DAWN GROSS PUCHALSKY v. CRAIG PUCHALSKYAnnotate this Case
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-0
DAWN GROSS PUCHALSKY,
June 22, 2015
Submitted December 17, 2014 Decided
Before Judges Waugh, Maven, and Carroll.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Atlantic County, Docket No. FM-01-612-07.
Swift Law Firm, LLC, attorneys for appellant (Jennifer B. Barr Swift, on the brief).
Biel, Zlotnick & Feinberg, PA, attorneys for respondent (Mark Biel, on the brief).
Defendant Craig Puchalsky appeals the Family Part's June 27, 2013 judgment of divorce (JOD), as well as the order denying his motion for reconsideration. We affirm the JOD, vacate the Family Part's order denying the motion for reconsideration, but deny that motion ourselves in an exercise of original jurisdiction.
We discern the following facts and procedural history from the record on appeal.
Plaintiff Dawn Gross Puchalsky and Craig Puchalsky became engaged during their senior year of college. In 1985, Craig1 graduated from Hofstra University, and Dawn graduated from Ithaca College. Craig started dental school at the University of Buffalo, while Dawn worked at a clothing store. They married in December 1987, while Craig was still in dental school. Neither party brought significant income or assets to the marriage.
Following graduation and becoming licensed as a dentist, Craig worked for a dental practice in Pleasantville for approximately two years. He left in January 1991 to form his own practice in Smithville. Dawn worked at the practice on a part-time basis from the time it opened until 2005.
According to Dawn, she performed general office work, including answering phones, making appointments, filling in for receptionists, and processing insurance claims. She was paid $500 per week. According to Craig, however, Dawn acted as the office manager, which included bookkeeping, accounting, billing, and "front-office operations."
The dental practice was busy and successful. Dawn and Craig had an upscale lifestyle. They lived in a large lakefront home in Linwood, with a pool, cabana, waterfall with bridges, and dock. Both Dawn and Craig drove expensive cars throughout the marriage, spent extensively on clothing and jewelry, ate at fine restaurants several times a week, and traveled widely. Craig also enjoyed gambling at casinos, and was a member of two country clubs. Dawn estimated the joint marital expenses at $23,636 per month.
Two daughters were born from the marriage, one in March 1989, and the other in August 1994. Dawn and Craig took their children on vacations to Disney World and on overnight stays in New York City for shopping, shows, and dining.
In January 2005, the New Jersey Division of Criminal Justice (Division) charged Dawn and Craig with healthcare fraud. The Division temporarily closed Craig's practice, and seized evidence from his office and home. The investigation eventually disclosed that Dawn and Craig had been evading taxes by under-reporting their income.
The Division allowed Craig to reopen his office approximately three weeks later. He started seeing patients again after recovering patient records from the State. According to Craig, he worked half days on Monday or Wednesday, and made himself available to patients as needed at other times. Initially, Craig did not hire any staff because he did not trust anyone else to do the office work.
At the time the practice was seized, the couple were living separately, but Craig moved back into the marital home on the day of the seizure. He moved out again later in 2005, and the parties separated permanently.
During the criminal investigation, Dawn and Craig filed amended joint state and federal tax returns. Their amended income for the years 2000 to 2003 was $416,806, $346,924, $421,407, and $431,133, respectively. Their income for 2004 was reported as $461,347. As a result of the amended filings, the tax authorities imposed liens in excess of $880,000 for unpaid taxes and penalties.
On October 5, 2007, Dawn and Craig, who were represented by separate counsel, entered into a memorandum of understanding (MOU) with the Division, seeking to resolve their criminal, tax, and related legal issues.2 The basic terms were that Craig would plead not guilty to a charge of third-degree theft by deception and would apply for pretrial intervention (PTI), and pay restitution. The Division would refer the matter to the Board of Dentistry, but would not object to a licensing sanction that would allow Craig to continue practicing. Dawn agreed to waive indictment and plead guilty to third-degree healthcare claims fraud. N.J.S.A. 2C:21-4.3(c). She would receive a non-custodial sentence, including probation and a restitution agreement.
The MOU also provided for the disposition of the $417,469 seized from the parties' financial accounts, as well as the liens on Craig's office and the marital home. Approximately $90,000 of the seized funds were to be used for payment of penalties assessed for the healthcare fraud and by the Division of Taxation. The remainder was to be forfeited to the State. The equity in the dental office property, estimated at $57,766, was forfeited to the State. The marital home, which had an estimated value of $1,000,090, with a mortgage of approximately $250,000, was to be sold within a year. Up to half of the proceeds would be available to purchase a modest home for Dawn and her daughters. The other half was to be used to pay the federal tax lien.
Dawn filed for divorce in January 2007. The Family Part judge entered a pendente lite custody and support order on May 22. Dawn was awarded residential custody of the children and taxable support in the amount of $2000 per week. She was responsible to pay approximately $4000 a month for the mortgage and property taxes on the marital residence, where she was living with their children.
Dawn and Craig entered into a stipulation of dismissal of the divorce complaint without prejudice. However, they agreed that either party could seek enforcement of the pendente lite support order. Dawn filed a new complaint for divorce in 2008.
In the spring of 2008, Dawn and Craig entered into an indemnification agreement, which provided that Craig would indemnify Dawn for any federal and state tax claims based on the amended joint returns. Craig also indemnified Dawn for any third-party claims from patients or insurance companies. Finally, the agreement provided that
the subject matter of any allegations of health care fraud and/or theft, the disposition of any of the aforementioned civil or criminal claims or forfeiture proceedings, will not be utilized or introduced into evidence, directly or indirectly, in any proceedings by and between Craig Puchalsky and Dawn Puchalsky, including, but not limited to, the present litigation or future matrimonial litigations, that neither party is to blame, or the parties are equally to blame, for any consequences arising from actions taken by the State of New Jersey and/or the Internal Revenue Service and federal authorities.
At the time the agreement was signed, Dawn had not yet pled guilty to healthcare fraud.
After Dawn failed to make regular payments on the mortgage, the home went into foreclosure in February 2008. She alleged that she was unable to make the payments because Craig was not current with his weekly payments. She also asserted that she should have been receiving more support because Craig was falsifying his income.
Dawn was relieved of her obligation to pay the mortgage in June 2009, as a result of which her weekly support was reduced to $1062. It subsequently increased to $1100, to reflect an increase in the cost of living, but remained at that amount until the final judgment of divorce was entered in 2013. Because Craig was frequently in arrears with his support obligation, Dawn filed motions for payment of support, education expenses for the children, and other miscellaneous matters. In March 2011, Craig's arrears amounted to $30,000.
The divorce trial took place over four days between December 2012 and February 2013. Dawn testified that she pled guilty and Craig did not so that Craig could "keep his dental license since he was the only means of support." She also testified that she waited to enter her guilty plea until after Craig signed the indemnification agreement, which she understood would prevent her conviction from being used as evidence to effect support and equitable distribution in the divorce proceedings. She asserted that Craig had already violated the agreement by raising them in the matrimonial matter.
In contrast, Craig testified that he did not concern himself with the financial aspects of his practice. He maintained that Dawn was also responsible for billing patients and insurance carriers, and for preparing the taxes. According to Craig, he never met with their accountant because Dawn was in charge of everything related to taxes, including signing both of their names on the tax returns.
In rebuttal, Dawn testified that she and Craig shared culpability for the insurance fraud and underpayment of taxes. She asserted that Craig had learned how to fraudulently bill during his prior employment. He brought those methods to his own practice and showed her how it worked. She testified they did the insurance paperwork together at home.
Dawn testified concerning the nature and cost of the marital lifestyle. To assist with living expenses and attorneys' fees during the criminal proceedings and the divorce, Dawn asserted that she had to rely on money from her father. She was paying "rent" to her father in the amount of $2500 each month, and he paid the mortgage on her residence. Dawn claimed monthly expenses of $1800 for food for herself and her younger daughter, $2500 for clothing for herself and her daughter, and $200 for fuel and oil per month.
Dawn also testified that she was unable to work because of her criminal conviction, her responsibilities related to her children, and automobile accidents in 1999 and 2007, which resulted in limited range of motion, numbness, tingling, lower back pain, neck pain, and headaches. However, she agreed to an imputed annual income of $25,000.
Craig testified that he was living in a two-bedroom ranch house with a monthly mortgage payment of $2500. According to Craig's income tax returns, his adjusted gross income for the years 2005 to 2011 was $97,475, $276,826, $204,092, $151,826, $162,983, $222,372, and $231,560, respectively.
The parties jointly engaged an expert to prepare a report on Craig's income from his practice. He testified that he based his report on Craig's personal tax returns and the dental practice's tax returns and bank statements. According to the expert, Craig's average income from the practice from 2006 to 2008 was $294,000. Subsequently, Dawn engaged the expert separately to provide an updated analysis. From 2010 to 2011, Craig's average income from the practice was $347,000. Because the expert did not receive bank statements for the practice from 2009, he offered no opinion with respect to that year. Craig did not offer a competing expert with respect to the updated analysis.
Concerning other aspects of his budget, Craig explained that he no longer pays the Internal Revenue Service $3500 a month. In 2009, he began paying $1200 and, in 2010, as a result of his bankruptcy proceeding, he stopped paying. On cross-examination, Craig conceded that there were multiple deficiencies in his case information statements (CIS). He also admitted that the income information he submitted in connection with the May 2007 pendente lite order was based on his 2005 tax return.
