BRUCE LEFKON v. FRANCES LEFKON

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5951-03T15951-03T1

BRUCE LEFKON,

Plaintiff-Respondent,

v.

FRANCES LEFKON,

Defendant-Appellant.

_______________________________

 

Argued September 28, 2005 - Decided January 17, 2006

Before Judges Wefing and Fuentes.

On appeal from Superior Court of New

Jersey, Chancery Division, Family Part,

Morris County, Docket No. FM-14-616-03.

Bonnie C. Frost, argued the cause for

appellant (Einhorn, Harris, Ascher,

Barbarito, Frost & Ironson, attorneys;

Ms. Frost, on the brief).

Robert S. Field argued the cause for

respondent.

PER CURIAM

This is an appeal from an order entered by the Family Part setting the amount of spousal support awarded to defendant Frances Lefkon. The remaining issues stemming from the parties' matrimonial action were settled and memorialized in a consent order. The trial court determined the issue of alimony after a three-day trial, during which plaintiff stipulated that he would pay whatever amount of support the court determined to be fair, reasonable, and consistent with the parties' marital lifestyle.

After considering the evidence presented, the trial court issued a memorandum of decision, directing plaintiff to pay permanent alimony to defendant in the amount of $6,000 per month. In reaching this figure, the court disallowed a number of personal expense items listed by defendant, and imputed to her an annual unearned income of $60,000, to be generated from equitably distributed assets.

On appeal defendant objects to: (1) the reduction and elimination of various line items in the defendant's Case Information Statement; and (2) the method the trial court used in calculating imputed income from the defendant's assets.

I

The parties had been married for thirty-three years before plaintiff filed a complaint for divorce. They had three children, all of whom are now adults. The evidence presented to the trial court revealed an interpersonal history consistently driven by plaintiff's professional needs, with defendant assuming the traditional supportive role of homemaker consistent with the era.

At the time they were married, plaintiff was a twenty-six-year-old medical student, and defendant was twenty-four years old and had recently completed her Masters Degree in Library Science. She was also the only one working. They resided in Brooklyn for approximately two months before relocating to London in order for plaintiff to complete a medical school externship. They stayed in London for three to four months, eventually returning to the United States and settling in Los Angeles for approximately one year. This move was again designed to accommodate plaintiff's medical education.

In 1970, the parties moved to Manhattan, while plaintiff completed a one year surgical residency program at Beth Israel Hospital. After the birth of their first child in July of that same year, defendant worked part-time in the Bellevue Hospital's library. At the end of the one year medical residency program, the family relocated to Brooklyn, so that plaintiff could complete a three year residency in urology at SUNY Downstate Kings County Medical Center. While in Brooklyn, defendant worked part-time at the Brooklyn Public library, and had their second child in November of 1972.

Between 1973 and 1974, defendant applied and was admitted to Brooklyn Law School. At that same time, plaintiff was offered a urology position in Atlanta, Georgia. Defendant accompanied plaintiff to Atlanta, foregoing her own professional aspirations. Within a year after moving to Atlanta, the parties relocated to New Jersey. They bought a house in South Orange for $70,000, and shortly thereafter, had their third and final child. Plaintiff joined an existing urology practice.

In 1980, plaintiff opened his own urology practice, where he worked until 1997. Defendant worked part-time in her husband's medical practice, performing clerical and accounting services, computer training, and some basic medical assistance, for approximately ten years. Plaintiff closed his practice in 1997, and joined Associates in Urology, an existing practice that employed several doctors. He has worked in this capacity to the present.

After her position as an "office manager" ended, defendant has not worked, except as a self-employed day trader. She began to actively trade securities in the mid 1990's, and worked at home through 2002. Although she enjoyed some initial success, earning as much as $994,000 during the first six years, during the final three years that she traded, in part due to a declining stock market, she ended up losing approximately two and one-half million dollars.

By contrast, plaintiff maintained a steady annual income of more than $300,000 during the 1990's, and earned an average gross salary from 2000 to 2002 of more than $400,000. Throughout their marriage, the couple's "lifestyle" included an aggressive savings plan, with the goal of saving three and a half million dollars by the time plaintiff was sixty-three years old.

