BRENDA MICHELLE GUPTA v. RAJ A. GUPTA

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3866-11T1

BRENDA MICHELLE GUPTA,

n/k/a BRENDA MICHELLE FOSTER,

Plaintiff-Appellant,

v.

RAJ A. GUPTA,

Defendant-Respondent.

_______________________________

February 6, 2013

Submitted December 19, 2012 - Decided

Before Judges Grall and Simonelli.

On appeal from Superior Court of New

Jersey, Chancery Division, Family Part,

Monmouth County, Docket No. FM-13-672-10.

Darren O'Toole, attorney for appellant.

Linda L. Piff, attorney for respondent.

PER CURIAM

Plaintiff Brenda Michelle Gupta appeals the denial, and denial of reconsideration, of her application to vacate a matrimonial settlement agreement (MSA) incorporated in a judgment dissolving her marriage to defendant Raj A. Gupta.

The judgment was entered in December 2010. She also contends that the trial court erred in awarding defendant $2748.22 for fees and costs he incurred on his successful cross-motion to enforce plaintiff's obligations under the MSA and in defending against her motion to vacate the MSA. With the exception of the award of counsel fees, we affirm the orders. Because it is not at all clear that the court considered the factors governing the award of counsel fees that are implicated in this case, we vacate the award and remand for reconsideration.

I

Plaintiff and defendant married in October 1998, and they have two children who will be nine and seven years old by December 2013. Plaintiff commenced the divorce litigation in October 2009. At that time, defendant owned a 45% share of a medical practice. A certified public accountant determined that as of June 23, 2009, the value of defendant's share of the practice was $549,000. That valuation was completed on June 23, 2010. Defendant's partner left the practice in July 2010, and in October 2010 defendant executed an interest-redemption agreement and a $600,000 promissory note to acquire his partner's share of the business.

The parties executed the MSA in December 2010. It includes several provisions pertinent to the issues raised on this appeal.

The parties' marital residence is among the assets recognized in the MSA. The Guptas agreed to list it for sale at $699,000, but it was subject to a mortgage and a home equity loan, a total debt of about $668,000. Upon sale, defendant was to receive the net proceeds, minus $1 for plaintiff's interest. Pending the sale he agreed to assume full responsibility for paying the property tax, mortgage and home equity payments, as well as responsibility for any payment due at closing not covered by the net proceeds. Plaintiff was to have exclusive occupancy of the residence until April 1, 2012, at which time defendant would assume exclusive occupancy until sale.

With respect to defendant's interest in the medical practice, Article XV of the MSA provides:

15.1 The parties acknowledge that the Husband is the owner of a 45% interest in [the medical practice] which shall become the sole and exclusive property of the Husband. The Wife hereby relinquishes any claim or right, title or interest with respect to the business interest which the Husband now owns or may hereinafter acquire.

15.2 The Husband hereby agrees to indemnify the Wife against and agrees to assume sole liability and responsibility for any loss, damages, expense, or civil or criminal liability, including deficiency assessment, penalty or interest which the Husband may incur or has for any reason whatsoever incurred as the result of any transaction undertaken on behalf of the business in which [W]ife is waiving a claim or any business previously owned by Husband including but not limited to contracts, debts, taxes of any nature, penalties, interest, licenses, suits or any other obligation of the business.

It is undisputed that plaintiff was not aware of defendant's purchase of his partner's interest when she executed the MSA. Two provisions of the MSA address disclosure of assets. In Article XVI of the MSA, the parties each acknowledge that "there are no other individually or jointly held assets acquired during the course of the marriage other than those set forth" in the preceding paragraphs of the MSA. (Emphasis added).

The MSA also has a provision titled "Non-Disclosure of Assets." Paragraph 20.6 provides:

The parties represent to each other they have ascertained and weighed all the facts and circumstances likely to influence their judgment, and they have given due consideration to such fact[s] and circumstances, including the risk and cost attend[ant] to litigation, and they are entering into this Agreement freely and voluntarily. Notwithstanding the foregoing waivers, in the event it subsequently appears an asset or income of significant value has been omitted, the other party may, as to that asset or income, claim an equitable share thereof and the reasonable attorney's fees, expert fees, costs and disbursements incurred in establishing such omission shall be born[e] in full by the party having failed to make such disclosure.

[(Emphasis added)].

One of "foregoing waivers" referenced in paragraph 20.6 concerns subsequently acquired property. Article XIX provides: "Husband and Wife agree to waive and relinquish any and all right that he or she may now have or hereafter acquire in any real or tangible or intangible personal property subsequently acquired by the other party."

The MSA addresses alimony and child support, as well as equitable distribution of assets acquired during the marriage. The alimony is based on defendant having current income of $6730 per week and wife having income of $962 per week, but they agreed that neither would have the right to seek review of alimony. In an addendum to the MSA referenced therein, the parties further acknowledged that the alimony provisions were neither modifiable nor revocable, even in the face of circumstances such as substantial changes in income, inheritance or permanent loss of employment.

Defendant waived alimony. Plaintiff agreed to accept $2120 weekly alimony for a term of seven years commencing on April 1, 2012 or, if earlier, the date of closing on the sale of the marital residence. Plaintiff acknowledged that she would be unable to maintain a standard of living reasonably comparable to the marital standard of living, and defendant similarly acknowledged that he would be unable to maintain a standard of living reasonably comparable to the marital standard of living.

Defendant's child support obligation was fixed at $234 per week plus $16 per week in recognition of the fact that his income exceeds the child support guidelines. In addition, defendant agreed to pay 65% of each child's medical expenses over $250 per year, and 100% of the children's expenses for Atlantis prep and summer camp at Atlantis prep. He further agreed to increase his weekly child support to $250 per week when the oldest child no longer attends Atlantis prep full time.

II

One year subsequent to the execution of the MSA, plaintiff moved to vacate the agreement, alleging that defendant fraudulently misrepresented his share of the practice. In the alternative, plaintiff sought to recover an equitable share of the practice pursuant to paragraph 20.6 of the MSA.

In response to plaintiff's motion, defendant submitted a report of a certified public accountant, based on information provided to the accountant by defendant, not an audit. The report details, analyzes and compares the practice's revenue and net profit (based on consideration of income and expenses, including payments on debt, and cash flow available to defendant) for calendar years 2010 and 2011. Summarizing, the accountant reported a decline in gross revenue of approximately 18%; a decline in net profit of approximately 51%; and a $34,000, or 8%, decline in distributions to defendant during the time that he held a 90% interest in the medical practice.

Plaintiff filed a certification in reply. Apart from criticizing defendant's use of an accountant other than the joint expert who valued defendant's interest for the MSA and indicating that the price defendant paid to acquire his partner's 45% share, which gave defendant a 90% interest in the practice, was higher than the value of defendant's 45% share set forth in the MSA, plaintiff did not challenge the accountant's report.1

III

A. Denial of the Motion to Vacate. The trial court's factual findings and reasons for denying plaintiff's request for relief based on defendant's non-disclosure of his post-complaint acquisition of his partner's interest in the practice are set forth in an addendum to the order denying reconsideration. The court recited well-settled principles of law governing the setting aside of a settlement agreement, quoting an unpublished Appellate Division decision stating those principles and citing the precedents.

While unpublished opinions do not constitute precedent and may not be cited by any court, Rule 1:36-3, the principles upon which the trial court relied are well-settled. A judgment of divorce may be set aside, pursuant to Rule 4:50-1(f), upon "a showing of fraud or misconduct by a spouse in failing to disclose the true worth of his or her assets." Rosen v. Rosen, 225 N.J. Super. 33, 37 (App. Div.), certif. denied, 111 N.J. 649 (1988).

Where, as here, a judgment incorporates a settlement agreement, it will not be disturbed unless fraud or other compelling circumstances are established by clear and convincing evidence. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990); DeCaro v. DeCaro, 13 N.J. 36, 42 (1953). A party seeking to vacate a settlement agreement, unlike one seeking damages for fraud, need only "demonstrate a material misrepresentation made with intent that it be relied on, coupled with actual detrimental reliance." Nolan, supra, 120 N.J. at 472.

The trial court determined that plaintiff failed to show that defendant's misrepresentation was material. In reaching that conclusion, the trial court relied on Painter v. Painter, 65 N.J. 196, 218 (1974), which holds that the property that is subject to equitable distribution is the property acquired prior to the date that the complaint for divorce was filed. While post-complaint enhancements of the value of an asset that are attributable to market forces are subject to equitable distribution, a post-complaint enhancement attributable to investment of post-complaint income or efforts of one spouse are not. See Scavone v. Scavone, 243 N.J. Super. 134, 137 (App. Div. 1990); Bednar v. Bednar, 193 N.J. Super. 330, 332-33 (App. Div. 1984).

On those principles, the court did not err in denying the motion for absence of a "material" misrepresentation relevant to the distribution of marital property. There is nothing in the record that indicates defendant acquired his partner's interest in the practice prior to the date plaintiff filed her complaint for divorce. As the trial court noted, defendant acquired that interest by assuming an "enormous" debt long after the complaint and after the valuation of his share of the practice. Indeed, defendant produced the promissory note establishing his obligation to fund the acquisition of his partner's interest with funds from post-judgment profits. Moreover, defendant provided an accounting demonstrating the negative impact of the acquisition on the profitability of the practice. Plaintiff questioned the accounting, but she did not attempt to rebut it.

