BILLINGS WHEELER, IV v. ANNA WHEELER

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

BILLINGS WHEELER, IV,

Plaintiff-Respondent,

v.

ANNA WHEELER,

Defendant-Appellant.

_____________________________________________

July 24, 2013

 

Submitted May 13, 2013 - Decided

 

Before Judges Ashrafi and Guadagno.

 

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Union County, Docket No. FM-20-882-05.

 

Judith L. Rosenthal, attorney for appellant.

 

Franzblau Dratch, attorneys for respondent (Patrick T. Collins, on the brief).

PER CURIAM

Defendant, Anna Wheeler, appeals from portions of the August 26, 2011 order of the Family Part denying her motion to modify alimony and child support, for reimbursement of back taxes and penalties from the 2003 and 2004 tax years, and for counsel fees. We affirm.

 

I.

The parties were married for twenty-seven years. They did not pay federal income taxes in either 2003 or 2004. As a result, penalties and interest accrued. In October 2005, plaintiff filed for Chapter 7 bankruptcy and was discharged in January 2006.

On January 24, 2007, the parties were divorced pursuant to a judgment of divorce (JOD). There was no property settlement agreement, but in February 2007 the JOD was amended, with the consent of both parties, requiring plaintiff to pay permanent alimony of $4,166 per month. Although the amended judgment of divorce (AJOD) did not address the parties' respective tax liabilities,1 it did provide that defendant was not permitted to assert an equitable distribution claim, "save for those asserted in plaintiff's bankruptcy case."

In 2008, the Internal Revenue Service sought to collect back taxes, penalties, and interest due from defendant for the 2003 and 2004 tax years. Defendant notified the bankruptcy trustee of the taxes owed and in January 2009, the trustee made partial payment. The IRS sought payment from defendant for the remaining balance due. Defendant hired counsel and eventually was recognized by the IRS as an "innocent spouse"2 for the year 2004, which relieved her of the liability for that tax year. Defendant was denied innocent spouse status for 2003, as her application was not filed timely. In December 2010, defendant paid $13,264.12 in back taxes, penalties and interest to the IRS and roughly double that to her tax counsel in legal fees.

In 2009, plaintiff moved for modification of his support obligations. On December 18, 2009, following a plenary hearing, the Family Part issued an order reducing plaintiff's alimony obligation to $251 per week due to a change in circumstances. No appeal was taken from this order by either party.

In March 2011, defendant brought a motion seeking an increase in alimony and reimbursement from plaintiff for back taxes, interest and penalties she paid to the IRS, and for counsel fees she incurred in connection with disputing taxes owed on plaintiff's 2003 and 2004 income.

Following a hearing on April 8, 2011, the court denied defendant's motion without prejudice, finding she had presented "insufficient information to fairly evaluate this matter" and had failed to present the matter in a timely manner to plaintiff.

Defendant sought reconsideration. On August 26, 2011, following oral argument, the court denied her motion to modify child support and alimony as well as her motion for reimbursement for back taxes, penalties, and counsel fees for the 2003 and 2004 tax years.

Defendant filed a notice of appeal from the August 26, 2011 order and raised the following points:

POINT I

 

THE STANDARD OF REVIEW.

 

POINT II

 

THE LOWER COURT DID NOT CONSIDER, OR FAILED TO APPRECIATE, THE SIGNIFICANCE OF PROBATIVE, COMPETENT EVIDENCE OF WIFE'S CHANGED CIRCUMSTANCES.

 

POINT III

 

THE LOWER COURT FAILED TO MAKE THE REQUISITE FINDINGS OF FACT AND CONCLUSIONS OF LAW.

 

A. THE LOWER COURT FAILED TO MAKE THE REQUISITE FINDINGS AND CONCLUSIONS WITH REGARD TO CHANGED CIRCUMSTANCES.

 

B. THE LOWER COURT FAILED TO MAKE THE REQUISITE FINDINGS AND CONCLUSIONS WITH REGARD TO "VOLUNTARY UNDEREMPLOYMENT" TO SUPPORT ITS "IMPUTATION" HOLDING.

 

C. THE LOWER COURT ERRED IN MAKING CREDIBILITY DETERMINATIONS IN THE ABSENCE OF TESTIMONY.

 

POINT IV

 

THE LOWER COURT ABUSED ITS DISCRETION IN REFUSING TO RECONSIDER THAT HUSBAND, AS THE PARTY RESPONSIBLE FOR THE TAX DEBT, WAS RESPONSIBLE FOR PAYING IT.

 

A. THE COURT DENIED WIFE'S RELIEF BASED ON CONTINUALLY CHANGING AND INCORRECT STANDARDS.

 

B. THE LOWER COURT'S DECISION SHOULD HAVE BEEN GUIDED BY WHICH PARTY WAS RESPONSIBLE FOR THE TAX DEBT.

 

C. THE COURT'S RULING WAS MANIFESTLY UNSUPPORTED BECAUSE THE AMENDED JOD DID ADDRESS LIABILITIES, BUT BARRED WIFE FROM ADDRESSING THEM.

 

D. THE LOWER COURT FAILED TO MAKE FINDING[S] OR CONCLUSIONS REGARDING INTEREST, PENALTIES AND ATTORNEY'S FEES ARISING OUT OF HUSBAND'S NON-PAYMENT.

 

E. UNDER GENERAL EQUITABLE PRINCIPLES, THE COURT SHOULD NOT HAVE GRANTED RELIEF TO THE WRONGDOER.

 

POINT V

 

THE LOWER COURT ERRED IN FAILING TO MAKE FINDINGS OF FACT OR CONCLUSIONS OF LAW IN DENYING WIFE'S APPLICATION FOR COUNSEL FEES AND COSTS.

On April 30, 2013, the parties filed a Stipulation of Partial Dismissal whereby defendant withdrew Points IV-A, IV-B, and IV-C, as the IRS had reconsidered its earlier ruling and granted defendant innocent spouse status for the tax year 2003 and refunded to defendant $21,321.36 representing taxes, penalties and interest for that tax year. Defendant continues to appeal the denial of her motion for reimbursement of legal fees.

II.

A.

In order to establish a "prima facie showing of changed circumstances," a movant must "demonstrate that changed circumstances have substantially impaired" his or her "ability to support himself or herself." Lepis v. Lepis, 83 N.J. 139, 157 (1980).

Having reviewed the record in light of these contentions and the applicable law, we conclude that the motion judge was correct in holding that defendant had not made a prima facie showing of changed circumstances.

The motion judge entered the December 18, 2009 order after conducting a plenary hearing and making extensive findings supporting the conclusion that plaintiff had suffered a change of circumstances that justified a reduction of his alimony obligation to $251 per week. Among the findings made by the judge was that defendant was not believable. In denying defendant's motion for an increase in support, the judge referenced his prior findings:

I made credibility findings, and I found Ms. Wheeler's testimony in that hearing - - I don't know the words I used, but I would categorize them today as very, very low level of credibility, which is why the order is what it was.

 

I imputed $20,000 to her earnings, or for her potential earnings, and nothing has really changed from that. And I certainly find that there's been no change in circumstances demonstrated, the Lepis requirement of a significant change of circumstances that should change the alimony or child support order of December 18th, 2009.

 

A trial judge has broad discretion in reviewing an application to modify alimony. Storey v. Storey, 373 N.J. Super. 464, 470 (App. Div. 2004) (citing N.J.S.A. 2A:34-23). "Whether an alimony obligation should be modified based upon a claim of change of 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)).

To vacate a trial court's findings in a proceeding modifying alimony, an appellate court must conclude that the trial court clearly abused its discretion, failed to consider "all of the controlling legal principles," or it must otherwise be "well satisfied that the finding[s] [were] mistaken," or that the determination could not "reasonably have been reached on sufficient credible evidence present in the record after consideration of the proofs as a whole."

 

[Rolnick v. Rolnick, 262 N.J. Super. 343, 360 (App. Div. 1993) (citations omitted).]

 

Defendant's motion was filed fifteen months after the entry of the December 2009 order. There 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. In Larbig, the defendant ex-husband moved for the downward modification of his alimony and child support obligations, claiming his business was in decline and his income significantly diminished as a result. Id. at 21. The trial court denied the motion, focusing on the fact that the motion was filed twenty months after the entry of the judgment of divorce. Id. at 20. The trial court did not conduct a hearing and concluded the defendant "had failed to demonstrate that, even if [his business's] condition was as he alleged, the change was anything other than temporary." Id. at 22.

We affirmed, finding "[t]he trial judge did not abuse his discretion in leaving undisturbed the alimony and child support obligations because defendant's motion was filed only twenty months after entry of the judgment of divorce--a fact that strongly suggested defendant's reduced income had not become permanent." Id. at 19.

Similarly, in Donnelly v. Donnelly, 405 N.J. Super. 117 (App. Div. 2009), the trial judge denied the defendant ex-husband's second application for a reduction in his support obligations. In affirming, we found that the trial judge correctly focused "on the length of time that had elapsed since the last milepost in these post-judgment proceedings." Id. at 127-28. Citing Larbig and Lepis, we stated,

After carefully reviewing the judge's earlier findings and the allegations contained in the most recent Lepis motion, we are satisfied that the trial judge properly exercised his discretion in concluding that Gregory had returned to court far too soon to obtain relief. Considering that this second Lepis motion was filed only nine months after the denial of the first Lepis motion, Gregory failed to demonstrate that his alleged change in circumstances was anything but temporary.

 

[Id. at 128.]

 

Here, the trial judge correctly determined that defendant failed to demonstrate a change of circumstances warranting a modification of alimony.

B.

Defendant next argues that plaintiff should reimburse her in the amount of $25,346.25, representing the amount defendant paid to Lindabury, McCormack, Estabrook & Cooper, P.C. to represent her in the IRS proceedings.

Initially, on July 1, 2011, the trial court denied defendant's motion to compel plaintiff to pay for defendant's counsel fees related to the IRS proceedings, noting:

[T]here's really no basis to open this up. It's not an enforcement of the judgment of divorce. . . . [T]his is a court of equity . . . [b]ut I don't see equitably how I can go back and try to ferret out the responsibility or lack of responsibility for these -- paying these taxes.

 

. . . .

 

I don't believe that I can make any sense out of who should have been responsible for seeing that the taxes were paid and then go back and try to figure out what the IRS did and why they took their positions. I just think it's impossible to try to recreate that reality of 2003, 2002, 2001, and then the years forward until the parties got divorced.

 

On August 26, 2011, the motion judge denied defendant's motion for reconsideration regarding this issue, stating:

The amended judgment of divorce of February 2nd of 2007 did not contain what could have certainly been contained, which is a clause providing that [plaintiff] would be responsible for all past taxes . . . .

 

The parties did not address their respective tax liabilities in either the JOD or the AJOD. Although she never cites to the appropriate standard, defendant is arguing the motion judge erred in denying her motion to modify the AJOD. The motion judge recognized that defendant's application was not an enforcement motion and found no justification to "open up" the final judgment. We find no mistaken exercise of discretion in the denial of defendant's motion.

Under Rule 4:50-1, a party may move for relief from a judgment or order for the following reasons:

(a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under R. 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; . . . or (f) any other reason justifying relief from the operation of the judgment or order.

 

Under Rule 4:50-2, the motion "shall be made within a reasonable time, and for reasons (a), (b) and (c) of R. 4:50-1 not more than one year after the judgment, order or proceeding was entered or taken." Moreover, relief under Rule 4:50-1(f) "is available only when truly exceptional circumstances are present and only when the court is presented with a reason not included among any of the reasons subject to the one year limitation." Baumann v. Marinaro, 95 N.J. 380, 395 (1984).

A motion to reopen a judgment under Rule 4:50-1 "'is addressed to the sound discretion of the trial court, guided by equitable principles.'" In re Adoption of Child of Indian Heritage, 219 N.J. Super. 28, 42 (App. Div. 1987) (quoting Hodgson v. Applegate, 31 N.J. 29, 37 (1959)), aff'd, 111 N.J. 155 (1988). The trial court's ruling will be upheld in the absence of a mistaken exercise of discretion. Ibid.

"'Settlement of litigation ranks high in our public policy.'" Nolan v. Lee Ho, 120 N.J 465, 472 (1990) (quoting Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J. 61 (1961)). Thus, New Jersey courts "have refused to vacate final settlements absent compelling circumstances." Ibid. "In general, settlement agreements will be honored 'absent a demonstration of fraud or other compelling circumstances.'" Ibid. (quoting Pascarella v. Bruck, 190 N.J. Super. 118, 125 (App. Div.) (internal quotation omitted), certif. denied, 94 N.J. 600 (1983)). The party seeking to vacate a settlement agreement must provide "clear and convincing proof" that the agreement should be vacated. Ibid. Defendant has failed to make such a showing to justify reimbursement of counsel fees incurred before the IRS.

