NICOLE BELLO-ENGLESBE v. GREGORY ENGLESBE

(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NOT FOR PUBLICATION WITHOUT THE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-1285-08T2

NICOLE BELLO-ENGLESBE,

Plaintiff-Respondent,

v.

GREGORY ENGLESBE,

Defendant-Appellant.

 

 

Argued April 30, 2009 - Decided

Before Judges Parrillo and Lihotz.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, Docket No. FM-03-605-06.

Michael Bonamassa argued the cause for appellant (Domers & Bonamassa, attorneys; Mr. Bonamassa, of counsel and on the brief).

Maryann J. Rabkin argued the cause for respondent (Rabkin Law Offices, P.C., attorneys; Ms. Rabkin, of counsel and on the brief).

PER CURIAM

Defendant Gregory Englesbe appeals from a post-judgment order of the Family Part denying his motion for reduction in child support payments without benefit of a plenary hearing. We affirm for the following reasons.

By way of background, defendant and plaintiff Nicole Bello-Englesbe were married on December 31, 2002, and separated three years later. They were divorced by final judgment (FJD) entered on August 17, 2006, which incorporated a property settlement agreement (PSA) that was negotiated through their respective counsel, resolved all issues between them, and further provided:

IT FURTHER APPEARING that the Plaintiff and Defendant had entered into a Property Settlement Agreement, that settles all collateral issues which would otherwise have been decided by this Court[,] freely and voluntarily, without any undue influence and each having had the benefit of independent legal representation . . .

One child was born of the marriage on June 23, 2004. The parties share joint legal custody of their daughter, whose primary residence is with plaintiff. Post-separation, defendant commenced paying plaintiff $11,000.00 monthly as pendente lite spousal and child support, which, according to the PSA, would terminate upon defendant making full and final payment of the equitable distribution sum "retroactive to July 1, 2006." In this regard, the PSA required defendant to pay plaintiff "the sum of 1.5 million dollars as and for her portion of equitable distribution as to all assets acquired by the parties, or either of them during marriage[,]" and plaintiff to sign over to defendant title to three parcels of real estate which they owned as "tenants by the entireties."

Concerning child support specifically, the PSA obligates defendant to pay child support in the amount of $5,250.00 per month. This amount includes "any and all daycare, after school or other essential/non-essential costs associated with the child[,]" however, defendant has no obligation to pay any of the child's private elementary, middle school or high school costs. The $5,250.00 monthly payment commenced upon defendant paying plaintiff the sum of $1,500,000.00 in equitable distribution. As of August 8, 2008, defendant was current in his child support obligation.

Significant for present purposes, the PSA does not establish the basis for the amount set for defendant's child support obligation. Nor does it mention the parties' respective incomes, except to note that "the incomes of the parties make this a non-guidelines case[,]" and "the parties recognize that their incomes exceed the maximum income level covered by child support guidelines."

Less than two years after entry of the FJD, defendant moved, on July 14, 2008, to reduce child support and to preclude implementation of the proposed cost of living adjustment (COLA) increase. In support of his application, defendant, who owns and operates a mortgage business - E. Mortgage Management, L.L.C. - cited the downturn in the economy and, specifically, the collapse of the sub-prime market, which supposedly accounted for 99% of his business. In particular, defendant reported that his business had a net profit of $320,684 in 2004 on $2,265,054 in gross receipts; $658,012.00 in 2005 on gross receipts of $6,664,102; and $409,155 in 2006 on gross receipts of $6,711,096. In 2007, however, defendant reported a 50% decline in gross receipts of $3,040,994, with a net loss of -$287,283. He projected a further decline in gross receipts in 2008, estimated to be only $1,410,125. In addition, defendant reported W-2 wages in 2004 of $193,472 from American Mortgage Express Corporation and $100,000 in 2005 from his mortgage business. He reported no wage income in 2006 or 2007 and total current monthly expenses of $24,972.

Plaintiff cross-moved to deny defendant's application and for other relief, including an order directing defendant to be solely responsible for all taxes owed as a result of his apparent significant under-reporting of his income and compelling him to keep plaintiff informed of all actions taken by the I.R.S. and/or himself concerning their jointly filed income tax returns for the year 2005 and earlier. In support of these requests, plaintiff submitted a letter from the Internal Revenue Service (IRS) indicating the parties' joint 2005 income tax return was under-reported.

Plaintiff's current case information statement (CIS) indicates a gross weekly income in the amount of $2,231.00 with year-to-date commissions in the amount of $22,215.87, compared to W-2 earnings of $89,422 in 2004 and $37,966 in 2005. Plaintiff also presently receives about $2,000 monthly from her investments, which she claims lost $70,000 in value to date. She reports total monthly expenses of $17,062.

In objecting to defendant's motion to reduce child support, plaintiff cites to, among other things, substantial assets owned by defendant, namely his primary residence in Haddonfield, valued at approximately $3.5 million, and a vacation home in Avalon, worth in excess of $1 million. Defendant, on the other hand, alleges the Haddonfield property has a value of only $2 million and that, in any event, is saddled with a $2.4 million mortgage, while he also owes $1.2 million on the Avalon home.

At the conclusion of argument, the Family Part judge denied defendant's motion to reduce child support, finding no prima facie proof of a substantial change in circumstances under Lepis v. Lepis, 83 N.J. 139, 148 (1980), because "defendant has failed to establish a basis [for] the support order which he seeks to modify," Rule 5:5-4(a), and because "[t]emporary unemployment or under-employment is not basis to modify support[,]" citing Bonanno v. Bonanno, 4 N.J. 268, 275 (1950) and Gertcher v. Gertcher, 262 N.J. Super. 176, 177 (Ch. Div. 1992).

On appeal, defendant raises the following issues:

I. THE TRIAL COURT ERRED IN FINDING THAT APPELLANT HAD NOT DEMONSTRATED A SUBSTANTIAL CHANGE OF CIRCUMSTANCES WARRANTING A REVIEW OF HIS SUPPORT OBLIGATIONS UNDER LEPIS V. LEPIS.

A. THE TRIAL COURT ERRED IN FINDING THAT APPELLANT'S DECREASED INCOME WAS TEMPORARY AND NOT A SUFFICIENT BASIS TO MODIFY SUPPORT.

B. THE TRIAL COURT ERRED IN FINDING THAT APPELLANT FAILED TO ESTABLISH THE BASIS OF THE SUPPORT ORDER IN WHICH HE SOUGHT TO MODIFY.

II. THE TRIAL COURT ERRED BY FAILING TO CONDUCT A PLENARY HEARING AS THERE WERE GENUINE DISPUTES AS TO MATERIAL ISSUES OF FACT.

(I)

The equitable authority of a court to modify support obligations is unrestricted. Lepis, supra, 83 N.J. at 149. However, "[a]n application to modify an agreement is an exception, not the rule[,]" as judges should contemplate that agreements entered into good faith "shall be performed in accordance with their terms." Glass v. Glass, 366 N.J. Super. 357, 379 (App. Div.), certif. denied, 180 N.J. 354 (2004); see Avery v. Avery, 209 N.J. Super. 155, 160 (App. Div. 1986) ("there is a strong public policy favoring stability of consensual arrangements for support in matrimonial matters") (citing Lepis, supra, 83 N.J. at 141). "The agreement between the parties--the contract upon dissolution--is entitled to significant consideration[,]" because agreements, by their very nature, carry with them a certain stability to be respected at the time of enforcement or in the event modification is at issue. Glass, supra, 366 N.J. Super. at 372; see Konzelman v. Konzelman, 158 N.J. 185, 193 (1999) (stating that voluntary agreements "enabl[e] parties to order their personal lives consistently with their post-marital responsibilities" and, therefore, are given "prominence and weight"); Conforti v. Guliadis, 128 N.J. 318, 323 (1992) (recognizing that "[m]arital property settlement agreements 'involve far more than economic factors' and must serve the strong public and statutory purpose of ensuring fairness and equity in the dissolution of marriages"); Petersen v. Petersen, 85 N.J. 638, 645 (1981) (reiterating the desirability of "[v]oluntary accommodations regarding matrimonial differences"); Ozolins v. Ozolins, 308 N.J. Super. 243, 249 (App. Div. 1998) (reversing the termination of alimony and finding that the judge erred when, among other things, "the judge did not factor in the principle that the amount of alimony here was set originally by the parties themselves," as such agreements ordinarily include trade-offs between the parties). Only where circumstances arise where enforcement of the agreement becomes inequitable should an exception be made. Glass, supra, 366 N.J. Super. at 379.

