LORI WILLIAMS v. STEVEN FREITAG

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

LORI WILLIAMS,

Plaintiff-Respondent,

v.

STEVEN FREITAG,

Defendant-Appellant.

_______________________________

April 20, 2016

Before Judges Lihotz and Nugent.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-869-06.

Rajeh A. Saadeh argued the cause for appellant.

Richard A. Outhwaite argued the cause for respondent (Dughi, Hewit & Domalewski, P.C., attorneys; Mr. Outhwaite, on the brief).

PER CURIAM

Defendant Steven Freitag appeals from three post-judgment Family Part orders. The first order, filed on October 24, 2014, denied defendant's motion to modify alimony paid to plaintiff, Lori Williams, but granted his motion to modify child support after the eldest child's emancipation. The second order, filed on November 21, 2014, amended the prior order's computation of weekly child support. Finally, the January 9, 2015 order denied defendant's motion for reconsideration, except as to the child support amount, and awarded attorney's fees to plaintiff. On appeal, defendant seeks remand and a plenary hearing, arguing the judge misapplied the law.

Following our review, we affirm the denial of defendant's motion to modify alimony for reasons different from those stated by the motion judge. We reverse the effective date of child support modification, which may also require some further calculations, after accounting for the amount of the child's health-related insurance costs. We also reverse the award of counsel fees to plaintiff and remand this matter for additional consideration in light of our opinion.

These facts were presented during the motions before the Family Part. The parties divorced on October 16, 2006. The Dual Judgment of Divorce (JOD) incorporated the terms of the parties' Matrimonial Settlement Agreement (MSA), in which the parties agreed to resolve all collateral issues arising from the dissolution of their marriage. Although the MSA does not recite the parties' respective income or nature of employment, it is undisputed plaintiff was not employed at the time of divorce and, by agreement, a $25,000 annual income was imputed. An attached Child Support Guidelines worksheet set forth gross taxable weekly income, adjusted for weekly alimony paid by defendant, as agreed, and fixed child support for the parties' two children.

The instant matter was initiated by defendant on September 8, 2014. He moved to emancipate the parties' child following college graduation, as provided in the MSA, and sought to reduce alimony, arguing plaintiff's full-time employment provided gross earned income approximately sixty-five percent higher than what was imputed at the time of the divorce. Because he asserted this increase exceeded the amount he was ordered to pay in alimony, he maintained alimony should be terminated, or, alternatively, reduced.

Defendant's motion further noted plaintiff failed to comply with MSA provisions requiring the exchange of financial information, designed to enable meaningful negotiations without involving the courts. Through counsel, he attempted to settle the disputes. Plaintiff declined to respond, prompting his request for an award of attorney's fees.

Plaintiff agreed the older child was emancipated but otherwise opposed defendant's motion and filed a cross-motion for enforcement of parenting time provisions. Contrary to defendant's assertions, plaintiff stated her annual increased earnings were not as suggested by defendant and noted defendant's income had correspondingly increased even more than hers. Plaintiff explained both children lived in her home and she provided their support. She also asserted her expenses generally increased but did not attach a case information statement (CIS). Finally, plaintiff highlighted the MSA's provision regarding alimony termination, which did not include what she characterized as a modest increase in her income, and she sought attorney's fees.

Following oral argument, the Family Part judge issued written findings and conclusions supporting the October 24, 2014 order. The judge denied the application to modify or terminate alimony, concluding defendant "failed to make a prima facie showing of changed circumstances that have substantially impaired [d]efendant's financial condition" to justify a decrease. The judge emancipated the older child as of the date of college graduation and ordered plaintiff to file a CIS to allow recalculation of support for the younger child. The judge denied each party's request for a counsel fee award.

Upon receipt of plaintiff's CIS, support for the parties' unemancipated child was recalculated. The sum, which accounted for defendant's payment of the child's health insurance costs, reduced the prior support order by four dollars per week.1 The order did not include an effective date.

Defendant moved for reconsideration of these two orders. He also raised concerns regarding plaintiff's failure to cooperate regarding parenting time issues. The motion was met by a cross-motion for counsel fees. The matter was decided by the judge without oral argument; a written statement of reasons was attached to the January 9, 2015 order.

Preliminarily, in the January 9, 2015 order, the judge noted defendant's motion for reconsideration was untimely under Rule 4:49-2, having been filed outside the twenty-day time period. Nevertheless, the judge concluded the facts showed plaintiff's increased income did not warrant a decrease or termination of alimony. Regarding the child's medical and dental insurance costs, defendant's documentation showed the order inaccurately reflected the actual costs paid by defendant, which required correction. The judge adjusted this amount and correspondingly modified support. The judge also granted plaintiff's cross-motion for counsel fees after finding a majority of the application was directed to the reconsideration of defendant's request to modify alimony and also noting plaintiff demonstrated a willingness to resolve the child support challenge upon proof of the insurance costs. Thus, the judge concluded "[v]indicating [p]laintiff's interests in this matter has required substantial albeit avoidable time and labor." The fee award was approximately eighty percent of the total fees sought.

On appeal, defendant argues the judge erred in the October 24, 2014 order by denying his motion without verifying plaintiff's income. Further, he maintains because reconsideration could not be filed until plaintiff released proof of her income, the judge's conclusion his motion was untimely was also incorrect. Defendant further notes the judge failed to review the amendments to N.J.S.A. 2A:34-23(k), which address alimony modification motions filed after September 10, 2014, and seeks application of this court's original jurisdiction to determine this issue. Defendant also argues the judge failed to recalculate the effective date of child support and abused his discretion in awarding attorney's fees to plaintiff.

We do "not disturb the 'factual findings and legal conclusions of the trial judge unless . . . convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Cesare v. Cesare, 154 N.J. 394, 412 (1998) (quoting Rova Farms Resort, Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 484 (1974)). Therefore, if the trial judge's conclusions are evidentially supported, we are inclined to accept them. Gnall v. Gnall, 222 N.J. 414, 428 (2015). "Only when the trial court's conclusions are so 'clearly mistaken' or 'wide of the mark' should an appellate court intervene and make its own findings to ensure that there is not a denial of justice." N.J. Div. of Youth & Family Servs. v. E.P., 196 N.J. 88, 104 (2008) (quoting N.J. Div. of Youth & Family Servs. v. G.L., 191 N.J. 596, 605 (2007)).

"On the other hand, a 'trial judge's legal conclusions, and the application of those conclusions to the facts, are subject to our plenary review.'" Spangenberg v. Kolakowski, 442 N.J. Super. 529, 535 (App. Div. 2015) (quoting Reese v. Weis, 430 N.J. Super. 552, 568 (App. Div. 2013)); see also D'Agostino v. Maldonado, 216 N.J. 168, 182 (2013) ("To the extent that the trial court's decision constitutes a legal determination, we review it de novo.").

The primary "purpose of awarding alimony to a spouse is based on 'an economic right that arises out of the marital relationship and provides the dependent spouse with a level of support and standard of living generally commensurate with the quality of economic life that existed during the marriage.'" Clark v. Clark, 429 N.J. Super. 61, 72-73 (App. Div. 2012) (quoting Mani v. Mani, 183 N.J. 70, 80 (2005)). Importantly, "'alimony is neither a punishment for the payor nor a reward for the payee[,]' but rather is designed for the purpose of assisting an economically dependent spouse." Id. at 74. (alteration in original) (quoting Mani, supra, 183 N.J. at 80).

The economic dependence created as a result of the marital relationship is a crucial finding necessary to impose an alimony award. As stated by the Legislature in N.J.S.A. 2A:34-23, the Family Part has authority to "make such order as to the alimony or maintenance of the parties" after judgment of divorce, dissolution or maintenance "as the circumstances of the parties and the nature of the case shall render fit, reasonable and just."

Before a court considers a motion seeking modification of alimony, the movant must present prima facie proof of a substantial change in financial circumstances of the parties since the entry of the alimony order sought to be changed. Lepis v. Lepis, 83 N.J. 139, 146 (1980). "The party seeking modification has the burden of showing such 'changed circumstances' as would warrant relief from the support or maintenance provisions involved." Id. at 157. The Court has explained "a decrease is called for when circumstances render all or a portion of support received unnecessary for maintaining that standard" of living enjoyed during the marriage. Id. at 153.

The factors to be considered in modifying alimony, especially when the obligor suffers a loss or forced change in employment, have been codified in amendments to N.J.S.A. 2A:34-23, effective September 10, 2014. L. 2014, c. 42, 1. In pertinent part, the statute provides

k. When a non-self-employed party seeks modification of alimony, the court shall consider the following factors

. . . .

(4) The income of the obligee; the obligee's circumstances; and the obligee's reasonable efforts to obtain employment in view of those circumstances and existing opportunities;

. . . .

(7) Any changes in the respective financial circumstances of the parties that have occurred since the date of the order from which modification is sought;

(8) The reasons for any change in either party's financial circumstances since the date of the order from which modification is sought, including, but not limited to, assessment of the extent to which either party's financial circumstances at the time of the application are attributable to enhanced earnings or financial benefits received from any source since the date of the order;

. . . . and

(10) Any other factor the court deems relevant to fairly and equitably decide the application.

