MARGARET RUVOLDT v. JAMES HOFFMAN

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MARGARET RUVOLDT,

Plaintiff-Respondent/

Cross-Appellant,

v.

JAMES HOFFMAN,

Defendant-Appellant/

Cross-Respondent.

_______________________________

Argued April 8, 2014 Decided May 13, 2014

Before Judges Espinosa and Koblitz.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-1628-08.

Edward S. Snyder argued the cause for appellant/cross-respondent (Snyder & Sarno, L.L.C., attorneys; Mr. Snyder, of counsel and on the brief; Jill D. Turkish, on the brief).

Harold J. Ruvoldt, Jr., argued the cause for respondent/cross-appellant (Cavalli & McCann, L.L.C., attorneys; Brian P. McCann, on the brief).

PER CURIAM

Defendant James Hoffman (father) appeals from an October 19, 2012 order, entered after a plenary hearing, denying his post-judgment application to reduce child support and requiring that private school costs of the two children should be equally divided, as well as the January 4, 2013 order denying reconsideration. Plaintiff Margaret Ruvoldt (mother) cross-appeals from the January 4, 2013 order denying her application for counsel fees. We affirm.

The parties were married on October 12, 1996, and, during their marriage, adopted two children born in 2000 and 2001. The parties were divorced in 2008. The judgment of divorce (JOD) incorporated the matrimonial settlement agreement (MSA). Father was residing in Texas at the time. He was employed with MedAssets, which in 2008 had acquired his prior employer, Accuro Healthcare Solutions, and had a base salary of $225,000 with an average annual bonus of $65,000. Mother was residing with the children in New Jersey. She was employed at Sterling Infosystems and was earning an annual income of $98,000.

The mother was the parent of primary residence, with the father exercising parenting time on alternate weekends and for four weeks during the year. The father's child support obligation was not calculated in accordance with the Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2579 (2014), but was established in the amount of $7,023 per month, $2,023 of which would be deferred until the time the parties' Texas home was sold.1 The MSA sets forth that the parties were each required to contribute $100,000 to an account to be used for the children's private school costs. The MSA further provides for a "one-time review" of their contribution to private school payment to occur upon the earlier of the depletion of the $200,000 or four years.

The MSA provides for a complete waiver of alimony by mother "in consideration of the totality of the provisions" in the agreement. Only "if there is a change of circumstances due to the Wife's Multiple Sclerosis or other significant disability, or child support as set forth . . . is reduced," is the waiver of alimony modifiable. Mother has remarried.

By the time the JOD was entered, father was president and general manager for Accuro Healthcare Solutions' revenue management division. MedAssets was pleased with father's work and sought to retain him by suggesting four alternative employment options, including remaining in the current position and various positions in Washington State, Georgia, and New Jersey with the same compensation structure, benefits, incentive plans, and 80,000 stock options which the expert testified were worth "potentially" $800,000 and which would vest "in two years."

Claiming "that he did not have a future with the company," father rejected the offers and left the company in January 2009, accepting a severance package in the amount of $170,000 in exchange for his one-year "non-compete" agreement. He entered into a Transition and Separation Agreement, in which father acknowledged that his resignation is "without Good Reason for all purposes under the Employment Agreement." From January 2009 to February 2010, father remained unemployed, although he received gross earnings of approximately $225,000.2

At the expiration of the non-compete agreement, father contacted Besler Consulting and made a proposal of employment with a salary of $200,000 with participation in the company bonus plan. Around March 15, 2010, father started working as Chief Technology Officer of Besler Consulting in New Jersey under the proposed conditions. At the time of the hearing, father had received a pay increase to $225,000 per year.

When the JOD was entered, mother was employed at Sterling Infosystems and was earning $98,000. After passing a certification exam for professionals in human resources, she accepted a position with 2Tor Inc. as vice president of human resources in May 2010 with a salary of $140,000. She received several increases in her base salary, and at the end of the plenary hearing, her income was in excess of $189,000. When father filed a notice of motion for reconsideration in November 2012, mother's income had increased to $220,000.

The children's expenses increased, including the costs for food, clothes, summer camps, extracurricular activities, and lessons. Despite the increasing costs and expenses for the children, father's child support obligation remained the same and mother absorbed the increased expenses with her increased earnings. Mother must plan for her financial future with the knowledge that she may not be able to work due to her multiple sclerosis.

The court heard the testimony of Dr. David Stein, Ph.D., mother's vocational and employability expert; Robert J. Zak, CPA/ABV, the court-appointed forensic accountant; and David Bongiovanni, CEO and General Counsel for Besler Consulting.

Based on his research, review of pleadings and documents, consideration of father's age, educational background, and past and present employment experiences, Dr. Stein opined that father had the capacity to earn more than what he was earning at Besler. He also stated that father's job search during the period of the unemployment was "very, very little" and amounted to "basically a one-day job search, one or two days tops." The trial judge found Dr. Stein's testimony "reliable, fact-sensitive and persuasive."

