STUART KRONBERG v. ANN KRONBERG

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1734-04T11734-04T1

STUART KRONBERG,

Plaintiff-Appellant,

v.

ANN KRONBERG,

Defendant-Respondent.

_________________________________

 

Argued January 19, 2006 - Decided June 2, 2006

Before Judges Wecker, Fuentes and Graves.

On appeal from the Superior Court of New

Jersey, Chancery Division, Family Part, Essex

County, FM-07-694-04.

Michael S. Simitz argued the cause for

appellant.

Patsyann DiGiacomo argued the cause for

respondent (Patsyann DiGiacomo, attorneys;

Ms. DiGiacomo, of counsel; Mary M. Theroux,

on the brief).

PER CURIAM

Plaintiff, Stuart Kronberg, appeals that portion of a final judgment of divorce that awards defendant, Ann Kronberg, 80% of the net proceeds of the sale of the marital home as her share of equitable distribution. In the alternative, plaintiff contends that the award of $385 per week as permanent alimony is inconsistent with the 80/20 division of the property. In essence, plaintiff argues that to the extent that the 80/20 division is based upon the parties' unequal earning ability, it represents a duplication of remedy, because the alimony award itself reflects the disparate earning ability.

The evidence at trial supports the following facts. The parties married on June 21, 1975, and had four children prior to their separation in 1999. In 1978, the couple moved into a two-and-one-half family house located at 427 Grove Street in Upper Montclair, New Jersey. They agree that they purchased the house at a lower price than others in the neighborhood because it was in need of significant repairs. When they separated, Mr. Kronberg initially took up residence in the third floor of the marital home. In January 2000 he moved out of the house entirely. Mrs. Kronberg and the four children lived on the first floor, which was described as a "small apartment" with "an eat-in-kitchen," and was described as "one bedroom with a small [second] bedroom."

The parties, who were both in their mid-fifties when the case was tried, have significantly different education backgrounds and work experience. Mr. Kronberg has a Bachelor of Science degree in industrial technology and has been employed in sales of industrial equipment. In 2003, he had a base salary of $75,000 per year and received a $2,000 bonus. He had been unemployed from March 2001 to October 2001, and in the previous year he had earned approximately $45,000 in salary. Mrs. Kronberg completed ninety-five credits of undergraduate college courses. She was working when they were first married, but stopped in 1977 after suffering from agoraphobia. In 1998, Mrs. Kronberg began working again on a part-time basis. At the time of the trial, August 19, 2004, she was working full-time for an advertising agency, with a gross income of about $36,000.

Each party has certain health issues, as do their children. In 2001, Mr. Kronberg was diagnosed with prostate cancer but appears to be in recovery. He takes oral medication for diabetes, high blood pressure, and high cholesterol. Mr. Kronberg contended that Mrs. Kronberg had a drinking problem that affected her ability to care for their children and the home. Mrs. Kronberg spends $50 a month on psychological counseling for herself; she has battled agoraphobia but denies having an excessive drinking problem. Mrs. Kronberg testified that their son Joshua had been experiencing emotional difficulties and had beaten her twice within two weeks, but she did not report the incident because of the poor condition of the house. Mrs. Kronberg also testified that daughter Sarah had bouts of depression and saw a counselor. Sarah's medical records were admitted in evidence by agreement, and supplied much information that demonstrated the unfortunate, dysfunctional family relationships.

With respect to equitable distribution, the key issue addressed by the trial court was the condition of the marital home. The appraised value was $325,000; a realtor, with whom defendant spoke, stated that the house could not be sold for more than $350,000. Mrs. Kronberg testified that the house was in deplorable condition. Mr. Kronberg speculated that if the house was in excellent condition, it would probably be worth up to $700,000. Each party blamed the other for the condition of the house and thus for its reduced market value.

Mrs. Kronberg testified that the house has needed repairs since they moved in, but Mr. Kronberg never got around to having everything fixed. As a result, the children slept on the floor their entire lives, most of the electricity did not work, and because of holes in the house, there were possums and squirrels in the dwelling. According to her, when Mr. Kronberg set out to fix the kitchen, he ripped it open and left it in disrepair for seven years. In addition, there was no heat in the house, the kitchen ceiling collapsed, leaving animal excrement, and there were rats in some of the cabinets and holes in the bathroom. She testified that they took out a home equity loan to fix the house but when Mr. Kronberg switched to a sales job that was commission-based, they had to use the loan proceeds for living expenses.