Dawn testified that the couple purchased jewelry during the marriage, including three watches for Craig. She had a five-carat diamond ring, a diamond tennis bracelet, a sapphire ring with diamonds, and diamond stud earrings. All of these purchases were made with cash. Dawn testified that she sold most of the jewelry, realizing less than $12,000, and gave some to her daughters. She claimed that she sold the jewelry because she was not receiving regular support payments.
Craig testified as to the cost of the jewelry. He claimed that he spent about $12,000 on a diamond ring; $8000 for Dawn's wedding ring; $39,000 for the five-carat diamond ring; $7500 for the sapphire ring; $7500 for the diamond tennis bracelet; and $10,000 for the diamond earrings. According to Craig, Dawn still had the three watches, which had a total cost of $21,000.
Dawn testified that she retained five of the seven oriental rugs purchased during the marriage. She did not place a value on the rugs or have them appraised. Craig testified that the cost of the rugs exceeded $100,000.
The marital home was sold in October 2010 for $565,000, which was a short sale. Prior to the sale of the home, Dawn arranged for the sale of some of its contents. Craig went to the sale and purchased the items he wanted. Dawn testified that the items that were not sold were given to their older daughter or donated to charity. According to Dawn, the sale netted approximately $3000.
Craig did not produce any evidence of the value of the items sold at the sale, nor did he claim to have any such evidence. When he filed for bankruptcy in July 2010, he listed personal property of $3500, including jewelry and furs. In addition, his CIS listed $1000 for personal property. His updated, August 2012 CIS had an entry of $0.
The jointly-engaged expert also testified to the value of Craig's dental practice. He determined that, as of 2008, Craig's dental practice was worth $430,000. The expert's evaluation focused on the years 2006 to 2008, and was based on his review of the cash flow of the practice, book value, and good will.
On June 27, the trial judge entered a final JOD. He awarded Dawn permanent alimony in the amount of $2100 per week. The judge ordered Craig to pay child support in the amount of $331 per week for the younger daughter, and seventy-five percent of college costs for the older daughter. In addition, pursuant to Mallamo v. Mallamo, 280 N.J. Super. 8 (App. Div. 1995), the judge awarded a retroactive adjustment of the pendente lite support in the amount of $156,000, to be paid at a rate of $500 per week.
The judge determined that the only property subject to equitable distribution was Craig's dental practice. He awarded Dawn a twenty percent interest, valued at $86,000. Craig was ordered to maintain health insurance for his children and purchase a one million dollar life insurance policy for the benefit of Dawn and the children. The judge also awarded $85,000 in attorney's fees and expenses to Dawn.
The judge explained his reasons in a written opinion. He found Craig's testimony concerning his lack of knowledge of, and participation in, the healthcare fraud and tax evasion to be "completely incredible." He characterized Craig's testimony on "virtually all issues" as questionable. In contrast, the judge found Dawn's testimony with respect to the fraud to be generally credible, observing that, while not completely credible in certain aspects, her overall testimony was more credible than Craig's.
The judge concluded that Craig's assertion that "Dawn pled guilty because she was guilty and that he received PTI because he was innocent" was less credible than Dawn's assertion that she "took the fall so that Craig could retain his license . . . to support himself and the family." He noted that neither party was charged with tax evasion and that the proceeds of the healthcare fraud, slightly less than $9000, was low in comparison to the significant amount of the forfeiture. Those facts suggested that the MOU was structured so that Craig could retain his dental license in order to support the family.
Regarding equitable distribution, the judge found that the dental practice was the only marital asset for which there was adequate proof to base a determination. Although Craig asserted that there were other marital assets, the judge noted that he had provided no credible evidence as to their value. There were no appraisals or sales receipts for any jewelry, rugs, or furniture. The judge also pointed to the values that Craig had listed in the bankruptcy filing and on his CIS.
The judge applied the factors set forth in N.J.S.A. 2A:34-23.1, to determine equitable distribution. He found that the most significant factors were the income and earning capacities of the parties, the contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the value of the asset, and the current debts and liabilities of the parties. The judge determined that both parties had participated in the fraud that brought down the practice. Following the temporary closing of the practice by the Division, Craig began rebuilding "with the foundation that was established through the years the practice existed and Dawn contributed to the establishment of that practice." The judge did not credit Craig's assertion that he built the practice "from zero" after it collapsed. Having analyzed all the factors, the judge concluded that Dawn was entitled to $86,000, representing twenty percent of what the judge determined to be the value of the practice.
The judge found that Dawn's earning capacity was limited. Craig, on the other hand, had a successful practice that would continue to grow. The judge noted that Craig had discharged significant debt through filing bankruptcy.
The judge determined that the tax liabilities of the parties were governed by the indemnification agreement, under which Craig was to hold Dawn harmless for tax liabilities arising from the amended joint returns from 1999 through 2004. The agreement contained a provision rendering it void if there is an ability to discharge the tax debt in bankruptcy and if Craig, on notice to Dawn, filed for bankruptcy and has had the tax liabilities discharged. To avoid that result, Dawn would also have to file for bankruptcy and "make good-faith efforts to follow through." The judge found that the agreement was still in effect because Craig had not given notice to Dawn prior to filing for bankruptcy and "it was not established that the tax liabilities have been discharged through bankruptcy," despite "some indication that this may have occurred." Therefore, the tax liabilities would not be subject to equitable distribution.
The judge analyzed the factors set forth in N.J.S.A. 2A:34-23 with respect to alimony. He concluded that the significant factors were Dawn's actual need, the standard of living established during the marriage, Dawn's present earning capacity, Craig's claim that Dawn should not receive any money because she was responsible for the demise of the dental practice, and Dawn's claim that Craig had underpaid his support obligations.
With respect to Dawn's actual need and the standard of living during the marriage, the judge found that the lifestyle the couple led during the marriage was substantially funded by tax evasion, and was now unattainable for that reason. He reviewed and adjusted each party's expenses. The judge accepted Dawn's proposal to impute $25,000 a year in income, which would net a monthly income of about $1800. He found that, although Dawn has a college degree, she "is limited by age and physical condition from meaningful employment." He also observed that her criminal background "probably forms a substantial road block to other meaningful employment."
The judge considered and rejected Craig's contention that Dawn should not be entitled to alimony because she "was responsible for the demise of the dental practice due to her illegal activity," citing Clark v. Clark, 429 N.J. Super. 61 (App. Div. 2012). Instead, he reaffirmed his conclusion that (1) Craig's version of events was not credible, (2) both parties were responsible for healthcare fraud and tax evasion, and (3) any fault on Dawn's part "does not discharge or reduce Craig's obligation to pay alimony."
The judge granted Dawn's request for a Mallamo adjustment. He found that Craig had understated his income repeatedly, and that the judge who established the pendente lite support had relied on those misstatements in fashioning Craig's support obligations. However, the Mallamo adjustment was based only on the period between the June 2009 order and the JOD, because the first pendente lite order contemplated that Dawn would pay the mortgage, which she did not do.
Finally, the judge analyzed the factors for the award of legal fees under Rule 5:3-5(c). He found the following factors to be most significant: the financial circumstances of the parties, the reasonableness of the parties' positions, the extent of fees incurred by both parties, and the results obtained. The judge determined that Dawn had no ability to pay her legal fees other than support from her father. In contrast, Craig's legal and professional fees had been eliminated by the bankruptcy filed in the middle of the litigation. Dawn's legal fees were in excess of $250,000. In addition, the judge observed that "[t]he litigation has been marked by Craig's misrepresentations to the court and repeated motions brought largely by [Dawn] to compel compliance with a whole series of court orders over the years," while "Dawn has been far more forthcoming." After applying the relevant factors, the judge ordered Craig to pay $85,000 of Dawn's attorney's fees.
Craig filed a motion for reconsideration on July 12. On July 16, the judge held a telephone conference to discuss with counsel a letter he had sent to them a few days earlier. In the letter, he advised them that, following the filing of the JOD and his opinion, he had learned that a friend with whom he used to play golf was dating Dawn. He also learned from that individual that, approximately a year before, they had played golf with Dawn's father at the country club to which they, but not the judge, belonged. The judge explained that he had been unaware of those facts at the time of trial and when he issued his opinion and the JOD, although he told counsel that the man who is Dawn's father did mention he had a child involved in a divorce pending in the vicinage. He advised counsel that he would consider whether to disqualify himself from hearing the motion for reconsideration or whether "the doctrine of necessity"3 warranted his considering it. Craig subsequently requested that the judge authorize a subpoena for the golf club's records concerning his playing golf with the individuals associated with Dawn.
The trial judge heard oral argument on the motion on August 16. He explained that his concern was not that he would be prejudiced against Craig, but rather that he would be "overcompensating and be unfair to [Dawn]." He determined that he would hear the motion for reconsideration, but not any post-judgment issues. The judge also denied the request to subpoena the country club records.
The issues raised in the motion were whether (1) Craig's request that his obligation to pay equitable distribution to Dawn be postponed until the sale of the dental practice; (2) Craig should receive a $48,000 credit for overpaying Dawn's support with regard to the portion of the support that was allocated to pay the mortgage; and (3) Craig should receive a $75,000 credit for the proceeds from personal property that Dawn sold or retained.
