MARIEN TARTAK COLON v. JOSE COLON

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5986-02T55986-02T5

MARIEN TARTAK COLON,

Plaintiff-Appellant/

Cross-Respondent,

v.

JOSE COLON,

Defendant-Respondent/

Cross-Appellant.

 

 

Argued November 9, 2005 - Decided August 11, 2006

Before Judges Coburn, Collester and Lisa.

On appeal from the Superior Court of New

Jersey, Chancery Division, Family Part,

Essex County, FM-07-257-00.

Barry I. Croland argued the cause for appellant/

cross-respondent (Shapiro & Croland, and

Weinstein Snyder Lindemann Sarno, attorneys;

Mr. Croland, of counsel; Jay Rubenstein and

Cynthia B. Lindemann, on the brief).

Mark H. Sobel and Steven I. Kern argued the

cause for defendant/cross-appellant (Greenbaum,

Rowe, Smith, Ravin, Davis & Himmel, and Kern, Augustine, Conroy & Shoppmann, attorneys; Mr.

Sobel, Mr. Kern and Jacqueline M. Printz on

the brief).

PER CURIAM

Both parties appeal from different provisions of a dual judgment of divorce of June 2, 2003. Plaintiff Marien Tartek Colon seeks reversal of the trial judge's award of $125,000 in punitive damages against her for invading defendant's privacy by secretly recording and videotaping his activities at their home in West Orange and at an apartment in New York City acquired during the marriage. She contests the judge's order that she pay nearly $300,000 of defendant's counsel fees. She contends that the parties' prenuptial agreement was misinterpreted by the court and the division of assets in equitable distribution was therefore erroneous. She argues that a reversal and remand is required from the trial judge's decision to deny her financial discovery from defendant and precluding her from calling a substitute expert witness when her original expert was unavailable for trial. She also contends that the judge erred in ordering her to reimburse over $600,000 she received in pendente lite support. Finally, she maintains the case should be remanded to a different judge. On cross-appeal, defendant Jose Colon argues that the trial judge erred by setting an excessive amount for his child support obligation.

The parties were married on November 21, 1987, in Puerto Rico. Both were educated and successful professionals. In addition to her design business, plaintiff managed her late father's furniture operation in Puerto Rico and was also involved in owning, leasing and managing several parcels of real estate in Puerto Rico. She inherited about $1.8 million from her father's estate. Defendant was a medical doctor with a private practice in New Jersey specializing in rehabilitative medicine. The day before their wedding, the parties signed a prenuptial agreement prepared by plaintiff's attorney in which they identified the rights of each in regard to his or her separate premarital property and the income derived from that property. The marriage was her first and his third. She was thirty-one; he was thirty-four. Defendant had a four-year-old son, Sean, who came to live with them in 1989 after the death of his mother. Although plaintiff never adopted Sean, she came to regard him as her own son. The family grew to include two daughters, Marien Laurel, born October 10, 1989, and Paloma, born October 19, 1991.

After the marriage, the parties moved to West Orange. Focusing on rehabilitative medicine, defendant opened rehabilitation centers in Newark and Orange. While plaintiff did not contribute monetarily, she decorated and furnished the centers. In November 1998, defendant purchased a practice in New York City, near the World Trade Center. He prospered. In 1998, defendant's federal income tax return showed an adjusted gross income of $595,256. In 1999, his adjusted gross income was $922,007.

It is hardly hyperbole to describe the way the parties lived as the "lifestyle of the rich and famous." They traveled to Europe six or seven times and stayed in luxury hotels. Cars acquired during the marriage included a BMW convertible, a Rolls Royce, a Mercedes-Benz, a Volvo station wagon and a Ford Windstar mini van. The parties took trips on various yachts acquired during the marriage to St. Maarten, St. Bart's, Venezuela, Cancun and Cuba. Defendant hired a full-time captain, two first mates and a cook who were on board when the parties traveled. The captain's yearly salary was $60,000, paid through defendant's business, and he lived rent-free in a house in Puerto Rico purchased by defendant. Their home in Llewellyn Park was on three acres in a gated community and had eight bedrooms, seven bathrooms, nanny's quarters, a separate garage apartment and a sauna. There was a live-in nanny for the children, a housekeeper who worked thirty hours a week, and a chef.

Defendant gave plaintiff jewelry costing well in excess of $100,000. Plaintiff purchased clothes for the family at Saks Fifth Avenue, Neiman Marcus and Bloomingdales. Defendant had his suits custom-made in Italy. The children attended the private Montclair Kimberley Academy. At the time of trial, Sean was attending Tufts University, at a cost of about $40,000 per year.

The parties purchased property together, including a townhouse in Guaynabo, Puerto Rico, for $200,000, for which plaintiff paid $30,000 and the defendant the remainder. Prior to trial, it was sold for a net gain of $389,698. The parties purchased a beach house and adjacent property in Palmas del Mar, Puerto Rico, which was titled in both names. Defendant paid for the purchase and maintenance, while plaintiff decorated the house. Defendant also purchased an apartment on East 57th Street in Manhattan for $200,000, which was titled solely in his name.

In 1995 plaintiff began to suspect defendant was being unfaithful. While she was redecorating the New York apartment, she had a video recorder without audio installed and concealed in the molding of the bedroom. In November 1996, her suspicions were confirmed when videotape showed defendant and another woman having sexual relations. Plaintiff did not confront defendant. She consulted a divorce attorney, but took no action at that time other than to change the beneficiary of her life insurance from defendant to the three children. There is no indication that plaintiff showed the videotape to a third party.

Plaintiff testified that in June 1997, she discovered tape recorders on the telephones in the living room and in the office off of the master bedroom of the marital home. She listened to the tapes and found her conversations had been recorded. Defendant admitted putting the recorder on the office phone, but said it was to record his conversations with his stockbrokers when he activated it, but he denied placing a recorder on the living room phone.

Plaintiff said after she found the phone recorder, she hired a private investigator to install a hidden video camera, which was placed in one of her handbags in a clothing armoire. This surveillance continued for four months. The video recordings show defendant at his desk and at times in his underwear. It also showed that the children and plaintiff frequented his office area. There is no indication that the tapes were shown to third parties.

In early May 1999, defendant discovered a duffel bag under the nanny's bed which contained video footage from the New York apartment showing him in bed with another woman. He left the home permanently that evening.

Plaintiff filed her divorce complaint on August 6, 1999, alleging extreme cruelty, and subsequently, an amended complaint charging that defendant violated the Wiretap Act, N.J.S.A. 2A:156A-2 to -34, and seeking damages. In the fall of 2001, she filed a motion for pendente lite support for herself and the children. In her accompanying Case Information Statement (CIS), she stated her income for 1998 was $27,673, consisting of $16,873 in interest, $10,800 in rental income from properties in Puerto Rico and $7,692 from her short-term job as a receptionist at one of defendant's rehabilitation centers. She also listed her Paine Webber account worth $75,000, property that was acquired during the marriage and defendant's business ventures. She did not include any references to other property she owned in Puerto Rico or any businesses in which she was involved without her husband. She claimed monthly expenses for herself and the children of $39,958, in accordance with the standard of living they enjoyed.

On December 6, 1999, the motion judge signed an order of unallocated support. He directed that defendant (1) restore plaintiff's credit cards and pay for plaintiff's use of the cards consistent with her use in the preceding twenty-four months; (2) pay plaintiff $500 per week; (3) pay the nanny and the household staff; (4) pay all school expenses for the children; (5) pay overhead costs of all homes in New Jersey and Puerto Rico as well as for maintenance of the yacht; (6) pay all transportation expenses for plaintiff and the children; (7) pay $50,000 in pendente lite counsel fees to plaintiff's counsel; and (8) pay $15,000 toward plaintiff's expert fees. Subsequent to this pendente lite order, the parties filed a multiplicity of motions, including an application for enforcement or modification of the order, issues of discovery, and parenting time for defendant.

Neither in her original complaint, her amended complaint, her pendente lite motion for support nor her accompanying CIS did plaintiff seek enforcement of or even mention the prenuptial agreement of November 20, 1987. Defendant did not mention the issue in his answer, but did raise the matter in his response to plaintiff's motion for pendente lite support and attached a translation of it to counter the list of properties and assets in plaintiff's CIS. The pendente lite order made no mention of the agreement.

The prenuptial agreement was first addressed by Judge Herbert S. Glickman, the third judge assigned to the case. In a written interlocutory decision on March 20, 2001, he held that the validity and interpretation of the November 20, 1987, agreement should be construed according to Puerto Rico law and scheduled a hearing on the validity and effect of the agreement. He also found that the language of the agreement was clear and unambiguous so that parol evidence would not be permitted to vary its terms.

Defendant then moved to stay any discovery other than respecting the prenuptial agreement until the court made its rulings. He also requested and obtained leave to file an amended answer and counterclaim for divorce on grounds of eighteen months separation as well as for compensatory and punitive damages, alleging defendant had violated the Wiretap Act and invaded his privacy.

The plenary hearing on the prenuptial agreement began with the parties stipulating to the validity of the agreement, leaving open only the issue of its interpretation. Each side presented expert witnesses on the interpretation of the agreement under Puerto Rico law. In his written opinion on August 16, 2002, Judge Glickman found as follows: (1) the prenuptial agreement was enforceable; (2) Puerto Rico law provided for "a complete separation" of assets owned at the time of the marriage including any property or income derived therefrom; (3) property acquired during the marriage by either of the parties using their own funds or assets belonged solely to such party; and (4) only property or other assets acquired by the parties during the marriage titled in joint names was subject to equitable distribution and was to be "based on the respective contribution each made to the acquisition."

Judge Glickman further noted that he was the third judge involved in the case and that due to his imminent retirement, "[u]nfortunately I will not be the last." He also stated, "I am making a strong recommendation to the presiding judge that this case should receive a preemptory (sic) trial date as soon as possible."

The trial commenced on September 2002, and concluded in December after seven trial days. During the trial plaintiff moved for additional discovery and to submit as an expert witness a different forensic accountant other than the one named in discovery. The trial judge denied both applications. At the conclusion of the trial on December 11, 2002, an order was entered granting a dual divorce while reserving on the financial issue. On April 4, 2003, the trial judge issued a forty-page written opinion in which he directed equitable distribution based on the prenuptial agreement, denied plaintiff alimony, set the amount of $1,250 per month as defendant's child support obligation, in addition to education costs and one-half of their medical and dental expenses. In this regard, the judge found that plaintiff had received an excessive pendente lite support order because she failed to disclose the extent of her assets and income and directed she was to reimburse defendant in the amount of $675,157. He made a factual finding that plaintiff placed an audio recording device in the home to record defendant's conversations and awarded defendant damages of $1,000 under N.J.S.A. 2A:156A-24. Furthermore, he found that by placing and using video surveillance cameras in defendant's office and the bedroom of the New York apartment, plaintiff had invaded defendant's privacy. Since defendant had presented no evidence of compensatory damages, the judge awarded nominal damages of $1 and then added punitive damages of $125,000. Finally, the court addressed defendant's application for attorneys fees and costs and granted his attorney the full amount of fees requested in the certification of services of $273,232, as well as fees to co-counsel of $24,000 related to for the wiretapping and invasion of privacy claims. Each party has appealed. We first address the arguments of plaintiff.