Defendant's employability expert testified that during his evaluation in December, 2003, defendant was unfocused and unable to express her thoughts coherently. Although defendant had a high verbal ability, her clerical speed and accuracy were low. He also opined that defendant needed to address her alcoholism and use of prescription drugs before she could go back to work. The trial court accepted the employability expert's assessment.

Shortly after separating from defendant in 2001, plaintiff purchased a townhouse for $598,623, and contracted for $15,000 of additional upgrades. The value of the townhouse at the time of trial was approximated at $725,000. Defendant testified that she intends to buy a condominium property for approximately $700,000 in New York City. She estimated the maintenance fees would be between $1,200 to $1,600 per month.

The parties had domestic help throughout the time they resided in South Orange. This included a live-in person to care for the children, to do housework twice a week, to do laundry, and to take care of their domestic animals. Their three children went to private schools, summer camps in Europe, travel programs in Beijing and France, and upon graduating high school to private colleges.

During the marriage, the parties traveled in the United States, to Europe, the Caribbean, and Asia. Several summers the family vacationed at a camp-site in the Adirondacks, and in the winters stayed at various ski lodges. Defendant also traveled to France to study for approximately six weeks, and enrolled in art history courses in the final years of the marriage, at a cost of $550 per course. She participated in six language immersion courses in Italian, Spanish and Chinese during the course of the marriage. She characterized traveling and education as her "two passions."

The parties' lifestyle also included entertainment visits to New York City museums, the theater, the ballet, and dining in fine restaurants. They have been members of a tennis club since 1983, at a cost of between $400 and $1,200 per month. Defendant shopped at upscale retail stores, as well as local shops. The parties had various cars over the years, but generally kept their cars for six to eight years. At the time of trial, plaintiff was leasing a Lexus for $417 per month. In each of the three years prior to their separation, the parties deducted an average of $6,928 in charitable donations and gifts from their joint tax return.

Defendant became addicted to alcohol while living in South Orange in the late 1980's. She has unsuccessfully battled her addiction through various inpatient and outpatient programs. At the time of the trial, she was also being treated for anxiety, bipolar disorder and depression.

II

The trial court concluded that defendant could spend approximately $700,000 on a residence, eliminating the need for any financing. The court also reduced the defendant's shelter expenses by $450, finding that the amount suggested by the defendant for maintenance fees for a condominium "far exceed[s] the common experience of this Court in regard to condominium housing in the Northern New Jersey area." The court also found defendant's desire to live in New York City, as inconsistent with the marital lifestyle. The court also modified the following categories of expenses:

1) clothing costs from $400 per month to $200 per month;

2) domestic help cost from $300 to $200 per month;

3) club membership budget from $1,000 to $500 per month;

4) elimination of New York Columbia Club fees and costs for a personal trainer;

5) reduction of vacation costs from $1,660 per month to $1,000 per month;

6) elimination of all costs for education;

7) elimination of cost of $200 per month in charitable contributions; and

8) elimination of $2,000 per month in savings.

These adjustments reduced defendant's expenses from $9,814 to $4,160, resulting in a total after-taxes budget of $8,829 per month.

Although the court found that defendant's medical problems prohibited her from obtaining employment, it imputed to her $60,000 annually in passive income generated from the equitably distributed assets. The court arrived at this figure by assigning a return rate of 4.6% to the $1.3 million dollars defendant would have at her disposal, after deducting $700,000 for the acquisition of a residence. Using this analysis as a spring board, the court determined that plaintiff's alimony obligation would be $6,000 per month. This figure was based on a before-taxes budget to defendant of $132,000 per year, reduced by the $60,000 in imputed income.

III

Defendant contends that the trial court erred in awarding her only $6,000 per month in alimony, because the "award diminished defendant's lifestyle, was not based on credible evidence in the record and provided plaintiff a windfall at defendant's expense." We agree in part and reverse.

The standard of review for issues concerning the amount of an alimony award is whether there was an abuse of the trial judge's discretion. Borodinsky v. Borodinsky, 162 N.J. Super. 437, 444 (App. Div. 1978). Abuse of discretion is a limited standard of review. Savoie v. Savoie, 245 N.J. Super. 1, 7 (App. Div. 1990).

When reviewing an alimony award, we must defer to the trial court's findings "if those findings are supported by substantial credible evidence in the record as a whole." Cox v. Cox, 335 N.J. Super. 465, 473 (App. Div 2000), (quoting Reid v. Reid, 310 N.J. Super. 12, 22 (App. Div.), certif. denied, 154 N.J. 608 (1998)). We must also give substantial weight to the trial court's findings regarding the parties' demeanor, comprehension and credibility. Rolnick v. Rolnick, 262 N.J. Super. 343, 359 (App. Div. 1993); and Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974).

In determining the amount of spousal support required, the trial court must be guided by the policy underpinning the entire analysis, "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). Alimony should also "permit the [supported] spouse to share in the accumulated marital assets to which he or she contributed." Konzelman v. Konzelman, 158 N.J. 185, 195 (1999).

In examining the marital lifestyle, the court must only assess the parties' actual standard of living, whether supported exclusively by the parties' earnings or supplemented by excessive borrowing or liquidation of assets. Hughes v. Hughes, 311 N.J. Super. 15, 34 (App. Div. 1998). In determining the marital lifestyle, the trial court looks at various elements including the marital residence, cars owned, typical travel and vacations each year, entertainment, household help, and other personal services. Weishaus v. Weishaus, 360 N.J. Super. 281, 290-291 (App. Div.), rev'd on other grounds, 180 N.J. 131 (2004). The ultimate determination must be based not only on the amounts expended, but also what is equitable. Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div.), certif. denied, 180 N.J. 354 (2004).

Spousal support may include an amount that allows for the accumulation of "reasonable savings to protect [the supported spouse] against the day when alimony payments may cease because of [the death of the supporting spouse] or change in circumstances." Davis v. Davis, 184 N.J. Super. 430, 437 (1982) (quoting Khalaf v. Khalaf, 58 N.J. 63, 70 (1971)). The court can take into account the marital standard of living and can allow the supported spouse to also save for the future. Glass, supra, 366 N.J. Super. at 379. This is particularly true when the supporting spouse can afford any amount paid to the supported spouse. Glass, supra, 366 N.J. Super. at 379-80.

Savings is also permitted in lieu of directing the supporting spouse to keep a life insurance policy or a trust. See Davis, supra, 184 N.J. Super. at 436-440 (upholding an order directing the supporting spouse to designate the dependant spouse as a beneficiary on a life insurance policy on his life); and Jacobitti v. Jacobitti, 135 N.J. 571, 582 (1994) (upholding an order to create a trust in lieu of life insurance to ensure "continuing alimony payments for the life of the dependent spouse".) In short, savings is a relevant and appropriate factor to be considered in the establishment of a reasonable and equitable alimony award, because the amount of support is subject to review and modification upon a showing of a change of circumstances. Crews, supra, 164 N.J. at 24.

Here, both sides testified at length about the various aspects of the marital lifestyle. In evaluating the parties' testimony, the trial court determined that plaintiff's account was more credible. In so doing, the court rejected defendant's testimony regarding membership in private clubs during the marriage and the "substantial expenses for enrichment." As an appellate court, we are not at liberty to overlook these findings. If a factual finding is based on a witness' credibility, we defer to the trial court's on-the-scene observations. Rolnick, supra, 262 N.J. Super. at 359.

Defendant disputes the trial court's reductions in the budget for clothing, domestic help, club memberships, maintenance fees and vacations. Both parties testified regarding the costs for clothing, the type and cost of club memberships and extensively regarding the cost and frequency of vacations. Due to defendant's failure to produce any evidence supporting the costs of the various line items, and the difficulty she had in accurately remembering such details, the trial court was free to find, as it did here, that plaintiff's account regarding these items was more accurate.

Condominium Fee

With respect to defendant's condominium maintenance fee, the court found that a residence in New York was not within the scope of the marital lifestyle, and the amount sought for the maintenance fee "far exceed[s] the common experience of this Court in regard to condominium housing in the Northern New Jersey area." Here, the record does not support the court's finding.

It is undisputed, that the parties' marital history included significant contacts with New York City. Indeed, as a resident of the northeastern part of New Jersey, defendant's recreational and educational experiences throughout her marriage included frequent visits to Manhattan, both with and without her husband. In this transitional phase of her life, it is entirely reasonable for defendant to want to relocate to New York City. The personal experiences of the trial judge are not a legal basis to determine the economic reasonableness of defendant's condominium fee request. We are, therefore, compelled to remand this issue for further hearings, to permit defendant to present sufficient competent evidence to the court as to the reasonableness of including the requested condominium fee as part of her alimony award.

Savings and Related Issues

Defendant also disputes the trial court's reductions for savings, the elimination of contributions to charities, and the elimination of educational expenses for the purpose of self-enrichment. It is undisputed that the parties' plan throughout the marriage was to save $3.5 million by the time plaintiff was ready to retire at age sixty-three. The parties indicated in their CIS the desire to continue to save as previously planned during the marriage. The trial court accordingly found that savings was part of their marital lifestyle.

Despite this finding, and the case law authority previously cited supporting the inclusion of savings as a valid component of an award of spousal support, the court eliminated the $2,000 per month savings requested by defendant. The court concluded that, given her age, defendant was no longer in need of savings. We disagree and reverse. As defendant accurately points out, an award of permanent alimony is not the equivalent of a guaranty of support for the remainder of her life, at the exact amount originally ordered by the court.

Plaintiff was not ordered to purchase life insurance to secure alimony payments for the remainder of defendant's life. Therefore, the plaintiff's death would terminate alimony payments to the defendant. N.J.S.A. 2A:34-25. Upon his retirement, he is legally entitled to petition the court to reduce the amount of support. Glass, supra, 366 N.J. Super. at 379. Thus, including savings in an award of alimony is not only consistent with the parties' marital lifestyle, but warranted by the eventual downward modification or outright termination of support.

We also conclude that the trial court abused its discretion by completely eliminating the line item for educational expenses. As defendant testified, education is one of her passions. It should thus be akin to a hobby. Throughout the marriage, defendant selected subjects ranging from stocks to botany. She read books and enrolled in classes to learn about these subjects. While some of these classes resulted in the acquisition of employment, others were purely recreational.

In combining the language immersion courses with defendant's travel budget, the trial court did not account for the elimination of the costs to take classes in other subject areas. The court acknowledged that the "self-enrichment programs in which the defendant participated were funded to some degree." In justifying the elimination of the line item for education expenses, however, the court simply notes that "[d]efendant has asserted no rehabilitation plan to warrant an ongoing educational expense of $6,000 per year."

The court is required to make specific findings regarding the degree of funding for these self-enrichment classes and factor these costs into calculating defendant's budget.

The court also eliminated the budget line item for charitable contributions, because the defendant did not testify as to the amount of past contributions. In doing so, the court disregarded that: (1) plaintiff did not refute the amount indicated by defendant for this budget line item; (2) the parties' Case Information Statements budgeted for such contributions; and (3) the parties' joint tax returns showed in excess of $6,000 donated to charity annually since 1997.

In the absence of evidential support, we are not bound by a trial court's factual findings. Here, the record does not provide a rational basis for the elimination of charitable contributions. Cox, supra, 335 N.J. Super. at 473, (quoting Reid, supra, 310 N.J. Super. at 22).

Imputation of Income to Defendant

The only remaining issue contested by defendant is the imputation of income generated by equitably distributed assets. We are in complete agreement with the trial court's determination in this respect. Given defendant's history with investing, the amount of the assets, the modest percent yield, and the limited testimony during the trial, the trial court did not abuse its discretion in finding that defendant's imputed annual income amounted to $60,000 or 4.6% interest on the defendant's assets of $1.3 million.

Conclusion

The judgment of the trial court awarding defendant $6,000 per month in spousal support is reversed and vacated. The matter is remanded for further proceedings consistent with this opinion.

 
Reversed and remanded.

In their joint tax returns for 2000, the parties listed defendant as an "office manager," with an annual salary of $80,000. Both parties acknowledge, however, that the salary was not commensurate with the work provided, but was paid to defendant to maximize savings in the medical practice's pension and profit sharing plans.

(continued)

(continued)

17

A-5951-03T1

January 17, 2006