Opinion
DOCKET NO. A-0892-12T1
06-16-2014
MICHELLE GABRIEL, Plaintiff-Respondent, v. BENJAMIN GABRIEL, Defendant-Appellant.
Marianne R. Mele argued the cause for appellant. Angelo Sarno argued the cause for respondent (Snyder & Sarno, L.L.C., attorneys; Mr. Sarno and Stacey A. Cozewith, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo, Harris and Guadagno.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket No. FM-14-559-09.
Marianne R. Mele argued the cause for appellant.
Angelo Sarno argued the cause for respondent (Snyder & Sarno, L.L.C., attorneys; Mr. Sarno and Stacey A. Cozewith, of counsel and on the brief). PER CURIAM
Defendant Benjamin Gabriel appeals from a September 21, 2012 post-divorce judgment order of the Family Part denying his motion for a reduction in his alimony obligation to plaintiff, Michelle Gabriel. Defendant also appeals from a later order of April 5 2013, dismissing without prejudice his claim to have the sum of $8622.76, which was distributed to plaintiff from his bankruptcy estate, credited to his probation account. For the reasons that follow, we affirm the first order and remand as to the second.
By way of background, the parties were married on December 31, 1995 and divorced fifteen years later by final judgment of divorce (FJD) on April 19, 2011. They have two children, a son, born in 2001, and a daughter, born in 2003.
During the course of their marriage, in September 1999, the parties formed a business and opened a jewelry store, Gabriel Jewelers, as defendant had previously worked in his family's jewelry business and had operated a jewelry booth of his own for a decade. Plaintiff, who had been a pharmaceutical sales representative, had also worked at the jewelry booth part-time. The parties ran the store together, although plaintiff eventually worked part-time in order to raise their children. Plaintiff was paid $50,000 per year and defendant received $75,000 per year from the business. The parties stipulated that their pre-tax income for 2006 to 2008 was $293,689, $320,576 and $212,308, respectively.
The parties separated on October 27, 2008, and thereafter signed a consent order establishing a sealed bid process whereby one would buy-out the other's interest in the business; at the time, the inventory was valued at $1.15 million. Defendant bought out plaintiff for a little over $400,000 and acquired the business as of April 1, 2009. He then formed a new business entity with his parents called Gabriel Jewelers, L.L.C. According to defendant, he thereafter conveyed his interest in the business to his father for $75,000, although he produced no supporting documentation. In any event, defendant continued to operate the business with a $75,000 yearly salary.
A pendente lite support order provided that defendant pay plaintiff $7200 per month.
The divorce trial commenced in June 2010 and did not end until January 28, 2011. In the April 19, 2011 FJD, the court, among other things, awarded plaintiff $3358 per month in spousal support and $597 per month in child support. In fixing these amounts, the judge imputed yearly income to defendant of $175,000 based on his ownership of Gabriel Jewelers, which the judge found, contrary to defendant's testimony, he did not convey to his parents, given the lack of any supporting documentation. The judge also imputed $60,000 annual income to plaintiff based on her previous experience in pharmaceutical sales. The judge further found that during their marriage, the parties "lived a comfortable, upper middle-class lifestyle."
Pertinent for present purposes, the judge found that defendant had not testified credibly "as to material issues," specifically referencing a past incident wherein defendant had falsely reported his income as only $15,000 after he was sued for child support for another child in Texas. Furthermore, the judge found that "defendant has proceeded in considerable bad faith throughout this litigation," and on April 17, 2012, awarded plaintiff attorney's fees and costs, calculated at $98,998.75.
Defendant did not appeal from the FJD.
Following entry of the FJD, defendant filed for Chapter 7 bankruptcy, which stayed plaintiff's enforcement action in the Family Part. Later, on December 6, 2011, the bankruptcy court lifted the automatic stay and plaintiff re-filed her motion for enforcement of defendant's support obligations on December 23, 2011, inasmuch as defendant had never paid alimony since entry of the FJD. Ultimately, this motion was resolved by the execution of two consent orders on March 2 and March 5, 2012.