Defendant next argues the motion judge erred in denying her motion for counsel fees in the post-judgment matrimonial matter. We disagree.

In a matrimonial action, the award of counsel fees is discretionary "and an exercise thereof will not be disturbed in an absence of a showing of abuse." Chestone v. Chestone, 322 N.J. Super. 250, 258 (App. Div. 1999) (citing Berkowitz v. Berkowitz, 55 N.J. 564, 570 (1970)). Pursuant to Rule 5:3-5, the following factors should guide the trial court's decision:

(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).]

In this case, the motion judge denied defendant's motion for attorney's fees after meticulous analysis of the relevant factors:

2 Factor Number 1 of the nine factors, the financial circumstances of the parties. From what I have been able to ascertain, the financial circumstances of neither party is terribly good at this time. So that factor is kind of a neutral as far as I can determine, although I really don't know who's living with who at this point and who's being supported by who.

 

2 Factor Number 2, the ability of the parties to pay their own fees or to contribute to the fees of the other party. Well, in this case, both parties have hired attorneys. This motion was first made by [defendant]. I have to assume that she understood that there would be a significant chance that she would be paying for her attorneys and be responsible for her attorney. [Plaintiff] certainly has to pay his own attorney.

 

[Factor number three], the reasonableness and good faith of the positions advanced by the parties. With respect to the tax liability issue that I did not grant, I think it was a reasonable and good faith argument regarding something that has the color of inequity given the . . . circumstances. So I don't find it was an unreasonable bad faith argument to make. So that issue sides towards [defendant] on that point, although I think [plaintiff]'s . . . position was reasonable. And, of course, I sided with [plaintiff] on that issue.

 

With respect to the college expenses issue, I found [defendant]'s position . . . was unreasonable in my view.

 

2 Factor number 4, the extent of fees incurred by the parties. Both parties have experienced attorneys working for them, and I'm sure they both are paying significantly to have the representation they . . . do.

 

[Factor number five], any fees previously awarded. As far as I know, in my experience in this case which is, you know, a year's worth, I'm not aware that any fees were previously awarded to the other side.

 

2 Factor 6, the amount of fees previously paid to counsel by each party. I assume both parties have paid significant amounts to counsel.

 

2 Factor Number 7, [defendant] did not prevail on -- on either of the two motions, either her motion or the cross-motion.

 

2 Factor Number 8, the degree to which the fees were incurred to enforce existing orders or to compel discovery. In this case, [defendant]'s motion was not based upon an existing order as far as I see it or to compel discovery. [Plaintiff]'s motion -- cross-motion here was based on existing orders and the prior divorce judgment.

 

2 Factor Number 9, any other factor bearing on the fairness of the award. I appreciate fully that both parties have come out of this divorce in difficult circumstances from what they enjoyed for many, many years. I observed the last time we were here that for better, for worse, both children appear to have gotten out of . . . the difficulties of their parents' divorce with college educations. So that's to the credit of both parties. But I am denying the application for [defendant] to be awarded attorney fees to be paid by [plaintiff] in this case for all the reasons I have just articulated.

 

On August 26, 2011, the motion judge denied defendant's motion for reconsideration, reasoning:

[Defendant]'s request for attorney fees on this application are denied, pursuant to the Court rules.

 

. . . .

 

There are nine factors to be evaluated by the [c]ourt if there's an application for attorney fees. I find that this motion was not successful -- well, actually a little bit successful, a tiny bit with respect to the trust funds.

 

I don't feel that [there] -- were any particularly new issues raised. And so I find that [plaintiff] has largely prevailed in the response to this motion. And all of the nine factors together seems to me weigh in favor of the denial of the attorney fees.

 

The motion judge properly analyzed defendant's motion for counsel fees under Rule 5:3-5(c), and provided adequate factual findings to support his decision.

Affirmed.

 

1 Defendant maintains that she was unaware taxes were not paid in 2003 or 2004. Plaintiff disputes this.

2 Taxpayers who file joint returns are held jointly and severally liable for liabilities that flow from those submissions. See 26 U.S.C. 6013(d)(3). "Innocent spouse" relief provisions in the tax code offer a narrow exception to this arrangement. Under these, the tax code exempts a joint filer who "did not know or have reason to know that there was an understatement on the tax return" from joint and several liability. Jones v. Comm'r, 642 F.3d 459, 460 (4th Cir. 2011).