After the separation, Mrs. Kronberg was only able to get two hours of heat at a time in the fourteen-room house, and it took Mr. Kronberg three days to check on the boiler after she complained. She testified that the Township of Montclair wanted her to move out of the house with the children because there was no heat, but they had no place else to go. When she told Mr. Kronberg that she was going to call Public Service to have a boiler installed on a monthly payment plan, he told her the account was in his name alone and he would not authorize it.

Mr. Kronberg testified that they used the $50,000 home equity loan primarily to pay for their children's tuition at private schools. He also testified that the children were forced to live in a small space because the rest of the house had been rented to Mrs. Kronberg's parents and sister. During the marriage, he did extensive work on the house either by himself or with friends. He did this work, which included renovating the first-floor bedrooms, rewiring electricity, renovating the upstairs bedrooms, replacing an oil burner with a gas burner, installing a gas hot-water heater, and renovating the first-floor kitchen and bathroom, after returning from his job each evening and on weekends. The kitchen took a long time to complete because of financial difficulties.

The parties' oldest child, Joshua, testified that he saw his father complete various projects and repairs around the house, including repair of the roof, building fences, repairing the stairs, constructing walls, renovating the kitchen and working on the boiler. Mrs. Kronberg suggested that her fight with her son had some bearing on his testimony.

Apparently due to the condition of the home, DYFS removed their youngest daughter, Lavinia, from the home, and placed her with Mrs. Kronberg's aunt. Mrs. Kronberg supported her contention that Mr. Kronberg was responsible for the home's condition with testimony that she had no control over family spending or family income, and that he made frivolous spending decisions that did not involve repairing the home. She argued that Mr. Kronberg handled the majority, if not all, of the family bills as the family's sole supporter for most of the marriage. She stressed his expenditure of about $4,500 for one daughter's yearly ice hockey league, a sport the child had participated in since the age of four (apparently without objection by Mrs. Kronberg). Mr. Kronberg said he paid for each hockey season at the beginning of the year, and had already spent the money when the boiler in the house stopped working.

The judge found that Mr. Kronberg's earning ability was $80,000 per year, whereas Mrs. Kronberg's earning ability was $36,000 per year. The judge also found that in order to maintain the marital standard of living, Mrs. Kronberg required permanent alimony of $385 per week, that is, $20,020 per year, and that Mr. Kronberg was able to pay that amount. In ordering alimony at that level, taxable to Mrs. Kronberg and deductible to Mr. Kronberg, as well as ordering child support of $242 per week, that is, $12,584 per year, the judge effectively reduced Mr. Kronberg's anticipated gross income to less than $48,800 and increased Mrs. Kronberg's anticipated gross income to somewhat over $68,000.

Mrs. Kronberg asked the court to distribute 100% of the net proceeds of the house to her, to allow her to finance a home for herself and the children. The judge ordered that she receive 80% of the proceeds of the marital home, in addition to $385 per week as permanent alimony and $242 per week in child support for the unemancipated children.

On appeal Mr. Kronberg argued as follows:

I. THE TRIAL COURT CLEARLY ABUSED ITS DISCRETION IN DISTRIBUTING THE PROCEEDS FROM THE MARITAL HOME 80% TO 20% IN RESPONDENT'S FAVOR AS THERE WAS NO EVIDENCE IN THE RECORD JUSTIFYING SUCH AN INEQUITABLE RESULT.

A. The Trial Court Committed Legal and Factual Error By Finding That Appellant Had Dissipated the Marital Home Prior to Separation.

B. The Trial Court Committed Legal and Factual Error By Finding That Appellant Had Dissipated the Marital Home After to [sic] Separation.

C. The Uneven Distribution of the Marital Home Cannot be Based Upon the Potential Increase in Income Disparity Between the Parties as That Was Addressed By Alimony Award.

D. The Trial Court Erred as a Matter of Law By Considering Appellant's Alleged Emotional Abandonment of His Children and Respondent in Determining Equitable Distribution.

II. IN THE ALTERNATIVE, THE ALIMONY AWARD SHOULD BE REVERSED AS IT IS INCONSISTENT WITH THE 80%-20% DIVISION OF THE MARITAL HOME.

In reviewing a trial judge's award of equitable distribution, our role is:

to determine whether the result could reasonably have been reached by the trial judge on the evidence, or whether it is clearly unfair or unjustly distorted by a misconception of law or findings of fact that are contrary to the evidence. The task is a difficult one of balancing the need for a check on unbridled discretion in the trial court against affording a trial de novo in this court. An equitable distribution will be affirmed even if this court would not have made the same division of assets as the trial judge.

[Perkins v. Perkins, 159 N.J. Super. 243, 247-48 (App. Div. 1978).]

We defer to a Family Part judge's findings of fact respecting equitable distribution as long as they are supported by substantial credible evidence. E.g., Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-44 (App. Div. 1978). We review the division of assets in equitable distribution as an exercise of discretion by the trial judge. Steneken v. Steneken, 183 N.J. 290, 303-04 (2005) ("Trial courts remain free to consider, in the exercise of their discretion and in accordance with the statutory guidelines, the fair and proper quantum of alimony and equitable distribution attendant to each case before them." (Internal footnote omitted.)); LaSala v. LaSala, 335 N.J. Super. 1, 6 (App. Div. 2000) ("[W]e will affirm an equitable distribution as long as the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake."), certif. denied, 167 N.J. 630 (2001); Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985) (holding 50/50 division of assets in equitable distribution was not an abuse of discretion); Borodinsky, supra, 162 N.J. Super. at 444. Our review of the lower court's determinations as to the law, however, is plenary, with no special deference to the legal conclusions of the trial court. See Manalapan Realty L.P. v. Tp. Comm., 140 N.J. 366, 378 (1995).

To determine equitable distribution, a judge must follow a three-step process: (1) decide what property is eligible for distribution; (2) determine the value of the property; (3) decide how most equitably to allocate the property. Rothman v. Rothman, 65 N.J. 219, 232 (1974). Under New Jersey's equitable distribution statute, both parties in a marriage are presumed to have made contributions to their social and financial success, N.J.S.A. 2A:34-23.1, thus each party is expected to "receive his or her fair share of the fruits of those efforts by way of equitable distribution." Sculler v. Sculler, 348 N.J. Super. 374, 378 (Ch. Div. 2001). The question, in every instance, is "what is a fair share?"

The non-exclusive factors the court must consider in determining equitable distribution include:

a. The duration of the marriage;

b. The age and physical and emotional health of the parties;

c. The income or property brought to the marriage by each party;

d. The standard of living established during the marriage;

e. Any written agreement made by the parties before or during the marriage concerning an arrangement of property distribution;

f. The economic circumstances of each party at the time the division of property becomes effective;

g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage;

h. The contribution by each party to the education, training or earning power of the other;

i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, as well as the contribution of a party as a homemaker;

j. The tax consequences of the proposed distribution to each party;

k. The present value of the property;

l. The need of a parent who has physical custody of a child to own or occupy the marital residence and to use or own the household effects;

m. The debts and liabilities of the parties;

n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse or children;

o. The extent to which a party deferred achieving their career goals; and

p. Any other factors which the court may deem relevant.

[N.J.S.A. 2A:34-23.1.]

The two factors most critical to the issue before us are reflected in N.J.S.A. 2A:34-23.1(f) and (i). We recognize that a trial judge does not fulfill his or her discretionary obligation if he or she routinely or mechanically divides the marital assets equally. Wadlow, supra, 200 N.J. Super. at 377. In fact, the New Jersey Supreme Court rejected the contention that trial judges should adopt a 50/50 distribution:

The suggestion has been offered that in undertaking to effect an equitable distribution of marital assets, the trial court should, to establish a starting point, presumptively assign some proportion, generally mentioned as 50%, of all eligible assets to each spouse. We disapprove of this proposal. No basis for it is to be found in the statute itself, it would import into our law concepts now held chiefly, if not solely, in those states where community property law principles have gained acceptance, and we foresee that it might readily lead to unjust results. Rejecting any simple formula, we rather believe that each case should be examined as an individual and particular entity.

[Rothman, supra, 65 N.J. at 232 n.6.]

Taking into account Mr. Kronberg's greater ability to increase his earning ability in the next several years, as the judge found, it was not unreasonable to provide Mrs. Kronberg with a somewhat greater share of the parties' major asset. The issue here is whether the 80/20 division of the parties' major marital asset, in light of the alimony and child support awards, was outside the bounds of a reasonable exercise of the court's broad discretion. We conclude that it was. "[T]he final judicial inquiry is plainly put: whether the ultimate result, both in its whole as well as in its constituent parts, is fair under the circumstances and congruent with the standards set forth in N.J.S.A. 2A:34-23 (alimony) and -23.1 (equitable distribution)." Steneken, supra, 183 N.J. at 302.

The trial judge decided that Mrs. Kronberg was entitled to a substantially larger share of the proceeds of the sale of the marital home, after finding that Mr. Kronberg was responsible for its poor condition and resulting loss in value:

[Mr. Kronberg] did not contribute equally to the marriage and to the raising of their four children. However, while [Mrs. Kronberg] clearly contributed as wife, mother and homemaker, she attempted to fill the gap left void by [Mr. Kronberg] when he left the family. The court does not accept as credible that [Mrs. Kronberg] was [to] blame for the condition of the house and the family's emotional and psychological problems. [Mr. Kronberg] clearly created the vacuum resulting in the dissipation of the value of the house and in the loss of years for the children to enroll in college.

Addressing the concept of marriage as a partnership, the judge continued:

[Mr. Kronberg] has been the sole income earner for the family until 1997 when [Mrs. Kronberg] obtained employment after twenty-two years as a homemaker. The disparity between the parties' income is likely to increase over time and will steadily increase in [Mr. Kronberg's] favor. This increasing disparity in the parties' incomes has been factored into the equitable distribution equation. Moreover, for all of the above reasons[,] especially the failure to preserve [the] marital residence and [Mr. Kronberg's] dissipation of value of the [marital] two-family home and his abandonment of his children to the sole care of [Mrs. Kronberg], the court concludes that [Mrs. Kronberg] is entitled to more than the presumptive fifty-fifty split as to the marital residence.

The trial court then found:

Based on the years of marriage, the age and economic circumstances of each of the parties, the income and earning capacity of the parties, the defendant's [sic] failure to preserve and maintain the marital residence [the plaintiff's testimony that the marital home was worth $600,000 to $700,000 and the appraisal's deduction for condition averaged approximately $100,000] the court awards [Mrs. Kronberg] 80% of the net sales price of the marital home . . . . The court does not attribute the cat condition or the failure to pick up clothes to the lowering [of] the value since the parties had cats at the home as well as clothes while [Mr. Kronberg] resided with the family.

The judge based the equitable distribution award largely on the conclusions that Mr. Kronberg "abandoned" the family and made poor choices with the couple's money, leaving the home in extreme disrepair for years and therefore grossly undervalued in comparison to other homes in the area. The trial judge placed virtually all of the blame for the devaluation of the house on Mr. Kronberg. But the equitable distribution statute, providing that the contribution of a homemaker to the value of marital property is a factor in its allocation, cuts both ways. N.J.S.A. 2A:34-23.1(i) actually provides:

The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, as well as the contribution of a party as a homemaker.

[Emphasis added.]

We accept the judge's conclusion to the extent that Mr. Kronberg historically took on greater responsibility for the structural defects of the property, but we cannot ignore substantial evidence of Mrs. Kronberg's responsibility for the home's condition. The indisputable facts are that for most of the years when the parties were living together, Mr. Kronberg was working outside the home, supporting the family, and Mrs. Kronberg was at home full-time. Moreover, after the separation, Mrs. Kronberg had exclusive possession of the house during the five years preceding the trial. We cannot understand the judge's total rejection of the part played by Mrs. Kronberg in contributing to the condition of the property.

We find no abuse of discretion in the determination that Mrs. Kronberg should receive a somewhat larger percentage of the proceeds from the marital home than Mr. Kronberg. Nonetheless, we find the order awarding her 80% of the net proceeds to be excessive in light of the credible evidence in the record. At oral argument, counsel advised us that the house actually sold for $406,000. The record indicates that the mortgage balance was approximately $44,000, and other debts totaled $16,000, leaving net proceeds of approximately $346,000. We were also informed at argument that after the closing, 50% of the net proceeds was distributed to Mrs. Kronberg, 20% to Mr. Kronberg, and 30% (representing the disputed portion) was placed in escrow pending the outcome of this appeal. Presumably, then, Mr. Kronberg received $69,200, Mrs. Kronberg received $173,000, and $103,800 remains in escrow (all approximations). An 80/20 distribution would provide Mrs. Kronberg with a total of $276,800, compared with Mr. Kronberg's $69,200.

There is no magic formula for determining a fair distribution of the parties' only substantial marital asset. Lack of precision does not mean a fair and reasonable determination cannot be accomplished. The expert's appraisal of the value of the real estate, which was admitted at trial, was $325,000. The expert also opined that if the property was in reasonable condition, it would have been appraised at $100,000 more, or $425,000. In other words, the poor condition reduced the market value by $100,000. The judge's 80/20 division was based upon his finding that Mr. Kronberg was soley responsible for the poor condition. But we have concluded that the record does not support that finding. Moreover, it appears that the judge based the distribution in part upon an improper factor: Mr. Kronberg's "fault" in leaving the family home and purportedly failing to provide adequate emotional support to the children.

In light of the substantial evidence of dysfunctional behaviors and relationships between and among the parties and their children, we cannot find sufficient credible evidence in the record to support, for example, the judge's conclusion that in their attempts "to obtain a college education," two of the children were "thwarted by [Mr. Kronberg's] failure to properly provide parental guidance." In fact, the judge also found that "[i]t is clear that the parties' children had emotional and psychological stress related to their parents' behavior." (Emphasis added.)

We do not find a mistaken exercise of discretion in the determination that it is fair for Mrs. Kronberg to receive a larger share of the proceeds to make up for her more limited ability to increase her future earning capacity relative to Mr. Kronberg. But a 60% differential (between 20% and 80%) is neither fair nor reasonable. Under all the circumstances, and after giving substantial consideration to both parties' limited financial means, we conclude that it would be counterproductive to remand the matter for further proceedings in the trial court. Cf. Esposito v. Esposito, 158 N.J. Super. 285, 291-292 (App. Div. 1978). We therefore exercise our original jurisdiction, R. 2:10-5, to modify the equitable distribution of the proceeds of the sale of the marital home, and award 65% to Mrs. Kronberg and 35% to Mr. Kronberg.

In our view, an award of a 65% share to Mrs. Kronberg would more reasonably and fairly take into account the parties' disparate earning capacity, as well as the relative responsibility of each for the condition of the property. A 65/35 distribution of the proceeds of $346,000 would provide approximately $225,000 to Mrs. Kronberg and $121,000 to Mr. Kronberg.

Recognizing the interrelationship between the various financial terms of a divorce, and having found merit in Mr. Kronberg's contention that the 80/20 division reflected a form of double-counting of the parties' disparate earnings (given the alimony award), we find no basis for interfering with the alimony award of $385 per week. If Mrs. Kronberg's financial situation improves in the future, or if she remarries, Mr. Kronberg can petition the court for a modification of alimony. E.g., Innes v. Innes, 117 N.J. 496, 504 (1990) (a person seeking modification of an alimony award must show a change in circumstances that warrants relief from the maintenance obligations); see also Konzelman v. Konzelman, 158 N.J. 185, 196 (1999) (permanent alimony terminates upon remarriage).

The judgment is affirmed as modified.

 

The only other marital assets, Mr. Kronberg's IRA's totaling $6,437 and his corporate retirement account valued at $31,660, are to be divided equally. The judgment also provides that Mr. Kronberg pay $242 per week as child support for the three unemancipated children, and Mrs. Kronberg is to pay $80 per week in child support to her aunt, for as long as the youngest child lives with the aunt. The judgment further provides that the college expenses of two of the parties' children be shared 52%/48%, with Mrs. Kronberg paying the greater portion. Each party is to maintain a $200,000 term life insurance policy for the benefit of the three younger children, and Mr. Kronberg is to maintain a $250,000 term policy for Mrs. Kronberg's benefit.

Debts of $11,042.48 owed to St. Cassian's School and $5,000 owed to Mrs. Kronberg's aunt (for tuition payments she made on their behalf) are to be paid out of the proceeds of the sale of the marital home. An amended judgment provided that appellant would be entitled to claim their child, Malachy, as a dependent on his tax return, and was also to be responsible for any taxes or penalties related to the tax years 1999 to 2003, inclusive.

The four children are: Joshua, born in 1978; Sarah, born in 1984; Malachy, born in 1985; and Lavinia, born in 1991. The parties agree that Joshua is emancipated and Lavinia is unemancipated. They also agree that if Sarah and Malachy enter college, as planned, they will be considered unemancipated.

The judge based that standard on the family income of $75,000-$80,000 when the parties separated. We express no opinion in regard to that finding, which is not directly before us.

For example, the judge rejected the evidence that Mrs. Kronberg allowed excessive number of cats in the house, and failed to address evidence of Mrs. Kronberg's drinking over the years.

Mrs. Kronberg moved to supplement the record with certain post-judgment pleadings respecting the sale of the property, and we have now granted that motion and considered all of the documents in both parties' appendices.

The post-judgment pleadings that supplement the record on appeal suggest that Mr. Kronberg's employment, and therefore his income, may have been interrupted since the trial. Nothing in our decision today precludes an application in the Family Part to secure Mrs. Kronberg's future alimony or child support payments against Mr. Kronberg's share of the escrowed proceeds.

(continued)

(continued)

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A-1734-04T1

June 2, 2006