NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-4063-14T3
Argued January 9, 2018 – Decided February 20, 2018
Before Judges Yannotti, Carroll, and Mawla.
On appeal from Superior Court of New Jersey,
Chancery Division, Family Part, Union County,
Docket No. FM-20-2163-11.
Robert A. Epstein argued the cause for
appellant (Fox Rothschild, LLP, attorneys;
Robert A. Epstein, of counsel and on the
Jeffrey P. Weinstein argued the cause for
respondent (Weinstein Lindemann & Weinstein,
attorneys; Jeffrey P. Weinstein, of counsel
and on the brief; Donald Schumacher, on the
Defendant appeals from a December 31, 2014 final judgment of
divorce, an April 17, 2015 order denying reconsideration of certain
aspects of the judgment, and pendente lite orders addressing
discovery relating to a business operated by plaintiff. We affirm
the pendente lite orders, and affirm in part and reverse in part
the judgment and order denying reconsideration.
The following facts are taken from the record. Plaintiff
S.W. and defendant G.W. were married May 19, 1984. Both parties
are college educated and met when they worked in an investment
bank. Three children were born of the marriage, all of whom are
adults and were attending college at the time of trial.
According to his testimony, plaintiff was employed throughout
the marriage initially as a partner at Touche Ross, then Deloitte,
and since 2001, as a Senior Managing Director of Zolfo Cooper
(ZC), a boutique restructuring firm. Defendant ceased employment
in the late-1980's, after the birth of the parties' first child.
Plaintiff's income financed the family's expenses throughout the
In 2002, ZC was purchased by Kroll, Inc. (Kroll). In 2004,
Kroll was purchased by Marsh & McLennan Companies, Inc. (MMC). In
2008, plaintiff and two other principals financed the purchase of
ZC for $27,000,000, with a loan from MMC. Each principal also
contributed $1,000,000 to capitalize ZC.
After the acquisition, plaintiff held a one-third ownership
interest in ZC. However, in the event the company was liquidated
or sold, plaintiff would receive only twenty-three percent based
on his rights in the company's class A and B shares.
Plaintiff was compensated through a net draw and a year-end
bonus that was paid based upon company performance and plaintiff's
individual performance. ZC paid all taxes on its partners'
compensation. The business also paid for plaintiff's firm-related
expenses, such as travel, meals, and entertainment. It also paid
certain personal expenses for plaintiff, such as insurance and a
At the same time as the 2008 acquisition, plaintiff executed
a key partner employment agreement. Under the terms of this
agreement, plaintiff agreed to remain employed at ZC while the
purchase note was outstanding. During the same time period,
plaintiff's base salary was set at $850,000, plus incentive
compensation, and reimbursement of reasonable business and
entertainment expenses. Plaintiff's aggregate compensation was
capped at $2,000,000 per year. However, in 2008, 2009, 2012, and
2014, plaintiff's income exceeded the sums in the employment
Plaintiff testified that ZC's business boomed in 2009, and
earnings approximated $70,000,000. However, revenue declined in
subsequent years due to the recession and the advent of more
industry competition. In 2010, revenue fell to approximately
$35,000,000, and then $25,000,000 in 2011. As a result, in 2010
and 2011, ZC executed forbearance agreements on the purchase note
with MMC. In 2012, the MMC note was renegotiated. The new note
tied repayments to the company's income over the course of three
years, through 2014.
The company also laid off employees, sublet space, and reduced
the income of managing directors in order to remain in business.
Plaintiff's draw experienced a commensurate decline as well,
falling from $850,000 in 2009, to $600,000 in 2010, and $450,000
in 2011, where it remained through the time of trial.
Plaintiff's bonuses were $250,000 in 2010 and 2011, $400,000
in 2012, and $800,000 in 2013. His 2013 bonus was utilized to pay
the children's tuitions, court-ordered support, and the parties'
counsel fees for this litigation.
The parties' marriage began to decline in 2008. Defendant
testified she was unaware of the parties' finances. She claimed
plaintiff hid financial information from her relating to the
marriage. She also testified he squandered money on extra-marital
affairs. Ultimately, plaintiff filed a complaint for divorce on
June 20, 2011, ending the parties' twenty-seven-year marriage.
The parties lived a wealthy lifestyle and did not save. At
the time of trial, the parties had no retirement accounts because
those amount had been liquidated to fund the marital lifestyle.
The parties purchased a marital residence in 1986 and a residence
on Cape Cod in 1998. According to the testimony, the judge
concluded both residences "were renovated and enlarged on an almost
constant basis." The improvements were financed through mortgage
re-financing of both homes.
The parties owned twelve boats during the marriage including
sailboats and three Boston Whalers. Plaintiff's Case Information
Statement (CIS) nearest the date of complaint set forth monthly
expenses of $80,853 and defendant's CIS indicated those expenses
were $92,147 per month. The parties' children attended private
schools, including exclusive boarding schools for high school.
The children's educational and activity fees and expenses were
funded by plaintiff's income and student loans. The family enjoyed
the benefits of country club, dinner club, and yacht club
memberships. Plaintiff's CIS articulated a family vacation budget
of $60,000 and defendant $150,000 per year. Defendant spent
$100,000 per year on a photography hobby.
Even though defendant estimated the family spent between
$1,000,000 and $1,500,000 annually, defendant maintained plaintiff
had secreted funds from the marriage. The trial judge concluded
defendant had not proved a dissipation because she had admitted
all of plaintiff's income was used to pay the marital expenses.
The judge found "[t]he overwhelming evidence is that these parties
both lived an incredibly profligate lifestyle as evidenced by both
parties['] [CISs] . . . . In short, it was a budget without any
Pendente lite support for defendant and the children had
initially been set by an October 17, 2011 order, which required
plaintiff to pay defendant $43,000 per month in unallocated
support. The court entered an order on January 5, 2012, reducing
pendente lite support to $20,000 per month and also requiring
plaintiff to pay for all shelter expenses associated with the
marital residence. After the parties' Cape Cod residence was sold
on July 31, 2012, the court again reduced pendente lite support
to $15,000 to account for the absence of expenses associated with
the residence. The final pendente lite order entered was dated
February 26, 2013. It required plaintiff to pay defendant $22,000
At trial, plaintiff sought a credit for the overpayment of
pendente lite support as well funds defendant withdrew from a
joint account near the filing of the complaint. Defendant conceded
she withdrew funds from a joint account, but claimed she did so
to preserve the funds. She argued she spent the money to meet her
expenses and the children's needs because plaintiff had not paid
enough support. At trial, defendant sought a retroactive increase
of pendente lite support.
Defendant sought an award of permanent alimony that included
a savings component, and an order requiring plaintiff to maintain
life and disability insurance, which named her as beneficiary, to
secure the alimony obligation. The CIS defendant relied upon at
trial set forth a monthly need of $27,042. Defendant also argued
plaintiff should be responsible for the entirety of the children's
remaining educational expenses. Because the children resided
outside of the marital residence, defendant did not seek an award
of child support.
In addition to the parties' testimony, plaintiff adduced the
testimony of the court-appointed forensic expert David Politziner,
CPA, of Eisner Amper, LLP, and defendant offered testimony from
her expert, Barry Sziklay, CPA, of Friedman, LLP. The expert
testimony concerned valuation of the parties' largest asset,
namely, plaintiff's ownership interest in ZC.
Originally, the parties retained Politziner as their joint
forensic expert to value ZC and plaintiff's ownership interest.
However, before Politziner could render his report, defendant
retained Sziklay. As a result, the court entered an order that
designated Politziner as a court-appointed expert.
Politziner testified that he reviewed documentation provided
by ZC for 2008 through 2011. He accepted the documentation as
accurate, since he was not commissioned to perform a fraud analysis
and because the company's financial statements with the exception
of the 2011 statement, which was in draft form, had been audited.
Politziner also reviewed industry information and general economic
data for purposes of addressing the financial outlook of the firm.
He also spoke with both parties, and with the company's general
Politziner utilized the income or capitalization of earnings
method to determine the fair value of ZC. He testified this
methodology assumes the company would continue to be a going
concern and looks to past performance for a projection of future
earnings. Politziner testified the valuation methodology involved
applying "normalization adjustments" to the company's reported
earnings in order to determine the company's true income.
Politziner explained he consulted outside sources to determine the
reasonable compensation for ZC's partners as opposed to their
actual compensation. He also adjusted for the partners' personal
expenses paid by the business, including certain insurance
expenses, and expenses for professional fees, personal tax
returns, and estate planning. Politziner made a normalization
adjustment for ZC's excessive marketing expenses, which he reduced
by twenty-five percent.
Politziner testified he eliminated $23,000,000 in "good will"
from ZC's balance sheet because it was "really not an asset." He
eliminated the remaining debt owed to MMC, with the exception of
$2,000,000, because he opined it would not be paid, and he
eliminated excess cash on hand.
Politziner testified that he considered the high volatility
of earnings in the industry, and ZC's fluctuating earnings over
the years. He determined ZC's substantial earnings in 2009 were
unlikely to recur. Therefore, he weighted the average earnings
in 2010 and 2011, the date of complaint. Politziner testified
2011 was the point at which the company's earnings had bottomed,
and he did not expect the downward trend to continue.
Ultimately, Politziner applied a capitalization rate of 16.45
percent. Politziner opined plaintiff owned one-third of the
business by virtue of his ownership of one-third of the class A
shares. Although plaintiff owned class B shares, which meant he
would receive less than a one-third distribution in the event of
a liquidation, Politziner opined a sale of ZC was not in the
offing. Therefore, he valued the company as of the date of
complaint at $7,820,843, and plaintiff's one-third ownership
interest at $2,607,281.
Sziklay's testimony highlighted the information he lacked in
order to perform a valuation of ZC. He testified he was provided
with a PDF of the company's general ledger, which prevented him
from reviewing the details of any particular transaction. He
testified he did not have access to the general ledgers of the
entities that comprised ZC. He also did not have access to
retainer letters for ZC's clientele, bank statements, or detailed
payroll information. He was not permitted to interview plaintiff's
partners or ZC's Chief Financial Officer.
Notwithstanding, Sziklay valued ZC at $21,162,000 as of the
date of the complaint, and assigned plaintiff a one-third ownership
interest valued at $7,054,000. Like Politziner, he utilized the
capitalization of earnings methodology to arrive at ZC's fair
value. Also like Politziner, he did not perceive the class B
shares as diluting plaintiff's one-third ownership interest.
However, Politziner and Sziklay's valuations differed in the
calculation of the capitalization rate. Unlike Politziner,
Sziklay used the weighted average cost of capital method of
calculating the capitalization rate, which blends a debt and equity
rate. Politziner explained that blending a debt and equity rate
was inappropriate in evaluating a personal service business, which
generally does not carry much debt. Politziner found this to be
the case with ZC, which did not have debt other than the
acquisition debt. This fundamental difference resulted in a
capitalization rate used by Sziklay of twelve and one-half percent,
compared with Politziner's sixteen percent.
Also, Politziner used a weighted average of earnings in 2010
and 2011. Sziklay used only 2011 earnings.
Politziner and Sziklay also disagreed with respect to the
appropriateness of taking a normalization adjustment for the
company's excessive compensation expenses. Politziner opined
compensation expenses accounted for seventy-two percent of ZC's
total revenue in 2011, up from forty-eight percent in 2009.
Sziklay opined compensation expenses accounted for 77.19% of the
company's total revenue in 2011, up from 53.05% in 2009.
Thus, Sziklay applied a normalization adjustment for ZC's
excessive compensation because he concluded the compensation
expenses represented a large percentage of revenues. Sziklay
opined the expenses were inconsistent with industry standards and
the company's own financial plan, which called for compensation
expenses to account for only fifty percent of total revenue.
Sziklay set compensation at sixty percent of revenue, which he
considered a "conservative" figure. By so reducing ZC's
compensation expenses the company's valuation significantly
Politziner agreed ZC's compensation-to-revenue ratio in 2011
was higher than the industry standard, which he opined was
approximately fifty-three percent. He also conceded the 2011
ratio was greater than the ratio ZC had projected for itself.
However, he did not agree Sziklay's adjustment was appropriate,
because ZC already made significant reductions in its compensation
expenses. Moreover, Politziner accepted plaintiff's
representation the higher compensation was due to employee
retention in hopes of generating future business.
Another equitable distribution issue involved plaintiff
seeking a credit for the pendente lite pay down of the mortgage
on the marital residence. Defendant sought to retain the marital
residence and to deny plaintiff any credit for paying the mortgage
because it had fallen into default pendente lite, albeit the
arrears were later paid by plaintiff.
The Cape Cod residence was sold in July 2012 for $2,895,000
and yielded net proceeds of $650,794.74. Each party received
$100,000 and each counsel received $75,000. The remainder of the
proceeds were deposited with plaintiff's counsel. Plaintiff
argued for a credit against the sales proceeds for mortgage
expenses paid by him pendente lite that defendant was supposed to
pay. Defendant argued the mortgage arrears accrued when plaintiff
was responsible for the mortgage and that the court ordered the
sale of the residence at a low price. Defendant also sought
credits for expenses incurred to ready the residence for sale and
to move the parties' belongings from the residence after it was
Plaintiff sought certain items of personalty and furnishings
from both residences, including family heirlooms. Defendant
sought to retain all personalty and furnishings in both residences,
and argued many items were gifted by her grandparents and not
subject to equitable distribution.
The parties owned five vehicles, each driven by a member of
the family. Pendente lite, plaintiff sold a 1999 Jeep Wrangler
and utilized the proceeds to purchase a newer vehicle for one of
the children. Plaintiff also testified he sold an Infiniti CRX
56 pendente lite, and used those proceeds to purchase the vehicle
he was operating at the time of the trial. Defendant sought a
credit in equitable distribution for the vehicles plaintiff sold
Plaintiff testified he incurred substantial counsel fees,
contributed to defendant's counsel fees, paid Politziner's fees,
and paid mediation fees. Plaintiff sought a contribution for his
counsel fees and an order requiring defendant to bear one-half of
Politziner's fees. Defendant incurred substantial counsel and
expert fees as well. She testified she had contributed to
Politziner's fees, but argued plaintiff should be responsible for
the remaining fees as Politziner had become aligned with
plaintiff's position. Defendant argued plaintiff should bear the
entirety of her counsel fees and the cost of the mediation.
The trial concluded on June 30, 2014, after six days of
testimony. On December 31, 2014, the trial judge issued a
comprehensive written opinion.
The judge rejected defendant's dissipation claims, finding
"[d]efendant had not carried her burden to prove that [p]laintiff
has purposely defrauded or dissipated the marital assets with an
intent to deprive her of same." The judge concluded "infidelity
itself is not the same as dissipation." The judge found plaintiff
had not shown that she had been deprived of any benefit of the
income or assets of the marriage. He stated:
The overwhelming evidence is that these
parties both lived an incredibly profligate
lifestyle as evidenced by both parties[']
(sic) [CISs], which include such items as a
photography hobby of [d]efendant's in which
she spent in excess of $100,000 per
year. . . . In other words, [d]efendant's
argument that [p]laintiff was dissipating
assets of the marriage is completely undercut
by the fact that she herself admits that all
of [plaintiff's] income was going to the
The trial judge next addressed the issue of equitable
distribution of ZC and defendant's claim she had been deprived of
discovery relating to the business. Regarding discovery, the
trial judge noted Sziklay had been granted access to all of the
records possessed by Politziner. The judge noted when Sziklay
sought more information and motion practice ensued over the
discovery "the [c]ourt painstakingly went line by line through the
additional requests, and ruled on each. . . . Sziklay, therefore,
had more material to rely on than even the court-appointed expert
Regarding the valuation of ZC, the trial judge made specific
findings regarding each expert. The judge found Sziklay's report
to be unreliable because he purposely reduced the actual
compensation figures notwithstanding Sziklay's assumption ZC would
be run "with the same level of management effectiveness." The
trial judge also found Sziklay had ignored the forbearance
agreements signed with MMC. The judge concluded these agreements
demonstrated MMC was willing to be paid less than its original
agreement with ZC, thereby reflecting a more accurate picture of
the actual corporate health and ZC's value.
The judge acknowledged "valuation experts will often make
relatively minor adjustments to a bottom line, as both experts did
here . . . [h]owever, it is a completely different thing to make
wholesale changes in a company's financial operation as a prelude
to a valuation calculation." Thus, the judge concluded "[g]iven
that . . . Sziklay acknowledged the effectiveness of the company,
and then completely ignored its actual finances and substituted
his individual judgment, the [c]ourt finds that his opinion as to
ultimate value should be given no weight."
The trial judge also scrutinized Politziner's valuation.
Although the judge noted he accorded greater weight to the
testimony of Politziner, he disagreed with Politziner's
consideration of the class B shares in determining plaintiff's
percentage of ownership of ZC. The judge found "these shares
would only be realizable in a liquidation event." The judge also
noted "the effective cross-examination . . . called into question
[Politziner's] reliance on the [twenty] year government [treasury
bill] also as a function of the equity risk premium could have
resulted in a slightly higher value once the capitalization rate
After considering the expert testimony and plaintiff's
testimony regarding ZC, the trial judge concluded ZC had a value
of $9,000,000, and plaintiff's one-third interest was worth
$3,000,000. The judge noted plaintiff acquired his interest in
ZC in 2008 "just a few short years before the filing of the
[c]omplaint." Beforehand, plaintiff had been an employee "and
perhaps it could be argued that by 2008, the marital enterprise
was largely ending." The judge also attributed acquisition of the
business to defendant who "managed their family life so that
[plaintiff] could focus on his career." However, the judge
concluded "it is the business [owners'] hard work, their track
record of success, and indeed their 'sweat equity' that allows
them to build a successful career." Thus, the judge awarded
defendant $750,000 representing a twenty-five percent share of
one-third the value of ZC.
Regarding defendant's request to remain in the marital
residence, the judge concluded "[t]here is no basis in law for the
[c]ourt to grant [it]." This was because defendant conceded she
could not qualify for a mortgage to purchase plaintiff's share of
the residence. The judge noted the residence had been valued at
$1,635,000, and was encumbered by debt of $1,321,000.
The trial judge rejected each party's claim for credits from
the sale of the Cape Cod residence. The judge noted plaintiff had
not met his burden to prove he was entitled to a $15,000 credit
for pay down of the mortgage on the residence because he had only
estimated the sum he believed was due. The judge also rejected
defendant's argument for a credit because the residence had been
ordered to be listed at a lower price than she had desired. The
judge found defendant's argument was in essence a motion for
reconsideration of the court's pendente lite determination "made
two years out of time."
Regarding the vehicles, the trial judge noted "[n]either
party offered any proofs as to the vehicles listed on their CIS.
The [c]ourt is not in a position to equitably divide same." Thus,
the judge ordered each party to retain the vehicle in his/her
possession, the children retain their vehicles, and all boats to
be sold and the proceeds equally divided.
The trial judge ordered the furniture from both residences
divided equally. He denied defendant's claim as to the items she
argued were exempt from equitable distribution and held: "The
[c]ourt has no tangible proof, other than [d]efendant's testimony,
that some furniture was either gifted or bought with inherited
The trial judge awarded defendant permanent alimony utilizing
the version of
N.J.S.A. 2A:34-23(b) that existed before its
amendment in September 2014. The judge reasoned "the matter was
tried under the former iteration of the statute. That being the
case, the [c]ourt believes it should be decided under the former
statute. Moreover, in making this decision the [c]ourt believes
that, given the facts of this case, the result would be strikingly
The judge determined permanent alimony was supported by the
majority of the statutory factors. He concluded the marriage was
of an "extremely long duration" and "the parties lived a relatively
opulent, and certainly an upper income lifestyle. Their lifestyle
consumed the entirety of [plaintiff's] income." He found:
the goal of "maintaining the lifestyle" is
more of a goal than a reality. In the case
of [defendant,] her most recent CIS shows that
her lifestyle has decreased from $92,352 to
$27,042 per month. Without even beginning to
analyze these figures for credibility
purposes, it is clear that she has had to
"sacrifice" her prior lifestyle during the
course of this litigation, and will have to
do so going forward.
The judge found plaintiff's ability to maintain the lifestyle
going forward was facilitated by "an extremely generous expense
account." Thus, the judge found plaintiff would "have more
flexibility" in maintaining the lifestyle than defendant who would
be dependent on alimony alone. Conversely, the judge found the
equitable distribution award supported the alimony amount awarded
because defendant would receive at least $750,000 from her share
of ZC to invest "while [plaintiff] will likely someday have the
ability to be bought out upon retirement."
The judge found defendant could earn no money because she had
been "out of the workforce for decades." The judge found that
plaintiff and his partners had reduced their draw from $850,000
to $450,000 per year each. He determined plaintiff's income
fluctuated dramatically because the "bonus can vary relatively
wildly." However, the judge determined there was never a year
where plaintiff's income fell below $1,000,000.
The judge ordered the alimony payable at a rate of $22,000
per month from plaintiff's draw and $186,000 per year payable from
the bonus for a total yearly obligation of $450,000. The judge
made alimony taxable to defendant and tax deductible to plaintiff.
The judge ordered plaintiff to maintain life insurance of
$4,000,000 to secure his alimony obligation.
The trial judge denied plaintiff's request for a credit for
overpayment of pendente lite support noting the final alimony
award did not support such a credit. The judge also stated:
Moreover, the interim support has not been tax
affected as the alimony will be. The [c]ourt
has adjusted interim support a number of
times. It has visited upon [plaintiff,] as
the sole bread winner, any number of other
costs during the course of the litigation.
Thus, while the alimony award is greater than
the [pendente lite] award, the [c]ourt does
not believe either party would be entitled to
a retroactive credit.
The trial judge determined the parties' eldest and youngest
children were unemancipated because they remained in college. The
parties' middle child having graduated college was deemed
emancipated. Therefore, the judge addressed the college
contribution for the remaining children.
The judge found both parents were "very supportive of the
children and clearly intend they finish their education." The
judge noted the children's educations were funded pendente lite
from plaintiff's income. The judge ordered that plaintiff bear
seventy-five percent and defendant twenty-five percent of the
unemancipated children's college housing, tuition, food, and
books. The judge declined to order child support.
The trial judge next addressed the issue of counsel, expert,
and mediation fees, and each party's claim for a contribution to
fees. The judge noted the combined total spent by the parties on
such expenses was $1,402,580.
The judge noted plaintiff "can clearly afford his counsel's
fees. [Defendant] is less favorably disposed but has received a
significant award both in terms of equitable distribution and
alimony." The judge also noted plaintiff had been ordered to pay
$130,000 towards defendant's fees without prejudice.
Addressing the parties' good faith, the trial judge found
defendant achieved a result better than plaintiff had offered her
in settlement discussions. However, the judge found "on at least
two occasions, [d]efendant's conduct of blatantly violating the
confidentiality agreement regarding [ZC] required [p]laintiff's
counsel to come into [c]ourt seeking emergent relief. . . .
Defendant at times has acted out of control while both parties
have failed to heed orders of this [c]ourt." The judge also found
plaintiff had violated a court order "not to receive any monies
from ZC, and then signing loan advances to himself."
Thus, the judge awarded plaintiff $25,000 for defendant's
violations of the confidentiality agreement, and ordered plaintiff
to bear one-third of defendant's counsel fees. The judge ordered
the parties to split the mediator's fees equally, which totaled
Regarding expert fees, the judge noted defendant had
abandoned Politziner as a joint expert before he could complete
his work or render an opinion in favor of retaining Sziklay. The
judge rejected defendant's challenge to Politziner's "methods, his
billing practices, the thoroughness of his investigation, and
. . . his conclusions." The judge found that both parties had
stipulated to Politziner's expertise and the judge's review of
Politziner's billing records did not reveal any inappropriate
billing, and that Politziner's bill was less than Sziklay's. The
judge noted he found Politziner's conclusions regarding the value
of ZC sound and his testimony "extremely helpful." Thus, the
judge held plaintiff responsible for two-thirds of Politziner's
bill and defendant responsible for the remaining one-third.
The trial judge did not order plaintiff to share in Sziklay's
fees. The judge noted although Sziklay was "extremely qualified
. . . his position in this matter has been almost completely
rejected by this [c]ourt."
Post-judgment, defendant sought reconsideration of the final
judgment of divorce, which the judge denied in an order dated
April 17, 2015. This appeal followed.
On appeal, defendant argues the trial judge erred in: adopting
Politziner's valuation of ZC and in the percentage of ZC's value
awarded to defendant; valuing the Cape Cod residence; ordering the
sale of the marital residence; ordering taxable alimony be paid
to defendant, and the amount of alimony and life insurance to
insure it; failing to give defendant a Mallamo1 adjustment in light
of the alimony awarded at trial; rejecting defendant's dissipation
claim; failing to make an equitable distribution of personal
property; failing to award defendant a portion of the 2011 income
tax overpayment; failing to make an equitable distribution of the
parties' automobiles; requiring the parties to share in the
children's college expenses; granting plaintiff's application to
hold defendant in violation of litigant's rights for violation of
the confidentiality agreement; and awarding of counsel fees.
Mallamo v. Mallamo,
280 N.J. Super. 8 (App. Div. 1995).
We begin with our standard of review. The Supreme Court has
[F]indings by a trial court are binding on
appeal when supported by adequate,
substantial, credible evidence. Cesare v.
154 N.J. 394, 411-12 (1998). We defer
to the credibility determinations made by the
trial court because the trial judge "hears the
case, sees and observes the witnesses, and
hears them testify," affording it "a better
perspective than a reviewing court in
evaluating the veracity of a witness." Id.
at 412 (citing Pascale v. Pascale,
20, 33 (1988)).
If the trial court's conclusions are supported
by the evidence, we are inclined to accept
them. Ibid. 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
Resort, Inc. v. Inv'rs Ins. Co. of Am., 65
N.J. 474, 484 (1974)). "Only when the trial
court's conclusions are so 'clearly mistaken'
or 'wide of the mark'" should we interfere to
"ensure that there is not a denial of
justice." N.J. Div. of Youth & Family Servs.
196 N.J. 88, 104 (2008) (quoting N.J.
Div. of Youth & Family Servs. v. G.L., 191
N.J. 596, 605 (2007)).
[Gnall v. Gnall,
222 N.J. 414, 428 (2015).]
"Appellate courts accord particular deference to the Family
Part because of its 'special jurisdiction and expertise' in family
matters." Harte v. Hand,
433 N.J. Super. 457, 461 (App. Div.
2013) (quoting Cesare,
154 N.J. at 412). However, "[t]his court
does not accord the same deference to a trial judge's legal
determinations. Rather, all legal issues are reviewed de novo."
Ricci v. Ricci,
448 N.J. Super. 546, 565 (App. Div. 2017) (citing
Reese v. Weis,
430 N.J. Super. 552, 568 (App. Div. 2013)).
Defendant argues the trial judge abused his discretion in
limiting discovery relating to the valuation of ZC. She contends
this error made both experts' opinions unreliable net opinions.
She also argues the judge erred regarding the value of ZC, and in
awarding an equitable distribution of only twenty-five percent of
plaintiff's ownership interest.
The Supreme Court has held "deference is generally accorded
to the trial court" on discovery matters. Wilson v. Amerada Hess
168 N.J. 236, 253 (2001). Therefore, we apply an abuse of
discretion standard in our review of discovery determinations by
a trial court. Connolly v. Burger King Corp.,
306 N.J. Super.
344, 349 (App. Div. 1997).
The trial judge explained that defendant's expert Sziklay
received more discovery regarding ZC than Politziner. Both experts
were able to render an opinion as to ZC's value. Moreover, the
trial judge addressed defendant's pendente lite motions and
exercised his discretion by engaging in a detailed review of
defendant's discovery demands.
Defendant does not identify any particular discovery requests
that were improperly denied. Rather, she argues generally that
"[t]he record reveals the extent of the discovery limitations
imposed by the court," and claims the "discovery-based [o]rders
were in error." Furthermore, she does not state with any
particularity why the unspecified discovery was necessary for her
to establish the true value of ZC, or why the permitted discovery
was insufficient for that purpose. Having reviewed the record and
the judge's determination we are not convinced the alleged lack
of discovery had an adverse impact upon the equitable distribution
We also find no support for defendant's assertion the lack
of discovery rendered the experts' reports net opinions. Defendant
made no such claim at trial. Moreover, a net opinion is one
rendered with only "an expert's bare conclusions, unsupported by
factual evidence[.]" Buckelew v. Grossbard,
87 N.J. 512, 524
(1981). "In essence, the net opinion rule requires an expert
witness to give the why and wherefore of his expert opinion, not
just a mere conclusion." Vitrano v. Schiffman,
305 N.J. Super.
572, 577 (App. Div. 1997) (quoting Jimenez v. GNOC, Corp.,
286 N.J. Super. 533, 540 (App. Div. 1996)). "Where . . . an expert
offers an opinion without providing specific underlying reasons
. . . he ceases to assist the trier of fact and becomes nothing
more tha[n] an additional juror." Ibid. (quoting Jimenez,
286 N.J. Super. at 540). "An expert's conclusion 'is excluded if it
is "based merely on unfounded speculation and unquantified
possibilities."'" Townsend v. Pierre,
221 N.J. 36, 55 (2015)
(quoting Grzanka v. Pfeifer,
301 N.J. Super. 563, 580 (App. Div.
Given the trial judge's detailed analysis of each expert's
report, and explanation regarding how each arrived at a conclusion
of valuation, defendant's claim the reports were net opinions
lacks merit. Each expert provided a detailed and thorough
explanation of the valuation methodology and reasoning for
valuation. Their reports were not unsupported speculation.
We also disagree the valuation determination was erroneous.
Our review of equitable distribution determinations is narrow.
Valentino v. Valentino,
309 N.J. Super. 334, 339 (App. Div. 1998);
Wadlow v. Wadlow,
200 N.J. Super. 372, 377 (App. Div. 1985). We
decide only whether the trial court "mistakenly exercised its
broad authority to divide the parties' property and whether the
result was 'reached by the trial judge on the evidence, or whether
it is clearly unfair or unjustly distorted by a misconception of
law or findings of fact that are contrary to the evidence.'"
309 N.J. Super. at 339 (quoting Wadlow,
200 N.J. Super.
at 382). "A sharp departure from reasonableness must be
demonstrated before our intercession can be expected." Wadlow,
200 N.J. Super. at 382 (quoting Perkins v. Perkins,
159 N.J. Super.
243, 248 (App. Div. 1978)).
To make an equitable distribution the trial judge must
identify the assets subject to equitable distribution, value the
assets as of the date of complaint, and determine how the assets
should be distributed between the parties. Rothman v. Rothman,
65 N.J. 219, 232 (1974). The goal of equitable distribution is
to achieve a fair division of marital property. Steneken v.
183 N.J. 290, 299 (2005). Pursuant to
23.1, the Legislature has provided sixteen factors the trial judge
must utilize in making an equitable distribution.
Equitable distribution of a spouse's interest in a closely
held company requires identifying the fair value of the business.
As stated by the Supreme Court in Steneken,
183 N.J. at 296-97:
"There are . . . few assets whose valuation
impose as difficult, intricate and
sophisticated a task as interests in close
corporations." Torres v. Schripps, Inc., 342
N.J. Super. 419, 435 (App. Div. 2001) (quoting
Lavene v. Lavene,
148 N.J. Super. 267, 275
(App. Div. 1977)). . . . Although there is
no general formula that will apply to the
"many different valuation situations," the
ultimate "goal is to arrive at a fair market
value for a stock for which there is no
The capitalized earnings method, used by both experts in this
case, involves "[c]apitalization of indicated earnings at a
reasonable return on investment based on relative risk and current
interest rates." Lavene v. Lavene,
162 N.J. Super. 187, 197 (Ch.
This method requires analysis of the earning
power of the corporation as it is related to
the rates of return expected in the current
money market for various types of investments
with consideration given to expected rates of
growth, risk and the potential time lag until
a reasonable level of profit can be obtained.
Based on this analysis the earning power is
converted into a corresponding value.
This conversion is usually accomplished "by
relating the rate of return expected to a
corresponding multiple of net after tax income
such as is represented by the price-earnings
ratio often discussed in analysis of stock
exchange traded equities."
The appropriate rate to use in
capitalization . . . is a matter of
judgment based primarily upon the
degree of risk associated with the
probable future income stream and
determination of what should be a
fair return on the investment.
The capitalizing procedure is
appropriate where it appears that
the operation can continue on for a
long period as a profitable
[Id. at 197-98 (emphasis added) (alteration
in original) (citations omitted).]
The valuation technique accepted by the trial court, is
"measured against a reasonableness standard." Steneken,
at 297. Although the approach must be grounded in principles that
are generally acceptable in the financial community, a business
valuation is a very fact-sensitive inquiry, and it is more an art
than a precise science. Id. at 297-98; accord Balsamides v.
Protameen Chems., Inc.,
160 N.J. 352, 368 (1999); Brown v. Brown,
348 N.J. Super. 466, 477 (App. Div. 2002).
The purpose of normalization adjustments is to reach a fair
value of the company based upon application of industry standards.
We disagree with defendant's argument the judge erred in rejecting
Sziklay's opinion based upon the normalization adjustment he took
for the company's excessive compensation expenses. Courts are
free to accept or reject expert testimony, and do not have to
adopt the opinion of either expert. Brown,
348 N.J. Super. at
478; Cty. of Middlesex v. Clearwater Vill., Inc.,
163 N.J. Super.
166, 174 (App. Div. 1978). Moreover, such adjustments are not
mandatory. In Steneken, the Court expressly stated: "for the
purpose of valuing a closely-held corporation in determining the
proper equitable distribution thereof, proper valuation
techniques, which may include the normalization of excess salary
expenses, are to be applied."
183 N.J. at 293 (emphasis added).
As we noted, the trial judge found that by making the
normalization adjustment for compensation, Sziklay had essentially
rewritten the corporate books and valued a "fictional
corporation." Although it is a generally accepted accounting
valuation practice to take the normalization adjustment for
excessive compensation, the trial judge provided a reasonable
explanation for rejecting Sziklay's adjustment methodology. The
judge found Sziklay's reduction of compensation by forty percent
was inconsistent with his "'assumption' that ZC would be managed
in the future 'with the same level of effectiveness' as it was on
the date of valuation."
Both experts testified regarding normalization adjustments
they took for items beyond compensation, namely, ZC's excessive
marketing expenses, as well as the upward adjustments made to the
partners' compensation amounts. Both experts agreed the industry
standard for compensation as a percentage of total revenue was
approximately fifty percent, and this was ZC's historical
percentage, as well as its future goal. However, in 2011, the
compensation ratio for ZC was over seventy percent. Sziklay took
a normalization adjustment that assumed a percentage ratio of
Politziner made no adjustment because he accepted plaintiff's
representation the excess compensation was necessary to retain
staff and generate future business. This was not inconsistent
with Politziner's testimony that ZC had experienced boom years
because it was well managed and that based on its prior performance
it hoped to achieve similar results compared to its historical
Defendant also argues the trial judge improperly relied on
the restructured note as dispositive of the company's value, thus
using a "fair market value" standard for valuing the company, as
opposed to the "fair value" standard. We disagree.
"Ordinarily the value that people put on an asset is the most
productive place to start such an inquiry[.]" Bowen v. Bowen,
96 N.J. 36, 45 (1984); see also Slutsky v. Slutsky,
451 N.J. Super
332, 362 (App. Div. 2017) (finding a law firm's shareholder
agreement relevant to the issue of valuation of partner's
Here, both experts clearly utilized a fair value methodology
approach. However, the judge found Sziklay ignored the forbearance
agreement altogether. The judge disfavored Sziklay's valuation
Given that the theory underlying setting a
valuation is always what a willing buyer would
pay a willing seller, neither being under any
compunction to act, the decision of [MMC] to
renegotiate and accept a largely reduced
purchase price from the principals of ZC is,
to this [c]ourt, much more indicative of true
Therefore, Politziner's consideration of the note did not
change his analysis to a fair market value approach, but instead
better described ZC's fair value. The trial judge's acceptance
of Politziner's valuation was not erroneous.
Defendant argues the judge erred in failing to consider other
indicators of ZC's value, including: pre-complaint financial
reports commissioned by plaintiff, which indicated a value of
$25,000,000; the life and disability insurance policies purchased
by the company with respect to plaintiff; the $600,000 in revenue
sent to the company's Cayman Island branch; and the sale of Zolfo
Cooper Europe (ZCE), in February 2015, for $100,000,000. We
The pre-complaint reports and the value of the insurance ZC
held on plaintiff's life were less reliable indicators of value
than the valuation undertaken by both experts, who analyzed ZC's
prior performance and compared it with its industry. Moreover,
the document relied upon by defendant to prove the company had a
Cayman Islands operation was not prepared by ZC, and the trial
judge accepted plaintiff's testimony that the document was
inaccurate. Also, defendant raised the value of ZCE for the first
time in her motion for reconsideration, and there is no evidence
in the record plaintiff had any ownership interest in ZCE. The
aforementioned items were not a reliable means of valuation.
Defendant argues the trial judge erred in awarding her only
twenty-five percent of the value of plaintiff's ownership interest
in ZC. She argues she should have received a fifty percent
As we recently stated:
The equitable distribution statute "reflects
a public policy that is 'at least in part an
acknowledgment that marriage is a shared
enterprise, a joint undertaking, that in many
ways . . . is akin to a partnership.'" Thieme
227 N.J. 269, 284 (2016)
(quoting Smith v. Smith,
72 N.J. 350, 361
(1977)). But, equitable is not synonymous
with equal. See Rothman,
65 N.J. at 232 n.6.
Our courts must remain true to the legislative
mandate expressed in
which assures an ordered equitable
distribution be "designed to advance the
policy of promoting equity and fair dealing
between divorcing spouses." Barr v. Barr, 418
N.J. Super. 18, 45 (App. Div. 2011). This
requires evaluation of unique facts attributed
to each asset.
451 N.J. Super. at 358.]
The trial judge was not required to award defendant fifty
percent of plaintiff's ownership interest in ZC. The judge's
findings reflect an adherence to an analysis of the facts by
applying the statutory factors to each asset rather than a uniform
application and even distribution of each asset. The trial judge
[Plaintiff's] interest in ZC only began in
2008, just a few short years before the filing
of this Complaint. Prior to that, [plaintiff]
was an employee, and perhaps it could be
argued that by 2008, the marital enterprise
was largely ending. . . . He was entrusted,
along with his partners, by [MMC] [sic] to
assume the business effectively for no money
down based on the long track record he has
built as an effective professional in the
industry. He was able to build that track
record because he had a partner in life, one
[who] managed their family life so that he
could focus on his career. That relationship
continued throughout the entirety of his
career. Having said that, the [c]ourt
recognizes that it is the business owner's
hard work, their track record of success, and
indeed their 'sweat equity' that allows them
to build a successful career. It is for that
reason that the equitable distribution of a
business is different than any other asset of
The trial judge's equitable distribution determination of ZC
is supported by sufficient credible evidence in the record. The
equitable distribution award was not an abuse of discretion.
Defendant argues the trial judge erred in denying her a credit
for fifty percent of the difference between the $3,200,000 listing
price she requested for the Cape Cod home, and its ultimate sale
price of $2,895,000. We find no error in the judge's findings.
Pendente lite, the trial judge ordered the sale of the Cape
Cod residence and set the listing price at $2,895,000. The
residence sold at the listing price before trial, and the funds
were deposited into escrow, along with funds attributable to
plaintiff's post-complaint earnings.
At trial, defendant argued the trial judge's determination
of the listing price for the residence was artificially low. The
trial judge rejected defendant's claim, referring to her argument
as "essentially a Motion for Reconsideration made two years out
We disagree. Defendant was not time barred to challenge the
trial judge's pendente lite order setting the listing price for
the Cape Cod residence because the order was interlocutory in
nature and therefore reviewable. See Johnson v. Cyklop Strapping
220 N.J. Super. 250, 261 (App. Div. 1987) (stating "[t]he
inherent power of the court to modify its own interlocutory orders
prior to the entry of final judgment has long since been recognized
in New Jersey.").
Nevertheless, the record lacks evidence supporting a
$3,200,000 value for the Cape Cod home. Defendant's testimony was
that the parties should have chosen a listing price of $2,995,000.
She adduced no expert testimony regarding the value of the home
or other objective evidence to establish the home would have sold
for an amount greater than the listing price. The trial judge did
not err in refusing to grant defendant a credit based upon a
hypothetical sales price for the Cape Cod residence.
Defendant argues the trial judge erred in ordering the sale
of the marital home. Additionally, she asserts "[t]he court also
erred regarding the escrow account." We find no merit to these
The trial judge ordered the sale and equal distribution of
the marital residence, which had an appraised value of $1,635,000,
and approximately $1,321,000 in mortgage debt. Pursuant to
N.J.S.A. 2A:34-23.1(l), the judge found defendant had no need to
retain the residence because the children were grown and residing
outside of the residence. The judge acknowledged defendant's
desire to remain in the residence, but noted her testimony
conceding she could not obtain a mortgage to purchase plaintiff's
interest. Therefore, the judge's decision to order the residence
sold was not an abuse of discretion.
The record reveals that the escrow account was comprised of
plaintiff's post-complaint earnings and the proceeds from the sale
of the Cape Cod home. The trial judge awarded defendant one-half
of the proceeds from the sale of the Cape Cod residence. Defendant
has not articulated a reason why the judge erred in permitting
plaintiff to retain his post-complaint earnings. Indeed, absent
other circumstances, the filing of a complaint for divorce
terminates the marital enterprise. See Painter v. Painter,
65 N.J. 196, 218 (1974); see also Brandenburg v. Brandenburg,
198, 209-10 (1980). For these reasons, we decline to disturb the
trial judge's decision to permit plaintiff to retain his post-
complaint earnings from the escrow.
Defendant argues the trial judge awarded an insufficient sum
of alimony, and as a result the sum of life insurance was also
erroneous. Specifically, she contends the judge made inadequate
findings regarding the marital lifestyle and inaccurately
calculated plaintiff's annual income to be $1,313,000, without
considering benefits, perquisites, and plaintiff's earnings for
2012 and 2013. Defendant also argues the trial judge erred by
awarding taxable alimony because ZC paid the taxes. Defendant
argues the alimony failed to account for the cost of defendant's
medical insurance expenses and had no savings component. Defendant
asserts the judge failed to specify how the equitable distribution
award factored into the alimony determination.
In a review of an alimony award, we defer to the trial judge's
findings. Overbay v. Overbay,
376 N.J. Super. 99, 106 (App. Div.
2005). We will not overturn an alimony award unless we find
the trial court clearly abused its discretion
or 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).]
"An alimony award that lacks consideration of the factors set
N.J.S.A. 2A:34-23(b) is inadequate[.]" Crews v. Crews,
164 N.J. 11, 26 (2000).
Courts may award alimony "as the circumstances of the parties
and the nature of the case shall render fit, reasonable and
N.J.S.A. 2A:34-23. The standard of living during the
marriage serves as the "touchstone" for alimony. Crews,
at 16. Whenever possible, the alimony award should be set at an
amount that will "enable each party to live a lifestyle 'reasonably
comparable' to the marital standard of living." Id. at 26 (citing
Although the trial judge addressed each statutory factor, he
only described the characteristics of the marital lifestyle. He
failed to articulate, numerically, his findings regarding the
marital lifestyle. Indeed, the judge reviewed plaintiff's income
between 2005 and 2011, excepting 2009, which was aberrational, and
concluded plaintiff earned an average of $1,313,000 per year. The
judge further noted plaintiff's income was paid primarily in the
form of a bonus, which could vary from year-to-year. Thus, while
plaintiff's income had never dropped below $1,000,000 annually,
the judge found it also "could be more than twice that amount."
The judge also noted that plaintiff benefited from "an extremely
generous expense account" and "the firm's largesse extended
towards its clients on such things as holiday parties, ski trips
and the like."
The judge concluded "[p]laintiff's income represented all of
the household income," and the parties spent all of plaintiff's
income to support their "incredibly profligate lifestyle." The
judge further found that the parties "were not savers." Rather,
they "liv[ed] at or even above their means."
Although the judge's descriptive findings regarding the
lifestyle were adequate, we are unable to correlate his findings
regarding the parties' expenditures with the alimony award.
Indeed, the judge ordered plaintiff to pay defendant permanent
alimony of $450,000 per year based on an income of $1,313,000, but
without a numerical finding of lifestyle, we are unable to
determine how the alimony figure was derived.2 For these reasons,
Conversely, we have no difficulty with the trial judge's
calculation of plaintiff's income. The averaging of the income
for five years preceding the complaint without consideration of
the post-complaint earnings was a sound methodology. See Platt
384 N.J. Super. 418, 426-27 (App. Div. 2006) (affirming
we reverse the alimony award and remand for the trial judge to
make a numerical finding of the marital lifestyle and then explain
whether and how the alimony award meets it.
The judge's consideration of the marital lifestyle should
also consider defendant's claims regarding the costs of her medical
insurance. This expense was paid by ZC during the marriage, and
post-judgment will continue to inure to plaintiff's benefit alone,
yet become a significant post-judgment expense for defendant.
However, we disagree that the trial judge should have
increased the calculation of plaintiff's income by the value of
the medical insurance provided by ZC, and the expense account ZC
afforded plaintiff for marketing purposes, as these benefits only
defrayed the marital lifestyle and the trial judge already
determined the marital lifestyle was defined by the expenditure
of plaintiff's earnings.
We also disagree the trial judge erred by not including a
savings component for alimony. We recently stated:
[T]he court can take into account the marital
standard of living and allow the supported
spouse to save for the future. See [Glass v.
Glass] 366 N.J. Super. [357,] 379 [(App. Div.
2004)]; see also Capodanno v. Capodanno, 58
the use of a five year average of an obligor's income plus two
years following the complaint, but only where the obligor purposely
reduced his post-complaint income despite his business performing
well). Here, there was no need to consider plaintiff's post-
complaint income because he did not intentionally reduce it.
3 N.J. 113, 120 (1971). This is particularly
true when the supporting spouse can afford any
amount paid to the supported spouse. [Glass,
366 N.J. Super. at 379.]
A spouse's need for savings has long been
recognized as a component of alimony, see
21 N.J. at 354], that allows for
the accumulation of "reasonable savings to
protect [the supported spouse] against the day
when alimony payments may cease because of
[the death of the supporting spouse] or change
in circumstances." Davis [v. Davis], 184 N.J.
Super. [430,] 437 [(App. Div. 1982)] (quoting
Khalaf v. Khalaf,
58 N.J. 63, 70 (1971)).
Savings have been used for such security in
lieu of directing the supporting spouse to
keep a life insurance policy or establish a
trust. . . . In short, savings has been a
relevant and appropriate factor to be
considered in the establishment of a
reasonable and equitable alimony award because
the amount of support awarded is subject to
review and modification upon a showing of a
change of circumstances, which could result
in the supported spouse being incapable of
supporting himself or herself. See [Davis,
184 N.J. Super. at 437.]
However, the protection of income being
derived through alimony is not the only reason
why a supported spouse requires savings,
especially where regular savings have been
part of the established marital lifestyle.
"[A]n appropriate rate of savings to meet
needs in the event of a disaster, to make
future major acquisitions such as automobiles
and appliances, and for retirement can, and
in the appropriate case should, be considered
as a living expense when considering an award
of . . . [alimony]." [In re Marriage of]
Weibel, 965 P.2d [126,] 129-30 [(Colo. App.
1998); see also [Glass,
366 N.J. Super. at 378.]
The most "appropriate case" in which to
include a savings component is where the
parties' lifestyle included regular savings.
[Lombardi v. Lombardi,
447 N.J. Super. 26, 38-
39 (App. Div. 2016) (alterations in original)
(emphasis added) (citations omitted).]
The parties did not save during the marriage. Moreover,
although plaintiff earns a substantial income, he cannot afford
to pay an unlimited amount of alimony to defendant. Also, the
trial judge ordered life insurance to secure alimony for defendant
in the event of plaintiff's demise. There is no indication the
alimony awarded would not enable plaintiff to acquire assets in
the future. Moreover, the final judgment of divorce does not
foreclose plaintiff from seeking an increase in alimony in the
event of a substantial and permanent change in circumstances
requiring greater support. For these reasons, we decline to
require consideration of a savings component for alimony on remand.
We conclude the trial judge erred by awarding taxable alimony
to defendant. There is no dispute ZC pays the taxes on plaintiff's
income and that he is not obligated to do so. Therefore, awarding
taxable alimony to defendant where there was no commensurate
benefit of deductibility to plaintiff seems to only financially
burden defendant. Therefore, we reverse the alimony award and
direct the trial judge to award an appropriate sum of non-taxable
alimony to defendant.
We note further the alimony award must be reversed because
the trial judge utilized the wrong version of
23(b). Although he acknowledged the statute was amended in
September 2014, before the entry of final judgment, the judge
reasoned the case had been tried and concluded prior to the
amendment of the alimony statute.
This may be so, but the trial judge's failure to utilize the
current statute was an error. We have previously held that the
current statute does not apply where "the post-judgment order
became final before the statutory amendment's effective date[.]"
Spangenberg v. Kolakowski,
442 N.J. Super. 529, 539 (App. Div.
2015). Here, because the trial judge's decision was issued four
months after the September 10, 2014 effective date of the alimony
statute, the current version of the law should have been applied.
Indeed, the amendments to the statute altered the core factors
trial judges should consider in fashioning an alimony award.
Therefore, the determination here did not comport with the
statutory requirement the trial judge "shall consider . . . [all
of the] factors" in
N.J.S.A. 2A:34-23(b).3 For these reasons, we
reverse and remand the alimony determination.
We do not address defendant's claims regarding how the trial
judge weighed the equitable distribution award in the alimony
calculation because the trial judge will be considering the current
statutory factors anew upon remand.
The trial judge ordered plaintiff to maintain $4,000,000 in
life insurance with defendant as the named beneficiary for the
duration of the alimony obligation. To the extent the alimony
determination upon remand necessitates a review of the life
insurance award, the trial judge should also adjust the insurance
amount plaintiff is required to maintain, if appropriate.
Defendant contends the judge erred in denying her Mallamo
claims and made inadequate findings of fact. She argues the
pendente lite support awards were insufficient in light of
plaintiff's post-complaint earnings and the ultimate alimony
award. She also argues that the judge erred in granting plaintiff
a fifty-percent credit for the money defendant withdrew from the
parties' joint money market account.
In Mallamo, we described how, pendente lite,
[i]n many instances the motion judge is
presented reams of conflicting and, at times,
incomplete information concerning the income,
assets and lifestyles of the litigants. The
orders are entered largely based upon a review
of the submitted papers supplemented by oral
argument. Absent agreement between the
parties, however, a judge will not receive a
reasonably complete picture of the financial
status of the parties until a full trial is
conducted. Only then can the judge evaluate
the evidence, oral and documentary, and weigh
the credibility of the parties. Only then can
the judge determine whether the supporting
spouse has the economic means represented by
the other spouse or in the case of declining
income has suffered legitimate economic
reversal or has been afflicted with a
temporary case of diminished resources
occasioned by a divorce.
280 N.J. Super. at 16 (emphasis added).]
Here, as we noted, support fluctuated from $43,000, $20,000,
$15,000 and $22,000 per month as pendente lite circumstances
changed. The trial judge declined to award a retroactive
modification of pendente lite support reasoning the final alimony
award was taxable and that plaintiff had been ordered to pay "any
number of other costs during the course of the litigation."
However, because the trial judge's decision lacks a numeric
description of the marital lifestyle, we are unable to determine
whether the pendente lite support was adequate and whether the
other expenses paid by plaintiff that the trial judge noted, but
failed to quantify, obviated more pendente lite support to
defendant. Moreover, the issue of pendente lite support must be
revisited in light of our remand on the issue of the taxability
of alimony. Our remand of alimony for the purpose of consideration
of the factors set forth in the current version of the alimony
statute is particularly relevant to this issue, as
23(b)(13) requires the trial judge to consider the "nature, amount
and length of pendente lite support paid" in awarding alimony.
We affirm the trial judge's decision to grant plaintiff a
credit for one-half of the funds defendant unilaterally withdrew
from the parties' joint account after the complaint. Specifically,
the judge credited plaintiff $65,500 of the $131,000 unilaterally
withdrawn by defendant post-complaint. The judge also accepted
plaintiff's valuation of the account, which was greater than
Defendant offers no basis for us to second guess the trial
judge's findings. We are satisfied the decision to grant plaintiff
a credit was not an abuse of discretion and was supported by the
credible evidence in the record.
Defendant argues the trial judge erred by not finding
plaintiff had dissipated income and assets from the marriage. We
N.J.S.A. 2A:34-23.1(i) states the trial court shall consider,
"[t]he 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." See
Vander Weert v. Vander Weert,
304 N.J. Super. 339, 349 (App. Div.
1997) ("[A]s a general matter, the distributable marital estate
is deemed to include assets diverted by one of the spouses in
contemplation of divorce and for the purpose of diminishing the
other spouse's distributable share."); see also Monte v. Monte,
212 N.J. Super. 557, 567-68 (App. Div. 1986) (stating debts
incurred by one spouse without knowledge of the other in order to
purposely encumber a marital asset constituted a dissipation of
The concept of dissipation "is a plastic one, suited to fit
the demands of the individual case." Kothari v. Kothari,
Super. 500, 506 (App. Div. 1992). In determining whether a spouse
has dissipated marital assets, courts consider the following
(1) the proximity of the expenditure to the
parties' separation, (2) whether the
expenditure was typical of expenditures made
by the parties prior to the breakdown of the
marriage, (3) whether the expenditure
benefitted the "joint" marital enterprise or
was for the benefit of one spouse to the
exclusion of the other, and (4) the need for,
and amount of, the expenditure.
[Id. at 507 (quoting Annotation, Spouse's
Dissipation Of Marital Assets Prior To The
Divorce As A Factor In Divorce Court's
Determination Of Property Division,
4th 416, 421 (1985)).]
"The question ultimately to be answered by a weighing of these
considerations is whether the assets were expended by one spouse
with the intent of diminishing the other spouse's share of the
marital estate." Ibid.
The record supports the judge's rejection of defendant's
dissipation claim. In particular, defendant pointed to 2010 as
the time when the marriage began to break down. She claimed
plaintiff had consulted with divorce strategists and
simultaneously lulled her into believing he desired to remain
However, defendant adduced no evidence of dissipation in
2010, or the years following, to corroborate her theory. Instead,
defendant produced self-created charts purporting to demonstrate
the dissipation prior to 2010, and her own timeline for the
breakdown of the marriage. Moreover, there was no showing
plaintiff hid his relationships and expenditures from defendant
or evidence he encumbered or transferred marital assets to avoid
an equitable distribution to defendant. The record demonstrates
plaintiff's income was known and he made no attempts to divert it
from the marriage.
The trial judge's finding that the extramarital relationships
alleged by defendant were not in and of themselves proof that a
dissipation is sound. We discern no abuse of discretion or mistake
of law, and affirm this aspect of the judgment.
Defendant argues the trial judge erred in failing to award
her certain personal property within the marital residence and
instead evenly dividing it. Specifically, referring to the trial
judge's finding that items defendant claimed were gifted to her
had become marital because she brought them into the marriage,
defendant argues "[p]ersonalty cannot be deemed a marital asset
simply because it exists in the marital home."
N.J.S.A. 2A:34-23(h) states:
Except as provided in this subsection, in all
actions where a judgment of divorce, . . . is
entered the court may make such award or
awards to the parties . . . to effectuate an
equitable distribution of the property, both
real and personal, which was legally and
beneficially acquired by them or either of
them during the marriage . . . . However, all
such property, real, personal or otherwise,
legally or beneficially acquired during the
marriage . . . by either party by way of gift,
devise, or intestate succession shall not be
subject to equitable distribution . . . .
The burden of establishing that property is immune from
distribution "will rest upon the spouse who asserts it." Painter,
65 N.J. at 214.
Defendant identified items she claimed were gifts from her
family members, and argued they should be immune from distribution.
However, the judge rejected defendant's claim, stating: "The
[c]ourt has no tangible proof, other than [d]efendant's testimony,
that some furniture was either gifted or bought with inherited
funds. In any event, the exempt status was lost when the furniture
became part of the marital residence."
We agree with defendant that inherited or otherwise immune
personalty does not become co-mingled merely because of its
location within the marital residence. However, defendant's claim
failed because she did not meet her burden of proof to establish
the exempt status of the furnishings. We have not been presented
with any other evidence to establish the immune nature of the
personalty. The trial judge's findings are entitled to deference.
For these reasons, we affirm the judge's determination.
Defendant contends the judge erred by not addressing her
request for equitable distribution of a 2011 income tax overpayment
of $99,234. Although the record reflects no findings by the trial
judge on this issue, the reason is self-evident.
It is undisputed ZC paid all of the income taxes for
plaintiff. Thus, any overpayment of tax would be due to the firm
and did not belong to the parties as equitable distribution.
Therefore, pursuant to Rule 2:10-5, we exercise original
jurisdiction to adjudicate this issue. As stated by our Supreme
[r]esort to original jurisdiction is
particularly appropriate to avoid unnecessary
further litigation, as where the record is
adequate to terminate the dispute and no
further fact-finding or administrative
expertise or discretion is involved, and thus
a remand would be pointless because the issue
to be decided is one of law and implicates the
[Price v. Himeji, LLC,
214 N.J. 263, 294
(2013) (alteration in original) (quoting Vas
418 N.J. Super. 509, 523-24 (App.
For these reasons, defendant's request for equitable
distribution of the 2011 income tax overpayment is denied.
Defendant contends the trial judge erred in failing to address
her request "for a credit of fifty percent . . . of funds generated
by plaintiff's unilateral sale of vehicles during the [divorce]
proceedings." We disagree.
As we noted, plaintiff sold a Jeep and used its proceeds to
purchase a new vehicle for one of the parties' children. He also
sold an Infiniti and applied the proceeds to the purchase of an
automobile for himself.
If defendant sought an equitable distribution of the proceeds
from sale of the automobiles, which had been invested in newer
vehicles, the burden of proof as to value lay with her. Rothman,
65 N.J. at 233. The trial judge stated that "[n]either party
offered any proofs as to the vehicles listed on their CIS," and
therefore the court was "not in a position to equitably divide
same." Therefore, the judge decided that the parties would retain
their vehicles, without setoff, and the children's vehicles were
to be transferred to them.
The trial judge did not abuse his discretion. We affirm the
decision regarding the parties' automobiles.
Defendant argues the judge erred by requiring the parties to
share in the un-emancipated children's college expenses, without
applying the factors set forth in Newburgh v. Arrigo,
88 N.J. 529
(1982). She also argues the judge's finding that the parties'
eldest child was un-emancipated was contrary to prevailing law.
Pursuant to Newburgh, when a parent seeks contribution to a
child's college expenses, the court must consider the following
(1) whether the parent, if still living with
the child, would have contributed toward the
costs of the requested higher education; (2)
the effect of the background, values and goals
of the parent on the reasonableness of the
expectation of the child for higher education;
(3) the amount of the contribution sought by
the child for the cost of higher education;
(4) the ability of the parent to pay that cost;
(5) the relationship of the requested
contribution to the kind of school or course
of study sought by the child; (6) the
financial resources of both parents; (7) the
commitment to and aptitude of the child for
the requested education; (8) the financial
resources of the child, including assets owned
individually or held in custodianship or
trust; (9) the ability of the child to earn
income during the school year or on vacation;
(10) the availability of financial aid in the
form of college grants and loans; (11) the
child's relationship to the paying parent,
including mutual affection and shared goals
as well as responsiveness to parental advice
and guidance; and (12) the relationship of the
education requested to any prior training and
to the overall long-range goals of the child.
88 N.J. at 545.]
The trial judge noted the parties' eldest and youngest child
each attended college away from home. The judge found both parties
were "very supportive of the children and clearly intend they
finish their education." However, the record lacks any other
findings regarding any of the Newburgh factors to enable us to
determine whether the judge's decision that the parties share the
college expense on a seventy-five percent/twenty-five percent
basis was an appropriate exercise of discretion. Therefore, this
issue is remanded for the trial judge to make the appropriate
As set forth in Newburgh,
88 N.J. at 543, "[a]ttainment of
ages 18 establishes prima facie, but not conclusive, proof of
emancipation." However, "[w]hether a child is emancipated at age
18, with the correlative termination of the right to parental
support, depends upon the facts of each case." Ibid.
"[E]mancipation of a child occurs when the fundamental dependent
relationship between parent and child is terminated. When a child
moves beyond the sphere of influence and responsibility exercised
by a parent and obtains an independent status on his or her own,
generally he or she will be deemed emancipated." Bishop v. Bishop,
287 N.J. Super. 593, 598 (Ch. Div. 1995). Thus, "[t]he
demonstrable needs of the child, not the child's age, are
determinative of the duty of support." Patetta v. Patetta,
358 N.J. Super. 90, 93-94 (App. Div. 2003).
Here, the parties' eldest child was twenty-seven years old
at the time of trial, and thus well over the presumptive age of
emancipation. However, she was a student at Penn State, and
remained financially dependent upon her parents. Therefore, the
trial judge did not err by finding her un-emancipated, and
defendant's argument in this regard lacks merit.
Defendant argues the trial judge erred by requiring her to
pay $25,000 of plaintiff's counsel fees as a sanction for her
violation of the confidentiality agreement. We disagree.
The parties signed a confidentiality agreement on October 19,
2011. In 2013, the judge concluded defendant had violated the
confidentiality agreement, but did not issue any sanctions at that
time, noting only that defendant was bound by the agreement.
After hearing the trial testimony and considering the
evidence, the trial judge found defendant had once again violated
the agreement by offering to provide confidential information from
the parties' case to a financial reporter. Therefore, the judge
restrained defendant from disclosing confidential information or
documentation regarding plaintiff or ZC, and assessed a sanction
against her in the form of paying $25,000 in plaintiff's counsel
fees "expended in response to [d]efendant's violations of the
"There is no doubt at all of the right of a trial judge, as
an exercise of discretion, to impose sanctions for violation of
the rules or failure to obey the orders of the court[.]" Kohn's
Bakery, Inc. v. Terracciano,
147 N.J. Super. 582, 584-85 (App.
Div. 1977). We review a trial judge's enforcement of litigant's
rights pursuant to Rule 1:10-3 under an abuse of discretion
418 N.J. Super. at 46.
The record supports the trial judge's decision. Defendant
clearly violated the confidentiality agreement. The trial judge
did not abuse his discretion by requiring payment of a sanction.
Defendant argues the trial judge's determination regarding
counsel and expert fees and costs was erroneous. Specifically,
defendant claims "[i]n light of the trial court's disregard of the
uncontroverted marital lifestyle, the limited equitable
distribution award, and the amount of taxable alimony, [she] was
in need of a far greater award of fees/costs." She also claims
that the judge erred in concluding plaintiff had already paid
$130,000 in her counsel fees, because the payment had come from
the proceeds from sale of the Cape Cod home, half of which belonged
to defendant. Defendant also argues the trial judge's decision
to ignore plaintiff's misconduct was the cause of her increased
expenditure of fees. Lastly, she argues that by requiring her to
pay all of Sziklay's fees, the court punished her for retaining
her own accounting expert.
N.J.S.A. 2A:34-23 provides: "The court may order one party
to pay a retainer on behalf of the other for expert and legal
services when the respective financial circumstances of the
parties make the award reasonable and just." Rule 5:3-5(c) sets
forth nine factors the court must consider in making an award of
counsel fees in a family action. Essentially,
in awarding counsel fees, the court must
consider whether the party requesting the fees
is in financial need; whether the party
against whom the fees are sought has the
ability to pay; the good or bad faith of either
party in pursuing or defending the action; the
nature and extent of the services rendered;
and the reasonableness of the fees.
[Mani v. Mani, 183 N.J. 70, 94-95 (2005)
An award "of counsel fees is discretionary, and will not be
reversed except upon a showing of an abuse of discretion." Barr,
418 N.J. Super. at 46. The award here was not an abuse of
The trial judge addressed all of the factors of Rule 5:3-
5(c). The judge concluded the certifications filed by counsel
complied with the relevant rules, and their fees, although high,
were "appropriate for the work performed." Considering the factors
under Rule 5:3-5(c), the judge concluded plaintiff "had a
considerable income and can clearly afford his counsel's fees,"
and noted that he had been ordered to pay some of defendant's
fees, in an approximate amount of $130,000. As for defendant, the
judge acknowledged that she was "less favorably disposed," but
noted that she "has received a significant award both in terms of
equitable distribution and alimony."
The judge also found defendant had achieved a result
"significantly better" than plaintiff's settlement proposal, which
had been provided to the judge under seal for purposes of
considering counsel fees. The judge stated both parties had failed
to heed court orders, noting defendant's breach of the
confidentiality agreement and plaintiff's advancement of loans to
himself in violation of court orders barring the incurrence of
Ultimately, "[u]nder all of the circumstances and in
consideration of the factors under R[ule] 5:3-5," the judge ordered
that plaintiff was responsible for his own legal fees, with the
exception of a $25,000 credit for fees expended in response to
defendant's violations of the confidentiality agreement. The
judge also ordered plaintiff to pay one-third of defendant's legal
fees, with "credit for any monies previously paid by him from
In addition, the judge decided the parties were equally
responsible for the mediation fees, and to the extent plaintiff
paid them he was entitled to a fifty percent credit. The judge
ordered the parties to share Politziner's fees, with plaintiff
responsible for two-thirds of his fees and defendant one-third.
The judge ordered defendant to bear all of Sziklay's fees, noting
that "however extremely qualified Mr. Sziklay is, his position in
this matter has been almost completely rejected by this [c]ourt
for the reasons previously discussed."
We discern no error in the trial judge's reasoning. He
appropriately balanced the Rule 5:3-5(c) factors. Also, it was
not an abuse of discretion for the trial judge to require defendant
to contribute to the former joint expert's fees, but not require
plaintiff to contribute to a partisan expert's fees, especially
where the court has rejected his opinion. For these reasons, we
decline to disturb the trial judge's determination on counsel and
We also find defendant's claim the trial judge ostensibly
gave plaintiff a credit for paying defendant's counsel fees by
using defendant's equitable distribution proceeds from the sale
of the Cape Cod home to lack merit. As set forth in the final
judgment, the judge ruled plaintiff was responsible for one-third
of defendant's fees, with a credit only for fees already paid out
of his post-complaint earnings. Therefore, the judge did not
permit plaintiff a credit for any of defendant's fees paid out of
the Cape Cod proceeds.
Affirmed in part; reversed and remanded in part. We do not