NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3207-15T1
ALI SHAHEED JONES-MUHAMMAD,
Plaintiff-Appellant,
v.
KRISTINE OTT,
Defendant-Respondent. ______________________________________________
Submitted May 2, 2017 – Decided October 11, 2017
Before Judges Messano and Grall.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1350-11.
W. Lois Kahagi, attorney for appellant.
Snyder Sarno D'Aniello Maceri & da Costa, LLC, attorneys for respondent (Angelo Sarno, of counsel and on the brief; Michelle A. Wortmann, on the brief).
PER CURIAM
Plaintiff Ali Shaheed Jones-Muhammad and defendant Kristine
Ott married in 1997 and separated in 2007. Plaintiff filed the complaint in 2010, and they were divorced on March 28, 2013.1
The judgment incorporates their marital settlement agreement
(MSA). Plaintiff appeals a post-judgment order enforcing
equitable distribution of the marital residence, transfer of
responsibility for making the mortgage payments, and plaintiff's
assumption of sole responsibility for his unpaid income taxes.
Defendant contends we should affirm.
The order resolves a motion defendant filed in March 2015,
when she learned the principal balance on the mortgage was
higher than stipulated in the MSA, and another she filed in
October 2015, because a title search disclosed recorded federal
income tax liens that exceeded the home's value. As a
consequence of those liens, defendant could not close on a
contract to sell the home for $384,000 scheduled for August
2015.
The February 26, 2016, order requires plaintiff to retake
title to the home he conveyed and pay her $75,000 to address the
loss she suffered as a consequence of the liens, and a $10,000
counsel fee. It requires plaintiff to pay the $75,000 in
fifteen $5000 monthly installments commencing on March 15, 2016
1 The judgment, a transcript of the first of two motion hearings and several exhibits submitted on the motions are not included in the record on appeal.
2 A-3207-15T1 plus "interest on the total lump sum at 3% per annum" at the end
of the term. The counsel fee was due by April 30, 2016.
Plaintiff acknowledges his liability and does not dispute
the amount of the award. He contends the judge failed to
consider his ability to pay the $75,000 award at the rate
established. He also seeks reversal of the counsel fee, because
it was not supported by an affidavit of services and exceeded
the flat fee defendant was charged. With the exception of the
counsel fee, which was awarded without a certification of
services and must be remanded, we affirm.
I.
During the marriage, plaintiff's income was from his work
as a performer, composer, recording artist, and producer. His
income includes royalties and profit from business entities.
While they were together, defendant assisted plaintiff,
travelled with him when he was on tour and had no significant
earnings. As stipulated in the MSA, plaintiff's average income
was $211,000 during the four years preceding divorce and they
imputed defendant's earnings at $35,000 annually. Plaintiff
focused on music and entrusted his managers to handle his
personal finances and write his checks.
3 A-3207-15T1 Defendant agreed to accept reduced alimony for a limited
duration, $3500 monthly for fifty-six months, as consideration
for their agreement on equitable distribution.2
By way of the MSA provisions on equitable distribution,
defendant was to acquire the marital residence and all of its
equity free and clear of plaintiff's interest. Plaintiff had
purchased the home prior to the marriage, and the title and
mortgage were in his name. They agreed the home was worth
$300,000, encumbered by no debt other than a mortgage securing a
$230,000 loan from Chase Bank (Chase), and it had approximately
$70,000 of equity. Plaintiff assured defendant he was "not
aware of" any judgment or lien against the home other than the
mortgage, and defendant gave him the same assurance. They
agreed neither would "further encumber the residence."
In further consideration of the alimony, plaintiff assumed
sole responsibility for his income tax liability and "promised
to indemnify defendant and hold her" harmless with respect to
"his liability (including taxes, penalties, interest and
2 The parties had previously divided their personal property, and they agreed each would retain their bank and investment accounts — defendant a $60,000 annuity, and plaintiff an investment account worth less than $2000.
4 A-3207-15T1 accounting/legal fees) assessed against him as a result of [his]
failure . . . to pay any taxes, interest or penalties."3
The MSA addresses transfer of the home's title and
responsibility for paying the mortgage from plaintiff to
defendant. Plaintiff agreed to bring payments on the mortgage
current by the date of divorce and make his first alimony
payment on April 1, 2013. Defendant agreed to make the mortgage
payments as of that date.
They did not follow the plan for transfer, but they had
also agreed to "make sincere efforts between them to settle"
before going to court. Plaintiff did not bring the mortgage
payments current by the date of divorce, because he was in the
process of securing a loan modification from Chase. The
modification would not take effect unless he made three "trial"
payments at the modified rate. He made the last "trial" payment
on June 1, 2013, and the modification took effect on July 1.
To the extent plaintiff's loan modification brought
payments current, it was accomplished by adding debt,
$37,584.91, to the principal. The additional debt included
past-due mortgage payments and interest and brought the balance
3 The same paragraph of the MSA, includes a similarly stated obligation for defendant, but there is no indication she had any tax liability.
5 A-3207-15T1 to $266,654.91. The monthly payments were lower, $1914.01, but
payable over a term twice the length. Under the mortgage in
place, the monthly mortgage payment was $2552.14, $1539.27 of
which was for principal and interest, with interest at 2.852%.4
The parties' explanations for deviating from the payment
plan were similar but not identical. By defendant's account in
"late spring 2013," plaintiff told her he was behind on
payments, promised to bring them current and said he would
continue making them until he had. Plaintiff acknowledges the
discussion and his promise to bring those expenses current but
denies any agreement on future payments.
In any event, plaintiff did not give defendant the
information she would need to pay the mortgage until much later.
Starting in April 2013 and ending in February 2015, the parties
exchanged emails discussing the home's carrying costs.
Plaintiff discussed his struggle to bring the mortgage current.
Defendant inquired about homeowner's insurance, the amount of
the payments and the balance. In November 2014, he gave
4 The amounts stated were reported by Chase in a loan modification agreement offered to plaintiff near the time of divorce. He was required to accept by March 23, 2013. The Chase documents indicate that $1012.87 of both the current and lower modified payments was for escrow covering property taxes and homeowner's insurance.
6 A-3207-15T1 defendant the name of the lender who had purchased his loan and
mortgage from Chase. Within two weeks of receiving that
essential information, defendant obtained a statement showing a
monthly payment of $3126.13, outstanding payments totaling
$17,878.46, and $258,626 principal.5 Despite defendant's several
requests for documentation on loan modifications and payments,
which she was not able to obtain from the lender, and a request
from her attorney, plaintiff did not provide the information.
The final request was made in February 2015.
By early March, defendant concluded she could not afford
the payments, made some repairs and listed her home for sale.
She also filed a motion to enforce plaintiff's obligations under
the MSA. On June 8, the judge entered an order directing
plaintiff to sign authorizations requiring the first and second
mortgage lenders to release all relevant information. He
reserved decision on relief.
While the first motion was pending, defendant received and
accepted an offer to purchase the home for $384,000 in August
2015. In anticipation of the closing, she moved. The federal
income tax liens disclosed by the title search amounted to
5 The statement and figures are referenced in the certification defendant submitted on the motion, but the statement is not in the record on appeal.
7 A-3207-15T1 $610,197.10. The liability reflected on the notices of tax lien
was actually less: $521,841.67, when defendant discovered the
liens in August 2015, and $258,366.60, when the judge signed the
order at issue on this appeal in February 2016.6 During the
motion hearing, the judge indicated that the total was about
$500,000. The observation demonstrates review of the notices,
which indicated the balance would be significantly lower by
February 2016.
On her second motion, defendant asserted plaintiff's
violation of his obligation to disclose the income tax liens at
the time of divorce and sought enforcement of their agreement on
equitable distribution, which includes the hold harmless clause.
She requested alternative forms of relief: an order compelling
plaintiff to remove all recorded liens other than the mortgage
6 The Notice of Federal Tax Lien associated with each recorded lien includes the following information: "For each assessment listed below, unless notice of the lien is refiled by the date given in column (e), this notice shall, on the day following such date, operate as a certificate of release[.]" By August 2015, the last refiling date had passed for three of the four tax liabilities stated in the notice of lien recorded in 2006 and one of the liabilities stated in the lien recorded in 2008 had expired. By February 2016, all four liabilities recorded on the lien filed in 2006 and two of the liabilities listed on the lien recorded in 2008 had expired. The third liability listed on the lien recorded in 2008 will expire in December 2017, and the liabilities listed on the lien recorded in 2011, a total of $144,874, is scheduled to expire in December 2021.
8 A-3207-15T1 and eliminate debt on the mortgage in excess of $230,000; or if
he could not do that, an order compelling him to retake the
deed, pay the expenses she incurred, and the $154,000 she lost
with the sale.
Plaintiff filed a cross-motion. Acknowledging his sole
responsibility for the tax liabilities and his obligation to
address defendant's loss, he denied knowledge of the recorded
liens at the time of divorce. He did not assert he was unable
to pay defendant damages. He offered reasons for not knowing
about the liens. His only requests were for the judge to
consider defendant's failure to pay the mortgage as of April 1,
2013 and to have the agent representing him before the IRS
attend the conference to report on the status of a compromise
under negotiation that could reduce the obligation secured by
the deed.
During the argument on that motion, the judge said he did
not believe plaintiff's denial of awareness of the tax liens
against the residence at the time of divorce, indicating the IRS
gives notice and that plaintiff said he had been working with
the IRS since 2013. As to ability to pay, the judge mentioned
that plaintiff's group had just released a new album and he did
not believe plaintiff was not making any money and acknowledged
that he needed current information on the parties' financial
9 A-3207-15T1 status. Stating he did not know whether plaintiff's claim that
his managers failed to notify him was true or not, the judge
said, "[t]hey're his liens."
Following a colloquy on solutions to address defendant's
lost $384,000 contract, the judge suggested the attorneys
consider a solution involving plaintiff retaking the home and
extending alimony. Defendant's attorney advised they were
discussing a settlement "along [those] lines," and the problem
was "quantifying the amount" owed. Plaintiff's attorney
responded: "Exactly." Plaintiff's attorney presented no
argument about defendant's inability to pay, the judge entered
an order directing exchange and submission of recent tax
returns, case information statements (CISs) and written
statements of their positions on damages with supporting
documentation. The judge reserved decision on damages and
counsel fees pending the submissions, and he denied all relief
not addressed.
The tax returns and CISs revealed plaintiff earned at a
slightly higher rate than he had during the four years preceding
divorce. The average of his earnings between January 1, 2013
10 A-3207-15T1 and October 31, 2015 was $239,172.7 His CIS also reports monthly
payments to the IRS and the State of the New Jersey in excess of
$17,000.
The parties submitted their positions in writing in
December 2015. Neither discussed legal principles governing
enforcement and modification of MSAs but both set forth
positions on damages. See Eaton v. Grau, 368 N.J. Super. 215
(App. Div. 2004). In response to the colloquy on the motion
hearing, defendant's attorney indicated her client would accept
payments on a monthly basis in the amount of $5000.
As to damages, both parties started with the $384,000 offer
to purchase, reduced by the $230,000 debt on the mortgage stated
in the MSA — $154,000. Defendant recognized the $154,000 should
be reduced by the real estate commission stated in the contract
of sale ($19,200). She sought additions to equity covering
repairs she made prior to sale and carrying costs she paid after
she moved.8
7 The stated average is computed on the "Total income" reported on plaintiff's 2013 and 2014 1040s and the "Gross Earnings" from January 1 to October 31, 2015 reported on his CIS. Defendant notes that plaintiff's 2013 "Foreign Tax Credit" Form 1116 reports $2,119,866 "Gross income from all sources," including $844,597 "income from K-1s." 8 The contract was submitted in this trial court but not on appeal.
11 A-3207-15T1 Defendant also requested a counsel fee for services
rendered on the motions in a total amount of $14,749.50, and she
indicated a certification of services would "be submitted within
a timeframe to be directed by the court." The judge awarded a
$10,000 fee although the certifications provided earlier
indicated defendant was charged a flat fee and, at that point,
had received services that would have costs much less than
$10,000.
Plaintiff's position statement does not include a
discussion of his ability to pay, a payment schedule or the
information in his tax returns or CIS. He simply requested
reductions from the $154,000. One was for closing costs
estimated at $25,000 to $28,000, which he suggested could be
determined by preparing a "dummy" HUD-statement. In lieu of a
reasonable rent, he sought a reduction equal to payments
defendant would have made on the mortgage prior to the loan
modification, $2552.14, for thirty-three months — the period
between April 1, 2013 and date of his written submission. He
also sought a reduction for late fees payable at the rate of
$2526 monthly.
Consistent with the submissions, the judge predicated the
award on the value of defendant's lost sale, $154,000, minus
expenses that would have been incurred had the sale occurred.
12 A-3207-15T1 The order provides the only explanation for the result:
"$154,000 in equity, less $24,000 closing costs, less $55,000
(reasonable monthly rental costs imputed to defendant for the
subject premises — i.e. [d]efendant cannot live rent free)."
There is no explanation for payment of the $75,000 at the rate
of $5000 monthly.
As to liability, the judge determined plaintiff "had actual
and/or constructive knowledge that the tax liens attached to the
marital residence at the time of [divorce]," resulting from his
or his agents' conduct, and affecting the marketability of the
residence to the extent that it was worthless to defendant.
