NANCY LAWLER DONAHUE v. JOSEPH FRANCIS DONAHUE

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6703-02T3

NANCY LAWLER DONAHUE,

Plaintiff-Respondent,

v.

JOSEPH FRANCIS DONAHUE,

Defendant-Appellant.

________________________________

 

Argued February 8, 2005 - Decided

Before Judges Wecker, S.L. Reisner and

Graves.

On appeal from the Superior Court of New

Jersey, Chancery Division, Family Part,

Hunterdon County, FM-10-50-02.

Bonnie C. Frost argued the cause for

appellant (Einhorn, Harris, Ascher,

Barbarito, Frost & Ironson, attorneys;

Ms. Frost, on the brief).

Nancy Lawler Donahue, respondent, argued

the cause pro se.

PER CURIAM

After a fourteen-day trial in this divorce action, the trial judge, now retired, placed her detailed findings of fact and conclusions of law on the record in the presence of the parties and counsel. During the trial and after receiving the report of Dr. William Compagna, the court-appointed psychologist, the parties reached an agreement on custody and visitation. The Amended Dual Judgment of Divorce, filed on June 12, 2003 nunc pro tunc to April 9, 2003, included details respecting child support and equitable distribution. A separate order was entered on July 18, 2003, awarding plaintiff counsel fees and denying defendant's fee requests.

Defendant appeals provisions respecting his obligations for child support, equitable distribution, and plaintiff's counsel fees. This protracted matrimonial litigation, and the excessive costs incurred, reflect extreme emotional components that are only partially explained by the stresses that necessarily accompany the end of a marriage.

I

These are the essential facts supported by the record. The parties were married on April 30, 1988, and had five children: Leanne Rose, born March 17, 1991; Grace Elizabeth, born April 25, 1993; Joseph Timothy, born April 2, 1995; Danielle Marie, born April 16, 1997; and Michael Martin, born September 9, 1999. Plaintiff filed the complaint on July 26, 2001.

Defendant's appeal respecting child support centers around his claim that the trial judge imputed excessive income to him, in light of his allegedly involuntary change in employment, and failed to impute income to plaintiff. Plaintiff obtained a Bachelor of Arts degree from Villanova University, and held a real estate license for one year, in 1987 or 1988. She held a department store retail sales job from Fall 1987 to Spring 1988, and then worked in a small advertising firm, earning between $18,000 and $20,000, until she left that position in June 1990. She held a part-time department store position that summer, and earned $10 to $12 per hour as a bank teller until February 1991, when Leanne was born. Since that time, she has not worked outside the home.

In December 2002, plaintiff's typical day involved getting breakfast and preparing lunches or providing lunch money for the oldest three children in time for them to catch school buses at 7:15 a.m., 7:40 a.m., and 8:00 a.m., respectively. Before-school activities frequently required plaintiff to drive Leanne to school at 7:00 a.m. Plaintiff often brought Danielle to morning Daisy club meetings, and at 11:50 a.m. Danielle would board the bus to attend kindergarten. For the next couple of hours, plaintiff performed errands and household chores, accompanied by three-year-old Michael. The other children arrived home at 2:30 p.m., 3:30 p.m., and 3:50 p.m. Plaintiff drove the children to after-school activities, assisted with their homework, prepared dinner, did daily laundry, and got the children to bed.

Plaintiff found it hard to find time to make necessary phone calls, and did not believe that her schedule would permit her to do any type of telemarketing work. She had not explored any employment opportunities since filing for divorce, focusing instead on raising the children. As of the divorce trial, plaintiff did not have any plans to seek a job in the near future.

Defendant held a Bachelor of Science degree in chemistry, with a minor in computer science, from Villanova University, where he graduated in December 1985. He worked for six months at The BOC Group, establishing a molecular modeling laboratory for drug manufacturing. In August 1986, he began working at Molecular Design Limited (later called MDL Information Systems), the software company that The BOC Group had used. Defendant worked at MDL for fifteen years, in the niche market of cheminformatics, a means of searching molecular diagrams by computer to facilitate finding prior research on similar chemical compounds. Only four other companies in the world did this kind of work, and MDL had 90%-95% of the market share in that field.

Defendant moved into sales and sales management positions at MDL, finally becoming the Vice President of North American sales. Defendant was a member of MDL's President's Club honoring sales target achievements for each of ten years. He was the top sales representative in North America in 1991, 1993, 1995, and 1996, and the top person worldwide in 1993 and 1996. Defendant's base salary at MDL was in the range of $115,000 to $120,000, but he also received substantial bonuses or commissions. His W-2 statements showed total wages and other compensation of $374,740 in 1994; $172,000 in 1995; $308,761 in 1996; $488,905 in 1997; $306,223 in 1998; $250,577 in 1999; and $183,439 for part of 2000.