"[C]ourts have recognized 'changed circumstances' [may] warrant modification." Lepis, supra, 83 N.J. at 151. An increase in the cost of living, see Martindell v. Martindell, 21 N.J. 341, 353 (1956), and an increase or decrease in the supporting spouse's income, id at 355; Traudt v. Traudt, 116 N.J. Eq. 75 (E & A 1934); Acheson v. Acheson 24 N.J. Misc. 133 (Ch. 1946), fall into this rubric. Lepis, supra, 83 N.J. at 151; see, e.g., Walles v. Walles, 295 N.J. Super. 498 (App. Div. 1996) (upholding a downward modification of child support where competent evidence showed a decrease in the income of the supporting spouse). Such changed circumstances may require a modification of the agreement "based upon equitable principles." Avery, supra, 209 N.J. Super. at 160.

Whether a support obligation should be modified based upon a claim of changed circumstances rests within a Family Part judge's sound discretion. Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006) (citing Innes v. Innes, 117 N.J. 496, 504 (1990); Storey v. Storey, 373 N.J. Super. 464, 470 (App. Div. 2004); Steneken v. Steneken, 367 N.J. Super. 427, 434 (App. Div. 2004), aff'd as modified, 183 N.J. 290 (2005)). Accordingly, each and every motion to modify support obligations "rests upon its own particular footing and the appellate court must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters." Martindell, supra, 21 N.J. at 355; see also Rolnick v. Rolnick, 262 N.J. Super. 343, 359 (App. Div. 1993).

In order to modify a child support order, the court must consider whether the moving party has met his or her burden of making a prima facie showing of changed circumstances warranting relief. Lepis, supra, 83 N.J. at 151, 157; see Ibrahim v. Aziz, 402 N.J. Super. 205, 213 (App. Div. 2008) (defendant had the burden to show that an increase or decrease in his income warranted a downward modification in his child support obligation). "Only after the movant has made this prima facie showing should the respondent's ability to pay become a factor for the court to consider." Lepis, supra, 83 N.J. at 157.

As part of satisfying this burden, a movant must adhere to Rule 5:5-4(a) which provides that where,

a motion is brought for the modification of an order or judgment for alimony or child support, the pleading filed in support of the motion shall have appended to it a copy of the prior Case Information Statement or Statements filed before entry of the order or judgment sought to be modified and a copy of a current Case Information Statement.

In this vein, "[the] complete financial information of both parents [i]s necessary for any order of child support." Zazzo v. Zazzo, 245 N.J. Super. 124, 129 (App. Div. 1990), certif. denied, 126 N.J. 321 (1991). The financial information submitted to the court must be current and updated prior to any modification order. Gulya v. Gulya, 251 N.J. Super. 250, 253-54 (App. Div. 1991).

This mandate is not just window dressing. It is, on the contrary, a way for the trial judge to get a complete picture of the finances of the movants in a modification case. This is important because the movant bears the initial burden in such a case under Lepis v. Lepis, 83 N.J. 139 (1980).
 
[Gulya v. Gulya, 251 N.J. Super. 250, 253-54 (App. Div. 1991).]

Obviously, the parties must not only file a CIS, but this information must be considered by the court on its disposition of the motion. Terry v. Terry, 270 N.J. Super. 105, 121 (App. Div. 1994). In fact, the court considers all relevant information and makes a determination "in the best interests of the child." See Lepis, supra, 83 N.J. at 157 ("When the movant is seeking modification of child support, the guiding principle is the 'best interests of the children'"); Lissner v. Marburger, 394 N.J. Super. 393, 403 (Ch. Div. 2007) ("if a party agrees to support a child beyond that otherwise required, a court must favor the agreement, in the interests of the child"); Hallberg v. Hallberg, 113 N.J. Super. 205, 209 (App. Div. 1971); Clayton v. Muth, 144 N.J. Super. 491, 493 (Ch. Div. 1976). In addition, when the request for modification of the child support obligation is based on a claimed decrease in income, the court must consider whether the changed circumstance had substantially impaired the spouse's ability to support himself or herself. Foust v. Glaser, 340 N.J. Super. 312, 316 (App. Div. 2001) (citing Lepis, supra, 83 N.J. at 157).

Importantly, in this regard, "[d]etermining the impact and magnitude of 'changed circumstances' necessarily entails knowing the starting point before the change, that is, the point from which the change can be measured." Foust, supra, 340 N.J. Super. at 316. "Without accurately knowing the true point of beginning," New Jersey courts consider unreliable, by definition, a Lepis determination of changed circumstances. Id. at 316-17. Even still, a court may not "presuppose an arbitrary or false starting point." Ibid.

Also, whether modification is necessary rests on a determination relying "not only on numbers, but also on 'what, in light of all the facts presented to it, is equitable and fair, giving due weight to the strong public policy favoring stability of arrangements.'" Glass, supra, 366 N.J. Super. at 372 (quoting Smith v. Smith, 72 N.J. 350, 360 (1977)); see also Rolnick v. Rolnick, 262 N.J. Super. 343, 353 (App. Div. 1993). Such a fairness and equity determination involves consideration of such issues as the adequacy of the agreement at inception, the presumed understanding of the parties at that time, the reasonable expectation of the parties during the life of the agreement, and the manner in which the parties acted and relied on the agreement. Glass, 366 N.J. Super. at 373; see Savarese v. Corcoran, 311 N.J. Super. 240, 248-49 (Ch. Div. 1997) (finding the parties intended the PSA, which included an anti-Lepis clause, to be an integrated agreement, in light of what the parties "actually understood at the time and how they conducted themselves subsequently"), aff'd, 311 N.J. Super. 182 (App. Div. 1998); cf. Dilger v. Dilger, 242 N.J. Super. 380, 385 (Ch. Div. 1990) (stating that to determine whether defendant's retirement is a changed circumstance warranting modification of alimony, the court must first "examin[e] the intention of the parties as expressed in the agreement itself").

In evaluating the manner in which the parties acted, the court must determine whether the moving party has acted in "good faith" concerning his child support payment. Kuron v. Hamilton, 331 N.J. Super. 561, 571-72 (App. Div. 2000):

Facts concerning the motives, timing, and reasonableness of the payor's conduct should be evaluated with a view to determining whether he or she has acted in good faith in the matrimonial matter. Thus, in making its evaluation, the court should also focus on whether the payor acted with the intent to reduce his or her support obligations, i.e., in bad faith relative to the requirements of the judgment of divorce. Good faith in the context of changed circumstances is concerned less with the specific conduct that has led to the reduction in income and more with why the payor has adopted his or her course of action, and with the relationship of the payor's conduct and motives to the parties' positions in the matrimonial matter.

[Kuron, supra, 331 N.J. Super. at 571-72 (citations omitted).]

However, although an integral factor, the presence of good faith, standing alone, will not be dispositive of "changed circumstances." Id. at 572. "It is but one ingredient in determining whether the payor can be deemed to have acted reasonably with regard to his or her support responsibilities." Ibid.; see Dilger, supra, 242 N.J. Super. at 387-88 (rejecting out-of-state cases that relied solely on the issue of good faith in deciding whether voluntary early retirement resulted in changed circumstances). If the court finds that the payor has acted in good faith and advances rational bases for his actions, the court must then determine "whether the advantage to the payor [in modifying the support payment] substantially outweighs the disadvantage to the payee." Kuron, supra, 331 N.J. Super. at 572 (citing Deegan v. Deegan, 254 N.J. Super. 350, 358 (App. Div. 1992)). "Only if the court so finds in addition to other factors should the payor's conduct be viewed as having produced a legitimate change of circumstances entitling him

. . . to a modification of the support obligation." Kuron, supra, 331 N.J. Super. at 572.