In the meantime, on December 27, 2011, plaintiff filed a notice of claim in the bankruptcy action for $363,774.52 (later amended to $344,539.71), which included alimony and child support arrears as well as attorney's fees and costs awarded by the FJD and the April 17, 2012 order. Defendant was granted a bankruptcy discharge on April 10, 2012. His obligations to plaintiff under the FJD, however, were not discharged in the bankruptcy.
On May 16, 2012, defendant filed an application in the Family Part seeking to have his non-spousal debts under the FJD be deemed satisfied based on his bankruptcy filing. A consent order resolving these claims was entered on July 18, 2012.
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On July 31, 2012, and only fifteen months after entry of the FJD, defendant moved to decrease his alimony obligation. He alleged that his divorce-related expenses of $6118 ($3358 in alimony; $1083 in arrears; $579 in child support; and $1098 for health insurance for him and his two children) far exceeded his net monthly income of $2811.60 per month, and that he is living on the generosity of family and friends. He claimed that, by contrast, plaintiff had opened her own jewelry business since the divorce and thus is self-supporting.
Plaintiff cross-moved for, among other things, enforcement of the FJD and subsequent orders. Following argument, the Family Part judge denied defendant's motion to reduce his spousal obligation, finding that defendant had not established a prima facie case of changed circumstances to warrant a decrease. The judge reasoned:
that Defendant has not met his burden, as he has not demonstrated a substantial change in circumstances. While he asserts that he has experienced an involuntary change in economic circumstances, his proofs and the background recited above do not support his argument. For example, his CIS from time of final hearing [in the divorce action] reflects a marital lifestyle of $24,000 per month, when that same CIS reflected his gross income of $75,000 per year. To say that these figures "don't add up," is an understatement. Also a comparison of his partnership return from time of final hearing to the 2011 tax return attached to his updated CIS shows that last year, the jewelry business' revenue increased by over $100,000. Also, he confirms in his exhibits that in April, 2012, he received a discharge in his bankruptcy proceedings. Next, he has failed to indicate substantially why the imputation of income, which was carefully analyzed by the Trial Court, should be rejected, especially since Defendant advanced many of the same arguments at time of trial that he is advancing now. Also, as indicated above, a moving party must show a permanent, rather than merely a temporary, change in economic circumstances, and Defendant continues to urge that he never made anywhere near $175,000 while running his business. The Trial Court was well aware of the parties' finances at the time of final hearing, the sagging economy, and the gaps in Defendant's proofs. He has not appealed the Trial Court's decision, nor has the Trial Court's decision been reconsidered as to support . . . . Defendant's application is made less than two years following final hearing, and only months after the Trial Court in April, 2012, took another look at its proofs when addressing Defendant's income. Moreover, the Defendant continues to work in the same jewelry business with his parents and his proofs remain lacking in terms of any State filings
confirming a transfer to his parents. Lastly, for reasons unexplained, Defendant submits an updated, handwritten CIS [] bearing an April, 2012 date, and signed in July, 2012, which does not show his true expenses, since he admits he is not paying rent to his "friend" (later admitted to be his fiancé), and that same CIS reflects that two children primarily reside with Defendant, when they do not. Given all of the above, this Court is not persuaded that it should disturb the Trial Court's decision on alimony and child support.
Defendant appealed and, while the appeal was pending, filed a motion in the Family Part seeking a credit on his domestic support account with the Department of Probation for an amount distributed from defendant's bankruptcy (an $8622.76 check to plaintiff in September 2012). On April 5, 2013, the judge denied defendant's request for the credit without prejudice, declining to rule on the issue due to the pending appeal. Defendant moved to amend his notice of appeal to include the April 5, 2013 order as well.
On appeal, defendant raises the following issues:
I. THE LOWER COURT ERRED IN DENYING A PLENARY HEARING FOR REDUCTION OF ALIMONY BASED ON THE CHANGED CIRCUMSTANCES.In his supplemental brief, defendant also argues:
II. THE LOWER COURT ERRED IN DENYING A PLENARY HEARING FOR REDUCTION OF ALIMONY BASED ON THE SEVERE DECREASE IN DEFENDANT'S SALARY.
III. THE LOWER COURT ERRED IN DENYING A PLENARY HEARING FOR REDUCTION OF
ALIMONY BASED ON PLAINTIFF'S DRAMATIC INCREASE IN SALARY AND LIFESTYLE.
IV. THE LOWER COURT ERRED IN DENYING A PLENARY HEARING BASED ON THE REALITY THAT NONE OF THE $3358 ALIMONY PER MONTH IS NEEDED BY PLAINTIFF WHO IS LIVING A LIFESTYLE THAT FAR EXCEEDS THAT OF THE MARRIAGE, NOR HAS IT EVER BEEN PAID.
V. THE LOWER COURT ERRED IN DENYING A PLENARY HEARING IN THAT DEFENDANT'S FINANCIAL RUIN IS PERMANENT AND ESCALATING DESPITE THE DISCHARGE IN BANKRUPTCY AND DEFENDANT CANNOT SUPPORT HIMSELF AND IS CLOSE TO BECOMING DESTITUTE.
VI. THE APPELLATE DIVISION HAS THE AUTHORITY TO ISSUE AN ORDER THAT A DOMESTIC SUPPORT DISTRIBUTION IN BANKRUPTCY BE CREDITED AGAINST A PARTY'S ARREARAGES WITH PROBATION.
VII. ALTERNATIVELY, THE APPELLATE COURT CAN REMAND THE CASE TO THE FAMILY COURT TO ISSUE AN ORDER THAT A DOMESTIC SUPPORT DISTRIBUTION IN BANKRUPTCY BE CREDITED AGAINST A PARTY'S ARREARAGES WITH PROBATION.
VIII. A DISTRIBUTION FROM A PARTY CLEARLY DESIGNATED AS DOMESTIC SUPPORT PURSUANT TO A BANKRUPTCY TRUSTEE'S FINAL REPORT SHOULD BE CREDITED AGAINST THE PARTY'S OUTSTANDING SUPPORT ARREARAGES WITH PROBATION.
I.
As a threshold matter, we owe "particular deference" to the decisions of the family court because of its "special jurisdiction and expertise in family matters." Cesare v. Cesare, 154 N.J. 394, 413 (1998). Specifically, "[w]hether an alimony obligation should be modified based upon a claim of changed circumstances rests within a Family Part judge's sound discretion." Larbig v. Larbig, 384 N.J. Super. 17, 21 (App. Div. 2006). "Each and every motion to modify an alimony obligation 'rests upon its own particular footing and the appellate court must give due recognition to the wide discretion which our law rightly affords to the trial judges who deal with these matters.'" Ibid. (quoting Martindell v. Martindell, 21 N.J. 341, 355 (1956)).
Moreover, "[g]enerally, the special jurisdiction and expertise of the family court requires that we defer to factual determinations if they are supported by adequate, substantial, and credible evidence in the record." Milne v. Goldenberg, 428 N.J. Super. 184, 197 (App. Div. 2012). Therefore, "[t]he findings of a trial judge are entitled to great deference and will be overturned only if '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.'" Platt v. Platt, 384 N.J. Super. 418, 425 (App. Div. 2006) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)).
Alimony awards may be modified. N.J.S.A. 2A:34-23. "The party seeking modification has the burden of demonstrating a change in circumstances warranting relief from the support or maintenance obligations." Innes v. Innes, 117 N.J. 496, 504 (1990). The party moving for modification must present a prima facie showing of changed circumstances to justify a plenary hearing on the matter. Miller v. Miller, 160 N.J. 408, 420 (1999). Only after such a showing is made will the court order discovery and conduct a hearing to "determine the supporting spouse's ability to pay." Ibid.
Alimony is generally set based on the marital standard of living. Lepis v. Lepis, 83 N.J. 139, 150 (1980) ("The supporting spouse's obligation is mainly determined by the quality of economic life during the marriage, not bare survival."). Alimony amounts thus "'contemplate[s][] continued maintenance at the standard of living [the spouse] had become accustomed to prior to the separation.'" Ibid. (quoting Khalaf v. Khalaf, 58 N.J. 63, 69 (1971)). These awards, however, can be modified based on the "changed circumstances" of the parties, which may include
(1) an increase in the cost of living; (2) increase or decrease in the supporting spouse's income; (3) illness, disability or infirmity arising after the original judgment; (4) the dependent spouse's loss of a house or apartment; (5) the dependent
spouse's cohabitation with another; (6) subsequent employment by the dependent spouse; and (7) changes in federal income tax law.
[Id. at 151 (internal citations omitted).]
If the movant is arguing changed circumstances based on a reduction in income (Factor Two), to establish a prima facie case, the movant must show specifically "that changed circumstances have substantially impaired the ability to support himself or herself." Crews v. Crews, 164 N.J. 11, 28 (2000) (quoting Lepis, supra, 83 N.J. at 157). This standard "must be understood to mean the ability to maintain a standard of living reasonably comparable to the standard enjoyed during the marriage." Ibid.
Additionally, "it is not enough that an obligor demonstrate a reduction in income; the obligor must also demonstrate how he or she has attempted to improve the diminishing circumstances." Donnelly v. Donnelly, 405 N.J. Super. 117, 130 n.5 (App. Div. 2009); see also Aronson v. Aronson, 245 N.J. Super. 354, 361 (App. Div. 1991) (finding no prima facie case of changed circumstances when "what [movant] did was to allow his practice to continue to diminish unchecked while bemoaning his fate").
The movant must also show that the reduction in income is not merely temporary. Innes, supra, 117 N.J. at 504. In considering whether the reduction will be long-term, courts have looked at, among other factors, the time between the entry of the FJD and the motion for modification. Larbig, supra, 3 84 N.J. Super. at 19 (rejecting a motion for modification filed only twenty months after the entry of the FJD). However, there is no brightline rule to measure when a changed circumstance is sufficient to allow relief. Id. at 23. In Donnelly, supra, we affirmed the family court's denial of movant's motion for modification, holding that "the trial judge properly exercised his discretion in concluding that [movant] had returned to court far too soon to obtain relief[,] [c]onsidering that th[e] motion [at issue] was filed only nine months after the denial of the first Lepis motion." 405 N.J. Super. at 128. We concluded that the short timeframe meant that the movant "failed to demonstrate that his alleged change in circumstances was anything but temporary." Ibid.
Moreover, courts apply closer scrutiny to "what constitutes a temporary change in income" when the movant is self-employed. Ibid. In Donnelly, supra, we also noted that a self-employed movant is "'in a better position to present an unrealistic picture of his or her actual income than a W-2 earner[,]'" and thus "'what constitutes a temporary change in income should be viewed more expansively when urged by a self-employed obligor[.]'" Id. at 128-29 (quoting Larbig, supra, 384 N.J. Super. at 23).
Changed circumstances can also be established based on the supported spouse's improved economic situation (Factor Six). Stamberg v. Stamberg, 302 N.J. Super. 35, 42 (App. Div. 1997) ("[A] payor spouse is as much entitled to a reconsideration of alimony where there has been a significant change for the better in the circumstances of the dependent spouse as where there has been a significant change for the worse in the payor's own circumstances."); Aronson, supra, 245 N.J. Super. at 364-65. Thus, the movant could make a prima facie case for changed circumstances by showing improvements in the supporting spouse's financial status. Stamberg, supra, 302 N.J. Super. at 42.
Governed by these principles, we discern no abuse of discretion in the judge's denial of defendant's motion to reduce his alimony obligation. As noted, we defer to the Family Part judge, who discredited defendant's proof of his present financial condition, noting that "the [c]ourt is well aware of the [d]efendant's extensive delinquencies in payment [of support]" and that "the bench warrant threat is necessary to impress upon him that it is imperative he pay the support ordered, rather than pick and choose what he will pay." And, defendant presented no evidence, besides perhaps proof of his bankruptcy filing, that he had made any attempt to ameliorate his business losses.
Similarly lacking is any documentation in support of defendant's claim that he sold his interest in Gabriel Jewelers to his parents. Moreover, here, as in Donnelly, supra, defendant is self-employed to the extent that he either works for a business that he owns or that is owned by his parents. He is, therefore, "in a better position to present an unrealistic picture of his [] actual income than a W-2 earner[,]" 405 N.J. Super. at 128-29, and thus the judge properly considered his proof of a declining income skeptically. In fact, by having his debts discharged in bankruptcy, defendant appears to have actually improved his financial condition. And, as we stated in Donnelly, supra, the judge was entitled to rely upon her own experience with the case in making her determination about whether changed circumstances genuinely existed. Ibid.
