would result in new business and a healthier financial position, but this did not occur.
In late 2010, BOA filed a complaint against PCG, defendant, and Palecco seeking $3,000,000 after they defaulted on the BOA loan. The BOA suit was settled with financial contributions by the former GMG shareholders, resulting in the refinancing of GCG in March 2012. The refinancing reduced the ownership share of defendant and Palecco to 5% each. The refinancing also caused the reduction of each shareholder's annual salary to $150,000, plus a $300 weekly "paycheck" to enable them to obtain health insurance. Defendant thus now has a gross annual income of $165,600.
Before the refinancing, defendant was able to meet his obligations under the PSA by liquidating assets and borrowing against his retirement accounts. After the refinancing and resulting reduction of his salary, he was no longer able to make his alimony, supplemental, and PCG payments, as well as pay his share of their daughter's college expenses, her extraordinary medical expenses from a severe back injury in 2010, and his taxes.
Plaintiff's reply certification essentially did not dispute defendant's changed financial circumstances. Rather, she argued that the change was due to his poor business decisions.
At the September 12, 2012 hearing, the Family Part judge questioned defendant, who verified the essential allegations of his certification. Defendant added that, PCG's revenues had declined from more than $11 million in 2007 to only $6.5 million before the 2010 merger with the similarly sized GMG. The merging companies hoped to reach a combined annual revenue of $13-$14 million, but reached only $10 million.
In its written opinion and order filed October 9, 2012 the court noted that defendant's annual alimony, supplemental, PCG, and child support payments totaled $115,040.12, but his annual pre-tax income had been reduced from $240,000 to $165,600. Because defendant's annual income had "dropped by about a third," the court found that his "financial circumstances have substantially changed." The court also ruled that, because defendant's income was now "less than $175,000, he is entitled to request modification of his alimony obligation."
The court found that defendant was paying to plaintiff each week "just under 70%" of his pre-tax income, not including his 75% share of their daughter's college and unreimbursed medical expenses. Accordingly, the court ruled that "[t]he substantial change in Defendant's circumstances has prevented him from upholding [the] parties' PSA," and that his alimony and child support "obligations shall be modified in accordance with his reduced ability to pay." The court reduced his weekly obligations for alimony to $600 and for child support to $170, effective August 13, 2012. The court denied defendant's requests to change his weekly obligations to pay $289 in supplemental payments or $289 in PCG payments.
II.
Plaintiff appeals. We must hew to our standard of review. "The scope of appellate review of a trial court's fact-finding function is limited. The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). "Appellate courts accord particular deference to the Family Part because of its 'special jurisdiction and expertise' in family matters." Harte v. Hand, 433 N.J. Super. 457, 461 (App. Div. 2013) (quoting Cesare, supra, 154 N.J. at 412). We may reverse only if there is "a denial of justice because the family court's conclusions are clearly mistaken or wide of the mark." Parish v. Parish, 412 N.J. Super. 39, 48 (App. Div. 2010) (quotation and deletion marks omitted).
III.
"The Legislature has left applications to modify alimony to the broad discretion of trial judges." Storey v. Storey, 373 N.J. Super. 464, 470 (App. Div. 2004). Alimony orders "may be revised and altered by the court from time to time as circumstances may require." N.J.S.A. 2A:34-23. Thus, alimony obligations, whether set in judicial orders or parties' agreements, "are always subject to review and modification on a showing of 'changed circumstances.'" Lepis v. Lepis, 83 N.J. 139, 146 (1980).
An "increase or decrease in the supporting spouse's income" is a recognized "changed circumstance." Id. at 151. "Where the change is involuntary, all that is required is an analysis of the alterations in the parties' financial circumstances. However, where the change is a voluntary one, other considerations come into play." Deegan v. Deegan, 254 N.J. Super. 350, 355 (App. Div. 1992). "In computing alimony, '[i]ncome may be imputed to a party who is voluntarily unemployed or underemployed.'" Gnall v. Gnall, 432 N.J. Super. 129, 158 (App. Div. 2013), certif. granted, 217 N.J. 52 (2014).
Plaintiff argues that defendant failed to show that his change of circumstances was involuntary. She asserts that defendant voluntarily participated in the merger of PCG with GMG which reduced his ownership interest from 50% to 25%, and later in the refinancing of GCG which reduced his interest to 5%. Plaintiff's rigid use of voluntariness is misplaced. See Storey, supra, 373 N.J. Super. at 469 (rejecting "'bright line' standards that base modification solely on 'voluntariness,' 'fault,' or 'good faith'").
We require an obligor with diminished income to "demonstrate how he or she has attempted to improve the diminishing circumstances." Donnelly v. Donnelly, 405 N.J. Super. 117, 130 n.5 (App. Div. 2009). Thus, regardless of the "external pressures on the viability of his practice," defendant was required to take action rather than allow his business "to continue to diminish unchecked while bemoaning his fate." Aronson v. Aronson, 245 N.J. Super. 354, 360-61 (App. Div. 1991).
Here, defendant appropriately took action trying to save his business, maintain his income, and avoid bankruptcy. He first made efforts to negotiate a lower rent, get better loans from BOA, and reduce expenses by laying off almost one-third of PCG's employees. When those efforts proved inadequate, he sought additional capital through merger, and then used that capital to settle the BOA suit. The alternative was bankruptcy for PCG and defendant. Those voluntary actions diminished his ownership share in the larger GCG and were ultimately unsuccessful in restoring his income, but that does not make his reduction of income voluntary. As we have noted in a similar context, an obligee "is not necessarily immunized from the ill fortune of" the obligor. Foust v. Glaser, 340 N.J. Super. 312, 318 (App. Div. 2001).
Plaintiff also contends defendant failed to show that his reduction in income is permanent. "Courts have consistently rejected requests for modification based on circumstances which are only temporary[.]" Lepis, supra, 83 N.J. at 151. "There is, of course, no brightline rule by which to measure when a changed circumstance has endured long enough to warrant a modification of a support obligation." Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006). "Instead, such matters turn on the discretionary determinations of Family Part judges, based upon their experience as applied to all the relevant circumstances presented[.]" Ibid.
Here, defendant showed that the diminution of income commenced in August 2009 and persisted through the September 2012 hearing. Further, defendant certified that GCG was still operating at a loss, had no chance of a profit in 2012, and had no contemplated purchaser. The court could thus properly find that defendant's reduction in income was not merely temporary.
Plaintiff acknowledges that the PSA permits defendant to move for a reduction of his alimony obligation based on changed circumstances if his income falls below $175,000, and that GCG paid defendant $169,513.62 in 2011. Nonetheless, she argues that this $5,486.38 difference is a de minimus rather than a substantial change of circumstances, and thus does not warrant modification. However, as the court recognized, "the changed-circumstances determination must be made by comparing the parties' financial circumstances at the time the motion for relief is made with the circumstances which formed the basis for the last order fixing support obligations." Beck v. Beck, 239 N.J. Super. 183, 190 (App. Div. 1990).
Here, the last order fixing support obligations was the Final Judgment of Divorce, which was based on defendant's income of $240,000. Defendant's income in 2012 was $165,600. This 31% reduction in income "satisfactorily demonstrate[d] a significant change of circumstances necessitating a review of" defendant's alimony and child support obligations. See Jacoby v. Jacoby, 427 N.J. Super. 109, 118 (App. Div. 2012) (finding a one-third reduction sufficient); Walles v. Walles, 295 N.J. Super. 498, 510, 519 (App. Div. 1996) (same).
In response to defendant's 31% percent reduction in pre-tax income, the court reduced defendant's total weekly payment obligation from $2,212.31 to $1,348.00, a 39% reduction. Given that defendant's 75% share of the daughter's college and medical expenses was not reduced despite his reduction in income, we cannot say that this difference was an abuse of discretion. We "'must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with'" requests to modify alimony. Larbig, supra, 384 N.J. Super. at 21, 23 (quoting Martindell v. Martindell, 21 N.J. 341, 355 (1956)).
IV.
Plaintiff next argues that the family court could not reduce defendant's alimony and child support obligations without ordering discovery and a plenary hearing. However, plaintiff never asked the court for discovery or an evidentiary hearing. Indeed, when defendant asked the court for at least a temporary reduction "pending any hearing," plaintiff responded that "there is no request in defendant's papers for a hearing."
In any event, "particularly" in the Family Part, "a plenary hearing is only required if there is a genuine, material and legitimate factual dispute." Segal v. Lynch, 211 N.J. 230, 264-65 (2012). "In determining whether a material fact is in dispute, a court should rely on the supporting documents and affidavits of the parties." Lepis, supra, 83 N.J. at 159. Plaintiff's reply certification identified no material fact in dispute.
The court found that defendant had "provided documents to clearly and credibly establish the substantially changed financial circumstances he asserts." Before any motions were filed, defendant supplied plaintiff with documents relating to his salary and his use of the corporate credit card. When defendant filed his cross-motion, he attached that correspondence to his certification, along with the BOA complaint, his current employment agreement, his current Case Information Statement (CIS) with supporting documentation including pay stubs, and his CIS predating the PSA. Plaintiff provided GCG's payroll ledger and defendant's yearly corporate credit card statements. Where, as here, the dispute can "be resolved based on the documentary evidence," the family court did not err in concluding that the matter could be resolved without an evidentiary hearing. Segal, supra, 211 N.J. at 265-66.
Plaintiff's reply certification questioned why defendant charged less to his corporate credit card in 2012 than he had in 2011; claimed defendant misdescribed the prefabricated house he owned in New York; and noted that defendant's CIS did not mentioned his boat, all-terrain vehicles, or snowmobiles. Plaintiff fails to show that discovery or a hearing on those relatively minor points was necessary to resolve whether defendant's income had been reduced, which was supported by the substantial undisputed evidence. "[A] party must clearly demonstrate the existence of a genuine issue as to a material fact before a hearing is necessary." Lepis, supra, 83 N.J. at 159.
Plaintiff also complains that the court should not have ruled without "any financial disclosure from" her. However, plaintiff voluntarily chose not to provide that information. Indeed, Rule 5:5-4(a) provides that when a cross-motion is brought seeking an order modifying a judgment for alimony based on changed circumstances, "[t]he pleading filed in opposition to entry of such an order shall have appended to it a copy of all prior case information statements." Plaintiff did not attach her prior CIS to her reply certification, or attempt to submit an updated CIS. Rather, her counsel merely argued that she "does work currently, but her income was nowhere near what [defendant] earns," and that she was still not "able to support herself." Nothing prevented plaintiff from submitting a past or updated CIS, even if she was not required to do so. See Donnelly, supra, 405 N.J. Super. at 131.
Plaintiff does not claim that she relied on Rule 5:5-4(a)'s provision that "[i]f the party seeking the alimony or child support relief has demonstrated a prima facie showing of a substantial change of circumstances, then the court will order the other party to file a copy of a current case information statement."
--------
Plaintiff notes that "'the dependent spouse's needs, [and] that spouse's ability to contribute to the fulfillment of those needs'" are factors in considering whether to modify alimony. Innes v. Innes, 117 N.J. 496, 504 (1990) (quoting Lepis, supra, 83 N.J. at 152).
Here, the family court noted plaintiff's stipulated income of $15,000 from the PSA, which also partially addressed her needs. See Harrington v. Harrington, 281 N.J. Super. 39, 47-48 (App. Div.), certif. denied, 142 N.J. 455 (1995). Plaintiff has not proffered an updated CIS or other evidence to show that the court's reliance on the PSA was "clearly capable of producing an unjust result." See R. 2:10-2. She thus fails to show plain error.
V.
To challenge the reduction in child support, plaintiff again raises the meritless argument that defendant has not shown his reduction of income is permanent. Plaintiff also claims the family court misapprehended the Child Support Guidelines.
Defendant moved to reduce child support based not only on his financial circumstances but also on their daughter's attendance at college. Plaintiff's reply certification had pointed out that the daughter attended County College of Morris and commuted from plaintiff's home. The family court referenced the guidelines particularly, Pressler & Verniero, Current New Jersey Court Rules, Appendix IX-A(18) to R. 5:6A at 2597 (2014), which states:
These child support guidelines are intended to apply to children who are less than 18 years of age or more than 18 years of age but still attending high school or a similar secondary educational institution. For the reasons set forth below, the Appendix IX-F support schedules shall not be used to determine parental contributions for college or other post-secondary (hereafter college) expenses nor the amount of support for a child attending college. The child support guidelines may be applied in the court's discretion to support for students over 18 years of age who commute to college.After citing and quoting the first sentence, but without referring to the last sentence, the family court stated: "In the context of this case the Appendix IX-F support schedules shall not be used . . . for amount of support for a child attending college."
However, the family court noted that a decrease in the supporting spouse's income may constitute changed circumstances, and found that "[d]efendant's current income is simply inadequate to afford the sizeable weekly payment, which is in fact greater than the amount required by the child support guidelines. Defendant has suffered a permanent decrease in income and as such, is entitled to a recalculation of child support." Based on that ruling, it is clear that the family court based its reduction of child support on defendant's reduced income, rather than any misapprehension of the effect of the daughter's attendance at community college.
Plaintiff claims the family court should have further explained how it decided to reduce the child support from $192.31 to $170.00. To the contrary, the 31% reduction of income provided ample justification for the court's decision to reduce defendant's child support obligation by less than 12%. Particularly as the parties had already deviated from the Guidelines in the PSA, it was within the court's discretion not to use the Guidelines' support schedules.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION