ROBERT CAMCHE v. JILL COOPERMAN

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ROBERT CAMCHE,

Plaintiff-Appellant,

v.

JILL COOPERMAN,

Defendant-Respondent.

March 11, 2014

 

Argued March 4, 2014 Decided

 

Before Judges Ostrer and Carroll.

 

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-347-98.

 

Ira A. Cohen argued the cause for appellant.

 

Bruce H. Nagel argued the cause for respondent (Nagel Rice, attorneys; Mr. Nagel, of counsel and on the brief).

PER CURIAM

In this post-judgment matrimonial matter, plaintiff Robert Camche appeals from an August 14, 2012 Family Part order. That order substantially denied his motion for reconsideration of a June 15, 2012 order, which granted an increase in child support to defendant Jill Cooperman, retroactive to December 15, 2009. We affirm.

 

I.

The parties were married in June 1995. One son of the marriage was born in January 1997. On May 20, 1998, the parties divorced, and a Property Settlement Agreement (PSA) that was entered on the record was incorporated into their Dual Judgment of Divorce (JOD) filed on August 3, 1998. The parties agreed to joint custody of their son, with primary residential custody to defendant. Plaintiff was initially obligated to pay defendant $330 per week, allocated $200 as alimony and $130 as child support, from August 1, 1998, through December 31, 2000. At that time plaintiff's alimony obligation was to end, and child support was to be recalculated in accordance with the Child Support Guidelines based upon the parties' then current incomes. In establishing plaintiff's initial support obligation, the PSA stipulated that $60,000 annual income was imputed to plaintiff, and $30,000 to defendant.

On December 15, 2009, defendant filed a motion to increase child support due to changed circumstances. Plaintiff opposed the motion, and cross-moved to establish a firm parenting schedule and other relief. On March 25, 2010, the court ordered a plenary hearing, set a discovery schedule, and directed the parties to attend mediation. In the interim, plaintiff twice moved unsuccessfully to disqualify defendant's counsel.

The plenary hearing was conducted over four days between March 24, 2011, and July 28, 2011. Plaintiff now resides in Florida, and he and his brother each own a fifty percent share of Becarro International Corp. (Becarro), which is engaged in the business of importing ladies handbags and small leather goods for sale to retailers in the United States. Plaintiff, along with his current wife, also jointly own an affiliated company, RWC Holding, LLC (RWC). In 2009, Becarro lent RWC $153,000, which, according to plaintiff, RWC used to purchase a commercial property adjacent to Becarro's office and warehouse. Because Becarro is a subchapter S corporation (S Corp), the true level of plaintiff's earnings from Becarro, to be used in calculating his child support obligation, was a prime focal point of the hearing.

Plaintiff testified that since Becarro imported its merchandise from China, it needed to retain profits in the company to pay for those goods since they could not be purchased on credit, as well as to meet the company's other normal operating expenses. Consequently, while the corporate tax returns and K-1 statements listed larger amounts as distributions and/or "pass-through" income to plaintiff, he did not actually realize those amounts as income, since they went to satisfy tax obligations or were retained in an accumulated adjustments (Triple A) account.

On plaintiff's December 21, 2009 Case Information Statement (CIS), he reported his 2008 gross income as $149,407, consisting of $117,638 in earned income and $31,769 unearned income. On cross-examination, plaintiff admitted this amount did not include $345,602 in pass-through income shown on his 2008 K-1.

Plaintiff's CIS for 2009 showed $220,418 earned income and $18,412 unearned income, for a total of $238,830, which included the $111,600 reported on his 2009 K-1. This total conflicted with plaintiff's December 23, 2009 certification to the court, in which he stated: "My annual salary is $78,000 with bi-monthly distributions totaling $111,600 and $3000 for taxes, for health care, for a total income of $192,600."

The parties each retained expert forensic accountants to analyze plaintiff's earnings from Becarro. Defendant's expert, Ann Marie O'Hare, testified that Becarro's cash balances, as reported on its corporate tax returns, were $1,280,893 as of December 31, 2007, $513,336 as of December 31, 2008, and $511,630 as of December 31, 2009. She concluded that the cash flow available to plaintiff before tax implications was $561,144 in 2008 and $352,907 in 2009, for a two-year average of $457,025. O'Hare included the $153,000 loan to RWC in her 2009 calculations. She also estimated plaintiff's 2010 total income to be $327,997.

Plaintiff's expert, Lori A. Roth, agreed with O'Hare's conclusions, except as to the $153,000 loan, which she did not deem to be a distribution to plaintiff, nor includable in his 2009 cash flow. Consequently, Roth opined that plaintiff's 2009 income on a cash flow basis was $199,907, with the $153,000 loan accounting for the sole discrepancy.

Defendant is a licensed attorney, who last practiced on a part-time basis in 2006. That year her brother began operating a restaurant, owned by her father, where plaintiff worked, largely performing bookkeeping duties. She earned $50,000 per year at the restaurant, until it closed in April 2010. Thereafter she obtained her real estate brokers and insurance licenses. At the time of the hearing, plaintiff was working as an account executive for an insurance company, earning $65,000 per year. According to her testimony, she also received $170 per week in child support from plaintiff.1

On June 15, 2012, Judge James M. DeMarzo issued a comprehensive forty-five page written decision, increasing plaintiff's child support obligation to $667 per week, retroactive to December 15, 2009. The judge found plaintiff credible, although he noted there "were moments in his testimony, specifically when discussing business investments," that his testimony was "contradictory, and somewhat evasive." The court also found defendant credible, while similarly noting that "she too was evasive and contradictory at times, particularly with respect to her employment as a lawyer, and her general expenses."

In his decision, the judge thoroughly considered the expert testimony and documentary evidence presented during the four-day hearing. The court found that defendant met her burden of proof in establishing a prima facie case of changed circumstances, as sixteen years had passed since child support was initially established, and there was no dispute that plaintiff was earning significantly more than the $60,000 amount upon which his initial support obligation was based.

The court next determined what portion of plaintiff's salary, distributions, and retained earnings from Becarro qualified as gross income, as defined in Appendix IX-B to the Child Support Guidelines (Guidelines).2The judge noted that while he "considered the testimony of both experts, and although the outcome [was] influenced by their testimony, [he] did not adopt the entirety of either witness' findings." The court declined to consider the $153,000 loan as income to plaintiff in 2009, finding that it was already included in his 2008 income. Following a detailed analysis of the corporate and individual tax returns, the judge concluded:

Thus, from the proofs before it the court shall calculate Mr. Camche's income as follows. First, it was established Mr. Camche had the ability to draw $587,424 for the years 2008[]and 2009 from Becarro, and it was projected that he would draw $197,259 in 2010. The average of these figures over three (3) years is $261,561. Turning next to his reported gross income minus distributions, in 2008 he made $137,508; in 2009 he made $84,841; and in 2010 it was projected that he would make $130,747 excluding distributions. Averaging the aforementioned figures his average income minus distribution over those three (3) years is $117,699. This average added to the distribution average is approximately $379,260 per year.

 

. . . .

 

The court acknowledges the fact that this figure is not exact, as it did not have the corporate tax returns for the other LLCs and Partnerships Mr. Camche is involved in, or were the 2007 or 2010 S-Corp tax returns, or Mr. Camche's individual 2010 tax return submitted to the court. This determination was made from testimony, and the papers submitted. The court also did not include [in] its figure the retained earnings which were not distributed.

 

The court next considered defendant's earnings, and whether additional income should be imputed to her when calculating child support. Defendant is a licensed attorney, as well as a licensed real estate and insurance agent. The court noted that the mean yearly wage for an attorney, as reported by the New Jersey Department of Labor, was $129,650. However, "tak[ing] into consideration the fact that defendant has not practiced as an attorney for many years, and the difficulty for new associates entering the job market today," the judge imputed $75,000 annual income to defendant.

Having established plaintiff's and defendant's yearly incomes at $379,260 and $75,000 respectively, the court computed plaintiff's child support obligation under the Guidelines to be $385 per week. Because the parties' combined income exceeded $187,200, it was thus necessary to determine a discretionary child support amount to supplement the Guidelines-based award. Relying on Strahan v. Strahan, 402 N.J. Super.298, 306-07 (App. Div. 2008), and the factors embodied in N.J.S.A.2A:34-23(a), the court found that an additional $282 per week was representative of the child's reasonable needs, thus yielding a total child support award of $667 per week.

The court also found it "clear . . . that [d]efendant has attempted to alienate [the child] from his father for no other reason than her general enmity of [p]laintiff," and that "defendant . . . hindered plaintiff and [the child] from having a meaningful father-son relationship for many years." Accordingly the court approved plaintiff's proposed parenting plan, finding it to be in the child's best interest.

Both sides also sought an award of counsel fees. The court heard oral argument on the fee applications on December 7, 2011. In his written decision, the judge thoroughly analyzed the factors set forth in Rule5:3-5(c), and found that both parties proceeded in good faith, that there were complex issues meriting a plenary hearing, and that each had obtained favorable results on certain of those issues. Noting that "[p]laintiff's financial circumstances are far superior to [d]efendant's," and that defendant incurred substantially higher fees than plaintiff, the court found it "equitable" that plaintiff contribute $6000 toward defendant's counsel fees.

Both parties moved for reconsideration of the court's June 15, 2012 order and decision. The court heard oral argument on the motions on August 14, 2012. The judge recognized that he had made an error in the Guidelines component of his support calculations. As a result, defendant's obligation was reduced from $667 to $617 per week. With that exception, the judge re-affirmed his earlier ruling. This appeal followed.

On appeal, plaintiff raises the following points for our consideration:

 

The Superior Court Erred in Denying Reconsideration of Its Child Support Calculation By Failing to Utilize Accurate Income Figures for the Plaintiff; Impute Income to the Defendant Commensurate With Her CIS Budget; and Reapportion the Percentages of Child Support Owed By the Parties

 

The Superior Court Erred in Failing to Award Attorney Fees to the Plaintiff Where the Conduct of the Defendant was Tantamount to Bad Faith and Caused the Plaintiff to Incur Attorney Fees Beyond What Was Reasonable and Customary

 

The Superior Court Erred in Failing to Impose Sanctions Against the Defendant Based Upon the Determination of the Motion Judge that the Defendant Alienated the Affections of Dylan and Interfered with the Plaintiff's Parenting Time

 

The Superior Court Erred in Failing to Recalculate the Defendant's Income Based Upon the Fact that Her CIS Budget of $118,000 Was Met Without Debt Service; and Rendering an Income of $147,500 the Appropriate Income for the Defendant

 

The Superior Court Erred in Assessing an Add-On Component to Child Support Because the Defendant Failed to Meet Her Burden of Proof to Establish Expenses and/or Needs That Would Necessitate Any Additional Child Support Over the Child Support Guidelines

 

The Superior Court Erred in Awarding 2009, 2010, and 2011 Child Support Retroactively to the Defendant Without Due Process Being Afforded to the Plaintiff, Who Was Prejudiced by the Delay in the Matter

 

The Superior Court Erred in Failing to Find That Defense Counsel Should Have Been Recused at Commencement of the Matter, When It Ascertained That His Wife Was the Minor Child's Treating Therapist

 

The Superior Court Erred in Failing to Find that the Defendant and Her Counsel Engaged in a Contingency Fee Arrangement That Was Contrary to the Rules of Professional Conduct

 

The Superior Court Erred in Imposing Child Support Requirements That Effectively Reduced the Plaintiff's Ability to Be a Joint Legal Custodian

 

After carefully reviewing the record and applicable legal principles, we affirm, substantially for the reasons expressed by Judge DeMarzo in his comprehensive written and oral decisions. We add the following comments.

II.

Our review of a trial court's factual findings is limited. "The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J.394, 411-12 (1998) (citing Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J.474, 484 (1974)). Since a trial court "hears the case, sees and observes the witnesses, [and] hears them testify, it has a better perspective than a reviewing court in evaluating the veracity of witnesses." Id.at 412 (internal quotations and citations omitted). Consequently, we do not disturb the "factual findings and legal conclusions of the trial judge unless . . . convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Ibid. (quoting Rova Farms, supra, 65 N.J.at 484). However, "we are not bound by '[a] trial court's interpretation of the law' and do not defer to legal consequences drawn from established facts." Jacoby v. Jacoby, 427 N.J. Super. 109, 116-17 (App. Div. 2012) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

A support order is "always subject to review and modification on a showing of changed circumstances." Lepis v. Lepis, 83 N.J. 139, 146 (1980) (citations omitted). "When reviewing decisions granting or denying applications to modify child support, we examine whether, given the facts, the trial judge abused his or her discretion." J.B. v. W.B., 215 N.J. 305, 325 (2013). "The trial court has substantial discretion in making a child support award. If consistent with the law, such an award will not be disturbed unless it is manifestly unreasonable, arbitrary, or clearly contrary to reason or to other evidence, or the result of whim or caprice." Jacoby, supra, 427 N.J. Super. at 116 (citations omitted). "'Of course, the exercise of this discretion is not limitless [,]' and remains guided by the law and principles of equity." Ibid. (quoting Steneken v. Steneken, 367 N.J. Super. 427, 434 (App. Div. 2004), aff'd in part and modified in part, 183 N.J. 290 (2005)). "An abuse of discretion arises when a decision is made without rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Ibid. (internal quotation marks and citations omitted).

We first address plaintiff's contention that the judge made various errors in calculating the new child support award. These include: (1) considering plaintiff's retained earnings as part of his gross income for child support purposes; (2) failing to address significant tax return items, including the payment of taxes on income; (3) imputing only $75,000 income to defendant, when her CIS showed a yearly budget of $118,000; and (4) assessing supplemental support beyond the Guidelines-based amount.

Preliminarily, we note that plaintiff has not included in his appendix the tax returns, CISs, or any of the financial documents upon which his arguments are based, and on which the trial court relied in determining the parties' respective incomes and the reasonable expenses attendant to the child. A party on appeal is obliged to provide the court with "such other parts of the record . . . as are essential to the proper consideration of the issues." R. 2:6-1(a)(1)(I). Plaintiff's failure to supply this critical financial information substantially impedes our ability to effectively review the trial court's findings and conclusions. See Society Hill Condo. Ass'n v. Society Hill Assocs., 347 N.J. Super. 163, 177-78 (App. Div. 2002).

Based then on the truncated record before us, we discern no abuse of discretion in the court's child support calculation. As the judge correctly recognized, the instructions for defining gross income for purposes of the Guidelines (App. IX-B) refer to monies available to pay expenses of the child. They indicate:

Income and expenses from self-employment or the operation of a business should be carefully reviewed to determine gross income that is available to the parent to pay a child support obligation. In most cases, this amount will differ from the determination of business income for tax purposes.

 

[Pressler & Verniero, Current N.J. Court Rules, Appendix IX-B to R. 5:6A (2014). Instructions for Lines 1 through 5, Income from self-employment or operation of a business, par. b, at 2605.]

 

Subparagraph c of the same section also lists a series of expenses which the Internal Revenue Service allows for tax purposes, but which the Guidelines do not permit the joint owner of a closely held corporation, such as plaintiff, to exclude from the business's income as ordinary and necessary expenses. These include certain types of depreciation, home offices, entertainment, excessive voluntary contributions to pension plans, and, of significance here, "any other business expenses that the court finds to be inappropriate for determining gross income for child support purposes." Id. at c(11).

To the extent then that plaintiff's argument can be understood for the proposition that retained earnings can never be deemed an income source for purposes of the Guidelines calculations, we disagree. Rather, the appropriate analysis includes a focus on the legitimate need of the corporation to retain income, and whether the company retained excessive earnings which could otherwise have been disbursed to the supporting parent as income, thus enabling him or her to pay increased child support. In the present case, the trial judge scrupulously examined the testimony of the two expert witnesses, as well as plaintiff's individual and business tax returns, his CISs, and his prior Certification. While the court found "[p]laintiff's desire to expand his business commendable, it also acknowledge[d] that he could have withdrawn the money from the business and spent it on something else." Although the court included amounts shown as distributions to plaintiff from Becarro in calculating his income for child support purposes, it "did not include [in] its figure the retained earnings which were not distributed."