As to counsel fees, the order indicates: Plaintiff "acted
in bad faith with respect to his actions prior to, and
subsequent to, the Judgment of Divorce," which caused defendant
to file motions, including his failure to sign authorizations
for defendant to speak with the mortgage lender and provide
proof of life insurance. On those findings, the judge entered
the order plaintiff appeals.
II.
Repeating what we said at the outset of this opinion,
plaintiff acknowledges his liability and does not dispute the
$75,000 award. He simply contends the judge failed to consider
his ability to pay $5000 monthly. He also seeks reversal of the
13 A-3207-15T1 counsel fees, because it was not supported by an affidavit of
services and exceeded the flat fee defendant was charged.
If there were any doubt about plaintiff's acknowledgement
of liability and acceptance of the amount, it is dispelled by
assertions in his reply brief stating his "absolute intent to
take on the responsibility for his income tax liability" and
that "there is no issue of [plaintiff's] liability in this
appeal." He criticizes the judge's failure to address his
ability to pay and questions "whether the trial court properly
considered [plaintiff's] ability to pay his acknowledged
liability at the rate the trial court established in its
ruling." Plaintiff contends the judge gave "unjustified weight"
to disputed facts, relied on speculation rather than evidence,
abused his discretion and failed to provide an adequate
explication of his findings and reasons. See R. 1:6-6; R. 1:7-
4(a).
A.
Motions to enforce or modify equitable distribution involve
the exercise of judicial discretion. Eaton, supra, 368 N.J.
Super. at 222; Whitfield v. Whitfield, 373 N.J. Super. 573, 575
(App. Div. 2004); Castriota v. Castriota, 268 N.J. Super. 417,
421-22 (App. Div. 1993). An exercise of discretion requires "a
conscientious judgment" based on "the law and the particular
14 A-3207-15T1 circumstances of the case before the court." Higgins v. Polk,
14 N.J. 490, 493 (1954); accord Hand v. Hand, 391 N.J. Super.
102, 111 (App. Div. 2007). And, an explanation of the factual
and legal bases for discretionary determinations made on such
motions is expected. R. 1:7-4(a); Klajman v. Fair Lawn Estates,
292 N.J. Super. 54, 61 (App. Div.) (quoting Curtis v. Finneran,
83 N.J. 563, 569-70 (1980)), certif. denied, 146 N.J. 569
(1996).
In the absence of a statement of findings and conclusions,
review without remand is more difficult but not foreclosed. See
Isko v. Planning Bd. of Livingston, 51 N.J. 162, 175 (1968)
(noting the commonality and propriety of affirming a valid
determination entered on an erroneous basis); Castriota, supra,
268 N.J. Super. at 421-22 (declining to affirm denial of
enforcement of equitable distribution as an unstated exercise of
discretion, because equitable distribution in not subject to
modification on a showing of changed circumstances); Rosenberg
v. Bunce, 214 N.J. Super. 300, 304-05 (App. Div. 1986)
(reviewing a denial of a motion to open a default judgment and
reversing on the merits); see also R. 2:10-5; Esposito v.
Esposito, 158 N.J. Super. 285, 291-92, 300 (App. Div. 1978)
(exercising original jurisdiction to modify equitable
15 A-3207-15T1 distribution and affirming determinations not raised on appeal
where the judge had retired and the record was adequate).
In this case, a limited remand for more assiduous
compliance with Rule 1:7-4(a) prior to our decision was not an
option, because the judge is retired. But a remand for that
reason is not necessary. We are in a position to address issues
plaintiff raised in the trial court and on appeal to determine:
whether a genuine dispute of material fact required a plenary
hearing, see Harrington v. Harrington, 281 N.J. Super. 39, 47
(App. Div.), certif. denied, 142 N.J. 455 (1995); or whether
undisputed and substantial credible evidence in the record as a
whole permits an affirmance of the order, or part of it, for a
different reason than the one stated by the judge. Isko, supra,
51 N.J. at 175; see Monte v. Monte, 212 N.J. Super. 557, 565
(App. Div. 1986) (noting this court's obligation to "decid[e]
whether the determination . . . is supported by substantial
credible proof on the whole record").
B.
In the trial court, plaintiff did not ask the judge to
schedule payments of the $75,000 damage award and did not assert
a lack of ability to pay. As the preceding discussion of the
record demonstrates, plaintiff had three opportunities to raise
the issue on the motion addressing the liens imposed as a
16 A-3207-15T1 consequence of his tax liability: in opposition to the motion;
during argument on the motion; and in his final submission
stating his position on damages. He did not take it, and we
decline to address the issue for that reason.
