JAMES M. HOLLENDER v. KAREN J. HOLLENDER

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-00652-12T1

JAMES M. HOLLENDER,

Plaintiff-Respondent,

v.

KAREN J. HOLLENDER,

Defendant-Appellant.

________________________________

KAREN J. HOLLENDER,

Third-Party Plaintiff,

v.

SHEILA HOLLENDER,

Third-Party Defendant.

________________________________

October 23, 2014

Argued on September 23, 2014 Decided

Before Judges Reisner, Koblitz and Higbee.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-0647-07.

Thomas Baldwin argued the cause for appellant (Budd Larner, P.C.; attorneys, Mr. Baldwin on the brief).

Howard A. Bachman argued the cause for respondent (Goldstein, Bachman & Newman, P.A.; attorneys, Mr. Bachman, of counsel; Regan A. Stempniewicz, on the brief).

PER CURIAM

Defendant Karen J. Hollender appeals from an August 20, 2012 final judgment of divorce entered after a lengthy trial, contending that the trial judge erred in severing certain third and fourth-party claims, permitting plaintiff James M. Hollender to revisit the issue of his ability to pay alimony after a pre-trial ability-to-pay hearing was held, and rejecting defendant's claim that she had been the victim of fraud. After reviewing the record in light of the contentions advanced on appeal, we affirm.

The parties married in 1973 and had three children who are now emancipated. Defendant, who had a degree in art education, did not work outside the home after the first year of marriage. Plaintiff, who completed only three years of college, began working as a salesman for his father Edwin1 at Miller Hollender Sales Company (MHS) in 1972. Edwin co-owned the then-twenty-five-year-old business with its founder, Jess Miller. MHS sold automotive parts on behalf of manufacturers to after-market automotive parts dealers and distributors. MHS operated pursuant to thirty-day contracts with the various manufacturers it represented, and the manufacturers were free to engage new sales representatives upon the expiration of these contracts.

In 1975, Miller passed away and Edwin became the sole owner of MHS. He gave plaintiff fifteen percent of the company's stock and made him vice-president. Defendant was later added as co-owner of the stock.

In 1980, the parties and their children moved into a newly-constructed home in Morganville. Shortly thereafter, plaintiff became president of MHS. In the mid-1980's, he promoted Robert Rubin, a salesman with MHS since 1969, to sales manager, and gave him ten percent of MHS's stock (twenty shares). Although another long-time employee, Howard Palis, also petitioned to become a partner in the 1980's and 1990's, plaintiff denied his request, stating that the time was not right.

Between 1985 and 1989, plaintiff earned $39,600 to $48,000 annually. Plaintiff's income increased to $122,398 when MHS began selling to Pep Boys and Track Auto. In 1998, plaintiff's salary was $158,996. That same year, Edwin decided to retire, although he maintained some involvement with MHS. Pursuant to a partnership agreement dated April 28, 1998, stock in MHS was re-distributed such that plaintiff and defendant became joint owners of eighty-five shares, while Edwin and plaintiff's mother, Sheila, retained only sixty-four shares. Rubin retained his twenty shares.

According to plaintiff, MHS's business began to shrink in the early 2000's because of changes in the market. In April 2004, Palis and Rubin and three other MHS employees presented plaintiff with a letter and proposed business plan. The letter expressed the general unhappiness of the five employees and their belief that MHS was "going nowhere but steadily downhill[.]" It asserted that plaintiff had been "unable to get a handle on" things and had disregarded warnings from manufacturers and rejected all suggestions made by Palis and Rubin on ways to turn things around. It claimed that they had spoken with all of MHS's manufacturers and that most had lost confidence in plaintiff's leadership. Finally, the letter stated that they had to do something to protect their future livelihoods and noted that their proposed business plan had been endorsed by a "significant" number of MHS's manufacturers.

The proposed business plan set forth an offer by Palis and Rubin's new company, P&R Marketing (P&R), to purchase the contracts for vendor product lines of MHS by, among other provisions: (1) paying MHS fifty percent of the commissions from two of their biggest manufacturers, Milton Industries (Milton) and Lisle Corporation (Lisle), for three years; and then (2) paying MHS twenty percent of these same commissions for two more years. Rubin would surrender his shares of MHS and MHS would receive fifty percent of commissions for sales of new business to these accounts for three years and then sixty-five percent of commissions for year four and beyond.

According to plaintiff, Palis and Rubin made clear that, since the manufacturers were on board with them, they were going to start P&R with or without plaintiff, but wanted him to be part of the plan. Plaintiff understood that he was going to be hired by P&R at the expiration of the five-year period set forth in the proposal. Even though he was not entirely happy with the proposal, he retained his friend Richard Anslow of Anslow & Jacklin LLP, to prepare the agreement.

Plaintiff claimed that he told defendant about the proposal that evening and that she told him to do what he thought was best. Plaintiff believed that he had the authority to assign defendant's interest in MHS to P&R. Defendant claimed that plaintiff never discussed MHS with her and never informed her of the Assignment Agreement. She maintained that she first learned of the agreement in 2007 or 2008 when she was looking at documents with her divorce attorney.

The resulting "Assignment Agreement" was executed by plaintiff and Rubin on August 31, 2004. It mirrored the proposal and also provided that, in the event Miller or Lisle canceled their contracts, no further payments would be made to MHS for those accounts. Under the agreement, P&R did not assume MHS's liabilities, which included a $59,000 commercial loan from Bank of America. The agreement also included a five-year non-compete clause. No provision stated that plaintiff would be hired by P&R upon the expiration of the agreement.

Thereafter, plaintiff worked as a salesman as the sole remaining MHS employee. In 2004, the transitional year, MHS's gross income was $428,610. Plaintiff's 2004 income was $128,700.2 In 2005, MHS's gross income was $276,633, out of which half was paid back to P&R and $79,700 was designated as plaintiff's salary. Plaintiff represented on his 2005 tax return that his income was $85,378, which included monies earned from P&R. In 2006, MHS's gross income was $178,909, out of which half was paid back to P&R and $62,700 was designated as plaintiff's salary. He represented on his 2006 tax return that his income was $85,394, which included monies earned from P&R.

Plaintiff moved out of the marital home and, several months later, filed for divorce in October 2006. In February 2008 plaintiff stopped supporting defendant. A family judge ordered plaintiff to: (1) pay all of defendant's shelter and transportation expenses, her unreimbursed healthcare expenses, and an additional $500 per week in non-taxable support; and (2) maintain all marital insurance policies, including health, life, automobile, homeowner's and disability. The judge found that plaintiff had not been "completely candid" with the court and, as such, his ability to pay could be inferred. The judge denied for the moment defendant's request that plaintiff be directed to pay their middle child's college loans, noting that there was no reason why the child should not be deemed emancipated and fully-employable since he was twenty-nine years old and had taken college classes for eleven years.

In January 2010, after plaintiff failed to comply with the pendent lite support order, an ability to pay hearing occurred. The judge found that plaintiff had not made a good faith effort to look for a new job or pay support to defendant, and that he had not demonstrated that he was unable to make the payments due. Plaintiff was ordered to make an immediate payment of $5000 toward his arrears or be incarcerated, and an additional payment of $5000 by February 1, 2010. In light of plaintiff's bad faith, the judge also ordered plaintiff to pay $6,500 toward defendant's counsel fees. Plaintiff was later found in violation of litigant's rights again for failure to abide by this order and various additional sanctions were imposed.3

Defendant was granted leave to file additional claims against plaintiff, as well as a third-party complaint against P&R and Rubin, for civil conspiracy and fraud, alleging that the Assignment Agreement was executed without her knowledge or consent. She sought rescission of the agreement and damages. Defendant was later granted leave to join Sheila,4 Anslow and the Anslow law firm as third-party defendants. Defendant alleged that Shelia had conspired with plaintiff and aided him in committing a fraud against her. As to Anslow and the Anslow law firm, defendant asserted direct claims for breach of fiduciary duty and malpractice.

Although another judge had initially denied a severance, shortly before trial, the trial judge granted plaintiff's motion to sever the third and fourth-party complaints5 and transfer them to the Law Division.

The trial took place on seventeen days over the course of eight months in 2011. Plaintiff testified that he was sixty-one years old and had health issues. He was presently unemployed and collected $147 per week in unemployment benefits. He had been looking for jobs without success. He confirmed that he had been arrested twice for failing to pay support to defendant and that he had never paid any of the counsel fee awards made to defendant during the pendency of this case. Plaintiff acknowledged that he had been similarly unemployed when he was found to have the ability to pay at a pre-trial hearing. Plaintiff stated that his mother, Sheila, started giving him money in 2007 to cover his living and personal expenses. Plaintiff also admitted that, in June 2008, he put down $4500 to lease a $35,000 Jeep.

Plaintiff denied that he conspired with Rubin and Palis to remove MHS from the marital estate. He insisted that he had had no alternative but to take the buyout. In 2004, MHS was in financial distress. The Assignment Agreement would have been a "win-win" if the economy had not taken a downward turn and two new players, Auto Zone and Advanced Auto Repair, had not entered the picture and altered the after-market auto parts market. Plaintiff believed that the Assignment Agreement was fair until the end when he was not hired by P&R. He claimed that he was not hired by P&R because defendant sued them.

Plaintiff confirmed that he did not intend to pay anything further toward his son's remaining college loans. He admitted that he allowed his and defendant's health insurance to lapse, and that he also stopped paying the property taxes on the marital home years earlier. He also conceded that, although he signed her name to the check, he did not share the parties' 2007 tax refund check totaling $7,838 with defendant.

Plaintiff acknowledged that he consulted with a divorce attorney in February 2004, shortly before the meeting that resulted in the Assignment Agreement. He further admitted that during the same month, he also opened a bank account where he deposited money from his mother.

Defendant testified that she was sixty years old and suffered from numerous health problems. In 2005 she started working part-time as a pre-school teacher. She earned $5821 in 2010 and $6326 in 2011, but was terminated in June 2011. She claimed that, although qualified, she would not be able to handle an elementary school position due to her poor health.

Defendant stated that her mother started lending her money in 2007. She had been giving defendant $500 per week as needed and also paying for some of defendant's counsel fees. Defendant believed that she owed her mother $135,000. Defendant testified that, as of April 2011, plaintiff owed her $47,570 in support arrears.

Palis testified that he was hired by Edwin in 1975. Over the years, he worked as a salesman, regional sales manager, and vice president at MHS. He asked to become a partner many times over the years, but his requests were denied. Palis related that, as early as 2000, he felt that MHS, which was often late in paying commissions to its sales staff and had stopped providing health insurance to certain employees, was going downhill. In 2000 and again in 2003, he spoke to plaintiff about changing the dynamic at the company, but plaintiff was not open to his ideas.

Palis and Rubin formed P&R in 2004. In April 2004, after confirming that a significant number of MHS's manufacturers would go with them if they left MHS, the pair presented plaintiff with their letter and business proposal. Palis explained that, because MHS operated on thirty-day contracts, the manufacturers could have just fired MHS and transferred their business to P&R.

However, while he and Rubin could have simply taken the business, they felt the proposed five-year buyout, through which they purchased the product lines MHS represented, was fair. They wanted to give plaintiff the chance to "earn" his way back into the business. Palis noted that, like MHS, P&R operated under thirty-day contracts. There was no guarantee that their current manufacturers would stay with them.

Palis maintained that plaintiff was never promised a job at the conclusion of the five-year buyout period, and denied that the matter was ever discussed. Because they believed plaintiff had been ineffectual as president of MHS, Palis and Rubin wanted to see him prove himself as a salesman before they would even consider hiring him. Ultimately, P&R did not hire plaintiff because his sales earnings during the five-year buyout period were "almost nil," and also because defendant sued them. Palis stated that, because of the ongoing litigation, he and plaintiff did not speak anymore.

Plaintiff's mother, Sheila, testified that plaintiff did not do a good job running MHS. She confirmed that she presently had assets worth over $4,000,000. Because she did not believe that plaintiff could properly handle her money, she had given her daughter, Amy, power of attorney over all of her affairs. For a period of time she was giving plaintiff $4000 per month to cover his living expenses. She also paid his legal bills. Amy now made the monthly payments from Sheila to plaintiff. Shelia said the monies plaintiff received now would be credited against his share of her estate.

At the conclusion of the trial, the judge entered a judgment of divorce which provided that: (1) plaintiff was to pay defendant permanent alimony of $250 per week, as well as all unpaid pendente lite support through August 19, 2012; (2) the marital assets were to be divided as set forth in an accompanying opinion; and (3) plaintiff was to pay $101,900.77 towards defendant's requested counsel fees.

In his accompanying opinion, the judge directed that: (1) defendant was to receive full ownership of the marital home, which had net equity of $400,000; (2) the parties were each responsible for fifty percent of the property taxes that accrued prior to the date of the divorce judgment; (3) the cash surrender value of all of the parties' life insurance policies, including the $75,000 taken by plaintiff, was to be divided equally; (4) all retirement accounts were to be divided equally; (5) plaintiff was to assume full ownership of MHS and be solely responsible for settling any debts; (6) plaintiff was to pay defendant half of the 2007 and 2008 federal tax refunds; and (7) plaintiff could retain whatever remained of his instrument, amplifier and timepiece collections. The trial judge denied defendant's request that plaintiff pay their emancipated son's college loans.

I

Defendant contends in Point I of her brief that the trial judge abused his discretion when severing and sending to the Law Division the third and fourth-party complaints that asserted claims pertaining to the assignment of MHS's assets to P&R. At oral argument we were informed that the severed claims had been settled. Counsel further acknowledged that the severance issue was therefore now moot. "'An issue is 'moot' when the decision sought in a matter, when rendered, can have no practical effect on the existing controversy.'" Greenfield v. New Jersey Dep't of Corr., 382 N.J. Super. 254, 257-58 (App. Div. 2006) (quoting New York Susquehanna & W. Ry. Corp. v. State Dep't of Treasury, Div. of Taxation, 6 N.J. Tax 575, 582 (Tax Ct. 1984), aff'd, 204 N.J. Super. 630 (App. Div. 1985)). We may nevertheless reach the merits of an otherwise moot claim if the matter is capable of repetition, yet evading review, Gilbert v. Gladden, 87 N.J. 275, 295-96 (1981), or if it concerns matters of substantial public importance, In re Geraghty, 68 N.J. 209, 212 (1975). Neither exception applies here.

II

In Point II of her brief, plaintiff argues that in light of the pre-trial ability to pay hearing, the trial judge erred in revisiting the issue of the proper amount of support. An ability to pay hearing pursuant to Rule 1:10-3 "is not a plenary hearing to decide the appropriate amount of support an obligor should pay." Schochet v. Schochet, 435 N.J. Super. 542, 548 (App. Div. 2014). We thus find that the trial judge, after hearing all the testimony presented at trial, did not err in determining the proper alimony to award going forward.

III

In Point III defendant argues that the judge erred in finding that plaintiff did not conspire with the third parties to commit fraud, but rather was not a capable businessperson. In reaching this conclusion, the judge first noted that he found plaintiff to be a largely uneducated, unmotivated, and "lackluster guy," who was not terribly bright. Plaintiff did not possess his father's business savvy, as indicated by his decision to hire back a secretary who had stolen from him. Palis, whom the court found to be very credible, related that between 2000 and 2004, MHS experienced several problems under plaintiff's leadership. Plaintiff's own mother testified that plaintiff did not know how to properly run MHS. The judge found that defendant's "far-fetched" fraud theory was, in reality, nothing more than a "pipe dream[.]"

The trial judge emphasized that the substance of MHS's "middle-man" business was short, thirty-day contracts with various manufacturers. Because of this, the trial judge found that when Rubin and Palis came forward with their "win-win plan," they did not even need plaintiff's permission to start a competing business. Plaintiff had no choice but to give in to Palis and Rubin because they had the ability to take business away from MHS without any legal repercussions.

In reviewing a trial court's conclusions in a non-jury case, we owe substantial deference to the trial judge's findings of fact and credibility determinations. Cesare v. Cesare, 154 N.J. 394, 412 (1998) (citing Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974)). An appellate court should disturb these findings only where there is no doubt they are inconsistent with the relevant, credible evidence presented below, such that a manifest denial of justice would result from their preservation. Ibid. It is of no consequence that the reviewing court suspects that it might have reached a different result, or that all testimonial or evidentiary issues were resolved in favor of one side. State v. Johnson, 42 N.J. 146, 162 (1964).

The judge's decision rested upon his credibility determinations and the overriding fact that MHS operated in the short-term so that plaintiff could not prevent others, including his own employees, from taking over product lines previously represented by MHS. The judge's decision was consistent with the relevant credible evidence.

Defendant's related argument in Point V of her brief that the judge "abused [his] discretion in affording relief to [plaintiff] and Sheila considering their unclean hands" does not warrant further discussion. R. 2:11-3(e)(1)(E).

IV

Point IV of defendant's brief urges us to reject the incomes imputed to the parties as arbitrary. Certainly the imputation of some income to both parties was appropriate. Current earnings have never been viewed as the sole criterion upon which to establish a party's obligation for support. Weitzman v. Weitzman, 228 N.J. Super. 346, 354 (App. Div. 1988), certif. denied, 114 N.J. 505 (1989). Rather, a judge "'has every right to appraise realistically [a spouse's] potential earning power.'" Ibid. (quoting Mowery v. Mowery, 38 N.J. Super. 92, 102 (App. Div. 1955), certif. denied, 20 N.J. 307 (1956)). This includes a spouse's "'capacity to earn . . . by diligent attention to his [or her] business.'" Innes v. Innes, 117 N.J. 496, 503 (1990) (quoting Bonanno v. Bonanno, 4 N.J. 268, 275 (1950)). "[O]ne cannot find himself in, and choose to remain in, a position where he has diminished or no earning capacity and expect to be relieved of or to be able to ignore the obligations of support to one's family." Arribi v. Arribi, 186 N.J. Super. 116, 118 (Ch. Div. 1982). "Income may be imputed to a party who is voluntarily unemployed or underemployed." Golian v. Golian, 344 N.J. Super. 337, 341 (App. Div. 2001).

The trial judge imputed an annual salary of $45,000 to plaintiff. He found that plaintiff was an unmotivated and "lackluster" sixty-one-year-old college drop-out who had only ever worked in his family's business and possessed "hardly any business competency" or education. The family business was now gone, and with it, any possibility of plaintiff earning more than a "modest salary[.]" Nonetheless, the judge determined that plaintiff, who had been unemployed since November 2010, had some sales experience and could still "generate some income to pay" defendant and needed to make a better effort to find work.

Defendant relies on Platt v. Platt, 384 N.J. Super. 418 (App. Div. 2006), to argue that the judge erred in accepting plaintiff's representations regarding his poor financial situation and limited employment prospects. However, the facts in this case are nothing like those in Platt, supra, 384 N.J. Super. at 422-24, where the husband, who owned an ongoing business, unilaterally decided to drastically and repeatedly reduce his salary during the years the divorce was pending even though such reductions were not warranted given the generally healthy and improving state of his business. We concluded in Platt that, under these circumstances, the trial court properly based the plaintiff's alimony and child support obligations upon his average salary over the preceding five years, rather than upon his most recent annual salary. Id. at 426-27.

By contrast, here the family business is gone, and defendant failed to prove that plaintiff orchestrated the assignment of MHS's interests in order to limit her alimony and equitable distribution awards in an anticipated divorce action.

With respect to defendant, the court noted that she had been a homemaker for almost the entirety of the marriage, despite having a college degree in art education. Although defendant had been working on a part-time basis since 2005 earning approximately $10,000 per year, the court was persuaded that she was not employed to her full potential and that she was capable of earning more. Accordingly, the court imputed an income of $17,000 to defendant. The trial judge did not err in basing his imputations of income on the credible facts.

V

The remaining Points VI through IX in defendant's brief are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only the following comments. In Point VI defendant argues in two sentences that the judge erred by failing to make findings of fact regarding the marital lifestyle. Plaintiff did not dispute the marital standard of living as set forth in defendant's case information statement. Rather, he argued at trial that he could not continue to support such a lifestyle because he no longer had a job. Thus the lifestyle was not an issue in the trial. In Point VII defendant also briefly argues unpersuasively that the judge erred in not requiring plaintiff to pay his emancipated, twenty-nine-year-old son's college loans after the son did not complete his college education. Equally unpersuasive is defendant's short argument in Point VIII of her brief that defendant should have been awarded more counsel fees in light of plaintiff's bad faith conduct in not paying the pendent lite support ordered. As noted above, defendant was awarded more than $100,000 in counsel fees in a case where neither party was fully employed, the joint imputed income of the parties was $62,000, and the largest asset, the marital home, had $400,000 in equity. Defendant argues finally in Point IX that the judge should have ordered plaintiff to pay $143,800 in sanctions accumulated from pre-trial orders requiring him to suffer a sanction of $100 per day until the support was paid. The judge acted well within his discretion in modifying this sanction after trial. Mallamo v. Mallamo, 280 N.J. Super. 8, 12 (App. Div. 1995).

Affirmed.

1 We refer to plaintiff's parents, Edwin and Sheila Hollender, by their first names to avoid confusion. To preserve their privacy, we refer to plaintiff's sister Amy by her first name only and do not name the parties' middle child.

2 By comparison, MHS's gross income was $660,344, $634,011, and $670,775 in 2001, 2002 and 2003, respectively, while plaintiff's income was $94,298 in 2001, $104,591 in 2002, and $116,859 in 2003.

3 In February 2010, plaintiff started working as a full-time floor salesperson at a local Guitar Center, earning a little over $7 per hour. Between February and November 2010, when he was laid off, plaintiff earned $8,706.59.

4 The claim against Sheila was dismissed after trial.

5 P&R and Rubin sued Anslow and the Anslow law firm in a fourth-party action.