The judge explained that he had addressed the overpayment of support related to the mortgage by fixing the Mallamo adjustment from the date after the pendente lite support was adjusted down in June 2009. Consequently, he denied the motion for reconsideration on that issue. He also denied Craig's request for a credit for Dawn's sale or retention of personal property, finding that the parties had not submitted any evidence as to its value. He dismissed, without prejudice, other issues raised in the motion, aptly characterizing them as post-judgement issues. The implementing order was filed on August 23. This appeal followed.
Craig raises the following issues on appeal
POINT I: THE COURT BELOW ERRED IN ITS ASSESSMENT OF PLAINTIFF'S CREDIBILITY, WARRANTING REVERSAL.
A. Dawn's testimony directly contradicts evidence in the record and this court's opinion in the forfeiture action.
B. Dawn's credibility should have been impeached because of her criminal conviction (not raised below).
POINT II: THE COURT BELOW ERRED IN ITS DETERMINATION OF ALIMONY, WARRANTING REVERSAL.
A. Dawn's criminal conduct amounts to egregious conduct.
B. Dawn cannot prevent her criminal record from being used in family court (not raised below).
POINT III: THE COURT BELOW ERRED IN ITS DETERMINATION OF EQUITABLE DISTRIBUTION, WARRANTING REVERSAL.
A. Equitable distribution of the dental practice.
B. Equitable distribution of the other marital property.
POINT IV: THE COURT BELOW ERRED IN ITS DETERMINATION OF COUNSEL FEES, WARRANTING REVERSAL.
POINT V: THE TRIAL JUDGE BELOW SHOULD HAVE RECUSED HIMSELF FROM THE TRIAL AND MOTION FOR RECONSIDERATION, REQUIRING A REMAND TO ANOTHER JUDGE.
We find no merit in Craig's argument that the trial judge erred in his credibility determinations. Our standard of review requires us to give considerable deference to the discretionary decisions ofFamily Part judges. Donnelly v. Donnelly, 405 N.J. Super.117, 127 (App. Div. 2009)(quoting Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006)). When the judge has made findings of fact after considering the testimony and documents the parties have presented during a non-jury trial, those findings are generally "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. of Am., 65 N.J. 474, 484 (1979)).
That is so "[b]ecause of the family courts' special jurisdiction and expertise in family matters . . . ." Id. at 413. Just as important, the trial judge is in the best position to make judgments as to whether witnesses are believable. Clark v. Clark, 429 N.J. Super. 61, 71 (App. Div. 2012). Such deference is appropriate because the trial judge has a feel for the case and "the opportunity to make first-hand credibility judgments about the witnesses who appear on the stand." N.J. Div. of Youth & Family Servs. v. E.P., 196 N.J. 88, 104 (2008); see also N.J. Div. of Youth & Family Servs. v. M.M., 189 N.J. 261, 293 (2007). For those reasons, we will not reverse a trial judge's findings of fact unless they are "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Clark, supra, 429 N.J. Super. at 70 (quoting Rova Farms Resort, Inc., supra, 65 N.J. at 484).
Unlike a trial judge's fact and credibility findings, the judge's "'interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Crespo v. Crespo, 395 N.J. Super. 190, 194 (App. Div. 2007) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378, (1995)). A trial judge "is in no better position than we are when interpreting a statute or divining the meaning of the law." D.W. V. R.W., 212 N.J. 232, 245 (2012). We review the legal issues anew. Id. at 245-46.
The judge in this case heard the live testimony of the parties and evaluated their relative credibility. Although he did not accept Dawn's testimony wholesale, he found it more credible than Craig's on key issues. His conclusions were adequately explained and find ample support in the record.
With respect to the issue of the healthcare fraud and tax evasion, we note that Craig never specifically sought to admit Dawn's conviction for third-degree healthcare claims fraud under N.J.R.E. 609, but both parties testified concerning their involvement. The fact that Dawn pled guilty while Craig was admitted to PTI was well known to the trial judge.
In any event, N.J.R.E. 609 allows, but does not require, a factfinder to draw an adverse inference from a criminal conviction. In addition, "[a] guilty plea is merely evidence" in a civil action, "not conclusive proof" of the facts of an underlying offense. Eaton v. Eaton, 119 N.J. 628, 644 (1990).4 A party is not estopped from challenging the admitted fact and "may rebut or otherwise explain the circumstances surrounding the admission." Ibid. The judge adequately explained his reasons for finding that Craig was aware of and participated in those activities.
Craig next seeks reversal of the alimony award. First, citing Mani v. Mani, 183 N.J. 70 (2005) and Clark, Craig argues that Dawn's misconduct should have precluded, or at least reduced, an award of alimony. In Mani, supra, 183 N.J. at 91, the Court held that marital misconduct may be taken into account in an alimony calculation when it "affects the economic status quo of the parties." In cases where the misconduct rises to the level of egregious fault (for example, where one spouse attempts to murder the other, or deliberately infects the other with a loathsome disease), where "society would not abide continuing the economic bonds between the parties," the misconduct may preclude any alimony award. Id. at 92.
We question whether, even if Dawn had been significantly more culpable, her conduct would amount to egregious fault, keeping in mind that both Dawn and Craig benefited from the standard of living that the judge found to be unsustainable absent the proceeds of the tax evasion, as well as the healthcare fraud. In any event, given the judge's determination that both parties were involved in the wrongful conduct, we need not consider that argument.
We review a Family Part judge's decision on alimony for abuse of his or her discretionary authority. Innes v. Innes, 117 N.J. 496, 504 (1990).
To vacate a trial court's finding concerning alimony, we must conclude that the trial court clearly . . . failed to consider all of the controlling legal principles, or we must otherwise be satisfied that the findings were mistaken or that the determination could not reasonably have been reached on sufficient credible evidence present in the record after considering all of the proofs as a whole.
[Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340, 354 (App. Div. 2009).]
In determining an award of alimony, the trial judge relied on the following factors in N.J.S.A. 2A:34-23(b)
(1) The actual need and ability of the parties to pay;
(2) The duration of the marriage or civil union;
(3) The age, physical and emotional health of the parties;
(4) The standard of living established in the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living;
(5) The earning capacities, educational levels, vocational skills, and employability of the parties;
(6) The length of absence from the job market of the party seeking maintenance;
(7) The parental responsibilities for the children;
(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;
(9) The history of the financial or non-financial contributions to the marriage or civil union by each party including contributions to the care and education of the children and interruption of personal careers or educational opportunities;
(10) The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;
(11) The income available to either party through investment of any assets held by that party;
(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and
(13) Any other factors which the court may deem relevant.
"[T]he goal of a proper alimony award is to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage." Crews v. Crews, 164 N.J. 11, 16 (2000). Trial judges may award such alimony "as the circumstances of the parties and the nature of the case shall render fit, reasonable and just." N.J.S.A. 2A:34-23.
Measured against those standards and the judge's factual findings, we conclude that the trial judge did not abuse his discretion. He balanced the factors set forth in N.J.S.A. 2A:24-3 and arrived at an award of alimony that finds ample factual support in the record and accords with the applicable law. As noted, the judge correctly determined that replication of the parties' marital lifestyle was unattainable for either party through an alimony award because it was based substantially on funds resulting from illicit activity. He then fashioned a remedy consistent with the parties' needs and ability to generate income. There is no factual or legal basis for us to conclude that "the [judge's] determination could not reasonably have been reached on sufficient credible evidence present in the record after considering all of the proofs as a whole." Gonzalez-Posse, supra, 410 N.J. Super. at 354.
We next turn to the issue of equitable distribution, the purpose of which is to divide property acquired during the marriage in a manner that is just under the circumstances of the case. Painter v. Painter, 65 N.J. 196, 209 (1974). To this end, "where the parties to a divorce have accumulated substantial assets during a lengthy marriage, courts should compensate for any unfairness to one party who sacrificed for the other's education . . . by an equitable distribution of the assets to reflect the parties' different circumstances and earning capacities." Mahoney v. Mahoney, 91 N.J. 488, 504 (1982).
When equitably distributing marital property, a judge must "decide what specific property of each spouse is eligible for distribution, . . . then determine its value for purposes of such distribution, and [lastly,] decide the most equitable allocation between the parties after analysis of the statutory factors set forth N.J.S.A. 2A:34-23.1." Genovese v. Genovese, 392 N.J. Super. 215, 225-26 (App. Div. 2007) (citing Rothman v. Rothman, 65 N.J. 219, 232 (1974)). The applicable statutory factors are
a. The duration of the marriage or civil union;
b. The age and physical and emotional health of the parties;
c. The income or property brought to the marriage or civil union by each party;
d. The standard of living established during the marriage or civil union;
e. Any written agreement made by the parties before or during the marriage or civil union concerning an arrangement of property distribution;
f. The economic circumstances of each party at the time the division of property becomes effective;
g. The income and earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children, and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage or civil union;
h. The contribution by each party to the education, training or earning power of the other;
i. The contribution of each party to the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value of the marital property, or the property acquired during the civil union as well as the contribution of a party as a homemaker;
j. The tax consequences of the proposed distribution to each party;
k. The present value of the property;
l. The need of a parent who has physical custody of a child to own or occupy the marital residence or residence shared by the partners in a civil union couple and to use or own the household effects;
m. The debts and liabilities of the parties;
n. The need for creation, now or in the future, of a trust fund to secure reasonably foreseeable medical or educational costs for a spouse, partner in a civil union couple or children;
o. The extent to which a party deferred achieving their career goals; and
p. Any other factors which the court may deem relevant.
The trial judge should apply the statutory factors and "distribute the marital assets consistent with the unique needs of the parties." DeVane v. DeVane, 280 N.J. Super. 488, 493 (App. Div. 1995). Property need not be equally allocated if the "sole ownership or allocation of a major share to one of [the parties] is warranted by all the financial and personal considerations underlying the equitable distribution plan." Daeschler v. Daeschler, 214 N.J. Super. 545, 553 (App. Div. 1986).
We evaluate Family Part decisions concerning equitable distribution under an abuse of discretion standard. See Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-44 (App. Div. 1978). When applying that standard, "[w]e must determine 'whether the trial court mistakenly exercised its broad authority to divide the parties' property or whether the result reached was bottomed on a misconception of law or findings of fact that are contrary to the evidence.'" Sauro v. Sauro, 425 N.J. Super. 555, 573 (App. Div. 2012) (quoting Genovese, supra, 392 N.J. Super. at 223), certif. denied, 213 N.J. 389 (2013). We will affirm an equitable distribution award if "the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000) (citing Perkins v. Perkins, 159 N.J. Super. 243, 247-48 (App. Div. 1978)), certif. denied, 167 N.J. 630 (2001).
Craig raises two issues with respect to equitable distribution. The first relates to the dental practice. Craig argues that the judge's decision to equitably distribute the practice was erroneous because of his flawed factual findings, an assertion we have already rejected. The judge carefully considered the role of each party in "the acquisition, dissipation, preservation, depreciation or appreciation in the amount or value." N.J.S.A. 2A:34-23.1(i). Although Craig contends otherwise, the judge found that both parties were involved in the conduct that led to the temporary closing of the practice and the seizure of some of its assets by the State, a finding we have no basis to reverse. Consequently, we also reject Craig's argument that the equitable doctrine of unclean hands, Marino v. Marino, 200 N.J. 315, 345 (2009), should bar any award to Dawn. The amount of the award was amply supported by the evidence in the record, including the valuation of the practice by the parties' joint expert, which Craig does not contest.
Craig also argues that the judge erred in not equitably dividing the personal property acquired during the marriage. We disagree. As the judge found, there was little clarity in the record as to what property remained and its value. Some property was sold and other property was being used by family members. Craig, who now claims that the personal property was quite valuable, did not list substantial personal property in his bankruptcy filing nor did he present convincing evidence on the issue during trial. Under the circumstances, we find no error on the judge's part in not addressing the issue more specifically.
Craig also challenges the judge's award of counsel fees. Rule 4:42-9(a)(1) provides that "[i]n a family action, a fee allowance both pendente lite and on final determination may be made pursuant to R. 5:3-5(c)," which states, in relevant part
[T]he court in its discretion may make an allowance, both pendente lite and on final determination, to be paid by any party to the action, including, if deemed to be just, any party successful in the action, on any claim for divorce, dissolution of civil union, termination of domestic partnership, nullity, support, alimony, custody, parenting time, equitable distribution, separate maintenance, enforcement of agreements between spouses, domestic partners, or civil union partners and claims relating to family type matters. . . . In determining the amount of the fee award, the court should consider . . . the following factors: (1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.
We will disturb a trial judge's determination on counsel fees only on the 'rarest occasion,' and then only because of clear abuse of discretion." Strahan v. Strahan, 402 N.J. Super. 298, 317 (App. Div. 2008) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)). An abuse of discretion "arises when a decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (quoting Achacoso-Sanchez v. Immigration & Naturalization Serv., 779 F.2d 1260, 1265 (7th Cir. 1985)).
Having reviewed Craig's argument in light of the facts in the record and the applicable law, we find them to be without merit and not warranting discussion in a written opinion. R. 2:11-3(e)(1)(E). The trial judge adequately explained his reasons for requiring Craig to pay $85,000 of the $250,000 Dawn incurred in litigation expenses and we find no clear abuse of his discretion.
Finally, we turn to Craig's argument that the judge should have recused himself from the trial and the motion for reconsideration, and should not consider any issues remanded as a result of this appeal.
In Chandok v. Chandok, 406 N.J. Super. 595, 603-04 (App. Div.) (alteration in original), certif. denied, 200 N.J. 207 (2009), we outlined the considerations surrounding judicial disqualifications as follows
Rule 1:12-2 provides that "[a]ny party, on motion made to the judge before trial . . . and stating the reasons therefor, may seek that judge's disqualification." The disposition of a motion for disqualification is "entrusted to the 'sound discretion' of the trial judge whose recusal is sought." Panitch v. Panitch, 339 N.J. Super. 63, 66 (App. Div. 2001) (quoting Magill v. Casel, 238 N.J. Super. 57, 63 (App. Div. 1990)). A judge "shall be disqualified on the court's own motion and shall not sit in any matter" when, among other things, "there is any other reason which might preclude a fair and unbiased hearing and judgment, or which might reasonably lead counsel or the parties to believe so." R. 1:12-1(f). However, a judge need not "withdraw from a case upon a mere suggestion that he is disqualified 'unless the alleged cause of recusal is known by him to exist or is shown to be true in fact.'" Panitch, supra, 339 N.J. Super. at 66-67 (quoting Hundred East Credit Corp. v. Eric Schuster Corp., 212 N.J. Super. 350, 358 (App. Div.), certif. denied, 107 N.J. 60 (1986)). On the other hand, "[i]t is unnecessary to prove actual prejudice on the part of the court, but rather 'the mere appearance of bias may require disqualification'" so long as the belief of unfairness is "objectively reasonable." Id. at 67 (quoting State v. Marshall, 148 N.J. 89, 279, cert. denied, 522 U.S. 850, 118 S. Ct. 140, 139 L. Ed. 2d 88 (1997)).
At the time he tried the divorce case and made his decision, the judge was unaware of the operative facts, that a golfing friend with whom he had not had recent contact was dating Dawn and that he had played golf a year earlier with Dawn's father. There was no reason for the judge to have recused himself based on facts of which he was unaware. We also see no basis to vacate the judgment so that the matter can be retried by a different judge. We cannot form an objectively reasonable basis for an appearance of impropriety from these facts.
With respect to the motion for reconsideration, by which time the judge was aware of the operative facts, we are constrained to conclude that a litigant such as Craig could have a good faith concern. Although we are satisfied that the judge thought he was acting appropriately in reconsidering the issues of the Mallamo adjustment and the personal property, we conclude that the better course would have been to refer those issues to another judge. Consequently, we vacate the order denying the motion for reconsideration as to those issues. In order to avoid a remand, we exercise our original jurisdiction, Rule 2:10-5, and review the issue ourselves.
Dawn's initial support was set at $2000 per week in May 2007, which contemplated her use of approximately half of the funds to pay the mortgage. In June 2009, the support obligation was lowered to $1062, without any obligation to pay the mortgage. After a cost of living adjustment, it was increased to around $1100.
In awarding the Mallamo adjustment, the trial judge specifically withheld any adjustment for the period during which the support amount included funds that should have been used to pay the mortgage. Instead, the adjustment was limited to the period after Dawn was relieved of that obligation. The judge clearly realized that Dawn's support was not, in reality, too low for the period between May 2007 and June 2009. The adjustment totaled $156,000, which was approximately $750 per week for four years. That was additional support to which Dawn was entitled, because she received less support than she was entitled to receive based on Craig's misrepresentation of his income. It was generally consistent with the award of permanent alimony.
As to the personal property, there was, as the judge observed, no hard evidence as to the value of the property and whether it had been sold, given to family members, or retained. Craig has taken very inconsistent positions on the issue, representing at times that there was little or no personal property and at other times that there were numerous items of personal property with significant value. The nature of those representations was consistent with how they would benefit Craig at the time they were made.
We find no grounds to conclude that the trial judge's initial decisions with respect to the Mallamo adjustment or the personal property were based on "a palpably incorrect or irrational basis" or that the judge "either did not consider, or failed to appreciate the significance of probative, competent evidence." Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996). Consequently, the motion for reconsideration on those issues is denied.
In summary, we affirm the JOD and vacate the order denying the motion for reconsideration. We deny that motion in an exercise of our original jurisdiction.
1 Because the parties share the same last name, we refer to them by their first names for the sake of clarity and convenience.
2 The terms of the MOU are described in detail in our opinion in State v. Real Property Commonly Known as 48 South New York Road, Suite C-1, Absecon, New Jersey (Block 1260, Lot 29-2 on tax map of the town of Absecon) Titled To Craig Puchalsky and Dawn Puchalsky (Housing the office of Craig Puchalsky, D.D.S.), No. A-0494-08 (App. Div. Sept. 14, 2009) (slip. op. at 3-4).
3 See Pyatt v. Dunellen, 9 N.J. 548, 557 (1952) ("'[I]f by the disqualification of a judge there would be no means of proceeding, he may take such cognizance of the case as is absolutely necessary.'" (quoting Downs v. Mayor & Common Council of S. Amboy, 116 N.J.L. 588, 515 (E. & A. 1936))).
4 On appeal, Craig seeks to rely on assertions by the State, made in a separate proceeding, that Dawn was the culpable party. Even if those statements had been drawn to the attention of the judge, which is not apparent from the record, they were hearsay statements, N.J.R.E. 801(c), not admissible under any exception to the hearsay rule, N.J.R.E. 802.