It is a well-settled principle that our appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available "unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest."
[Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (quoting Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)).]
This award, as defendant argues, enforces the MSA's scheme
for equitable distribution — the marital residence and the hold
harmless clause were what the parties bargained for. See Eaton,
supra, 368 N.J. Super. at 224; Castriota, supra, 268 N.J. Super.
at 421-22.9 The judge's insistence on tax returns and CISs
9 As to the residence, the hold harmless clause shielding defendant from plaintiff's tax liability was not conditioned on his ability to pay and the tax liability prevented its the sale. As to the value of sale, plaintiff urged calculation based on mortgage payments defendant would have made. A calculation based on those payments would not have favored plaintiff. (footnote continued next page)
17 A-3207-15T1 dispels any concern that he based the payment schedule on
unsupported assumptions equating plaintiff's celebrity status
with wealth. The judge had tax returns. On the question of
inability to perform his promise to hold defendant harmless,
plaintiff had the burden of proof. See Morris v. Morris, 263
N.J. Super. 237, 244-45 (App. Div. 1993) (discussing the payor's
Had he brought the payments current and defendant had made them starting on April 1, 2013 and ending on August 1, 2015, the result would have been more favorable to her. Defendant would have been making monthly payments of principal and interest in the amount of $1539.27, on an interest rate of 2.852%. She would have made twenty-nine payments, starting on April 1, 2013 and ending on August 1, 2015. Assuming the worst case scenario from the perspective of accruing equity in the home — that the April 1, 2013 payment was the first, the amount owed on debt would have been lower — between $208,595 (calculated at 2.8%) and $208,750 (calculated at 2.9%). Had plaintiff's suggestion for a reduction based on payments and established costs of closing been used this would be the result: the period would be for twenty-nine not thirty- three months, because no payments would be made after closing: $384,000 - $209,000 (principal due) = $175,000 (equity) - $74,012.16 (29 total payments including escrow $2552.14 per payment) = $100,987.84 (equity - payments) - $19,204 (the only closing cost supported by evidence) = $81,783.78. Moreover, reading the integrated agreement as a whole and recognizing that the residence and protection from tax liability was in consideration for the agreement on reduced alimony for a limited duration, more than the total of numbers on a HUD sheet was involved. Glass v. Glass, 366 N.J. Super. 357, 371-74 (App. Div.), certif. denied, 180 N.J. 354 (2004); Morris v. Morris, 263 N.J. Super. 237, 244 (App. Div. 1993) (finding no inequity in enforcing the parties' integrated agreement fashioned in light of husband's debt).
18 A-3207-15T1 obligations to disclose and explain financial information in a
similar situation).
C. Counsel Fees
We agree with plaintiff that the award of counsel fees must
be vacated and remanded for reconsideration. The judge erred by
considering it without a complete certification of services
permitting assessment of the reasonableness of the fees charged.
Here, a certification detailing services and a discussion of
legal principles relied upon to award a counsel fee in excess of
the flat fee charged were essential. See N.J.S.A. 2A:34-23; R.
4:24-9 (b)-(d); R. 5:3-5(c); Mani v. Mani, 183 N.J. 70, 93-95
(2005).
On remand, the judge should not accept the judge's
conclusion, stated in the February 26, 2016 order, that
plaintiff had actual knowledge of liens at the time of divorce
and acted in bad faith by failing to disclose them. In the
trial court and on appeal, plaintiff claimed that a genuine
factual dispute precluded a finding that he knew about the liens
at the time of divorce without a plenary hearing, and that point
is well-taken.
The notices of tax liens and plaintiff's statement that he
had been working with the IRS since 2013 reasonably supported an
inference that plaintiff knew about the liens prior to divorce.
19 A-3207-15T1 But plaintiff denied having that knowledge, and he provided
sufficient plausible explanations to require a plenary hearing.
We refer to plaintiff's assertions of reliance on business
managers to handle his personal finances and write his checks;
Chase's approval of the loan modification; and the silence on
the subject of liens from the attorneys providing services in
divorce proceeding given the MSA's contemplation of transfer of
title by quit claim deed.10
The award of attorney's fees is vacated and remanded for
consideration anew in conformity with this decision; the order
of judgment appealed from is otherwise affirmed; jurisdiction is
not retained.
10 Had plaintiff disputed liability based on a knowing false representation that the residence was encumbered by liens other than the mortgage, we would have affirmed on a different ground — enforcement of the MSA's undisputedly applicable hold harmless clause.
20 A-3207-15T1