Even assuming, however, a decline in the income imputed to defendant in the FJD, not enough time has elapsed since then to warrant a finding that this changed circumstance is permanent in nature. Defendant moved for a reduction in his alimony obligation only fifteen months after entry of the FJD in April 2011, which, in our view, is too short a time to indicate other than, at most, a temporary condition. See Donnelly, supra, 405 N.J. Super. at 128; Larbig, supra, 384 N.J. Super. at 19. This is especially true since defendant had advanced many of the same arguments at time of trial as he did on his post-FJD motion to reduce his spousal support obligation.
Lastly, defendant's account of plaintiff's allegedly improved financial condition is equally unsupported in the record. As the motion judge noted, "there are no proofs to suggest plaintiff's income is in [the] range [suggested by defendant]."
Consequently, we find the court's denial of defendant's motion for modification of alimony is based on sufficient, credible evidence in the record and does not amount to an abuse of discretion.
II.
Defendant next argues that we should take original jurisdiction and determine whether defendant's bankruptcy payment to plaintiff should be credited against his outstanding support arrearages, because no further fact-finding is necessary and the issue is thus a "clear question of law." We disagree, and decline the invitation.
"The appellate court may exercise such original jurisdiction as is necessary to the complete determination of any matter on review." R. 2:10-5. "[T]he exercise of original jurisdiction is appropriate when there is 'public interest in an expeditious disposition of the significant issues raised[.]'" Price v. Himeji, L.L.C., 214 N.J. 263, 294 (2013) (quoting Karins v. City of Atlantic City, 152 N.J. 532, 540-41 (1998)). Moreover, we should generally not exercise original jurisdiction if fact-finding would be necessary to resolve the case. See State v. Santos, 210 N.J. 129, 142 (2012) (noting that Rule 2:10-5 "allow[s the] appellate court to exercise original jurisdiction to eliminate unnecessary further litigation, but discourag[es] its use if fact-finding is involved[.]"). Thus, original jurisdiction should be exercised sparingly. Tomaino v. Burman, 364 N.J. Super. 224, 234-35 (App. Div. 2003) (internal quotations omitted) ("Our original fact-finding authority must be exercised only with great frugality and in none but a clear case free of doubt."), certif. denied, 179 N.J. 310 (2004).
Here, the motion court made no findings of fact or conclusions of law in light of the pending appeal, although it did suggest that further factual development may be indicated:
Defendant asserts that Plaintiff received [$8,622.76] from the Chapter 7 Bankruptcy Distribution and will not give him a credit against his support arrearages. Plaintiff asserts that the money she received was the entire remainder of Defendant's estate after payment of the bankruptcy Trustee and the Trustee's attorney. She states that the payment was towards the $363,7 75 that Defendant owed to her under the [FJD] andIn fact, contrary to defendant's contention that the nature of plaintiff's claim in bankruptcy is undisputed, the certification of plaintiff's counsel in the bankruptcy matter suggests that the attorney's fees and court costs allocated to defendant in the FJD should count as domestic support under the United States Bankruptcy Code. In other words, there appear to be questions of fact and law as to which obligations of defendant were actually included in plaintiff's proof of claim in the bankruptcy court, that is, whether the entire bankruptcy payment to plaintiff of $8622.76 should be credited to his arrears account with the Department of Probation, or whether that sum should be allocated to plaintiff's additional claims, including attorney's and expert fees. Under the circumstances, then, the exercise of our original jurisdiction would be inappropriate. Because the motion judge denied defendant's application for a full credit without prejudice, we remand to the Family Part for resolution of this issue.
should not be credited against his support arrears. As this issue has been raised while Defendant's appeal is pending, the Court declines to adjudicate this issue, pending resolution of the appeal. While it would appear that Defendant would be entitled to this credit against his arrears, as his support obligations were not discharged in bankruptcy, this Court suggests the parties' counsel communicate with the bankruptcy judge who presided over their matter to determine if the disbursement was for a purpose other than to be applied to Plaintiff's support arrears. In any event, this Court is not in a position of adjudicating the nature of Defendant's payment due to the pending appeal.
The order of September 21, 2012 is affirmed. We remand the issue addressed in the April 5, 2013 order to the Family Part.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION