MARCIA C. REI v. AUGUSTO D. REI

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0036-09T3

MARCIA C. REI,

Plaintiff-Respondent,

v.

AUGUSTO D. REI,

Defendant-Appellant.

__________________________________________

April 11, 2011

Argued October 12, 2010 Decided

Before Judges Rodr guez and LeWinn.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-2207-07.

Kevin W. Ku argued the cause for appellant (Lyons & Associates, attorneys; Mr. Ku, on the brief).

Respondent has not filed a brief.

PER CURIAM

Defendant Augusto D. Rei appeals from certain provisions of a judgment of divorce, entered after a trial. Specifically, he challenges the equitable distribution of a building located at Lexington Street and cash in bank accounts, and the award of counsel and expert fees to plaintiff Marcia C. Rei. She did not respond to the appeal. We affirm.

The parties were divorced on July 13, 2009, after fourteen years of marriage. No children were born of the marriage. Marcia met Augusto in 1993 or early 1994 when she began renting an apartment in a building he owned on Lexington Street in Newark. After a year, they began dating and married six months later. After completing some renovations, they moved into the first-floor apartment of the Lexington Street property where they lived throughout the marriage.

They purchased, in Marcia's name, an investment property on Mott Street in Newark. Marcia co-signed the purchase money mortgage.

The amount of income generated from the Mott Street property is disputed. Marcia claimed that some funds generated from rents on apartments in the Mott Street property were used to subsidize the Lexington Street property. Augusto denies that Marcia ever contributed any money to the maintenance of the Lexington Street property either personally or with her share of rental income from the Mott Street property. In any case, rents from both properties were deposited in the same joint account and expenses for both properties were also paid from that account.

The parties maintained two joint accounts during the marriage at Valley National Bank. These accounts had balances of $104,391 and $129,267.44, as of February 27, 2007. Augusto also maintained several accounts exclusively in his name with balances totaling $64,455.73, as of different dates in April 2007.

At the time the complaint for divorce was filed on April 9, 2007, Augusto was fifty-eight years old and Marcia was forty years old. Augusto made several significant withdrawals that severely depleted some of the joint accounts during the period just prior to and after Marcia filed the divorce complaint. At trial, Augusto testified that a $140,621.91 deposit into one of the joint accounts "was a business loan from his partner" through the New Alliance Developer, LLC (NAD). The NAD statement of assets and liabilities, however, indicated no loan to Augusto.

At the conclusion of the trial, the judge ordered that: (1) the joint bank accounts and Augusto's account be divided equally between the parties; (2) the Lexington Street property be awarded to Augusto; (3) the Mott Street property be awarded to Marcia; and (4) that Augusto pay $19,793 in attorney s and expert s fees to Marcia.

Augusto appeals, contending that "the trial court erred in its determination of the equitable distribution of the pre-marital Lexington Street property." Augusto argues that because he purchased the Lexington Street property prior to meeting and marrying Marcia, only the appreciation of the property should be deemed a marital asset subject to equitable distribution. We disagree.

"Where the issue on appeal concerns which assets are available for distribution or the valuation of those assets, it is apparent that the standard of review is whether the trial judge's findings are supported by adequate credible evidence in the record." Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-444 (App. Div. 1978) (citing Rothman v. Rothman, 65 N.J. 219, 233 (1974); Perkins v. Perkins, 159 N.J. Super. 243, 247 (App. Div. 1978)).

The general rule is that "all property, regardless of its source, in which a spouse acquires an interest during the marriage shall be eligible for distribution in the event of divorce." Painter v. Painter, 65 N.J. 196, 217 (1974). "[T]he party seeking exclusion of the asset must bear the burden of establishing such immunity [from equitable distribution] as to any particular asset." Pascale v. Pascale, 140 N.J. 583, 609 (1995) (alteration in original) (quoting Landwehr v. Landwehr, 111 N.J. 491, 504 (1988)) (internal quotation marks omitted).

The judge "enters upon a three-step proceeding" when "receiving and considering evidence designed to equip him to make an equitable distribution of marital assets." Rothman, supra, 65 N.J. at 232. "Assuming that some allocation is to be made, [the judge] must first decide what specific property of each spouse is eligible for distribution. Secondly, [the judge] must determine its value for purposes of such distribution. Thirdly, [the judge] must decide how such allocation can most equitably be made." Ibid. N.J.S.A. 2A:34-23.1 sets forth a nonexclusive list of fact-intensive criteria that must be considered in determining equitable distribution:

a. The duration of the marriage or civil union;

b. The age and physical and emotional health of the parties;

c. The income or property brought to the marriage or civil union by each party;

d. The standard of living established during the marriage or civil union;

e. Any written agreement made by the parties before or during the marriage or civil union concerning an arrangement of property distribution;

f. The economic circumstances of each party at the time the division of property becomes effective;

g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage or civil union;

h. The contribution by each party to the education, training or earning power of the other;

i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker;

j. The tax consequences of the proposed distribution to each party;

k. The present value of the property;

l. The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects;

m. The debts and liabilities of the parties;

n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union couple or children;

o. The extent to which a party deferred achieving their career goals; and

p. Any other factors which the court may deem relevant.

Here, Augusto purchased the Lexington Street property prior to meeting Marcia. Augusto contends that Marcia contributed nothing to the property during the marriage but concedes that Marcia is entitled to the difference between the value of the Lexington Street property when they were married and the value of the property when she filed for divorce. However, we disagree that the value in Marcia's interest is so limited.

When the value of an asset "is derived, in part or in whole, from the efforts of the non-owner, it is subject to distribution." Scavone v. Scavone, 230 N.J. Super. 482, 488 (Ch. Div. 1988). Moreover, a contribution to an increase in the value of an asset can consist of the work that a spouse does in the home that allows the other spouse to focus exclusively on directly increasing the value of the asset. Valentino v. Valentino, 309 N.J. Super. 334, 340 (App. Div. 1998).

At trial, the judge found that, Augusto admitted making improvements to the property during the marriage including the "replacement of bathrooms and updating kitchens but failed to produce discovery requests for improvements." Augusto also admitted that the mortgage for the property was paid from a joint account. The judge found that "[t]he parties were married for over twelve years at the time [Marcia] filed her complaint for divorce." The judge noted that N.J.S.A. 2A:34-23.1 provides for a "rebuttable presumption that each party made a substantial financial or non-financial contribution to the acquisition of income and property while married." He found no evidence that Augusto overcame this presumption.

Although the passive increase in the value of a house due to inflation and economic factors beyond the control of the parties is immune from distribution when the asset is owned by only one party, increased value derived from active improvement of the property is subject to distribution. Mol v. Mol, 147 N.J. Super. 5, 9 (App. Div. 1977). Here, the judge noted that improvements were made to the property during the marriage in deciding that the Lexington Street property is a marital asset to be distributed equitably between the parties.

Augusto's failure to provide documentation related to the improvements is properly held against him because, as noted above, he bears the burden of proving the exclusion of assets from distribution. We find no error in including the Lexington Street property among the assets to be distributed. As for the proportion that the judge distributed to each party, we find no error in the allocation of the assets.

First, we note that distribution according to equitable principles does not mean that a particular percentage must be awarded by the court. Rather, the court may determine the proportion that each party receives by applying the statutory factors. N.J.S.A. 2A:34-23.1

Second, the judge made a distribution with respect to many assets, not just the bank accounts and real property challenged on appeal. The following assets were also distributed: a three-bedroom apartment in Porto Segundo, Brazil; a 2 006 BMW; 2007 Mitsubishi; Continental Airlines stock; and Continental 401K plan. After a careful consideration of the evidence, the discovery failures by Augusto, and the judge's analysis, we conclude that there is no error in the overall distribution of all marital assets.

Augusto also contends that "the trial court erred in its determination as to the monies awarded to [Marcia] from monies that were deposited into [his] bank accounts and then repaid as loans." He argues that the court incorrectly calculated the amount of assets present in the parties' accounts because the source of a portion of the funds was a loan and that the valuation of the accounts was incorrect because they were evaluated at different times which did not properly reflect transfers between accounts.

This argument is without merit because the judge did not credit Augusto's testimony. In fact, the judge specifically found that Augusto's claim that the funds were loan proceeds was not credible. Judge Convery noted that Augusto gave contradictory testimony regarding the alleged loan; failed to produce loan documents or witnesses to attest to the loan; and produced an altered check in an effort to prove that the loan originated from his business partner. Credibility determinations are reserved for the finder of fact. Dolson v. Anastasia, 55 N.J. 2, 6 (1969). We will not disturb a trial judge's findings "as to the total value of assets eligible for distribution that are owned by each party" when they are supported by "adequate and credible evidence." Rothman, supra, 65 N.J. at 233. Our scope of review of a trial court's findings of fact and credibility is exceedingly narrow. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).

Augusto also argues that "the trial court used different valuation dates for the accounts for purposes of distribution, which resulted [in] some monies being counted two and three times because those monies had been transferred between accounts throughout the varying valuation dates." We reject this contention because Augusto fails to point to any evidence that shows where any error occurred.

Augusto also contends that "the trial court erred in its determination as to the award of counsel and expert fees to [Marcia]". He argues that: (a) the judge erred in awarding the full amount of counsel and expert fees to Marcia because he did not consider the factors pursuant to Rule 5:3-5(c); (b) the judge's analysis was unduly focused on Augusto being the "guilty party"; and (c) N.J.S.A. 2A:34-23 authorizes the award of counsel's fees in matrimonial cases, in the absence of financial inequality, only when the opposing party acts in bad faith. We reject this argument. The judge made specific findings in accordance with Rule 5:3-5(c).

"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) (citing R. 5:3-5(c)). In deciding whether to award counsel fees, and the amount of the award, the judge should consider the following factors:

(1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained: (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.

[R. 5:3-5(c)]

The judge incorporated his findings from the equitable distribution and alimony portions of his opinion in determining that Marcia was due the award of counsel fees. The judge specifically pointed out the inequality in financial positions of the parties and the bad faith of Augusto. The judge noted that "[i]t is clear [Augusto] acted in bad faith from the beginning of the litigation in failing to provide financial discovery and in raising or prolonging issues requiring more of [Marcia's] attorney's time and court proceedings." The judge further noted that "[Marcia] was required to seek discovery by motion, and enforcement motions were necessary to protect marital assets subject to equitable distribution." In addition, "[Augusto] clearly attempted to hide his income and to dissipate and hide marital property."

We conclude that the judge clearly considered the Rule 5:3-5(c) factors. The record also shows that during the pendency of the action, Augusto was a recalcitrant litigant. The judge had to impose sanctions for Augusto's failure to make discovery. He was held in contempt twice for failure to pay $30,000 as replenishment of funds taken by him. In September 2008, the judge ordered that Augusto's pleadings be dismissed with prejudice if he failed to produce discovery. Therefore, the judge's decision to award counsel and expert fees was not an abuse of discretion.

A