Opinion
DOCKET NO. A-1822-13T1
05-13-2015
DANIEL K. DEVINE, Plaintiff-Appellant, v. JESSICA A. DEVINE, n/k/a JESSICA A. LANZA, Defendant-Respondent.
Daniel K. Devine, appellant, argued the cause pro se. Jessica A. Lanza, respondent, argued the cause pro se.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Lihotz and St. John. On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-330-08. Daniel K. Devine, appellant, argued the cause pro se. Jessica A. Lanza, respondent, argued the cause pro se. PER CURIAM
Plaintiff Daniel Devine appeals from two post-judgment matrimonial orders. The first, filed on April 18, 2013, denied his motion to modify child support and granted him the right to claim one of the parties' two children as a dependent for income tax purposes. The second, filed on November 8, 2013, denied reconsideration of the prior order, again denying plaintiff's request to modify child support and grant him both dependent exemptions. The same order awarded defendant Jessica Devine, now known as Jessica Lanza, counsel fees and addressed payment or reimbursement of various expenses.
On appeal, plaintiff argues the judge not only disregarded provisions of the parties' Property Settlement Agreement (PSA), incorporated by reference into the Judgment of Divorce (JOD), which required child support to be renegotiated annually, but also improperly found he had not established a change in his financial circumstances warranting a reduction in support.
We have reviewed these arguments in light of the record and applicable law. For the reasons delineated in our opinion, we affirm the order denying plaintiff's motion to reduce child support, award counsel fees and allocate the dependent exemptions. However, we reverse the order requiring plaintiff to reimburse defendant $491 in activity costs.
The parties were divorced on October 30, 2008. Plaintiff, a technology project manager and Vice President at Goldman Sachs, received annual compensation that included salary and a discretionary bonus. Defendant was not working at the time the divorce complaint was filed. At the time of this motion, both parties had remarried and have additional children.
The parties agreed to resolve the collateral issues, including support for their children. Their understanding was memorialized in the PSA. The support obligation, defined in Paragraphs 19 and 20, stated:
19. [Plaintiff] shall pay to [defendant] child support of $40,000.00 per year / $769.00 per week. This child support award was calculated based on the formula set forth in Paragraph 16. This income comparison shall also be utilized for purposes of determining the parties' respective responsibilities for the various expenses for the children set forth in this Agreement so that [plaintiff] pays 90% and [defendant] pays 10% for the first year through 12/31/09. The parties acknowledge that this award exceeds the award provided under the basis of the Child Support Guidelines as they existed in October 2008, because [plaintiff]'s income exceeds the maximum income considered under the Guidelines.[]
20. The parties may not re-evaluate or modify the child support award for at least one year following the execution of this Agreement. However, either parent may seek a review of the child support award any year thereafter at one year intervals. However, nothing in this paragraph precludes either party from making an application to the Court based on a substantial change of circumstances, including [plaintiff]'s loss of employment or a substantial increase or
decrease in [plaintiff]'s total compensation due to a promotion or change in employment.
References in the parties' PSA and in our opinion to the Guidelines refer to The New Jersey Child Support Guidelines identified in Rule 5:6A and found at Pressler & Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A at 2625-48 (2015).
Paragraph 19 referenced Paragraph 16, which incorporated Exhibit C, a handwritten statement that provided:
This percentage shall annually be recalculated on the basis of [plaintiff]'s actual income at that time (which at this time is $415,000 in total compensation) and [defendant] being imputed with $45,000 or her actual income at that time, whichever is greater. The parties shall file their income tax returns by April 1st of each year (first year 2010) and shall provide the other with a copy of same by April 2nd of each year (first year 2010), and child support payments and ratio will be established, that shall be effective retroactive to January 1st of that year. The ratio at this time is 90% [plaintiff] and 10% [defendant]. This shall be re-evaluated by April 30, 2010 and retroactive to January 1, 2010. Thereafter the child support will be recalculated annually as specified above.Additional PSA provisions discussed the maintenance and payment of the children's medical and dental insurance and any uninsured expenses; child care costs; and summer camp and extracurricular activity expenses.
The JOD reflected and incorporated the provisions of the PSA. On the issue of child support, the JOD provided plaintiff:
shall pay child support in the amount of $769.00 per week payable on the 15th and the 30th of each month, according to [plaintiff]'s pay schedule, as $1,666.67 commencing on October 30, 2008, which amount shall be re-negotiated by April 2010 and
each year thereafter with notification to Probation by way of an Amended Order retroactive to January 1, 2010 and each January 1st thereafter . . . .
In 2012, plaintiff alleged his annual gross income decreased from that used in the JOD. Although his base salary had not changed, his 2011 bonus, paid in January 2012, was significantly less than the prior year's bonus. Overall, he alleged his annual earned income was approximately 40% less than the amount delineated in the PSA. Plaintiff asserts the variation in his bonus amount was the basis for the annual renegotiation of the child support amount.
On September 7, 2012, plaintiff emailed defendant requesting the parties mediate a proposed modification of child support and related obligations. Apparently, she did not agree, and he moved to enforce litigant's rights. Invoking the identified provisions of the PSA, particularly Exhibit C, plaintiff requested child support be reduced because of the change in his financial circumstances. Defendant opposed the motion. She asserted her requests for plaintiff's full disclosure of his "total compensation" were ignored. She averred this entailed not only information regarding plaintiff's salary and cash bonus, but also his deferred compensation. Defendant identified a document, entitled "Fiscal Year End Compensation Summary" (FYECS) issued by plaintiff's employer, which outlined the total annual compensation package, noting plaintiff neglected to include this in his pleadings. Defendant believed the income level identified in the PSA included plaintiff's deferred compensation, paid in the form of restricted stock units (RSUs). Documentation for 2011 that defendant was able to assess also showed "general equity awards" plaintiff received.
A majority of plaintiff's motion is devoted to custody and parenting time issues, matters not pertinent on this appeal.
In his reply, plaintiff insisted "[d]efendant received proper financial disclosure" because he provided his tax return. He did not release his 2011 FYECS, but attached a December 31, 2012 earnings summary, and acknowledged he received RSUs in January 2012. The total year-to-date compensation set forth on the earnings summary exceeded the sum urged by him as his annual compensation.
The April 18, 2013 order denied plaintiff's motion. In the attached statement of reasons, the judge found plaintiff "failed to meet [his] burden [to prove] changed circumstances." Comparing plaintiff's 2008 income against that for 2012, the judge found plaintiff was "working in the same capacity" for the same employer and "making nearly the same amount of money," concluding the change was "not material." The order allocated the dependent exemptions, awarding each party the right to claim one child, and denied defendant's request for counsel fees.
Plaintiff moved for reconsideration highlighting a host of factual errors he identified in the judge's underlying statement of reasons. Plaintiff pointed to the PSA's Exhibit C asserting it directed annual review and adjustment of child support. He attached his 2012 W-2 and his computation of support under the Guidelines. Plaintiff also included the FYECS for 2011, showing he received RSU's paid in January 2012 valued as $5,460.
The judge denied the motion on November 18, 2013. In the attached written statement of reasons, he recognized plaintiff's asserted reduction in annual gross earned income, but noted "he has not expressed why his income ha[d] decreased" or what "meaningful effort[s]" he undertook to improve his status or show he was working at capacity. Therefore, the judge concluded plaintiff failed to sustain his burden to prove a permanent non-volitional adverse change in his financial circumstances. The judge also noted plaintiff's presentation ignored the Guidelines provisions allowing a discretionary support award in high parental income situations, such as this matter. See Pressler & Verniero, supra, comment 20(b) on Appendix IX-A to R. 5:6A at 2645; see also R. 5:6A (adopting Guidelines set forth in Appendix IX-A to the Court Rules). Finally, the court awarded defendant $1,000 in counsel fees, finding "the motion for reconsideration simply reinstitute[d] the same claim with immaterial changes in the facts presented hoping for a different outcome."
This appeal ensued. On plaintiff's motion, we permitted the appeal to address both orders.
Our review of a trial court's factual findings is limited. "'When reviewing decisions granting or denying applications to modify child support, we examine whether, given the facts, the trial judge abused his or her discretion.'" J.B. v. W.B., 215 N.J. 305, 325-26 (2013) (quoting Jacoby v. Jacoby, 427 N.J. Super. 109, 116 (App. Div. 2012)). Trial courts are given "substantial discretion in making a child support award," and "[i]f consistent with the law, such an award 'will not be disturbed unless it is manifestly unreasonable, arbitrary, or clearly contrary to reason or to other evidence, or the result of whim or caprice.'" Foust v. Glaser, 340 N.J. Super. 312, 315-16 (App. Div. 2001) (quoting Raynor v. Raynor, 319 N.J. Super. 591, 605 (App. Div. 1999)) (additional internal quotation marks omitted). See also W.B., supra, 215 N.J. at 325-26 ("The trial court's award will not be disturbed unless it is manifestly unreasonable, arbitrary, or clearly contrary to reason or to other evidence, or the result of whim or caprice." (citation and internal quotation marks omitted)). Consequently, "we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice . . . ." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (citation and internal quotation marks omitted).
However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). In our consideration of the ordered result, we also evaluate whether a party clearly demonstrates "the existence of a genuine issue as to a material fact," requiring resolution upon presentation of evidence in an evidentiary hearing. Lepis v. Lepis, 83 N.J. 139, 159 (1980). We will reverse legal determinations "when the [family] court's conclusions are so 'clearly mistaken' or 'wide of the mark'" to "ensure that there is not a denial of justice." N.J. Div. of Youth & Family Servs. v. E.P., 196 N.J. 88, 104 (2008) (citation omitted).
In four of plaintiff's eight points presented on appeal, he challenges the denial of his request to modify child support. Plaintiff maintains the clear understanding between the parties was to review child support annually and argues the judge erroneously ignored the PSA and failed to recognize the significant change in his income as representing a change of circumstances. Further, he identifies factual mistakes in the court's statement of reasons, which he suggests contributed to the erroneous denial of his motion.
Well-defined legal principles guide our review of the parties' PSA. "When examining the terms of a settlement agreement, we are guided by the rules of contract construction." Globe Motor Co. v. Igdalev, 436 N.J. Super. 594, 601 (App. Div. 2014). See also Thompson v. City of Atl. City, 190 N.J. 359, 379 (2007). "'The polestar of contract construction is to discover the intention of the parties as revealed by the language used by them.'" Igdalev, supra, 436 N.J. Super. at 601 (quoting Karl's Sales & Serv., Inc. v. Gimbel Bros., Inc., 249 N.J. Super. 487, 492 (App. Div.), certif. denied, 127 N.J. 548 (1991)). The parties' intention as expressed is "'revealed by the language used, taken as an entirety; and, in the quest for the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain . . . .'" Id. at 602 (alteration in original) (quoting Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J. Super. 324, 339 (App. Div.), certif. denied, 188 N.J. 353 (2006)).
Examining the terms of the PSA, we note, Paragraph 20 precludes modification for one year and thereafter, permits either party to seek review. The agreement includes an annual exchange of income information, which could only be for the purpose of verifying the level of plaintiff's income because defendant did not then and does not now work outside the home. The agreement does not mandate annual changes in child support.
Paragraph 20 expresses review premised upon a substantial change in financial circumstances. The PSA provisions also recognize the parties' combined incomes are above the maximum level evaluated by the Guidelines, so that the level of support "exceeds the award provided under the basis of the Child Support Guidelines." Finally, Exhibit C provides "th[e] percentage" allocation between the parties "shall annually be re-calculated on the basis of [plaintiff]'s actual income . . . [and defendant's] actual income at that time." The clause continues to describe the exchange of tax returns beginning in 2010, stating "child support payments and ratio will be established[] that shall be effective retroactive to January 1st of that year. . . . [T]he child support will be recalculated annually as specified above."
The plain language of the agreement requires the exchange of all financial information relevant to computing child support and permits either party to seek a modification of the level of support, upon demonstration of a change in financial circumstances. This reflects the status of the law, which permits child support agreements to be reviewed and modified upon a showing of changed circumstances. Lepis, supra, 83 N.J. at 145-49. A party seeking modification has the burden of showing changed circumstances significant enough to warrant relief from the current support obligations. Id. at 157. On the other hand, temporary or anticipated changed circumstances do not warrant modification. Id. at 151. See also Larbig v. Larbig, 384 N.J. Super. 17, 23 (App. Div. 2006) (providing changed circumstances must be material).
Also, a mere fluctuation of a parent's gross earned income is not the sole barometer of available monies to determine the amount of his or her child support obligation. An alleged reduction in income is but one factor considered when viewing overall financial circumstances to determine the appropriateness of modification.
It has long been the law of this State that courts have the authority to consider the assets and other financial circumstances of the parties in addition to their income when determining child support. The Legislature has specifically expressed its intent in
that regard through adoption of N.J.S.A. 2A:34-23[(a)]. . . . [It is] clear child support [is] based upon total family resources and all parents' resources should be considered available for support of the children.
[Connell v. Connell, 313 N.J. Super. 426, 432 (App. Div. 1998) (citation omitted).]
We underscore this principle: "[c]hild support is the right of the child," Pascale v. Pascale, 140 N.J. 583, 593 (1995), which means a judge must remain ever mindful of the need to protect the children's best interests. Lepis, supra, 83 N.J. at 157 (stating the "guiding principle" remains the "best interests of the child"). Accordingly, in effectuating its role as parens patriae, a trial judge does not mechanically apply the Guidelines to reported W-2 wages. Rather, the judge must examine each case, which turns on its own unique facts.
Following review, we are not persuaded plaintiff's decreased annual bonus income sufficiently evinced a change in financial circumstances mandating a reduction in child support. First, we cannot agree modification is automatic upon proof of W-2 income. Were this so, the level of child support could be subjected to an obligor's voluntary acts causing a lessening of remuneration, that may include whimsy or manipulation. The language of the PSA does not prompt modification by a change in earned income. Instead, it incorporates the required demonstration of a substantial change in financial circumstances, as recognized under our case law.
Second, we agree with the motion judge's general analysis that plaintiff had not carried his burden of proof in this regard. Plaintiff's initial motion addressed a change in his gross earned income; redacting information regarding unearned or deferred compensation. Not until he filed a reply certification did plaintiff reveal the deferred 2011 compensation, and his 2012 FYECS was never provided.
The motion judge's analysis recognized the deficiency in plaintiff's proofs, commenting plaintiff did not explain why his income had changed or relate his efforts taken to ameliorate actual reduction. See Halliwell v. Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999) ("The potential earning capacity of an individual, not his or her actual income, should be considered when determining the amount a supporting party must pay."); Connell, supra, 313 N.J. Super. at 433-34 (noting a court may consider the capacity to produce income when computing a child support obligation). We agree such facts are critical and must be assessed before reducing child support. Certainly, voluntary conduct resulting in lower income would not support a decrease in child support. See Deegan v. Deegan, 254 N.J. Super. 350, 358-59 (App. Div. 1992) ("Any party is free to retire, take a vow of poverty, write poetry or hawk roses in an airport, if he or she sees fit."). The obligations to support one's children as he or she is best able will not give way to finding self-fulfillment. See ibid.
The judge's statement of reasons also made clear plaintiff's pleadings did not demonstrate an inability to pay the support as ordered in the JOD. See Connell, supra, 313 N.J. Super. at 433-34 (stating the needs of the children may require a parent who has the ability to use assets to satisfy a child support obligation). This additional and important fact implicates plaintiff's ability to satisfy the children's needs and their best interests.
We briefly address the use of the Guidelines in high income cases, such as this one. See Caplan v. Caplan, 182 N.J. 250, 265-66 (2005) (discussing child support awards in extreme income situations). The Guidelines set the minimum basic child support award for two children at $589 or $30,628 per year based on $3,600 net weekly parental income. See Pressler & Verniero, supra, Appendix IX-F to R. 5:6A at 2708. The needs of the children then dictate whether it is appropriate or necessary to award additional discretionary support payable from the income in excess of the $3,600, as fixed pursuant to N.J.S.A. 2A:34-23. Ibid.; see also Pressler & Verniero, supra, comment 20(b) on Appendix IX-A to R. 5:6A at 2645. The objective is to assure the child support amount is "fair and reasonable . . . ." Caplan, supra, 182 N.J. at 271.
In this matter, the motion judge did muddle these concepts. Nevertheless, plaintiff is wrong to suggest his support is limited to the sum calculated under the Guidelines. The evidence of record reflects plaintiff's available weekly income exceeds the Guidelines' maximum level by several hundred dollars. Therefore, the minimum amount of support may be supplemented. The budget information filed by defendant shows the mortgage and minimal utilities alone exceed the agreed amount of child support in the PSA. The child support award granted in 2008 had not been modified for the parties' two children who are now in high school and middle school. These facts also support the need for continuing support, at a level originally ordered. On the other hand, plaintiff failed to demonstrate his inability to comply with the child support order. Having considered this record, we cannot agree the judge abused his discretion in finding plaintiff's proofs did not meet his burden to trigger review of the child support award.
Plaintiff's child support calculations add a deduction for his child born during his current marriage. However, the other dependent deduction is only available when proof of income of the new child's other parent is supplied. See Pressler & Verniero, supra, comment 10 on Appendix IX-A to R. 5:6A at 2633. Here, no evidence of plaintiff's wife's income was submitted, as her Schedule C attached to their jointly filed federal Form 1040 has been redacted.
Plaintiff correctly identifies several factual mistakes in the judge's statement of reasons. For example, the statement mislabels plaintiff's 2007 income as his 2008 income and recited his 2011 gross earned income as being earned in 2012. The judge also did not reference the PSA statements regarding review of child support, and incorrectly suggested as maximum gross income to which the Guidelines apply, a level that represents the maximum net income of parties. See Pressler & Verniero, supra, comment 20(b) on Appendix IX-A to R. 5:6A at 2645 ("If the combined net income of the parents is more than $187,200 per year, the court shall apply the guidelines up to $187,200 and supplement the guidelines-based award with a discretionary amount . . . ."). However, none of these errors alter the ultimate conclusion that plaintiff failed to carry his burden of proving a basis for modification. R. 2:11-3(e)(1)(E).
Regarding plaintiff's challenge to the counsel fees awarded defendant, we are not persuaded the judge abused his discretion, in light of plaintiff's failure to provide additional evidence upon reconsideration. A "trial judge has broad discretion as to when, where and under what circumstances" to award counsel fees to a particular party. Enright v. Lubow, 215 N.J. Super. 306, 313 (App. Div.), certif. denied, 108 N.J. 193 (1987). Rule 5:3-5(c) empowers a judge to award counsel fees and identifies the factors to be considered in making such an award. The judge here determined plaintiff's reconsideration motion "simply reinstitute[d] the same claim with immaterial changes in the facts presented hoping for a different outcome." Also, there is a vast difference in the parties' incomes and, therefore, their ability to pay for legal representation.
Plaintiff next requests we reverse the order requiring his reimbursement of activity costs, claiming the expense was neither enumerated nor authorized by the PSA. The parties' motions contain very limited information in this regard. Defendant identified the cost for a school class trip. Plaintiff noted the PSA limited reimbursement of extracurricular activities to dance/karate classes, religion class, one sport per season, girl/boy scouts and other activities undertaken after a decision "jointly made by the parties," noting neither party's consent be unreasonably withheld.
Defendant bears the burden of proof on this issue. The record contains no agreement between the parties. In ordering plaintiff to reimburse $491, the motion judge made no findings that plaintiff agreed to pay a prorated portion of the trip. Therefore, the activity costs provision of the November 18, 2013 order was not satisfied and must be vacated.
Plaintiff's challenge to the allocation of the dependency exemptions states only that defendant has no income and cannot benefit from an exemption. We determine the record is insufficient to show that plaintiff would benefit or defendant receives no benefit from the dependency exemption. We also have no way of determining whether the exemption reduction factor imposed on higher income earning taxpayers such as plaintiff eliminates the benefit to him. See 26 U.S.C.A. § 151(d)(3) (setting forth the exemption phaseout as incomes increase). Because the evidence is in equipoise, the judge correctly denied plaintiff's request.
Defendant, who filed a joint return with her spouse, claimed the child, suggesting the family does benefit from the deduction.
We reject as moot plaintiff's challenge to an award directing defendant to reimburse him within thirty days of receipt for paid medical, dental and extracurricular expenses. R. 2:11-3(e)(1)(E).
In summation, we affirm the provisions of the Family Part orders dated April 18, 2013 and November 8, 2013, denying plaintiff's motion to modify child support because he failed to sustain his burden of proof demonstrating a significant change in economic circumstances warranting a reduction in child support. We also affirm the award of attorney's fees granted to defendant for responding to plaintiff's motion for reconsideration and the denial of plaintiff's request to modify the allocation of the dependent exemptions. We reverse Paragraph 6 of the November 8, 2013 order, requiring plaintiff reimburse defendant for the class trip, as defendant failed to demonstrate compliance with the PSA. Any other arguments not specifically discussed in our opinion were found to lack sufficient merit to warrant discussion in our opinion. R. 2:11-3(e)(1)(E).
Affirmed in part and reversed in part. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION