SHARON MILLER GROMEK v. VITOLD GROMEK

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4825-03T14825-03T1

SHARON MILLER GROMEK,

Plaintiff-Respondent,

v.

VITOLD GROMEK,

Defendant-Appellant.

_______________________________

 

Argued: September 27, 2005 - Decided:

Before Judges Skillman, Axelrad and Francis.

On appeal from the Superior Court of New Jersey, Chancery Division, Hunterdon County, FM-10-386-98.

John A. Hartman, III, argued the cause for appellant (Pellettieri, Rabstein and Altman, attorneys; Mr. Hartman, of counsel; Karen L. Steinbach, on the brief).

Brian M. English argued the cause for respondent (Tompkins, McGuire, Wachenfeld & Barry, attorneys; Marianne Espinosa Murphy, of counsel and on the brief).

PER CURIAM

Defendant Vitold Gromek challenges various portions of the trial court's decision on remand respecting alimony, equitable distribution and counsel fees arising from a final judgment of divorce. We affirm in part, reverse in part and remand in part.

I

Following a sixteen-year marriage, plaintiff Sharon Miller Gromek filed for divorce. After trial, the court issued a written decision on July 16, 1999, and on September 8, 1999, it released two corrected pages to the July l6 decision and issued a final judgment of divorce. We incorporate by reference the trial testimony and evidence presented by the parties and their respective positions, as well as the court's rulings, set forth at length in our per curiam opinion of January l7, 2002 (Docket A-6302-99T1 and A-0480-99T1), and repeat only those facts and rulings necessary to the present appeal.

The parties were married in l982. In l987 they purchased a home in Clinton for $235,000, with a down payment of $55,000, which was sold after trial and produced net proceeds of $56,847. They adopted two children, Samantha, who was born in l988, and Douglas, who was born in l990. Plaintiff, who had a bachelor of fine arts degree, worked full-time in various architectural or interior design firms until the parties adopted Samantha in February l989. Her highest income during her full-time employment was $44,000 per year. In l995 and l996 she worked thirty hours a week as the assistant director at the Acorn Montessori School and earned $12,000 to $15,000 the first year and $15,000 to $17,000 the second year. She did not return to the school for a third year due to a combination of factors, including her health.

Defendant received undergraduate degrees in architecture and urban planning, and earned an MBA in finance during the marriage. At the time of the marriage he worked in an architectural firm. In l987 he started Miller-Gromek Technical Real Estate Advisory Service, which he operated as a sole proprietorship out of the parties' home until January l997. Defendant's business was profitable from the beginning, though fluctuating, with average annual income ten years prior to trial of $125,731, and five years prior to trial of $136,530.

In 1993 the parties purchased an investment property in Nantucket for $284,990, and titled it solely in plaintiff's name. In the final judgment of divorce, the trial court ordered the property to be sold and the proceeds evenly split, along with any capital gains taxes. The house was sold in February 2000, and approximately $269,766 in proceeds was placed in escrow. Capital gains liability resulting from the sale had to be claimed solely on plaintiff's tax return as the record owner of the property. By order of February 3, 2004, the trial court directed $65,852 to be withdrawn from the escrow account to halt the accumulation of penalties associated with the late filing of plaintiff's tax returns. The total tax liability resulting from capital gains on the sale of the Nantucket property was ultimately determined by the parties' accountants to be $43,398.

The trial judge required defendant to pay plaintiff $2,262 per week alimony, and imputed an income of $45,000 to plaintiff as of October l, 2000, stating that defendant could apply for a recalculation of alimony at that time. We affirmed various components of plaintiff's budget allowed by the court, including $100 in educational expenses "for fifteen months" to accomplish the goal of taking courses to update her designer skills, which the employability report found would cost approximately $2,111. We held that

[t]he alimony award is problematic, however, in that . . . it appears the judge awarded plaintiff $1,113 per month more than the judge herself found plaintiff needed. This gap was to have been further widened to $1,461 per month when plaintiff's car payment was to end in December 2000. We remand for a recalculation of alimony based on defendant's averaged income for l996-98, and in accordance with plaintiff's actual needs as the judge found at that time.

We also vacated "so much of the trial court's findings in the judgment under appeal that relate to the determinations at trial with respect to tax calculations, and because we remand in this opinion for recalculation of alimony the trial court shall take into account, with respect to tax calculations, any adjustment in alimony."

With respect to defendant's claim of judicial failure to account for income generated from equitable distribution received by plaintiff, we noted that "on remand the trial judge stated in her September 24, 200l order that 'the request to impute income from equitable distribution is DENIED WITHOUT PREJUDICE to reconsideration after the distribution has actually occurred.'" We found that to be the proper course.

As to other alimony contentions we stated:

In defendant's sub-point E, he asserts that the judge failed to adjust alimony despite findings that plaintiff's needs would decrease and income would increase over time. He points out that the judge found as follows: 1) in January 2000, plaintiff's car would be paid off and she would not have to pay $348 a month for a car, 2) in December 2000, she would no longer have a $300 per month health insurance cost, as it was expected that she would be employed, and 3) in October 2000, she was expected to have employment at a salary of $45,000 per year. We direct that this issue be reexamined upon remand to the extent an appropriate adjustment has not already been made.

The purpose and intent of our remand was clearly summarized:

[T]o summarize as to alimony, we remand for recalculation of alimony based on an average of defendant's income over thirty-six months from l996 through l998. The award should also be adjusted to reflect plaintiff's actual needs, including her tax reserve, and take into account any equitable distribution payments she has received. The alimony award should be recalculated for the period beginning October 2000, when income was to be imputed to plaintiff. Adjustments made in alimony in the trial court's September 24, 200l order following remand should be made. Child support [based on a single parent worksheet] should also be properly calculated for both periods.

The trial judge had ordered defendant to pay $12,000 of plaintiff's counsel fees. We agreed with defendant that the judge failed to consider all of the proper factors set forth in Rule 5:3-5(c), and remanded for findings of fact.

On remand, the trial judge permitted the parties to supplement the record with documentation and testimonial evidence, and issued a written decision and order on March 25, 2004. Defendant asserts the following arguments on appeal:

I. THE TRIAL COURT ERRED IN ADDRESSING ISSUES OUTSIDE THE SCOPE OF THE REMAND.

II. THE TRIAL COURT ERRED IN RECALCULATING DEFENDANT'S ALIMONY AND CHILD SUPPORT OBLIGATIONS.

A. Plaintiff's Budget

B. Defendant's Tax Liability and Credit

C. Imputation of Interest Income to Defendant

D. Reduction of Defendant's Budget

E. Defendant's Ability to Pay

F. Averaging of Defendant's Income

G. Credit to Defendant

III. THE TRIAL COURT ERRED IN RESOLVING EQUITABLE DISTRIBUTION ISSUES.

A. 2000 Tax Penalties and Interest

B. Credit for 2000 Tax Advance

C. Furniture and Furnishings of Marital Home

D. Professional Expenses Related to Joint 1998 Tax Return

E. Nantucket Rental Income

F. Passive Loss on 1999 Tax Return

G. Lack of Notice of Issues to Be Addressed At Remand Hearings

H. Refusal to Evaluate Evidence or Take Testimony

Regarding Equitable Distribution

IV. THE TRIAL COURT ERRED IN ITS AWARD AND CALCULATION OF COUNSEL FEES.

II

Instructions from an appellate court are binding on the trial court on remand. Pressler, Current N.J. Court Rules, comment 2 on R. 2:9-1 (2006). "A trial court must implement both the letter and spirit of the mandate [of the appellate court], taking into account [its] opinion and the circumstances it embraces." Casey v. Planned Parenthood of Southeastern Pa., 14 F.3d 848, 857 (3d Cir. 1994) (quoting Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir. 1985)). This rule, however, only applies to issues decided by the appellate court. Ibid. A trial court, on remand, can "make any order or direction in further progress of the case, not inconsistent with the decision of the appellate court, as to any question not settled by the decision." Ibid. (quoting Bankers Trust Corp., supra, 761 F. 2d at 950). In appropriate circumstances, a party may assert new claims or legal theories on remand. Bubis v. Kassin, 353 N.J. Super. 415, 427 (App. Div. 2002). The language of the appellate court opinion must be consulted to determine what the court intended. Casey, supra, 14 F.3d at 857.

We remanded the case specifically to consider issues relating to alimony and counsel fees. Our prior opinion did not expressly prohibit supplementation of the record on remand, nor did we expressly authorize it. We recognize that some supplementation of the record was warranted to accomplish the adjustments we ordered, such as those relating to plaintiff's tax reserve and equitable distribution payments. In other instances, it was within the discretion of the trial judge. We are not persuaded by defendant's generalized complaint of trial court error merely because it reviewed additional evidence. Defendant had adequate notice and opportunity to be heard regarding the supplementation of the record. Both parties participated and defendant acquiesced in at least some supplementation of the record. He cannot now in good faith claim total surprise or prejudice in those instances where he received an adverse decision. We will address in turn the specific instances where the trial court did exceed the scope of the remand and improperly considered additional evidence or revisited issues settled by our prior opinion. Defendant contends the trial court erred in failing to eliminate the $100 per month educational expense and $300 per month health insurance cost from plaintiff's budget as of October 2000, to reflect the elimination of these expenses once plaintiff was to have resumed employment, which adversely affected the calculation of his alimony and child support obligations. We agree with defendant as to the educational expense. We expressly affirmed the expense for a specified period, ending October 2000, based on the cost of the skills update courses. There is nothing in our opinion that suggests that elimination of this expense item was subject to reconsideration. Moreover, although plaintiff did not become employed until August l, 2001, no evidence was presented that she pursued additional education than that anticipated and quantified at trial. Accordingly, on remand this $100 expense shall be eliminated from plaintiff's budget effective October 2000.

As to continuation of the health insurance cost, however, we discern no error. We directed the trial court to "re-examine" this issue upon remand "to the extent an appropriate adjustment has not already been made." We affirmed the court's imputation of $45,000 annual income to plaintiff beginning October 2000. Even though plaintiff did not become employed at that time, and when she did, she earned significantly less than that imputed, on remand the court did not modify the date or amount of its initial imputation. To that extent, defendant benefited. Although the court had anticipated that plaintiff would have obtained nominal or free medical health coverage as a fringe benefit of employment beginning fifteen months after the judgment, that was not a condition of the imputed income. On remand the court appropriately considered the reality of the situation and used its equitable power to make an "appropriate adjustment" and continue that expense in plaintiff's budget.

On remand the trial court properly reduced plaintiff's alimony by adjusting her pretax budget in accordance with our instructions, and adding back in a weekly amount for taxes based on her actual tax liability.

In accordance with its September 24, 200l order, the trial court reconsidered defendant's request to impute interest income on the investment value of the proceeds plaintiff received from the sale of the Nantucket property subsequent to trial, and declined to do so. Contrary to defendant's assertion, we did not specifically order that income be imputed on the Nantucket property or any other distribution, but simply that the consideration of income imputation be done once the distribution occurred. The court complied with our mandate and with the statutory requirements for determining an alimony award. See N.J.S.A. 2A:34-23b (requiring a court to consider as a factor in determining an alimony award, "[t]he 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" and "[t]he income available to either party through investment of any assets held by that party"). Accordingly, we defer to the court's discretion with respect to this issue. The record supports the court's reasoning that interest income should not be imputed to plaintiff from that source because of the "present debt and other needs that must be met by that money and she owns no home and is spending an exorbitant amount on her present rental." Plaintiff used a significant portion of her equitable distribution to pay off debt and fund this expensive litigation. We are aware that plaintiff unwisely incurred greater shelter expenses than were warranted by her financial circumstances, resulting in foreclosure. This expenditure is an insufficient basis to impute interest income, considering that plaintiff overall did not appear to have enjoyed an extravagant lifestyle.

The trial court followed our directions in recalculating and reducing defendant's income for purposes of alimony based on an average over thirty-six months from l996 through l998. Based on our express directive, it would have been error for the court to have used the three-year rolling average urged by defendant. The court then deducted from defendant's budget $450 per month for medical costs on the ground that it was already reflected as a business expense, and $150 per month to equalize the parties' savings. Although this would have been a reasonable and proper adjustment following the divorce hearing, to do so at this late date exceeded the scope of our limited remand. We authorized the trial court to consider plaintiff's actual needs as determined at the time of the final judgment of divorce, with certain specified adjustments, not to re-examine defendant's budget. Accordingly, on remand the court shall assess defendant's ability to pay alimony and child support based on the new income figure obtained through income averaging and defendant's previously determined budget.

III

Although our remand did not include equitable distribution, we are satisfied the trial judge had the authority to address some aspects of equitable distribution, either by way of enforcement of the judgment of divorce under Rule 1:10-3 or relief from the judgment under Rule 4:50-1.

There is substantial credible evidence in the record to support the trial court's finding that defendant objected, delayed and refused to allow the release of the escrowed proceeds of the Nantucket sale, which contributed to plaintiff's failure to timely pay the 2000 capital gains tax. In its decision on remand the trial court stated:

[W]ith the Nantucket proceeds languishing in escrow and Defendant's objections to its release to pay her accountant to prepare the returns and to pay the taxes on Plaintiff's 2000 returns, he is as much a party of any fault for the delay as Plaintiff. He has provided no evidence that he ever offered to release escrow money for these purposes but argued on several occasions that none should be released because it all or a greater part of it belonged to him. In fact, the tax returns couldn't be filed until this remand when the court ordered "the bleeding (of IRS late fees and interest accumulations) be stopped," [and] ordered the release of escrow money to pay the taxes on the returns. For these reasons, the parties will be equally responsible for all year 2000 late fees and penalties and their accountants should work together to have these reduced as much as possible. $40,000 will be retained in escrow on behalf of both parties to pay these fees, which [the plaintiff's accountant] has estimated at $36,095.

Accordingly, we discern no error in the court's order on remand requiring defendant to pay one-half the interest and penalty that accrued on the delinquent capital gains tax payment. Moreover, regardless of either party's fault, the tax liability on the sale of the marital investment property, including interest and penalties, would have appropriately been considered a joint debt. Monte v. Monte, 212 N.J. Super. 557, 567 (App. Div. l986).

Defendant is clearly entitled to a credit for the surplus funds withdrawn from the Nantucket escrow that were not attributable to capital gains taxes incurred in connection with the sale of that property. The February 3, 2004 order was not intended to be a final distribution of funds but only an interim measure to halt the accumulation of interest and penalties associated with the late filing of plaintiff's returns, as evidenced by its explicit statement that "[t]hese withdrawals [of $65,852] are without prejudice to the court's ultimate distribution of the balance of the Nantucket funds." On remand, the trial court shall calculate the credit due defendant, which appears to be about $23,000, and adjust the distribution of the escrow account to reflect this credit.

It is undisputed that though titled solely in plaintiff's name, the Nantucket investment property was a joint marital asset. Under tax law, however, defendant was precluded from claiming any loss related to that property on his own return. Plaintiff, as sole title owner, was the only person authorized to report the $25,000 passive loss on that property on her l999 tax return. The trial court erred in declining to make an equitable adjustment to compensate for the tax results. Just as defendant was responsible for paying one-half of the capital gains tax incurred on the 2000 sale of the Nantucket property, even though the gain could only be reported by plaintiff as title owner, it is only equitable that he be permitted to share the same as it relates to the tax benefit of that property. Accordingly, on remand defendant shall be given credit for one-half of the benefit resulting from the claimed $25,000 passive loss.

Defendant also contends that because he paid pendente lite support effective October 1, 1998, he is entitled to a refund or credit of $5,500, the money paid from October 1 through October 15, 1998, if the order was not effective until October 15, 1998. In the alternative, he asserts that if the order was effective on October 1, 1998, then he is entitled to a credit or refund for $1,650 of income from the Nantucket property, as he was to receive all Nantucket income under the pendente lite order. We discern no error in the court's decision to address some matters involving the Nantucket property on remand and to decline to address this issue. Pendente lite awards are interlocutory in nature only and do not generally survive the final judgment of divorce unless otherwise stated in that final judgment. Mallamo v. Mallamo, 280 N.J. Super. 8, 12 (App. Div. l995). There is nothing in the parties' final judgment of divorce that would authorize such a pendente lite adjustment.

We are also satisfied the trial court properly declined to address defendant's request that plaintiff be responsible for the approximately $6,000 in fees incurred in filing the joint l998 tax return, as it was outside the scope of our remand. As defendant's argument with respect to the purported indemnification agreement was not presented to the trial court, it will not be addressed by us. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).

On the other hand, the trial court's disposition of the personal property in each party's possession as contained in paragraph seven of the order on appeal clearly went beyond the scope of our limited remand. Our remand did not direct, either expressly or implicitly, that the equitable distribution of the parties' personal property be revisited. Moreover, the ruling was outside of the scope of the trial court's authority absent a Rule 4:50-1 motion seeking to set aside the provision of the judgment of divorce relating to this subject.

In the final judgment of divorce the trial court directed the distribution of the parties' furniture and furnishings as follows:

[E]ach party shall keep his or her own pre-marital personalty and the heirlooms from his and her own family without further adjustment. The balance shall be divided equally by placing these items on a list within 30 days of the effective date of this Order. To the extent the parties can agree both as to who is entitled to the item and the value of that item within two weeks thereafter, they shall do so. The remaining items shall be selected by alternating choices after a coin toss. If the parties cannot agree as to the party to receive the item and its value, the item shall remain on the list to be chosen alternatively by the parties.

This scheme was not effective. The trial court then appointed Dale Blazure to help direct the division of the personal property, which was also ineffective. On March 7, 2001, the trial court denied certain requests by defendant with respect to the furniture and personal property, indicating "until the parties have a three way conference with Mr. Blazure, and attempt in good faith to work with him to resolve the personalty equalization the Court shall not entertain their prayers for relief."

The issue of furniture was discussed briefly on several occasions during the remand hearing, during which the trial court clearly expressed its frustration with the inability of the parties to resolve this issue. The court refused defendant's request to testify about the personalty, and at the conclusion of the hearing, the court simply directed the parties to "[f]ollow the instructions of the final judgment of divorce." That was an appropriate response.

However, in its March 2004 decision following remand the court ordered each party to retain the personal property in his or her possession with no further adjustments. This distribution was inconsistent with the terms of the l999 divorce judgment, and no explanation was provided for the court's change in position or factual basis provided for the ruling. The court stated:

Defendant asserts that personal property has never been equitably divided between the parties. The court provided a method for doing so in the Final Judgment of Divorce and addressed the matter again in a post judgment motion. Neither method has resolved the issues because neither will cooperate with the other. Since the majority of the personalty was located in the marital home, it should have been distributed when the home was sold. Now, it is highly unlikely that any inequities in distribution can be corrected at a cost less than the value of the personalty. Therefore, it is this court's opinion that the personalty should remain with the person who presently possesses it. After all, it is 5 years post judgment and much of the personalty will have depreciated, or if it has any worth, it will probably ultimately pass to the children of the marriage.

Defendant also contends that the provision of the divorce judgment dividing the furniture and personalty was part of the prior appeal. That notice of appeal is not included in the record before us, and it is not evident in our 2002 opinion that this issue was appealed. If it were, the trial court would have been powerless to alter that distribution scheme in view of our affirmance of all equitable distribution issues that were the subject of the prior appeal.

Even if the division of personalty were properly before the trial court on remand, the proceedings leading up to the grant of this relief were inadequate, and such ruling is not supported by the record. The trial court's refusal to hear additional evidence on the issue, especially given its ultimate decision to alter the previous distribution, precluded it from basing its decision on a full and updated factual record. Defendant has proffered that the evidence would have revealed that plaintiff took some of the possessions in his control while he was out of town. Moreover, the court's conclusory statement that "it is highly unlikely that any inequities in distribution can be corrected at a cost less than the value of the personalty" is devoid of any factual findings and is contradicted by defendant's assertion on appeal that some of the property in plaintiff's possession includes "substantial antiques."

Accordingly, we vacate paragraph seven of the order under appeal and reinstate the equitable distribution of the parties' furniture, furnishings and related personalty contained in paragraph twenty-six of the final judgment of divorce. Any party seeking to modify this distribution may file an appropriate motion before the trial court. We expressly direct that this issue is not to be part of the remand hearing. IV

On remand, the trial court made specific findings on the counsel fee issue, concluding:

Based on the above analysis of Defendant's ability to pay, Plaintiff's need, and the failure of Defendant to pay any pendente lite counsel fee to Plaintiff . . . when she was entitled to litigate on a level playing field and Defendant was the wage earner in this traditional family, and Plaintiff's need to file the February 1999 support enforcement motion, this court is satisfied that the award of $12,000 toward unpaid fees of about $30,000 at the time of the entry of the Final Judgment of Divorce is appropriate and fully warranted. However, the court never considered giving a credit to Defendant for the $7,500 pendente lite fee because though ordered to be paid by December 1998, it had not been paid to [Plaintiff's attorney] by July 1999 when Mr. Gromek submitted his written summation requesting Mr. Gromek pay $30,000 toward Plaintiff's fees. Thus, neither he nor the court counted that $7,500 as paid. Since the $7,500 was ultimately paid by Defendant in March 2000 the court will reduce the $12,000 by $7,500, which leaves a balance of $6,500, which Defendant will pay to [Plaintiff's attorney] from his Nantucket proceeds.

We are satisfied with these findings and discern no abuse of discretion in the trial court's counsel fee award. Rule 5:3-5(c); Williams v. Williams, 59 N.J. 229, 233 (1971). We note, however, that the court made a $2,000 mathematical error when it applied defendant's $7,500 payment to the $12,000 award and concluded that the balance due was $6,500. Accordingly, on remand this error should be corrected to require defendant to pay only $4,500 to plaintiff's attorney from his Nantucket proceeds.

V

In summary, we vacate the trial court's disposition of the personal property in each party's possession as contained in paragraph seven of the order on appeal and reinstate the equitable distribution of the parties' furniture, furnishings and related personalty contained in paragraph twenty-six of the final judgment of divorce. On remand, the trial court shall eliminate the $100 educational expense from plaintiff's budget as of October 2000, utilizing $7,270 as her monthly need for alimony and child support calculations. The court shall use defendant's net annual income figure of $127,465 based on income averaging and his previously determined budget of $4,840 per month in assessing his ability to pay alimony and child support. Defendant's probation account shall be adjusted to reflect any credits for excess payments made. Defendant shall receive a credit for the surplus funds withdrawn from the Nantucket escrow that were not attributable to the 2000 capital gains taxes incurred in connection with the sale of that property, and for one-half of the benefit resulting from the $25,000 passive loss on the Nantucket property reported on plaintiff's l999 tax return. Additionally, $4,500 shall be paid to plaintiff's attorney from defendant's share of the Nantucket sales proceeds, representing the balance due on his $12,000 court-ordered contribution. The order from which this appeal is taken is affirmed in all other respects.

 
Affirmed in part; reversed in part; and remanded in part consistent with this opinion.

The trial court's September 24, 2001 order following another remand recalculated alimony payable to plaintiff at $872 per week based on a new determination of what was needed to be paid to plaintiff to cover the taxes on her income. The recalculation was not before us in the 2002 appeal, nor is it now.

The trial court's July 16, 1999 opinion lists the educational cost at $100 for fourteen months based on "AFG report skills update at $1,400 for l4 months." The discrepancy is immaterial to the issue on appeal.

Because of the multiple remands in this case, we recite defendant's arguments in detail to minimize any confusion in the subsequent remand as to the issues raised on appeal.

For 2004, the parties agreed during the remand hearing that plaintiff would carry the children and herself on her medical insurance, which costs $253 a month, per her December 2003 pay stubs.

At oral argument we were advised that plaintiff was able to obtain an abatement of the penalties and that defendant's share of the interest payment was $6,000.

(continued)

(continued)

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A-4825-03T1

October 27, 2005