Opinion
DOCKET NO. A-1569-14T3
07-21-2016
JANET YIJUAN FOU, Plaintiff-Respondent, v. JOE ZHUOWU FOU, Defendant-Appellant.
Michael Confusione argued the cause for appellant (Hegge & Confusione, LLC, attorneys; Mr. Confusione, of counsel and on the brief). James A. Plaisted argued the cause for respondent (Walder Hayden, P.A., attorneys; Mr. Plaisted, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Yannotti, St. John and Guadagno. On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-1685-09. Michael Confusione argued the cause for appellant (Hegge & Confusione, LLC, attorneys; Mr. Confusione, of counsel and on the brief). James A. Plaisted argued the cause for respondent (Walder Hayden, P.A., attorneys; Mr. Plaisted, of counsel and on the brief). PER CURIAM
Defendant Joe Zhuowu Fou appeals from an amended final judgment of divorce entered by the Family Part on October 22, 2014, which awarded plaintiff Janet Yijuan Fou equitable distribution, alimony, and attorney's fees. Defendant also appeals from certain other orders entered during the course of the trial court proceedings. We affirm.
I.
We briefly summarize the pertinent facts and procedural history. The parties were married in China in 1975, and around 1985, they relocated to the United States. Thereafter, defendant earned a Ph.D. in Atomic/Molecular Physics. In 1998, defendant established a family importing business and spent extensive periods of time in China on company business. Plaintiff has worked in this country in various low-skilled jobs. She has limited English-language skills.
In 2007, the parties began to discuss divorce. In September and November 2007, the parties executed two agreements in their native Mandarin. Among other things, these agreements provided that the property and assets of the family business would be divided equally between the parties at some future time. In February 2009, plaintiff went with defendant to an attorney defendant had selected. Plaintiff signed a retainer agreement. On February 15, 2009, the parties executed two other agreements in Mandarin, which provided, in part, that all of the family and company's assets in China would be divided equally between the parties at a future date.
The attorney also prepared an English-language property settlement agreement (PSA) for the parties. The PSA stated that beginning in January 2009, defendant would pay plaintiff one-third of his salary as support. The PSA further provided that each party would be responsible for his or her debts and obligations; the marital residence would be sold and the net sale proceeds divided equally; the parties would retain all other assets in their possession; and there would be no other equitable distribution.
The attorney told plaintiff she would institute a divorce proceeding and defendant would default. Thereafter, a complaint was filed on plaintiff's behalf, and the attorney entered an appearance for her. On May 4, 2009, the court filed a final judgment of divorce, which dissolved the parties' marriage. The PSA was incorporated into the final judgment.
In September 2011, plaintiff filed a motion pursuant to Rule 4:50-1 for relief from the final judgment. Plaintiff claimed that the PSA differed substantially from the parties' prior Chinese Agreements. She alleged that defendant had concealed assets in China to place them beyond her reach. She asked the court to: set aside the final judgment on the grounds that it had been procured by fraud; compel defendant to pay one- third of his income as support; and order discovery regarding defendant's income and assets.
Defendant opposed the motion. He asserted that he had paid plaintiff what he owed her, and that the Chinese Agreements were merely non-binding, informal negotiations. On December 2, 2011, the trial court entered an order reserving a decision upon plaintiff's discovery requests until after a plenary hearing had been held on plaintiff's motion. The hearing took place on various dates in June, August and September 2012.
On September 12, 2012, the court placed its decision on the record. The court found plaintiff's motion was timely under Rule 4:50-2, since it had been filed within a reasonable time after plaintiff became aware that she was not going to receive a share of the family company's assets. The court found that the PSA had been presented to the court in an uncontested divorce proceeding, and the court therefore had been prevented from making a "searching inquiry" into whether plaintiff had voluntarily entered into that agreement.
The court noted that plaintiff's counsel had indicated he was representing her in the proceeding, but the attorney had been "procured" by defendant, not plaintiff. The attorney also had admitted that defendant had been the "conduit" for all information provided to him in the matter. The attorney said he had prepared the PSA in accordance with defendant's instructions. The court found that the retainer agreement was invalid, and that plaintiff had not been provided independent counsel.
In addition, the court found that plaintiff had been manipulated in the divorce proceedings, and it was "very troubling" that there were inconsistencies between the PSA and the Chinese Agreements. The court noted that the PSA, which was executed only twelve days after the Chinese Agreements of February 15, 2009, did not mention a division of the company assets.
The court found that all of the agreements were invalid. The court noted that it could not determine if any of the agreements had been negotiated freely or voluntarily. The court also noted that it did not know what financial disclosures the parties had made. The court pointed out that the parties had not submitted case information statements (CIS).
The court concluded that the parties would have to re-litigate the issues of equitable distribution and spousal support. The court gave the parties 120 days for discovery. The court memorialized its decision in an order dated September 12, 2012.
On February 7, 2013, the court conducted a case management conference and ordered the parties to immediately re-serve their discovery requests. The parties were ordered to provide discovery within thirty days of their receipt. On June 7, 2013, the court entered an order holding defendant in contempt for failing to comply with its discovery order. The court ordered defendant to immediately respond to plaintiff's discovery requests.
Defendant thereafter filed a motion for reconsideration of the June 7, 2013 order. Plaintiff filed a cross-motion requesting that the court suppress defendant's pleadings without prejudice for failure to provide discovery. On July 26, 2013, the court denied defendant's motion and granted plaintiff's motion, suppressing defendant's pleadings without prejudice. On August 26, 2013, the court entered an order requiring defendant to pay plaintiff $7,929 in counsel fees.
In September 2013, defendant filed another motion for reconsideration of the June 7, 2013 order. Defendant claimed he had recently provided plaintiff with the required discovery. Plaintiff filed a cross-motion to dismiss or suppress defendant's pleadings with prejudice because defendant had not provided discovery or complied with the court's discovery orders. On October 25, 2013, the trial court denied defendant's motion and granted plaintiff's cross-motion. The court suppressed defendant's pleadings with prejudice and entered default against defendant.
Plaintiff then filed a notice of equitable distribution. She also sought spousal support. The hearing on the motion was scheduled for January 24, 2014. Defendant sought an adjournment, which the court granted in part. The hearing was adjourned to February 21, 2014. The hearing took place on that date before another judge. Defendant did not appear.
The judge entered an amended final judgment of divorce on October 22, 2014. The judge awarded plaintiff alimony in the amount of one-third of defendant's annual income, which was computed based on defendant's last known combined annual earnings of $54,000. The judge awarded plaintiff one-half of the family company and assets, and $1,100,000, which was approximately half of the monies defendant had in certain accounts.
The judge also awarded plaintiff fifty percent of the amount in defendant's Vanguard account, and an interest in defendant's real property. In addition, the judge awarded plaintiff attorney's fees in the amount of $229,389.69. This appeal followed.
On appeal, defendant argues: (1) the trial court erred by dismissing his pleadings with prejudice and entering default against him; (2) the court erred by failing to grant his requests for adjournments and by conducting the hearing on equitable distribution and alimony without his presence or participation; (3) the court erred by setting aside the marital settlement agreement incorporated in the initial final judgment of divorce; (4) the amended final judgment rests on insufficient credible evidence; and (5) the court abused its discretion by awarding plaintiff attorney's fees.
II.
We turn first to defendant's argument that the trial court erred by invalidating the parties' PSA, which was incorporated into the initial judgment of divorce. He contends the motion was not timely under Rule 4:50-2.
Rule 4:50-1 provides that a party may seek relief from a judgment or order on the basis of
(a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under [Rule] 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) the judgment or order has been satisfied, released or discharged, or a prior judgment
or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or (f) any other reason justifying relief from the operation of the judgment or order.
Rule 4:50-2 states that when relief is sought pursuant to sections (a), (b) or (c) of Rule 4:50-1, the motion should be made not more than one year after the judgment or order was entered. However, in all other respects, the motion must be made within a reasonable time. R. 4:50-2.
Defendant argues that plaintiff's application should have been considered one seeking relief under subsections (b) or (c) of Rule 4:50-1, and therefore her motion for relief from the initial judgment of divorce was untimely. We disagree. Here, the court properly considered plaintiff's application for relief from the divorce judgment under Rule 4:50-1(f). See Schwartzman v. Schwartzman, 248 N.J. Super. 73, 77 (App. Div.), certif. denied, 126 N.J. 341 (1991); Edgerton v. Edgerton, 203 N.J. Super. 160, 173-75 (App. Div.), certif. denied, 101 N.J. 293 (1985).
Moreover, the record supports the judge's finding that plaintiff's motion was brought within a reasonable time, as required by Rule 4:50-2. The initial divorce judgment was entered on May 4, 2009. Plaintiff filed her motion seeking relief from the judgment on September 30, 2011. The judge noted that plaintiff did not initially know that significant terms of the Chinese Agreements had been omitted from the PSA. The judge found that it was understandable that it would take plaintiff a substantial amount of time before she could discover and understand the differences in the agreements.
Furthermore, plaintiff filed her motion about two years and four months from the time the original judgment was entered. The motion was filed within a reasonable time. See Edgerton, supra, 203 N.J. Super. at 173-75 (holding that motion for relief from judgment under Rule 4:50-1(f) was timely when filed two years and eight months after the judgment was entered).
Defendant also argues that, even if plaintiff's motion was timely, she failed to establish grounds for relief under Rule 4:50-1(f). Again, we disagree.
A party may secure relief from a PSA pursuant to Rule 4:50-1(f) if there are exceptional or compelling circumstances which indicate that enforcement of the agreement "would be unjust, oppressive or inequitable." Schwartzman, supra, 248 N.J. Super. at 77 (citing Quagliato v. Bodner, 115 N.J. Super. 133, 138 (App. Div. 1971)).
A spousal agreement may be reformed when it is unconscionable, it is the product of fraud or overreaching by a party with power to take advantage of a confidential relationship, or when, due to common mistake [] or mistake of one party accompanied by
concealment of the other, the agreement fails to express the real intent of the parties.The decision on whether to grant such relief is entrusted in the sound discretion of the trial court. Schwartzman, supra, 248 N.J. Super. at 77 (citing Inv. Co. v. Perillo, 48 N.J. 334, 341, (1966)).
[Adessa v. Adessa, 392 N.J. Super. 58, 66 (App. Div. 2007) (citations omitted).]
Here, the record supports the trial court's finding that plaintiff established exceptional circumstances for relief from the PSA. The judge noted that plaintiff had difficulty understanding the English language and did not comprehend the differences between the Chinese Agreements and the PSA which was incorporated into the judgment.
The court also noted that plaintiff's attorney had been essentially retained by defendant, and the retainer agreement that plaintiff signed was invalid. Plaintiff did not have independent counsel. In addition, the court pointed out the critical differences between the Chinese Agreements and the PSA, which showed that defendant had deceived and manipulated the divorce proceedings to plaintiff's disadvantage.
We conclude that the court's decision to grant plaintiff relief from the PSA incorporated in the initial divorce judgment was supported by sufficient credible evidence and it was not a mistaken exercise of discretion.
III.
Next, defendant argues that the trial court erred by: suppressing his pleadings with prejudice and entering default against him. He contends that he fully complied with plaintiff's discovery requests and that, at most, there was a genuine dispute as to whether he provided a complete response to plaintiff's discovery demands. These arguments are patently without merit.
Rule 4:23-5(a)(1) states that a party seeking discovery may move for dismissal or suppression of the other party's pleadings without prejudice if the other party has not provided discovery. Moreover, if the order of dismissal or suppression has not been vacated, the party entitled to discovery may, after the expiration of sixty days from the date of the earlier order, move to dismiss or suppress the other party's pleadings with prejudice. R. 4:23-5(a)(2).
The rule further provides that the motion "shall be granted unless a motion to vacate the previously entered order of dismissal or suppression without prejudice has been filed by the delinquent party and either the demanded and fully responsive discovery has been provided or exceptional circumstances are demonstrated." Ibid. If a party's answer is "stricken with prejudice, the clerk shall enter a default on the docket as to such party." R. 4:43-1.
Here, the trial court did not err by suppressing defendant's pleadings with prejudice. The record shows that defendant failed to provide a complete response to plaintiff's discovery demands, despite having been repeatedly ordered to do so. As noted previously, the trial court entered an order dated February 7, 2013, which required the parties to re-serve their discovery demands within forty-eight hours, and respond to the discovery requests within thirty days of their receipt.
Thereafter, plaintiff served a discovery request, seeking an extensive array of documents, including copies of defendant's state and federal income tax returns for the previous seven years; records pertaining to defendant's bank accounts; records of defendant's income from all sources for the previous seven years; records of all debts and liabilities; records pertaining to any real estate owned by defendant, or by another person for defendant's benefit; records for any business entity in which defendant had more than a one percent ownership interest; and records pertaining to any savings, checking or money market accounts maintained for defendant's benefit.
In May 2013, plaintiff submitted a certification to the trial court, which detailed defendant's failure to provide discovery. Plaintiff noted that after she filed her motion for relief from the initial divorce judgment, defendant had transferred ownership of his recently-acquired North Carolina home to his second wife. Defendant also failed to provide an accounting of the family business's income and assets. Plaintiff asserted that defendant had given money to relatives in China to hold for him "as loans." According to plaintiff, defendant had transferred many millions of dollars in income from the family business to his second wife.
Plaintiff also stated that defendant had transferred his monies to other persons or entities in an effort to shield these funds from her reach. She said defendant also had established new entities, which he had not disclosed on his CIS. Plaintiff asserted that discovery regarding all of these entities was required since the information was relevant to her claims for equitable distribution and alimony.
The trial court entered an order dated June 7, 2013, finding defendant in violation of the February 7, 2013 order. The court ordered defendant to immediately provide a response to plaintiff's discovery requests. The order specifically required defendant to produce documents pertaining to all accounts, of any kind, held in any banking institution, in defendant's name or for his benefit, along with applications to open the accounts, account statements, ledger sheets evidencing all deposits and withdrawals from the accounts from the time in which such accounts were opened to the present.
On June 17, 2013, defendant wrote to the court, indicating that he was willing to comply with the court's order. However, the record shows that defendant did not produce the records he was ordered to produce. Plaintiff then filed a motion in aid of litigant's rights, seeking a determination that defendant had not complied with the court's orders of February 7, 2013, and June 7, 2013.
The court entered an order dated July 26, 2013, which granted plaintiff's motion and dismissed defendant's pleadings without prejudice pursuant to Rule 4:25-5(a)(1). The order stated that defendant's pleadings would not be reinstated unless he fully complied with the court's prior orders. The order also stated that defendant must comply with the June 7, 2013 order within ten days.
In August 2013, defendant provided plaintiff with copies of 184 checks he had written between 2006 and 2009. The following month, defendant filed a motion to reinstate his pleadings, claiming that he had fully complied with the court's discovery orders. Plaintiff filed a cross-motion to strike or suppress defendant's pleadings with prejudice, and to enter default against defendant.
In her supporting certification, plaintiff again detailed defendant's failure to comply with the court's prior orders compelling discovery. Plaintiff asserted that the random 184 checks that defendant had provided could not be considered compliance with her prior discovery request. The trial court entered an order dated October 25, 2013, which denied defendant's motion and granted plaintiff's cross-motion. The court suppressed defendant's pleadings with prejudice pursuant to Rule 4:23-5(a)(2).
Defendant argues that the court erred because there was a genuine dispute as to whether he had provided a complete response to plaintiff's discovery demands. In support of this argument, defendant relies upon Zimmerman v. United Servs. Auto Ass'n, 260 N.J. Super. 368 (App. Div. 1992). Defendant's reliance upon Zimmerman is misplaced.
In Zimmerman, we held that dismissal or suppression of pleadings pursuant to Rule 4:23-5 is not warranted if there is a genuine dispute as to whether a party has fully responded to a discovery request. Id. at 377-79. We stated, however, that pleadings may be dismissed or suppressed with prejudice when "the answering party has been ordered to answer more fully and fails to do so." Id. at 378.
The record shows that defendant provided only a small portion of the documents that plaintiff sought. Before suppressing defendant's pleadings without prejudice, the court entered two orders compelling discovery. Defendant did not comply with those orders, and he never fully responded to the discovery requests. Moreover, even after the court suppressed his pleadings without prejudice, defendant did not fully respond to plaintiff's discovery demands.
Thus, defendant failed to provide discovery, despite being repeatedly ordered to do so. This was not, as defendant claims, a bona fide dispute as to whether defendant had fully responded to plaintiff's discovery demands. We are therefore convinced the court did not mistakenly exercise its discretion by suppressing defendant's pleadings with prejudice.
IV.
Defendant further argues that the trial court erred by denying his requests for adjournments and by conducting the hearing on equitable distribution and alimony in his absence. Again, we disagree.
The determination as to whether to grant an adjournment rests within the sound discretion of the trial court. J.D. v. M.D.F., 207 N.J. 458, 480 (2011). Trial courts are empowered with "broad discretion to reject a request for an adjournment that is ill founded or designed only to create delay." Ibid. Here, the trial court's refusal to grant defendant's application to adjourn the hearing on equitable distribution and alimony beyond February 21, 2014, was not a mistaken exercise of discretion.
Defendant claims he mailed a letter dated October 21, 2013, to the trial court requesting a six-month adjournment of the case due to certain alleged medical problems. Defendant has included a copy of this letter in his appendix, but there is no indication it was ever filed with the court or served upon plaintiff or her attorney. Indeed, plaintiff's counsel denies receiving the letter.
Similarly, defendant includes in his appendix a copy of a letter dated November 1, 2013, purporting to be from defendant's second wife, which reiterates defendant's request for a six-month adjournment. There is no indication that this letter was ever filed with the court, or served upon plaintiff or her attorney. Plaintiff's attorney also asserts that he never received a copy of this letter.
Furthermore, on January 23, 2014, one day before the scheduled hearing on plaintiff's motion for equitable distribution and alimony, defendant wrote to the court seeking a six-month adjournment. Plaintiff opposed the request. The court granted the application in part, and adjourned the hearing to February 21, 2014. The hearing took place on that date, but defendant did not appear.
We are convinced that the court properly exercised its discretion in refusing to adjourn the matter beyond February 21, 2014. Defendant never provided the court with a statement from any medical practitioner supporting his adjournment requests. Further adjournment would have unduly delayed the proceedings and thwarted plaintiff's efforts to secure a decision on equitable distribution and alimony.
Moreover, defendant's pleadings had been suppressed and default entered against him. Thus, defendant's participation in the hearing would have been strictly limited, had he appeared. See Jugan v. Pollen, 253 N.J. Super. 123, 129 (App. Div. 1992), certif. denied, 138 N.J. 217 (1994). Defendant chose not to appear and provided the court with no credible evidence to justify his non-appearance.
We conclude that, under the circumstances, the trial court did not mistakenly exercise its discretion in denying defendant's adjournment requests.
V.
In addition, defendant argues that the amended final judgment of divorce rests upon insufficient credible evidence in the record. Defendant's arguments are meritless.
A. Equitable Distribution.
Equitable distribution of the parties' marital assets rests within the sound discretion of the trial court. La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000) (citing Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-44 (App. Div. 1978)), certif. denied, 167 N.J. 630 (2001). Therefore, the court's decision on equitable distribution is reviewed for abuse of discretion on appeal. Ibid. "[W]e will affirm an equitable distribution as long as the trial court could reasonably have reached its result from the evidence presented, and the award is not distorted by legal or factual mistake." Ibid. (citing Perkins v. Perkins, 159 N.J. Super. 243, 247-48 (App. Div. 1978)).
Defendant argues that the trial court erred by awarding plaintiff one half of the family business and assets. He contends that G&E International was the only company in which he had an interest. He asserts that there is no evidence that he owned the other companies cited by plaintiff, specifically GECasting, Genband, Castco, Shanghai TongFuji Trade Co. Ltd, and CastcoBank.
We conclude, however, that the award of one half of defendant's interest in defendant's companies was supported by sufficient credible evidence in the record. Defendant conceded he owned G&E International, and he failed to provide discovery regarding the other companies. The court's order does not preclude defendant from establishing, in an appropriate post-judgment collection proceeding, that he did not have an ownership interest in any of the other entities cited by plaintiff.
Defendant also argues there is insufficient credible evidence to support the court's finding that he concealed substantial assets from plaintiff. However, at the hearing, plaintiff presented financial records which showed that defendant had more than $2 million in assets. In addition, defendant's will indicated that he had about $2.2 million in assets. The court properly relied upon the statements in the financial records and the will as support for its finding.
Defendant further contends the court erred by allowing plaintiff to file a notice of lis pendens in North Carolina regarding defendant's property in that state. Defendant argues that his second wife contributed monies from her savings to purchase the home. He also argues that the court improperly considered this property as evidence that he has more than $2 million in assets.
However, at trial, plaintiff testified that immediately upon filing her motion to set aside the initial divorce judgment, defendant transferred the North Carolina property to his second wife, who then transferred the property to an acquaintance in China. Defendant confirmed plaintiff's testimony in his deposition. We are therefore convinced there is sufficient credible evidence in the record to support the court's determination regarding the North Carolina property.
B. Alimony.
As noted, the trial court awarded plaintiff $18,000 per year in alimony, which was one-third of the annual income of $54,000 that defendant reported in 2011. Defendant argues that by the time the court entered the amended final judgment of divorce, he no longer owned or operated the family company. Defendant asserts that as of November 2011, he was only receiving $857 per month in social security benefits. Defendant claims that he has no other income.
Trial courts are vested with broad discretion in awarding alimony. Steneken v. Steneken, 367 N.J. Super. 434-35 (App. Div. 2004), aff'd in part, rev'd in part, 183 N.J. 290 (2005). These determinations are reviewed for abuse of discretion. Ibid.
Although defendant claimed he had retired, he testified at his deposition in 2012 that it was a matter of opinion as to whether he was retired. He conceded that he still owned and operated the family business. Moreover, defendant never provided any updated information as to his salary. We are convinced that, under the circumstances, the trial court did not err by using defendant's last reported annual income as a basis for its alimony determination.
VI.
Defendant contends that the trial court erred by awarding plaintiff attorney's fees in the amount of $229,389.69. He asserts that the court failed to consider whether he had the ability to pay the fees. He also asserts the court did not consider the extent to which plaintiff failed to provide discovery. He contends there was no proof that he took actions which resulted in plaintiff incurring unnecessary counsel fees, and that the court merely "rubber stamped" the fee application. These arguments are totally without merit.
Awards of counsel fees and costs in matrimonial actions rest within the sound discretion of the trial judge. Williams v. Williams, 59 N.J. 229, 233 (1971); N.J.S.A. 2A:34-23; R. 5:3-5(c). In matters in the Family Part, the court may, in its discretion, order that an award of attorney's fees be paid by any party to the action. R. 5:3-5(c).
When granting such an award, the court must consider the following nine factors:
(1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the results obtained; (8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and (9) any other factor bearing on the fairness of an award.
[Ibid.]
Here, the trial court considered and addressed each of the factors in Rule 5:3-5(c). Among other things, the court noted that plaintiff did not have the ability to pay the fees, whereas defendant had the ability to do so. The court took note of defendant's lack of disclosure regarding his assets, which was an attempt to hide his "true wealth." The court noted that defendant had acted in a deceitful manner by failing to provide discovery regarding his assets. The court also found that defendant acted in bad faith by failing to comply with the court's discovery orders, and plaintiff had incurred significant legal costs to set aside the unconscionable marital agreement. The court determined that requiring defendant to pay plaintiff's counsel fees was just and fair.
We are convinced that there is sufficient credible evidence in the record to support the court's findings and its award of counsel fees to plaintiff was not a mistaken exercise of discretion.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION