Opinion
DOCKET NO. A-6074-11T1
03-18-2014
GRACE LEATHERMAN, Plaintiff-Respondent, v. TODD R. LEATHERMAN, Defendant-Appellant.
Shamy, Shipers & Lonski, P.C., attorneys for appellant (Robert J. MacNiven, on the brief). Backes and Backes, LLC, attorneys for respondent (Pierson W. Backes, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo and Guadagno.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Ocean County, Docket No. FM-15-1277-11.
Shamy, Shipers & Lonski, P.C., attorneys for appellant (Robert J. MacNiven, on the brief).
Backes and Backes, LLC, attorneys for respondent (Pierson W. Backes, on the brief). PER CURIAM
Defendant, Todd R. Leatherman, appeals from portions of a June 27, 2012 final judgment of divorce entered by the Family Part after trial. Defendant challenges the trial court's imputation of income to him and to plaintiff, Grace Leatherman. For the reasons that follow, we affirm.
Todd and Grace Leatherman married in 1995. Two biological children were born of the marriage and two other children were adopted. Defendant was a firefighter for approximately nine years, but was declared disabled after an evaluation determined he had limited use of his right hand and could not perform his job requirements. Defendant receives a pension from the State of New Jersey for approximately $27,810 annually.
During defendant's career as a firefighter, he often worked nights and holidays. That permitted him to work in construction companies he had ownership interests in. Two of these companies, Leatherman Builders and Leatherman Development and Management Group, declared bankruptcy. Defendant and plaintiff started another business, Seaport Builders, in May 2008. Seaport initially sold outdoor showers, but expanded into other areas. Defendant was a salaried employee at Seaport, earning approximately $40,000 per year. Ultimately, Seaport Builders also failed.
Defendant then started two other companies, Causeway Construction and Outdoor Showers, LLC, with loans from friends and family. Defendant was required to assume a $19,000 debt that Seaport owed one of its suppliers to establish a new line of credit with that company.
Plaintiff has a teaching degree and was employed as an elementary school teacher during the first few years of their marriage. She stopped teaching in 1999 when her first child was born. At the time of trial, plaintiff had been working as a substitute teacher and applying, without success, for a full-time teaching position.
On appeal, defendant argues that the trial court failed to consider the "required criteria" in imputing income to him. We disagree.
We review a trial judge's decision to impute income under an abuse of discretion standard. Ibrahim v. Aziz, 402 N.J. Super. 205, 210 (App. Div. 2008). The decision "to impute income of a specified amount will not be overturned unless the underlying findings are inconsistent with or unsupported by competent evidence." Storey v. Storey, 373 N.J. Super. 464, 474-75 (App. Div. 2004); see also Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) ("[An abuse of discretion] arises when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis."). "Competent evidence includes data on prevailing wages from sources subject to judicial notice." Storey, supra, 373 N.J. Super. at 475. A court may impute income to a party whose income cannot be determined, Tash v. Tash, 353 N.J. Super. 94, 99 (App. Div. 2002), or to a party who "has voluntarily become underemployed or unemployed without just cause." Ibrahim, supra, 402 N.J. Super. at 210-11.
Defendant contends that the trial court "assume[d] that [he] was intentionally underemployed while building up his new business[,]" without finding that he purposely reduced his income, changed fields, or was underutilizing skills. Although the trial court did not find that defendant was intentionally underemployed, that is not the only basis for imputing income to a party. See Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2589 (2014); Tash, supra, 353 N.J. Super. at 99.
In Tash, the defendant appealed from an order directing him to pay child support based on imputed income. Id. at 97. The defendant argued that the court imputed too much income but, despite numerous orders, the defendant failed to provide the judge with adequate financial information. Id. at 98-99. That "placed the judge in a position where he had to examine the defendant's health and work abilities and realistically impute income." Id. at 99. We rejected the defendant's challenge, finding that "the [Child Support] guidelines and the case law of this State explicitly permit the imputation of income where earnings cannot be determined." Ibid.
Although defendant here submitted an extensive amount of financial paperwork, very little of it aided the court in determining either party's income. The complexity of the parties' financial situation stemmed from the numerous companies they owned, the ensuing bankruptcies of the companies, their own personal bankruptcy, and their failure to file personal income taxes for several years.
Specifically, the court found that defendant's case information statement was not helpful and described most of the information contained in it as "[j]ust a bunch of zeros." The court disregarded the amount defendant claimed as his income, finding that it was inconsistent with the other information brought out at trial.
The court further found that defendant's tax returns, for the years that he filed a tax return, were equally unhelpful:
So what you're left with is a whole mess of kind of just joint tax returns where the numbers are different every year, it appears, no forensic analysis, and it's very difficult to glean from that information, at least, what the historic actual earnings were, not just in terms of W-2, of self-reported W-2 earnings, paying yourself, but in terms of the profit from the operation of the business. It would be very difficult to get any sense of what the numbers were even if -- certainly for 2011 and 2012.In light of the difficulty in determining defendant's income from the documents provided, the trial court did not abuse its discretion in imputing income to defendant.
Defendant also challenges the amount of income imputed. In Storey, we held that "[i]mputation of income is a discretionary matter not capable of precise or exact determination but rather requiring a trial judge to realistically appraise capacity to earn and job availability." Storey, supra, 373 N.J. Super. at 474 (citing Tash, supra, 353 N.J. Super. at 99). Defendant argues that the trial court failed to consider his capacity to earn and the availability of employment opportunities.
The trial court based its decision on defendant's financial statement from February 2011 and on the New Jersey Department of Labor (NJDOL) occupational statistics for construction management. Defendant's financial statement from approximately one month before the divorce listed income of $125,000 ($100,000 salary and $25,000 commission). The court placed great reliance on that document, explaining, "[i]t's his words. . . . [and] [i]t kind of filters through a lot of these disjointed financial papers submitted." Additionally, the court found that the financial statement was "fairly consistent with . . . [the NJDOL] occupational employment statistics" for construction management.
Defendant's contention that the financial statement was "misleading" because it listed his income before his business failed is not persuasive and the subsequent failure of his business is irrelevant. When imputing income, the court considers an individual's earning capacity, not current income. See Halliwell v. Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999) ("The potential earning capacity of an individual, not his or her actual income, should be considered when determining the amount a supporting party must pay."); Gnall v. Gnall, 432 N.J. Super. 129, 159 (App. Div. 2013) ("Both when setting child support and in reaching a proper alimony award, a judge must examine not only each party's income, but also his or her earning ability.") certif. granted, ___ N.J. ___ (2014). Consequently, the fact that defendant's business went bankrupt does not preclude the court from considering the amount earned as evidence of his earning potential.
Contrary to defendant's contention that there was no evidence that he was qualified for a job in construction management, the trial court made specific findings that he was qualified for such work:
it's pretty clear to the Court the defendant certainly has the ability to function as a construction manager. He's been supervising managers. He's [been] paying managers as much as $70.00 an hour on certain jobs when necessary. He's been in the construction
business operating -- heading up projects for years. By his own testimony, he does an excellent job. There's no evidence he does not. He's building a resume of successfully completed public projects which is impressive.
The court also found that:
while defendant claims he's rebuilding a business from scratch, it shouldn't take him particularly long to do since it's essentially the same business and what the Court gathered from the evidence in terms of the construction business. . . . Defendant's done it in the past. He started up Seaport after Leatherman Builders fell apart. So this is not a neophyte doing this. He has years of experience.
. . . .
The Court finds he's a talented individual. He certainly has marketable skills. . . . Much of his testimony was about the connections and good friends he has, et cetera.
The trial court also relied on the NJDOL employment statistics for construction management. That decision was proper and is supported by both the court rules and case law. The Child Support Guidelines provide that when imputing income to a party, a court can:
a. impute income based on potential employment and earning capacity using the parent's work history, occupational qualifications, educational background, and prevailing job opportunities in the region. The court may impute income based on the parent's former income at that person's
usual or former occupation or the average
earnings for that occupation as reported by the New Jersey Department of Labor (NJDOL);
b. if potential earnings cannot be determined, impute income based on the parent's most recent wage or benefit record (a minimum of two calendar quarters) on file with the NJDOL) . . . ; or
c. if a NJDOL wage or benefit record is not available, impute income based on the full-time employment (40 hours) at the New Jersey minimum wage ($7.15 per hour).
[Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2589, (2014).]
The record provides ample support for the trial court's finding that defendant had extensive experience and was highly qualified in the field of construction management and we find no abuse of discretion in the amount imputed to him.
Defendant also challenges the trial court's imputation of income to plaintiff, claiming the income amounts "are not based on any specific finding, but rather, are a guess."
From the entry of the judgment until December 31, 2 012, the court imputed an income of $15,000 per year to plaintiff. The amount increased to $25,000 annually as of January 1, 2013. The trial court made several factual findings regarding plaintiff's employment history and earning potential. It discussed in detail why it was illogical to impute a teacher's salary of $50,000 to $60,000 on plaintiff when she had been out of the work force for over ten years. The court noted that plaintiff had not kept her teaching skills current, had no connections in the industry, and the job market for teachers was limited due to the economy. The court also found that it was equally unfair to use plaintiff's actual income of less than $5,000 because she did have a teaching degree and work experience, and she was capable of earning more money, even if it was not as a teacher.
Plaintiff's case information statement reported her 2011 income as $1,000. Plaintiff's income for 2012 through May 4, was $2,415.
In arriving at the imputed income figure for plaintiff, the court considered plaintiff's education and her past teaching experience. The court also noted that plaintiff had not worked as a teacher for sixteen years. During that period, she spent most of her time caring for their children and some of the time assisting defendant run his businesses. Since her attempted reentry into the workforce, she has had limited success working as a substitute teacher on a part-time basis.
We are satisfied that the court's imputation of income to plaintiff was based on a realistic assessment of her capacity to earn. See Story, supra, 373 N.J. Super. at 474.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION