MARJORIE WALSH v. J. GARVIN WALSH

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4046-03T24046-03T2

MARJORIE WALSH,

Plaintiff-Respondent/

Cross-Appellant,

v.

J. GARVIN WALSH,

Defendant-Appellant.

____________________________________________________________

 

Submitted December 14, 2005 - Decided August 11, 2006

Before Judges Wefing, Wecker and Graves.

On appeal from Superior Court of New Jersey,

Chancery Division, Family Part, Morris County,

FM-14-973-02.

Walder, Hayden & Brogan, attorneys for appellant

(Barry H. Evenchick, of counsel; Mr. Evenchick,

Robert L. Penza, and Peter G. Bracuti, on the

brief).

Joel M. Harris, attorney for respondent/cross-

appellant.

PER CURIAM

The parties were married in June 1976, and they have three daughters: Amanda, born January 4, 1980; Mariana, born March 16, 1983; and Julia, born June 4, 1985. Both parties appeal from a dual judgment of divorce, entered after a six-day trial, and an order denying their motions for reconsideration. After reviewing the record and applicable law, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

Defendant J. Garvin Walsh presents the following arguments on appeal:

POINT I

THE TRIAL COURT ERRED IN AWARDING $10,000.00 PER MONTH YEAR [sic] IN ALIMONY TO THE PLAINTIFF AS THIS AMOUNT WAS IN EXCESS OF THE PLAINTIFF'S ALLEGED AND ACTUAL NEEDS.

POINT II

THE COURT'S DECISION TO EMPLOY AN ELEVEN YEAR AVERAGE OF THE DEFENDANT'S PRE-COMPLAINT INCOME AND THEN TO ENHANCE THAT SUM BY THE CONSUMER PRICE INDEX TO ESTABLISH A BASIS FOR THE PLAINTIFF'S SUPPORT OBLIGATIONS WAS IMPROPER.

POINT III

THE COURT'S MANDATE FOR THE DEFENDANT TO PROVIDE $1,000,000 IN LIFE INSURANCE COVERAGE NAMING THE PLAINTIFF AS BENEFICIARY WAS ERRONEOUS IN THAT IT PROVIDES A POTENTIAL WINDFALL TO THE PLAINTIFF.

POINT IV

THE COURT'S DETERMINATION TO COMPEL DEFENDANT TO PAY ALL COLLEGE COSTS FOR THE PARTIES' TWO (2) CHILDREN WAS ERRONEOUS.

POINT V

THE COURT'S CHILD SUPPORT AWARD WAS IMPROPER AS SAME WAS NOT IN ACCORDANCE WITH THE CHILD SUPPORT GUIDELINES AND CURRENT COURT RULES.

POINT VI

THE COURT ABUSED ITS DISCRETION IN AWARDING THE PLAINTIFF COUNSEL AND EXPERT FEES.

POINT VII

THE COURT IMPROPERLY DENIED THE DEFENDANT'S CLAIMED CREDIT FOR PENDENTE LITE SUPPORT CONTRIBUTIONS MADE POST COMPLAINT.

POINT VIII

THE COURT'S ALLOCATION OF RESPONSIBILITY FOR PAYMENT FOR PAYMENT [sic] OF INCOME TAXES OWED WAS IMPROPER AS SAME WAS BASED ON AN ERRONEOUS FIGURE.

In her cross-appeal, plaintiff Marjorie Walsh contends:

THE TRIAL COURT ERRED IN EXCLUDING FROM EQUITABLE DISTRIBUTION THE RESTRICTED STOCK UNITS DEFENDANT WAS AWARDED AFTER THE PARTIES SEPARATED.

We recognize, of course, that the scope of our review is limited. A trial court's findings are binding on appeal when supported by "adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). "[A]n appellate court should not disturb the factual findings and legal conclusions of the trial judge unless [it is] convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Id. at 412 (second alteration in original) (internal quotation marks omitted). Such deference is particularly appropriate when the evidence is mostly testimonial and involves questions of credibility. Ibid. "Because a trial court hears the case, sees and observes the witnesses, [and] hears them testify, it has a better perspective than a reviewing court in evaluating the veracity of witnesses." Ibid. (alteration in original) (internal quotation marks omitted). Furthermore, "[b]ecause of the family courts' special jurisdiction and expertise in family matters, appellate courts should accord deference to family court factfinding." Id. at 413.

At the time of trial, plaintiff was fifty-one, and defendant was fifty-two years of age. The parties met while attending college at Georgetown. Defendant graduated in 1973 with a Bachelor of Arts degree in Sociology, and, thereafter, he took evening business courses at Pace University. Plaintiff graduated from Georgetown in 1974 with a Bachelor of Arts in Portuguese.

Defendant began working with Dean Witter Reynolds, Inc., a stock brokerage firm, in 1975. Shortly thereafter, he passed the necessary exams to become a registered representative of the New York Stock Exchange. Throughout the marriage, he continued to work in the securities field.

From 1975 to 1979, plaintiff was employed in an administrative capacity at Chemical Bank in New York City. During this period, the most plaintiff ever earned was approximately $13,000 a year.

By mutual agreement, plaintiff terminated her employment in November 1979, after becoming pregnant with the parties' first child, Amanda. Defendant testified that throughout the marriage, plaintiff was "primarily, you know, a mother," and the trial court concluded that plaintiff was "a stay-at-home mom, based upon an agreement of the parties."

In November 1980, the parties purchased a home in Morris Township, New Jersey, for $135,000. Defendant testified he earned more than $100,000 in 1980, and his income increased throughout the 1980s. By the latter part of that decade, defendant was earning more than $300,000 per year.

In 1985, the parties purchased thirteen acres of property located on Lees Hill Road in New Vernon, New Jersey, for $265,000, and they had a large residence built on the property. Defendant estimated the construction cost for the home was "close to a million dollars, about half of which was financed with a mortgage . . . ." The family moved into the New Vernon residence in 1986 or 1987. During this period, all three children attended private schools.

In 1989, defendant's employment with Salomon Brothers, which had commenced in 1981, was terminated. During the next six or seven years, he worked for several different companies. In June 1989, defendant began working for SG Warburg and Company at an annual salary of $125,000, and he received an annual bonus. In 1992, defendant voluntarily left SG Warburg and accepted a position at Serfin Securities, where he earned $250,000 per year in salary and bonus. He was "let go" after one year and remained unemployed for a few months during the summer of 1993.

In September 1993, defendant accepted a sales position with Cresvale International, selling convertible bonds, and he remained with this company until 1995. His annual salary was $125,000 plus a bonus. In 1995, he signed a two-year employment contract with Cr dit Lyonnais, which guaranteed him an annual salary and bonus of at least $250,000. But in 1996, he was "let go," and the parties agreed to "downsize" their lifestyle.

As part of their plan to downsize, the parties enrolled the two youngest children in Harding Township public schools. In addition, they sold their New Vernon residence for $1,165,000 and purchased a home located at 11 Colonial Drive, in Harding Township, for $650,000. The purchase was accomplished by using the net proceeds from the sale of the New Vernon residence, together with a mortgage in the amount of $200,000. The home was situated on six acres and had four bedrooms.

Following his departure from Cr dit Lyonnais in the Spring of 1996, defendant had difficulty obtaining employment. In February 1997, he began working for Lehman Brothers, and he remained employed by Lehman Brothers at the time of trial. His initial fixed salary was $20,000 a month; however, in 1998 he "went on commission," and at that point he automatically began to participate in "the stock accumulation plan for the purchase of restricted stock units" (RSUs). At the time of trial, defendant was still employed by Lehman Brothers as a commissioned salesman. During the trial in April 2003, defendant was asked if his position with Lehman Brothers had grown, been reduced, or if it had stayed relatively the same since 1997, and he answered, "I believe it's grown."

Throughout the marriage, defendant managed the parties' finances, paid the bills, and wrote the checks. He gave plaintiff approximately $2,000 a month for "general expenses," like dry cleaning and groceries. Plaintiff also had the use of several credit cards to cover the bulk of her expenses. She generally charged "a couple of thousand dollars" a month on credit cards, and she would also charge "a couple of hundred a month" on store accounts. During certain months, spending would be higher. For example, plaintiff generally charged a lot of clothing for the three girls in September, and during the Christmas holiday season, she would charge $6,000-$7,000 for gifts. Plaintiff had store credit cards at Neiman Marcus, Bloomingdales, Saks Fifth Avenue, and Macy's.

Although the family did not travel extensively, there were several vacations in Florida and Vermont. They did not incur hotel expenses during these family vacations because they stayed in homes owned by relatives. Plaintiff generally charged about $5,000 to cover various expenses associated with these vacations including airfare and dining. The family also enjoyed skiing when they vacationed in Vermont.

In 1988, the family vacationed in California and visited Disneyland. In February 1997, the parties took a one-week vacation in the Cayman Islands. According to plaintiff, the parties dined in "very expensive" restaurants every weekend and took the children out for dinner once a month. Defendant testified, however, that they frequented mid-tier restaurants on a regular basis, and expensive restaurants only occasionally.

In 1984, the parties joined the Somerset Hills Country Club (SHCC) where they were still members at the time of trial. Defendant could not recall what the initiation fee was, but he did recall that it was expensive and that he paid it in three installments. In addition to the initiation fee, there was an annual membership fee, which was about $5,000 at the time of trial. The parties also incurred additional fees when they played golf at SHCC.

In 1986, defendant obtained a family membership at the Essex Hunt Club. The entire family enjoyed skating and dining at this club, and defendant and the children participated in ice hockey programs. In addition, the parties obtained a "house" membership at the Morris County Golf Club (Golf Club) in 1989. This membership was limited in that it included dining, tennis, and swimming, but not golf. The family remained members of the Golf Club until about 1996.

All three girls attended high school at the Pingry School where the yearly annual tuition started at about $16,000 per child; tuition increased by grade level. In addition, various other school charges were billed separately including books and fees for participation on sport teams. According to a letter written by defendant, the tuition for Julia's senior year at Pingry was $19,405.

The trial court found that the parties drove "normal, modest cars." The family vehicles included a Peugeot, a Ford Country Squire station wagon, a Dodge Caravan, and two Saabs. According to defendant, he purchased the Dodge Caravan for plaintiff in 1992 for $25,000, and he purchased a Saab for himself for $21,000 in 1994.

The trial court found that the parties maintained an "upper middle class lifestyle," and it concluded that defendant should pay alimony in the amount of $10,000 per month based upon his average annual income of $365,000. The court determined defendant's average annual income by applying "cost of living adjustments" to his income for the eleven-year period from 1987 to 1997:

[W]hat makes this case difficult and/or unique is the income of the defendant. During the course of this litigation income tax returns were not filed for a period of 1993 until, I think it's 2001, if I recall, properly. And then ultimately they were filed. But even if they had been filed, given the nature of his business and the stock market, the income is variable. It's substantially variable. In some years was modified or it's supplemented by, I guess they're called, RSUs, which reflected a higher income in some years and a lesser income in other years.

. . . .

The parties separated in early 1998 and therefore, I concluded that for the years 1998 forward they should not be . . . included in the calculation for the purposes of calculating alimony. So I took the years 1987 through 1997.

Now, I recognize that 1987 is a fairly long time ago, particularly in terms of comparable incomes. $338,000 in 1987 was not $338,000 for current dollars. In the terms of fixing alimony and dealing with Plaintiff's lifestyle, I thought it was appropriate, and I did . . . take a look at the cost of living adjustments. And I used the guidelines that are in the Lawyers Diary for the Northeast -- New York, Northeast New Jersey region -- and adjusted the incomes from 1987 to 1997, based upon cost of living. And I simply used the January base of the current year and calculated 1987.

And my notes indicate, for example, 2002 the cost of living base was 183.5 as compared to 119.6 in 1997. So I made that adjustment . . . because it is unusual to go so far back. But I felt in this case I had to in order to get some real basis of what the average income was during the course of the parties' marriage up until the date of separation.

. . . .

I also looked at the plaintiff's resources and later on I'll indicate that she has about $85,000 in funds from, I believe it's an inheritance. It is premarital. It is not subject to equitable distribution, so those funds are hers. If I look at her budget of $8900 [per month] and I look at income of her own of [$]25,000 plus approximately $300 of interest generated by the exempt asset of $85,000, comparing that to her needs I come up with a monthly alimony obligation of $10,000 a month. I will order, therefore, $10,000 a month. I believe that is . . . consistent with the plaintiff's budget and is very consistent with the defendant's ability to pay . . . given the $365,000 as his income average.

The basic purpose of alimony is "to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage." Crews v. Crews, 164 N.J. 11, 16 (2000). "The supporting spouse's obligation is set at a level that will maintain that standard." Innes v. Innes, 117 N.J. 496, 503 (1990) (citing Lepis v. Lepis, 83 N.J. 139, 150 (1980)). "Bare survival is not the proper standard, it is the quality of the economic life during the marriage that determines alimony." Hughes v. Hughes, 311 N.J. Super. 15, 31 (App. Div. 1998).

N.J.S.A. 2A:34-23(b) sets out twelve, non-exclusive factors that a court must consider in deciding whether to award permanent alimony and, if so, in what amount. There is no dispute that this is a permanent alimony case. The three most important considerations in fixing the amount of an alimony award are: (1) the dependent spouse's needs; (2) the dependent spouse's ability to contribute to the fulfillment of those needs; and (3) the supporting spouse's ability to maintain the dependent spouse at the former standard of living to which the parties had become accustomed prior to their separation. Crews, supra, 164 N.J. at 24.

When reviewing an alimony award, we consider whether the trial court's findings are supported by sufficient credible evidence present in the record, whether the trial court failed to consider controlling legal principles, and whether the trial court abused its discretion. Heinl v. Heinl, 287 N.J. Super. 337, 345 (App. Div. 1996). As noted by the trial court, there were substantial variations in defendant's income, and it was not unreasonable for the trial court to use income averaging when determining defendant's ability to pay alimony. See Platt v. Platt, 384 N.J. Super. 418, 426 (App. Div. 2006) (noting that it was logical and reasonable to average defendant's income over a five-year period for purposes of calculating alimony and child support where husband was self-employed with income fluctuating from year to year).

We are satisfied, however, that the trial court abused its discretion by applying the Consumer Price Index (CPI) to defendant's average income over the eleven-year period from 1987 to 1997. Defendant's actual average income for the eleven-year period was $278,856 per year. The trial court increased defendant's average annual income by more than $86,000 to $365,000 per year by applying "CPI adjustments." Defendant argues that the CPI adjustments arbitrarily inflated his actual income, and there is "no statute, rule, or case law" which justifies the enhancement of his actual income. We agree.

We also conclude that the trial court erred when it failed to consider defendant's actual income after the parties separated in 1998. Defendant's average annual income during the five-year period from 1998 to 2002 exceeded $500,000. At the remand hearing, the trial court should take into account defendant's actual income when determining his ability to contribute to his former wife's reasonable needs for support. Steneken v. Steneken, 183 N.J. 290, 293 (2005) (holding that "actual income of the paying spouse is the lodestar for determining the extent of that party's alimony obligation"); see also Lynn v. Lynn, 165 N.J. Super. 328, 341 (App. Div.), certif. denied, 81 N.J. 52 (1979) (noting that "earning capacity or prospective earnings" are proper elements for the court's consideration when determining the amount of alimony to be paid).

Defendant contends that the award of alimony "was in excess of the plaintiff's alleged and actual needs." In her case information statement dated February 21, 2003, plaintiff certified that her monthly budget totaled $9,282.41. This figure included $350 per month for credit card debt service. The trial court subtracted the debt service from plaintiff's budget, however, because plaintiff could satisfy her credit card debts, which totaled $3,621.26, from equitable distribution assets. Thus, the trial court determined that plaintiff's monthly budget was $8,900, and her annual budget was $106,800. The trial court also imputed earned income in the amount of $25,000 per year and investment income of $3,600 per year to plaintiff. Thus defendant argues that his annual alimony obligation of $120,000 substantially exceeds plaintiff's stated needs of $106,800 less her imputed income of $28,600. We trust that this argument will be addressed at the remand hearing and that the trial court will take into consideration all of the relevant facts and circumstances, including the tax consequences of the alimony payments when determining the appropriate amount of permanent alimony to be paid by defendant to plaintiff.

On remand, the trial court shall also consider the advisability of periodic adjustments to the amount of life insurance coverage defendant is obligated to maintain. See Claffey v. Claffey, 360 N.J. Super. 240, 264-65 (App. Div. 2003) ("[I]t is perfectly reasonable to provide for the periodic reduction or review of the amount of that required security to reflect the diminishing need for it as the parties age, or circumstances otherwise change.").

Defendant contends that the trial court also abused its discretion in awarding plaintiff counsel fees and expert fees. The dual judgment of divorce requires defendant to "be responsible for the payment of $50,000 of Plaintiff's legal fees and costs, represented to be $116,551.00." In addition, the judgment provides that defendant is responsible for "all costs associated with, and due and owing to Benjamin Michel, Esq., appointed mediator, during the pendency of this action, which has been represented to be $17,545"; and he must pay plaintiff one-half of her expert's fee (Amper Politziner) in an unspecified amount.

Following the trial court's decision on September 17, 2003, both parties filed motions for reconsideration. With respect to the award of counsel fees, defendant's attorney argued that the award of counsel fees was improper because plaintiff's attorney had not submitted an affidavit of services; Mr. Michel had not provided "any type of statement" as to his fees; and there was no statement from plaintiff's expert. Nevertheless, the trial court ruled as follows:

I think it's a reasonable request that nobody should pay any fees until they get a full statement of what the fees were. That's pretty straight forward . . . . I will ask the parties to please obtain statements so that they know what they're paying for. As I believe, with the exception of many of the fees, I ordered a percentage. I think with one of them it was 50/50 and one of them was 100 percent. So you have the right to know what those fees are. No question about it. Get the bills and go forward.

When considering an award for expert and legal services, a trial court must "consider the factors set forth in the court rule on counsel fees, the financial circumstances of the parties, and the good or bad faith of either party." N.J.S.A. 2A:34-23. An award of counsel fees and expert fees in a matrimonial case is discretionary. R. 5:3-5(c); see also Williams v. Williams, 59 N.J. 229, 233 (1971) (noting that "courts focus on several factors, including the wife's need, the husband's financial ability to pay and the wife's good faith in instituting or defending the action").

Rule 4:42-9 requires that all fee applications in a family action shall be supported by an affidavit of services addressing the factors enumerated by RPC 1.5(a). The affidavit must also include a recitation of other factors listed in R. 5:3-5(c). Because the required affidavit of service was not submitted to the court and opposing counsel, we reverse the award of attorney and expert fees and remand so that plaintiff may submit an appropriate application together with the necessary affidavit of services. Kingsdorf v. Kingsdorf, 351 N.J. Super. 144, 159 (App. Div. 2002); see also Mayer v. Mayer, 180 N.J. Super. 164, 169-70 (App. Div.) (noting award of counsel fees involves critical review of nature and extent of services rendered, complexity and difficulty of issues determined, and reasonableness and necessity of time spent by counsel rendering legal services), certif. denied, 88 N.J. 494 (1981).

Defendant also contends that the trial court erred in allocating responsibility for the payment of income taxes. With respect to this issue, the dual judgment of divorce provides as follows:

It is further ORDERED that the Plaintiff and the Defendant shall equally be responsible for any obligations owed to the Internal Revenue Service relative to Joint Income Tax Returns for the calendar years 1995 through 1997. This cost has been represented to be approximately $17,540.00. Defendant, therefore, shall receive a credit at the time of closing on the former marital residence for 50% of this amount advanced.

According to defendant, the trial court "apparently misread trial Exhibit D - 19WW" in awarding him a credit of $17,540, because the "testimony at trial and in that exhibit" indicate that the amount of additional taxes paid for those years was $59,521. Our review of the record confirms that this matter needs to be clarified at the remand hearing. In its oral decision on September 17, 2003, the trial court stated that defendant "had an obligation to prepare and file tax returns which he . . . didn't do." Apparently the delay in filing the tax returns resulted in additional tax obligations, and it is not clear to what extent, if at all, the trial court may have intended to limit plaintiff's responsibility for costs incurred as a result of the untimely filing of tax returns.

We are satisfied that defendant's remaining arguments concerning college costs, child support, and his "claimed credit for pendente lite support contributions made post complaint" lack sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(A) & (E). The record discloses there was adequate, substantial, credible evidence to support the findings and conclusions of the trial court on each of those issues.

In her cross-appeal, plaintiff argues that the trial court erred when it determined that restricted stock units (RSUs) earned by defendant while employed by Lehman Brothers were not subject to equitable distribution because the RSUs had not vested. The judgment of divorce provides as follows: "this Court determines that Defendant's RSU's were not vested prior to the date of the Complaint and this Court, therefore, finds them not subject to equitable distribution."

Pursuant to N.J.S.A. 2A:34-23(h), the trial court may "effectuate an equitable distribution of the property, both real and personal, which was legally and beneficially acquired by . . . [the parties] or either of them during the marriage." Generally, the marriage is considered ended by the "filing of a valid divorce complaint that culminates in a divorce." Zappala v. Zappala, 222 N.J. Super. 169, 172 (App. Div. 1988) (citing Portner v. Portner, 93 N.J. 215, 219 (1983)).

To effectuate an equitable distribution of property, the trial court must: (1) identify the specific property determined to be subject to equitable distribution; (2) determine the value of each asset; and (3) equitably distribute the assets. Rothman v. Rothman, 65 N.J. 219, 232 (1974). This three-step process has been incorporated by the Legislature in N.J.S.A. 2A:34-23.1, which requires that "[i]n every case, the court shall make specific findings of fact on the evidence relative to all issues pertaining to asset eligibility or ineligibility, asset valuation, and equitable distribution . . . ."

The court is vested with broad authority to divide the parties' property, and we consider only whether the result was "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." Wadlow v. Wadlow, 200 N.J. Super. 372, 377, 382 (1985) (quoting Perkins v. Perkins, 159 N.J. Super. 243, 247-48 (App. Div. 1978)).

As a threshold matter, it should be noted that at the time the original complaint was filed, some of defendant's RSUs had already vested, and the trial court took those RSUs into account when determining alimony. Plaintiff argues, however, that an unspecified number of RSUs vested prior to the filing of husband's answer, and that given the equities involved, the trial court should have included the value of those RSUs in determining equitable distribution.

We perceive no basis to disturb the trial court's determination that the facts of this case did not warrant a deviation from the general rule that the date of filing of the original complaint was the appropriate cut-off date for identifying the RSUs that are eligible for equitable distribution. Unlike the "unmeritorious" complaint filed by the husband in Portner, supra, the original complaint here did not amount to a "frivolous claim" interposed only "to circumvent the Legislature's intent and deprive . . . [a] spouse of the protection intended to continue during th[e] marriage under N.J.S.A. 2A:34-23." 93 N.J. at 220-22. Indeed, prior to filing the original complaint, plaintiff had secured a temporary restraining order barring defendant from the marital residence and there is no evidence in the record that the parties ever intended to reconcile.

Although plaintiff's original and amended complaints were dismissed on stipulation, this was not because the complaints were frivolous or because the parties were attempting to reconcile. Rather, plaintiff agreed to the dismissals to preserve her rights given the trial court's stated intention to dismiss the pleadings and/or implement negative inferences, based upon the parties' inability to meet discovery deadlines and proceed to trial on the scheduled date. At the time of the dismissals, defendant had not yet complied with all of plaintiff's discovery demands, including those concerned with his income. Also, each party's original attorney had withdrawn, and their new attorneys were unable or unwilling to prepare for the scheduled trial dates. Whether the "voluntary" dismissals were recommended by counsel or required by the court, plaintiff agreed to the dismissals despite her desire to obtain a divorce. In addition, the stipulation dismissing both the original and amended divorce complaints, specifically provided that "[t]he valuation date for equitable distribution purposes in any further action shall be the same as the original filings in this case." Under these circumstances, it cannot be said that the interests of justice or equity were offended by adhering to the filing date of the original complaint for purposes of fixing eligibility of assets for equitable distribution.

Nevertheless, we are convinced that the trial court erred in excluding certain RSUs from equitable distribution based upon considerations of vesting. If the RSUs resulted from efforts expended during the marriage, controlling case law and equitable considerations require that they be recognized as marital assets subject to equitable distribution. See Pascale v. Pascale, 140 N.J. 583, 610 (1995) (stating that "stock options awarded after the marriage has terminated but obtained as a result of efforts expended during the marriage should be subject to equitable distribution"); see also Reinbold v. Reinbold, 311 N.J. Super. 460, 471-72 (App. Div. 1998) (noting that portions of a retirement incentive package offered after the divorce were based on pre-complaint efforts and subject to equitable distribution).

In this case, it appears that the RSUs at issue represent a contingent, future interest in common stock awarded on the basis of past service. Defendant began working at Lehman Brothers in February 1997, approximately one year before plaintiff filed the original divorce complaint in February 1998. Thus, the operative time-period for calculation of plaintiff's share of the RSUs is from February 1997, when defendant began accruing credits towards RSUs, through February 1998, when the original divorce complaint was filed. On remand, the trial court must make specific findings regarding the nature of the RSUs (whether they are equivalent to stock options), and plaintiff's interest, if any, in the RSUs attributable to defendant's efforts during the marriage prior to the filing of the original divorce complaint. Whether or not any such RSUs were vested is irrelevant.

As to defendant's appeal, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion. With respect to plaintiff's cross-appeal, we reverse and remand for additional proceedings in accordance with this decision.

 

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A-4046-03T2

August 11, 2006