MARK D. NORYCH v. MERYL S. NORYCH

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2633-07T12633-07T1

MARK D. NORYCH,

Plaintiff-Appellant,

v.

MERYL S. NORYCH,

Defendant-Respondent.

________________________________________________________________

 

Submitted March 18, 2009 - Decided

Before Judges Fisher and Baxter.

On appeal from the Superior Court of New Jersey, Chancery Division - Family Part, Monmouth County, Docket No. FM-13-632-92.

Jerrold A. Tenzer, attorney for appellant.

Gourvitz & Gourvitz, attorneys for respondent (Ari H. Gourvitz, on the brief).

PER CURIAM

In this post-judgment matrimonial matter, we review a December 21, 2007 order that denied the motion of plaintiff, Mark Norych, to reduce or eliminate his $1,100 per month permanent alimony obligation. The motion judge concluded that the potential liabilities and debts of plaintiff's law firm were contingent liabilities that had not yet ripened into a change of circumstances. We affirm.

I.

At the time of the parties' September 18, 1992 divorce, plaintiff was ordered to pay defendant, Meryl S. Norych, $1,000 per month in permanent alimony. At the time, plaintiff's gross income from his law practice was approximately $70,000 per year, whereas, defendant, a teacher, was earning $25,000 per year. In 2002, his alimony obligation was increased to $1,100 per month. Plaintiff apparently paid his alimony obligation faithfully until the end of 2006.

According to the certification plaintiff filed in support of the October 2007 motion that is the subject of this appeal, "two events took place in the latter half of 2006 that caused [his] entire business, financial . . . asset[s], holdings and income to come to an abrupt end." The first such event occurred on August 31, 2006, when Mitchell Tallis, plaintiff's law partner of twenty-two years, took his own life. After Tallis's death, plaintiff learned that for a long period of time, Tallis had been "stealing client trust funds, embezzling and wrongfully dissipating business assets and forging [plaintiff's] name on various lease and contractual obligations which resulted in the complete depletion and loss of the trust and business account funds" of their New York law firm, Norych & Tallis.

Plaintiff alleged that Tallis's conduct had other ramifications. Shortly after Tallis's death, plaintiff received a demand letter from the Bank of America, where the law firm of Norych & Tallis maintained its accounts, asserting that the firm's trust account was overdrawn and demanding that plaintiff pay $149,000 to satisfy that overdraft. To complicate matters further, plaintiff claims the firm's professional liability carriers have disclaimed coverage and plaintiff has instituted declaratory judgment actions to determine his rights. He alleges that he has also been named as a defendant in a lawsuit by a former client seeking $450,000 for funds Tallis allegedly stole from him. Plaintiff asserts that Tallis's conduct has "left [him] with potentially millions of dollars in personal liability."

Although Tallis was responsible for operating the New York office, plaintiff operated the Florida office of Norych & Tallis, and had been doing so ever since 1997, when he relocated to Florida. Although plaintiff has never been admitted to the Florida Bar, Florida apparently permits out-of-state lawyers to maintain a law practice there as long as they are associated with a licensed Florida attorney.

In October 2006, shortly after plaintiff learned of Tallis's misconduct at the New York office, plaintiff undertook an audit of the financial records of the Florida firm. He alleges that the results of that audit constitute the second of the two "devastating and shattering occurrences" that formed the basis of his October 18, 2007 motion. In particular, plaintiff claimed that the head bookkeeper of the Florida office had, over a period of time, transferred trust funds into the firm's business accounts and used these client funds to pay the firm's operating expenses. By so doing, the bookkeeper was able to conceal from plaintiff and his Florida law partner the considerable losses that the firm had been experiencing.

Plaintiff maintains that "[a]s a result of these two devastating, shocking occurrences, the Florida law firm of Norych & Tallis, LLP, has lost most of its client base and is trying to keep the practice alive," and that "[n]o law firm will hire [him] with all these matters and claims in existence and with resolution a long way off . . . ." As of the time plaintiff filed his motion in October 2007, his licenses to practice law in New York and New Jersey remained intact. Although he asserted that "no law firm will hire [him]," plaintiff has made no effort to find work.

Plaintiff argued before the Family Part that prior to Tallis's suicide and the unraveling of the Florida firm, his income for the preceding three years had risen to $300,000 per year. The events in question caused his net taxable income for 2006 to drop to $132,420. He submitted a certification from the managing partner of the Florida office, Jacob Linhart, who certified that "to the best of [his] knowledge," plaintiff had taken no draw from the Florida office since October 2006, and that the firm "has been operating at a loss or at break-even." Plaintiff asserted that to maintain his living expenses and keep the Florida firm afloat, he was forced to borrow $250,000 from his widowed mother and other family members because no bank or other financial institution would extend him credit. He presented promissory notes as evidence of those two loans. He also maintains that he has been forced to borrow against his life insurance policy and 401K plan. He submitted no documents to verify these latter borrowings.

Plaintiff concedes that his current wife, Stephanie Norych, has worked for him for more than twenty years as a legal secretary, paralegal and office administrator. She presently earns $75,000 per year from the Florida office of Norych & Tallis.

Plaintiff argued before the Family Part that he has "a six-figure negative net worth, not counting $4,500,000 of contingent liabilities" due to the conduct of his deceased former New York law partner. He submitted no certified financial statements from an accountant to support that claim.

He also argued before the Family Part that the significant increase in defendant's income was a second changed circumstance. He pointed to his ex-wife's present earnings of $70,000 per year as a public school teacher which, when combined with her income from private tutoring, results in a gross income of $85,000 per year, exclusive of the $13,200 in alimony that he is obliged to pay. He asserts that defendant no longer has a need for alimony, and has been able to maintain an extremely comfortable lifestyle based upon her own earnings.

At the December 21, 2007 motion hearing, the judge held that plaintiff had not demonstrated a change of circumstances. The judge reasoned:

[Plaintiff] seek[s] a modification of his alimony based on alleged changed circumstances because of his decrease in income arising out of several unfortunate situations, embezzlement by a partner in the New York office, [although] I don't know whether anything has been actually finalized with it, improper crediting of trust account funds by the bookkeeper in the Florida office, all of which have now made him the subject of multiple lawsuits, disputes with his insurance carrier, possible problems with future clients, although at the present time he's trying to hold the firm together in Florida.

. . . .

Because of his present situation, he indicates he's basically making no money from the firm . . . .

. . . .

[Plaintiff] argues . . . that there are changed circumstances that should call for either a total wipe-out of the alimony or a reduction.

I'm not satisfied, even despite his difficulties, that there is a sufficient change [of] circumstances, to impact the alimony . . . . [H]is difficulties are real but his liabilities at this point are still substantially contingent and I don't find that this is an appropriate basis upon which to terminate her minimal alimony that she needs for her expenses, even with the increased sum that she's now making. . . .

[Plaintiff argues] that . . . the items in . . . [his] CIS, they're not being paid, but he shows that his [present] expenses are over $200,000, and he's relying basically, solely on his wife's salary, about $70,000. It doesn't add up.

On appeal, plaintiff argues that the trial court's denial of his motion to reduce or eliminate alimony was flawed for two reasons: the judge misapplied Lepis v. Lepis, 83 N.J. 139 (1980), and made the "unfounded" assumption that plaintiff has hidden assets.

II.

"The party seeking modification has the burden of showing such 'changed circumstances' as would warrant relief from the support or maintenance provisions involved." Lepis, supra, 83 N.J. at 157. "When the movant is seeking modification of an alimony award, that party must demonstrate that changed circumstances have substantially impaired the ability to support himself or herself." Ibid. Moreover, a request for downward modification of alimony based on circumstances "which are expected but have not yet occurred" should be rejected. Id. at 151.

On appeal, we review a trial judge's denial of a motion to terminate alimony for an abuse of discretion. Innes v. Innes, 117 N.J. 496, 504 (1990). A trial court has broad discretion to determine whether circumstances warrant modification or termination of an alimony award. Ibid. The trial court's determination of whether the movant has demonstrated changed circumstances is entitled to "substantial deference" and should not be disturbed unless the reviewing court is convinced the findings are "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Walles v. Walles, 295 N.J. Super. 498, 513 (App. Div. 1996) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974)). Therefore, we will not overturn a trial judge's determination absent an abuse of discretion. Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006).

After an alimony award is made, the Family Part retains the power to revise alimony awards, modifying them as changing circumstances require. Innes, supra, 117 N.J. at 503. One circumstance that warrants modification of an alimony order is an increase or decrease in the supporting spouse's income. Id. at 504. In such case, the party moving to terminate or modify alimony "bears the burden of making a prima facie showing of changed circumstances." Miller v. Miller, 160 N.J. 408, 420 (1999). The moving party must also demonstrate that the circumstances requiring the modification are not likely to change in the near future and are not merely temporary. Innes, supra, 117 N.J. at 504.

With these principles in mind, we turn to a review of Judge Iadanza's decision. At first blush, plaintiff paints a bleak picture of a collapsed law firm, angry creditors and looming financial liabilities. However, a closer look--focusing on what plaintiff failed to submit--demonstrates that Judge Iadanza correctly denied plaintiff's motion. As we have observed, plaintiff's moving papers included none of the following: the independent audit that presumably showed the diversion of client trust funds from the Florida office; the demand from the Bank of America that plaintiff pay $149,000 to satisfy Tallis's alleged overdraft; a copy of the summons and complaint in which a former client allegedly seeks to recover from plaintiff $450,000 that Tallis allegedly stole from him; or a certified financial statement supporting plaintiff's claim that he has a "six-figure negative net worth, not counting $4,500,000 of contingent liabilities." Equally significant, despite the passage of more than a year between Tallis's suicide and the filing of plaintiffs' motion to eliminate his alimony obligation, plaintiff makes no claim that a single creditor has yet obtained a judgment against him. Moreover, although we need not decide this issue, we recognize that courts in New York might ultimately conclude that plaintiff has no liability for Tallis's misdeeds because plaintiff had been practicing in Florida ever since 1997 and apparently had no involvement in the day-to-day operation of the New York office. Also, if, as plaintiff maintains, Tallis forged plaintiff's name on leases and contractual obligations, plaintiff may well be able to avoid any responsibility for payment. Again, we need not resolve these questions. We simply point them out as further support for Judge Iadanza's conclusion that any liabilities are merely contingent at this time. In this case, these lingering issues are of the utmost importance because unless contingent liabilities ripen into judgments, they do not constitute changed circumstances. Lepis, supra, 83 N.J. at 151. Thus, in light of the contingent nature of plaintiff's claimed liabilities, and plaintiff's failure to support many of these claimed liabilities with documentary proof, Judge Iadanza correctly rejected plaintiff's claim of changed circumstances.

The judge's denial of plaintiff's motion to terminate alimony was correct for a second reason. If, as plaintiff claims, he has not taken a draw since October 2006, he is not entitled to sit idly by, make no effort to replace the lost income, and expect that a judge will relieve him of his alimony obligation. Donnelly v. Donnelly, 405 N.J. Super. 117, 130 n.5 (App. Div. 2009). "[I]t is not enough that an obligor demonstrate a reduction in income; the obligor must also demonstrate how he or she has attempted to improve the diminishing circumstances." Ibid. When the obligor makes no effort to replace lost income, he has "failed to meet the burden of establishing that he ha[s] undergone changed circumstances within the meaning of Lepis. . . ." Aronson v. Aronson, 245 N.J. Super. 354, 361 (App. Div. 1991). Here, the record is devoid of any evidence that plaintiff made the slightest effort to address the alleged decline in his income. Instead, he merely asserts, with no evidence to support such claim, that no law firm will hire him. Having failed to shoulder the burden Donnelly and Aronson impose, defendant's claim of changed circumstances must fail. Ibid.

Affirmed.

 

Plaintiff submitted letters from one malpractice insurance carrier, American Guarantee and Liability Insurance Company, refusing to indemnify Norych & Tallis, due to alleged misrepresentations made in the application for coverage. Another carrier, Zurich, has not disclaimed coverage.

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A-2633-07T1

April 16, 2009