Here, in denying defendant's motion outright, the court held that, without at least a prima facie demonstration of the adequacy of the agreement at inception, or the parties' understanding at the time, or their reasonable expectations on a going forward basis, or any means of comparative measurement, plaintiff has failed to establish a legitimate basis for modifying the original order, much less for a determination of "whether the advantage to the payor [in such modification] substantially outweighs the disadvantage to the payee" and, in particular, to the child, whose "best interests" predominate. As the judge, noting there is no point from which change can be measured, stated:

What I'm saying is you can't meet your burden of providing me the information as to what the basis is, so I could never determine whether it would be right to modify it upward or downward.

. . . .

And you have an obligation under the rules, and I cite to Rule 5:5-4(a), to provide me, on any modification application, what was the basis for the award so that the original award and that you're seeking to modify.

. . . .

It's too difficult for me to determine with regard to these parties' income whether or not there has been a I am finding that there has not been a substantial change in circumstance, but quite frankly, with the countervailing, you know increase in in things like gas and and food, as a result of that, it's also it's difficult for me to make a determination that it would be appropriate to be able to meet those extra costs based on what little information I have about about each parties' respective income at the time that they entered this agreement.

We agree. "[T]his evidentiary lacuna renders it impossible to know with reasonable accuracy the starting point for measuring an alleged change in circumstances." Foust, supra, 340 N.J. Super. at 316.

Significantly, at the time the parties entered into the PSA and set defendant's child support obligation, no findings were made as to the adequacy or sufficiency of the agreement. See Glass, supra, 366 N.J. Super. at 373. On the contrary, the parties agreed to waive substantial discovery as to defendant's income, assets and businesses, and, as the judge noted, no expert evaluation of his mortgage company was ever conducted. Indeed, according to plaintiff, she simply accepted defendant's representations as given, without evidentiary proof, when executing the PSA.

To be sure, the record contains financial information from 2004 through 2007 from which, defendant alleges, some comparison may be made. However, as noted by the motion judge, this information has never been proven reliable nor, for that matter, shown to have been relied upon by the parties as the basis for fixing defendant's child support obligation. In fact, the financial information presently provided, as pointed out by defendant's counsel himself, demonstrates a steady decline from which, given defendant's own admission that the economic downturn did not occur overnight, it can legitimately be inferred that continued record profits were not within the parties' reasonable expectations at the time the PSA was executed.

In sum, both parties, with benefit of counsel and freely and knowingly, entered into a comprehensive PSA which specified the terms and amount of defendant's child support obligation. By express consent of the parties, the court did not take evidence on, or adjudicate, the merits of the PSA, finding their voluntary and intelligent agreement fully binding on both of them. Less than two years later, when asked by defendant to alter the terms, the court, recognizing that the parties had "made a very particularized agreement[,]" declined the invitation. This holding accords with the New Jersey public policy favoring stability of marital agreements, Glass, supra, 366 N.J. Super. at 379; Avery, supra, 209 N.J. Super. at 160; necessarily considers the "presumed understanding" and intentions of the parties in making the agreement, Glass, supra, 366 N.J. Super. at 372, and properly determines a lack of prima facie proof of changed circumstances.

(II)

In light of this disposition, we need not resolve the propriety of the judge's other basis for rejecting defendant's motion, namely that he had not shown his decrease in income was other than temporary. We simply make the following comments.

"[S]upport, whether set by court order or agreement, [may] be modified upon a showing of substantial, non-temporary changes in ability to support oneself or pay support." Gordon v. Rozenwald, 380 N.J. Super. 55, 67-68 (App. Div. 2005) (emphasis added). "[T]emporary unemployment is not grounds for a modification of support." Gertcher, supra, 262 N.J. Super. at 177. Accordingly, New Jersey courts have "consistently rejected" requests for modification of child support obligations where such requests are "based on circumstances which are only temporary or expected but have not yet occurred." Lepis, supra, 83 N.J. at 151 (citing Bonanno, supra, 4 N.J. at 275); see Innes, supra, 117 N.J. at 504 ("[t]emporary circumstances are an insufficient basis for modification").

The rationale rests on the theory that, more significant than the party's actual employment, is the party's immediate past ability to earn a specific salary and to find employment which will yield an income sufficient to fulfill his obligations. Gertcher, supra, 262 N.J. Super. at 177; see Innes, supra, 117 N.J. at 503 ("Although the supporting spouse's current income is the primary source considered in setting the amount of the award, his or her property, capital assets, and capacity to earn the support awarded by diligent attention to his . . . business are also proper elements for consideration."). "One of the strongest indicators of a party's ability to earn is the salary which he . . . was recently earning, especially when a party has been unemployed for only a brief period of time." Gertcher, supra, 262 N.J. Super. at 177.

Another consideration, of course, is "the prompt and adequate support of children." Ibid. Therefore, where a child's parents are divorced, that child should not, alone, bear the full brunt of the divorcing parents' financial problems. Ibid. "[W]hen parties suffer temporary fiscal setbacks[,] the loss may not be shifted to the children." Ibid. This principle applies alongside the strong New Jersey public policy favoring stability of marital agreements. Glass, supra, 366 N.J. Super. at 372.

Our courts have made determinations as to whether the payor's unemployment or under-employment status merits modification of the payor's child support obligations in a variety of settings. See, e.g., Miller v. Miller, 160 N.J. 408 (1999); Bergen Co. Bd. of Servs. v. Steinhauer, 294 N.J. Super. 507, 510 (Ch. Div. 1996). For example, in a case where it was alleged that the obligator's sole proprietorship "had fallen on hard times," and therefore his income had dramatically decreased, a period of twenty months of a change in financial status was not considered long enough to qualify as other than "temporary." See Larbig v. Larbig, 384 N.J. Super. 17, 22-23 (App. Div. 2006) (holding that, in light of the timing of husband's motion to modify his child support filed twenty months after execution of the PSA, the trial court did not abuse its discretion by finding that appellant husband failed to show that his declining financial situation was anything other than temporary).

Granted, in New Jersey, "[t]here is . . . no brightline rule by which to measure when a changed circumstance has endured long enough to warrant a modification of a support obligation." Larbig, supra, 384 N.J. Super. at 23. Such matters turn on the discretionary determinations of Family Part judges, "based upon their experience as applied to all the relevant circumstances presented[.]" Ibid. We do not disturb such determinations absent finding of an abuse of discretion. Ibid.

Here, the record is not as fully developed as would have been preferred. Absent therefrom is any evidence of defendant's prospective earning capacity, ability to find alternate employment or comparable business opportunities, or access to other assets to fund his support obligation. Certainly, if his "immediate past ability to earn a specific salary and to find employment" is any measure of his future fiscal situation, defendant's prospects are not as bleak nor remote as he suggests. Equally certain, his own "expected losses" cannot alone provide the basis for reduction of his child support obligation. Lepis, supra, 83 N.J. at 151; Bonanno, supra, 4 N.J. at 275.

In any event, we need not decide whether the motion judge abused her discretion in determining defendant's "temporary" situation did not qualify him for a reduction in child support, because a sound basis for such a denial otherwise existed in the lack of prima facie proof of changed circumstances.

Affirmed.

Defendant disputed this amount, contending he currently owes the IRS only $150,000 in unpaid taxes, penalties and interest.

In addition, the court granted defendant's application for an order directing the Probation Department not to implement the proposed COLA increase; denied plaintiff's request to increase defendant's child support obligation; granted her request to hold defendant solely liable for any underreporting of joint income and to provide her with updates within a certain time limitation of any actions taken by the IRS and/or defendant in this regard; and denied her application for counsel fees.

(continued)

(continued)

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A-1285-08T2

June 5, 2009