ELIZABETH C. PATTISON v. CARLTON R. PATTISON, JR.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4360-05T54360-05T5

ELIZABETH C. PATTISON,

Plaintiff-Respondent,

v.

CARLTON R. PATTISON, JR.,

Defendant-Appellant.

______________________________

 

Submitted February 7, 2007 - Decided April 5, 2007

Before Judges Cuff, Winkelstein and Fuentes.

On appeal from Superior Court of New Jersey,

Chancery Division, Family Part, Salem County,

Docket No. FM-17-195-04.

Paul H. Scull, Jr., attorney for appellant.

Mann, Moore & Cavagnaro, attorneys for

respondent (Carl W. Cavagnaro, on the brief).

PER CURIAM

The parties in this case were divorced on March 20, 2006, after nearly twenty years of marriage. As part of the final judgment of divorce (JOD), the Family Part directed that defendant's tax-deferred savings plan be subjected to equitable distribution, despite a provision in a prenuptial agreement apparently providing otherwise. The court found that defendant's increased contributions to the savings plan during the marriage were not foreseeable at the time the agreement was signed, thereby rendering the section at issue unenforceable. The court also ordered defendant to pay plaintiff rehabilitative alimony for three years while she completed her college degree. The court reasoned that this would allow plaintiff to earn the income necessary to maintain her marital lifestyle.

Defendant now appeals, arguing that the trial court erred by: (1) refusing to enforce as written the tax-deferred plan in the prenuptial agreement; and (2) misapplying the statutory factors that must be considered when awarding alimony. After a careful review of the record, and in light of prevailing legal standards, we affirm substantially for the reasons expressed by Judge White in her well-reasoned memorandum of opinion.

At the time the parties began dating in 1985, defendant was also finalizing his divorce from his first wife. As part of the relief obtained in the divorce, defendant's first wife was awarded a share of his pension, which defendant eventually bought back from her with borrowed funds. Due to this experience, when the parties began discussing marriage, defendant suggested that they enter into a prenuptial agreement in order to shield his savings and pension against any future equitable distribution claim. Both parties were represented by separate attorneys during the process of negotiating the agreement. The parties negotiated for several months, and numerous draft agreements were prepared and considered.

The parties married on September 5, 1986, before completing the negotiations on the prenuptial agreement. Defendant was forty-two years old, and at age twenty-three, plaintiff was nineteen years his junior. The agreement was finally completed approximately six weeks after the date of the wedding. As part of the agreement, defendant's pension plan was valued at $16,000; his profit-sharing plan was valued at $7,000; and his proceeds from the sale of his home with his ex-wife were fixed at $20,000. At the time of the negotiations, plaintiff was involved in litigation over a personal injury claim related to a car accident. No damages had yet been awarded.

After the marriage, defendant used the $20,000 that he received from the sale of his former marital home to purchase a new residence for himself and his new wife. The parties referred to the property as "Barely A Farm," and operated a business buying, selling, and raising horses. During the marriage, plaintiff received $18,000 from a settlement of her personal injury litigation. She also received an inheritance from her grandmother in the amount of $62,000.

Although plaintiff kept the funds from the personal injury litigation and inheritance in a separate bank account, she used them to defray marital expenses, including: $3,000 for a tractor for defendant; $10,000 for a pick-up truck; and $10,000 for the construction of a horse barn. Defendant alleged that plaintiff only spent a total of $13,000. The balance of these funds was spent on miscellaneous home and farm expenses.

Plaintiff's employment history involved mostly unskilled or low-end labor positions. She worked as a membership clerk for the American Automobile Association ("AAA") of New Jersey until she was terminated in July 1985. In early 1986, she began working as a bus driver, and continued to hold this job for the next twelve years. Commencing in 1998, plaintiff worked on the couple's farm, training horses, and operating a leather store. She returned to work as a bus driver in 2000, and was still with the same employer at the time of trial. In 2004, plaintiff earned a total of $27,593.

During the marriage, defendant worked as a truck driver for United Parcel Service ("UPS"). According to defendant, he routinely worked thirteen to fourteen hours a day because of the company's mandatory-overtime policy. At the time the parties executed the prenuptial agreement, defendant had a pension and profit-sharing benefit plan through UPS, which allowed him to contribute a maximum of six dollars per week.

Commencing in 1988, the profit-sharing program was converted to a 401(k) tax-deferred savings plan and IRA, which allowed him to increase his contributions to fourteen percent of his gross salary. Defendant decided to take advantage of this new feature in his retirement plan without first consulting plaintiff. At the time defendant retired from UPS in 2003, he was earning $50,000 per year.

On March 16, 2004, plaintiff filed for divorce. The case was tried before the Family Part over a three-day period. Both parties testified, as well as defendant's daughter from the prior marriage, and a friend of both parties. With respect to the prenuptial agreement, both parties recalled reviewing several drafts. Two versions were presented at trial. The version designated by the trial court as P-1 provided for the agreement to remain in effect "until the tenth annual anniversary of the marriage of the parties." By contrast, the version designated as P-2, stated that the agreement would remain in full effect "until the marriage of the parties is terminated." Eventually, both parties testified that the agreement marked as P-2 was the version that should guide the trial court's analysis.

