N.C., Plaintiff–Appellant, v. D.C., Defendant–Respondent. (2014)

In this post-judgment matrimonial action, plaintiff N.C. (husband) appeals from a January 10, 2012 order that vacated the parties' 2009 modified Marital Settlement Agreement (MSA) and Addendum, adjusted equitable distribution, and awarded defendant D.C. (wife) $2000 in monthly permanent alimony, $110 in weekly child support, and $25,000 in counsel fees.

On appeal, husband contends the judge erred by vacating the modified MSA. Alternatively, he claims the judge erred by modifying equitable distribution;  awarding wife permanent alimony, child support and counsel fees;  and denying his recusal motion.   We disagree and affirm all aspects of the order.

The parties were married in 1988.   Husband was twenty-eight and wife twenty-seven years old.   Twenty years after they married, they entered into a MSA. The next year, 2009, husband filed a complaint for divorce that incorporated a modified MSA dated the prior week.   Wife signed an “acknowledgment of service;  waiver of time to file answer;  [and] consent to enter judgment.”

The court granted husband's motion for default judgment without the appearance of either party, and entered a dual final judgment of divorce (JOD) incorporating the modified MSA in September 2009.   The following month, the parties entered into an Addendum to the modified MSA.

Six months later, after retaining counsel for the first time, wife moved to vacate the JOD, the modified MSA, and Addendum based on duress, unfairness, and fraud.

A plenary hearing was held before the family judge between October 2010 and May 2011.   In February 2011, husband filed an order to show cause, seeking to recuse the judge on the basis that she was biased because he, the movant, claimed to have had an ex parte communication with the judge in a restaurant in April 2010.

Husband's Education & Employment

Husband received an undergraduate degree in accounting and, as an income tax preparer and IRS-enrolled agent, he began his own business, [N.C.] & Associates, Inc., in 1987.   Sometime in late 2009, the company “went out of business,” and was replaced with [N.C.] & Associates I, LLC. Husband remained as owner.

Husband testified that he believed he would be dead in five years due to wife poisoning him, and wanted to “rid [himself] of everything” and retire.   In March 2010, husband sold the business to a “reput[able]” CPA, for $105,000.   The CPA paid $5000;  the remaining balance was to be paid in ten annual $10,000 increments, commencing on May 1, 2011.   As a condition of the sale, husband continued working for the business part-time as a tax preparer and consultant during tax season at an hourly rate of $15.   In addition, the CPA paid husband $3000 per month in rent for the building out of which the business operated that husband owned.   In 2011, husband also received $8000 in gross receipts from [N.C.] & Associates, II, LLC, a payroll company he owned.

Wife's Education & Employment

Wife received an undergraduate degree in elementary education and taught first grade at a Catholic school for three years.   She sought to obtain her teaching certification eighteen times, but never passed the examination.   From 1988 through 2009, wife also worked part-time as a secretary in husband's accounting business during tax season.

At the time of trial, wife worked nineteen hours per week at $15 per hour as a teacher's aide for special-needs children.   She also worked eight hours per week as a school cafeteria worker at $8 per hour.

Preparation & Execution of 2009 Modified MSA

Wife testified that husband frequently accused her of infidelity, usually when husband returned home in an inebriated condition late at night.   Wife voluntarily took lie detector tests to disprove those allegations.

Wife claimed that the accusations resulted in beatings and physical assaults by husband.   At least one such instance in 2000 resulted in an emergency room admission.   During that admission, wife told the treating physician that she had fallen “down the steps” because she “didn't want to have [husband] arrested ․ [and] put [her] girls through that.”   Wife never sought a domestic violence restraining order and husband denied these allegations.

Wife testified that after infidelity accusations in 2005, husband forced her to sign a quitclaim deed transferring ownership of six marital properties to him for $1 consideration.   Husband then transferred the properties to his friend, D.K. After wife passed a lie detector test, one of those properties was transferred back to her individually.   Two of the remaining properties were transferred to limited liability companies ( [D.C.] I, LLC and [D.C.] II, LLC) created by husband.   Wife denied owning those companies, although husband testified she did.

The parties signed a MSA dated April 25, 2008, without consulting counsel.   The agreement provided the children were emancipated “upon completion of high school,” and that the parties would equally contribute to college expenses to the extent they had the “financial means to do so.”

Wife waived alimony, and husband agreed to pay wife's car insurance, health insurance, and utility expenses for five years.

With respect to equitable distribution, wife received the marital home and one other marital property.   Husband received the other seven of the parties' nine properties.   According to the respective valuations of the properties in the 2008 MSA, husband's properties were cumulatively valued at $1,130,000, while wife's were valued at $510,000.   The parties equally divided a savings account valued at $120,000.   Wife also received two retirement accounts valued at $30,000 total and “household furnishings and jewelry” valued at $175,000.   Both parties retained their respective cars, and husband retained his paintings.

Wife denied knowledge of the contents of the 2008 MSA, claiming that she had never seen that document before trial, while husband testified the parties mutually agreed to its terms.   Husband testified that his friend, a paralegal, put the agreement “in proper form.”   The paralegal similarly testified that he witnessed the parties discuss and mutually agree to all of the terms in the 2008 MSA.

In August 2009, the parties and children drove to Florida to take the eldest child to college.   The trip was extremely acrimonious after the parties stopped mid-way in Myrtle Beach to visit wife's friends, and husband again accused wife of infidelity.

Within a week of returning from Florida, husband presented wife with a modified MSA, demanding she either admit to having an affair on the trip or sign the agreement.   Wife testified that she met with husband and the paralegal once before signing the modified MSA. Neither party consulted with counsel.

According to wife, on the day that husband and the paralegal presented her with the modified MSA for signature, she was distressed about her marriage ending and consumed with worry about providing for her children.   She merely “skimmed” the agreement rather than “read[ing] everything.”   When husband and the paralegal reviewed the document with wife, she was not attentive to its contents, only stating she needed a new car for the children's safety.

Just prior to signing the modified MSA on August 21, husband walked with wife outside, “badgering [her] about ․ cheating.”   Since it was clear to wife that husband did not believe she had been faithful, she agreed to sign the agreement without “really ․ look[ing] at it.”   She signed a one-page document in the presence of a bank employee and licensed notary.   The notary testified he normally did not notarize a single page, but he received authorization from his manager to do so on this occasion.

On September 1, 2009, the parties signed a one-page document at husband's accounting office in the presence of a secretary who was a notary.   That page was the last page of the two-page document that purported to acknowledge service of the divorce complaint on wife and waive her right to answer.   That document also stated she consented to the relief requested in the divorce complaint.

At trial, wife was shown the entire divorce complaint and acknowledgment of service.   She testified she had never seen the divorce complaint before.   Wife stated she did not understand the terminology used in the acknowledgment of service.

Alimony

Husband testified in detail about his amendments to the 2008 and 2007 tax returns filed separately for himself and wife.   In 2008, husband adjusted his gross income from $9359 to $133,172 and wife's from $45,325 to $169,352.   Similarly, in 2007, husband adjusted his gross income from $24,817 to $163,943, and wife's from $37,755 to $177,498.   Husband did not specify how he arrived at those figures, explaining that it was “very difficult” to “patch” those numbers together.¹

As to her reported income in 2007 and 2008, wife testified that the amended tax returns were incorrect.   According to wife's social security earnings statement, her average total annual salary for the years 2005 through 2009 was $10,120.

The modified MSA provided for rehabilitative alimony to wife in the weekly amount of $100 for five years.   In addition, husband was obligated to pay wife's health, automobile, and homeowner insurances, as well as her utility expenses, property taxes, and the children's clothing and school supplies.

In October 2009, the parties executed the Addendum, which provided wife with $1700 in monthly rehabilitative alimony for five years and relieved husband from paying any other support.

According to wife, husband presented her with the Addendum, stating she needed to execute it.   According to husband, the parties discussed the alimony clause extensively.   The paralegal testified he prepared the Addendum based on wife's desire to receive one check per month.

Equitable Distribution

A. Marital Home

The parties agreed in the modified MSA that the value of the marital home was $450,000.   After hearing testimony from both parties' experts regarding the home's value, the judge awarded the marital home to wife and valued it at $325,000.

B. The Northfield Property

The 2009 MSA awarded the Northfield Property to husband, with a value of $225,000.   He testified the property generated monthly rental income of $500.   As of February 1992, the property was titled to wife.   By deed dated October 4, 2005, it was transferred to husband.   By a separate deed of the same date, it was transferred to D.K. In December 2005, it was transferred to [D.C.] II, LLC. In March 2010, [D.C.] II, LLC, which husband solely owned, transferred the property to D.K.

The judge voided the property transfer to D.K. pursuant to the Uniform Fraudulent Conveyance Act, N.J.S.A. 25:2–20 to –34, and awarded the property to wife.

C. The Florida Property

The 2008 MSA distributed the Florida property to husband, while the modified MSA distributed it to wife.   The Addendum stated that the property's deed “shall remain” in husband's name, but “ownership of the house shall be with” wife, who “will assume all liability and responsibility arising from said property.”   In addition, the Addendum stated that the parties and their children “shall be granted” a “[l]ife [e]state” in the property.

According to husband, the parties agreed that wife owned the property for her lifetime.   Nevertheless, the property remained deeded to him “so [wife] would pay less property tax.”   According to wife, she believed she owned the property free of all encumbrances.   When questioned regarding the reason for not having the property deeded to her, wife explained husband said it was necessary for insurance purposes.   The judge awarded the property to wife, “free and clear of any life estate that may have been created.”

Child Support

The parties have four children.   Both the 2008 and 2009 MSAs provided that the parties “agree[d] to support the minor children while in their individual care and custody.”   The Addendum provided that the parties would equally share in the joint custody of the children.

Counsel Fees

As of June 20, 2011, wife had paid her attorney $40,193.71, and still owed $33,577.37.   According to the judge's written opinion, husband had incurred in excess of $80,000 in fees and paid $30,000 as of May 10, 2011.

I

Husband contends on appeal that the judge erred by vacating the modified MSA. After summarizing the circumstances surrounding the preparation and execution of the modified MSA, the judge found that husband's conduct inducing wife to “sign the divorce documents, acknowledgement of service and waiver and the [modified MSA] ․ signature page” was both “coerc[ive] and dece[ptive].”   The judge found that “it was without the full knowledge and understanding of the [wife].”

The judge recounted wife's testimony about suffering from abuse and found that the acrimonious relationship and constant accusations of infidelity “influenced the state of mind of the [wife] when she was presented with the paralegal and copies of a[M]SA to modify and sign.”   The judge concluded that, “[g]iven the [wife]'s state of mind and the [husband]'s clear intention to design their ultimate separation,” the modified MSA “was not entered into by the [wife] knowingly with the full understanding of its provisions.”   The judge made detailed credibility findings, concluding that wife was more credible than husband, especially with respect to the circumstances surrounding the preparation and execution of the modified MSA and her state of mind at the time she signed the agreement.

Rule 4:50–1 provides for relief from a judgment or order due to “fraud ․ misrepresentation, or other misconduct of an adverse party,” or “any other reason justifying relief.”   R. 4:50–1(c), (f).  “A motion under Rule 4:50–1 is addressed to the sound discretion of the trial court[.]”  Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994).

“The scope of appellate review of a trial court's fact-finding function is limited.   The general rule is that findings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence.”  Cesare v. Cesare, 154 N.J. 394, 411–12 (1998).  “Because of the family courts' special ․ expertise in family matters, appellate courts should accord deference to family court factfinding.”  Id. at 413.   Settlement agreements that are procured by fraud, duress, coercion, or are otherwise entered into involuntarily “must be set aside.”  Peskin v. Peskin, 271 N.J.Super. 261, 276 (App.Div.), certif. denied, 137 N.J. 165 (1994).   The judge's conclusions were supported by adequate, substantial credible evidence.   It is notable that because the JOD, which incorporated the modified MSA, was entered by default, wife was not questioned by the court as to whether she understood and believed the provisions of the modified MSA to be reasonable.

II

Husband contends that the judge erred by changing certain equitable distribution provisions of the modified MSA, including valuation of the marital home, distribution of the Northfield property to wife, and voidance of the life estate interest in the Florida property.   He also claims the judge failed to consider the equitable distribution factors in N.J.S.A. 2A:34–23.1.

We review an equitable distribution award for an abuse of discretion.   Savoie v. Savoie, 245 N.J.Super. 1, 6 (App.Div.1990).   Courts are vested with the “equitable authority” to modify or reform MSAs to “reflect the strong public and statutory purpose of ensuring fairness and equity in the dissolution of marriages.”  Miller v. Miller, 160 N.J. 408, 418 (1999).

With respect to the Northfield property, husband contends that the judge violated D.K.'s constitutional rights by voiding the property conveyance without joining him as a party to the post-judgment proceeding.   Husband lacks standing to claim that a non-party's constitutional rights were violated.   See Jersey Shore Med. Ctr.-Fitkin Hosp. v. Baum, 84 N.J. 137, 144 (1980) ( “Ordinarily, a litigant may not claim standing to assert the rights of a third party.”).

Regarding the Florida property, husband argues that the judge “gave no clear explanation” for awarding wife full title to the property.   We disagree.   The judge's finding that it was “the mutual intent of the parties ․ for ․ [wife] to receive an interest in th[e] property and be responsible for ․ [it] as if she were the full owner” was fully supported by the evidence.

In addition, husband claims that the judge misstated the equitable distribution each party received under the 2009 modified MSA because her calculations did not account for other asset distributions, such as personal property and retirement accounts.   However, the judge's “Equitable Distribution Worksheet,” attached to her written opinion, makes clear that she considered all of the assets distributed under the modified MSA.

Finally, husband claims the court erred by failing to apply the equitable distribution factors set forth in N.J.S.A. 2A:34–23.1 when redistributing the marital property.  “[T]he goal of equitable distribution ․ is to effect a fair and just division of marital [property].”  Steneken v. Steneken, 183 N.J. 290, 299 (2005) (internal quotation marks and citation omitted).   The judge must “first decide what specific property of each spouse is eligible for distribution.   Secondly, [she] must determine its value for purposes of such distribution.   Thirdly, [she] must decide how such allocation can most equitably be made.”  Rothman v. Rothman, 65 N.J. 219, 232 (1974).   In addition, the judge must consider the statutory factors set forth in N.J.S.A. 2A:34–23.1.

The judge gave detailed reasons for her findings as to value and division, which are supported by adequate, substantial credible evidence.   Even though the judge did not make express findings as to every equitable distribution factor, “the resultant award of equitable distribution would remain unchanged had they been expressly considered and applied.”  Winer v. Winer, 241 N.J.Super. 510, 524 (App.Div.1990).   That is, the judge's modification furthered the purpose of equitable distribution by effectuating a fair and just division of the marital assets as demonstrated by the court's “Equitable Distribution Worksheet.”   Moreover, the judge made express findings in her award of permanent alimony.   Those alimony factors overlap with the equitable distribution factors, and thus the judge considered the majority of the equitable distribution factors.   Compare N.J.S.A. 2A:34–23(b) with N.J.S.A. 2A:34–23.1.

III

Husband contends the judge erred by awarding permanent alimony, imputing $60,000 of annual income to him, and improperly analyzing N.J.S.A. 2A:34–23(b)(4) (marital standard of living) and (b)(10) (equitable distribution award).

The judge found that the Addendum, which provided wife with $1700 in rehabilitative alimony for five years, “fail[ed] to address the appropriate level of spousal support” because “the evidence adduced at trial showed ․ [that] the household budget far exceeded” that amount.   The judge found that husband's “inability to articulate coherent testimony on [the parties' combined income] affects the [husband]'s claim of inability to afford a certain level of alimony.”

In awarding permanent alimony of only $300 more per month than the agreed-upon five-year term alimony, the judge made specific fact-findings with respect to each of the alimony factors enumerated at N.J.S.A. 2A:34–23(b).

We review an alimony award for an abuse of discretion.  Heinl v. Heinl, 287 N.J.Super. 337, 345 (App.Div.1996).  “[T]he goal of a proper alimony award is to assist the supported spouse in achieving a lifestyle that is reasonably comparable to the one enjoyed while living with the supporting spouse during the marriage.”  Crews v. Crews, 164 N.J. 11, 16 (2000).   In making an alimony award in divorce actions, courts may award “permanent alimony [,] rehabilitative alimony[,] limited duration alimony or reimbursement alimony to either party” so long as the factors enumerated in N.J.S.A. 2A:34–23(b) are considered.

Husband claims the judge failed to explain her reasons for awarding permanent alimony.   The judge made specific findings concerning the statutory factors delineated by N.J.S.A. 2A:34–23(b), including the length of the marriage, the parties' ages, health, standard of living, and their projected expenses.   The judge also considered the disparity in their income and the distribution of real and personal property.

Next, husband argues that the judge failed to explain her reasons for imputing $60,000 of income to him.   The record supported the imputation because husband testified he earned approximately $450 per week during tax season, $3000 per month in rental income, and $10,000 per year from the sale of his accounting business, all of which totaled more than $60,000.

In addition, husband contends the judge improperly analyzed the parties' marital standard of living.   The judge, however, found that:

The standard of living during the marriage was very good.   The parties testified that they travelled with the children, had large birthday parties for the girls, owned multiple properties and maintained a nice home in Northfield.   The parties each testified that they will not be able to maintain the same standard of living after the divorce.   The [wife] has reduced her budget to eliminate parties, savings, gifts, travelling and other aspects that the family had engaged in.

IV

Husband claims the monthly child support award was premature because the parties' custody arrangement was not finalized.   In awarding wife $110 in weekly child support, the judge applied the Child Support Guidelines, Pressler & Verniero, Current N.J. Court Rules, Appendix IX–A to R. 5:6A at 2579 (2014), “used an annual gross income of $60,000 for [husband] and gross income of $1225 per month for [wife],” and credited husband with “parenting time of three overnights per week.”

“An award of [child] support is within the discretion of the trial court.”   Raynor v. Raynor, 319 N.J.Super. 591, 605 (App.Div.1999).  “It will not be disturbed unless it is manifestly unreasonable, arbitrary or clearly contrary to reason or to the evidence, or the result of whim or caprice.”  DeVita v. DeVita, 145 N.J.Super. 120, 123 (App.Div.1976).

Husband claims the judge “failed to address the uncertainty of the parenting time arrangement” in calculating child support.   The judge acknowledged that the children had not been spending time with husband as of trial, but nonetheless credited him with three weekly overnight visits in anticipation that the children would begin spending time with him.

V

Husband contends the judge erred by ordering him to pay an excessive amount of wife's counsel fees.   In awarding wife $25,000 in fees, the judge made detailed findings and carefully considered each of the nine factors enumerated in Rule 5:3–5(c).  In particular, she found that husband “acted in bad faith during the trial by testifying so evasively that his credibility was impugned[,]” and “his conduct during the trial ․ contributed substantially to the counsel fees expended[.]”

We only overturn a judge's determination on fees “on the ‘rarest occasion [s],’ ” and only for a “clear abuse of discretion.”  Strahan v. Strahan, 402 N.J.Super. 298, 317 (App.Div.2008) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).   The judge did not clearly abuse her discretion in awarding fees.

VI

Finally, husband contends the judge erred by failing to grant his February 2011 recusal motion.   Husband failed to list the order denying recusal in the notice of appeal.   R. 2:5–1(f)(3)(A);  Pressler & Verniero, supra, comment 6.1 on R. 2:5–1 (“[I]t is clear that it is only the judgments or orders or parts thereof designated in the notice of appeal which are subject to the appeal process and review.”).   Husband also failed to provide the transcript relating to this motion, in contravention of Rules 2:5–3(a) and 2:6–1(a)(1).   Thus, we do not have the benefit of the judge's reasons for denying the motion.   We reject husband's argument on these bases.   We add only that “it is improper for judges to err on the side of caution and recuse themselves unless there is a true basis that requires disqualification.”  Johnson v. Johnson, 204 N.J. 529, 551 (2010) (Rabner, C.J., concurring).

Affirmed.

FOOTNOTES

FN1. Joint amended tax returns for 2001 through 2006 similarly reported six-figure increases in adjusted gross income..  FN1. Joint amended tax returns for 2001 through 2006 similarly reported six-figure increases in adjusted gross income.

PER CURIAM