RICHARD BENNETT v. CHERYL BENNETT

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0939-04T10939-04T1

RICHARD BENNETT,

Plaintiff-Respondent,

v.

CHERYL BENNETT,

Defendant-Appellant.

 

Submitted: March 1, 2006 - Decided:

Before Judges Fall, C.S. Fisher and Grall.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket Number FM-14-439-99.

Einhorn, Harris, Ascher, Barbarito, Frost & Ironson, attorneys (Bonnie C. Frost, on the brief).

Respondent did not file a brief.

PER CURIAM

In this post-judgment matrimonial matter, defendant Cheryl Bennett appeals from an order entered in the Family Part on September 8, 2004. The following factual and procedural history is relevant to our consideration of the issues advanced on appeal.

Defendant and plaintiff Richard Bennett were married on August 14, 1982. Two children were born of their marriage: Alex, on May 22, 1988; and Elizabeth, on April 30, 1994. They separated on April 19, 1998, and the complaint for divorce was filed on or about October 6, 1998.

On June 13, 2000, the parties entered into a consent order, executed by the court, that finalized the procedure for sale of the former marital domicile in Chester, and disposition of the net proceeds. Pursuant to that order, the parties agreed to "engage in binding arbitration for the purpose of resolving all issues arising from these matrimonial proceedings." All discovery was to be completed by June 30, 2000, and an arbitrator selected by that date. The arbitration was to be completed by September 15, 2000, with a final decision on or before September 30, 2000.

William Morrison, a certified public accountant, served as arbitrator and issued an arbitrator's award on October 13, 2000, that provided in pertinent part:

1. Plaintiff's stock options from his employment at Lucent Technologies for April 1997, October 1997, and October 1998 were subject to equitable distribution, with portions thereof being distributed to defendant, as follows: 35%, or 9,520 shares of the April 21, 1997 option at $12.95 per share; 25%, or 4,500 shares of the October 1997 option at $21.66 per share; and 20%, or 3,000 shares of the October 1998 option at $29.36 per share. The October 1999 option was ruled not subject to equitable distribution;

2. Plaintiff was to receive a credit of $132,000 based on the disproportionate, agreed-upon division of the proceeds of sale of the marital domicile;

3. Stock in the possession of plaintiff (400 shares of Cisco; 130 shares of Oracle; 70 shares of General Electric) shall be shared equally. The Sun and Litepath stock, purchased subsequent to filing of the complaint, was not subject to equitable distribution;

4. After considering additional credits, in addition to the marital domicile credit, the net credit to plaintiff was $104,000, to be paid within 60 days of the final judgment, or within 6 months at 7% on the unpaid balance;

5. Defendant was entitled to 50% of plaintiff's frequent flyer miles as of the date of the filing of the complaint;

6. All retirement funds in existence as of the date of the complaint were to be divided evenly between the parties pursuant to a Qualified Domestic Relations Order (QDRO);

7. Defendant shall receive permanent alimony in the amount of $40,000 per year, plus rehabilitative alimony in the amount of $15,000 for four years;

8. For year 2000, plaintiff was entitled to take tax deductions, and "Insofar as these payments include interest and taxes on the former marital residence, the wife will be entitled to claim the tax and interest payments as deductions on her tax return and the defendant will claim the payments as deductible alimony payments[;]"

9. [Plaintiff] will pay [defendant] "child support of $12,500 per year per child and 15% of his gross bonus (if any) on an annual basis with a cap on the bonus of $200,000; therefore, there will be a cap on the child support from the bonus of $30,000 ($200,000 x 15% = $30,000). Moreover, for the first four years (when rehabilitative alimony is paid), [defendant] will receive no child support on the first $60,000 of the bonus. All unreimbursed medical and dental, prescription drug expenses will be paid two-thirds by the [plaintiff] and one-third by the [defendant]. Summer camp will be allocated two- thirds to the [plaintiff] and one-third to the [defendant] with a cap of $4,000 per child for summer camp. [Plaintiff] is responsible for the son Alex's orthodontic expense. The evaluation expense for Alex will be allocated two- thirds to the [plaintiff] and one-third to the [defendant]. Tutoring expenses will be allocated two-thirds to the [plaintiff] and one-third to the [defendant]. All unreimbursed medical expenses will be paid two-thirds by the [plaintiff] and one-third by the [defendant]. [Plaintiff] will maintain medical insurance for the children on his policy. . . ."

A dual final judgment of divorce was entered on November 9, 2000, dissolving their marriage and incorporating the terms of the arbitrator's award. In response to post-judgment questions posed by counsel for the parties, by letter dated November 20, 2000, the arbitrator responded, as follows:

Since Mr. Bennett receives both a salary and a year-end bonus, my intention in structuring alimony and child support awards with payments to be made from salary and from bonus was to protect Mr. Bennett should he receive a lower bonus or receive no bonus. My intention and all of my calculations show that Mr. Bennett was to pay the $40,000 permanent alimony award, the $15,000 per year rehabilitative alimony award and the $25,000 in child support from his salary, not from his bonus. Because he was to pay the additional $15,000 per year for four years as rehabilitative alimony, I intended to give him relief on the first $60,000 of bonus so that there was no child support to be paid from this amount.

I did not intend to link the rehabilitative alimony to the bonus. [I] intended that the rehabilitative alimony be paid whether or not Mr. Bennett be paid a bonus.

The record on appeal discloses that the parties did not effectuate the distribution of retirement proceeds through a QDRO, or the payment of the equitable distribution credit to plaintiff as set forth in the arbitrator's award, as incorporated by the final judgment. The record also reflects that beginning shortly after entry of the divorce judgment in November 2000, there were numerous post-judgment motions filed in the Family Part over the next several years on numerous issues, including the QDRO and equitable distribution credit issues.

On June 29, 2001, the Family Part issued an order directing plaintiff's attorney, Lawrence Forster, Esq. to prepare a QDRO to effect the arbitrator's award, with the parties to equally share the preparation costs. From defendant's share of her receipt of funds from the QDROs, defendant was ordered to liquidate enough funds to pay plaintiff the $104,000 equitable distribution credit, and the court reserved on the issue of plaintiff's entitlement to interest on that amount.

Subsequent to the June 29, 2001 order, correspondence in the record discloses that Mr. Forster was unable to begin preparation of the QDROs due to a lack of required information. On October 31, 2001, the Family Part issued an order appointing DeAnne C. DeFuccio, Esq. to prepare the QDROs. Correspondence in the record indicates that eight more months passed and the Ms. DeFuccio had still not been formally retained by the parties, and the QDROs were still not prepared.

On July 9, 2002, the Family Part issued an order that provided as follows:

1. Plaintiff was required to pay defendant $3,655 by not later than August 10, 2002, as reimbursement for the 2002 summer camp tuition for the children;

2. Plaintiff was ordered to pay defendant the outstanding balance for orthodontic treatment of Alex of $2,620, and plaintiff was permitted to discuss future treatment with the orthodontist;

3. Plaintiff was directed, within 45 days of receipt of bills, to pay defendant uncovered hospital bills arising from the injury suffered by Alex on May 31, 2002;

4. Plaintiff was directed to pay his two- thirds share of the cost of the 2001 camps for the children within 7 days of his receipt of his $104,000 equitable distribution credit.

The ongoing dispute concerning the identity of retirement funds subject to distribution by the QDROs continued for more than an additional year.

On September 15, 2003, defendant filed a motion seeking an increase in child support; an increase in the permanent alimony award and an extension of the rehabilitative alimony award, or, in the alternative requiring plaintiff to submit an updated case information statement (CIS), a copy of the deed to his residence and his 2002 and 2003 income tax returns; directing plaintiff to provide documentation concerning bonuses received from his employers for the years 2000 through 2003, and to pay child support arrearages to be calculated thereon; directing plaintiff to pay $14,281.60 in arrearages on the children's expenses that he was required by the final judgment to pay; awarding defendant the ability to exercise 17,020 of plaintiff's stock options "and in the alternative should Plaintiff not have received 17,200 of stock options awarding Defendant the value of the stock options or her proportionate share of any compensation received by Plaintiff in consideration of his Lucent Stock Options from United Technologies[;]" crediting defendant $23,000 for the value of common stock awarded to her by the final judgment against the $104,000 owed to plaintiff; directing that the credit awarded to plaintiff of $104,000 be vacated pursuant to R. 4:50-1; directing that the medical insurance provider pay claims directly to the medical provider, that defendant receive all information regarding claims and coverage from the provider, and that plaintiff provide proof of the required life insurance coverage; directing plaintiff to compensate defendant $15,000 for the frequent flyer mileage awarded to her in equitable distribution; directing that plaintiff pay the orthodontic bills of Alex directly; requiring plaintiff to contact the children's therapists to work toward normalizing his parenting schedule; and for an award of counsel fees and costs.

In her supporting certification, defendant contended, inter alia, that the alimony, equitable distribution and child support awards had not allowed her and the children to live at the standard of living acquired during the marriage, whereas plaintiff's standard of living had dramatically increased. She asserted that plaintiff's earnings had significantly increased, as he had attained the position of vice president of global operations of United Technologies Corporation.

With respect to the stock options, defendant contended that plaintiff had left Lucent Technologies, where he had been a vice president, in April 2002, and had failed to notify her of the status of her 17,020 Lucent stock options. She stated that when he left Lucent, plaintiff forfeited his right to those options and they became worthless. She also speculated that plaintiff was likely compensated for the loss of those Lucent stock options by stock options awarded to him by United Technologies.

Defendant also asserted that plaintiff's delay in effecting distribution of the retirement funds through QDROs, as required by the final judgment, had resulted in a substantial diminishment of her share of retirement funds due to the substantial decrease in the value of Lucent stock, which comprised a large portion of those funds.

In his responding certification, plaintiff contended that the delay in obtaining QDROs to effect the ordered equitable distribution of the pension funds was attributable to defendant's conduct. Plaintiff explained that since the final judgment provided that his equitable distribution credit of $104,000 was to be paid from the division of the pension funds, defendant had embarked on a conscious effort to prevent that distribution. He also asserted that defendant had failed to exercise the stock options, and had refused to obtain employment although highly qualified.

Plaintiff stated that he was not an officer of Lucent, and had not been privy to inside information concerning the financial stability of the company. He asserted that he was fortunate to obtain employment with United Technologies in 2002 after Lucent suffered financial setbacks. Plaintiff denied the assertion that his income had increased substantially, noting that his average gross income from 1997 through 1999 was $413,000, and that his average gross income for the period 2000 through 2002 was $221,000. Plaintiff contended that his gross income had decreased by 46% since the date of divorce, and asserted he had received no salary increases or bonuses from Lucent in 2000, 2001, or 2002. Plaintiff also denied receiving any hiring, retention or other cash compensation from United Technologies when he accepted that position in 2002.

Plaintiff certified that he "never realized any money from the stock options granted to me while employed at Lucent." He further noted that following the final judgment, defendant "never requested her shares be exercised." Plaintiff explained that each Lucent stock option vested three years after its grant. At the time of the final judgment, Lucent stock was trading at $19.20 per share and the pre-tax value of the shares granted to defendant was $72,600. Plaintiff explained that the Lucent stock options became worthless because its stock declined to a value of $8.70 per share by May 9, 2001, and then to less than $3.00 per share thereafter.

