SHASHI K. AGARWAL v. POONAM AGARWAL

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0581-06T30581-06T3

SHASHI K. AGARWAL,

Plaintiff-Appellant/

Cross-Respondent,

v.

POONAM AGARWAL,

Defendant-Respondent/

Cross-Appellant.

__________________________________

 

Argued telephonically May 12, 2009 - Decided

Before Judges Rodr guez, Payne and Newman.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-557-99.

Dale E. Console argued the cause for appellant/cross-respondent.

Malcolm Blum argued the cause for the respondent/cross-appellant.

PER CURIAM

Plaintiff Dr. Shashi K. Agarwal (husband) and Poonam Agarwal (wife) entered into an arranged marriage on January 18, 1981. Two children were born of the marriage: a son in 1989, and a daughter in 1992. Husband is a cardiologist who, despite problems involving his medical licensure, earned a large income over the years of the marriage and the parties acquired significant amounts of real and personal property.

On September 11, 1998, husband filed a complaint seeking a divorce. Discovery was hampered by poor recordkeeping and a lack of cooperation on the parties' parts. Each party changed counsel several times. The result was that the matter was not tried until 2004-2005, and an amended dual final judgment of divorce was not entered until September 15, 2006. Husband appeals and wife cross-appeals from the final judgment.

At issue on husband's appeal are whether the trial court erred: (1) in valuing husband's medical practice and in awarding wife one-half of that value in equitable distribution; (2) in determining that the "Richard Road" property was a marital asset that was available for equitable distribution; (3) in failing to consider almost $2,000,000 in federal and state income tax liabilities when making its equitable distribution determination; (4) in awarding wife one-half of funds allegedly held by husband in the Midland Bank; (5) in requiring husband to pay all of wife's counsel fees and almost all of her experts' fees; and (6) in imposing a restraint in the final judgment on husband's ability to transfer and dispose of his property following the divorce.

On the cross-appeal, wife argues that the trial court erred both in imputing annual income of $50,000 to her and in failing to address and equitably distribute two marital assets, husband's interest in Indus Investments, Inc. (Indus) and his ownership interest in a condominium unit in Las Vegas, Nevada.

We now affirm in part and reverse in part on both the direct and cross-appeals and remand to the trial judge for further proceedings.

We need not summarize the facts. The trial judge found husband unworthy of belief and his witnesses not credible. Needless to say, husband expended great effort into obfuscating his finances. He was able to do so by investing in other countries (the United Kingdom and India); with deceptive motive, having relatives and friends hold money for and return monies to him by subterfuge; and by not paying and underpaying federal and state income taxes, culminating in debt in excess of $2,000,000. These credibility determinations are well-grounded in the record and will not be disturbed by us. However, the credibility determinations do not furnish us with sufficient reasons to review the trial court rulings on the issues to be addressed which we now consider.

HUSBAND'S DIRECT APPEAL

I.

Husband first contends that the trial court erred in valuing his medical practice as of the trial date and in awarding wife one-half of that value in equitable distribution. At trial, husband's accounting expert, James A. DiGabriele, testified that husband's medical practice had a value of $666,960, as of December 31, 2004. DiGabriele's overall valuation amount was "comprised of $403,894 of Intangible Goodwill and Tangible Net Assets of $263,066." However, because husband failed to provide accurate and reliable financial information to DiGabriele, the trial court gave "very little weight" to DiGabriele's valuation.

In opposition, wife's accounting expert, Eliot D. Wexler, indicated that husband's medical practice had a value of approximately $2,500,000, as of September 30, 2004. Wexler's overall valuation amount was comprised of $1,817,794 of intangible goodwill and $728,414 of tangible assets. Significantly, the record does not indicate why Wexler and DiGabriele valued husband's medical practice as of September 30 and December 31, 2004, respectively. Nor does the record indicate why they did not value the practice as of the filing date of the divorce complaint: September 11, 1998.

In its oral decision, the trial court determined that "the assets in the marriage are to be equitably distributed among the parties on a 50/50 basis." Relying in part on Wexler's valuation, the trial court determined that husband's medical practice was valued at:

$1 million and that's based upon the tangible assets of $728,414 and the balance being goodwill. And the reason that the court is giving less value to the goodwill of the practice than Mr. Wexler did is that apparently after it came to light that Dr. Agarwal [husband] had received over 1.5 million [dollars] from Medicare up until September of 2004 that he's now under investigation by Medicare. They [Medicare] have stopped all payments to him and they're investigating his recordkeeping and practice, so it appears that source of income for his business has essentially dried up. But it seems like every time one source dries up for Dr. Agarwal he does -- is able to find another source and I'm sure that he will find another avenue to generate income. So I am valuing the practice at $1 million and each party is entitled to one-half of that.