I. RIGHT OF PRIVACY AND PUNITIVE DAMAGES

The finding of a violation of defendant's right to privacy was based on the video surveillance devices placed by plaintiff in a room in the marital home used by defendant as an office and in the bedroom of the New York apartment. We find no actionable claim and reverse that portion of the judgment against plaintiff.

The tort of unlawful intrusion of privacy is a right established by common law in New Jersey. In Hennessey v. Coastal Eagle Point Oil Co., 129 N.J. 81 (1992), the Supreme Court adopted the wording of the Restatement (Second) of Torts, 652B (1977), which states: "One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person." Hennessey, supra, 129 N.J. at 94-95. The issue of whether the conduct is "highly offensive to a reasonable person" turns on whether there is a reasonable expectation of privacy as established by social norms. State v. Hempele, 120 N.J. 182, 200 (1990); Del Presto v. Del Presto, 97 N.J. Super. 446, 454-56 (App. Div. 1967); White v. White, 344 N.J. Super. 211, 222-23 (Ch. Div. 2001). Here the trial judge made no finding that defendant had a reasonable expectation of privacy in the home office, and the evidence is to the contrary, since the office was next to the master bedroom and was used not only by defendant but by plaintiff and the children, who freely entered the room.

New York law applies to the video surveillance at the New York apartment and there is no common law right of privacy or applicable statute in New York for the claim of invasion of privacy alleged by defendant. See Freihofer v. Hearst Corp., 480 N.E.2d 349 (N.Y. 1985); Talmor v. Talmor, 712 N.Y.S.2d 833, (Sup. Ct. 2000). Furthermore, even assuming an actionable intrusion into defendant's privacy, the award of punitive damages was contrary to the Punitive Damages Act, which requires a finding of compensatory damages before punitive damages can be awarded. N.J.S.A. 2A:15-5.13(c); Dong v. Alape, 361 N.J. Super. 106, 119 (App. Div. 2003). The trial judge specifically found that plaintiff produced no evidence of compensatory damages and based the punitive award on nominal damages, which is not proper under N.J.S.A. 2A:15-5.13(c). Therefore, we reverse that portion of the judgment finding invasion of defendant's privacy and awarding damages.

II. THE PRENUPTIAL AGREEMENT

Plaintiff argues that Judge Glickman misconstrued the prenuptial agreement and misapplied applicable law. We disagree. "In Puerto Rico, upon marriage, a new entity is created which commences on the day of marriage." Fernandez-Cerra v. Commercial Ins. Co. of Newark, 344 F. Supp. 314, 316 (D.C.P.R. 1972); P.R. Laws Ann. tit. 31, 3622 (2002). This entity, called the "conjugal partnership," is separate and distinct from the spouses. Cruz Viera v. Registrar of Prop. of Manati, 18 P.R. Offic. Trans. 1046, 1051 (1987). In other words, the conjugal partnership, not the spouses, is the sole owner of assets acquired during the marriage. Ibid. On the other hand, under P.R. Laws Ann. tit. 31, 3631 (2002), separate property of the spouses includes that brought to the marriage as his or her own, that acquired by gift or inheritance and that bought with money belonging exclusively to the wife or to the husband.

However, the parties are free to make other contractual arrangements under the following circumstances:

Under the contractual freedom provided by the Civil Code even when executing a prenuptial agreement, a couple can opt for: (1) the separation of property but with participation in any gains; (2) the community property marital partnership, in which case all they have to do is remain silent and make no stipulation or expressly stipulate to it, which is not prohibited either; (3) waive the community property marital partnership; (4) full separation of property, or (5) choose any other system that combines these possibilities, as long as they do not violate the law, morality or good customs.

[Dominguez Maldonado v. E.L.A., 137 D.P.R. 954, 964 (1995).]

The terms of a prenuptial agreement "should be clear and definite, and to that effect, they must be strictly construed in everything respecting the system of said partnership." Vilarino Martinez v. Registrar of Property of Ponce, 88 P.R.R. 279, 284 (1963).

The prenuptial agreement the parties signed the day before their wedding listed their individual assets. It stated that plaintiff was the "heiress" of Eduardo Tartak Badui, that his estate was presently in the "process of distribution and adjudication" and that "all of the assets forthcoming from said estate are of private origin and the proceeds and profits derived therefrom shall continue to be her own private and separate assets." Defendant's separate assets included the house in Llewellyn Park and his medical practice.

The second part of the agreement stated that the parties agreed that all of the assets listed

are and shall continue to be exclusively owned by, and shall be deemed to be private property of, each of the respective spouses, as shall all assets acquired by them after their marriage, whether through inheritance, gift, dowry or adjudication that is made to them in payment of any credit or debt payable thereto prior to their marriage or by any other means that does not require payment of consideration, and each of the spouses shall have the freedom to administer their own property.

In the same manner, the income, civil fruits and interest generated by the separate assets of the respective spouses shall also be deemed to be their separate property, to wit:

First: Same, as well as the principal to which they shall accrue, shall be subject to the exclusive administration of the spouse to which they belong.

Second: The assets acquired in the future by either of the appearing parties and during their marriage shall also be deemed to be their separate and individual property and shall be subject to their exclusive administration.