Plaintiff also denied that there were any child support arrears, stating that he paid the amounts contained in the final judgment and that he had received no bonuses in 2000 through 2002. Plaintiff's certification also addressed other issues raised by defendant's motion, contending defendant had destroyed his relationship with the children; had filed a meritless domestic violence action against him; had refused to satisfy the equitable distribution credit due him in the amount of $104,000; and had obtained double reimbursement for some medical bills. Plaintiff further denied that the medical, dental or life insurance coverage had lapsed, and stated that airline policy precluded the transferring of frequent flyer miles to defendant.

In her reply certification, defendant argued that there were no findings by the arbitrator concerning marital lifestyle, and that since the assets she was distributed were never received or became worthless she was unable to maintain the lifestyle acquired during the marriage. Defendant argued that since she did not received the assets anticipated and contemplated by the arbitrator's award, the support level should be increased to allow her to meet the increasing costs associated with the support of the children.

Defendant maintained that the support figures were based on plaintiff's base salary of $191,700, not the figures set forth in plaintiff's certification. She argued that plaintiff's base salary had since increased by approximately $50,000 since that time. She also contended that plaintiff had received a bonus of $85,000 in 2003. Defendant stated that it had always been contemplated that the $104,000 equitable distribution credit would be paid to plaintiff from distribution of the retirement funds, which was unduly delayed by him, or from the stock options, which were now worthless. Defendant requested discovery on the issues of plaintiff's bonuses and stock options. Defendant also asserted she was incapable of working, and has been under the care of a psychiatrist.

On October 31, 2003, the Family Part issued an order directing discovery and scheduling the matter for a plenary hearing. The order also required plaintiff to pay defendant $3,750, payable at $800 per month, in additional child support based upon plaintiff's September 15, 2003 pay stub showing a bonus of $85,000.

Consistent with the nature of the procedural history of this matter, the discovery period was contentious. On February 19, 2004, defendant filed a motion seeking enforcement of discovery; payment of the balance of support monies due her based on plaintiff's bonuses; payment of medical bills and health care costs; and for counsel fees and costs. Opposition was filed by plaintiff.

On March 19, 2004, the court issued an order requiring plaintiff to comply with all discovery within ten days; directing plaintiff to pay alimony at the rate of $7,000 per month, beginning March 29, 2004; ordering plaintiff to pay defendant the amount due on his 2003 bonus within fourteen days; directing plaintiff to pay $1,000 to defendant in counsel fees and costs; and requiring plaintiff to make arrangements for the bill of Dr. Gates to be paid within fourteen days.

In June 2004, Ms. DeFuccio completed the QDRO, and the parties received distribution of equal shares of the retirement funds.

The plenary hearing was conducted in the Family Part on June 21, July 7, July 8, July 15, and July 16, 2004. On August 17, 2004, the trial judge delivered an oral decision, and entered an order on September 9, 2004 that provided in relevant part:

1. Plaintiff's permanent alimony obligation to defendant was increased from the $40,000 per year to the sum of $55,000 per year effective on the first day of the month following the final payment of rehabilitative alimony;

2. Income of $25,000 per year net was imputed to defendant;

3. Plaintiff's child support obligation was increased from $25,000 to $27,612 per year, but he was given a credit for any payments he had made associated with his bonus for the year 2004;

4. Plaintiff's share of the following children expenses was increased from two-thirds to seventy-five percent: all unreimbursed medical, dental and prescription drug expenses of the children after defendant pays the first $250 per child per year; all of the children's camp, tutoring expenses, driving lessons, the increase of defendant's automobile insurance, and the SAT prep costs; the costs of one vacation with the defendant per year per child; and 100% of the costs of an up-to-date computer for the children;

5. Plaintiff shall pay defendant $8,668.64 for medical expense arrears and $696.30 for dental expenses, said amounts to be credited against defendant's obligation to pay plaintiff $104,000 plus simple interest at the court rule rate from May 9, 2001;

6. Plaintiff shall pay defendant $12,000 in legal fees, to be credited against her $104,000 obligation to plaintiff;

7. Plaintiff shall transfer the General Electric, Oracle and Cisco stocks to defendant;

8. Defendant shall pay plaintiff $104,000, plus simple interest at the court rule rate from May 9, 2001, minus credits of $8,668.64, $686.30, $12,000, and the counsel fee award from the March 19, 2004 order, by December 31, 2004. Upon failure to do so, plaintiff may take a credit of $20,000 per year against his alimony payments; and

9. Plaintiff shall transfer one-half of his frequent flyer miles to defendant within 21 days.

The court did not specifically address defendant's request that the Lucent stock options be replaced with United Technologies stock options.

Defendant filed a notice of appeal on October 22, 2004. Plaintiff filed a notice of cross-appeal on November 4, 2004. Plaintiff's cross-appeal has been dismissed and his brief suppressed.

On appeal, defendant presents the following arguments for our consideration:

POINT I

THE COURT DID NOT MAKE FINDINGS OF FACT TO UNDERGIRD ITS DECISIONS AND THEREFORE ITS DECISION MUST BE OVERTURNED.

POINT II

THIS IS AN ABOVE THE GUIDELINES CASE AND THUS, THE COURT ERRED IN AWARDING ONLY $531 PER WEEK IN CHILD SUPPORT FOR TWO CHILDREN, ONE OF WHOM IS 16 YEARS OLD.

POINT III

IN THE INTERESTS OF JUSTICE, THE $104,000 CREDIT OWED BY DEFENDANT TO PLAINTIFF SHOULD HAVE BEEN VACATED.

POINT IV

THE COURT ERRED IN NOT ADDRESSING DEFENDANT'S REQUEST TO HAVE THE LUCENT OPTIONS PLAINTIFF FORFEITED ON HER BEHALF BE REPLACED BY UNITED TECHNOLOGY OPTIONS.

POINT V

THE COURT SHOULD HAVE AWARDED DEFENDANT $15,000 IN LIEU OF DEFENDANT'S SHARE OF FREQUENT FLYER MILES WHICH NOW REQUIRES PLAINTIFF TO COOPERATE WITH DEFENDANT.

POINT VI

LEGAL FEES - THE COURT'S AWARD OF $12,000 IN LEGAL FEES FAILS TO ADDRESS DEFENDANT'S NEEDS AND REWARDS PLAINTIFF'S BAD FAITH ACTIONS.

I.

Defendant argues that the trial judge erred in denying her application to modify the equitable distribution award. In her motion, defendant had sought an order replacing the worthless Lucent stock options with United Technologies stock options; awarding her the sum of $15,000 in lieu of her awarded share of frequent flyer miles; and vacating her obligation to pay plaintiff the $104,000 equitable distribution credit (less the credits awarded), plus interest.

In support of her contention that she is entitled to an award of United Technologies stock options in lieu of the worthless Lucent stock options, defendant notes that when plaintiff left Lucent in 2002, United Technologies provided him with a sign-on incentive of 12,500 stock options, with a value of approximately $420,000. Defendant argues that this stock-option incentive essentially replaced the worthless Lucent stock options, and therefore should be partially distributable to her. Alternatively, defendant argues that a portion of the United Technologies stock options should have been awarded to her as additional child support under that portion of the final judgment requiring plaintiff to pay fifteen percent of his gross bonus after the first $60,000.

As we have noted, the trial court did not rule on this request by defendant. Defendant testified, without contradiction, that Lucent required stock options to be exercised within ninety days of resignation. Defendant asserts that because she was never consulted with respect to the exercise, or not, of the Lucent stock options, they were forfeited. She contends that plaintiff, ex parte, chose that course of action because he was able to recoup the value of those options in the form of a sign-on incentive with United Technologies in the form of stock options of that company.

Although it is undisputed that plaintiff did not consult defendant concerning the exercise of the Lucent stock options at or within ninety days of his resignation from Lucent in 2002, our review of the record discloses that during her testimony, defendant acknowledged that by the time the final judgment was entered on November 9, 2000, the Lucent stock options were valueless because Lucent stock had plummeted below the strike price of the lowest options. Therefore, it made no economic sense to exercise the stock options and take a loss. Moreover, the record reflects that the circumstances vis- -vis the economic feasibility of exercising the stock options at the time plaintiff left Lucent in 2002 had not improved and its stock was less than $3.00 per share, well under the strike prices of $12.95 to $29.36 per share under the options. We therefore find no basis in the record warranting a substituted distribution of the United Technologies stock options because they were not legally or beneficially acquired during the marriage and thereby were not subject to equitable distribution. See N.J.S.A. 2A:34-23h (authorizing the court "to effectuate an equitable distribution of the property . . . which was legally and beneficially acquired" by the parties "during the marriage").

Nevertheless, the stock options conferred upon plaintiff by United Technologies as a sign-on bonus constituted a potentially significant benefit to plaintiff that at least warranted consideration in the application of defendant to vacate the $104,000 equitable distribution credit pursuant to R. 4:50-1(f), as well as consideration in the support calculus.

As we have noted in Harrington v. Harrington, 281 N.J. Super. 39, 48 (App. Div.), certif. denied, 142 N.J. 455 (1996):

Modification of the equitable distribution provisions of the property settlement agreement here is governed by R. 4:50-1(f). Designed to balance the interests of finality of judgments and judicial economy, . . . relief from judgments pursuant to R. 4:50-1(f) requires proof of exceptional circumstances. . . . Ordinarily, to establish the right to such relief, it must be shown that enforcement of the order or judgment would be unjust, oppressive or inequitable. . . .

[Citations omitted.]

Accord Schwartzman v. Schwartzman, 248 N.J. Super. 73, 77 (App. Div.), certif. denied, 126 N.J. 341 (1991); Rosen v. Rosen, 225 N.J. Super. 33, 35-36 (App. Div.), certif. denied, 11 N.J. 649 (1988); Edgerton v. Edgerton, 203 N.J. Super. 160 (App. Div. 1985).

We have noted that the standard applicable to modification of equitable distribution orders is quite different from the changed circumstances of Lepis v. Lepis, 83 N.J. 139, 145-49 (1980), which is only applicable to the modification of support obligations. Inserra v. Inserra, 260 N.J. Super. 71, 73-74 (App. Div. 1992); Connor v. Connor, 254 N.J. Super. 591 (App. Div. 1992). Therefore, a change in financial circumstances, standing alone, does not satisfy the R. 4:50-1(f) standard. Ibid.

The record reflects that defendant's request for an order, pursuant to R. 4:50-1(f), vacating her responsibility under the final judgment to satisfy the $104,000 equitable distribution credit was not specifically adjudicated. Accordingly, we are constrained to remand that issue to the Family Part for further consideration in accordance with the standards articulated above. By this remand, we do not suggest that it should be granted or denied, only that it be addressed, analyzed, and decided, supported by findings of fact and conclusions of law. See R. 1:7-4(a).

Plaintiff's receipt of the sign-on incentive stock options from United Technologies is, however, relevant to the consideration of child support, particularly since plaintiff elected to take stock options instead of United Technologies' offer of less stock options and cash, which may have impacted on the additional child support provisions of the final judgment. Children are entitled to share in the economic success of their parents. Loro v. Colliano, 354 N.J. Super. 212, 223-24 (App. Div.), certif. denied, 174 N.J. 544 (2002). Moreover, in circumstances where the total income of the parties exceeds the child support guidelines, the goal is to calculate a child support obligation that reflects the best interests of children, "after giving due consideration of the statutory factors and the guidelines." Caplan v. Caplan, 182 N.J. 250, 272 (2005). Here, the record does not reflect how, or whether, plaintiff's receipt of these sign-on incentive stock options was considered when fashioning the children's entitlement to child support. See N.J.S.A. 2A:34-23a(3) (requiring the court to consider "[a]ll sources of income and assets of each parent[]" in fashioning a child support order). Accordingly, we are constrained to remand the matter to the Family Part for that determination.

Defendant also asserts that the court erred in failing to require plaintiff to pay her $15,000 in lieu of half of the frequent flyer miles that she was awarded in the final judgment. We disagree. There is nothing in the record to support defendant's contention that her share of the frequent flyer miles equated to a value of $15,000. Moreover, the trial court implemented the agreement of the parties by requiring plaintiff to transfer to defendant's name her share of the miles. In the event that is not, or cannot be, accomplished, the court can consider the matter further upon application by either party.

Defendant further argues that the trial court erred in requiring her to obtain a home equity loan to repay the balance of that amount due plaintiff, plus interest at the court rule rate, and in absence thereof, authorizing plaintiff to deduct $20,000 per year from the alimony obligation to satisfy the amount due if she failed to pay same. We agree.

The record on appeal contains significant information in the form of correspondence, as well as testimony, concerning the reasons for the significant delay in achieving distribution of those pension proceeds subject to equitable distribution through execution of a QDRO. Although the parties dispute the reasons why it took more than three and one-half years to obtain a signed QDRO to effect that distribution, both agree that the delay was costly, as the value of the retirement proceeds significantly decreased during that period.

Our review of the record also discloses that at the time of the final judgment, the two principal sources from which defendant would be able to pay that equitable distribution credit to plaintiff were the stock options, which are now worthless, and the retirement funds, which are now diminished to the point that they are inadequate to achieve repayment. Defendant's assets that existed at the time of the arbitration/mediation in September 2000, have dramatically decreased. At that time, it was anticipated by all that defendant would be receiving significant funds in the form of Lucent stock options, retirement funds, and common stock. All of those assets are now either non-existent or have been substantially reduced in value. Although the same is true as to plaintiff's interest in those assets, he has had a demonstrated "opportunity for future acquisitions of capital assets and income[,]" N.J.S.A. 2A:34-23b(8), in the form of a very substantial income and benefits from United Technologies and new stock options of substantial value from that company. Additionally, defendant testified that the equity in her home was insufficient to enable her to obtain an additional mortgage to satisfy the equitable distribution credit.

Thereby, the record supports the testimony of defendant that the only viable method by which she would have been financially able to pay plaintiff the agreed-upon equitable distribution credit would be through the ordered reduction in the alimony. However, implementation of such a method undercuts the fundamental basis of the support analyses otherwise undertaken by the trial court, in that defendant would be unable to provide for her own needs, as well as those of the children if she receives $20,000 less per year in alimony until that remaining obligation is satisfied. Such an order, if permitted to stand, can only result in harm to the children.

Specifically, the trial judge found that the monthly expenses of defendant and the children were $10,840. The judge then imputed $2,083.33 net monthly income to defendant, and awarded her $4,583.33 per month in gross alimony, and $2,301 in child support. If defendant is required to repay the equitable distribution credit at the ordered rate of $1,666.66 per month, defendant's gross alimony would be $2,916.67. Assuming a twenty-percent (20%) tax rate applicable to the alimony, as the trial judge did, it would leave defendant with $2,332 in net monthly alimony. That amount, plus the child support award, would provide defendant with total monthly net income, inclusive of the imputed income, of $6,716.33. It is evident that in light of this substantial budgetary shortfall created by the ordered repayment of the equitable distribution credit in this manner, there would be no ability of defendant or the children to maintain a reasonable lifestyle, no less a lifestyle reasonably comparable to that enjoyed during the marriage.

An ordered payout of equitable distribution from funds otherwise designated as support designed to sustain basic needs and a lifestyle reasonably comparable to that enjoyed during the marriage is a powerful factor in the calculus of arriving at an order that is equitable and fair. See N.J.S.A. 2A:34-23b(10) (recognizing, as one of the factors in determining alimony, "[t]he equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair[]").

In this record, we find no analysis of the effect of the imposed requirement that defendant repay the equitable distribution credit to plaintiff through a reduction of her alimony award. On this record, for the reasons stated, we find this method to be wholly inequitable and patently unfair.

We also consider the award of interest to plaintiff on the balance of the equitable distribution credit to constitute error. The parties' agreement, as memorialized in the final judgment, provided:

Wife will have the option to pay the husband $104,000 within 60 days from final [judgment] of divorce or in the alternative to pay within 6 months with simple interest at a rate of 7% on the unpaid balance from the date of the final judgment of divorce. If payment is not made within six months, the husband will have the option of liquidating the wife's share of stock options sufficient to provide him with $104,000 after deducting 40% for taxes. At her discretion, the wife may credit Oracle, Cisco or General Electric stock net of taxes in accordance with the above methodology.

Since both the stock options and the common stock were in plaintiff's name and control, plaintiff could have liquidated those assets and satisfied all or at least a portion of defendant's obligation to him from her share of those assets. He did neither, and there have been no findings by the trial court quantifying the value or availability of those assets for that purpose.

Accordingly, we conclude that the trial court misapplied its discretion in requiring defendant to pay plaintiff the equitable distribution credit through a reduction of alimony, and in ordering her to pay interest thereon. Unless the Family Part otherwise vacates the equitable distribution credit, we remand the issues of payment of the remaining balance on the equitable distribution credit and interest, if any, due thereon. In doing so, and in arriving at an equitable and fair determination, the trial court shall consider the interrelationship of alimony, child support and equitable distribution, and the interplay all of the factors contained in N.J.S.A. 2A:34-23a, N.J.S.A. 2a:34-23b, and N.J.S.A. 2A:34-23.1 on the current circumstances of the parties and children.

II.

Defendant also argues that the trial court erred in setting permanent alimony at $55,000 per year, contending that the court should have increased the permanent alimony award to $84,000 per year and extended the rehabilitative alimony award for at least one more year. Defendant further contends that the trial judge erred in setting the child support award at $27,612 per year. We discuss these issues together because of the interrelationship between child support and alimony.

After considering the testimony and evidence adduced at the plenary hearing, the trial judge found "that there are changed circumstances in this matter." The judge recognized that it had been anticipated that defendant would be able to supplement the alimony award with earned income, but "[u]nfortunately, her health deteriorated after the divorce, and the parties' son has had significant problems with drugs and depression that have affected [defendant's] ability to work and pursue a career." The judge further noted that

at the time of the arbitrator's decision, it was assumed that [defendant] would receive significant assets as her share of stock options granted to [plaintiff] during the marriage.

She was to be able to generate income from investments, and . . . the estimated value of the options was someplace between $400,000 to a million dollars.

Unfortunately, the stock options lost their value, and [defendant's] expectation of additional income was never fulfilled. Moreover, there was a concern at the time that [plaintiff] would not be able to match his marital income because he might not receive bonuses similar to that which he had earned during the marriage.

However, [plaintiff] is now making an income close to that which he earned during the marriage. This will permit him to meet the needs of [defendant]. . . .

Clearly, $40,000 in alimony was not likely to permit [defendant] to live in the lifestyle the parties enjoyed during the marriage. The arbitrator contemplated that [defendant] would pursue a career and she would be able to generate additional income from her share of the stock options.

This hasn't happened and, thus, circumstances have changed from the initial award, in addition to [plaintiff's] increased income, which now demonstrate that he does have the ability to pay in accordance with [defendant's] needs.

After making these predicate findings, the trial judge reviewed the parties' marital lifestyle, as disclosed by the testimony of the parties, stating that it consisted of, inter alia, large homes, several acres of land for the marital dwelling, hired decorators, expensive furniture, paid lawn care and snow removal, domestic help, company cars, vacations, some connected with business, money available for travel in Europe, Canada and the United States, dining in restaurants, purchase of clothing from boutique shops, memberships in tennis clubs, riding lessons, no credit card debt, $331,000 in savings and 401Ks, approximately $53,000 in IRAs, and medical coverage with dental and prescription plans.

The judge then found that a lifestyle comparable to that enjoyed by defendant and the children during the marriage required approximately $10,840 per month. The judge then imputed $25,000 in annual gross income to plaintiff, considered the then-existing $40,000 alimony award, assumed an income tax burden of $10,000, factored in the $25,000 child support award, and found that defendant "has $80,000 available to her for herself and her children." The judge found that this amount of net available funds would not permit defendant and the children to meet the "lifestyle expenses each month."

In analyzing the alimony issue, the judge decided to increase the permanent alimony award to $55,000, and concluded that, as tax-affected, that increase would give defendant a total of $90,000 per year in net available funds, assuming the child support remained at the $25,000 level.

The judge noted that the support contained in the final judgment was founded on plaintiff's base gross income of approximately $190,000, and reasoned that the base salary was used at that time "[b]ecause of the deterioration of Lucent and the concern about [plaintiff's] ability to pay more alimony based on the size of the bonuses he had received in the past[.]" The judge recognized that increases in child support were provided for in the event bonuses were received, but noted that "any increase in alimony based on future bonuses appears not to have been addressed by the arbitrator." The judge concluded that based on the certainty of plaintiff's current income, he "has the ability to pay support for [defendant] so that she could live in the marital lifestyle[,]" finding that defendant "is not able to live the marital lifestyle with the support she is not receiving." Therefore, the judge increased the annual award of permanent alimony from $40,000 to $55,000, and eliminated the rehabilitative alimony award on the basis of her ability to earn.

The trial judge properly recognized that the goal of alimony is to assist a dependent spouse in achieving a lifestyle that is reasonably comparable to that acquired during the marriage. Crews v. Crews, 163 N.J. 11, 16 (2000). In determining an appropriate alimony award, either initially or in the modification of an existing award upon a finding of changed circumstances, the court shall consider the following factors:

(1) The actual need and ability of the parties to pay;

(2) The duration of the marriage;

(3) The age, physical and emotional health of the parties;

(4) The standard of living established in the marriage and the likelihood that each party can maintain a reasonably comparable standard of living;

(5) The earning capacities, educational levels, vocational skills, and employability of the parties;

(6) The length of absence from the job market of the party seeking maintenance;

(7) The parental responsibilities for the children;

(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;

(9) The history of the financial or non- financial contributions to the marriage by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;

(10) The equitable distribution of property and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;

(11) The income available to either party through investment of any assets held by that party;

(12) The tax treatment and consequences to both parties of any alimony award including the designation of all or a portion of the payment as a non-taxable payment; and

(13) Any other factors which the court may deem relevant.

[N.J.S.A. 2A:34-23b.]

Here, after concluding that the reasonably comparable lifestyle needs of defendant and the children were $10,840 per month, the trial judge increased the annual permanent alimony award from $40,000 to $55,000; declined to extend rehabilitative alimony; and imputed gross annual income to defendant of $25,000.

We are unable to fully determine from the record on appeal how the trial court arrived at the $10,840 monthly needs. Although there was some discussion by the trial judge of certain expenses, and an indication that some were inflated, we cannot determine what adjustments were made or why the court believed certain expenses were inflated. There is also an absence of a discussion and analysis of the factors outlined in N.J.S.A. 2A:34-23b in arriving at the alimony amount.

Additionally, defendant testified her budget had included some of expenses of the children that he was court-ordered to pay because plaintiff had not been paying his share thereof. Defendant had testified that her monthly budgetary needs were $12,640, which the judge reduced to $10,840. The judge stated that some of her alleged expenses were inflated, but the record is not clear as to whether the judge also reduced defendant's proffered budget by amounts contained therein that represented plaintiff's share of some of the children's expenses. We also note that defendant testified that some of the expenses on her 2003 case information statement had increased, such as school lunches, clothing, club dues and memberships, education costs for defendant to obtain a teaching certification, children's lessons, alcohol, gifts, attorneys' fees, and others. We cannot determine whether that testimony was considered and, if so, how it factored into the court's determination of the reasonable budgetary needs of defendant and the children.

In imputing $25,000 gross income to defendant, the judge considered that defendant had received rehabilitative alimony of $15,000 annually for four years; she had obtained a paralegal certification during that time; and that she had some experience in the environmental field. The judge also ruled that defendant had not established that Alex's health and drug problems would impede her ability to work. Neither party introduced any evidence to establish the types of jobs that defendant should be able to obtain or concerning the average salary of those jobs. There are specific income imputation procedures set forth in the child support guidelines. See Pressler, Current New Jersey Court Rules, Appendix IX-A, 12. "Imputing Income to Parents" (2006). However, the record contains no analysis in accordance with those procedures. Thus, it is not clear how the judge reached the annual figure of $25,000 gross income for defendant.

We also note that despite the trial court's finding that plaintiff had been earning income sufficient to pay a support amount that would permit defendant and the children to maintain a lifestyle reasonable comparable to that acquired during the marriage, the combination of the court-determined alimony, child support and imputed income was woefully insufficient to meet the lifestyle needs of defendant and the children, as found by the judge. According to the child support guidelines worksheet attached to the September 9, 2004 order, the amount of the alimony and imputed income, as tax affected, yielded net weekly income of $1,175, or, $5,091.66 per month. The awarded child support is $2,301 per month, for a total of $7,392.66 per month, which is approximately $3,447.34 per month less than the lifestyle needs found by the trial judge. Accordingly, the findings are internally inconsistent.

Therefore, we are unable to determine whether the trial court misapplied its discretion in establishing the permanent alimony award. See Salch v. Salch, 240 N.J. Super. 441, 443 (App. Div. 1990) (noting that meaningful appellate review is precluded in the absence of specific reasons and analysis). We are thus constrained to reverse the alimony award and remand the matter for further findings and an analysis of the factors contained in N.J.S.A. 2A:34-23b in determining an appropriate alimony award. The findings of the judge concerning defendant's ability to work at some level of income are supported by the record; it is the level of that income that is not supported by the record. Although it thus appears that further rehabilitative alimony is not appropriate, we cannot definitively come to that conclusion based on this record. Accordingly, on remand the trial court should also consider the issue of rehabilitative alimony.

The judge next turned to the issue of child support. The judge first increased plaintiff's share of the children's expenses from two-thirds to three-quarters "so that the percentage is more in accordance with the proportion of [plaintiff's] income to that of [defendant]." The judge then concluded that

[c]hild support should be increased in accordance with the child support guidelines, in addition to a supplemental sum as directed by this court. This is so because [plaintiff's] income exceeds the guidelines, and the court is directed to supplement the guidelines with other contributions which will establish an appropriate amount of support for the children without [defendant] having to wait for [plaintiff] to admit he received a bonus.

This was certainly the appropriate approach. See Caplan v. Caplan, 182 N.J. 250, 270-72 (2005) (ruling that when "the combined net income of the parties exceeds the maximum income under the guidelines of $150,800, the court must also consider the factors set forth in N.J.S.A. 2A:34-23, and any other relevant factor" when determining "the supplemental support award").

Based on the judge's finding that plaintiff's gross annual income was $342,000, the judge required plaintiff to pay child support of $531 per week, or, $27,612 annually, in addition to three-quarters of the children's unreimbursed medical, dental and prescription drug expenses, after defendant pays the first $250 per year for each child; three-quarters of the children's camp expenses, and the costs of tutoring, driving lessons, tennis lessons, riding lessons, SAT preparation courses, and increases in automobile insurance for the children. The judge also required plaintiff to purchase an updated computer system for the children, as well as three-quarters of the cost of one vacation for the children each year.

As we have already noted, although the judge found the monthly needs of defendant and the children to be $10,840 in order to maintain a lifestyle reasonably comparable to that acquired during the marriage, the record does not contain an analysis of the remaining factors set forth in N.J.S.A. 2A:34-23b as to the alimony award. Likewise, we find no analysis in the record of the factors contained in N.J.S.A. 2A:34-23a to determine whether an additional amount of child support above the guidelines award was appropriate and, if so, in what amount, and why. The child support guidelines worksheet attached to the September 9, 2004 order discloses that the court used $481 in gross taxable income for defendant ($25,012 annually), and $6,594 in gross taxable income for plaintiff ($342,888 annually), in arriving at the $531 weekly child support award. Since there was no monetary amount ordered in excess of the guidelines-calculated amount, the inevitable conclusion is that the trial judge decided that the "supplemental support award" warranted consisted of the increase of plaintiff's responsibility for the other, non-guidelines-based needs of the children from two-thirds to three-quarters. However, the record does not quantify the monetary value of those needs, nor what this increase in plaintiff's percentage responsibility amounts to in terms of actual costs.

Since the record contains no analysis of the factors in N.J.S.A. 2A:34-23a, we are constrained to reverse the child support award and remand the issue of child support for further consideration. We also note that the record does not contain an analysis of the differentiation between the needs of the children and the needs of the defendant, given the reality that many of those needs overlap. Moreover, since the guidelines calculation is partially dependent upon the amount of alimony ordered, in that alimony constitutes taxable income to defendant and is tax deductible by plaintiff, if reexamination of the alimony results in a different amount ordered, the guideline-based portion of the child support must be then recalculated.

III.

Defendant also argues that the trial court erred in not ordering plaintiff to pay arrears in child support based on bonuses that plaintiff received in 2001, 2002, and 2003. We disagree.

In the motion filed by defendant in September 2003, she requested that the court require plaintiff to supplement the child support with the required percentage of any bonuses earned by plaintiff between 2001 and 2003. In the October 31, 2003 order, the trial court granted defendant's request in relation to an $85,000 bonus that appeared on plaintiff's September 15, 2003 pay stub, earned in 2002. Paragraph 4 of that order also required plaintiff to "provide documentation of bonuses from employers for the years 2000 through 2003[.]"

In the March 19, 2004 order, the trial court ordered plaintiff to supplement child support based on any bonus he earned in 2003 and paid in February 2004, but denied defendant's request that plaintiff be ordered to pay her the balance due on the 2002 bonus, paid in 2003.

Plaintiff's 2001 federal income tax return is contained in the record on appeal. It discloses that plaintiff had $204,057 in gross wages from Lucent in 2001. Therefore, no additional amount of child support would be due, because the final judgment provides that the defendant "will receive no child support on the first $60,000 of the bonus[,]" because she was then receiving rehabilitative alimony. Additionally, the support provisions of the final judgment were based on the base annual gross income of plaintiff of $191,700. Moreover, the court has already ordered an additional amount of child support based on plaintiff's receipt of bonuses for the years 2002 and 2003. Therefore, we reject defendant's contentions on this issue.

IV.

Defendant also asserts that the trial court erred in awarding her only $12,000 in counsel fees. She seeks reimbursement of $30,673.03, the full amount of counsel fees charged during the relevant post-judgment proceedings. We disagree.

N.J.S.A. 2A:34-23 and R. 5:3-5(c) authorize the award of counsel fees in family actions. In deciding such a request, the court must analyze the factors enumerated in R. 5:3-5(c). The determination of the counsel-fee request lies within the discretion of the trial court. Chestone v. Chestone, 322 N.J. Super. 250, 258 (App. Div. 1999).

Our review of the record discloses that in striking the counsel-fee award, the trial judge enumerated and considered the various factors set forth in the rule. We cannot conclude that the judge misapplied her discretion in setting a counsel fee award of $12,000.

V.

In summary, we affirm the trial court's determination that changed circumstances were presented that warranted modification of the alimony and child support obligations of plaintiff. However, we reverse the trial court's determinations on alimony and child support as contained in the September 9, 2004 order, and remand the matter for further findings and analysis consistent with this opinion.

We affirm the imputation of income to plaintiff, but reverse the determination imputing the sum of $25,000 gross per year and remand the matter for further findings and conclusions on the appropriate amount of imputed income consistent with this opinion. We affirm the award of counsel fees to defendant as contained in the September 9, 2004 order.

We reverse the court's determination requiring defendant to pay plaintiff $104,000 (less certain credits), plus interest, and remand the issue of whether that equitable distribution credit should be vacated, modified, or enforced. We specifically reverse the provision in the September 9, 2004 order that permits a reduction in alimony to satisfy such obligation, if any.

We affirm the trial court's determination on the award of frequent flyer miles to defendant, subject to her right to renew applications to the trial court on that issue should those awarded frequent flyer miles not be available to defendant.

The remaining provisions of the September 9, 2004 order shall remain in full force and effect.

Affirmed in part, reversed in part, and remanded in part for further proceedings consistent with this opinion. We do not retain jurisdiction.

 

Although the proceedings were labeled as "arbitration," the record reflects that the parties actually participated in "mediation" and reached an agreement in the form memorialized by Mr. Morrison in his letter.

Defendant testified at the plenary hearing that her share of the retirement funds had decreased from approximately $300,000 in value at the time of the final judgment, to $113,000 at the time the QDRO was effectuated in June 2004.

Alimony that is received by defendant is taxable to her at ordinary income tax rates. Although the trial court had the authority to do so, it did not designate all or a portion of the alimony as a non-taxable payment. See N.J.S.A. 2A:34-23b(12).

The trial court did not differentiate between the needs of the children and the needs of defendant.

The "basic child support amount" used in the guidelines worksheet is $702; however, we note that the maximum basic child support amount contained in Appendix IX-F of the guidelines for two children is $654 per week. There is no explanation in the record for the increase, by $48, of that maximum amount.

(continued)

(continued)

42

A-0939-04T1

June 14, 2006