The trial court did not expressly state that it was valuing husband's medical practice as of the date of trial or as of the date Wexler chose for valuation, September 30, 2004. However, by relying upon Wexler's valuation amount of $728,414 for the practice's tangible assets, the court was not valuing the practice as of the date more than six years earlier when the divorce complaint was filed. The trial court did not explain why it elected to value the practice as of a date other than the filing date for the divorce complaint.

On appeal, husband disputes the $1,000,000 valuation amount set by the trial court for his medical practice. Husband further asserts that the trial court erred both in awarding wife one-half of the value of the practice in equitable distribution and "in determining that the post-complaint value of Dr. Agarwal's practice was subject to equitable distribution."

In arriving at its decision to equally distribute the marital assets, the trial court set out and considered the numerous statutory factors set forth in N.J.S.A. 2A:34-23.1. The court relied heavily upon the "duration of the marriage" statutory factor, specifically noting that "this is a long-term marriage" of seventeen years. See N.J.S.A. 2A:34-23.1(a). The point is that the trial court placed on the record its basis for equitably distributing to wife one-half of the marital assets, including the medical practice.

Husband does not refer to any legal authority for his assertion that the court abused its discretion in making that percentage distribution. Rather, husband simply contends both that, "[a]s a general rule, a small business owned by one spouse is rarely divided equally" and that the "non-owning spouse is generally awarded a percentage in the range of one-third." Because the trial court expressly relied upon the statutory factors set out in N.J.S.A. 2A:34-23.1 in making its equitable distribution determination, that determination is insulated from challenge under the unsupported "general rule" that husband cites.

A "trial court has discretion in allocating marital assets to the parties in equitable distribution." La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001). When reviewing a trial court's distribution decision, this court "will affirm an equitable distribution as long as the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." Ibid.

The trial court's award of one-half of the value of husband's medical practice to wife is both reasonable and without legal or factual mistake, based upon the trial court's express discussion of and reliance upon the statutory equitable distribution factors. Accordingly, husband's contention concerning the distribution of one-half of the practice's value to wife is rejected.

Husband's second contention is that the trial court's valuation of his medical practice as of a date other than the filing date of the divorce complaint is unexplained and thus arguably incorrect.

For purposes of equitable distribution, marital assets may be divided into passive and active assets. Scavone v. Scavone, 230 N.J. Super. 482, 485-93 (Ch. Div. 1988), aff'd, 243 N.J. Super. 134 (App. Div. 1990). Passive assets are those assets "whose value fluctuations are based exclusively on market conditions," while active assets "involve contributions and efforts towards their growth and development which directly increase their value." Id. at 486-87.

Because the value of passive marital assets fluctuates independently of the efforts of the litigating spouses, their value may be determined as of the date of trial or distribution, based upon the rationale that each spouse should share in the fortuitous increase in asset value. Bednar v. Bednar, 193 N.J. Super. 330, 332-33 (App. Div. 1984). In contrast, where active assets are concerned, "[i]nterim accretions [in value] pending actual distribution due to the diligence and industry of a party in possession of an [active] asset, independent of identifiable market forces, should accrue to that party alone." Id. at 333. Thus, the value of an active asset for purposes of equitable distribution is usually determined as of the date the complaint for divorce is filed because the "act of filing the divorce complaint signifies the death of the marital relationship and simultaneously terminates the non-participatory spouse's proportionate share of the asset's heightened value." Scavone, supra, 230 N.J. Super. at 491.

It is undisputed that husband's medical practice is an active asset. The value of the practice was apparently determined as of September 30, 2004, which was more than six years after the divorce complaint was filed. The difficulty is that, while "[t]here is no absolutely iron-clad rule for determining the date of evaluation" of marital assets for purposes of equitable distribution, Bednar, supra, 193 N.J. Super. at 332, the trial court did not indicate why it varied from the usual date for valuing an active asset. Stated differently, the trial court did not state why it elected not to value the medical practice as of the filing date of the divorce complaint.

Wife suggests that the trial court chose the later valuation date because of husband's bad faith and non-cooperation in concealing his income and assets from the court. While husband acted badly in that regard, the fact is that those bad acts appear to have occurred in the course of litigation after the divorce complaint was filed. Thus, husband's later bad acts did not provide a clear basis for the court to determine the practice's value as of a date later than the complaint's filing date. Moreover, the court did not expressly indicate that husband's bad acts had influenced its choice of a valuation date.

Wife also suggests that the unexplained use of a later valuation date is excusable because husband "agreed to have his medical practice valued as of the date of trial." As proof of husband's purported agreement, wife points to the circumstance that husband's accounting expert, DiGabriele, valued the practice as of December 31, 2004, thereby indicating husband's acceptance of a later valuation date.