Plaintiff also urges error in the trial court's imputation of only $75,000 income to plaintiff. A trial judge has the discretion to impute income, but only after first finding that a party is voluntarily unemployed or underemployed. Caplan v. Caplan, 182 N.J.250, 268 (2005); Golian v. Golian, 344 N.J. Super.337, 341 (App. Div. 2001); Dorfman v. Dorfman, 315 N.J. Super. 511, 516 (App. Div. 1998). In fact, "[s]uch a finding is requisite, before considering imputation of income." Dorfman, supra, 315 N.J. Super. at 516. Here, the judge determined that defendant was underemployed voluntarily, and conducted the difficult task of identifying an amount of income to impute to her.

"Imputation of income is a discretionary matter not capable of precise or exact determination but rather requiring a trial judge to realistically appraise capacity to earn and job availability." Storey v. Storey, 373 N.J. Super. 464, 474 (App. Div. 2004). On appeal, a trial judge's imputation of a specific amount of income "will not be overturned unless the underlying findings are inconsistent with or unsupported by competent evidence." Id. at 474-75. There are no bright-line rules that govern the imputation of income. Id. at 474; see also Caplan, supra, 182 N.J. at 270. Against these standards, we see no abuse of discretion.

Turning to the discretionary component of the child support award, it is clear that the parties' combined income levels exceed the maximum child support guidelines. In such circumstances, "a judge should not extrapolate above the threshold using the respective percentages of total combined net income." Isaacson v. Isaacson, 348 N.J. Super. 560, 581 (App. Div. 2002). Rather, "the maximum amount provided for in the guidelines should be 'supplemented' by an additional award determined through application of the statutory factors in N.J.S.A. 2A:34-23(a)." Ibid. Once again, the trial court adhered to the proper procedure, and engaged in a detailed analysis of the statutory factors. In the absence of the CISs and other financial documentation on which the judge relied in conducting this analysis, we are unable to discern any abuse of discretion.

Plaintiff next argues that the trial court erred in modifying his child support obligation retroactive to December 15, 2009. We disagree. While N.J.S.A. 2A:17-56.23a prohibits retroactive child-support modifications, it contains an exception "with respect to the period during which there is a pending application for modification." Since defendant's motion to modify support was filed on December 15, 2009, the retroactive increase clearly comported with the statute. Moreover, as plaintiff was afforded a full and fair evidentiary hearing, we likewise find no merit in his contention that he was denied "due process" by virtue of the retroactive increase.

Plaintiff also challenges the judge's award of counsel fees, on the basis that defendant's conduct was "tantamount to bad faith." A judge in a matrimonial action may award a party reasonable attorney's fees and costs, and in making that determination "shall consider the factors set forth in the court rule on counsel fees, the financial circumstances of the parties, and the good or bad faith of either party." N.J.S.A.2A:34-23; seeR.5:3-5(c). The decision to award counsel fees "in a matrimonial action rests in the discretion of the trial court," Addesa v. Addesa, 392 N.J. Super. 58, 78 (App. Div. 2007), and will be disturbed "only on the 'rarest occasion,' and then only because of clear abuse of discretion." Strahan, supra, 402 N.J. Super.at 317 (quoting Rendine v. Pantzer, 141 N.J.292, 317 (1995)).

For purposes of awarding counsel fees, bad faith relates to the party's conduct during the litigation. Mani v. Mani, 183 N.J.70, 95 (2005). The purpose of an award of fees against a "bad faith" litigant "is to protect the innocent party from unnecessary costs . . . ." Yueh v. Yueh, 329 N.J. Super. 447, 461 (App. Div. 2000).

Here the trial judge, who had the opportunity to assess the credibility of the parties, specifically found "that neither party acted in bad faith" in the litigation, which was necessary to resolve the disputed issues. We are satisfied that the court properly applied the factors set forth in Rule5:3-5(c) and did not abuse its discretion in awarding defendant limited counsel fees and denying plaintiff's fee application.

We find plaintiff's remaining arguments wholly unsupported by the record and without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).

Affirmed.

1 In his June 15, 2012 decision, the judge noted that plaintiff's child support obligation was presently $179 per week.

2 See Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-B to R. 5:6A (2014).