In March 2001, Judge Glickman held that the validity and interpretation of the prenuptial agreement would be determined according to Puerto Rico law. At the subsequent hearing in December 2001, both parties stipulated to the validity of the agreement, leaving its interpretation to be determined. Plaintiff's position was that the agreement created two categories of assets. The first were those assets identified as individually owned, including incremental increases in value resulting from the passage of time or market conditions; assets acquired by inheritance or gift; assets acquired separately by each party with his or her own funds; and assets and income derived from rents and income accruing from the separate assets. She contended that assets in this category were not subject to equitable distribution but that the following assets in the second category were: (1) any funds acquired through the industry, work or effort of the spouses; (2) any increment in value of common or separate assets which has resulted from the industry, work or effort of the spouses or either of them; (3) assets acquired jointly without specifying separate participation; (4) assets which must be presumed to belong to the marital partnership of gains, for lack of evidence as to their separate nature; and (5) any civil fruits derived from such funds belonging to the partnership. On the other hand, defendant's position was that the agreement provided for the complete separation of the assets of the parties and all property, dividends or income of any nature derived from those assets.

Each of the parties relied upon the testimony of experts at the plenary hearing. Professor Carlos Gorrin Peralta testified on behalf of plaintiff and opined that the parties' prenuptial agreement created a "mixed system" of separate assets and conjugal partnership assets. Defendant's expert was Puerto Rico family-law attorney and notary public Cecil Sola Placa who testified that the parties contracted for a complete separation of assets and that, under Puerto Rico law, the concept of passive and active assets does not exist.

Judge Glickman relied primarily on the testimony of defendant's expert. He determined that the intent of the parties was to create a complete separation of assets, including those derived from income. He further found that the agreement was not ambiguous and the conduct of both parties throughout the marriage demonstrated their clear intent to separate their assets. Accordingly, Judge Glickman interpreted the agreement to provide that only those properties and assets purchased in joint names were subject to equitable distribution based upon the respective contribution each made to the acquisition.

Pursuant to Judge Glickman's rulings, the trial judge later distributed the jointly held assets in accordance with the parties' respective financial contributions to the acquisition. He found that the parties purchased a townhouse in Guaynabo, Puerto Rico, and that plaintiff contributed fifteen percent of the purchase price while defendant paid the mortgage, improvements and maintenance of the property, and therefore plaintiff was entitled to fifteen percent of the proceeds from the sale. A beach house and lot in Palmas del Mar was titled in the names of both parties. The judge held that since defendant paid all of the costs of acquisition and maintenance, plaintiff received no credit in equitable distribution. As to other property in Palmas del Mar approved for a marina held by a partnership including plaintiff and defendant, the judge held that each party would retain his or her ownership interest. Similarly, a Palmas del Mar commercial property was held with another person and since neither party presented any evidence as to the financial contributions to its acquisition, the judge ruled each party would retain his or her own interest. The trial judge awarded no credit to a party for property titled in the name of the other party and gave no credit to the non-titled party for any appreciation in value.

Plaintiff maintains that the interpretation of the prenuptial agreement affecting a total separation of property before and during the marriage was erroneous. She argues that the agreement established a mixed regime of separate and conjugal property. First, she argues with regard to the property purchased jointly during the marriage that since the parties appeared jointly in the deed of sale without making any reservation as to the separate assets used for acquisition, or their respective participation in the property, the prenuptial agreement did not cover this situation. Therefore, she argues, the court was required to find in favor of maintaining the community property regime as to those omissions. Second, with respect to the joint property as well as to the separate property of defendant, including his medical practice, she argues that nothing in the agreement indicates that the parties intended to exclude from the conjugal partnership the consideration, income or compensation derived through the efforts, labors or work performed by either or both of them after they married. She contends that the conjugal partnership owned any increases in defendant's personal assets that were due to her labor and industry and to her non-financial contributions provided through her services as a wife and mother.

"Interpretation and construction of a contract is a matter of law for the court subject to de novo review." Fastenberg v. Prudential Ins. Co., 309 N.J. Super. 415, 420 (App. Div. 1998). "A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

The prenuptial agreement states: "The assets acquired in the future by either of the appearing parties and during their marriage shall also be deemed to be their separate and individual property and shall be subject to their exclusive administration." We agree with Judge Glickman that this clearly and unambiguously establishes the intention of the parties to totally separate their assets acquired before and during the marriage.

Plaintiff next argues that she is entitled to credit for the increase in both the joint assets and the separate assets that can be attributed not to market forces but to her active efforts. Additionally, she left Puerto Rico to live with defendant in New Jersey and was a caretaker for their own two children as well as defendant's son, leaving defendant "free to pursue other ventures and interests" and also worked in defendant's business and "devoted marital effort to the success of the enterprise." The judge did not address this issue.

Plaintiff relies on New Jersey law in support of her contention that she is entitled to recover equitable distribution for her efforts which increased the value of both joint and individual property. See Scherzer v. Scherzer, 136 N.J. Super. 397, 488 (App. Div. 1975), certif. denied, 69 N.J. 391 (1976); Scavone v. Scavone, 230 N.J. Super. 482, 488 (Ch. Div. 1988), aff'd, 243 N.J. Super. 134 (App. Div. 1990). She asserts that since the parties resided in New Jersey, the court was required to enforce the agreement pursuant to New Jersey law, not Puerto Rico law. In fact, the New Jersey law plaintiff seeks to apply is very similar to that of Puerto Rico. Heirs of Santaella Sauri v. Sec'y of Treas. of P.R., 96 P.R.R. 431, 436 (1968).

In Dominguez Maldonado, supra, 137 D.P.R. at 954, the court stated:

In fact and as a general rule, household chores are not evaluated in monetary terms. But such chores, which include, among others, childcare, cleaning house, kitchen labors, washing, ironing, miscellaneous household tasks, shopping, errands and services related to children and husband, and depending on the family's economic and social status, social activities and entertainment, represent marketable labor activities. Moreover, they release the husband from daily chores so that he can concentrate on his job. Therefore, the economic value of services performed in a home by a wife and homemaker, together with the economic contributions made by either of the spouses, must be taken into consideration when making decisions on the division and distributions of the assets of a marital estate.

The question then becomes not whether New Jersey or Puerto Rico's law applies, but whether the parties agreed to another arrangement in their prenuptial agreement. Plaintiff argues that to read the agreement to exclude her from sharing in increases in defendant's property to which she contributed her labor renders it inequitable and unenforceable. Prenuptial agreements are enforceable assuming full disclosure and absent unconscionability. Marschall v. Marschall, 195 N.J. Super. 16, 30-31 (Ch. Div. 1984), cited with approval in D'Onofrio v. D'Onofrio, 200 N.J. Super. 361, 366 (App. Div. 1985). Marschall defines an unconscionable agreement as one "which would leave a spouse a public charge or close to it, or which would provide a standard of living far below that which was enjoyed both before and during the marriage." Marschall, supra, 195 N.J. Super. at 31. Neither party claimed that there was a lack of disclosure, and both parties have substantial assets. Therefore, we do not find that this prenuptial agreement is "unconscionable" if read as not allowing a spouse to obtain an active increase in an asset based on his or her labor.

In any event, however the argument is read, the record discloses that any contribution by plaintiff to defendant's assets was limited. She worked as a receptionist in his office for a short time and was paid a receptionist's wage. She assisted in furnishing and decorating defendant's office and other facilities as well as the New York apartment and the Puerto Rico vacation house. While no one disputes that she was a caring mother, the fact is that plaintiff did not cook, clean, grocery shop or do laundry for her family. She had a cook and a thirty-hour-per-week housekeeper to do those chores, along with a full-time live-in nanny to take care of the children and a groundskeeper to care of the outside of the home. Moreover, during the course of the marriage, she managed her individual inherited property into a multi-million dollar enterprise, showing that she devoted her time and energy during the marriage to the running of her business. Therefore, even if the prenuptial agreement were read to entitle plaintiff to share in the increase in defendant's property attributable to the plaintiff's labor and efforts or non-financial contributions to the home and family, there is an insufficient showing by plaintiff of significant contribution by her to defendant's medical practice or other assets.

In sum, we find no error in the holding that the prenuptial agreement governed the rights to equitable distribution and in the subsequent determination regarding distribution of assets.

III. DISCOVERY ISSUES

Plaintiff contends that the judge erred in refusing to allow additional financial discovery and by barring a substituted forensic accountant from testifying at trial. We note initially that discovery rulings by a trial judge are generally upheld on appeal unless shown to be an abuse of discretion. Axelrod v. CBS Publ'ns, 185 N.J. Super. 359, 372 (App. Div. 1982). There is no such showing in this case.

Plaintiff asserts that Judge Glickman stayed discovery as to financial issues until the plenary hearing and his decision on the prenuptial agreement, and that as a result, she was deprived of essential pre-trial discovery. While the trial judge correctly noted that no order of Judge Glickman directed a stay of discovery, it is clear from the record and comments of both counsel during oral argument, that they understood or assumed that a stay was in place. However, the hearing concluded in December 2001, ten months before the case was ordered to trial. Moreover, in his written opinion of August 16, 2002, Judge Glickman made a "strong recommendation" that a preemptory trial be set "as soon as possible." At that time the case was more than three years old. Counsel had ample time for discovery during this period, and there was no stay after conclusion of the plenary hearing.

With regard to plaintiff's claim of prejudicial error in the trial judge's refusal of her mid-trial argument to permit a new forensic accountant to testify, we also find no abuse of discretion. Plaintiff had previously named Gary Trugman, CPA, as her expert, but on October 4, 2002, after trial had commenced, her attorney sent a letter indicating Trugman would be out of the country when the trial resumed in December and, therefore, would substitute Leonard M. Schneider as the expert. Defendant objected to allowing Schneider to review any documents because he was not previously named as an expert, and agreed to make available only to plaintiff's counsel the documents not previously made available, namely, cancelled checks. In denying plaintiff's motion for leave to substitute Schneider as her expert in place of Trugman, the trial judge stated:

There's no reason why experts should not have filed reports in this case. There is ample credible evidence to indicate that discovery was made by the defendant to the plaintiff with regard to this matter. Whatever reason about switching experts

. . . there should have been a report from the previous expert, prior to the switch.

While plaintiff contends that the judge erred by not allowing discovery, she is not specific about what documents defendant failed to produce or what exactly she needed that she did not receive. Moreover, the judge cited several earlier orders concerning discovery and allowed plaintiff further opportunity to review the material even during the trial. As to the judge's decision disallowing Schneider from testifying, plaintiff claims she was deprived of presenting evidence of defendant's income to prove that his businesses provided a significant resource to support the family's lifestyle, beyond his compensation and income distributions. However, even if plaintiff had all the discovery she wanted about defendant's businesses and was permitted to present Schneider as an expert witness, we see no realistic reason to believe that the trial judge's decision on support would have been different. He found that "the parties' and their children's [lifestyle] was partially funded through defendant's business perquisites" and that "defendant failed to provide credible evidence that he had sustained losses in income and/or perquisites from his businesses and investment properties." That is, the judge found exactly what plaintiff sought to prove: that defendant's businesses provided him with funds beyond what was represented in his income, to sustain the family's lifestyle. Therefore, aside from our findings that the trial judge did not abuse his discretion, we also find that plaintiff failed to show significant harm by the trial judge's discovery decisions.

IV. REIMBURSEMENT OF PENDENTE LITE SUPPORT

In the CIS accompanying her application for pendente lite alimony and child support, plaintiff listed a single investment account with a $75,000 balance; an insurance policy; income on premarital assets in the past year of $11,200 and rental income of $20,000 from property in Puerto Rico. At oral argument the motion judge specifically stated:

I will enter a pendente lite order based on your representation that the only liquid assets your client has is $75,000 as presented in the Case Information Statement....

Counsel for defendant protested, asserting that defendant had several properties and businesses in Puerto Rico referenced in the premarital agreement attached to defendant's certification. Nonetheless, the motion judge entered an unallocated order of alimony and child support, stating:

The history of this matter is that Dr. Colon has been the primary caretaker for - or provider for the family and during this pendente lite period, he should continue to be the primary provider, regardless of what assets either of the parties may have

in their own names.

The Appellate Division in a recent case of Miller v. Miller, has commented upon the fact that the Court cannot ignore the fact that there are assets in individual parties names and, certainly, it should be taken into consideration.

But the fact that there may be items that are absent in an initial Case Information Statement isn't going to close the door on further disclosure and you each have a right to discovery, which I'm sure your attorneys will pursue vigorously on your behalf. And, certainly, given the concerns that have been expressed with regard to bank accounts in the Cayman Islands; with regard to a transfer of funds; a history of multiple businesses, discovery is going to be an important part of determining what you are each entitled to receive by virtue of equitable distribution, what assets are exempt and what ongoing support obligations should be.

Defendant moved three times for modification of the pendente lite order. Although certain aspects of the order were changed, such as placing a limit on plaintiff's credit card use, the remainder of the order was not changed pending resolution of disputed factual issues at trial.

At the conclusion of plaintiff's testimony on September 23, 2002, the trial judge granted a motion by defendant to modify and suspend all payments to plaintiff on the pendente lite order except for shelter expenses on the West Orange home and the children's school expenses because plaintiff "ha[d] not provided accurate, complete and current income with regard to her assets and income." The judge also reserved as to defendant's application for retroactive modification under Mallamo v. Mallamo, 280 N.J. Super. 8 (App. Div. 1995). Later in the trial the judge admitted into evidence defendant's list of check payments he asserted he made for support of plaintiff and the children.

Plaintiff contends that the judge erred in granting the retroactive reduction of the pendente lite order and requiring her to repay defendant. The judge found: "It is clear that the defendant would not have received the support order dated December 6, 1999, if she disclosed the full extent of her income and assets. The plaintiff has been found to have substantial income to support herself and to be equally responsible for the support of the parties['] children."

He then relied on the defendant's "summary accounting of his support obligations as a result of the entry of the court's December 6, 1999, pendente lite order," which totaled $1,678,048. The judge noted that plaintiff did not produce any evidence of the expenses of the parties' children and the allocation between the parties even though she had been put on notice that defendant was seeking modification.

The judge ruled:

The court finds that the sum of 1,391,481.51 to be reasonably related to the approximate three year period for pendente lite support of the parties' children. The court omitted or credited against the defendant's payments one-third of school expenses allocated to defendant's son; improvements (not repairs) to 80 Glen Avenue, West Orange; defendant's life insurances; automobile for defendant's son and expense related to the "captain's house". The court also deducted the plaintiff's parking and EZ pass violations and attorney and expert fees awarded pendente lite. The parties are equally responsible for the pendente lite support of their children or each financially responsible for $695,741 during the pendente lite support period. The defendant is entitled to be reimbursed the sum paid as plaintiff's share. However, the parties are entitled to additional credits of offsets against each other. The defendant took the tax deductions for real estate taxes and mortgage interest on his individual tax returns for 2000, 2001 and 2002. The plaintiff was entitled to equitably share in the deductions since the court determined that those expenses were reasonably related to child support. The total real estate taxes and mortgage interest deducted by the defendant over the pendente lite period amount to $334,208 of which the plaintiff is entitled to one-half credit or offset in the sum of $167,101. The defendant is entitled to a credit for those expenses he paid which were the plaintiff's expenses. Those expenses are the parking and EZ pass violations ($369.30) paid by the defendant and the professional fees ($129,016.33) as well as reimbursement of $17,131.33 in insurance premiums paid by the defendant as required by the December 6, 1999 court order. Therefore, the defendant is entitled to be reimbursed by the plaintiff for retroactive support and expenses in the amount of $675,157.

Plaintiff argues that she should not have been liable for any support for herself or the children because it was undisputed that defendant paid all of those expenses during the marriage and the general purpose of pendente lite support is to maintain the status quo pending final hearing. See, e.g., Rose v. Csapo, 359 N.J. Super. 53, 60 (Ch. Div. 2002). Neither Rose nor any other case states that if one spouse solely supported the lifestyle of the family, that support must continue until the final divorce. While the status quo of the standard of living must be maintained, "pendente lite support is grounded in necessity." Nebel v. Nebel, 99 N.J. Super. 256, 261 (Ch. Div.), aff'd o.b., 103 N.J. Super. 216 (App. Div. 1968), overruled on other grounds, Finger v. Zenn, 335 N.J. Super. 438 (App. Div. 2000). When a spouse has sufficient separate property to maintain the standard of living, that spouse is not entitled to pendente lite support. McPherson v. McPherson, 9 N.J. Misc. 4, 5 (Ch. 1930). Here, the judge made a factual finding that plaintiff had sufficient assets of her own to maintain the marital standard of living and that the amount of pendente lite support had been awarded based on her misrepresentations of need to the court. Accordingly, we find no merit in plaintiff's argument that she was entitled to have defendant pay all of her pendente lite expenses based on his total support of her during the marriage.

Plaintiff next argues that assuming defendant was not obligated to pay all of the pendente lite expenses, the amount the judge ordered her to repay was not supported in the evidence. Plaintiff does not elaborate on her claim, and, as noted by the trial judge, she did not submit any allocation of expenses related to the children throughout discovery or when requested by the trial judge. Therefore, the allocation by the trial judge of the amount expended for child support during the pendente lite period was based on the only evidence presented and constitutional as a proper factual finding.

However, plaintiff is entitled to an additional credit toward the amount she was ordered to pay since pendente lite support payments were suspended from September 2002 to April 2003, when the trial judge directed defendant to pay $12,500 per month as child support. The judge limited defendant's pendente lite obligation to paying the shelter expenses for the West Orange home, the private school expenses for the girls, and the college expenses of his son, and stated "I will reserve on a specific allocation of any child support." However, there was no mention in the final decision of the period between September 23, 2002 and April 1, 2003, when defendant's permanent child support obligation started. Therefore, plaintiff is entitled to a credit. But despite plaintiff's suggestion, we cannot simply credit her with payments of $12,500 per month, or $75,000, since defendant was paying all of the shelter expenses during that six-month period, which in part benefited the children and would be part of the child support calculus. Therefore, it is necessary to remand for a determination of the appropriate amount of the credit to plaintiff.

V. COUNSEL FEES

Counsel fees in this case through the trial amounted to over a million dollars. Plaintiff's attorney fees were $599,633.08, and she paid $534,204.03, of which defendant paid $63,911 as ordered pendente lite. There remains a balance of more than $60,000. Defendant incurred attorney fees of $498,678.09 and has paid $393,942.22, leaving a balance of $104,735.89. At the trial's conclusion defendant's attorney moved for a counsel fee award to be assessed against plaintiff. He submitted a certification of services pursuant to R. 4:49-2 stating that services rendered and costs incurred by his firm totaled $273,232. The judge found the hourly rate reasonable and the expenditure of time necessary due to "plaintiff's recalcitrance in acknowledging the prenuptial agreement and her evasiveness, her concealment and her outright stonewalling as to the truth of her wealth." Noting that plaintiff's own counsel fees were even greater, the judge found that her fees "were the result of her own conduct" and that she clearly had the ability to pay her own and any counsel fee award assessed against her. After listing the factors set forth in R. 5:3-5(c), the trial judge awarded defendant the full amount requested of $273,232 to be assessed against plaintiff in addition to $24,000 in attorney fees to co-counsel for services related to the wiretapping and invasion of privacy claims. The judge gave the following reasons:

This was a garden variety divorce whose progress was impeded by the foot dragging and recalcitrance of the plaintiff. The plaintiff's request for attorney fees is denied based on her bad faith in instituting and defending this divorce action while not acknowledging the parties' prenuptial agreement and for failing to disclose her true assets and income. The prenuptial agreement was ignored by the plaintiff and not even referred to in her initial pleadings. The financial aspects of the divorce would have been resolved early on instead of on a protracted time consuming basis but for the plaintiff's failure to acknowledge the prenuptial agreement until the plenary hearing. Moreover, the financial aspects of the divorce would clearly have been resolved early on instead of on a protracted time consuming basis but for the plaintiff's willful and deliberate failure to fully disclose her assets and income. From both the plaintiff's denial of the prenuptial agreement and then its validity, the defendant's attorneys had to expend significant time on legal issues, in preparation, in retaining and for preparation of expert witnesses, discovery, enforcement hearings, plenary hearings and for trial. From the plaintiff's failure to fully disclose her income and assets, the defendant's attorney filed numerous applications seeking relief from the pendente lite support order premised on the plaintiff's initial financial representations to the court. The defendant's attorneys also had to defend the plaintiff's enforcement motions as to the defendant's court ordered support obligations. It was not until the trial that the defendant obtained financial relief from the pendente lite support order. The defendant was forced to litigate the issues of the prenuptial agreement, alimony, child support, equitable distribution and attorney fees and as a result incurred extraordinary counsel fees. This court is convinced that the plaintiff has engaged in the tactic to raise issues not supported by the facts and law. The plaintiff acted in bad faith and caused additional attorney's time for both her attorneys and the defendant's attorneys. The court incorporates all of its findings under its alimony, child support, wiretapping and damage analysis. R. 5:3-5(c).

We disagree that this was "a garden variety divorce." The validity, applicability and interpretation of the prenuptial agreement were novel issues. Extensive briefing by counsel was required on the choice of law between New Jersey and Puerto Rico, leading to a written decision by Judge Glickman. A hearing was conducted with experts called by each side to testify as to the proper interpretation of the agreement under the law of Puerto Rico. Judge Glickman issued a lengthy and well-reasoned legal opinion as to the interpretation of the agreement in light of New Jersey law on equitable distribution. The trial judge then applied the agreement to resolve issues of assets acquired during the marriage as well as active and passive increases in the value of assets acquired before and after marriage. These were not garden variety issues, and neither were the issues presented on the applicability of the Wiretap Act and defendant's pursuit of a claim of right of privacy with a demand for punitive damages.

Moreover, the court's finding that the plaintiff "failed to acknowledge the prenuptial agreement until the plenary hearing" is not supported by the record. While plaintiff did not mention the agreement in her original and amended complaints, neither did defendant in his answer. The agreement came to the attention of the court prior to the order for pendente lite support and was attached to defendant's responding papers. Furthermore, plaintiff did not deny the existence of the agreement but did question its validity, application and interpretation, issues, which, as we have indicated, involved complex issues of law. Accordingly, we find that the portion of the counsel fee award for legal services and costs relating to the prenuptial agreement constituted a misapplication of discretion.

Furthermore, there is no basis for an award of attorney fees based on defendant's claim that plaintiff violated his right to privacy by secretly videotaping him in the New York apartment. Defendant's counsel did not alert the trial judge to the fact that there was no such common law or statutory right in New York or that the award of punitive damages was contrary to the New Jersey Punitive Damages Act. Therefore, any portion of the counsel fee award relating to those issues must be deleted. In this regard, we note that the trial judge's award of $24,000 to defendant's co-counsel was for services related to the wiretap and right of privacy claims. Accordingly, that portion of the award related to privacy claims must be eliminated.

Plaintiff contends that there should have been no counsel fee award because the judge failed to consider the relative financial positions of the parties, their relative income and assets and that defendant demonstrated no financial need. She asserts that the factors named in R. 5:3-5(c) must be satisfied before the court may consider "the reasonableness and good faith of the positions advanced by the parties." R. 5:3-5(c)(3). There is little question that plaintiff has the ability to pay her own counsel fees as well as the counsel fee award to defendant. But the counsel fee award was due to the judge's finding that plaintiff acted in bad faith. In his opinion, the judge gave the following definition of bad faith and its application to an award of counsel fees:

Marital disputes generally lend themselves to compliance with the Rules of Court related to uncovering and disclosing assets and income information. Black's Law Dictionary defines "Bad Faith" as "... neglect or refusal to fulfill some duty or contractual obligation not prompted by some honest mistake as to one's rights or duties, but by some interested conduct or sinister motive". Bad faith is not just bad judgment or negligent actions, but "it implies the conscious doing of wrong because of dishonest purpose and moral obliquity". Borzillo v. Borzillo, 259 N.J. Super. 289 (Ch. Div. 1991). Moreover, the economic position of the parties has little relevance where a party acts in bad faith since the purpose of an award is to protect the innocent party from unnecessary cost and punish the guilty party. Kelly v. Kelly, 261 N.J. Super. 303 (Ch. Div. 1992). This case was an extremely acrimonious litigation. As already indicated[,] both parties have tremendous wealth and income derived from their assets and businesses. The parties' applications for attorney fees turns on the parties' good faith.

While the reasons stated the judge's finding of bad faith are not applicable to issues of the prenuptial agreement or defendant's assertion of invasion of his privacy, the record substantiates a finding that either deliberately or due to misguided tactics of trial counsel, plaintiff was not forthcoming about the extent of her wealth and, most especially, her available income. While the prenuptial agreement noted assets and her inheritance, necessary information regarding the properties she owned, her business or businesses in which she was involved, as well as liquid assets available to her was lacking until disclosed at trial. In this regard we agree with the trial court that plaintiff prolonged the litigation, which necessitated additional expenditures by defendant for counsel fees.

"Bad faith" cannot be a short-cut to an award of counsel fees while ignoring other relevant factors in R. 5:3-5(c). It certainly should not be found in the usual case. Family law judges are quite familiar with the emotional nature of this litigation and the acrimony and distrust that may well follow. It is only after a clear finding that actions taken by one party have resulted in unnecessary expenditure of funds by the other that bad faith is a proper consideration in a counsel fee award and then only to the extent of the funds expended.

An award of counsel fees is appropriate if the court finds that proceedings were commenced that were frivolous or designed to harass, resulting in expenditure of additional funds. Kozak v. Kozak, 280 N.J. Super. 272, 277-79 (Ch. Div. 1994), certif. denied, 151 N.J. 73 (1997); Yueh v. Yueh, 329 N.J. Super. 447, 460 (App. Div. 2000); N.J.S.A. 2A:34-23. However, counsel fees may not be imposed simply as a punitive measure against a matrimonial litigator. Ridley v. Dennison, 298 N.J. Super. 373, 381 (App. Div. 1997); Chestone v. Chestone, 322 N.J. Super. 250, 256-57 (App. Div. 1999).

Therefore, there is adequate, substantial and credible evidence to support the finding of bad faith based on plaintiff's non-disclosure of pertinent financial information, entitling defendant to a partial award of counsel fees. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). However, we take note that the trial judge awarded the entire amount sought by defendant's counsel and co-counsel without analysis, simply basing the award on his finding of bad faith. We conclude that the award was improperly punitive and the extent of counsel fees awarded was so wide of the mark as to constitute a mistaken exercise of discretion. Accordingly, we reverse and remand for reconsideration of the counsel fee award.

Plaintiff argues that on remand the case should be assigned to a different judge because of the trial judge's findings as to her lack of credibility and bad faith. We have exercised this power sparingly, see, e.g., J.L. v. J.F., 317 N.J. Super. 418, 438 (App. Div.), certif. denied, 158 N.J. 685 (1999), and find that it is unnecessary in this case. The trial judge is an experienced and well-regarded judge of the Family Part, and we have every confidence that he can adjudge the matter fairly and properly on remand.

IV. DEFENDANT'S CROSS-APPEAL

Defendant contends that the judge erred in setting his child support award at $12,500 per month. There is no merit to his argument. See Isaacson v. Isaacson, 348 N.J. Super. 560, 579 (App. Div.), certif. denied, 174 N.J. 364 (2002). The judge found that defendant had not submitted sufficient evidence to support his claim that he is unable to pay the amount representing half of the children's expenses. There was no abuse of discretion. Raynor v. Raynor, 319 N.J. Super. 591, 605 (App. Div. 1999).

Affirmed in part. Reversed in part.

 

The parties had resolved the issues of custody, with plaintiff having sole legal and residential custody of the three children, including Sean.

Although the trial judge's opinion does not clearly state, the record discloses that defendant's lead attorney devoted time to the issue as well, and, therefore, it will be necessary to segregate that portion to eliminate it from the final award.

(continued)

(continued)

33

A-5986-02T5

August 11, 2006