The trial judge also considered the reports and testimony of Robert Zak, CPA/ABV. Recognizing the one-time review for each party's future contributions to the private school costs, Zak testified that pursuant to the MSA gross income from all sources were to be used to evaluate the one-time review of private school payment.

The trial judge observed the demeanor of the mother and observed her to be an honest, credible, sincere witness. The trial judge found that father's testimony was "evasive and hesitant," "flippant," "incredulous," "disingenuous," and "blatantly false."

The trial judge denied father's motion to reduce child support, concluding that father intentionally failed to earn what he was capable of earning, based on executing the MSA on the verge of contemplating termination of employment, rejecting four viable employment offers, foregoing lucrative stock options and failing to obtain comparable employment. During his year of unemployment, father also bought guitars and coins at a cost of $80,000. Finding that father has an ability to earn income commensurate with his education, years of experience in the workforce in his growing field, and his documented history of earnings as well as opportunities he failed to avail himself of and that he is voluntarily underemployed, the trial judge imputed income to father equal to his income at the time of the JOD. She found that he manipulated his income to "best take [] advantage of the one-time review" in the MSA. The judge did not award counsel fees to either side, although she found father to be not credible in his testimony and intentionally underemployed.

In father's motion for reconsideration, the court was asked to consider the significant increase in mother's income since the divorce. In denying father any relief, the trial court considered mother's income, and found that mother alone had been paying for the children's camps, extracurricular activities, and increased expenses. The judge again denied mother's request for counsel fees "because of her recent increase in her income" and father's lack of the type of bad faith required for such an award on that basis.

An appellate court owes substantial deference to a family court's fact-finding "[b]ecause of the family courts' special jurisdiction and expertise in family matters[.]" Cesare v. Cesare, 154 N.J. 394, 413 (1998). We do not disturb the "'factual findings and legal conclusions of the trial judge unless [we are] 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.'" Id. at 412 (quoting Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974)).

"'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, 325-26 (2013) (quoting Jacoby v. Jacoby, 427 N.J. Super. 109, 116 (App. Div. 2012)). The trial court's "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." Id. at 326 (internal quotation marks and citations omitted).

"Where the supporting parent's income is reduced voluntarily, requests for modification routinely have been denied in New Jersey without regard to whether the reduction was incurred for the purpose of avoiding the support obligation." Halliwell v. Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999). With regard to the trial judge's decision to divide the cost of private school equally between the parents, father claims that the judge failed to apply the agreed-upon formula for a one-time review set forth in the MSA. We disagree. The MSA reads:

For purposes of reviewing whether the children shall continue in private school the parties agree that, if at the time of the review, the parties' combined gross income from all sources is above $460,000 and the annual expenses to be paid by the parties for the children's private school education is less than or equal to 11 percent of the parties['] combined gross income from all sources, then the children shall continue in private school and the parties shall continue to contribute equally to the private school costs of the children. If, however, these criteria are not met, [father's] responsibility to contribute to the private school expenses of the children shall be limited to one half of 11 percent of their combined income; and in that event the decision as to whether the children continue in private school shall be the [mother's] decision.

The parties agree that the $200,000 school fund ran out in December 2011. That year mother's income was $165,075. Father's imputed income was $285,000. The parties had rental income from the Texas property of $60,000. Additionally, had father accepted a position offered by his former employer, he would have been able to exercise 80,000 stock options, which the judge found to have a potential value of $800,000, after two years, when the school funds were depleted. The judge found that father intentionally reduced his income to avoid the one-time review. The judge did not explicitly explain how the formula was affected by the facts. Instead, the judge relied on the expert's testimony, which we find somewhat confusing. Had father taken the offered position and exercised the stock options, the parties' income from all sources would have been well over the $460,000 required by the MSA formula and the $72,600 school costs would have been well under the 11% of total income necessary for an equal division of the school costs. Thus, the judge was well within her discretion in requiring father to pay half of the children's private school costs, especially where father agreed it would be in the children's best interests to attend private school.

We have considered the apparent inconsistency in a finding that father testified falsely and manipulated his income, yet did not litigate in bad faith. The trial judge, however, has considerable discretion in awarding counsel fees. Eaton v. Grau, 368 N.J. Super. 215, 225 (App. Div. 2004). Given mother's income, the trial judge did not abuse her discretion in failing to assess counsel fees.

We also note that a parent's increase in income does not necessarily result in a decrease in child support due the other parent. Unlike former spouses, children should enjoy the increased prosperity of the parties post-divorce. A careful review of the Guidelines reveal that the increased income of the custodial parent rarely affects the support obligation of the non-custodial parent, because with increased income of the parents' joint income, the amount of child support increases. See Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2582-83 (2014). The mother's increased level of support is reflected in her expenditures for the children, while the father's support is paid to the mother.

Affirmed.

1 The Texas home was not sold as of the final order pending before us on appeal.

2 He received a deferred payment related to the sale of MedAssets as well as the severance package.