GLENN SCHUNKEWITZ v. CAROL SCHUNKEWITZ

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2830-04T52830-04T5

GLENN SCHUNKEWITZ,

Plaintiff-Appellant,

v.

CAROL SCHUNKEWITZ,

Defendant-Respondent.

________________________________________

 
Telephonically argued on April 25, 2006 - Decided August 14, 2006

Before Judges Stern and Grall.

On appeal from Superior Court of New

Jersey, Chancery Division, Family Part,

Morris County, FM-14-941-99.

Brian J. Levine argued the cause for appellant (Brenner & Levine, attorneys;

Mr. Levine, on the brief).

Stephen P. Haller argued the cause for respondent (Einhorn, Harris, Ascher, Barbarito, Frost & Ironson, attorneys;

Mr. Haller, of counsel; Jennie L. Osborne, on the brief).

PER CURIAM

Plaintiff Glenn Schunkewitz appeals from an order requiring him to pay defendant Carol Schunkewitz $35,000 for counsel fees she incurred in this post-judgment matrimonial litigation. Because the findings of fact and legal conclusions do not permit us to determine the basis for the award, we remand for reconsideration.

The parties were married on June 16, 1985, and divorced on December 5, 2000. They have two children; both reside with defendant. Their final judgment of divorce incorporates their property settlement agreement. Under that agreement plaintiff was obligated to pay alimony in the amount of $3,500 per month for three years and $3,000 per month for the next seven years. He is also obligated to pay child support in the amount of $3,000 per month, camp expenses of up to $3,000 per year per child, all temple fees and the costs of religious education through the year of the Bar Mitzvah of the youngest child, and a contribution of up to $10,000 per child for Bar Mitzvah/Bat Mitzvah celebrations.

The parties returned to court on post-judgment matters prior to the litigation that resulted in the counsel fee award under review. In connection with that earlier post-judgment litigation, by order dated December 10, 2001, plaintiff was required to pay $2,612.50 toward fees defendant owed to the attorney who represented her in that litigation.

Plaintiff commenced this round of post-judgment litigation in April 2002 when he moved to reduce his support obligation. Defendant, represented by new counsel, cross-moved to enforce the judgment and prior orders. The motion judge determined that plaintiff had established a prima facie case for modification based on changed circumstances and scheduled a plenary hearing. The parties were unable to complete discovery without the assistance of the court, and the plenary hearing was delayed.

Following the plenary hearing, by order dated September 27, 2004, the judge denied plaintiff's application to modify support. By order dated September 28, 2004, the judge required plaintiff to pay $74,182.01 in past due child support and alimony. By order dated October 13, 2004, the judge memorialized an agreement on her remaining issues. That order provided for defendant to receive an additional $16,102.39 in resolution of the remaining claims. The question of counsel fees for this round of post-judgment litigation was reserved pending receipt of certifications.

The certification of services submitted by defendant's attorney listed hours, services and fees "relating solely to the trial of the financial issues in the case" in the amount of $64,944.15. Costs totaled $486.97. The total for fees and costs was $65,431.12. In addition the attorney provided a certification from defendant's prior attorney, which reflected fees in the amount of $3,423.75. The grand total was $68,854.87. The attorney acknowledged that defendant's fees had been paid "by her mother either through indebtedness to her mother or [on] a direct basis."

Plaintiff's certification in opposition to defendant's request for counsel fees focused on his obligation to pay over $87,000 as a consequence of the orders arising from the litigation. He explained that the obligation to pay counsel fees on behalf of defendant, in addition to the amount owed, would compromise his ability to pay support, which was based, in part, on funds he would be required to deplete to pay any counsel fee award.

Plaintiff's attorney objected to the generality of the description of services provided in support of defendant's application, noting that the parties were also involved in extensive litigation concerning the children of the marriage before a different judge of the Family Part and questioning whether defendant's attorney had properly segregated the fees related to this litigation. He also objected to the reasonableness and proportionality of the time charged for specific services. By way of example, the attorney referenced a letter written because plaintiff's check for $16,100 was $2.39 short. A charge for that letter, however, was not included in the certification of services submitted on behalf of defendant. Plaintiff's attorney did not submit a certification of services on behalf of his client. He simply reported that he had billed his client a total of $67,817.33 for his own attorney's services, $15,663.33 of which had not been paid. With respect to fees paid by defendant's mother, plaintiff's attorney asserted that defendant had testified that her mother had paid all of the fees as a gift to her. On that basis, he argued that defendant did not need a contribution toward fees from plaintiff.

The judge's factual findings and conclusions supporting the $35,000 award of attorneys fees are as follows:

In determining an issue such as this the Court is required to address the factors in R. 5:3-5c. Those factors are the financial circumstances of the parties, the ability of the parties to pay their own fees or to contribute to the fees of the other party, the reasonableness and good faith of the parties advancing their positions, the extent of the fees incurred by both parties, any fees previously awarded, the amount of the fees previously paid to counsel by each party, the results obtained, the degree to which the fees . . . incurred . . . to enforce existing orders or to compel discovery or other factors.

. . . Here we have Mr. Schunkewitz, who is obviously a very competent individual, who has engaged in the financial world as

. . . an investment adviser, stockbroker, manages portfolios, has clients, trades securities for the accounts of others. And obviously is responsible in that regard.

He was working for Prudential for a number of years. He elected to move from Prudential to EBL PaineWebber and in the process got a six, $700,000 -- we'll call it employee forgivable loan that came in core factor.

Now, he said he moved because of the divorce, really, because many of his clients I think were -- he claimed source or derived from his relationship with his wife and the wife's family. He made that decision. He elected to cast his lot in that direction.

And on the merit[s] . . . of the application for reduction of . . . support, . . . I denied it.

Financially, likely both parties suffered as a result of the divorce. Financially, Ms. Schunkewitz is in large measure dependent upon the largess of her mother, who has, in fact, subsidized her substantially throughout this process. . . .

She works for her mother's firm, but because of the situation with the children has elected to focus on their needs and does not work likely up to her potential . . . she is an engineer. Obviously a very competent person in her own right.

The ability of the parties to pay their own fees or to contribute to the other party's fees, again, is problematic because we're not dealing here with people who are without resources. On both sides. They both have abilities.

. . . .

Certainly I think Mr. Schunkewitz ultimately has an ability. It's a matter of the effect on his life. On his ego. On his bank accounts.

Ms. Schunkewitz, push comes to shove, she'll go to mom. She did. She got the money from mom. I have no reason to believe she owes attorneys anything in this case. And that's not because of her own resources. It's because -- because of her mother's resources.

To what extent can the Court look toward the "ability?" What does ability mean? Does it mean I can pick up the phone and call mom and mom's going to write a check for me? Is that ability? Or is it my ability theoretically to go out and get a job? . . .

The reasonableness and good faith of the positions advanced by the parties. Reasonableness is a factor. Different -- differentiated from good faith. Mr. Schunkewitz obviously did not want to pay the level of support that he agreed to. He took a position. He lost it. There is a consequence for that.

. . . The fact that you do lose a case does not, of course, mean you took the position in bad faith. Hardly.

But his client did, in fact, engage in conduct [that] . . . was intended to secret assets for some reason. Intentionally. . . .

. . . .

We haven't awarded fees and -- we may have, but they're not a factor. The amount of fees paid by each party, about the same in the case. Maybe a little more for Ms. Schunkewitz, but about the same. Results obtained, of course, Ms. Schunkewitz prevailed in the motion on the support, but the aspects of the unreimbursed expenses, that was settled. So hardly, . . . it was not a hundred percent win. The primary issue, though was support.

Mr. Schunkewitz has shown good faith. He's paid off what the Court has ordered. . . .

. . . .

The total claim sought is -- and you can work the ratios. There's a claim from the Donohue -- the Donohue firm for about [] $3700. Something like that.

And the balance is for fees asserted through [present counsel].

. . . What I'm going to do is I'm going to award a fee in the sum of $35,000. It will be broken down in the ratio [between the two attorneys].

This court must review an award of counsel fees for abuse of discretion. Where the judge follows the law and "makes appropriate findings of fact, a fee award is accorded substantial deference and will be disturbed only in the clearest case of abuse of discretion." Yueh v. Yueh, 329 N.J. Super. 447, 466 (App. Div. 2000); see Berkowitz v. Berkowitz, 55 N.J. 564, 570 (1970). Although the judge recited the criteria controlling the counsel fee decision, the factual findings are inadequate to allow the litigants or this court to understand the basis for this discretionary ruling, and we must remand. See Curtis v. Finneran, 83 N.J. 563, 569-70 (1980); Klajman v. Fair Lawn Estates, 292 N.J. Super. 54, 61 (App.Div.), certif. denied, 146 N.J. 569 (1996).

The controlling law is clear. "In awarding attorney's fees, N.J.S.A. 2A:34-23 requires a court 'to consider the factors set forth in the court rule[s] on counsel fees, the financial circumstances of the parties, and the good or bad faith of either party.'" Mani v. Mani, 183 N.J. 70, 93 (2005) (quoting N.J.S.A. 2A:34-23). The Supreme Court has summarized the findings required by the statute and relevant court rules, which are R. 5:3-5(1)(c) and R. 4:42-9(b), as follows:

[T]he court must consider whether the party requesting the fees is in financial need; whether the party against whom the fees are sought has the ability to pay; the good or bad faith of either party in pursuing or defending the action; the nature and extent of the services rendered; and the reasonableness of the fees. . . .

[Id. at 93-94 (citations omitted).]

Comparative gross income is not the measure of need and ability to pay. The judge must consider taxes, expenses, including support obligations, earning capacity and ability to access available assets. See Argila v. Argila, 256 N.J. Super. 484, 494 (App. Div. 1992); Lavene v. Lavene, 148 N.J. Super. 267, 277 (App.Div.), certif. denied, 75 N.J. 28 (1977).

This case raises a question whether a litigant's ability to call upon a parent for funds to pay her counsel fees should be considered. The trial judge referenced this issue but did not resolve the question. Because we are remanding the matter for further consideration and the parties have raised the issue on appeal, we provide some guidance.

We begin with the proposition that parents of divorcing spouses have no obligation to pay legal fees. In general, obligations flowing from familial relationships depend upon the financial needs and abilities of the parties, not of their parents. See A.N. ex rel. S.N. v. S.M., 333 N.J. Super. 566, 572-73 (App. Div.) (recognizing the general principle and imposing a support obligation on a non-custodial grandfather commensurate with his decision to limit the gainful employment of the father, who was a minor), certif. denied, 166 N.J. 606 (2000); N.J.S.A. 2A:34-23 (factors considered in child support and alimony).

This court's decision in Hughes v. Hughes, 311 N.J. Super. 15 (App. Div. 1998), is instructive. In that case we held that the standard of living enjoyed during the marriage is the standard against which courts should measure alimony and child support, even if that marital lifestyle was made possible only because of the generosity of the parents' of one spouse or reckless borrowing. Id. at 34-35. We did not hold, however, that it is appropriate to impute income to a spouse based on prior parental giving or reckless borrowing. Ibid. To the contrary, we held that the proper amount of support is that amount commensurate with the marital standard as limited by the parties' present financial needs and abilities. Ibid.

Our decision in Hughes makes it clear that there are two distinct issues relevant to support -- current ability to pay (which is based on the parties' circumstances) and the standard of living enjoyed during the marriage (which is the manner in which the parties lived during the marriage regardless of the source of funds spent). Id. at 34. In the context of an application for counsel fees, the relevant question is the party's need for a contribution to counsel fees. Because a parent of a litigant has no obligation to contribute, a parent's ability to contribute is not relevant.

The more difficult question is how courts should consider gifts or loans from a litigant's parents. The answer requires us to consider the purpose of a counsel fee award. In litigation in the Family Part, a primary purpose of a counsel fee award is to permit the parties' to litigate with relative equality. Anzalone v. Anzalone Bros., Inc., 185 N.J. Super. 481, 486-87 (App. Div. 1982). In that sense, counsel fee awards to matrimonial litigants are akin to support. We have recognized the "support" function of counsel fees in the past. An attorney fee award to a matrimonial litigant serves as support to the extent that is intended "'to equalize the positions of the parties . . . and to provide the needier individual with the financial means of prosecuting or defending a court action.'" Winegarden v. Winegarden, 316 N.J. Super. 52, 62 (App. Div. 1998) (quoting DiGiacomo v. DiGiacomo, 256 N.J. Super. 404, 410, (App.Div.1992)).

To the extent that an attorney fee award is premised on equalizing the position of the parties, it is appropriate to consider gifts and loans as they are considered in the context of child support and alimony. Where a parent has given a married child a gift or bequest, the funds, unless subsequently gifted to the other spouse or dedicated to the marital enterprise, remain the separate property of the recipient. N.J.S.A. 2A:34-23(h). Upon divorce, however, this independent asset of the recipient is considered in determining that spouse's need for alimony and ability to pay child support and alimony. N.J.S.A. 2A:34-23(a)(3), (b)(11). The analysis should be similar in the context of a counsel fee award that is based on need. A gift of funds for counsel fees, regardless of the source, diminishes the recipient's need to look to his or her spouse for contribution; a loan of funds for counsel fees changes only the immediacy of the need. The inquiry required is fact specific. See Argila, supra, 256 N.J. Super. at 495 (discussing need to consider earning capacity as well as available assets).

While a counsel fee award is not appropriate in the absence of need and ability to pay, relative ability to pay is only one of several factors the court must consider. Mani, supra, 183 N.J. at 94-95. For example, R. 5:3-5(c)(8) directs courts to consider "the degree to which fees were incurred to enforce existing orders or compel discovery." And, N.J.S.A. 2A:34-23a requires an award of counsel fees in an action to collect and enforce child support and calls for consideration of need and ability to pay.

To the extent that fees are incurred to enforce orders or compel discovery, the significance of ability to pay diminishes. Thus, in Walles v. Walles, 295 N.J. Super. 498, 516-17 (App. Div. 1996), we held that "although plaintiff's financial circumstances might not have warranted an award of counsel fees in a routine post-divorce application," her need "to file five successful enforcement proceedings resulting from defendant's continuous failure to pay alimony and child support" supported the "modest sum awarded [and] demonstrate[d] that the court was fully appreciative of the fact that plaintiff was financially able to pay the bulk of her own counsel fees." See also Mani, supra, 183 N.J. at 94-95 (noting that "the good or bad faith of either party in pursuing or defending the action remains a relevant factor").

While the factual findings in this case relevant to need, ability to pay and the reason for incurring the fees are inadequate, we note that counsel did not provide the judge with all of the relevant information. Pursuant to R. 5:3-5(c)(4)-(6), the judge is required to consider the fees incurred by both parties, fees previously awarded, and the amount each party has paid. From the record before us, it appears that plaintiff did not provide a certification detailing services for which he incurred fees. The certification submitted by defendant suggested a debt to her mother but did not advise the court of the amount, if any, she is obligated to repay. The description of services does not facilitate identification of fees incurred as a consequence in enforcing orders or compelling discovery.

We have previously noted the difficult position in which litigants place a trial judge when they do not submit information relevant to the court's exercise of discretion. See Storey v. Storey, 373 N.J. Super. 464, 479 (App. Div. 2004). When the parties have not agreed on counsel fees and a litigant must seek a contribution, both litigants, at a minimum, should provide the relevant information in a manner that is sufficiently clear to avoid additional factual disputes relevant to the amount of fees. See Chestone v. Chestone, 322 N.J. Super. 250, 260 (App. Div. 1999).

In addition to assessing need, ability to pay and the extent to which the fees were incurred to enforce court order or compel discovery, a judge must assess the reasonableness of the fees after considering the hourly rate, time expended and the success of counsel's efforts in light of the fees incurred and the amount in issue. Yueh, supra, 329 N.J. Super. at 464-65 (discussing the analysis required to evaluate the reasonableness of fees); see Chestone, supra, 322 N.J. Super. at 259 (discussing the need for proportionality between fees and the amount in controversy and the responsibilities of the attorney and client in charting a course for the litigation). In this case, the factual findings are inadequate to allow us to conclude that "the judge critically considered the amount of time which should have been needed to pursue reasonable discovery and obtain compliance with the court orders and the discovery rule, and ultimately resolve the issue[s]" litigated. Yueh, supra, 329 N.J. Super. at 466; Chestone, supra, 322 N.J. Super. at 259.

Where, as here, the applicant's need is not an obviously weighty and controlling factor and there is a finding that one party has been less than forthcoming and cooperative during the course of the litigation, the judge should identify those fees reasonably incurred as a result of the recalcitrance. It is also appropriate to consider the extent to which the party requesting fees unduly contributed to the protracted nature of the litigation. To the extent that the decision in this case is based on such findings, we are unable to discern how those findings are related to the $35,000 counsel fee awarded.

It is likely that a remand of this case will result in "the parties [spending] more money in attorneys' fees to determine what those fees should have been in the first place." Chestone, supra, 322 N.J. Super. at 260. Because the record on appeal is inadequate to permit us to address the issue through an exercise of original jurisdiction, we are constrained to order a remand. Although neither party provided this court with the trial judge's factual findings on income relevant to plaintiff's motion to modify support and defendant's motion to enforce prior orders, the judge should incorporate his determinations about disposable income and liquidity of assets by express reference when ruling separately on an application for counsel fees.

 
The order awarding counsel fees is vacated and the matter is remanded for further proceedings.

(continued)

(continued)

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A-2830-04T5

August 14, 2006