Article One, section 1.1 of the agreement, recognized that all property obtained before the marriage would remain the sole property of the individual spouse. Regarding property acquired during the marriage, the agreement stated:

Any property acquired during the marriage where the source of the funds or assets by which such property was acquired are pre-marital assets and any increase in the value of said assets, specifically, the sum of $20,000.00 obtained by Carlton R. Pattison from the sale of 724 Walker Road, Waterford, New Jersey [defendant's former marital home with his ex-wife], which is to be converted to the purchase of real estate which shall be held in joint names, Pension Plan with Teamsters Pension Trust Fund and Profit Sharing and/or Thrift Plan with United Parcel Service, Inc. shall remain the separate property of the party acquiring such assets, including, but not limited to, any property into which same is converted, any income or other usufruct thereon, increments, accretions, or increases in value of such assets, whether due to market conditions or the services, skills, contributions, or efforts of either party, at any time thereto.

Thus, in the event of divorce, defendant would retain full ownership interest in his share of the proceeds from the sale of his former marital home, as well as his pension and profit-sharing plan.

As to alimony, the agreement provided that "[t]he parties specifically make no provision herein regarding alimony, maintenance or support upon the termination of the marriage, whether final or on a pendente lite basis, and leave such determination to a court of competent jurisdiction to be based upon the law thereof."

Against these facts, Judge White issued a memorandum of opinion that considered the parties' living expenses, as well as their respective income, net of taxes. Judge White accepted as both credible and reasonable plaintiff's short-term educational plans to complete a series of computer science courses, with the goal of obtaining a degree that would, in two to three years, "put her on track to earn $40,000 per year." Pending the completion of these courses, the court determined that plaintiff could continue to earn at least $25,000 per year as a bus driver.

With respect to the prenuptial agreement, Judge White noted that, although the agreement was actually finalized after the marriage, "it does not convert its character from a pre-marital agreement to a mid-marriage agreement." She considered the "additional fine-tuning of this agreement and its written terms following the marriage ceremony [to constitute] a simple continuation of the pre-marital negotiations and relates back to them." Judge White thus found that "the parties entered this agreement freely and voluntarily following mutual disclosure of assets, income and debt."

The court found the provision exempting defendant's pension from equitable distribution to be reasonable and enforceable. The court reached a different conclusion with respect to defendant's tax-deferred savings plan. This asset was subject to equitable distribution because the transformation from the original profit-sharing plan to a 401(k) plan and IRA that occurred in 1988 constituted a "fundamental and material change," which "could not have been anticipated when the agreement was made."

As noted by Judge White, other factors supported this conclusion:

[T]here is no record of how much was rolled over when the plan "converted" in 1988. Thus, assuming it would be fair to exclude the value of the Savings Plan and its increments before the 1988 roll over, it isn't possible to calculate the amount rolled over or [its] present value. The rollover must be deemed to be commingled with the converted Savings Plan and will be subject to equitable distribution; as is the entire Plan value on the complaint filing date.

The court also found defendant's contribution to the purchase of the marital property, and plaintiff's contribution of the proceeds of her personal injury action, to be subject to equitable distribution because these funds had been commingled to such an extent as to make them part of the combined marital estate. The trial court held, however, that "[plaintiff's] contributions will be recognized in the Court's determination of alimony and equitable distribution."

Finally, with respect to the question of rehabilitative alimony, Judge White applied the factors outlined in N.J.S.A. 2A:34-23 to the facts described here to award plaintiff alimony payments of $600 per month for thirty-six months. In support of this determination, the court found that defendant's income exceeded his budgeted expenses by $450 every month. Plaintiff, on the other hand, had a $1,000 monthly income shortfall.

As noted earlier, we agree with Judge White's analysis, and affirm substantially for the reasons she expressed. We also conclude that her factual findings are well supported by competent evidence, and thus are binding upon this court. Pascale v. Pascale, 113 N.J. 20, 33 (1988) (citing Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 484 (1974)). We make only the following brief comments.

"Rehabilitative alimony permits a short-term award 'from one party in a divorce [to] enable [the] former spouse to complete the preparation necessary for economic self-sufficiency.'" Cox v. Cox, 335 N.J. Super. 465, 474-75 (App. Div. 2000) (quoting Hill v. Hill, 91 N.J. 506, 509 (1982)). It is an appropriate remedy, "where, for example, 'a spouse who gave up or postponed her own education to support the household requires a lump sum or a short-term award to achieve economic self-sufficiency.'" Id. at 475 (quoting Mahoney v. Mahoney, 91 N.J. 488, 504 (1982)).

Here, Judge White correctly balanced plaintiff's legitimate educational and professional goals against the relatively short term financial burden imposed upon defendant. In this context, it is entirely reasonable for the court to order rehabilitative alimony to afford the dependent spouse the opportunity to acquire the skills necessary to achieve long term financial self-sufficiency.

 
Affirmed.

Although defendant paid for both attorneys, neither side has argued that this arrangement compromised plaintiff's attorney's duty of loyalty to plaintiff.

(continued)

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A-4360-05T5

April 5, 2007