Opinion
DOCKET NO. A-4193-13T2
03-11-2016
CAMILLE CESARI, Plaintiff-Respondent, v. JUAN AGUILERA, Defendant-Appellant.
Clara S. Licata, attorney for appellant. Camille Cesari, respondent pro se.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fasciale and Higbee. On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Hudson County, Docket No. FM-09-1875-08. Clara S. Licata, attorney for appellant. Camille Cesari, respondent pro se. PER CURIAM
Defendant appeals from a July 30, 2013 final judgment of divorce (JOD) and an April 3, 2014 order awarding plaintiff alimony, child support, equitable distribution, and counsel and expert fees. We affirm but remand in part for entry of an amended order as to the amount of expert fees consistent with this opinion.
The parties married in 1988 and had one child, who was born in 1992 and attended college at the time of the divorce proceedings. Defendant is an architect, who started his own consulting business in 1992. Early in the marriage, plaintiff - a clothing designer - largely stayed home and cared for the child, but she also assisted both defendant's mother in a business which provided adoption services and defendant in his business. Defendant provided the parties' primary income during the marriage. After approximately twenty years of marriage, plaintiff filed a complaint for divorce.
The judge tried this case for approximately twenty-five days from November 2010 to March 2012. Five witnesses testified: plaintiff; defendant; an expert who appraised defendant's business, Rufino Fernandez; an expert who appraised plaintiff's business, Matthew Donohue; and defendant's mother. The judge then rendered a comprehensive written opinion, made extensive findings of fact, including credibility determinations and conclusions of law. The parties then filed several post-judgment motions, which the court heard in March 2014. The judge resolved those motions by issuing the April 3, 2014 order.
On appeal, defendant argues (1) the judge's alimony award is not adequately supported by the evidence; (2) the judge erred in awarding plaintiff counsel and expert fees; and (3) the judge erred in calculating equitable distribution of the marital home, specifically that the court erred in finding that plaintiff received an irrevocable gift of defendant's mother's one-half interest in the home.
Findings of the trial judge are binding on appeal if they are supported by "adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Inv'rs., 65 N.J. 474, 484 (1974). This court reviews a "trial court's interpretation of the law and the legal consequences that flow from established facts" de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Following our review, we decline to disturb the judge's conclusions, which we determine are supported by the evidence in the record.
I.
We begin by addressing defendant's contention that the alimony award of $500 per week, retroactive to the date the first support order was restored in 2008 and continuing until 2018 was not adequately supported by the evidence.
"Alimony relates to support and standard of living; it involves the quality of economic life to which one spouse is entitled, which then becomes the obligation of the other." Gnall v. Gnall, 222 N.J. 414, 429 (2015). A Family Part judge's determination of "[w]hether alimony should be awarded is governed by distinct, objective standards defined by the Legislature in N.J.S.A. 2A:34-23(b)." Ibid. Ultimately, "the 'overriding "purpose of [N.J.S.A. 2A:34-23] is to give a matrimonial judge broad discretion and authority to fashion sagacious remedies on a case by case basis, which will achieve justice and fulfill the needs of the litigants."'" Randazzo v. Randazzo, 184 N.J. 101, 111 (2005) (quoting Pelow v. Pelow, 300 N.J. Super. 634, 646 (Ch. Div. 1996)).
A proper alimony award "assist[s] the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage." Tannen v. Tannen, 416 N.J. Super. 248, 260 (App. Div. 2010) (quoting Steneken v. Steneken, 183 N.J. 290, 299 (2005)), aff'd o.b., 208 N.J. 409 (2011). "[A] judge awarding alimony must methodically consider all evidence to assure the award is 'fit, reasonable and just' to both parties, N.J.S.A. 2A:34-23, and properly balances each party's needs, the finite marital resources, and the parties' desires to commence their separate futures, N.J.S.A. 2A:34-23(c)." Gnall v. Gnall, 432 N.J. Super. 129, 149 (App. Div. 2013), rev'd on other grounds, 222 N.J. 414 (2015). We will not vacate a Family Part judge's alimony findings unless we
conclude that the trial court clearly abused its discretion, failed to consider all of
the controlling legal principles, or must otherwise be well 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 the proofs as a whole. Moreover, substantial weight must be given to the judge's observations of the parties' demeanor, comprehension and speech and to the fact that the trial judge had the distinct advantage of observing the demeanor of the witnesses and a better opportunity to judge their credibility than a reviewing court.Here, the alimony award is supported by adequate, substantial, and credible evidence in the record. Moreover, the judge made extensive credibility findings which are owed deference.
[Heinl v. Heinl, 287 N.J. Super. 337, 345 (App. Div. 1996) (citations omitted).]
In 2010, Fernandez valued defendant's business, The Hudson Group. He used the income approach rather than the preferred asset based approach because of defendant's recalcitrance in submitting documentation. Defendant substantially co-mingled business assets, personal assets, expenses, and third-party funds. Despite defendant's incomplete submissions, he refused to authorize Fernandez to speak to his personal accountant and did not produce his accountant to testify regarding the receipts and expenses of The Hudson Group. Moreover, the judge found defendant's testimony incredible, noted that defendant repeatedly failed to comply with orders compelling discovery, and found that defendant's "obfuscation of documents . . . caused [Fernandez's] report to be guarded." The judge stated defendant
never alerted his attorney or adverse counsel about his second business, Hudson Management and Consulting Group[,] until it was uncovered by [plaintiff's] attorney during trial. He lied to the [c]ourt by submitting three different tax returns, for his company and himself, swearing that they were filed and admitting under the [c]ourt[']s questioning that they were not. He admitted that he did in fact employ people and paid them wages, after telling Mr. Fernandez (the business expert) that he did not. He did not give those employees their W-2's, submit taxes, or give them a 1099 form nor deduct their wages on his sole proprietorship returns. His testimony regarding his business and accounting practices was vague and clueless. He had no sense that his secretion of his business accounts was in violation of discovery processes for his income stream analysis, his testimony about his finances was incredible and his lack of proper reporting of his income must be referred to the Department of the Treasury.
To value The Hudson Group, Fernandez first calculated gross receipts. To do this, Fernandez tried to "reconstruct" defendant's year and requested his appointment book for 2007, which reflected fifty-seven appointments. For the six consulting jobs for which defendant provided invoices, Fernandez divided the total value of $40,423.98 by six to reach an average of $6,737.33 per job. As the judge noted, this average was favorable to defendant because it was reduced by expenses and did not include a seventh invoice received for a construction project totaling $81,571. To estimate the receipts from other consulting jobs for which defendant did not provide invoices, Fernandez multiplied the average $6,737.33 per job amount by the fifty-seven appointments to reach $384,027.81.
In light of Fernandez's testimony that he definitively identified eight other addresses besides the invoices defendant provided and the fact that there was an approximate $80,000 disparity between The Hudson Group's deposits of $161,353 and its $81,345 of gross receipts reported on its tax return, the judge rejected Fernandez's $384,027.81 estimate in favor of $80,000 of assumed consulting invoices. That is, the judge determined the $384,027.81 amount - based on the fifty-seven appointments reflected in defendant's appointment book - was not supported, but the $6,737.33 per job average was "representative of the clients served, despite [defendant's] horrid lack of bookkeeping practices."
Indeed, the judge explained the eight other addresses multiplied by the $6,737.33 per job average largely comported with the approximately $80,000 disparity between deposits and reported gross receipts. Thus, the judge substituted $80,000 instead of $384,027.81 into Fernandez's formula and calculated total gross receipts of $201,995, representing the sum of: consulting jobs for which invoices were provided, $40,423.98; assumed consulting jobs based on unexplained deposits, $80,000; and the invoice from the construction project, $81,571.
The judge adopted Fernandez's formula to derive The Hudson Group's total estimated adjusted income and gross excess income after taxes. The judge subtracted the $78,374 of expenses reported on The Hudson Group's 2007 tax return to reach a total adjusted income of $123,621. The judge then adopted Fernandez's input of $87,036 as defendant's reasonable compensation for his position based on occupational employment statistics. The judge subtracted the $87,036 from the $123,621 to reach defendant's gross excess income before taxes, and further subtracted based on a thirty-percent tax rate ($10,976) to reach a figure of $25,609 of gross excess income after taxes.
Defendant argues the judge erred by adding the $81,571 invoice from the construction project to arrive at an inflated estimate of $25,609 of gross excess income after taxes and by adding the $25,609 to the $87,036 reasonable compensation figure when analyzing defendant's ability to pay alimony. Neither Fernandez nor the judge included the construction invoice in the calculation for the $6,737.33 per consulting job average because it related to construction, not consulting. However, the judge properly included the $81,571 construction invoice as it was revenue received by defendant. Defendant's argument the judge should not have added the $25,609 of gross excess income after taxes to the $87,036 reasonable compensation figure is without merit. Defendant argues, because he operated The Hudson Group as a sole proprietor, defendant's income should have been regarded as the estimated total adjusted income of The Hudson Group. This figure was properly calculated as $123,621, greater than the sum of $25,609 and $87,036. Thus, the judge's calculation of defendant's income was lower than The Hudson Group's total adjusted income defendant argues for.
Defendant also contends the inclusion of "phantom contributions" when determining his ability to pay was erroneous. The contested $72,000 figure represented defendant's monthly payments averaging $6,000 to three credit card companies. The judge found defendant's mother "gives [defendant] free reign to utilize her funds she gives him to oversee, which became the money in his office CD's, [m]oney [m]arket funds and subsidizes his credit card bills."
Indeed, defendant's credit card bills "far exceed[ed]" his income. The judge attributed this disparity to the thousands of dollars defendant's mother allowed him. Although defendant maintained many of the purchases reflected on these bills were made by his mother and brother, he provided no corroboration for this assertion. The judge was
not convinced that [defendant's] mother and brother use his credit card to purchase items. His mother did not testify to it, his brother was never produced, the items purchased were obviously things [defendant] used and utilized in his many years of free spending. Bed Bath & Beyond, multiple restaurants for drinks and dinner, theater, concerts, club memberships and travel arrangements, are all items that were testified to by him as his.The judge's findings, which were based largely on credibility, are owed deference.
Defendant also maintains the judge erred by not allowing him to recall his mother to testify. Defendant argues he should have been permitted to re-examine his mother to "rehabilitate" his own credibility as to what credit card charges she made. Defendant's mother testified, and defense counsel, despite "[knowing] all along[,]" failed to elicit testimony on this issue. Especially considering the protracted duration of the trial, the judge was well within her discretion to determine defendant had an opportunity to elicit this testimony, the mother would not be recalled, and defendant's assertions would be weighted according to credibility. See N.J.R.E. 611 (explaining a judge "shall exercise reasonable control over the mode and order of interrogating witnesses and presenting evidence so as to . . . avoid needless consumption of time").
Further, defendant maintains his ability to pay was unjustifiably enhanced by gifts. Specifically he seeks reversal of the judge's inclusion of imputed interest income resulting from $72,000 worth of contributions from his mother and the $235,000 appraised value of defendant's apartment, which had been gifted to him by his mother.
N.J.S.A. 2A:34-23(b)(11) provides that in determining an alimony award, a judge must consider "[t]he income available to either party through investment of any assets held by that party." See also Miller v. Miller, 160 N.J. 408, 422 (1999) (explaining "courts have consistently held that a supporting spouse's assets may be considered in calculating an alimony award"). Even if the gifted apartment was exempt from equitable distribution, any potential income derived from it may be considered in awarding alimony. Ibid. Additionally, a supporting spouse may not insulate assets from the alimony calculus through holding non-income producing property. Ibid.; Stiffler v. Stiffler, 304 N.J. Super. 96, 102 (Ch. Div. 1997). When analyzing defendant's ability to pay alimony, the judge applied a conservative 1.8% annual interest rate - the rate for Treasury Inflation Protected Securities in January 2012 - to these amounts and considered the additional interest income of $5,526 per year.
Defendant's contention the judge erred by conforming the pleadings to the evidence to award alimony is "without sufficient merit to warrant discussion in a written opinion." R. 2:11-3(e)(1)(E). We note briefly that a court may modify a pendente lite support order prior to judgment, the entry of judgment may preserve the order, and revisiting the order is particularly appropriate following a trial where the judge has had the benefit of considering the evidence adduced. Mallamo v. Mallamo, 280 N.J. Super. 8, 12 (App. Div. 1995); Jacobitti v. Jacobitti, 263 N.J. Super. 608, 617 (App. Div. 1993), aff'd, 135 N.J. 571 (1994). Defendant's argument the judge erred by awarding alimony, which was not requested in plaintiff's complaint, ignores the trial court's jurisdiction to award alimony which must only be "fit, reasonable and just," N.J.S.A. 2A:34-23, and the judge's power to amend the pleadings to conform to the testimony and evidence presented. See Pressler & Verniero, Current N.J. Court Rules, cmt. on R. 4:9-2 (2016) ("Where evidence relating to issues beyond those framed prior to trial is adduced without objection, the rule requires amendment of the pleadings to conform to that evidence or, in the absence of actual amendment, deems the pleadings to have been so amended."). The decision to amend the pleadings to award alimony - retroactive to the pendente lite award - was amply supported. In light of the evidence adduced, the judge thoroughly explained why "[t]he issue of alimony was constructively consented to by the parties" and the proper measure of the alimony award, including consideration of defendant's inadequate, previously-provided support.
II.
We also reject defendant's contention that the judge erred by awarding plaintiff expert and counsel fees. As to counsel fees, a Family Part judge may award counsel fees at its discretion subject to the provisions of Rule 4:42-9. In determining the award, a judge should consider:
(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."[A] court [must] consider the factors set forth in [Rule 5:3-5(c)], the financial circumstances of the parties, and the good or bad faith of either party." Mani v. Mani, 183 N.J. 70, 93-94 (2005) (quoting N.J.S.A. 2A:34-23). Application of these factors and the decision to award fees is within the trial court's discretion. Gotlib v. Gotlib, 399 N.J. Super. 295, 314-15 (App. Div. 2008). That is, an "award of counsel fees in matrimonial actions is discretionary with the trial court, R. 4:42-9(a)(1), and an exercise thereof will not be disturbed in the absence of a showing of abuse." Berkowitz v. Berkowitz, 55 N.J. 564, 570 (1970). See also Rendine v. Pantzer, 141 N.J. 292, 317 (1995) (explaining an award of fees should be overturned only on the "rarest occasion").
[R. 5:3-5(c).]
Here, the judge explained at length defendant's incredible testimony, his instances of bad faith, and how they exacerbated fees. The judge found the amount of plaintiff's incurred counsel fees request to be reasonable and in compliance with R.P.C. 1.5(a) (and thus Rule 4:42-9(b)), imported her findings from her determination of defendant's ability to pay alimony, and analyzed each factor under Rule 5:3-5(c) before ordering defendant to pay seventy-five percent of plaintiff's counsel fees, $83,906. Defendant's argument the fee award is based on erroneous assumptions regarding his ability to pay is meritless because - as the judge repeatedly explained - defendant was consistently recalcitrant and exhibited bad faith. See Yueh v. Yueh, 329 N.J. Super. 447, 461 (App. Div. 2000) (explaining "'where one party acts in bad faith, the relative economic position of the parties has little relevance' because the purpose of the award is to protect the innocent party from unnecessary costs and to punish the guilty party" (quoting Kelly v. Kelly, 262 N.J. Super. 303, 307 (Ch. Div. 1992))). Plaintiff litigated in good faith, as the judge contrasted to defendant's actions. There is no reason to disturb the award of counsel fees.
As to expert fees, a Family Part judge's discretion to "direct who shall pay the cost of [an expert] examination, appraisal, or report" is found in Rule 5:3-3(i). In doing so, the judge should consider the same factors outlined in Rule 5:3-5(c). See Platt v. Platt, 384 N.J. Super. 418, 429 (App. Div. 2006) (citing Rule 5:3-5(c) in the context of allocating expert fees in an action for divorce). Here, the judge ordered defendant to pay seventy-five percent of Fernandez's fees and fifty percent of Donohue's fees. The judge explained:
The experts in the trial were Rufino Fernandez [and] Matthew Don[o]hue, both necessitated by the adversary party due to the ignorance of [defendant] and the financial inability of [plaintiff] to obtain their own experts. The three [c]ase [m]anagement [o]rders required each party to obtain experts and no less than six enforcement orders were entered to compel [defendant] to make payments, as [plaintiff] was financially unable to do so. [Defendant's] repeated lack of response caused additional work to be done by the experts and his obfuscation of documents needed caused the report to be guarded. [Defendant] will pay 75% of Mr. Fernandez's total bill, which was $22,928.50.We conclude there is no reason to disturb these findings. Although we do not challenge the propriety of these awards, we note inconsistencies between the JOD and the April 3, 2014 order. Although the JOD ordered defendant to pay seventy-five percent of Fernandez's fees and fifty-percent of Donohue's fees, the April 3, 2014 order setting forth the amounts defendant owed did not include Donohue's fees and listed the full amount of Fernandez's fees. Thus, we remand solely for the judge to enter an amended order correcting this typographical error and state the correct amount of expert fees awarded.
[Plaintiff] was forthcoming with her financial documents and Mr. Donohue's testimony notes that. His evaluation was timely due to her submissions and his testimony [was] accepted by the [c]ourt as to the valuation. [Plaintiff] will pay 50% of [Donohue's] bill and [defendant] will pay the remainder (giving him credit for the amount he already has paid).
III.
Defendant maintains the judge erred by awarding plaintiff 62.5% of the value of the marital home. Specifically, defendant contends his mother lacked the requisite donative intent to gift the home to plaintiff. As a result, he argues the judge erred in calculating equitable distribution because plaintiff did not receive an irrevocable gift of defendant's mother's one-half interest in the marital home.
The judge's finding defendant's mother unconditionally transferred her interest in the marital home to plaintiff is a factual finding entitled to substantial deference. Sipko v. Koger, Inc., 214 N.J. 364, 376 (2013). There are four elements constituting a valid, irrevocable gift: "First, the donor must perform some act constituting the actual or symbolic delivery of the subject matter of the gift. Second, the donor must possess the intent to give. Third, the donee must accept the gift . . . [and fourth,] the relinquishment by the donor 'of ownership and dominion over the subject matter of the gift.'" Ibid. (quoting Pascale v. Pascale, 113 N.J. 20, 29 (1988)). These elements should be clearly demonstrated. Farris v. Farris Eng'g Corp., 7 N.J. 487, 501 (1951).
Defendant and his mother purchased the marital home before the parties married. In 2007, defendant's mother conveyed her one-half interest in the marital home to plaintiff. The contested issue is whether the marital home was merely conditionally gifted to plaintiff, who subsequently failed to meet the conditions attached - allegedly, that she maintain it in trust for the child and finish the marital home's basement. "When the evidence establishes that the gift was premised upon the fulfillment of a condition by the donee, the gift is conditional; if the donee performs the condition, the gift becomes his or her property, but if the donee fails to perform the condition, the gift must be returned." Sipko, supra, 214 N.J. at 376. But the gift is irrevocable when it is absolute, voluntary, and knowingly made. Id. at 377.
The judge applied these principles to the evidence; she focused on the lack of any writing imposing a condition and the circumstances of the conveyance, then found inadequate evidence supporting the assertion the gift was conditional. Although the judge acknowledged the mother testified she intended plaintiff to place her interest in trust for the child, there was no writing supporting this. Similarly, there was inadequate support demonstrating the gift was conditioned upon finishing the basement. The judge explained the mother acquiesced in the mortgage, including attending the loan closing to sign the deed. Indeed, in 2006, the parties discussed the possibility of transferring a one-half interest in the home to plaintiff for her to execute a mortgage; and defendant brought to the closing a document requiring plaintiff to place $40,000 of the mortgage proceeds in escrow, clearly demonstrating all involved were well aware plaintiff intended to mortgage her newly acquired interest in the home. As the judge determined, "it is obvious by the actions of the parties prior to and on the day of closing, that this conveyance was planned for."
Although plaintiff did not place these funds in escrow, this is of no moment. As the judge explained, the agreement "has no effect and says nothing that binds [the parties]"; plaintiff had to invade the funds when defendant ceased providing adequate support, and plaintiff "pays the mortgage which supports the $40,000 amount she was to receive upon divorce." --------
Finally, defendant contends his share of the net equity in the marital home should not be diminished by the mortgage because the judge ordered plaintiff to be solely liable for the mortgage payments. Although plaintiff owned a one-half interest in the home, the parties - together - incurred the mortgage. The judge apportioned equity to each party based on the marital home's appraised value of $240,000, less the mortgage amount of approximately $140,000. Defendant is not liable on the mortgage, plaintiff is. Defendant cannot now gain additional equity in the home after originally agreeing to mortgage it in 2007; he is not responsible for one-half of the mortgage as he contends, his net equity simply reflects the mortgage he agreed to incur.
In addition to responding to defendant's arguments, plaintiff also challenges the award of equitable distribution and seeks enforcement of the ordered retroactive alimony payments. Plaintiff did not file a cross-appeal. Linek v. Korbeil, 333 N.J. Super. 464, 471 (App. Div.), certif. denied, 165 N.J. 676 (2000). As a result, we will not consider her challenge to equitable distribution provisions of the JOD. Finally, requests for enforcement should be directed to the Family Part.
Affirmed; remanded solely to enter an amended order fixing the amount of expert fees owing. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION