FRANCIS NATHANIEL CLARK v. DENISE LOCKWOOD CLARK

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

FRANCIS NATHANIEL CLARK,

Plaintiff-Appellant,

v.

DENISE LOCKWOOD CLARK,

Defendant-Respondent.

_________________________________

April 22, 2014

Submitted January 13, 2014 Decided

Before Judges Parrillo, Kennedy and Guadagno.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FM-10-435-08.

Einhorn, Harris, Ascher, Barbarito & Frost, attorneys for appellant (Matheu D. Nunn and Bonnie C. Frost, on the brief).

Respondent has not filed a brief.

PER CURIAM

Plaintiff, Francis Nathaniel Clark, appeals a December 14, 2012 judgment of the Family Part amending a prior final judgment of divorce. The amended judgment was issued following our opinion vacating "the alimony award set forth in the final judgment of divorce and remand[ing] to the trial court for further consideration in light of our opinion." Clark v. Clark, 429 N.J. Super. 61, 77 (App. Div. 2012).1 The amended judgment did not alter the alimony award, but simply provided it shall not become "payable" until defendant, plaintiff's former wife, "pays the judgment" entered against her in the final judgment of divorce for over $167,000, representing half the money she had embezzled over time from the marital business.2 The final judgment of divorce further required defendant to pay $279 per week to plaintiff in child support, and required plaintiff to pay to defendant $600 per week in permanent alimony. The amended judgment, as noted, did not alter the amount or duration of the weekly alimony owed by plaintiff, but, at the same time, lowered defendant's child support payment to plaintiff to $108 per week to avoid rendering her "destitute" and to "honor[] that fact that []defendant has needs [and] made contributions to the marriage."

Plaintiff argues that the Family Part erred in maintaining its previous award of permanent alimony to defendant, notwithstanding our finding that defendant engaged in egregious conduct, and in reducing defendant's child support obligation to plaintiff. We agree and, therefore, we reverse those portions of the Family Part's amended judgment pertaining to alimony and child support, and we remand the matter to the Family Part for further proceedings consistent with this opinion and our prior opinion.

I.

We briefly set forth the procedural history and facts pertaining to this appeal. The parties were married on February 19, 1983 and have four children.3 On April 9, 2008, plaintiff filed his complaint for divorce. During the marriage, the parties were equal shareholders in DeFranc, Inc., which owned and operated Grayrock Pharmacy (Grayrock). Plaintiff was Grayrock s founder and pharmacist, and defendant was Grayrock s bookkeeper.

The following statement is taken from our prior opinion:

In June 2008, Grayrock s accountant, Ron Zuckerman, warned that Grayrock was facing failure due to a cash flow shortage. Plaintiff commenced discussions to sell the business. He secured an $800,000 purchase offer from Drug Fair and also entertained discussions with Hank Incognito to sell the business for $1,000,000. Defendant s objections to these proposals generated plaintiff s motion to compel her cooperation with a sale of Grayrock. A Family Part judge denied plaintiff s motion, finding he failed to prove the financial necessity of a sale and because the asset provided a substantial source of income for the family. However, the motion judge determined the parties were draining cash from the business for their personal use, which created distrust between them and adversely affected operations. Consequently, she appointed a custodial receiver and approved the use of joint funds to "obtain experts to review [Grayrock s] financials . . . to determine its value and the advisability of a sale[.]" . . . Grayrock ultimately filed for bankruptcy and its assets were sold to Roseville Pharmacy, L.L.C., for $114,000.

. . . .

In accordance with the court order, plaintiff employed Albert P. Russo, C.P.A., to examine Grayrock s cash flow. Russo s report supported a pattern of consistent removal of significant cash receipts from the pharmacy.

. . . .

A different Family Part judge conducted trial over six days. In addition to his own testimony, plaintiff presented two fact witnesses. . . . [and] [p]laintiff [] presented Russo s expert testimony regarding his forensic analysis of Grayrock s cash activity from January 2004 to August 2008. Russo found significant discrepancies between the recorded cash sales and bank deposits. He examined the "operating bank account statements, deposit slips, and daily cash reports" from January 1, 2004 to July 31, 2008, computing a total discrepancy of $365,423. Further, gaps in the records caused by "missing" records for the period of August through December 2005, and August 2006 to October 2006, were considered by "us[ing] an average of the other . . . months . . . to come up with an extrapolated discrepancy," which increased the likely loss to as much as $407,656.

Defendant testified on her own behalf. She denied taking the claimed missing cash and insisted the discrepancies identified in Russo s report resulted from several sources. . . .

Defendant also discussed the basis of her rejection of the Drug Fair offer, which she felt was too low, and detailed her efforts to continue Grayrock s viability so the parties could sell it for a larger profit. As to the Incognito deal, defendant theorized Incognito and plaintiff were friends and his offer was never firm.

. . . .

In support of her request for alimony, defendant noted plaintiff remained at the pharmacy, after being hired as an employee by the new owner, and earned $107,000 a year. Defendant remained unemployed after plaintiff forced her to leave Grayrock. She contended she was unable to find a job and had no income or resources. . . .