[N.J.S.A. 2A:34-23(k).]

Here, the judge's factual findings stated in the October 24, 2014 order, concluding a prima facie change in financial circumstances had not been demonstrated, do not comport with this statutory analysis. Although defendant's ability to pay alimony has not lessened, see Lepis, supra, 83 N.J. at 157 (stating the party moving for modification "must demonstrate that changed circumstances have substantially impaired the ability to support himself or herself"), defendant adequately demonstrated plaintiff's gross earned income increased by sixteen thousand dollars from the amount imputed to her at the time of divorce. Contrary to the judge's statements, such a change in plaintiff's gross wages was "significant" when viewed in light of the family earnings at the time of divorce.2 See Aronson v. Aronson, 245 N.J. Super. 354, 364 (App. Div. 1991) (requiring consideration of obligee spouse's income as "crucial to the issue of that spouse's ability to contribute" to his or her support).

Accordingly, we conclude defendant's alimony modification request was improperly rejected. Defendant did present prima facie proof of a change in financial circumstances, making denial of his motion on October 24, 2014 premature. Plaintiff had not presented proof of her income and expenses. Thus, the motion judge should have deferred final consideration of defendant's application until plaintiff supplied her current, completed CIS.3 See R. 5:5-4(a) ("If the court concludes either that the party seeking relief has demonstrated a prima facie showing of a substantial change of circumstances or that there is other good cause, then the court will order the opposing party to file a copy of a current case information statement.").

That said, we note a substantial change in financial circumstances satisfies only one aspect of the financial equation needed to meet the Lepis test. The second consideration entails an examination of whether the dependent spouse has the financial wherewithal and ability to support herself (or himself) without further need of alimony. Crews, supra, 164 N.J. at 31. Ibid. Despite defendant's seemingly objective analysis of plaintiff's increased earnings purportedly eliminating a need for continued support, a review of all facts soundly refutes defendant's claim plaintiff is able to sustain herself without alimony.

Examining the record, we note plaintiff is employed on a full-time basis and earns a gross income above the amount imputed at the time of the divorce, yet her net income, after deducting taxes, medical insurance, and mandatory pension contributions, is insufficient to meet her Schedule A housing expenses. Defendant offers no evidence showing plaintiff's expenses are inflated or unsupported. Further, plaintiff's assets -- a home encumbered by mortgage debt and retirement savings -- are not liquid and remain unavailable to pay everyday needs. See Lepis, supra, 83 N.J. at 150 (noting reasonable support is not mere subsistence). Plaintiff's current CIS with supporting documentation does not demonstrate her need for alimony has diminished.

Defendant's analysis using gross income as demonstrating an ability to sustain the marital lifestyle ignores very obvious facts as it does not consider deductions for taxes, insurance, and mandatory pension contributions, which significantly reduce plaintiff's gross income. Other less specific costs, such as commuting, gasoline, clothing or lunch needs also may increase. See Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div.), certif. denied, 180 N.J. 354 (2004) (noting when reviewing marital lifestyle a "'numbers' inquiry and analysis" may be too limited a focus). Once these are accounted for, it is clear plaintiff remains in need of support.

We do not agree with defendant that an evidentiary hearing was necessary to reach this conclusion. Hand v. Hand, 391 N.J. Super. 102, 105 (App. Div. 2007) (concluding Family Part does not need to conduct a plenary hearing when it is unlikely the process would lead to a different outcome). Here, the uncontroverted evidence sufficiently enables examination of plaintiff's needs for support and defendant's ability to pay. Thus, the record is adequate to adjudicate the dispute and no further fact-finding is necessary. Vas v. Roberts, 418 N.J. Super. 509, 523-24 (2011).

Although the motion judge erred, the errors were harmless based on this record. See R. 2:10-2. For these reasons, we affirm the denial of the motion to modify or terminate alimony.

Defendant also contends the judge erred in failing to set May 11, 2014 as the effective date of the modified child support obligation. We agree in part.

Emancipation terminates an obligation to provide child support.4 Here, the May 11, 2014 emancipation of the oldest child required recalculation of child support for the unemancipated child. The January 9, 2015 order made the newly computed support effective December 10, 2014. The judge's statement of reasons suggests defendant's prior submissions insufficiently supported the costs he paid for the child's medical insurance. This ignores the objective in setting child support in an amount which is fair and equitable.

The documents ultimately submitted by defendant show he paid medical and dental insurance costs for the child in 2014 as well as 2015. The expenses actually paid by defendant for each year must be factored in as a component of child support. Accordingly, child support for one child must be calculated commencing May 14, 2014, using the insurance costs applicable to 2014; and, as necessary, again for costs paid in 2015, if changes in the insurance costs occurred. We remand this issue to the motion judge for additional review and if necessary, entry of a new order.

Defendant's appeal also challenges the award of counsel fees. Under Rule 5:3-5(c), the trial judge has discretion to award counsel fees in a matrimonial action. In making such an award, a judge must review the following factors enumerated in Rule 5:3-5(c)

(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.

See also R. 4:42-9(a)(1) ("No fee for legal services shall be allowed in the taxed costs or otherwise, except . . . [i]n a family action, a fee allowance . . . on final determination may be made pursuant to R. 5:35-5(c).").

Success in the litigation is not a prerequisite for an award of counsel fees. Guglielmo v. Guglielmo, 253 N.J. Super. 531, 545 (App. Div. 1992). Notably, our system does not employ the principle of "loser pays."

In a nutshell, in awarding counsel fees, the court must consider whether the party requesting the fees is in financial need; whether the party against whom the fees are sought has the ability to pay; the good or bad faith of either party in pursuing or defending the action; the nature and extent of the services rendered; and the reasonableness of the fees.

[Mani, supra, 183 N.J. at 94-95.]

We also underscore a fee award is not imposed on the more financially able party. Rather, the general rule is parties bear their own fees. The court in Kelly v. Kelly, 262 N.J. Super. 303 (Ch. Div. 1992), explained the circumstances warranting the imposition of fee shifting in matrimonial matters when bad faith is demonstrated

Fees in family actions are normally awarded to permit parties with unequal financial positions to litigate (in good faith) on an equal footing. Anzalone v. Anzalone Bros.[,] Inc. and Anzalone, 185 N.J. Super. 481, 486-[8]7 (App. Div. 1982). With the addition of bad faith as a consideration, it is also apparent that fees may be used to prevent a maliciously motivated party from inflicting economic damage on an opposing party by forcing expenditures for counsel fees. This purpose has a dual character since it sanctions a maliciously motivated position and indemnifies the "innocent" party from economic harm. Fagas v. Scott, [ 251 N.J. Super. 169, 194, 197-200 (Law Div. 1991).]

[Id. at 307.]

Here, the judge found defendant "filed his motion [for reconsideration] in bad faith" because: it was devoted to terminating alimony, despite the October 24, 2014 order; the motion was filed late; and the child support issues could have been resolved by agreement. Under these circumstances, two of the three bases underpinning the bad faith determination are no longer applicable.

As we have discussed, the October 24, 2014 denial of defendant's motion was erroneous, as a determination of whether alimony should be modified required review of plaintiff's financial situation. Unfortunately, the judge did not do this during the November 21, 2014 hearing, which prompted defendant's request to reconsider the issue. As stated in our opinion, we also disagree with the conclusion defendant's reconsideration motion was untimely.

We also reject the judge's finding of defendant's litigiousness because three motions were filed. In opposing the first motion, plaintiff did not include income documentation or a CIS; the October 24, 2014 order required her to supply these documents. Defendant's second motion addressed interference with parenting time. The remarks of the judge during the hearing justify defendant's assertions warranting intervention to curb plaintiff's inappropriate actions. The third motion sought reconsideration of the request to terminate alimony because the judge had not analyzed plaintiff's need for support once receiving her financial documentation. Although our opinion affirms the judge's order denying defendant's motion, this conclusion is based on review of the facts. Because the cited support for the finding defendant acted in bad faith is undermined, we remand the matter for consideration anew.

Finally, defendant maintains the judge did not explain the rationale for the order regarding provision of the child's medication. We disagree.

The January 9, 2015 order required plaintiff to fill and refill the prescriptions and granted defendant's request the child take the proper dose, as directed by his physician. The order further provides when the child has not taken the medication prior to commencing parenting time with defendant, plaintiff must assure the child has his medication.

Affirmed in part, reversed and remanded in part.

1 Defendant had also filed a motion to enforce parenting time, which was addressed by the court; appellate review of those issues was not sought.

2 We also agree the judge mistakenly considered how defendant did not suffer an impairment in his financial circumstances as impacting the rejection of his modification request. See Crews v. Crews, 164 N.J. 11, 31 (2000) ("[T]he financial condition of the supporting spouse is not relevant to the first step in the Lepis review, in which the movant must show that circumstances have changed for him or her.").

3 We also agree with defendant the time for reconsideration should not have commenced until after the November 21, 2014 order, which was entered following plaintiff's submission of her CIS.

4 Prohibiting the retroactive modification of child support is not implicated when the right to support ends. N.J.S.A. 2A:17-56.23a.