Defendant became unhappy with the new management at MDL, and on April 14, 2000, he left MDL for a position at Spotfire, Inc., a software company which had been a joint venturer with MDL. Defendant became responsible for Spotfire's worldwide sales of life sciences products to pharmaceutical and biotechnology companies, starting with an annual salary of $175,000 plus commissions up to $100,000 based upon meeting annual sales targets. Defendant also had health insurance benefits, a non-matching 401(k) plan, stock options, and a monthly car allowance of $450 at Spotfire. Defendant's 2000 W-2 from Spotfire, however, showed wages and compensation of only $181,396. Defendant received no commissions between the last quarter of 2000 and the summer of 2002. According to defendant, this was attributable to declining business. Spotfire's Vice President of Worldwide Sales and defendant's immediate supervisor was David Hadfield. According to defendant, Hadfield told him that he and the Chief Executive Officer also stopped receiving their bonuses at that time.

At trial, defendant acknowledged that he occasionally said that he was in danger of losing his job after the divorce complaint was filed, but he did not seek other employment because he did not truly believe he was in danger. He knew that he had some quarters that were "fantastic," and others were not so great. According to defendant, he failed to meet Spotfire's total bookings and profit objectives set for him in the first and third quarters of 2001, and in the first two quarters of 2002. But from late January or early February 2002 until August 5, 2002, defendant worked on closing a $2.4 million contract with Pfizer Pharmaceuticals. In early August, Spotfire gave defendant a special commission of about $135,000 for his work on the Pfizer contract, but just days later, on August 9, 2002, defendant was, allegedly, involuntarily terminated.

According to Hadfield, defendant was terminated for two reasons. First, Spotfire was not achieving the desired level of growth, even though the Spotfire Board had valued its company at $2 per share in April 2000 and at $6 per share from February 2001 through December 2002. But as of September 2002, Spotfire's website stated that the first quarter of 2002 was a "banner" quarter for the company.

The second reason Hadfield gave for defendant's termination was that defendant was extremely good at closing very large contracts with some of the major pharmaceutical companies, but once Spotfire had closed contracts with almost all of those companies, it needed a "different style of . . . Sales Vice President."

The judge noted inconsistencies in defendant's work history, beginning at about the time the divorce complaint was filed. When defendant began his job search, he told prospective employers that he left Spotfire because he was involved in a contentious divorce and needed to travel less and be closer to his children. For example, Hadfield explained the generous vacation time granted to defendant during the summer of 2002, just prior to his termination, by citing defendant's history of long hours and his need for time to be with his family during the divorce proceedings. During the marriage, defendant spent about 60% of his time away from home on business.

Defendant claimed to be unable to find work in his field at a pay level equivalent to what he initially received at Spotfire. He took a job as a car salesman at Nissan World of Red Bank (Nissan World) on November 11, 2002, where he coordinated internet sales activity and established websites for the company. The general sales manager of Nissan World testified in February 2003 that he expected defendant would be promoted shortly to positions that could yield between $75,000 and $100,000 annually.

In fact, however, defendant's reply brief on this appeal acknowledges that he had a "post judgment change of employment" to a position with Lion Bioscience AG. Defendant's prior employers, MDL and Spotfire, each had a collaborating partnership agreement with Lion Bioscience. Defendant had remained friendly with the individual who originally hired him at MDL, and who had become a sales representative for Lion Bioscience.

II

After several days of trial, plaintiff admitted that she was pregnant, and that the father of her baby was her new companion, Dan Rochelle. As a result of her new relationship, she withdrew her demand for alimony.

After imputing $262,000 as defendant's annual income, and determining that no income should be imputed to plaintiff, the judge awarded $950 per week as child support for the parties' five children. The judge found the gross value of the marital home to be $635,570, and determined that the net equity would be divided 60% to plaintiff and 40% to defendant. The parties' remaining assets were to be divided equally between them, with plaintiff having the opportunity to purchase defendant's share in the marital home, in part by offsetting her share in other marital assets. The judge awarded plaintiff counsel fees of $71,832.45, against which defendant received credits of $13,440 representing overpayments of certain pendente lite awards. The judge denied defendant's application for counsel fees, investigation expenses, and contribution toward the court-appointed psychologist's fees.

III

Defendant presents the following arguments on appeal:

POINT I

THE COURT'S RULINGS CAN NOT STAND AS THE TRIAL JUDGE WAS [BIASED] AGAINST DEFENDANT.

POINT II

THE COURT ERRED IN ITS DETERMINATION OF DEFENDANT'S ABILITY TO PAY.

POINT III

THE COURT ERRED IN ADOPTING PLAINTIFF'S MARCH 2, 2002 APPRAISAL AS THE VALUE OF THE MARITAL HOME IN LIGHT OF THE FACT THAT THE TRIAL TOOK PLACE IN DECEMBER 2002, AND THROUGH MARCH 2003 AND IN LIGHT OF THE FACT THAT THE APPRAISAL WAS FLAWED.

POINT IV

THE COURT'S RULINGS WITH RESPECT TO THE SMITH KLINE BEECHAM STOCK WERE THE RESULT OF THE COURT'S BIAS AGAINST DEFENDANT AND CAN NOT BE PERMITTED TO STAND.

POINT V

THE COURT ERRED IN NOT REQUIRING THE PLAINTIFF TO SHARE IN THE DEBT TO DEFENDANT'S FATHER TO ACQUIRE SPOTFIRE STOCK.

POINT VI

THE COURT ERRED IN ABDICATING ITS DECISION MAKING AUTHORITY TO A THIRD PARTY TO DETERMINE THE VALUE SUBJECT TO EQUITABLE DISTRIBUTION OF THE INVESTMENT AND RETIREMENT ACCOUNTS WHICH ARE TO BE USED AS SET OFFS AGAINST THE AMOUNT PLAINTIFF OWES DEFENDANT TO PURCHASE HIS INTEREST IN THE MARITAL HOME. []

POINT VII

THE VALUE ASSIGNED TO THE CMA ACCOUNT FOR EQUITABLE DISTRIBUTION VIS-A-VIS THE COURT'S TREATMENT OF THE PENDENTE LITE USE OF THIS ACCOUNT BY DEFENDANT IS IN ERROR.

POINT VIII

THE RECORD DOES NOT SUPPORT THE COURT'S DISTRIBUTION OF SAVER POINTS.

POINT IX

COUNSEL FEES SHOULD NOT HAVE BEEN AWARDED TO THE PLAINTIFF AND PLAINTIFF HAS BEEN REQUIRED TO MAKE A CONTRIBUTION TOWARDS DR. COMPAGNA'S COSTS, DEFENDANT'S COUNSEL FEES AND THE PRIVATE INVESTIGATOR FEES.

We have carefully considered the record, the briefs, and the contentions advanced by both parties, in light of applicable law. The scope of appellate review of a trial court's fact-finding function is limited; the findings of the trial court are "binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). "Because of the family courts' special jurisdiction and expertise in family matters, appellate courts should accord deference to family court factfinding." Cesare v. Cesare, 154 N.J. 394, 413 (1998).

With certain exceptions, which we will note, we are satisfied that the judge's findings were supported by substantial credible evidence and do not reflect either legal error or abuse of discretion. In Part IV of this opinion, we address the child support order and the essential finding respecting defendant's earning ability and thus his ability to pay. In Parts V and VI, we address the equitable distribution of marital assets: the valuation and distribution of equity in the marital home in Part V, and the parties' other assets in Part VI. In Part VII we address counsel fees. Finally, in Part VIII we address defendant's claim of judicial bias.

IV

The first aspect of the child support decision was to determine each party's income and earning ability. In calculating defendant's income for purposes of a child support award, the judge followed the instructions for using the child support guidelines to impute income:

The fairness of a child support award resulting from the application of these guidelines is dependent on the accurate determination of a parent's net income. If the court finds that either parent is, without just cause, voluntarily underemployed or unemployed, it shall impute income to that parent according to the following priorities . . . .

[Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2310 (2006).]

The instructions provide three methods for determining an imputed amount, based upon (1) the individual's "potential employment and earning capacity using the parent's work history, occupational qualifications, educational background, and prevailing job opportunities in the region"; or (2) "the parent's most recent wage or benefit record (a minimum of two calendar quarters) on file with the [New Jersey Department of Labor (NJDOL)]"; or (3) multiplying forty hours times the prevailing minimum wage. Ibid. The instructions also set forth the four factors that the trial court used here in discussing whether to impute income to plaintiff. See id. at 2311.

Plaintiff argued that defendant engineered his own termination from Spotfire, and his prior nine-year average annual income, $300,000, therefore should be used. Defendant sought to establish that he had been involuntarily terminated from his position at Spotfire, was unable to find suitable employment in his field for many months, and finally took a position selling cars. The evidence supports the finding that defendant's average income for the three-year period from July 1, 2000 to June 30, 2003 was $262,000.

Defendant's testimony in regard to his job change, and that of Hadfield, his former boss at Spotfire, suffered from significant credibility problems, including a November 6, 2001 letter from Hadfield to defendant's attorney, explaining that defendant was no longer receiving the bonuses that formed a major portion of his annual income. In a fax from defendant to his attorney enclosing that letter, defendant's handwritten note said: "FYI. Wanted to make sure you received with changes we discussed. Let's use it! Thanks, Joe." (Emphasis added).

Citing the comments to Rule 5:6A referencing Appendix IX, the court adopted an approach that yielded a result between the parties' positions:

Based on this detailed review of defendant's work history, the Court does conclude that defendant is underemployed in the automotive sales field and while it does not believe at this point that an annual income of $300,000 a year should be imputed to defendant, the fair approach to calculating his income for purposes of determining his child support obligation and also for weighing his income under equitable distribution factor number seven is to average the actual income over the past thirty-six months.

The judge concluded that defendant's underemployment as an auto salesman, earning $75,000 per year, was temporary, and that he was capable of earnings consistent with his past history. Thus, although the judge did not explicitly state that defendant was voluntarily underemployed, it is plain from the context that that was precisely her finding, and the record supports that finding. Using "defendant's proffered [$]75,000 a year for the first half of 2003 and . . . . his incomes for all of 2001, 2002 and half of the year 2000," the judge found that these figures yielded an average of $262,283, which she deemed to be defendant's income earning capacity.

Current earnings are not "the sole criterion to establish a party's obligation for support." Lynn v. Lynn, 165 N.J. Super. 328, 341 (App. Div.), certif. denied, 81 N.J. 52 (1979). "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." Halliwell v. Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999) (citing Mowery v. Mowery, 38 N.J. Super. 92, 105 (App. Div. 1955), certif. denied, 20 N.J. 307 (1956)).

There is no merit to defendant's assertion that the one-time payments of unused vacation pay and severance pay should not be included in his income calculation for 2002. The instructions for determining income for the sole-parenting worksheet specifically provides that severance pay should be included. Pressler, Current N.J. Court Rules, Appendix IX-B to R. 5:6A at 2326-27 (2006). Payments of unused vacation pay is arguably another form of severance pay, so it was not error for the trial court to include it in calculating defendant's income.

Applying the same factors to defendant's contention that earned income should be imputed to plaintiff, it is plain to us, as it was to the trial judge, that plaintiff, the mother of defendant's five children with a sixth child on the way, had not worked outside the home since the birth of the oldest child. While college educated, plaintiff had no particular career training and no significant work experience. In analyzing defendant's argument that $15,000 should be imputed as plaintiff's income, the judge noted that pursuant to paragraph 12 of Appendix IX-A, the court should impute income to a parent only if the court finds that "a parent is without just cause voluntarily underemployed or unemployed." See Pressler, Current N.J. Court Rules, Appendix to R. 5:6A, at 2310-11 (2006). The factors involved are:

(1) what the employment status and earning capacity of that parent would have been if the family had remained intact . . . (2) the reason and intent for the voluntary underemployment or unemployment (3) the availability of other assets that may be used to pay support and (4) the ages of any children in the parent's household and child-care alternatives.

The judge found that plaintiff would have continued as a full-time caretaker of the children had the marriage remained intact; she was not employed outside the home in order to take care of the five children of the marriage and her sixth child; her major post-judgment asset would be the marital residence, which was needed to shelter the children; and she had been caring for the children and the home on a full time basis while defendant worked more than full time and spent substantial time away from home.

It is plain, as the judge found, that the $15,000 defendant would impute to plaintiff as income would be more than offset by the cost of providing appropriate childcare. Because plaintiff's employment outside the home did not make sense economically, nor with regard to the emotional and physical well-being of the children, the court declined to impute any income to plaintiff. There was no error in the court's determination. "When imputing income to a parent who is caring for young children, the parent's income share of child-care costs necessary to allow that person to work outside the home shall be deducted from the imputed income." Caplan v. Caplan, 364 N.J. Super. 68, 88 (App. Div. 2003) (quoting Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A, at 2311), aff'd, 182 N.J. 250 (2005).

The judge reasonably concluded that defendant's average income over the three years preceding the filing of the complaint was $262,000, or $5,044 per week. After subtracting federal, state, and local taxes approximating $1,589, defendant's net income of $3,454 exceeded $2,900 per week, the maximum to which the Guidelines child support table applied. The judge properly used as a starting place $923, the child support required by the Guidelines for five children where the supporting parent's net weekly income is $2,900. The judge added $47, representing a 14% adjustment as provided by the Guidelines, because one child was over twelve years old. Given that defendant's net income was well above $2,900 per week, it was certainly not an abuse of discretion to impose an additional obligation to pay for the children's medical and dental insurance, unreimbursed medical expenses above the first $250 per child, and one sports or musical activity per child. See Pressler, Current N.J. Court Rules, Appendix IX-A, to R. 5:6A, at 2321 (2006).

Defendant's last argument regarding child support is that the court erred in declining to give him credit against his child support obligation to reflect 89 nights of parenting time. Defendant ignores the judge's specific explanation set forth on the Guidelines worksheet that was attached to the judgment:

No adjustment was made for defendant's parenting time since this case is an over guidelines case due to defendant's net income exceeding the $2900 maximum under the guidelines by $554/week. Had there been an adjustment it would have been about $85/week based on 89 O/N's [overnights]/week.[]

See Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A.

In denying any reduction for parenting time, the judge cited both defendant's over-the-guidelines income level and her decision allowing defendant to claim all five children as dependents on his tax returns. The court did not abuse its discretion in determining that by refraining from an increase in child support above that which is mandated by the Guidelines for the $2900 income level, and by taking into account the economic benefit of the tax deduction, any otherwise appropriate PAR (parent of alternate residence) time adjustment would be offset.

Finally, we observe that two years have gone by since the trial judge's child support determination. If defendant's employment over that period has been significantly less remunerative than past history and evidence at trial led the court to impute, or if otherwise justified, defendant is free to file an application on the basis of changed circumstances. See R. 5:6B. In addition, as provided by the Guidelines, child support orders are subject to reevaluation after three years, irrespective of any change in circumstances. R. 5:7-4(e). Thus there are built-in protections for defendant as the supporting parent.

V

The key to the disputed value of the marital home is that the parties agreed early on to a joint, non-adversarial appraisal by James Pennoyer of Professional Appraisal Associates. Pennoyer, who had more than twenty years of experience in residential appraisals, was retained jointly by the parties to appraise the marital residence. On March 1, 2002, he appraised the house and property at $620,000. His appraisal report was presented when he testified at trial in December 2002. As the judge noted, it was after receiving Pennoyer's report that defendant, dissatisfied with the result of Pennoyer's appraisal, retained his own appraiser, Craig R. Brotons. On the second day of trial, defendant delivered Brotons's appraisal to plaintiff.

The judge sustained an objection from plaintiff's counsel, stating, "No, I'm not going to permit a report from yesterday to be used," stating that this was "trial by sabotage and I will not permit it." Although the judge initially told counsel that they were both stuck with Pennoyer's original report, she did hear and consider Brotons' testimony. Defendant's counsel protested that Pennoyer's appraisal was nine months old; when pressed by the judge, he added that Brotons's appraisal was completed in late September 2002. The judge ruled that date was "recent enough." "I rarely try a case where I have a report that's more recent than two, three months before trial, because that's the discovery period ending." She saw no reason why either appraiser should be permitted to submit an updated appraisal that had not been timely exchanged in discovery. The judge also stopped plaintiff's counsel when he tried to elicit updated information from Pennoyer. The judge rejected defendant's counsel's attempt to ask Brotons to discuss Pennoyer's comparables, noting that neither expert had prepared supplemental reports analyzing the other expert's report, and, as a result, they were both in the same boat."

In her opinion placed on the record, the trial judge described the property in detail, analyzed the comparables used by each appraiser, and clearly explained why she found Pennoyer's appraisal more reliable than Brotons'. These reasons included disparities in the age, the view, the lot size, and the more "exclusive" subdivision of one of Brotons' comparables, which skewed his average. She noted that Brotons never saw the inside of the parties' house. The judge did, however, add $7,000 to Pennoyer's valuation, the amount at which Brotons valued the alarm system, central vacuum, and deck that Pennoyer did not mention; she also increased the valuation of the recent home addition of 857 square feet by ten dollars per square foot, thereby adding an additional $8,570 to Pennoyer's $620,000 value. The judge concluded that the property should be valued at $635,570.

Defendant's main argument against Pennoyer's appraisal is that it was nine months' old at the time of the trial. Again, the judge noted the procedural history of the appraisals, and found insufficient evidence in the record to support defendant's claim that the value of the property had changed significantly in the six months between Pennoyer's and Brotons' appraisals. She explicitly rejected as not credible, Brotons' testimony that the property value should be increased at six percent per year.

In concluding that plaintiff and the children should be able to remain in the marital home, and in equitably distributing the equity in the property, the judge said this:

Equitable distribution factor 12 requires the Court to consider the need of the custodial parent to own or occupy the marital residence and to use or own the house or effects. The large number of children and the defendant's income suggest that it is appropriate that plaintiff and the children continue to occupy the marital residence and that plaintiff and the children keep the essential household effects and the children's furnishings in their bedrooms and their other personal property. Otherwise the children's lifestyle would be drastically changed.

While defendant seeks immediate distribution of his interest in the home, either by plaintiff buying out his equity or by having the home sold, his purpose for seeking these funds is to use them to buy a four or five-bedroom condo, townhouse or home so he has room for the five children during his parenting time. At a fifty percent distribution, each party would receive $210,856, which is what the Court has calculated is the equity in the home.

For defendant this is less than his annual earnings these past three years. Furthermore, the family's standard of living was established by the defendant during the marriage, and he will carry his earning capacity into the future. And plaintiff's reduced capacity, due to her need to be the primary caretaker of these children will interfere with her earning capacity for many more years, considering the youngest child is only three and a half years old.

The so to better enable the plaintiff to keep the marital residence for the benefit of the five children, the Court concludes an equity distribution of sixty percent of the marital home to plaintiff is appropriate. The Court will also give plaintiff one year from the completion date of the equitable distribution on all other assets to arrange financing to buy out the balance of defendant's equity to the extent she is not able to presently offset that interest of defendant's [with] credits on her interest in other marital assets.

As to the defendant's ability correction. As to defendant's alleged immediate need for his equity from the marital home to buy his own residence, I note he already has a fully furnished place to exercise his parenting time in his parents Long Beach Island summer home, and that he is likely to return to his true earning capacity in the foreseeable future, once this litigation has concluded.

Thus, I conclude he will not be significantly disadvantaged by the need to wait for a portion of his equity for a year.

We find the judge's reasoning and her conclusions with respect to the value of the marital home to be well supported, and we will not disturb those conclusions.

VI

We now address the remaining assets, which the judge found subject to equitable distribution and distributed equally between the parties. The applicable standard of review is whether the allocation falls within a reasonable exercise of the trial judge's discretion. See LaSala v. LaSala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001); Borodinsky v. Borodinsky, 162 N.J. Super. 437, 444 (App. Div. 1978).

A

First is the Smith Kline stock gifted to the parties by defendant's parents in December 2000, seven months before plaintiff filed her divorce complaint. The shares were valued at approximately $36,000 at the time of the gift. They were placed in the parties' joint Cash Management Account (CMA) with Merrill Lynch and later sold by defendant at $24,683. The sale proceeds were mingled and spent during the course of the litigation. The judge rejected defendant's contention that plaintiff owed him one half the original value of the gift because his parents would not have included her in the gift had they known of her relationship with another man. The judge expressed two reasons for her decision: first, that she did not believe plaintiff's romantic relationship with the father of her sixth child began until June 2001; and second, that the gift was made with expressed gratitude to both parties.

The note that accompanied the gift, and a similar message to defendant's sister and her husband, said: "We are blessed by the presence of you and your families in our lives. You have brought great joy into our lives in the past, and just seems to get better all the time." Defendant's parents stated their plan to make similar annual gifts to the extent they remained able to do so, and they "felt that the assurance of these ongoing gifts would provide some peace of mind to you as you plan for your future, and that of your family." The gift recognized not only defendant, but the family he and plaintiff created and nurtured.

We see no error in denying defendant credit for one half the gift either at its original value or the value when sold.

B

Defendant had earned certain stock options while employed by Spotfire. The company was privately held, and as the judge found, the value of the options (both at the time the complaint was filed and at trial) was highly speculative and impossible to determine. Defendant made a unilateral decision to borrow $100,725 from his father to fund the exercise of certain options that were about to expire. He signed a note in favor of his father and sought at trial to allocate one-half of that debt to plaintiff. The judge denied that request, but rather than award any portion to plaintiff directly, ordered that the shares be "held in trust by defendant for the education of the five children of the marriage," with the apparent intention that the asset would defray some portion of the children's educational expenses in the future.

Defendant suggests that such value should be credited solely to his own future obligation for educational expenses. We note that under the judgment the children's educational expenses are to be determined (and presumably allocated between the parties based on circumstances then existing) "in the year prior to high school graduation of a child." We will not intervene further at this time.

C

Several investment and retirement accounts subject to equitable distribution were evidenced at trial and ordered to be divided equally between the parties:

(1) A Merck stock investment plan included 172.898 shares, with a value of $11,812 as of October 10, 2001. The judgment provides that "those shares plus dividends and stocks [sic] splits are subjected to equitable distribution."

(2) Defendant participated in 401(k) plans with two prior employers. Defendant's 401(k) plan with a former employer, MDL, was valued as of July 31, 2001, the date of the complaint, at $205,362.73. As of January 1, 2003, the plan's value was $163,125.66, which the parties agree was solely a result of market forces. The judge rejected, for lack of proof, defendant's contention that ten percent of the plan's assets were premarital. Defendant's 401(k) account at Spotfire was valued at $12,070 as of September 30, 2001.

The judge determined that both 401(k) plans were "to be divided by taking credits against the defendant's interest in the marital home or by dividing the assets equally, or by QDRO, thus creating present, separate 401(k) accounts for plaintiff." Although the judge also described, both in her opinion and in the judgment, the two plans having a "total [of] approximately $212,000.00," that approximation failed to take into account the undisputed market losses in the MDL account. If there have been no withdrawals since the judgment was entered, the current value of each 401(k) plan is the amount subject to distribution either by offset or by QDRO.

(3) Each party had a Fidelity IRA account. As of September 17, 2001, defendant's account was valued at $13,469, and plaintiff's account was valued at $3,234.51. There is no dispute about those values. The judgment provided that the accounts "are to be equalized or that plaintiff is to be given credits against the defendant's interest in the marital home."

(4) The parties had a joint Vanguard investment account with a value of $20,082 as of September 30, 2001. The judgment provides that "the present value after adding back any funds withdrawn without specific court approval in the form of a court Order shall be added back and that total is subject to equitable distribution."

(5) The parties had three Fleet Bank accounts totaling $7,000 at the time the complaint was filed, and "that present value [of each] after adding back any funds withdrawn without the benefit of a court Order shall be subject to equitable distribution."

(6) The parties' Merrill Lynch CMA was valued by the judge at $114,057 for purposes of equitable distribution. The judge went through a detailed review of the parties' claims and counterclaims with respect to the dissipation of most of that account during the pendency of the litigation, allowing credits to each side as she found appropriate. There is sufficient credible evidence in the record to support that valuation for purposes of equitable distribution, and we will not interfere with the judge's decision in that regard.

(7) The parties had accumulated miles or points in several "saver" accounts. The judge found that those accounts included "AT&T Universal, Merrill Lynch Visa, AMEX Rewards, Continental One Pass, United Airline Miles, and Delta Sky Miles, which value as of the date of the divorce complaint filing are to be split fifty/fifty (50/50)." The judge ordered those accounts to be divided equally. We reject defendant's contention on appeal that there was no evidence of such accounts in the record. The judge was entitled to rely on evidence of such accounts as they appeared on statements submitted to the court post-trial and before the judge issued her opinion. On remand, defendant is to cooperate with plaintiff and execute any documents necessary to divide those accounts.

The problem apparent in the judgment, with respect to the Vanguard and Fleet Bank accounts, is the unresolved addbacks. The value of each of those accounts was determined by the court as of the date of the complaint. If the present balance in either account reflects any withdrawal after the complaint was filed, without express court order approving that withdrawal, the party who withdrew such amount is liable to the other party for half the amount withdrawn, plus interest or dividends that would have been earned in the account since the withdrawal. On remand, each party shall have an opportunity to present evidence of such withdrawal by the other, as well as court approval of her or his own withdrawal, if any.

VII

The judge entered a separate order requiring defendant to pay $58,392 to plaintiff's attorneys, representing the award of $71,832, the balance due on plaintiff's account, less credits allowed to defendant in the judgment. Payment was to be made at the rate of $10,000 per month, beginning the first of the month following that order. The judge denied defendant's request that plaintiff contribute to his legal fees, to the cost of his private investigators, and to Dr. Compagna's fees. We find no abuse of discretion in these orders.

"The award of counsel fees in a matrimonial action is discretionary with the trial court, and an exercise thereof will not be disturbed in the absence of a showing of abuse." Berkowitz v. Berkowitz, 55 N.J. 564, 570 (1970) (internal citation omitted); See also Eaton v. Grau, 368 N.J. Super. 215, 225 (App. Div. 2004); R. 5:3-5(c). Income and available capital assets determine a spouse's need for a fee award, and a disparity in income often suggests some entitlement to a fee allowance. Argila v. Argila, 256 N.J. Super. 484, 494 (App. Div. 1992). The fact that the spouse seeking a fee award received a fair share of the marital property in equitable distribution "does not preclude the trial court from awarding [counsel] fees and costs." Id. at 488. The "need for an allowance of counsel fees and costs in a matrimonial action may still exist even though there has been an equitable distribution of the marital property." Shaffer v. Shaffer, 154 N.J. Super. 491, 494 (App. Div. 1977). The equitable distribution of property is "a factor for the court to weigh both in deciding whether to make such an award and fixing the amount thereof." Id. at 495. "[T]he value and liquidity of the property [distributed] will have a direct bearing upon [the] need for the award." Ibid. We need not repeat here the vast disparity in earned income, or the fact that plaintiff's primary asset, after effectuation of the judgment, will not be liquid.

The judge found that defendant had unnecessarily incurred excessive fees for investigators to conduct surveillance of plaintiff to establish her relationship with another man. The judge concluded that the potential relevance of that surveillance either to financial issues or to permissible contact between that individual and the parties' children, did not justify the expense or plaintiff's responsibility for such expense. The judge also concluded that while both parties' conduct contributed to the need for Dr. Compagna's involvement and evaluation respecting custody and visitation, it was defendant's overtly disparaging communications to the children about plaintiff, and his repeated attempts to get information about their mother from the children, that were responsible for a significant portion of the psychologist's fees.

The judge thoroughly discussed the reasons for the counsel fee award to plaintiff and for the denial of defendant's fee requests. Defendant's arguments for a different result are not persuasive.

VIII

Defendant contends that the trial judge's bias against him began with pretrial motions and was evidenced throughout the trial, citing numerous judicial comments and rulings adverse to defendant "to the fullest extent possible." Defendant listed fifteen examples of alleged "procedural irregularities" and "inappropriate and sometimes snide and sarcastic comments" that he viewed as abundant throughout out the proceedings.

In James v. City of E. Orange, 246 N.J. Super. 554, 563 (App. Div. 1991), the plaintiff's brief and oral argument were "committed in large measure to documenting the grievance that the presentation of her case was significantly prejudiced by the trial judge's castigation and belittling treatment of plaintiff's attorney in the jury's presence." A remand was required on other grounds, but we "carefully examined the alleged instances of intemperate conduct in the trial transcript." Ibid. We found it unnecessary to the disposition of the appeal to determine whether the judge exhibited bias, but we made these observations:

It is enough to say that the judge's rebukes and aspersions were out of proportion to counsel's transgressions. "A judge should be patient, dignified, and courteous to litigants, jurors, witnesses, lawyers, and others with whom the judge deals in an official capacity. . . ." Code of Judicial Conduct Canon 3A(3). Plaintiff's dismay with the censorious language addressed to her attorney by the judge is not to be lightly dismissed. To guard against any further appearance of unfairness we direct that the retrial of this matter be presided over by a judge other than the one who presided below.

[James, supra, 246 N.J. Super. at 563-64.]

In the present case, the trial judge heard fourteen days of testimony and extensive pretrial hearings and motions. There were many occasions when the judge's comments did not appear to be "patient, dignified, and courteous" to the litigants, witnesses, or lawyers. The court's remarks, however, were directed to both sides and frequently were provoked by inadequate document preparation, inartful questioning often seeking irrelevant information, failures to provide discovery that delayed the trial's progress, and frustration over the parties' frequent refusals to concede even the smallest points. While more negative comments appear to have been directed toward defendant's counsel, we view that not as evidence of bias, but rather as an unfortunate and occasionally intemperate reaction to counsel's repeatedly interrupting the judge or plaintiff's counsel, and counsel's persistence in arguing a point after the judge had made a ruling.

On the thirteenth day of trial, the judge reprimanded defendant's attorney for repeatedly interrupting the court, saying: "Now you just wait a minute and you stop talking that way to this court. I am not here to argue with attorneys. I am here to render decisions and to be listened to. You don't seem to grasp that concept from the git-go." After a few more exchanges, the judge said, "No -- I don't need this hassle" and left the bench (13T38). Upon returning, the judge said that she usually conducted a relatively informal courtroom and most attorneys were professional enough to recognize appropriate boundaries. "That has not happened in this trial. Dysfunction has permeated this case from the beginning . . . and now has reached a new low in the lack of respect for this institution." Thus, the court would require counsel to follow formal practices for courtroom decorum through the remainder of the trial, including respectful listening and refraining from speaking on objections until recognized. Defendant's attorney apologized for letting the rancor of the trial get to him; the judge responded that apologies meant the most when they were demonstrated.

Later, defendant's attorney again interrupted the judge, refused to accept a ruling, and complained "it's not fair." The judge briefly left the bench; upon returning, the judge reminded counsel that she was "reclaiming my courtroom," and that counsel was to exercise "patience, restraint and self-control" and accept the court's rulings.

The disrespectful and unprofessional behavior of counsel provoked verbal reprimands throughout the trial, but no formal sanctions were imposed. In our view, while the court's statements and rulings showed an increasing exasperation with defendant's counsel, neither that fact, nor the judge's findings with respect to defendant's credibility, establish a bias against defendant, nor an appearance of bias that could lead to an objectively reasonable conclusion that disqualification was required.

IX

The matter is remanded for the limited purposes of completing the equitable distribution of the assets of the marriage, specifically, (1) to calculate the value of plaintiff's share in the assets listed in Part VI C of this opinion, including the corrected value of the two 401(k) accounts and plaintiff's share therein, to be offset against the sum plaintiff owes defendant for his share in the marital home; and (2) to set a schedule for (a) plaintiff's payment to defendant for the balance of his share in the equity in the marital home; (b) plaintiff's satisfaction of defendant's obligation on existing mortgage loans secured by that property, by renegotiating the existing mortgages or otherwise; and (c) defendant's conveyance of title to plaintiff.

Affirmed in part, modified in part, and remanded.

 

Plaintiff included in her appendix pages from a website for Lion Bioscience AG, a press release dated May 8, 2003, announcing the appointment of Joseph F. Donahue as President of Lion Bioscience, Inc. The biographical information included in the release, including defendant's educational background and work for MDL and Spotfire, made defendant's identity clear. The record does not reflect that this information was provided to the trial judge.

Prior to trial the parties engaged in extensive motion practice, much of it revolving around defendant's applications to keep plaintiff's companion away from the children.

The argument is moot in light of the fact that the proposed third party did not serve in the anticipated role.

Plaintiff filed the divorce complaint on July 31, 2001. The trial took place between December 2002 and March 2003, with the judge's oral decision on April 9, 2003.

"For cases in which the combined net income of the parents is more than $2,900 per week, the child support award at $2,900 represents the minimum basic support award. The court must add a discretionary amount of child support to the minimum basic award based on the factors specified in N.J.S.A. 2A:34-23." Appendix IX-F.

[Pressler, Current N.J. Court Rules, Appendix IX-F to R. 5:6A, at 2382 (2006).]

According to the consent judgment for custody and parenting filed on March 10, 2003, the children would regularly reside with plaintiff, spending alternate weekends, five weeks of summer vacation, and alternate holidays with defendant at the home on Long Beach Island owned by his parents. Once defendant established a residence within a thirty-minute commute from the marital residence, defendant would also have one mid-week overnight parenting period.

The calculation is 89/365 x .37 x $950 = $87.75. See Pressler, Current N.J. Court Rules, Appendix IX-A to R. 5:6A, at 2311-12 (2006).

When defendant sought plaintiff's consent for Brotons to enter to prepare his own appraisal, defendant refused plaintiff's only condition: that defendant provide her with $500 to retain an independent appraiser of her own.

Defendant was properly credited with pendente lite payments of $8,640 and $4,800, for a total of $13,440.

Rule 5:3-5(c) provides, in pertinent part:

In determining the amount of the fee award, the court should consider, in addition to the information required to be submitted pursuant to R. 4:42-9, the following factors: (1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.

Appellate counsel for defendant did not represent him at trial.

(continued)

(continued)

38

A-6703-02T3

November 4, 2005