NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-2885-19
DANIELLE TIRENDI,
Plaintiff-Appellant,
v.
THOMAS J. TIRENDI,
Defendant-Respondent.
Argued October 21, 2021 – Decided December 21, 2021
Before Judges Alvarez and Mawla.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FM-10-0320-14.
Bruce W. Clark argued the cause for appellant (Clark Michie LLP, attorneys; Bruce W. Clark and Christopher J. Michie, on the briefs).
Bonnie C. Frost argued the cause for respondent (Einhorn, Barbarito, Frost & Botwinick, PC, attorneys; Bonnie C. Frost, Jennifer Fortunato, and Jessie M. Mills, on the brief).
PER CURIAM Plaintiff Danielle Tirendi appeals three post-divorce judgment orders
dated June 28, 2019, October 23, 2019, and February 5, 2020. The Family Part
judge entered the first order, accompanied by a written statement of reasons,
after a twelve-day hearing. The second order and statement of reasons addressed
plaintiff's reconsideration application; the third, defendant Thomas J. Tirendi's
reconsideration application. We affirm.
The parties' April 29, 2014 divorce decree incorporated a matrimonial
settlement agreement (MSA), which defendant unsuccessfully sought to set
aside. See Tirendi v. Tirendi, No. A-1543-15 (App. Div. Sept. 18, 2017). The
details regarding the parties' claims and personal circumstances, described in the
earlier decision, need not be repeated here, except to reiterate the agreement was
found to be enforceable. Tirendi, slip op. at 2-9. The parties have three children,
born August 2003, July 2006, and April 2008. The children reside with their
mother, and the parties share joint legal custody. The parties created 529
accounts during the marriage to save for the children's college expenses.
While married, the parties formed and operated a successful window
component business, Velocity Marketing (VM). The business's success heavily
depended on defendant's sales activity and various sales representatives working
for commission throughout twenty-five states.
A-2885-19 2 Some of the MSA terms are relevant to this appeal. For instance, plaintiff
was to receive three of defendant's retirement accounts: Vanguard -0614;
Vanguard Roth -2763; T. Rowe Price SEP -3655; as well as the parties' non-
retirement Vanguard brokerage account -5835.
Additionally, defendant indemnified plaintiff and was responsible for "all
payments" on the parties' line of credit, which then had a balance of $25,906.58,
and a $250,000 limit. Defendant kept his 2008 Jeep.
The MSA required the parties—at the appropriate time—to determine
each parent's share towards the children's college expenses pursuant to
Newburgh v. Arrigo, 88 N.J. 529 (1982). The 529 savings plans would reduce
each party's contribution. Plaintiff was designated the custodian for those
accounts.
Regarding alimony and child support, the MSA stated plaintiff would
defer her right to these payments based on "the parties' continued ownership and
operation" of VM. In the event VM was "sold or [plaintiff sold] her interest
therein to [defendant,]" defendant would commence alimony and child support
payments in an amount as agreed upon by the parties or determined by a court.
The MSA also stated that the parties' existing ownership allocation would
be reversed. Plaintiff originally owned thirty percent of the business, and
A-2885-19 3 defendant owned seventy percent. Going forward, plaintiff would now hold a
seventy percent interest, while defendant would retain only thirty percent.
Profits would be distributed accordingly.
An operating agreement signed incidental to the MSA included a covenant
not to compete. Additionally, a non-solicitation provision barred the parties
from encouraging employees or suppliers to alter their relationship with the
company.
The operating agreement, which barred either party from selling without
the other's approval, provided that plaintiff at her option could present defendant
with a "sale notice" forcing him to buy her interest in VM. The purchase price
would be seventy percent of the company's value, fixed at "three times the
average annual gross revenues of the [c]ompany for the three . . . calendar years
immediately preceding the [s]ale [n]otice . . . ." Ten percent of the purchase
price would be due at closing, with the balance reduced to a Purchase Money
Note. Payment would be made in sixty "quarter-annual" installments over a
five-year period,1 interest calculated at the prime rate plus two percent.
1 In an apparent error, the MSA provided for sixty quarterly—rather than monthly—payments while calling for a five-year term.
A-2885-19 4 The parties lived together for some time after the MSA was signed, in
some respects still functioning as an intact family. Around the time plaintiff
filed for divorce, she told defendant she wanted to build an indoor horse-riding
arena at the marital residence. Accordingly, defendant signed a construction
contract in March 2014. The parties paid the total cost of about $339,574 with
the line of credit and their income.
In March 2015, defendant transferred his retirement accounts to plaintiff,
believing he was complying with the MSA. He mistakenly included two
additional retirement accounts not listed on the MSA: T. Rowe Price -1869 and
Vanguard -5844, which totaled $571,965. He failed to transfer one account,
Vanguard Roth -2763, which had a balance of $8,397 by November 2018. In
all, defendant transferred more than one million dollars to plaintiff.
The parties retained Hubert Klein, CPA, to calculate the operating
agreement value of VM as well as its actual value. Klein prepared valuation
schedules for VM but did not draft a formal report. Using the terms of the
operating agreement, Klein fixed the value of the company at $3,893,004, or
three times its average gross revenue for the preceding three years, $1,297,668.
Klein thus concluded that the value of plaintiff's seventy-percent interest under
this formula rounded up to $2,730,000.
A-2885-19 5 However, Klein's second valuation used an alternative method, which
valued one hundred percent of the membership interest at $1,734,102, and
rounded plaintiff's seventy percent interest to $1,214,000.
Klein utilized a third method—valuing the company at $1,911,380. Under
this method, plaintiff's seventy percent interest rounded to $1,338,000.
Throughout 2016 and 2017, the parties had difficulties managing VM,
including disputes about sales commissions. They also clashed regarding
defendant's business expenses and company vehicle.
On November 6, 2017, defendant wrote to VM submitting his "resignation
as an employee[.]" He further "waiv[ed] and assign[ed]" to plaintiff his "[thirty
percent] ownership interest in lieu of future alimony and child support
obligations . . . ." The same day, defendant withdrew $60,429.58 from the VM
bank account.
The following day, Velocity Marketing North, an independent contractor
working for VM, terminated relations between the two companies. Velocity
Marketing South and Velocity Marketing Midwest similarly terminated
relations with VM the same day.
On November 15, 2017, plaintiff's counsel wrote to defendant's counsel,
tendering the sale notice contemplated in the MSA and operating agreement.
A-2885-19 6 The notice demanded a purchase price of $2,730,000 based on Klein's report,
with ten percent due at closing on December 18, 2017, and the balance due in
sixty consecutive monthly installments. Defense counsel rejected the sale notice
on November 20, 2017, alleging that defendant "gave [plaintiff] his [thirty
percent] interest in the business in lieu of making future alimony and child
support payments."
In December 2017, the family court heard motions by both parties and
imputed $240,000 in gross annual income to defendant, ordering him to make
weekly pendente lite payments of $1,100 for alimony and $308 for child support.
Around this time, defendant started a new business: Velocity Sales, LLC
(Velocity), an "independent rep organization" in the window and door industry
operating in five states. The new company was "smaller" and employed fewer
"subreps" than VM. The motion judge observed that defendant took most of
VM's business with him when he abruptly quit.
Plaintiff filed a case information statement (CIS) on November 7, 2018.
She reported total gross assets of $2,825,147, and total gross liabilities o f
$426,254. Among these assets were a TD Bank checking account containing
$67,165, and a VM account containing $147,941, both of which contained at
least some funds belonging to defendant, described in more detail below. Her
A-2885-19 7 annexed federal income tax returns showed gross earned income for 2017 of
$515,355. She reported that her then-current lifestyle expense, including the
costs associated with the children, was $11,076 per month. Going forward,
plaintiff estimated prospective lifestyle expenses of $23,689 per month.
Defendant filed a CIS on November 6, 2018. He reported gross assets of
$176,929, and gross liabilities of $179,907. His annexed 2017 federal income
tax returns showed gross earned income of $231,053, and that he earned
$208,000 in the first ten months of 2018. His then-current lifestyle cost $24,041
per month and his prospective lifestyle cost an estimated $22,221 per month.
The twelve-day plenary hearing lasted from November 2018 through
February 2019. Because the financial disputes required some historical context,
defendant testified regarding the marital residence purchased for $370,000 in
November 2001 with joint funds and an approximate $300,000 mortgage. The
parties nearly doubled the size of the home, adding an inground pool, pool
house, and horse barn. In 2014, the indoor riding arena was completed. At the
time of the plenary hearing, the line of credit balance attributable to the
construction of the riding arena was $179,906.
Defendant claimed plaintiff handled the couple's finances during the
marriage. In late 2015, he realized she was depositing her salary checks in an
A-2885-19 8 individual account. Both parties paid personal taxes from the VM account.
Plaintiff paid her legal fees from the VM account, and defendant attested to
sometimes using plaintiff's Mastercard paid from joint funds.
Defendant described the difficulties in operating the business with
plaintiff and the frustrations expressed by independent contractors in dealing
with her. She sometimes contacted sales representatives directly, which
conflicted with defendant's management strategy. When defendant's work
vehicle needed to be replaced in late 2017, plaintiff objected, characterizing the
car as a fringe benefit and suggesting defendant purchase a smaller vehicle that
he felt was inadequate for the job. Defendant further alleged plaintiff delayed
reimbursing travel expenses, defendant's monthly draw, and the cost of
demonstration materials.
Defendant saw no alternative but to resign from the company, and claimed
he did not start Velocity until the court released him from the non-compete
covenant. He estimated his 2018 income to be approximately $250,000. He
lived in a rented apartment during that time.
Plaintiff testified that she put defendant's salary into joint accounts to fund
family expenses. She began issuing herself salary checks in January 2014.
Plaintiff deposited some of these checks into her personal TD Bank accounts, at
A-2885-19 9 least one of which she opened on February 7, 2014. She deposited a total of
$372,000 in salary checks into her personal TD accounts from February 7, 2014,
through November 5, 2015.
Plaintiff transferred some of these funds, including payments of $10,000
and $43,000, to defendant's retirement accounts. She testified that additional
amounts from her TD accounts were also supposed to be transferred to
defendant's retirement accounts. But as of November 7, 2018, $67,165 remained
in her TD checking account, at least some of which was intended for defendant.
When defendant resigned in November 2017, plaintiff's net worth was
approximately two million dollars. Following the divorce, she received about
$500,000 per year in income from the business, while defendant received about
$250,000 to $300,000 in income from the business. Plaintiff acknowledged that
her own income increased each year from 2014 through 2016. She testified that
defendant's resignation "completely devastated" the company and "destroyed
[her] income stream" because several of their representatives and window
manufacturers terminated relations immediately following defendant's
resignation. Nonetheless, plaintiff took $196,934.73 in salary from VM from
January 1, 2018, through November 2, 2018. Her net worth at the time of the
plenary hearing was $2.1 million.
A-2885-19 10 Plaintiff testified that VM earned $1,431,567 in 2016. Of that, $1,032,502
remained after payments to the "subreps." Other business expenses, such as auto
and insurance, reduced the remaining total to approximately one million dollars.
Plaintiff believed defendant could earn that sum annually going forward because
of his industry connections. She also believed defendant had not provided his
true income with Velocity because he did not provide a list of the companies
that he represents. Plaintiff is now a licensed realtor; however, her employer
has declined to assign her any work until the matrimonial litigation is resolved.
She estimated she would earn $5,000 in 2019 as a realtor. In 2018, plaintiff
rented the pool house at the marital residence to her son's friend, yielding total
annual income of $14,700. She also earned approximately $2,380 from boarding
horses at the marital residence.
Plaintiff testified that the family lifestyle in 2012 and 2013 came to
approximately $40,207 per month, of which $7,500 was savings and
investments. Her current lifestyle costs were $11,075 per month. She estimated
a prospective lifestyle monthly budget, following the divorce, of $23,689.
Plaintiff owed $38,000 on a Bank of America credit card, reflecting
consolidation of the debts on previous credit cards.
A-2885-19 11 Plaintiff sought child support for the period of the VM buyout. The
children's health insurance costs totaled approximately $1,200 per month, and
the children's various sports incurred additional expenses. Additionally,
plaintiff wanted to register them for summer camps which cost between $4,000
and $5,000 per year for one child alone.
On cross-examination, plaintiff admitted defendant was not required to
transfer all of his retirement accounts to her. He needed only transfer three
accounts named in the MSA, which he had done. Plaintiff also acknowledged
that if defendant had to buy out her interest in VM, he was entitled to VM's
assets, including the bank account described in her CIS.
Paul White testified for plaintiff as an expert in forensic accounting. He
described his forensic investigation report as having the purpose to "rebut the
defendant's allegations of monies that were owed to him." He reviewed the
parties' financial records in detail.
White addressed defendant's March 2016 allegations that plaintiff
"embezzled" from his "earnings and business expense reimbursements" between
January 2014 and February 2016 to pay for her expenses and those of the
children. He also described defendant's allegation that plaintiff "embezzled"
A-2885-19 12 $108,667.76 from his "earnings and business expense reimbursements" to fund
the construction of the indoor riding arena.
Regarding the line of credit for the indoor riding arena, White determined
that defendant issued the first check for construction of the arena in April 2014,
along with a second check in October 2014. White therefore opined that the
cost of the indoor riding arena was a joint expense.
White determined that the operating agreement's call for a 70-30 income
split in plaintiff's favor was not effectuated in 2014 and 2015. He also found
that plaintiff spent $117,029 on defendant's Discover card and that defendant
owed plaintiff $2,849 for his personal use of her Bank of America cards. In
sum, White testified that after considering the excess salary payments, as well
as the credit card usage and other items in his report, defendant owed plaintiff
an equalization payment of $314,520.
On June 28, 2019, the judge fixed the value of plaintiff's seventy percent
interest in VM at $2,730,000, consistent with the operating agreement. Based
on this figure, the court ordered defendant to pay plaintiff $2,494,143, reflecting
certain credits, for her interest in VM.
The court awarded defendant three credits: $147,941, $33,582, and
$54,334. The $147,941 credit represented "the funds in VM's account at the
A-2885-19 13 time [defendant] resigned" pursuant to plaintiff's November 7, 2018 CIS,
because plaintiff testified on cross-examination that "these funds should go to
[defendant]." The court wrote that defendant claimed that there was $370,664
in the VM account, but the court "does not know where [that amount] came
from" and if these funds were a VM asset, then defendant was "owed an
additional credit." The $33,582 credit represented one-half of the value of
plaintiff's TD checking account, which plaintiff testified contained funds
intended to be deposited into both parties' retirement accounts. The $54,334
credit represented one-half of the additional funds spent on the riding arena,
awarded because "[b]oth of these parties made the decision to spend these
monies" but it was "inequitable, fundamentally unfair, for [plaintiff] to reap all
of the benefits of this capital improvement . . . ."
The order was silent as to the ten percent down payment and associated
interest payments required by the operating agreement. The buyout payments
were to be made quarterly in $50,000 increments for nearly fourteen years. In
light of these payments, the court refused to impose an alimony obligation, but
directed defendant to pay $100 per week in child support. Defendant was
awarded the return of two retirement accounts, Vanguard -5844 and T. Rowe
A-2885-19 14 Price -1869. He was directed to transfer the Vanguard IRA worth $8,397 to
plaintiff.2
The court held defendant was responsible for $25,906.58 of the balance
owed on the line of credit, while plaintiff was responsible for the remainder.
The judge did not award counsel fees.
Plaintiff's first motion for reconsideration requested the judge enforce
defendant's obligation to pay ten percent down on the VM purchase price as well
as interest on the balance. She also requested that the value of the T. Rowe Price
and Vanguard accounts be credited against defendant's buyout obligation, and
that the judge revisit the denial of alimony and the child support award. She
asked that the judge order use of the 529 account towards the oldest child's
private school education, shift all responsibility for the line of credit to
defendant, and order defendant to provide copies of Velocity's quarterly sales
records along with copies of his personal and business tax returns.
Defendant opposed the motion and cross-moved to amend the $147,941
credit for funds in the VM account to $376,312.61, suggesting that there were
additional earned funds yet to be deposited at the time of his resignation. He
2 It appears that this account is Vanguard Roth IRA -2763 referenced in the MSA, which was never previously transferred to plaintiff. A-2885-19 15 argued that the amended credit reduced the total buyout obligation to
$2,265,771.39. Defendant sought to enjoin plaintiff from dissipating the
children's 529 accounts, requesting that the funds be allocated equally toward
each parent's college expense obligations as called for by the MSA. He also
sought counsel fees.
The parties submitted a shared parenting worksheet based on the child
support guidelines. Plaintiff's worksheet showed gross taxable income of
$1,606 per week, and $7,692 per week for defendant, and a basic child support
amount of $802 per week. In a given year, the children were listed as spending
239 overnights with plaintiff, and 126 overnights with defendant. Based on the
worksheet calculations, defendant's net child support obligation was $480 per
week.
The judge denied the motion in part on October 23, 2019. At the earlier
oral argument, the judge stated he "rejected the position that [the MSA was]
unenforceable[,]" and was merely "interpret[ing]" the MSA.
The judge refused to credit the two retirement accounts against the buyout
price and ordered interest to accrue at the rate stated in the operating agreement
beginning October 23, 2019, the date of his decision. The court also refused to
impose retroactive interest because plaintiff had been in "improper possession
A-2885-19 16 of substantial assets of [defendant's], hundreds of thousands of dollars in
retirement benefits and VM monies. It would be unfair and inequitable to award
her substantial interest during a timeframe when she improperly had so much of
[defendant's] money."
The judge said he erred in omitting the buyout down payment and ordered
defendant to pay it, calculating that defendant would be able to fund the ten
percent payment "with the appropriate credit for monies he will receive from the
VM buyout (he is entitled to $376,312.61)." 3 Thus he granted defendant's
request to adjust credits to the buyout price based on the amount in the VM
account. The judge denied modification of child support, but noted that his
decision did not preclude plaintiff from seeking alimony in the future.
The court denied reconsideration of the ruling on the line of credit and
denied plaintiff's request for defendant's financial records. The judge ordered
plaintiff to transfer $571,965 in retirement funds, plus any gains, to defendant.
He directed that the 529 accounts be allocated against each party's college
expense obligation while the children are in college.
3 The face of the order states that the credit awarded is $376,312.61, but the accompanying statement of reasons says the credit is $370,664. In any event, plaintiff later stipulated to a credit of $370,664 and defendant does not dispute that amount. A-2885-19 17 Finally, on February 5, 2020, the court fixed the buyout price, with
consent of the parties, at $2,271,420. He vacated the ten percent down payment
provision found in the earlier order to "comport with the parties' proper
understanding[,]" since plaintiff's counsel had written to defendant's counsel
acknowledging that the ten percent down payment had already been paid.
Plaintiff's counsel's letter confirmed a November 6, 2019 on-the-record
discussion. Defendant was to make $50,000 quarterly payments to plaintiff,
which would include both principal and 2.5 percent interest, beginning July 18,
2019.
The judge acknowledged on reconsideration that including plaintiff's
desired interest, the purchase price for VM came to $3,741,029.91—an
unconscionable figure in light of Klein's report showing the actual value of
plaintiff's interest in VM to be $1,337,966. The operating agreement's interest
provisions were unconscionable "given the financial disparity between the
parties, with [plaintiff] having, at least at the time of the hearing, substantially
superior financial circumstances, [thus] the court deems a flat rate of 2.5
[percent] to be fair and equitable." The judge appointed a certified public
accountant to calculate gains and losses on the retirement funds relative to the
transfer.
A-2885-19 18 The judge did not credit plaintiff's embezzlement claims and limited
defendant's payment on the line of credit balance to $25,906.58. Both parties
were denied counsel fees.
On appeal, plaintiff alleges the following errors:
POINT I
THE TRIAL COURT ERRED IN DISREGARDING THE APPELLATE DIVISION'S BINDING RULING THAT THE MARITAL SETTLEMENT AGREEMENT IS NOT UNCONSCIONABLE AND "SHOULD BE ENFORCED."
A. The Appellate Division Ruling Controls This Case.
1. The appellate ruling is final and binding on the parties and the trial court.
2. The appellate ruling encompasses the MSA terms the trial court later modified.
B. The Trial Court Had No Valid Basis In Law Or Fact For Modifying The MSA.
1. The trial court lacked legal or equitable authority to modify the MSA.
2. The trial court lacked adequate evidence to modify the MSA.
a. The evidence did not support relieving [d]efendant of his obligation to pay the entire amount of the parties' line of credit.
A-2885-19 19 b. The evidence did not support relieving [d]efendant of his obligation to transfer all retirement accounts to [p]laintiff.
c. The trial court's modifications of the terms of [d]efendant's buyout of [p]laintiff's share of their business were erroneous and arbitrary.
i) The court erroneously and arbitrarily modified the terms of [d]efendant's buyout of [p]laintiff's share of their business.
ii) The court erred in concluding the interest rate on the buyout amount was unconscionable.
iii) The court erred in granting [d]efendant a credit for all money in the business bank account on an arbitrary date.
POINT II
THE TRIAL COURT ERRED IN CALCULATING CHILD SUPPORT.
A. The Trial Court Erred By Failing To Impute As Defendant's Income His Proven Earning Capacity And By Instead Imputing An Arbitrary And Unexplained Amount.
A-2885-19 20 B. The Trial Court Erred In Finding That Plaintiff Had Received And Would Receive Enough Money To Support The Parties' Children.
C. The Trial Court Erred In Allocating Credit For The Parties' 529 Plans Without Evidence Or Explanation.
POINT III
THE TRIAL COURT ABUSED ITS DISCRETION IN FAILING TO IMPOSE ON DEFENDANT AN OBLIGATION TO REGULARLY DISCLOSE TO PLAINTIFF HIS AND HIS COMPANY'S INCOME.
POINT IV
THE TRIAL COURT ABUSED ITS DISCRETION IN FAILING TO AWARD TO PLAINTIFF THE ATTORNEY'S FEES SHE NEEDLESSLY INCURRED TO RELITIGATE ISSUES ALREADY RESOLVED BY THE APPELLATE DIVISION.
I.
It is undisputed that we previously found the MSA to be enforceable. But
"[t]he equitable authority of courts to modify property distribution, alimony, and
support orders issued in divorce cases is well established." Conforti v. Guliadis,
128 N.J. 318, 323 (1992). Even when a divorce order incorporates agreements
reached privately between the parties, such orders can be modified "'in light of
all the facts' bearing on what is 'equitable and fair.'" Ibid. (quoting Smith v.
Smith,72 N.J. 350, 360 (1977)). Marital settlement agreements must "serve the
A-2885-19 21 strong public and statutory purpose of ensuring fairness and equity in the
dissolution of marriages." Ibid. The law "'grants particular leniency to
agreements made in the domestic arena,' thus allowing 'judges greater discretion
when interpreting such agreements.'" Sachau v. Sachau, 206 N.J. 1, 5 (2011)
(quoting Guglielmo v. Guglielmo, 253 N.J. Super. 531, 542 (App. Div. 1992)).
And "only those agreements that are 'fair and just' will be enforced." Addesa v.
Addesa, 392 N.J. Super. 58, 66 (App. Div. 2007) (quoting Petersen v. Petersen,
85 N.J. 638, 642 (1981)). A court may decline to enforce an oppressive or harsh
provision. Michalski v. Michalski, 50 N.J. Super. 454, 466-67 (App. Div. 1958).
Marital settlement agreements are subject to "judicial supervision and
enforcement . . . but only to the extent that they are just and equitable." Quinn
v. Quinn, 225 N.J. 34, 48 (2016). More precisely, a "narrow exception to the
general rule of enforcing settlement agreements as the parties intended is the
need to reform a settlement agreement due to 'unconscionability, fraud, or
overreaching in the negotiations of the settlement[.]'" Id. at 47 (quoting Miller
v. Miller, 160 N.J. 408, 419 (1999)). Reformation is permitted when a court
finds the terms of a marital settlement agreement unfair or inequitable. Miller,
160 N.J. at 418.
A-2885-19 22 "Because of the family courts' special jurisdiction and expertise in family
matters," we accord great deference to family court factfinding. Cesare v.
Cesare, 154 N.J. 394, 413 (1998). The Family Part's findings of fact are binding
on appeal when supported by adequate, substantial, and credible evidence. Id.
at 411-12.
We defer to the Family Part's discretion to decide issues pertaining to the
division of marital assets. La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div.
2000). The party seeking to modify equitable distribution must clearly and
convincingly prove that the settlement agreement is unconscionable under the
circumstances. Conforti, 128 N.J. at 322. Defendant's bid to establish overall
unconscionability failed. However, the court largely preserved the parties'
agreement and only modified the terms of the MSA and the operating agreement
which were not equitable or fair in light of intervening events. For example,
beginning with the line of credit, the MSA clearly made defendant responsible
for the obligation. But it did not oblige him to pay all balances incurred on that
account into perpetuity. When he signed the MSA, it had a balance of
$25,906.58. Afterward, the parties increased the line of credit. Nonetheless,
the riding arena is an improvement that ultimately benefits only plaintiff. We
A-2885-19 23 therefore agree with the judge that it would be inequitable to require defendant
to pay more than the balance remaining when the MSA was signed.