Plaintiff is correct in noting that the trial court did not expressly address her claim that defendant's failure to disclose his purchase of his partner's interest was relevant to the provisions of the agreement governing alimony and child support. There is no question that a spouse's ability to pay support at the time of the divorce is an important factor in determining the appropriate obligation. Bonanno v. Bonanno, 4 N.J. 268, 275 (1950).

That said, there is no evidence that defendant's income increased with the acquisition of his partner's interest in the practice. Indeed, there is no evidence that defendant's post-complaint income ever exceeded the amount of income noted in the MSA as the premise for the support set in the MSA. Thus, there was no "material" change in defendant's income to disclose.

For the foregoing reasons, we affirm the denial of plaintiff's applications to vacate the judgment based on misrepresentation. On these facts, the trial court's conclusion that plaintiff failed to make the showing required to vacate the MSA on grounds of a material misrepresentation was not an abuse of its discretion. U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012).

We recognize that plaintiff has also argued that she is entitled to relief because the trial court failed to order additional discovery, failed to conduct a plenary hearing before ruling on her motions to vacate the MSA and failed to adequately articulate its findings and reasons. The arguments advanced in support of those claims have insufficient merit to warrant any discussion beyond that set forth above. R. 2:11-3(e)(1)(E).

B. The Denial of Relief Provided in the MSA.

Plaintiff cannot prevail on her claim that she is entitled to relief under the terms of the MSA. True, through Article XVI of the MSA, defendant acknowledged that he had no assets that were not identified in the agreement and that were "acquired during the course of the marriage." But on this record, there is no evidence that defendant's silence on his post-complaint acquisition was inconsistent with the representation set forth in Article XVI. Defendant's interest in the practice was, as the trial court found, acquired after the complaint for divorce was filed not "during the course of the marriage."

Similarly, plaintiff's reliance on paragraph 20.6 is misplaced. That paragraph addresses omission of an "asset or income of significant value." Because post-complaint income can be relevant to support and in the interest of bringing this dispute to an end, we assume, without deciding, that the parties intended to include "significant" undisclosed income.2 That assumption does not advance plaintiff's claim, however. Income that does not exceed the amount on which support provided in the MSA is premised cannot be deemed "significant" or undisclosed within the meaning of paragraph 20.6.

With respect to assets, the fact that the parties agreed to the division of an asset excluded from the agreement indicates that the parties were referring to assets acquired during the marriage that are subject to equitable distribution. That understanding of the provision is consistent with governing law and Article XVI of this MSA.

For those reasons, we affirm the denial of relief under the terms of the MSA.

C. The Award of Counsel Fees to Defendant.

Plaintiff also contends that the trial court erred in awarding defendant counsel fees. An award of counsel fees in a matrimonial action "rests in the discretion of the trial court." Addesa v. Addesa, 392 N.J. Super. 58, 78 (App. Div. 2007). But that discretion must be exercised in conformity with N.J.S.A. 2A:34-23 and Rule 5:3-5(c). While our standard of review is extremely deferential, Strahan v. Strahan, 402 N.J. Super. 298, 317 (App. Div. 2008) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)), when a trial court fails to address the factors set forth in Rule 5:3-5(c) that are implicated by the facts of the case, we cannot defer. Gordon v. Rozenwald, 380 N.J. Super. 55, 79 (App. Div. 2005).

Pursuant to the Rule, the court must consider:

(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 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 concluding that defendant was entitled to an award of counsel fees, the trial court indicated that he considered all of the factors, but the court's only explanation for the award was that plaintiff's motion to vacate the MSA could not "possibly be viewed as being filed in good faith." In this case, we cannot discern what importance, if any, the judge assigned to other factors implicated in this case. Moreover, there is no obvious basis for the court's conclusion that plaintiff, who did not have access to the documents concerning defendant's acquisition of the business before filing the initial motion, acted in bad faith. Accordingly, we vacate the award of counsel fees and remand for reconsideration.

Affirmed in part; reversed in part; and remanded for reconsideration of the counsel fee award to defendant.

1 We have not discussed the facts pertinent to defendant's motion to enforce litigant's rights because neither party challenges the provisions of the order enforcing defendant's rights to the funds paid by the insurance company for damage to the marital residence or his right to occupy the marital residence from April 1, 2012 until its sale.

2 In our view, it is unlikely that the parties contemplated post-complaint income in paragraph 20.6. The remedy provided an equitable share of the omitted income suggests otherwise.