While logical, wife's assertion merely sheds light on another aspect of the problem infecting the trial court's choice of valuation dates. Like the trial court, DiGabriele and, for that matter, wife's expert Wexler and the court-appointed expert Rosenfarb Winters, LLC, did not explain why they valued husband's medical practice as of a date other than the filing date of the divorce complaint. The concern here is not whether husband may have arguably agreed to the later valuation date. Rather, the issue is whether the trial court had some basis for valuing an active asset as of a date later than the complaint's filing date. The trial court did not indicate that husband's purported agreement to a later valuation date provided the basis for its choice of such a valuation date.

In the family law sphere, "[i]n a complex financial case . . . it is particularly important that the judge make specific findings so that the parties and the appellate court may be informed of the rationale underlying his [or her] conclusion." Esposito v. Esposito, 158 N.J. Super. 285, 291 (App. Div. 1978). "Meaningful appellate review is inhibited unless the judge sets forth the reasons for his or her opinion. In the absence of reasons, we are left to conjecture as to what the judge may have had in mind." Salch v. Salch, 240 N.J. Super. 441, 443 (App. Div. 1990). Thus, in order to achieve a "fair resolution of a case," it is necessary for the trial court to articulate the reasons for its decision. Schwarz v. Schwarz, 328 N.J. Super. 275, 282 (App. Div. 2000).

As noted, the trial court did not explain why it elected to value husband's medical practice for equitable distribution purposes as of September 30, 2004, a date more than six years after the filing date of the divorce complaint. Absent some explanation and given that the practice was an active asset, it is uncertain whether the trial court abused its discretion in valuing the practice.

With regard to the valuation figure of $1,000,000 placed on the practice by the trial court, it used Wexler's $728,414 for the tangible assets and the balance represented goodwill. While we can appreciate "goodwill" has an ephemeral aspect to it, the number used by the trial court appears to have been picked out of the air to round out the practice value to the $1,000,000 figure. On remand, the trial court will have to address the valuation amount.

We reverse the final judgment insofar as the valuation and distribution of the medical practice is concerned and remand the matter for further consideration and clarification by the trial court.

II.

Husband next argues that the trial court erred both in determining that the "Richard Road" property was an equitably distributable marital asset and in fixing the value of that property at $750,000 for purposes of such distribution. This argument has partial merit.

Husband filed the divorce complaint on September 11, 1998. Less than two years later, on August 25, 2000, husband's mother, Raj Aggarwal, entered into a contract to purchase a single-family home located at 52 Richard Road in Edison, New Jersey, for $315,000. Closing took place on December 6, 2000, with husband representing his mother, who was a citizen and resident of India, as her "attorney in fact."

At closing, the "total cash disbursed [by husband's mother] was $318,356.95 for the purchase price and closing costs" for the Richard Road property. Payment of the purchase price and closing costs was made mostly with checks of varying amounts from various persons unrelated to husband's mother but who were apparently business associates of husband. Additionally, payment was made with numerous postal money orders totaling $25,650, none for amounts over $700. Evidently, husband's mother went to various post offices in the period immediately before closing and obtained these money orders.

At trial, husband denied that the monies used by his mother to purchase the Richard Road property were provided by him. In any event, husband "lives at the premises and is supposed to pay rent towards real estate taxes and other carrying costs in lieu of rent." Husband has not paid any of those rent-like expenses. Husband's mother died before she could offer any testimony at trial.

The trial court rejected husband's argument that the Richard Road property was not subject to equitable distribution because it was purchased by his mother at a time well after the divorce complaint was filed. Instead, the court found that the monies to purchase the property were "funneled" by husband to his friends who then "allegedly lent" the monies to husband's mother to fund the purchase. In so finding, the court viewed as very suspicious the circumstance of "how the parents on the day of or day before the closing actually went . . . [from] post office, to post office to get money orders for the purchase of the house."

The trial court closed by:

deeming that the house at 52 Richard Road, [in] Edison, New Jersey is in fact subject to equitable distribution having been purchased with funds from the marriage that were funneled by the plaintiff [husband] into this house. I understand that it was purchased for $350,000 [sic: $315,000]. It's been represented that it's appreciated in value to somewhere in the amount of 750,000 [dollars]. I find each . . . party is entitled to 50 percent of the house.

The trial court reasoned that husband's mother made a straw purchase of the Richard Road property for husband, using marital funds that were subject to equitable distribution. While the trial court did not perform a dollar-by-dollar tracing of the funds as they were transferred from husband to his friends or parents and ultimately applied to purchase the property at closing, the court did make clear that it did not believe husband's testimony concerning any financial matters, including his denial that the monies used to purchase the property were his.

Husband first contends that the trial court erred in determining that the Richard Road property was a marital asset that was available for equitable distribution. Husband relies on his assertion that the property was purchased by his mother after the divorce complaint was filed. Based on the evidence at trial, the trial court simply did not believe that he was not the source of the monies that his mother used to make the purchase.

A trial judge is vested with broad discretion concerning the equitable distribution of marital assets. Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985). This court will review such distributions to determine whether a trial court has abused its discretion and "will affirm an equitable distribution as long as the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." La Sala, supra, 335 N.J. Super. at 6.

Here, the evidence supported the trial court's finding that husband was the source of the home-purchase funds and that those funds were most likely marital assets. There was no evidence showing that husband's mother had sufficient personal funds to purchase the Richard Road property, and the persons who "loaned" monies to her were all associated with husband in his various financial deals. Moreover, the trial court did not believe anything that husband testified to at trial concerning any financial matters. In light of these factors, the trial court's determination that the Richard Road property was a distributable marital asset did not constitute an abuse of discretion.

Husband next argues that there was no evidence supporting the trial court's valuation of the Richard Road property at $750,000 at the time of trial. We agree.

In its oral decision, the trial court noted that "[i]t's been represented" that the Richard Road property had appreciated in value to $750,000. The problem is that the court did not indicate where this representation was made. The record does not include an appraisal by a real estate expert or a stipulation by the parties in that regard. While husband asserts that the $750,000 valuation was "apparently based solely on Mrs. Agarwal's [wife's] written summation," the record does not include that summation.

There is no substantial credible evidence supporting the trial court's valuation of the Richard Road property at $750,000 at the time of trial. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). We remand to the trial court so that it may make a fresh determination, based upon concrete evidence in the record, of the value of the Richard Road property for equitable distribution purposes.

Parenthetically, we observe that as part of husband's most recent bankruptcy filing, the bankruptcy court directed that the Richard Road property be sold. This circumstance suggests that husband acquired ownership of the property, presumably through his mother, following her death. Wife also asserts that the property was sold in December 2007 at a price of $420,000 to one of husband's business associates. It may be that these circumstances could be more closely explored on remand in connection with the valuation issue.

III.

Husband argues that the trial court erred by failing to consider $2,000,000 in federal and state income tax liabilities when making its equitable distribution determination.

At trial, husband testified that he and wife failed to file federal income tax returns for the years 1986 through 1991, and continued to underpay federal taxes from 1992 through 1998. Husband evidently continued to underpay his federal tax liability in 1999 and 2001, following the filing of the divorce complaint, and also failed to pay New Jersey income taxes for a period of time not set forth in the record.

As a result, by March 18, 2003, husband and wife owed $1,612,330.26 in unpaid federal income taxes, penalties, and interest, and about $355,326.60 in New Jersey income taxes, penalties, and costs. At trial in February 2005, husband testified that his federal tax liability was "$1.6 million" and "accumulating over 100,000 [dollars] a year," while his "current state tax liability" was "close to $450,000." According to husband, he is paying the federal tax authorities "$1,000 from my net income every two weeks," and paying the New Jersey tax authorities "40 percent of my gross income every two weeks."

The record indicates that, for some time, the federal tax authorities apparently imposed an "I.R.S. levy" on wife's financial accounts. According to wife, those levies terminated in 2004 when the federal tax authorities approved her application for "innocent spouse" status. The record does not include any information regarding wife's involvement with the New Jersey taxing authorities.

The trial court noted that, in 1992, husband "began to have tax problems with the IRS. He was audited by the IRS and it appeared that he had underpaid taxes owing well over a million and a half dollars to the IRS." This is the only direct reference made by the court to husband's federal tax liability. It is noteworthy that the court did not mention any New Jersey income tax liability and that it made no reference to wife's federal tax status as an innocent spouse.

In another section of its oral decision the trial court referred to property tax debt, indicating that:

[a]ny of these assets that the court has addressed or will be addressing and it [the trial court] determines that it's a marital asset subject to equitable distribution, if in fact there's any liability or debt owing -- ultimate debt owing on the asset, the court is finding that only the plaintiff [husband] is responsible for that liability because he essentially took control of these assets and let the debt accumulate.

To the extent that this comment by the trial court may be deemed also to encompass husband's federal and state tax liabilities, it appears that the trial court would recognize those liabilities as belonging to husband only and not to wife.

On appeal, husband contends that the trial court committed reversible error when it failed to consider his tax liabilities in making its equitable distribution determination.

"Generally speaking, in dividing marital assets the court must take into account the liabilities as well as the assets of the parties." Monte v. Monte, 212 N.J. Super. 557, 567 (App. Div. 1986). The problem is that husband's combined federal and state income tax liability is so large that it cannot be ignored as negligible and unimportant. The trial court was obliged to consider that tax liability as a factor or, at the very least, specifically address why it was not considering the liability as a factor, when it determined the parties' equitable distribution obligations.

The need for such consideration and comment is expressed in the relevant statute. Thus, the "debts and liabilities of the parties," N.J.S.A. 2A:34-23.1(m), is a factor that courts may consider when making an equitable distribution determination.

Because the trial court failed to even explicitly comment upon what appears to be a very weighty factor when making its equitable distribution determination, we reverse the provisions involving equitable distributions so that the trial court may initially address the issue of husband's sizable income tax liabilities.

IV.

Husband asserts that the trial court erred in equitably distributing to wife one-half of the funds allegedly held by husband in the Midland Bank, London, in the United Kingdom.

In its letter-report to the trial court dated July 29, 2003, the court appointed accounting expert, Rosenfarb Winters, noted that it had received copies of bank statements from the Midland Bank for two accounts maintained by husband. The statement dated July 9, 1993, indicated a balance in one account of 43,986.72 ($64,234), while the statement for the other account indicated a balance of 9,243.50 ($13,498). Additionally, a deposit slip dated August 17, 1994, from Citibank showed a deposit by husband of 40,000 ($58,412) into a Citibank account in India from a Midland Bank account.

These two bank statements from 1993 and the deposit slip from 1994 are the only tangible evidence showing the existence of these accounts. Rosenfarb Winters indicated in 2003 that it had "no other information on the current balance[s]" in those accounts. Husband's voluntary petition in the bankruptcy court, dated March 10, 1997, did not indicate that husband's Midland Bank accounts were in existence as of that date.

At trial, on direct examination, husband testified that he opened the Midland Bank account in the "late 80's" with a deposit of at least $50,000, when he and wife were considering purchasing property in London. Plans changed and husband testified that he transferred the monies that were in the accounts for a down payment on a New Jersey property and for payment toward a business venture in India. Husband indicated that the account was closed in "[p]robably [the] early 90's."

On cross-examination, husband identified the two statements from Midland Bank, verified their amounts, and indicated that the accounts were closed "[a]round '93, '94." On redirect examination, husband indicated that the Midland Bank accounts were closed around 1994, and he repeated that the monies in those accounts were transferred to India and to New Jersey around that time. Husband added that he and wife did not use the monies for the "purchase of a flat in London" because "we couldn't afford to" do so.

The trial court determined that "[t]here was established that the defendant [sic; plaintiff-husband] had an account in London in a Midland Bank and that the amount in that account was $97,000. The Court finds that that is a marital asset subject to distribution and each party is entitled to one-half of that" amount.

On appeal, husband contends that the trial court's equitable distribution of monies that were in the Midland Bank account is not supported by the evidence.

The evidence indicates that the disputed accounts were closed in 1994 and that some of the monies were transferred to New Jersey for the purchase of marital property, while the remaining monies were transferred to India for what was arguably a business venture that could have improved the marital finances. There is no evidence showing that the bank accounts still existed or that the monies in them could be traced when the divorce complaint was filed in September 1998. The record does not support the trial court's finding that the monies that were purportedly in the account on some undisclosed valuation date totaled $97,000.

The trial court has not made specific findings concerning the Midland Bank accounts that were based upon evidence in the record and has not clearly stated its rationale for making the distribution that it did. Esposito, supra, 158 N.J. Super. at 291. Rather, the trial court merely stated its conclusion and did not base that conclusion on any evidence or articulate the reasons for its decision. Schwarz, supra, 328 N.J. Super. at 282. Under these circumstances, we reverse the provision of the final judgment addressing the Midland Bank accounts and remand the matter to the trial court for reconsideration and clarification.

V.

Husband argues that the trial court erred in requiring him to pay all of wife's counsel fees and almost all of her experts' fees.

In its oral decision, the trial court addressed wife's request for counsel fees and expert expenses. The court began its analysis by stating that husband had not been "credible" at trial, had "obfuscate[d] the [discovery and trial] process," had failed to produce documents to both his own and wife's counsel, as well as to the court, had engaged in "fast and loose maneuvering," and had "caused a lot of problems for this Court," as well as for wife and wife's attorney. The trial court then warned that such conduct by husband was going to "impact on this Court's decision of attorney fees and expert fees."

The trial court continued by setting out some of the factors appearing in Rule 5:3-5(c) that a court should consider when determining whether to award a counsel fee. The court then indicated that the chief applicable factors in this case were the financial circumstances of the parties and the reasonableness and good faith of the parties. R. 5:3-5(c)(1) and (3).

Considering those factors, the trial court determined that husband was in a "financially superior position" compared to wife and that husband "throughout the course of this litigation failed to act in good faith" and, in fact, had "acted in bad faith." The court recited that husband had not been cooperative and that he had required wife to file numerous motions, "probably on a monthly basis," to compel him to comply with his court-ordered obligations. The court also noted that "there were numerous motions filed [by wife] with other judges prior to this Court for . . . similar relief."

The court reiterated that husband was in a financially superior position, that he had acted in bad faith, and that wife had incurred substantial counsel fees to compel husband's minimal cooperation in this litigation. Based upon those findings, the court required husband to pay all of wife's counsel fees, as well as the expert fees of accountants Wexler and Rosenfarb Winters. In determining that husband had to pay the fees of wife's prior counsel, the court noted that the certifications of counsel services had been provided by prior counsel to prior courts and that "judgments have been entered" concerning those prior counsel fees.

In the final judgment, the trial court ordered husband to pay the fees of three sets of wife's counsel: $51,247.75 to trial counsel Malcolm Blum, $126,178.74 to prior counsel Budd Larner, and $26,000 to prior counsel Elliott Gourvitz, as well as the charges set out by two accountants, $48,225 to Elliot Wexler and $40,000 to Rosenfarb Winters. The court indicated in the final judgment that it "made this determination because of the Plaintiff's bad faith and deliberate obfuscation of the process of this litigation."

Husband first contends that the trial court erred by relying too heavily upon his bad faith as a basis for making him responsible to pay all of wife's counsel fees and most of her experts' expenses. We disagree.

"The award of counsel fees and costs in a matrimonial action rests in the discretion of the trial court." Addesa v. Addesa, 392 N.J. Super. 58, 78 (App. Div. 2007). When making a counsel fee determination, it is within the discretion of the trial court both to rely heavily upon the circumstance that a party has not litigated in good faith and to impose a counsel-fee award for the "unnecessary litigation" for which that party is responsible. Id. at 78-79. This is what occurred here. The trial court did not abuse its discretion in making the counsel and expert fee award based chiefly upon husband's bad faith. Ibid.

Husband also contends that the trial court erred when it ordered that he pay wife's counsel fees and experts' expenses of almost $300,000, without first considering the "staggering" tax-related debts that he owes to the federal and state taxing authorities.

"[T]he financial circumstances of the parties" and the "ability of the parties to pay their own fees or to contribute to the fees of the other party" are factors that a trial court should consider when determining whether to award counsel fees. R. 5:3-5(c)(1) and (2); N.J.S.A. 2A:34-23.

The trial court should have addressed those tax liabilities and considered their impact on husband's ability to pay the trial court's award of counsel fees and experts' expenses. See R. 5:3-5(c)(2). The roughly $2,000,000 in federal and state tax liabilities imposed upon husband is simply too large a debt to ignore. Such liabilities must impact upon a party's ability to pay other obligations. The trial court's failure to consider or even address husband's tax liabilities in this context was error. We reverse the provision of the final judgment awarding counsel fees and expert expenses to wife and remand the matter so that the trial court may address that issue and make a new determination.

VI.

Husband's final argument is that the trial court erred in including a provision in the final judgment that restrained his ability to dispose of his property following the divorce.

On May 2, 2006, the trial court issued its comprehensive oral decision. At no point in that decision did the court discuss or consider the imposition of restraints on husband's ability to transfer his property following the divorce.

On June 2, 2006, the trial court entered its initial divorce judgment. Included in that judgment was a provision ordering that husband:

is hereby restrained from transferring, selling, encumbering by mortgage, liens, judgments, or otherwise, or in any other way disposing of any and all property or rights in real estate or personalty, as well as in cash, stocks, bonds, or equipment, in the United States, or India, or elsewhere, in which Plaintiff [husband] is the owner, or in which he may have a beneficial interest, or in which he may have a legal interest, or a possessory interest, or in which his medical practice or medical corporation may have an interest.

Husband moved to amend the final judgment by "[d]eleting the paragraph regarding the restraints upon" him. The trial court rejected husband's amendment without comment on the record, crossing out the requested relief on the submitted order. On September 15, 2006, the court entered an amended dual final judgment of divorce that included a restraint provision identical to the one in the initial divorce judgment.

Husband contends that the disputed restraint provision is an "inappropriate and overreaching requirement" that "must be vacated as this was not part of the trial judge's decision." By refusing husband's request to delete the restraint provision from the final judgment, the court effectively made that provision part of its overall decision.

The trial court's inclusion of the restraint provision in the final judgment was not addressed or explained on the record. The court provided no reasons for imposing the restraints and did not discuss whether a less all encompassing restraint provision could have been tailored to achieve whatever goal the court sought to achieve.

The trial court's failure to articulate its reasons for imposing the restraints hampers effective consideration of this issue on appeal. Schwarz, supra, 328 N.J. Super. at 282. We reverse and remand so that the trial court may address the restraint provisions anew and provide its reasoning if it elects to reimpose the same or similar restraints.

WIFE'S CROSS-APPEAL

VII.

Wife challenges the trial court's imputation of an annual income of $50,000 to her. Wife first contends that the trial court erred in imputing any income at all to her. Her second contention disputes the amount of annual income that the trial court indicated she was capable of earning.

At the time of trial, wife was fifty years old and was the chief custodial parent of the parties' two children: a sixteen-year-old boy and a twelve-year-old girl. Wife had graduated from high school in India and had attended college there, but dropped out toward the end of her freshman year. She later emigrated to the United States and married husband.

During the marriage, in 1993 or 1994, wife attended "electrolysis school," and graduated but failed to pass the state examination for that trade. Nevertheless, wife obtained a job in that field, working for three years until 2000 and earning about $5,000 annually.

In 1994, wife also attended and completed a two month program in manicuring at a cosmetology school, but apparently did not pass the state licensing examination. She testified that she never worked in that field because she "never enjoyed" such work.

During the marriage, wife also worked on a part-time basis as a combination receptionist and secretary in husband's medical practice. She also helped manage the parties' real estate holdings, dealing with tenants and vendors. For a short period of time, she was involved in a business owned by the parties that sold items made of brass. Purportedly, the business was a way to occupy the time of husband's father who, along with his wife, lived with the parties for almost two-thirds of the year although they were still citizens and residents of India. The business made no money and closed after a year. Wife's earnings, if any, from those endeavors are not revealed in the record.

Two "Employability Evaluation" reports concerning wife were submitted to the trial court. The first, prepared on her behalf, concluded both that wife's job prospects were limited because of her lack of education, training, and experience, and that she could be employed in entry-level positions as a receptionist, bank teller, or retail salesperson with median annual incomes in the $20,000 range. The report also indicated that, with additional education in a two year, full-time secretarial science program, wife could obtain more lucrative employment.

The second employability report, prepared on husband's behalf, concluded that, if wife obtained her manicuring license after further education, she would be able to earn $55,000 annually as a manicurist, provided that she also worked a second job as an electrologist. Alternatively, the report indicated that, with further education in the secretarial field, wife could earn $55,000 annually, also provided that she worked a second job as an electrologist. It should be noted that this report indicates that wife is a college graduate. That statement is incorrect.

In its oral decision, the trial court set out wife's educational background and limited work experience. In making its equitable distribution determination, the court noted that wife "isn't working, although the Court has ordered her on many occasions to get a job and really it appears that [she] is surviving upon pendente lite support that her plaintiff [husband] is obligated to pay as well as support from her two brothers."

The court continued by further noting that, "if she put her efforts to it, [wife] could make a living, obviously not as significant as the plaintiff [husband], however, she too is a very talented woman in the way she's assisted her counsel in preparing this case and she could use those skills."

Addressing child support, the trial court referred to the two employability reports that had arrived at differing conclusions regarding wife's capacity to earn income. The court then opined that:

I re-read both of these reports and also I've taken into consideration the fact that Mrs. Agarwal [wife] -- and I understand that she was perhaps raised to be a stay at home mother and homemaker, however, sometimes circumstances in life require changes in what our expectations were or lifestyles and in light of the fact that these parties are going to be divorced and supporting two households, she is in fact going to have to supplement her income with her own earnings. In fact she has been directed [by the court] a number of times to do that but she's never done that.

So in light of the fact that she's really not step -- stepped up to the plate to start in any way to earn meaningful income or find a real job, I've taken all of that into consideration and the court is going to impute [annual] income to her in the amount of $50,000. Her children are older, high school, middle school, she has a lot of free time. The court finds given her background and skills [that] she in fact could easily earn 50,000 [dollars] a year and that's [the amount] it will . . . impute to her.

Addressing alimony, the trial court discussed wife's ability to earn income, as well as her extended absence from the job market, noting that:

because she really has not been in the job market ever, although she did go to school to obtain some technical skills, especially in electrolysis, does have the capacity to earn some money. It will never rise to the level of what Dr. Agarwal [husband] will be able to []earn, but she does have the ability to earn money.

. . . [A]s I've noted that Mrs. Agarwal [wife] never has been in the job market other than on a part time basis, before her marriage [she] was a stay at home person basically at that point delegated with the role of taking care of her parents. When [she] got married with Dr. Agarwal, she took care of the household and once the children were born they became her primary responsibility.

It appears that the time and expense necessary for her to get the training she would need to go back -- [to work in] electrolysis is not that costly or time consuming.

In the final judgment, the trial court provided that it "imputes an annual income to the Defendant [wife] of $50,000."

Wife contends that the trial court erred in imputing any income to her because the court did not make a necessary preliminary finding that she was "voluntarily unemployed or underemployed." See Dorfman v. Dorfman, 315 N.J. Super. 511, 516 (App. Div. 1998) ("The flaw in imputing an annual gross income of $100,000 to defendant is the lack of a finding by the motion judge that defendant was, without just cause, voluntarily underemployed. Such a finding is requisite, before considering imputation of income.").

We are satisfied that the trial judge found voluntary unemployment on wife's part, although not expressly stated on the record. The court noted that wife was not working, although ordered to do so by the court "on many occasions," and that, despite being so ordered by the court, wife had not "stepped up to the plate to start in any way to earn a meaningful income or find a real job" in the seven years since the divorce complaint was filed.

These statements by the trial court constitute a finding, albeit an implicit one, that wife has been voluntarily unemployed without good reason, despite direction by the court to seek employment. There was no impediment to the trial court's authority to impute income to wife.

Wife argues that the imputation of $50,000 in annual income to her is "totally unjustified" because she "never earned anywhere near that amount, at anytime, before, or after, the filing of the complaint for divorce." We agree.

Both the trial court and the employability experts agree that wife requires more education and training before she will be able to obtain employment in the $50,000 annual income range as a secretary, electrologist, or manicurist. The trial court's imputation of $50,000 in annual income to wife now, however, presumes that she is presently able to obtain employment in those fields and at that wage level.

The imputation of income to a party in a matrimonial case is a matter within the trial court's discretion, and any such imputation of income will not be disturbed absent an abuse of that discretion. Robertson v. Robertson, 381 N.J. Super. 199, 206 (App. Div. 2005). While the trial court's imputation of $50,000 in annual income to wife was meant to spur her on to seek employment, it appears that the court is requiring wife to do what even the court recognizes she simply is not capable of doing absent a defined period of time for her to obtain further education and training. The trial court has mistakenly exercised its discretion by imputing too much annual income to wife at the present time.

We reverse the provision of the final judgment that imputes $50,000 in annual income to wife and remand the matter so that the trial court may consider anew the amount of income that it should impute to her.

VIII.

Wife's remaining argument on cross-appeal is that the trial court erred both in not addressing two marital assets in its equitable distribution determination and in failing to award her one-half of the value of those assets. Husband concedes that these were marital assets. The two assets in question are husband's interest in a business venture called Indus Investments, Inc. ("Indus"), and his ownership interest in a condominium unit located at 904 Boulder Spring Road, Las Vegas, Nevada.

At trial, husband testified that Indus consisted of a group of physicians who invested in developable land in Barnegat, New Jersey. Husband testified that he owned a fifteen percent interest in the venture, which he purchased with marital funds during the marriage. Indus was "dissolved" in 2003 when it sold the land it owned, and husband testified that he received gross proceeds of $100,000 and net proceeds of between $67,000 and $70,000 as his distributed share following dissolution. Husband did not give wife any part of the monies he received from Indus. Instead, husband testified that he used the funds to pay estimated federal and state taxes and "to pay for the children's tuition [for] that year."

Concerning the condominium in Las Vegas, husband testified that he purchased the unit with marital funds during the marriage and that it was sold by him in 2001. A listing agreement in the record shows that the property was listed for sale at $69,900 in 2001. Husband testified that, upon sale of the condominium, he received approximately $50,000, after paying all expenses. Husband did not give any of this money to wife.

The Indus dissolution proceeds and the condominium sale proceeds involved properties that were acquired during the marriage, which meant that the proceeds should have been subject to equitable distribution. There is, however, a question about the value of the assets. Wife asserts that husband's share of Indus amounted to $100,000, while husband asserts that the net proceeds were only $67,000. The record does not indicate the exact amount that husband received from his sale of the condominium.

The record is incomplete concerning the values of the two marital assets for purposes of equitable distribution. We therefore remand the matter to the trial court for a determination of the valuation issues.

CONCLUSION

We affirm the provisions of the final judgment awarding fifty percent of equitable distribution to wife, but reverse the award of equitable distribution and the award of counsel and expert fees to wife and remand those matters to the trial court so that it may consider the effect of husband's sizable federal and state tax liabilities on those issues.

We reverse the provision of the final judgment concerning the valuation and distribution of husband's medical practice, the valuation of the Richard Road property, and the equitable distribution of the Midland Bank account and remand those matters to the trial court for further consideration.

We reverse the provision of the final judgment imposing restraints on husband's ability to transfer his property and remand the matter to the trial court for an initial consideration of this issue on the record.

On the cross-appeal, we affirm the determination that income may be imputed to wife, but reverse the provision of the final judgment that imputed annual income of $50,000 to wife and remand the matter for reconsideration.

We remand and direct the trial court to determine the value, for equitable distribution purposes, of the Indus dissolution proceeds and of the Las Vegas condominium sale proceeds. We leave it to the trial court's discretion to determine what issues may require additional or supplemental testimony and/or documents.

Affirmed in part; reversed and remanded in part to Judge Sivilli for further consideration consistent with this opinion. The remand proceedings, including the trial court's written decision, shall be completed within 120 days of the date of this opinion. Jurisdiction is retained.

 

A prior court-appointed accounting expert (Rosenfarb Winters, LLC) had apparently attempted to determine the "value of marital assets as of December 31, 1998." Without explaining why it did not or could not value the medical practice as of that date, the expert eventually determined that, as of the end of 2002, husband's practice had no value. The trial judge implicitly rejected that valuation, finding instead that the Rosenfarb-Winters' report, dated March 19, 2004, was "not useful" in this case because it was "lacking in detail and information."

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A-0581-06T3

June 15, 2009