The judge decided that half of the $108,000 paid towards the expenses of
construction from other sources would be credited to each party. The judge's
decision is a common sense interpretation of the MSA language. He did not
modify the agreement, but merely interpreted an ambiguity. It was clearly in
the scope of his authority to do so. See generally Pacifico v. Pacifico, 190 N.J.
258 (2007).
Plaintiff claims a mutual mistake occurred in the drafting of the MSA as
the parties intended to transfer all of defendant's retirement accounts to her. The
agreement, prepared by plaintiff's attorney, did not specify the transfer of
defendant's T. Rowe Price account -1869, or his Vanguard -5844 account.
Defendant misinterpreted the MSA to mean he had to transfer those accounts as
well. His misunderstanding of a document he admits he did not read before
signing should not control. Most consequentially, agreements are construed
against the drafter. Id. at 267-68 (acknowledging that marital settlement
agreements, like other contracts, are to be construed against the drafter absent
both parties' involvement). Here, it is reasonable to construe the omission of
these accounts against plaintiff, not defendant. Thus, it was not error for the
A-2885-19 24 court to read the MSA as written and direct the return of accounts that defendant
mistakenly transferred to plaintiff.
Plaintiff also challenges each aspect of the judge's orders with respect to
the buyout. After our review of the record, we see no error. The court
essentially made ministerial changes intended to balance the equities and give
the MSA its plain meaning, given that plaintiff was mistakenly in possession of
hundreds of thousands of defendant's funds. With regard to the payment
schedule, the judge stated:
The [operating agreement] payment schedule is untenable, given [defendant's] financial circumstances. Since the [operating agreement] is incorporated into the MSA, the court has the power, through its power to make equitable distribution, to order a new payment schedule. [Defendant] shall pay [plaintiff] the $2,730,000 (minus credits) at the rate of $200,000 per year until the balance is paid. He will make payments to her quarterly, with $50,000 paid by March 1, June 1, September 1, and December 1 of each year.
The court reasonably directed the quarterly payments to begin following its
February 5, 2020 decision, rather than retroactively using the date of the sale
notice. It would otherwise have been an inequitable burden on defendant.
The court's October 23, 2019 order regarding the calculation of interest
was also reasonable. The judge rejected retroactive payments because plaintiff
wrongfully possessed defendant's substantial assets—"hundreds of thousands of
A-2885-19 25 dollars in retirement benefits and VM monies." It would be "unfair and
inequitable to award her substantial interest during a timeframe when she
improperly had so much of his money." Ultimately the court did award some
retroactive interest—but only from July 18, 2019, because the issue was not
raised until plaintiff moved for reconsideration on that date. The judge initially
directed interest be paid at the rate in the operating agreement, but reconsidered
when defendant filed his own motion, fixing the interest rate on the buyout at
2.5 percent.
According to the judge, plaintiff belatedly raised the interest issue. As the
judge calculated it, the interest sought by plaintiff would "impose[] on
[defendant] approximately $1 million or $3 million more in obligations than the
court envisioned in its June 2019 decision[,]" and the court already considered
the buyout price high in light of Klein's alternative valuations. Plaintiff's
requested buyout price of $2,730,000 would come instead to the inequitable and
unconscionably high total of $3,741,029.91. Thus, he reformed the interest rate
to a flat 2.5 percent. The judge had the authority to alter those terms. See
Conforti, 128 N.J. at 323; Addesa, 392 N.J. Super. at 66; Michalski, 50 N.J.
Super. at 466-67.
A-2885-19 26 Plaintiff also contends that the court erred in granting defendant a credit
for the money in the business account on an allegedly arbitrary date. The court's
June 28, 2019, order awarded defendant "a credit for the VM assets in existence
at the time of the resignation and buy-out." Thus, he was awarded a credit of
$147,941 for the funds "in the VM bank account" based on plaintiff's CIS and
her testimony that defendant was entitled to those funds, though defendant
contended that this amount was actually higher. The order stated that defendant
could seek the full credit claimed of $370,644 "by consent or in a future
application."
In its October 23, 2019 order, the court amended the credit to
$376,312.61.4 Plaintiff thereafter stipulated in her December 5, 2019
certification "to the [d]efendant's principal [purchase price] of $2,271,420 . . . ."
This figure included credits of $33,582, $54,334, and the very credit which
plaintiff now appeals, $370,664, for money in the VM account. Plaintiff cannot
reasonably object to these credits included in the stipulated buyout price.
Judicial estoppel precludes a party from "asserting a position in a case that
contradicts or is inconsistent with a position previously asserted by the party in
4 The statement of reasons says the credit should be $370,644, which conflicts with the order. A-2885-19 27 the case or a related legal proceeding." Newell v. Hudson, 376 N.J. Super. 29,
38 (App. Div. 2005) (quoting Tamburelli Props. v. Cresskill, 308 N.J. Super.
326, 335 (App. Div. 1998)).
II.
Plaintiff claims that the trial court erred in: calculating child support;
imputing income to defendant; finding she would receive enough funds to
support the children; and allocating credit for the parties' 529 plans.
In its June 28, 2019 opinion, the court cited defendant's testimony that as
of November 6, 2018, he grossed $208,000 in the first ten months of his new
business. The judge said he found it "difficult to accept [defendant's] testimony
regarding his income. He is an admitted liar, even while he is testifying under
oath. . . . He has a serious credibility problem." The court additionally found
that "[b]oth of these parties have credibility problems."
The judge wrote that the income he previously imputed of $240,000 per
year pendente lite was no longer a "reasonable amount." He credited plaintiff's
testimony that after paying subreps, VM netted approximately one million
dollars per year, though he was "not convinced" that defendant should be
imputed the full amount, as such a figure was not "demonstrated" at the plenary
hearing.
A-2885-19 28 Nonetheless, the court acknowledged that defendant had a "proven track
record of a lucrative and stable earning capacity[,]" having "generated revenues
in excess of $1.2 million each year" at VM before payments to subreps.
Defendant's new company performed "the same work, in the same industry, with
the same business contacts, in the same geographic areas," though on a smaller
scale. And, defendant had "stonewalled" discovery to prevent both plaintiff and
the court "from learning the full scope and true income of his business." The
court further found that defendant can earn more than he stated because "[h]e
earned that when he was receiving [thirty percent] of the VM compensation."
Without further calculations, the court concluded that defendant has the ability
to earn $400,000 per year.
Imputation of income is in the discretion of the court, based upon the
evidence presented. Sternesky v. Salcie-Sternesky, 396 N.J. Super. 290, 307-08
(App. Div. 2007). It "is a discretionary matter not capable of precise or exact
determination but rather requiring a trial judge to realistically appraise capacity
to earn and job availability." Storey v. Storey, 373 N.J. Super. 464, 474 (App.
Div. 2004). There are no bright line rules that govern the imputation of income.
Ibid. On appeal, a trial judge's decision "will not be overturned unless the
underlying findings are inconsistent with or unsupported by competent
A-2885-19 29 evidence." Id. at 474-75. Thus, a trial court's imputation of income for support
purposes is subject to an abuse of discretion standard. See Tash v. Tash, 353
N.J. Super. 94, 99-100 (App. Div. 2002).
The judge imputed a reasonable amount of income to defendant. Although
approximated, the court's figure is consistent with VM's earnings and
defendant's unchallenged testimony that Velocity operates on a smaller scale
than VM. Defendant testified that he earned $208,000 in the first ten months
operating Velocity. The court reasonably found that figure to be low, in light of
the scant information which defendant provided and his proven earnings history.
And the record shows it is probable that defendant's earnings will increase as his
new business grows.
Defendant did not testify that he voluntarily reduced his income—only
that Velocity operated on a smaller scale. Naturally, a newer and smaller
company that only covers five states will generate lower income than a larger
well-established company that covers twenty-five. The court was well within
its discretion to decide that defendant could earn $400,000 annually—more than
he acknowledged, yet less than his prior earnings.
In setting the amount of child support, the court analyzed the factors in
N.J.S.A. 2A:34-23(a), finding that the children's expenses totaled $9,527 per
A-2885-19 30 month. Regarding the standard of living of each parent, the court found that
plaintiff enjoys a "substantially higher" standard of living and has "substantially
more assets" than defendant. The court used the $400,000 of imputed income
for defendant. Regarding the needs of the children, the court recognized that
the parents intend for the children to attend college, that the children have no
income or assets and do not work, that the parents have no court-ordered support
for others, and that the children do not have any debts or liabilities, noting the
parties had debts. The court considered other statutory factors.
The judge observed that given the "unusual agreement" between the
parties regarding VM, the "guidelines are not helpful." The $200,000 annual
buyout payment "has elements of equitable distribution, spousal support , and
child support[,]" and the parties' arrangement "does not fit the child support
guidelines model." The court elected to deviate from the guidelines to preserve
fundamental fairness. The court concluded that plaintiff will be "well able to
support these three children" in a manner which is "at, or at least very close to,
the marital standard of living" through the buyout payments. Thus, the court
awarded $100 per week in child support. The court confirmed its award in ruling
on the initial motion for reconsideration, writing, "there should be a substantial
A-2885-19 31 deviation from the guidelines because [plaintiff] is receiving millions from the
VM buyout (in addition to the millions she has received since the divorce)."
Child support awards and modifications are entrusted to the sound
discretion of the trial court; we review for abuse of discretion. Innes v. Innes,
117 N.J. 496, 504 (1990). A child support award will not be set aside unless
shown to be unreasonable, unsupported by substantial evidence, or "the result
of whim or caprice." Tannen v. Tannen, 416 N.J. Super. 248, 278 (App. Div.
2010) (quoting Foust v. Glaser, 340 N.J. Super. 312, 315 (App. Div. 2001)). A
court must attach a guidelines worksheet and provide a statement of reasons.
Fodero v. Fodero, 355 N.J. Super. 168, 170 (App. Div. 2002).
A judge has discretion to supplement the child support award where the
family income exceeds the maximum income amount in the guidelines utilizing
the N.J.S.A. 2A:34-23(a) factors. Child Support Guidelines, Pressler &
Verniero, Current N.J. Court Rules, Appendix IX-A to R. 5:6A,
www.gannlaw.com (2021). See also Isaacson v. Isaacson, 348 N.J. Super. 560,
581 (App. Div. 2002).
A court may also deviate from the guidelines when good cause
demonstrates that adherence would be inappropriate. Ribner v. Ribner, 290 N.J.
Super. 66, 73 (App. Div. 1996). When a court "finds that the guidelines are
A-2885-19 32 inappropriate in a specific case, it may either disregard the guidelines or adjust
the guidelines-based award to accommodate the needs of the children or the
parents' circumstances." Pressler, Appendix IX–A.
The court here properly considered the factors found in N.J.S.A. 2A:34-
23(a), keeping in mind that the guidelines were not helpful in light of the
$200,000 annual payment for the buyout of VM, which encompassed alimony
and child support. The awards, including the buyout and child support, yield
plaintiff $17,100 per month—a reasonable sum between the amounts in her CIS
indicating that her lifestyle required income of $11,076 per month, with
prospective expenses of $23,689 per month. It greatly exceeded the $9,527 the
court found more accurately represented the children's monthly needs.
Furthermore, plaintiff's November 2018 CIS reported assets totaling $2,825,147
with only approximately $400,000 in liabilities. The court's determination was
proper.
With regard to the 529 plans, the MSA required the parties to calculate
their respective contributions at the time pursuant to Newburgh, 88 N.J. at 529.
Each parent's share would be reduced by the amount of any 529 plan. On
reconsideration, the court found the MSA clear, and each party was expected to
A-2885-19 33 contribute to the children's college expenses. The fact plaintiff was made
custodian of the accounts in no way lessened her responsibility to contribute.
The court rejected plaintiff's application based on the clear and
unmistakable language of the MSA. We see no reason to disturb the parties'
agreement as to their children's college savings.
III.
Plaintiff asserts that the court erred in not requiring defendant to provide
ongoing documentation of his personal and business income. We find the court's
decision reasonable. The cases plaintiff relies upon require documentation when
some idiosyncratic factor exists. None exists here. Defendant has not
established a basis for such extraordinary relief. See Walles v. Walles, 295 N.J.
Super. 498, 518-19 (App. Div. 1996) (only particular facts warrant the
extraordinary relief requiring a litigant to disclose his or her income).
IV.
The court analyzed each of the factors in Rule 5:3-5(c) in its initial opinion
regarding counsel fees. Plaintiff was in a superior financial position and "ha[d]
the ability to immediately pay all of the fees that she owe[d]." Both parties
"took unreasonable positions with respect to different issues" and "[e]ach party
prevailed with respect to different issues." The court found defendant incurred
A-2885-19 34 $352,669.79 in legal fees, while plaintiff incurred $533,133 in legal fees and
$27,586.46 in expert fees. Plaintiff was previously awarded $6,750 in legal fees
in June 2018. Plaintiff actually paid $366,366.43 in legal fees and $19,173.50
in expert fees. Plaintiff "misspent everyone's time" during the plenary hearing
with "persistent refusal[s] to answer questions . . . ." On balance, the court found
that these factors "militate for fees paid by each [party] to the other." Hence the
court ultimately declined to award counsel fees.
Rule 4:42-9 permits an award of fees in a family action based on a
weighing of the following factors set forth in Rule 5:3-5(c):
(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.
The award of counsel fees and costs in matrimonial actions rests in the
sound discretion of the trial court. Williams v. Williams, 59 N.J. 229, 233
(1971). Fees will not be disturbed in the absence of a showing of abuse.
Berkowitz v. Berkowitz, 55 N.J. 564, 570 (1970). "We will disturb a trial court's
A-2885-19 35 determination on counsel fees only on the 'rarest occasion,' and then only
because of 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)),
or a clear error in judgment. See Tannen, 416 N.J. Super. at 285. Where case
law, statutes and rules are followed and the judge makes appropriate findings of
fact, the fee award is entitled to deference. Yueh v. Yueh, 329 N.J. Super. 447,
466 (App. Div. 2000); see also Pressler & Verniero, Current N.J. Court Rules,
cmt. 4.7 on R. 5:3-5 (2022); J.E.V. v. K.V., 426 N.J. Super. 475, 493-94 (App.
Div. 2012).
One consideration in making an award of fees is whether a party acted in
bad faith throughout the litigation. Borzillo v. Borzillo, 259 N.J. Super. 286,
291-94 (Ch. Div. 1992); Williams, 59 N.J. at 233. Bad faith may include misuse
or abuse of process, seeking relief which one knows or should know that no
reasonable argument could support, intentional misrepresentation of facts or
law, and vexatious, wanton, or oppressive actions of a losing party. Borzillo,
259 N.J. Super. at 293-94. And counsel fees may be awarded when a party has
unnecessarily prolonged the litigation. Marx v. Marx, 265 N.J. Super. 418, 429
(Ch. Div. 1993).
A-2885-19 36 Here, the court appropriately considered Rule 5:3-5(c) and found the
parties' animosity and unreasonable positions extended the litigation, causing
substantial legal fees such that neither party was entitled to compensation. The
decision was not an abuse of discretion.
Affirmed.
A-2885-19 37