The trial judge rendered a comprehensive oral opinion, granting plaintiff s request for divorce and addressing the parties requests for collateral relief. With respect to the issues presented on appeal, the judge found plaintiff s income was $110,000 per year and defendant was "unemployed without just cause," thus requiring the imputation of income to her in the amount of $38,584 per year, based upon the Florida Department of Economic Opportunity Occupational Employment and Wages report. Reviewing the applicable factors in N.J.S.A. 2A:34-23(b), the trial judge found, among other things, the parties had a long-term marriage, defendant remained financially dependent, and plaintiff had available resources to support himself and contribute to defendant s support. The judge ordered plaintiff to pay defendant permanent alimony of $600 per week.

The judge ordered the division of the remaining marital assets. . . . He denied plaintiff s request for payment of half of the potential profit the parties would have realized had Grayrock been sold to Incognito. . . . However, the trial judge determined Russo s credible testimony supported a finding that defendant "took and hid sums of money as the bookkeeper from the business and from the marriage." She was ordered to pay plaintiff $172,845, representing one-half of the amount wrongfully withdrawn.

[Clark, supra, 429 N.J. Super. at 65-70 (footnote omitted).]

On September 21, 2011, the Family Part judge entered a final judgment of divorce. In relevant part, the judgment of divorce: (1) granted plaintiff a money judgment of $167,497.50 for the cash removed by her from the martial business; (2) ordered plaintiff to pay defendant $600 a week in permanent alimony; and (3) ordered defendant to pay plaintiff $279 a week in child support. Plaintiff appealed the award of permanent alimony, arguing, among other things, that "defendant's egregious conduct extinguishe[d] any obligation to pay alimony." Clark, supra, 429 N.J. Super. at 70.

We "reverse[d] the alimony provision of the final judgment of divorce, concluding the facts support[ed] a finding [that] defendant engaged in conduct rising to the level of egregious fault[,]" and "remand[ed] to the trial court for consideration of whether, in light of the showing of egregious marital fault, alimony should be denied." Id. at 65. We "affirm[ed] the remaining provisions of the final judgment of divorce." Id. at 78.

As to plaintiff's argument that defendant's egregious conduct should extinguish alimony, we explained that "defendant s illicit conduct invoked two statutory considerations to be weighed when fixing alimony: the history of the financial or non-financial contributions to the marriage, N.J.S.A. 2A:34-23(b)(9), and the so-called catch all category which permits a court to consider any other factor it may deem relevant[.]" Id. at 74 (internal citations omitted).

In addition, we held that "defendant's conduct fell within Mani s delineated 'narrow band of cases' that 'affected the parties' economic life,' impacting the amount of any alimony awarded," Id. at 74-75 (citing Mani v. Mani, 183 N.J. 70, 72, 91 (2005)) and was "a consideration omitted by the trial judge." Id. at 75. We explicitly found that "defendant s conduct transcend[ed] mere 'economic impact,' as she not only betrayed the sanctity of the martial vows of trust, but also kicked their economic security in the teeth by secretly draining cash from the pharmacy." Ibid. Therefore, we "determine[d] her actions smack[ed] of criminality and demonstrate[d] a willful and serious violation of societal norms." Ibid.

We observed that "when considering defendant s claim for alimony, the trial judge made a thorough and detailed analysis of each of the statutory economic considerations required by N.J.S.A. 2A:34-32(b), without regard to whether defendant s economic improprieties were so outrageous as to warrant additional relief as directed by Mani." Id. at 76-77. Because we found the trial judge s omission to be fatal, we "vacate[d] the alimony award set forth in the final judgment of divorce and remand[ed] to the trial court for further consideration in light of our opinion." Id. at 77. On remand, we directed the trial court to:

assess defendant s conduct in light of the standard we articulated to discern whether egregious fault has been demonstrated. If so, the court must then consider whether the conduct obviates the propriety of an award of alimony. Finally, if the court concludes alimony remains warranted, the trial judge must nevertheless assess the impact of defendant s conduct prior to fixing an amount of alimony.

[Ibid.]

We held that "equity demand[ed] the trial court consider defendant s dishonest, illegitimate conduct, and its impact on the past and future security of plaintiff and the children." Ibid.

On remand, the Family Part judge issued an amended judgment of divorce, as we stated earlier, predicated on a statement of reasons from the bench. The judge concurred with our earlier determination that defendant committed egregious misconduct with consequences that transcended "mere economic[s][,]" yet still required plaintiff to pay permanent alimony of $600 per week to a former spouse who had "kicked [the parties'] economic security in the teeth."

The Family Part judge also reiterated his prior finding that defendant "secreted" $345,690 from the parties pharmacy over the course of four and one-half years and "took and hid [that] money." He added that the evidence supporting the finding was "clear and unrebutted" and that defendant's willful misconduct had "more than a mere economic impact" on the marriage.

However, the judge concluded that defendant's significant and secret thefts "still [did not] obviate alimony in this case." He concluded "that alimony [was] still payable because the defendant's conduct [only] occurred for 43 out of the 299 months that the parties were married." He explained that "defendant ha[d] been economically dependent on the plaintiff for a substantial period of time" and that "defendant made contributions as a business partner . . . and as a homemaker."

As noted earlier, the judge reduced defendant's child support obligation to $108 a week and, in doing so, deviated from the Child Support Guidelines. He held that "[b]ecause alimony has now been abated child support, college and unreimbursed medical expenses must now change based upon the figures that have been run in the new guidelines." He explained that "rather than have the plaintiff pay [defendant] a modified alimony amount, which would clearly be an unjust result for him, the Court elect[ed] instead to deviate from the child support guidelines."

II.

The judge concluded he sufficiently compensated for this prolonged, significant and willful wrongdoing of defendant by declaring that permanent alimony would not be payable until defendant satisfied the judgment requiring her to pay to plaintiff half of the money she stole from their pharmacy business. He found such "offset against alimony" to be "the most attractive solution." While defendant did not appeal from the amended judgment, plaintiff asserts that such "offset" does not go far enough in addressing the issue as we required in our remand.

On appeal, plaintiff argues that the trial court erred in failing to vacate or modify defendant's alimony award. Plaintiff argues that "the trial court ignored the precepts of Mani, [supra, 183 N.J. 70] and incorrectly interpreted and applied the holding in Reid [v. Reid, 310 N.J. Super. 12 (App. Div.), certif. denied, 154 N.J. 608 (1998)] to this matter[.]" Additionally, plaintiff argues that the trial court erred in reducing defendant's child support obligation to plaintiff. We agree that the judge on remand erred in maintaining the alimony award and reducing defendant's child support obligation, thereby requiring, once again, vacating the alimony award and child support imposed and remanding to the Family Part for reconsideration.

Initially, we observe that our prior remand was not unrestricted. Rather, we explicitly instructed the trial judge as follows: to determine if egregious fault was demonstrated; and, if so, the judge must consider whether the egregious conduct obviated alimony entirely; and finally, if alimony was still warranted, the judge must assess the impact of defendant's conduct prior to fixing an amount. Clark, supra, 429 N.J. Super. at 77.

On remand, however, the judge did not reduce the alimony award in light of defendant's egregious misconduct but, simply deferred the alimony payments despite his determination that defendant's conduct amounted to egregious fault. Then, he adjusted defendant's child support obligation to compensate her for the deferral of alimony caused by her misconduct. While we respect the judge's thoughtful response to the remand, we part company with him on the relief he ordered.

Our Supreme Court has held that generally "marital fault is irrelevant" to determinations of alimony. Mani, supra, 183 N.J. at 72. However, the Court recognized two "narrow" exceptions: (1) "cases in which the fault has affected the parties' economic life" ibid. and (2) "cases in which the fault so violates societal norms that continuing the economic bonds between the parties would confound notions of simple justice." Ibid. The first exception "may be considered in the calculation of alimony" ibid. and the second exception may be considered "in connection with the initial determination of whether alimony should be allowed at all." Ibid. Both exceptions apply here.

Further, while the amount of alimony payable has an obvious impact on child support, the Family Part judge here offset the children's right to support as a consequence of the defendant's embezzlement. In so doing, the Family Part judge erred. "It is fundamental that the right to support belongs to the child[.]" L.V. v. R.S., 347 N.J. Super. 33, 41-43 (App. Div. 2002) (citing Kopak v. Polzer, 4 N.J. 327, 333 (1950)); Martinetti v. Hickman, 261 N.J. Super. 508, 512 (App. Div. 1993); Gotlib v. Golib, 399 N.J. Super. 295, 305 (App. Div. 2008). In addition, we stated in L.V., supra, 347 N.J. Super. at 39-40, that "there is no basis to impute to a child the custodial parent's negligence, purposeful delay or obstinacy so as to vitiate the child's independent right of support from a natural parent." Moreover, it is clear that the martial fault of the custodial parent will not affect the obligor parent's support obligation, and is an irrelevant consideration in fixing child support. Kinsella v. Kinsella, 150 N.J. 276, 314 (1997); Calbi v. Calbi, 396 N.J. Super. 532, 539 (App. Div. 2007); Gordon v. Gordon, 147 N.J. Super. 585 (App. Div. 1997); Ionno v. Ionno, 148 N.J. Super. 259 (App. Div. 1977).

Accordingly, we once against vacate the permanent alimony award and reverse the reduction in defendant's child support obligation. We restate our instructions from our past opinion and remand the matter to the Family Part to consider whether defendant is entitled to any alimony at all, and if so, what the appropriate reduction in alimony should be in light of defendant's egregious conduct.

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

1 Defendant has not participated in this appeal.

2 This figure is a net figure based on other adjustments. As we note hereinafter, the Family Part judge found that defendant "took and hid" over $340,000 from the parties' pharmacy business and that she was obligated to pay back $172,845, representing half of those stolen funds.

3 Plaintiff, the residential custodial parent, lives in the former marital home with the three youngest unemancipated children, two of whom have special needs, and defendant lives in Florida.