STEVEN BURG v. ADELE BURG

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6378-04T16378-04T1

STEVEN BURG,

Plaintiff-Appellant,

vs.

ADELE BURG,

Defendant-Respondent.

__________________________________

 

Argued: September 27, 2006 - Decided November 20, 2006

Before Judges Cuff and Fuentes.

On appeal from the Superior Court of New Jersey, Chancery Division-Family Part, Monmouth County, Docket No. FM-13-949-03.

Thomas D. Baldwin argued the cause for appellant (Budd Larner, attorneys; Mr. Baldwin and Christina M. Reger, on the brief).

Allan Weinberg argued the cause for respondent.

PER CURIAM

In this appeal we review an order entered in response to a post-judgment matrimonial motion filed by defendant Adele Burg to enforce plaintiff Steven Burg's support obligations and plaintiff's motion to reduce his support obligations. We reverse and remand for a plenary hearing.

The parties were married on July 12, 1987. Two children were born of the marriage, one daughter on July 27, 1989, and the other on June 13, 1991. During the marriage, the parties accumulated substantial assets and maintained an "extravagant" marital lifestyle, funded primarily by plaintiff's employment. Defendant worked intermittently as a chiropractor during the marriage. Plaintiff was employed as a mortgage broker and served as the chief financial officer of Worldwide Financial Resources of New Jersey (the Business). Plaintiff earned $130,000 in 1998 and $131,000 in 1999. In 2000, the parties filed a joint tax return reporting a total income of $204,664 of which $142,308 constituted wages.

On May 1, 2001, plaintiff entered into an employment agreement to sell his interest in the Business. Under the terms of this employment agreement, plaintiff was guaranteed monthly payments of $20,000 or $240,000 per year over and above his regular earnings from May 1, 2001 until April 30, 2004. In 2001, the parties reported total income of $388,658, of which $181,000 consisted of plaintiff's commissions. In 2002, the parties listed total income of $542,432, attributing $191,700 to commissions.

The parties divorced and entered into a property settlement agreement (PSA) on September 18, 2003. Both parties had assistance of counsel in the negotiation of the PSA. The PSA was incorporated into the final judgment of divorce and established the parties' respective rights and obligations flowing from the termination of their marriage. In the PSA, the parties established plaintiff's annual income at $250,000 and imputed $40,000 annual income to defendant for purposes of support computation. Accordingly, plaintiff agreed to pay $1,338.47 each week in alimony and $461.53 each week in child support.

In Article Two, paragraph four of the PSA, the parties agreed that the level of plaintiff's support obligations would not continue indefinitely due to the scheduled cessation on April 30, 2004, of buyout payments to plaintiff. The PSA provides "[t]he parties agree and acknowledge that the Husband's income is being paid pursuant to an Employment Agreement that expires on April 30, 2004. Said Employment Agreement was created as a result of the sale of Husband's interest in [the Business]."

In the PSA, the parties contemplated that the expiration of the $240,000 per year payments may cause "[plaintiff]'s income [to] change and he may earn lesser than, greater than or approximately the same as the amount which the parties have used for determining [plaintiff]'s financial obligations under this agreement of $250,000.00 per year." In full anticipation of such occurrence, the parties agreed in the PSA to "in good faith . . . review, between May 1, 2004 and August 1, 2004 at either party's election, the [plaintiff]'s then current earnings, to determine whether there should be any adjustment of alimony and if so, whether it should be adjusted in an upward or a downward fashion."

In the PSA, the parties further provided for resolution of a future impasse on the amount of alimony and waived the need for a Lepis application. Specifically, the PSA states:

The parties agree that in the event they cannot reach a consensual agreement that the amount of alimony should be determined by a court without the necessity of either party having to file an application based upon a change in circumstances, commonly known as a Lepis application. The parties acknowledge that the expiration of the Employment Agreement is a sufficient change in circumstances to warrant judicial review of the Husband's earnings for purposes of calculating ongoing alimony payments.

If the amount of alimony was, in fact, modified, the parties agreed in the PSA "that any such modification will be retroactively applied to May 1, 2004."

Article Three, section 2, paragraph three of the PSA mirrors the language of paragraph four, Article Two and establishes the same standard of review and retroactive application for any potential modification of child support as that used for adjustments to alimony. Specifically, the PSA provides that "the same review shall take place for the [plaintiff]'s child support at the same time and the parties shall use the same standards and same retroactive application."

The parties further agreed to waive their interest in the other's subsequently acquired property. The PSA states that "[s]pecifically, the [defendant] waives any claim to monies received by the [plaintiff] subsequent to this agreement, pursuant to his employment contract with [the Business] effective May 1, 2001 to April 30, 2004." Also, the parties agreed to the equitable distribution of their assets, such that both parties received approximately $1,150,000.

For the 2003 fiscal year, plaintiff reported $439,914 in wages, of which $199,914 constituted commissions. In 2004, defendant filed a motion for enforcement and plaintiff cross-moved to reduce his support obligations. In support of his motion, plaintiff filed a certification dated November 3, 2004. Plaintiff submitted that the expected cessation of buyout payments had occurred thereby triggering an adjustment to plaintiff's income and support obligations. By order dated November 12, 2004, a judge denied plaintiff's application for modification and instructed the parties to exchange Case Information Statements and tax returns.

On April 30, 2004, plaintiff's May 1, 2001 employment agreement terminated. By that date, plaintiff had earned $83,077.02 in guaranteed payments under the employment agreement; commissions of $37,811.53; and a bonus of $427.30. In total, plaintiff earned $121,315.85 before tax adjustments.

From May 1, 2004 to July 16, 2004, plaintiff received $50,769.29 as additional compensation "for additional monies owed to him pursuant to the sale of his share of the business based upon previous Company volume." In 2004, plaintiff earned total annual income of $239,463, of which $133,846.31 was derived from the buyout agreement.

Plaintiff then filed a second motion to modify his support obligations. On March 15, 2005, another judge entered an order granting plaintiff's application. The judge referred to the parties' PSA, which directed a "re-determination of plaintiff's alimony obligation after May 1, 2004 to reflect [plaintiff's] then current earnings" upon the expiration of buyout payments to plaintiff on April 30, 2004.

Because defendant "express[ly] waive[d]. . . her right to any monies received by plaintiff as a result of the termination of his employment contract" in the PSA, the judge determined plaintiff's "then current earnings" by deducting plaintiff's guaranteed payments from the employment agreement from plaintiff's total earnings in 2004. Thus, the judge deducted $133,846.31 in guaranteed payments from plaintiff's total earnings of $239,463 in 2004. The judge then concluded that "[a]fter making these required deductions, plaintiff earned $105,617 for the remainder of 2004."

Then the judge adjusted plaintiff's income from $250,000 as provided in the PSA to $105,617 for purposes of calculating plaintiff's support obligations. Accordingly, the judge reduced plaintiff's alimony obligation from $1,338.47 to $609 per week and child support from $461.53 to $313 per week retroactive to May 1, 2004, in accordance with the PSA.

In response, defendant filed a motion for reconsideration. By order dated May 13, 2005, the judge granted defendant's motion for reconsideration and vacated the order of March 15, 2005, and reinstated plaintiff's support obligations under the PSA. The judge found that "the issue of whether [plaintiff] had the potential to earn an amount equal or near what he historically earned during the marriage was not addressed." The judge also explained that he had not considered whether plaintiff could earn similar income after the expiration of the buyout agreement. He also questioned the wisdom, and by implication, the good faith of plaintiff's decision to sell his interest in the business. He also held that plaintiff had an obligation to seek employment elsewhere to replicate his former income.

In turn, plaintiff filed a motion for reconsideration that was denied by order dated June 24, 2005. The judge stated that plaintiff provided no new information, and further opined that "[t]here is no reason provided for plaintiff husband accepting a buyout agreement that would only increase his income for three (3) years only to return him to a much lower income figure after its expiration." By order dated September 19, 2005, the May 13, 2005 order and the July 18, 2005 supplemental order were stayed pending appeal.

On appeal, plaintiff argues that the orders entered by the motion judge are not supported by competent credible evidence and represent a sharp departure from reasonableness. He also contends that the motion judge ignored the clear intent of the PSA and imposed standards to determine changed circumstances different than those agreed to by the parties. Although he argues that the motion for reduction of his support obligation should have been resolved simply by a consideration of the undisputed income he derived from commissions, he urges that a plenary hearing should have been conducted if the motion judge had any questions about the extent of his current income and his ability to earn more income.

It is well established "that 'settlement of litigation ranks high in [the] public policy' of New Jersey." Harrington v. Harrington, 281 N.J. Super. 39, 46 (App. Div.) (quoting Lahue v. Pio Costa, 263 N.J. Super. 575, 595 (App. Div.), certif. denied, 134 N.J. 477 (1993)), certif. denied, 142 N.J. 455 (1995). "Nowhere is this policy more imperative than in the ever-burgeoning field of family law." Davidson v. Davidson, 194 N.J. Super. 547, 550 (Ch. Div. 1984). Public policy favors consensual settlement agreements because they provide "sane resolution of the myriad and complex aspects of family dissolution than a trial whereby inter-personal relationships and all things flowing from them become polarized." Ibid.

Furthermore, consensual settlement agreements such as the PSA entered into by plaintiff and defendant, are "enforceable subject, however, to . . . considerations of unconscionability, fraud or overreaching." Harrington, supra, 281 N.J. Super. at 46. "[F]air and definitive arrangements to resolve marital controversies arrived at by mutual consent should not be unnecessarily or lightly disturbed." Konzelman v. Konzelman, 158 N.J. 185, 193-94 (1999). Therefore, property settlement agreements "if found to be fair and just, are specifically enforceable in equity." Id. at 194.

It is also well-established that the parties may agree what circumstances shall be considered "changed circumstances" that will warrant an examination and adjustment of a party's support obligation. Innes v. Innes, 117 N.J. 496, 519 (1990). By questioning the wisdom and good faith of plaintiff's decision to sell his interest in the business, the motion judge ignored the terms of the PSA. The record supports the conclusion that the decision to sell plaintiff's interest in the business occurred while the parties were married. There is nothing in this record to suggest that the decision was made to evade or minimize a support obligation, and nothing to suggest that the PSA is unfair to defendant.

On the other hand, the record of commission income presented to the motion judge demonstrated a steady decline. There may be a simple explanation, such as the receipt of an override on all commissions earned by employees that is earned only by the owners of the business. Yet, in a period of booming real estate sales and refinancing of existing mortgages, the decline in the commission income received by plaintiff must be explained. In short, the record presented by the parties in support of and in opposition to the application to reduce plaintiff's support obligation required a plenary hearing to explore and resolve the question presented by the application for modification. We, therefore, reverse and remand for a plenary hearing on the amount of plaintiff's current income and his ability to earn income commensurate with his education and professional background.

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

 

Lepis v. Lepis, 83 N.J. 139 (1980).

(continued)

(continued)

11

A-6378-04T1

November 20, 2006