JANE G. MILES n/k/a JANE G. OLVING v. MICHAEL C. MILES

 

FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1171-05T51171-05T5

JANE G. MILES n/k/a

JANE G. OLVING,

Plaintiff-Respondent,

v.

MICHAEL C. MILES,

Defendant-Appellant.

__________________________________

 

Submitted October 10, 2006 - Decided November 3, 2006

Before Judges Seltzer and C.L. Miniman.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1284-99-A.

Drazin and Warshaw, attorneys for appellant (Vincent L. Stripto, on the brief).

Robert A. Abrams, attorney for respondent (Judith M. Knopf, on the brief).

PER CURIAM

Defendant Michael C. Miles appeals from a final post-judgment order denying his application for a reduction in child support based on a diminution in his income. Because the motion judge failed to conduct a plenary hearing to resolve disputed issues of fact as to whether Michael is entitled to relief based on changed circumstances, we reverse and remand to the trial court for further proceedings.

On January 9, 1993, Michael and plaintiff Jane G. Miles married. They had two children, Michael Henry, born December 3, 1993, and Samuel, born July 7, 1996. The parties divorced on March 28, 2001, and Michael paid alimony and child support through the Monmouth County Probation Department.

The judgment of divorce incorporated a December 13, 2000, property settlement agreement (PSA). When the parties entered into the PSA, Michael earned approximately $250,000 per year and Jane received $12,000 per year in unearned income. Paragraph 22 of the PSA governs child support and provides:

The Husband shall pay to the Wife as and for child support the sum of $37,076 per year payable weekly commencing January 1, 2001. The child support shall be reviewed every two years in accordance with Rule 5:6(b) of the Rul[es] Governing the Courts of the State of New Jersey. In addition to the issue of the cost of living adjustment pursuant to said Rule, the parties shall also adjust the child support based upon any substantial change in the parties['] income or assets.

Michael also agreed in the PSA to maintain a $500,000 life insurance policy for the benefit of the unemancipated children of the marriage, which was provided to Michael by his employer at the time of the divorce.

Michael worked in technology sales and his income fluctuated substantially after 2001 due to changes in the industry and changes in Michael's employment. Sometime after the divorce in 2001, Michael voluntarily changed jobs. He explained that his company was taken over by new management, who imposed heavy travel requirements that interfered with his joint custody arrangement. In addition, the new management imposed very difficult sales expectations that Michael felt he could not possibly achieve. As a result, Michael took a position at IPhrase, which agreed to pay him $150,000 per year plus commissions. Michael did not at that time seek a reduction in child support based on his reduced income.

Michael's employment was involuntarily terminated by IPhrase due to financial setbacks only five months after he joined the company. In 2002 Michael earned only $106,444. Despite this diminution in income, Michael continued to pay child support and alimony at the rate set by the PSA.

Michael was next hired by J.D. Edwards at an annual salary of $110,000. Nine months later, Michael appears to have voluntarily left J.D. Edwards for a position at Kiodex at a salary of $105,000 per year, income that was substantially equivalent to his previous position. He continued to pay child support at the rate of $37,076 per year. Michael was involuntarily terminated by Kiodex in mid-2003. In 2003 Michael earned approximately $96,000, which included $35,000 as a partial liquidation of his retirement funds. Nonetheless, Michael met his child-support and alimony obligations under the PSA.

After being compelled to leave his employment with Kiodex in 2003, Michael collected unemployment benefits for twenty-six weeks while looking for a new job. After soliciting over fifty employers during an eleven-month period, Michael found new employment in May 2004 working as an independent contractor with a company called CTI on a strictly commission basis. In 2004 Michael earned approximately $25,600 derived from a further liquidation of his 401(k) funds, unemployment benefits and tax refunds. Even though his income dropped from $250,000 to one-tenth of that amount, Michael kept up with his child-support payments through the end of 2004. In addition, Michael acquired a $150,000 life insurance policy for the children's benefit to replace the policy he lost when his employment was terminated.

Working on a commission-only basis in 2005, Michael began to fall behind in his child-support obligation. Jane moved to enforce the PSA and Michael cross-moved on August 31, 2005, for a modification of his child-support obligation. The motions were returnable on September 30, 2005. By September 1, 2005, Michael accumulated child-support arrears of $27,608. That month Michael learned that a warrant for his arrest had been issued, and he voluntarily surrendered. Michael was released from custody after he was ordered to pay $300 by the middle of October 2005.

In his August 29, 2005, certification, Michael recited the various changes in his employment and income, attaching tax returns for each year from 1999 to 2003 and 1099's for 2004. He also completed a Case Information Statement indicating that his income in 2004 was $24,583 and that his average gross weekly income in 2005 was $752.66. As of August 12, 2005, Michael's gross income was $24,085 and his net income was $19,585. These sums are equivalent to about $39,000 annual gross income and approximately $32,000 annual net income. Thus, in 2005 Michael had disposable income of $2632 per month and $612 per week. By comparison, his weekly child-support obligation was and still is $713.

Michael certified that he had cashed all of his liquid assets to meet his support obligations. He also incurred significant credit card debt, refinanced his home mortgage, and took out a home-equity loan to meet his expenses, including support. Michael also listed his home for sale in order to catch up on child-support payments and expected to net $200,000 from the sale. Finally, he certified that, if he did not obtain relief from his support obligations, he would quickly become insolvent.

Jane opposed Michael's cross-motion, arguing that Michael had not shown a substantial change of circumstances. She contended that Michael had voluntarily left the employment he had when they were divorced to take a lower-paying job with IPhase, and that he did the same thing when he quit his job at J.D. Edwards. She argued that Michael's income from CTI was less than $8.00 per hour and that he should not have taken such a low-paying job. She contended that Michael had not shown that he made a good-faith effort to generate adequate income, and that he had not submitted adequate proof that he could not secure $500,000 in life insurance.

After oral argument on September 30, 2005, the Family Part judge placed the following decision respecting Michael's motion for modification of his child-support obligation on the record:

All right, thank you. The court has listened, read the papers, extensive papers in the matter, somewhat unusual case of analyzing the employment. The court recognizes that in technology there has been problems. The sales issues that he had.

However, he has a child support obligation. He has two children. They're young, 11 and 9. The parties were divorced in March of 2001. And he stopped paying last January, it would appear he stopped paying child support after his alimony ran out. He's fallen perhaps on hard times. But, child support obligations, he has more disposable income since he doesn't have to pay alimony any more.

He knew what he had to pay. . . .

. . . .

The court will enter a judgment against the defendant husband for arrears in child support. In the event that the house sale, which it's listed for sale, she needs to be protected, get her payments.

. . . .

Now, the proof of life insurance, $500,000 policy. He's going to have to obtain that policy. The 150 that he has, he says he has, proof of that within seven days, or she may make an application for a bench warrant for his arrest. If he says he has the 150, then he's got to make efforts to get the 500. I don't know anything about his medical history. The fact his mother died at 48, that may or may not be a compelling factor.

. . . .

The applications on the part of the husband, respondent husband, seeking items 1, 2, 3, 4, the court does not find there has been an involuntary change of circumstances. Therefore all of those are denied. As is number 5. I'm not going to reduce the amount of life insurance that he's required to have.

The judge entered judgment against Michael for arrears in child support as of September 1, 2005, totaling $27,608. The judge also granted attorney's fees to Jane. This appeal followed, limited to the denial of Michael's application for modification of his child-support and life-insurance obligations.

Michael contends that he made a prima facie showing of changed circumstances under Lepis v. Lepis, 83 N.J. 139, 146 (1980), entitling him to a plenary hearing on his application. Michael also contends that the judge "failed to make adequate findings of fact [and] relied upon an incorrect princip[le] of law." In addition, he urges that, even without a substantial change in circumstances, he was entitled to an automatic review of his child-support obligation.

As a general proposition, our review of a trial judge's fact findings in a Family Part matter is limited to deciding whether those findings are supported by adequate, substantial, credible evidence in the record. Cesare v. Cesare, 154 N.J. 394, 411-12 (1988). That scope of review, however, is confined to matters where the trial judge has complied with the duty imposed upon him to make findings of fact and conclusions of law "on every motion decided by a written order that is appealable as of right." R. 1:7-4(a). Failure to perform this duty constitutes a disservice to the litigants, the attorneys, and the appellate court. Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (quoting Kenwood Assocs. v. Bd. of Adj. of City of Englewood, 141 N.J. Super. 1, 4 (App. Div. 1976)). Moreover, "[n]aked conclusions do not satisfy the purpose of R. 1:7-4." Id. at 570. Here, the trial judge failed to discharge this obligation.

The judge found that there were problems in the technology field, noted that perhaps Michael had fallen on hard times, but that Michael, nonetheless, had a child-support obligation. Therefore, the judge found that Michael was in arrears and entered a judgment against him. As to the life insurance, the judge found that he did not know anything about Michael's medical history and found that the death of Michael's mother at the age of 48 may or may not be a compelling factor in securing life insurance. Nonetheless, the judge ordered Michael to secure a $500,000 policy. These are not the type of "fact findings" required by R. 1:7-4(a). See, e.g., Ronan v. Adely, 182 N.J. 103, 110-11 (2004); Cameco, Inc. v. Gedicke, 157 N.J. 504, 509-10 (1999); Curtis, supra, 83 N.J. at 569-70. Moreover, the trial judge erred when he failed to conduct a plenary hearing because Michael had made a prima facie showing of changed circumstances and the facts were in dispute. Hallberg v. Hallberg, 113 N.J. Super. 205, 207 (App. Div. 1971) (holding that the trial court erred in resolving fact disputes based on affidavits and deposition testimony).

An application for modification of a support obligation is governed by Lepis, whether the obligation was the result of a consensual agreement or a judicial decree. Lepis, supra, 83 N.J. at 148. Support obligations "are always subject to review and modification on a showing of 'changed circumstances.'" Id. at 146.

The party seeking modification has the burden of showing such "changed circumstances" as would warrant relief from the support . . . provisions involved. A prima facie showing of changed circumstances must be made before a court will order discovery of an ex-spouse's financial status. . . . When the movant is seeking modification of child support, the guiding principle is the "best interests of the children."

[Id. at 157 (citations omitted).]

Here, the parties specifically provided in the PSA for adjustments to child support: "the parties shall also adjust the child support based upon any substantial change in the parties['] income or assets" (emphasis added). In order to meet the requirement of showing a prima facie case of entitlement to relief, Michael was required to show that changed circumstances substantially affected his ability to support himself. Michael did so by proffering evidence that his net weekly income was less than his weekly child-support obligation and that he had been liquidating assets to make ends meet. Although the judge recognized that there were problems in the technology field and noted that perhaps Michael had fallen on hard times, he disregarded this evidence and enforced the PSA, possibly because he believed that Michael had voluntarily left the employment he had at the time of the divorce. There is no bright line test that precludes relief merely because a change of circumstances was at some point in time voluntary.

When a party contends that a former spouse has voluntarily altered their financial circumstances, a judge is required to evaluate the evidence in accordance with the standards imposed in Kuron v. Hamilton, 331 N.J. Super. 561 (App. Div. 2000). There, we said:

Facts concerning the motives, timing, and reasonableness of the payor's conduct should be evaluated with a view to determining whether he or she has acted in good faith in the matrimonial matter. Thus, in making its evaluation, the court should also focus on whether the payor acted with the intent to reduce his or her support obligations, i.e., in bad faith relative to the requirements of the judgment of divorce. Good faith in the context of changed circumstances is concerned less with the specific conduct that has led to the reduction in income and more with why the payor has adopted his or her course of action, and with the relationship of the payor's conduct and motives to the parties' positions in the matrimonial matter. Yet, while a determination of good faith--or the absence of bad faith--would tend to weigh in favor of a finding of changed circumstances, it is not, by itself, dispositive either. It is but one ingredient in determining whether the payor can be deemed to have acted reasonably with regard to his or her support responsibilities.

[Id. at 571-72 (citations omitted).]

Issues such as these cannot be decided based on affidavits. "It is clear, in sum, that the issue of how voluntary conduct should affect a motion for modification is entirely fact sensitive and must be decided on a case-by-case basis after all appropriate considerations have been evaluated." Id. at 572. Here, Michael unequivocally showed that the circumstances of his income and assets had substantially changed since the PSA was executed. That is all the showing he was required to make under the agreement. The judge was thus required to take testimony from the parties and address each of the factors we have delineated in Kuron as well as any other relevant factors that the parties bring to the attention of the judge. For example, the judge must determine whether the first voluntary job change was made by Michael with the intent to reduce his support obligations or was it reasonable under all the circumstances then existing and done in good faith. There are other significant issues that have been raised by both parties, and none of them can be resolved without a plenary hearing. When the hearing is completed, the judge must make specific, detailed fact findings, and then apply the law and the PSA to the facts in order to reach an appropriate conclusion with respect to the relief sought.

As we did in Kuron, we must vacate the trial court's order which denied modification and remand for a plenary hearing on the application for reduction of the child-support and life insurance obligations imposed by the PSA.

 
Reversed and remanded.

In 2001 Michael earned $253,034. However, this was significantly above the income he earned during most of the marriage, which was between $120,000 and $150,000 per year.

The record does not establish the precise dates when Michael moved from one job to the next. However, Exhibit D to Michael's certification of August 29, 2005, indicates that he began searching for employment in June 2003.

The record does not disclose when the $150,000 policy was secured. Michael certified that he was not able to secure $500,000 in life insurance because of a combination of family history and current medical problems.

Alimony had been terminated sometime prior to 2005.

The Notice of Appeal was specifically limited to these issues and did not refer to the counsel fee award.

(continued)

(continued)

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A-1171-05T5

November 3, 2006