NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-4267-17T2
D.M.H.,
Plaintiff-Respondent,
v.
H.G.H.,
Defendant-Appellant. ______________________________
Argued January 9, 2020 – Decided June 12, 2020
Before Judges Alvarez, Nugent and DeAlmeida.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hudson County, Docket No. FM-09-2148-15.
Nirmalan Nagulendran argued the cause for appellant (Miller Meyerson & Corbo, attorneys; Nirmalan Nagulendran, of counsel and on the briefs).
Scott D. Danaher argued the cause for respondent (Snyder Sarno D'Aniello Maceri & Da Costa LLC, attorneys; Scott D. Danaher, of counsel and on the brief; Sarah Anne Sedlack, on the brief).
PER CURIAM Defendant H.G.H.1 appeals from provisions of the Family Part's August
31, 2017 amended judgment of divorce: (1) setting his child support and
payments in lieu of alimony obligations; (2) determining the value of the marital
home; (3) distributing a portion of the increase in value of a premarital asset to
plaintiff D.M.H.; and (4) creating a constructive trust for his share of marital
assets to ensure payment of his child support and other obligations.
We reverse the provisions of the amended judgment setting defendant's
child support and payments in lieu of alimony obligations because the trial court
erred when imputing income to defendant. We remand for redetermination of
those obligations. We affirm the remainder of the amended judgment.
I.
The following facts are derived from the record and the trial court's oral
opinion issued after a thirteen-day trial. Plaintiff and defendant were married in
2001 and had three children. As of the entry of the amended judgment of
divorce, defendant was fifty-two, plaintiff was forty-eight, and their children
were minors.
A. Defendant's Income.
1 We identify the parties by initials to protect the confidentiality of court records relating to domestic violence. R. 1:38-3(d)(9) and (13). A-4267-17T2 2 Defendant has a bachelor's degree in mathematics and economics and a
master's degree in economics from a university in Ireland. He also has a senior
commercial pilot's license but has not flown commercial airlines since the early
1990's when he worked for Ryanair, an Irish entity.
When the parties married, defendant was a voice broker in the foreign
exchange market on Wall Street. He explained this position as being a "middle
man," matching potential buyers of foreign currency with sellers and earning a
commission on each transaction. He executes exchanges over the telephone,
rather than electronically.
Defendant began working at Tullett, a Manhattan brokerage firm, in 1993.
In his three highest salary years, defendant earned $500,000, $500,000, and
$700,000 in consecutive years. After the financial crisis of 2008, his income
decreased significantly. Defendant identified three reasons for the change: (1)
advances in technology rendering voice brokers obsolete; (2) his age; and (3)
the 2010 enactment of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, 12 U.S.C.A. §§ 5301 to -5634; 15 U.S.C.A. §§ 1601 to -02, §
1631 (Dodd-Frank), and related regulations.
With respect to technology, screen-based trading programs using complex
algorithms progressed to become "far more cost effective and efficient than a
A-4267-17T2 3 voice broker." At trial, defendant predicted that within two years voice brokers
would be obsolete.
Defendant testified his advancing age affected his earning capacity
because most traders were younger than thirty-two, and the typical trader would
not want to conduct business with someone of defendant's generation.
Finally, according to defendant, Dodd-Frank and related regulations
changed the nature of his business. Defendant developed personal relationships
with banking clients, who he commonly entertained several nights a week. He
views these relationships as essential to his ability to generate transactions.
After the 2008 recession, he entertained clients approximately only one night
every other week. Since enactment of Dodd-Frank, brokerage firms are no
longer permitted to entertain banking clients.
Defendant testified the Dodd-Frank regulations also curtailed banks'
ability to trade and diminished their appetite for risk. As a result, trading volume
decreased significantly, and brokerage firms contracted. According to
defendant, while he once was able to facilitate a trade every five minutes, by the
time of the 2017 trial he was lucky to make two trades in a ten-hour workday.
Because of the contraction, voice brokers lost leverage to negotiate higher
compensation. His employer cut commission rates by forty or fifty percent.
A-4267-17T2 4 Defendant left Tullett in 2013. The reasons for his departure were
contested at trial. Plaintiff testified Tullett, dissatisfied with defendant's
drinking habits, demoted him and reduced his pay to force him to leave. She
testified defendant told her he was reprimanded for taking extended client
lunches and returning to the office intoxicated.
Defendant denied being disciplined for his alcohol use and testified Tullett
closed the desk at which he worked because Dodd-Frank prohibited brokerage
firms from having competing desks. According to defendant, Tullett offered
him a position at base salary of $100,000, but he declined and negotiated a deal
to earn $300,000 at GFI, where he started working as a foreign exchange broker
in 2013.
Beginning in February 2015, defendant's salary at GFI was cut to
$250,000 per year because he was not meeting his contractual quota. He
testified his failure to fulfill his quota was not his fault but resulted from changes
in the industry. He was informed in writing by GFI he could be terminated at
any time. A few weeks later, plaintiff filed for divorce.
On October 6, 2015, defendant's employment with GFI ended. According
to defendant, approximately forty percent of GFI employees were terminated at
that time. He testified GFI was moving toward paying brokers $100,000 per
A-4267-17T2 5 year instead of $300,000. Because he did not supply his 2015 or 2016 income
tax returns at trial, defendant's gross income for those years is not in the record.
After he was terminated from GFI, defendant left for Europe for about ten
weeks. He testified the trip was to "go home[,] . . . regroup[,]" and explore
employment opportunities. Although he claimed he interviewed unsuccessfully
with Ryanair and a London brokerage firm, he produced no evidence of job
interviews. Defendant ended his trip with a two-week stay in the Canary Islands.
After defendant returned from Europe, Tullett offered him a position as a
foreign exchange broker for $75,000 a year. Tradition America (Tradition)
thereafter offered defendant a position as a foreign exchange broker for $90,000
per year and commissions. Defendant started at Tradition in November 2016.
At Tradition, defendant earned a thirty-percent commission, and
generated about $25,000 of business per month. He testified that prior to 2008
he earned a forty-percent commission and generated $100,000 in business in an
average month. He also had a "seat cost" at Tradition for use of the firm's
computer terminal and other expenses totaling about $98,000 a year, which
diminished his net income.
Defendant testified his $90,000 salary represented the most he could earn
in any occupation. According to defendant, voice brokering was a "niche
A-4267-17T2 6 market," that was "dying," and he had a unique skill set not useful to brokering
other types of financial products. He testified he was too "burned out" to find
work in another field. He considered seeking a position in aviation but believed
he would earn about $30,000 a year as a first officer and be subject to mandatory
retirement at sixty-five.
Defendant presented Richard Higgs as an expert in the foreign exchange
industry. He testified the field had contracted dramatically and the number of
voice brokers had shrunk from about three hundred in 2007 to less than fifty in
2017. He testified he realized in 2008 the boom period for foreign exchange
brokers was ending and told his employees, including defendant, to start saving
or investing in other businesses. According to Higgs, while it was "very easy
for a lay person to look at . . . compensation over the years and think that this is
like any other industry and that income over the course of one's lifetime is linear
. . . or increasing gradually," that was "just not the case here. This is a cliff."
Higgs testified the industry had gone from a fragmented, volatile, and
"highly opportunistic" market to a heavily regulated field, which led to "a
cascade of other outcomes." The first of these outcomes stemmed from the
reduction in the number of banks. Because banks were foreign exchange
brokers' clients, their contraction necessarily reduced brokers' commissions. A
A-4267-17T2 7 broker, in Higgs's view, was "only as employable as his ability to make
commissions. . . . [T]here's no other real value that a voice broker provides
other than their relationships with particular banks." He opined that voice
brokers had "no proprietary knowledge or information," but instead were
"literally leveraging their relationships with two or three traders in order to get
them to do business with them."
Second, according to Higgs, there was a dramatic consolidation of voice
brokerage firms from more than a hundred at the beginning of this century to
three in 2017. This came about because technology eliminated the "market
manipulation" a voice broker could engage in with a trader now that all deals
and interests are accessible on an electronic platform.
Third, according to Higgs, as technology expenses increased, brokerage
firms pushed those expenses onto brokers.
Fourth, Higgs testified that following the 2008 financial crisis, the federal
government bought several banks' toxic assets on the condition the banks limit
speculation in foreign currency. Reduced speculation decreased market
volatility, compressed commissions, and lowered brokerage firm income. In
Higgs's view, Dodd-Frank resulted in voice brokers being paid what "they
always should have been paid, which is very little."
A-4267-17T2 8 As a result of these and other factors, Higgs testified, the remaining voice
brokers in the foreign exchange market, probably around forty-five in total, were
making between $50,000 and $250,000 as a base salary. By contrast, between
2004 and 2012, the average salary for a broker in the market was about
$400,000. He testified that voice brokers who left the industry were primarily
in real estate sales or were insurance brokers.
Defendant, in Higgs's opinion, was a "good broker," but "never a top ten
percent broker" and had been "skating along . . . the unemployability line." His
best skill was "endearing himself to others" and "establish[ing] relationships"
with traders, but that skill was now irrelevant in the field, "[b]ecause bank
traders no longer trade on relationships . . . ." Higgs believed defendant was no
longer capable of earning more than $100,000 a year as a voice broker and the
prospect of him earning $250,000 was a "very long shot." According to Higgs,
the problem was not "specific to him but endemic in the . . . market."
The trial court found defendant had "a significant earning capacity" as
demonstrated by his prior income and had been "voluntarily unemployed during
the majority of this litigation," and underemployed in his current position. The
court concluded that, after losing his job in 2015, defendant failed to engage in
"substantial efforts to find alternative employment or other means of earning
A-4267-17T2 9 money in addition to his job as a foreign exchange broker," given that "the skills
he ha[d] developed [we]re transferrable to other industries and he did no t prove
otherwise." In addition, the court found defendant "failed to show that he [wa]s
unable to earn greater income in a different market or with a different position
and admitted that he could earn more but was essentially 'burned out.'" Although
the court found Higgs testified credibly about the industry, it concluded
defendant "presented no reliable testimony as to his employability or overall
diminished earning capacity by way of an expert."
Finding defendant to be "an industrious, intelligent and educated
individual," the court imputed income to him of $300,000 annually. The court
used the imputed income to determine defendant's child support obligation and
payments in lieu of alimony.
B. The Marital Home.
In 2008, the parties purchased a house in Weehawken that was the marital
home for the remainder of their marriage. The house is on a cliff and has a view
of the Manhattan skyline.
Three experts testified with respect to the fair market value of the home
for purposes of equitable distribution, all using the comparable sales approach
to determine value. A court-appointed real estate appraiser considered a number
A-4267-17T2 10 of comparable sales, to which he made adjustments. He opined a fair market
value for the home of $439 per square foot of living space. Although the house
is 5425 square feet, he based his opinion of value on 2768 square feet of "livable
area," which did not include the finished basement. He appraised the value of
the house at $1,215,000.
The expert also considered high-rise apartments soon to be built between
the house and the Hudson River, which would obstruct some, but not all, of the
skyline view. In addition, he noted the house's cliffside location was "not the
most desirable area for people with families."
Plaintiff's expert opined a fair market value of $1,235,000. He also
excluded the basement area when determining value. Both experts testified that
the appraisal industry standard is to consider a basement to be an amenity.
Defendant's expert opined a fair market value of $1,750,000 for the home.
When reaching that opinion, he made significant adjustments to several of his
comparable sales and included the basement, which contains four of the home's
five bedrooms and has the best views of the skyline, in the home's living space.
Defendant testified he received an offer to purchase the marital home for
$1,700,000 from his brother-in-law, an officer with an Irish real estate company.
The brother-in-law testified he regularly bought and sold luxury real estate in
A-4267-17T2 11 Europe. He had never been inside the house but saw it from the Hudson River
and read defendant's expert's appraisal report.
The court determined the fair market value of the marital home to be
$1,215,000 based on the opinion of the court-appointed expert. The court did
not afford the opinion of defendant's expert great weight, finding he had deviated
from industry standards with respect to his treatment of the basement.
C. The Hoboken Property.
Before the marriage, defendant bought a residential condominium unit in
Hoboken for $220,000. After the parties married, they lived in the unit briefly.
The unit was thereafter used as a rental property. Because defendant
preferred not to engage with the homeowner's association, plaintiff was
responsible for finding tenants, collecting rent, and otherwise operating the
property. During plaintiff's management of the property, it was not in arrears
on its mortgage or association fees.
After plaintiff filed for divorce, defendant took control of the property,
including collecting rent. By the time of the trial, the property, despite
generating approximately $6000 a month in rent, was in pre-foreclosure on its
mortgage and line of credit. The trial court ordered the Hoboken property be
sold "to insure the stability and financial support" of the children.
A-4267-17T2 12 The trial court held that the central inquiry with respect to whether the
Hoboken unit was subject to equitable distribution is whether "the incremental
increase in the value of the property," during the marriage was attributable either
to the joint efforts of the couple or to the individual contributions of plaintiff.
The court found that plaintiff "was a full time homemaker for part of the
marriage and child rearer," who also managed the Hoboken property "in all
respects," including "assuring it was rented," and "dealing with the association
members the defendant disliked." The court noted that during that period, there
was never a late payment on the property.
The court found the parties pooled their resources during the marriage to
pay expenses, including when the Hoboken unit served as the marital home. The
court concluded "the increased equity in the premarital residence that resulted
from payments towards the principal pay down of the mortgage as opposed to
increasing the home values, [was] to be considered as a marital asset acquired
by the parties during the marriage and thus subject to equitable distribution."
The court directed proceeds from the sale of the property be distributed eighty
percent to defendant and twenty percent to plaintiff.
A-4267-17T2 13 D. The Constructive Trust.
Plaintiff testified that beginning in 2008, around the same time defendant's
employment prospects were changing, his drinking increased and intensified.
She described several instances she believed demonstrated defendant's
"alcoholism, his utter lack of control and any level of responsibility to his family
as a father." According to plaintiff, defendant was verbally and physically
abusive toward her and family members on a number of occasions. In addition,
plaintiff testified defendant was unavailable to her and the children for extended
periods of time without explanation.
An expert in psychiatry, with a specialty in addiction, conducted a
psychiatric and substance abuse evaluation of defendant and interviewed
plaintiff. He diagnosed defendant with alcohol use disorder, having found a
"clear pattern" of association between his drinking and his violent acts.
In a May 2015 consent order, defendant agreed he would maintain the
family's financial status quo. He failed to do so by not paying bills and stopping
payments on checks plaintiff wrote for household expenses.
Defendant also sabotaged the potential sale of a troubled bar in which he
held an interest by refusing to sign closing documents. He sent a series of emails
to an attorney involved in the transaction in which he said he would rather see
A-4267-17T2 14 the bar "burn to the ground" than allow plaintiff and his business partners to
profit from its sale. In an expletive-ridden email he threatened to castrate
another attorney if he emailed him again. Defendant admitted he had been
drinking when he sent that email and that it was "immature and childish."
While in Europe, defendant transferred €25,000 from the couple's joint
account to his personal account at the Bank of Ireland. He testified he used the
money to pay a debt but offered no proof of the debt or any payments. The
person to whom the debt purportedly was owed testified at trial but did not
mention the debt or any payments. While in Europe, defendant did not support
his family financially, and made no payments on the mortgage or line of credit
on the marital home or the line of credit on the Hoboken property.
During the marriage, the parties established college savings accounts for
their children. The court found defendant withdrew approximately $77,000
from those accounts for his personal use and enjoyment after the divorce
complaint was filed.
Between May 2015 and August 2016, defendant, while unemployed,
withdrew from ATMs, or charged, a total of $14,446.37 at or near casinos. He
testified that he gave the money withdrawn from ATMs to a friend to whom he
had a debt. According to defendant, his friend is a professional poker player
A-4267-17T2 15 who agreed to gamble with defendant's money and split his winnings to reduce
the debt. He provided no documentary evidence to support his testimony.
On August 16, 2016, the trial court ordered one of defendant's 401(k)
accounts be liquidated and placed in escrow, in part, to make current the
mortgage on the marital home. Defendant withdrew $125,331.41 from the
account and transferred $117,020 to his counsel. Of that amount, $25,000 was
paid to each party's attorneys and about $55,000 was used to bring the mortgage
current on the marital home. Defendant testified that he used the $8341.41 not
transferred to his attorney to pay a friend rent for having stayed in his apartment.
Defendant admitted he had not made child support payments as previously
ordered. As of trial, his child support arrears totaled $22,618. Plaintiff testified
defendant's erratic behavior could jeopardize her financial interest and sought
imposition of a constructive trust on defendant's share of marital assets .
The court found it "impossible to afford [defendant] great credibility,"
particularly with respect to his withdrawals purportedly to repay debts, about
which he provided no proof. The court also concluded "[n]umerous examples
of noncompliance by defendant . . . evidenc[ed] his inability to adhere to court
orders and a pattern of continued noncompliant behavior . . . ." The court found
defendant has alcohol abuse issues and a "pattern of conduct, which is of great
A-4267-17T2 16 concern as [to] his stability and emotional well[-]being." The court concluded
imposition of a constructive trust was "necessary, perhaps not permanently, but
at the very least until all of the equitable distribution is finalized."
On August 31, 2017, the trial court entered an amended final judgment of
divorce incorporating its decision.
This appeal followed. Defendant raises the following arguments:
POINT I
THE TRIAL COURT ABUSED ITS DISCRETION BY DISREGARDING NEW JERSEY LAW ON INCOME IMPUTATION.
POINT II
THE TRIAL COURT ABUSED ITS DISCRETION BY DISREGARDING THE FACTS AND EVIDENCE PRESENTED AT TRIAL WITH REGARDS TO THE DEFENDANT'S EMPLOYMENT AND INCOME.
POINT III
THE TRIAL COURT ERRED BY DETERMINING DEFENDANT WA[S] REQUIRED TO FIND [AN] ALTERNATIVE ADDITIONAL SOURCE OF INCOME.
POINT IV
THE TRIAL COURT ABUSED ITS DISCRETION BY ENTERING A CONSTRUCTIVE TRUST WHEREIN THE DEFENDANT WAS COMPLETELY
A-4267-17T2 17 DEPRIVED OF HIS INTEREST IN THE MARITAL ESTATE.
POINT V
THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING THE PLAINTIFF THE DEFENDANT'S PRE-MARITAL PROPERTY.
POINT VI
THE TRIAL COURT ABUSED ITS DISCRETION IN DETERMINING THE VALUE OF THE MARITAL HOME.
II.
Our review of a Family Part's order is limited. Cesare v. Cesare, 154 N.J.
394, 411 (1998). "[W]e do not overturn those determinations unless the court
abused its discretion, failed to consider controlling legal principles or made
findings inconsistent with or unsupported by competent evidence." Storey v.
Storey, 373 N.J. Super. 464, 479 (App. Div. 2004). We must accord substantial
deference to the findings of the Family Part due to that court's "special
jurisdiction and expertise in family matters . . . ." Cesare, 154 N.J. at 413.
We must defer to the judge's factual determinations, so long as they are
supported by substantial credible evidence in the record. Rova Farms Resort,
Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). This court's
"[a]ppellate review does not consist of weighing evidence anew and making
A-4267-17T2 18 independent factual findings; rather, [this court's] function is to determine
whether there is adequate evidence to support the judgment rendered at trial."
Cannuscio v. Claridge Hotel & Casino, 319 N.J. Super. 342, 347 (App. Div.
1999) (citing State v. Johnson, 42 N.J. 146, 161 (1964)). We review de novo
the court’s legal conclusions. Manalapan Realty, L.P. v. Twp. Comm., 140 N.J.
366, 378 (1995).
In addition, there must be "deference to the trial court's credibility
determinations[,]" N.J. Div. of Youth & Family Servs. v. M.M., 189 N.J. 261,
279 (2007), "because it 'hears the case, sees and observes the witnesses, and
hears them testify,' affording it 'a better perspective than a reviewing court in
evaluating the veracity of a witness.'" City Council v. Edwards, 455 N.J. Super.
261, 272 (App. Div. 2018) (quoting Gnall v. Gnall, 222 N.J. 414, 428 (2015)).
A. Imputation of Income to Defendant.
In "any matrimonial action . . . the court may make such order as to the
alimony or maintenance of the parties . . . as the circumstances of the parties and
the nature of the case shall render fit, reasonable and just . . . ." N.J.S.A. 2A:34-
23. "Underpinning the basis of every support order is the proposition the payor
has the 'ability to pay' the amount set . . . ." Dorfman v. Dorfman, 315 N.J.
Super. 511, 516 (App. Div. 1998).
A-4267-17T2 19 "[W]hen a parent, without just cause, is voluntarily unemployed or
underemployed, income may be imputed to that parent to provide for the child's
needs." Caplan v. Caplan, 182 N.J. 250, 268 (2005). "Inherent in a finding of
'underemployment' is the notion the obligor is intentionally failing to earn that
which he or she is capable of earning." Dorfman, 315 N.J. Super. at 516; accord
Strahan v. Strahan, 402 N.J. Super. 298, 312 (App. Div. 2008). "[T]he obligor
must establish that he or she is earning at capacity, i.e., not underemployed, in
order to avoid imputation." Storey, 373 N.J. Super. at 474.
"Imputation of income 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." Ibid. When an obligor shows "a concerted
effort to find the same work at comparable pay[,] . . . that obligor establishes
that he or she is not voluntarily underemployed in the new job." Id. at 472.
Defendant argues the trial court mistakenly exercised its discretion when
imputing income to him because the record establishes he was working at
capacity in his chosen field after losing a higher paying position as a result of
market changes beyond his control. We agree.
While the record supports the trial court's finding defendant spent more
than a year not seriously pursuing maximal employment after he was terminated
A-4267-17T2 20 by Tullett, it also contains undisputed evidence the voice trader foreign
exchange market seriously contracted after the 2008 financial crisis as a result
of the enactment of Dodd-Frank and related regulations and advances in
technology.
The only expert testimony in the record with respect to defendant's earning
potential is Higgs's opinion defendant is no longer capable of earning more than
$100,000 per year in the field in which he has been employed for the entire
marriage and nearly all of his adult life. We see no evidence supporting the
finding he is able to earn three times that amount in his present field or in another
profession, including aviation. See Ibrahim v. Aziz, 402 N.J. Super. 205, 212-
14 (App. Div. 2008) (holding it is error to impute income that "bears no
relationship to defendant's earnings or ability to earn money"). Defendant's age
and relative lack of skills, along with market and legal changes make it unlikely
he will earn more than he does at his present position.
We therefore vacate the portions of the amended final judgment of divorce
establishing defendant's child support and payments in lieu of alimony
obligations based on imputed annual income of $300,000. We remand for a new
determination of defendant's child support and other obligations based on
income reflecting market conditions in his field and his proven earning capacity.
A-4267-17T2 21 B. Valuation of Marital Home.
"Great deference is to be shown to a judge's discretionary decisions in
bench trials." In re A., 277 N.J. Super. 454, 472 (App. Div. 1994). In particular,
"[a]s the finder of fact, the trial judge ha[s] the prerogative to evaluate the
credibility of the testimony of . . . competing experts," and to determine which
expert opinion is the most credible. N.J. Div. of Child Prot. & Permanency v.
M.M., 459 N.J. Super. 246, 258 (App. Div. 2019).
"There are three traditional appraisal methods utilized to predict what a
willing buyer would pay a willing seller on a given date, applicable to different
types of properties: the comparable sales method, capitalization of income and
cost." Brown v. Borough of Glen Rock, 19 N.J. Tax 366, 376 (App. Div. 2001).
"The comparable sales approach is generally accepted as an appropriate method
of estimating the value of a single-family residence." Elrabie v. Borough of
Franklin Lakes, 24 N.J. Tax 158, 176 (Tax 2008) (citing Brown, 19 N.J. Tax at
377.) This method of valuation has been defined as "[a] set of procedures in
which a value indication is derived by comparing the property being appraised
to similar properties that have been sold recently, applying appropriate units of
comparison, and making adjustments to the sales prices of the comparables
based on the elements of comparison." Ibid. (alteration in original).
A-4267-17T2 22 Our review of the record revealed the trial court's determination of the fair
market value of the marital home is supported by adequate, substantial, credible
evidence. Cesare, 154 N.J. at 411-12. Having heard the testimony of three
expert appraisers, the court determined the opinion of value offered by the court-
appointed expert applying the well-established sales comparison approach
applicable to single-family homes was credible. We see no basis on which to
disturb that conclusion.
C. Distribution of Premarital Assets.
The "court may make such award or awards to the parties, in addition to
alimony and maintenance, to effectuate an equitable distribution of the property,
both real and personal, which was legally and beneficially acquired by them or
either of them during the marriage . . . ." N.J.S.A. 2A:34-23(h). The statute
"should be construed, to the extent feasible, to effectuate the public policy
underlying the equitable distribution law, which is to recognize that marriage is
'a shared enterprise, a joint undertaking, that in many ways . . . is akin to a
partnership.'" Weiss v. Weiss, 226 N.J. Super. 281, 287 (App. Div. 1988)
(quoting Smith v. Smith, 72 N.J. 350, 361 (1977)).
"Any property owned by a husband or wife at the time of marriage will
remain the separate property of such spouse and in the event of divorce will be
A-4267-17T2 23 considered an immune asset and not eligible for distribution." Valentino v.
Valentino, 309 N.J. Super. 334, 338 (App. Div. 1998). However, such
"[p]roperty 'clearly qualifies for distribution' when it is 'attributable to the
expenditure of effort by either spouse' during marriage." Pascale v. Pascale, 140
N.J. 583, 609 (1995).
Whether "the appreciation during the marriage of a pre-owned asset will
be subject to distribution" depends on whether the "asset is active or passive."
Valentino, 309 N.J. Super. at 338. "Passive immune assets can be defined as
those assets whose value fluctuations are based exclusively on market
conditions." Ibid. "An active, immune asset involves contributions and efforts
by one or both spouses toward the asset's growth and development which
directly increase its value." Ibid. "When the increase in value is brought about
solely through the efforts of the owner, that value is undistributable." Ibid.
However, "when such value is derived, in part or in whole, from the efforts
of the non-owner, the appreciation is subject to distribution." Ibid. "The
increased value of active immune assets must be considered eligible to the extent
that it may be attributable to the expenditures or the effort of the non-owner
spouse, and a determination must be made regarding the extent the original
investment has been enhanced by contributions of either spouse." Ibid. "The
A-4267-17T2 24 burden of establishing immunity rests upon the spouse asserting such
immunity." Ibid.; accord Pacifico v. Pacifico, 190 N.J. 258, 269 (2007).
"Appellate review pertaining to the division of marital assets is narrow."
Valentino, 309 N.J. Super. at 339. We "decide whether the trial [court]
mistakenly exercised its broad authority to divide the parties' property and
whether the result was 'reached by the trial judge on the evidence, or [was]
clearly unfair or unjustly distorted by a misconception of law or . . . fact . . . .'"
Ibid. (quoting Wadlow v. Wadlow, 200 N.J. Super. 372, 382 (App. Div. 1985)).
Having carefully reviewed the record, we reject defendant's argument that
the trial court abused its discretion in awarding plaintiff a percentage of the
Hoboken unit sale proceeds. The record contains evidence the parties pooled
their resources when they lived in the property and paid its mortgage. In
addition, plaintiff managed the property for years when it served as an income-
producing rental unit. These facts constitute sufficient support for the trial
court's conclusion the Hoboken property was an active immune asset of the
marriage, subject to equitable distribution.
D. Constructive Trust.
"[C]ourts are authorized to impose a constructive trust, wherever specific
restitution in equity is appropriate on the facts." Flanigan v. Munson, 175 N.J.
A-4267-17T2 25 597, 608 (2003) (internal quotations omitted). "[A] constructive trust is a
powerful tool to be used only when the equities of a given case clearly warrant
it." Id. at 611. In determining whether a constructive trust is justified, courts
employ a two-prong test. Id. at 608.
"First, a court must find that a party has committed 'a wrongful act.'" Ibid.
(quoting D'Ippolito v. Castoro, 51 N.J. 584, 589 (1968)). The "wrongful act"
will "usually" be, but is not limited to, either "fraud, mistake, undue influence,
or breach of a confidential relationship, which has resulted in a transfer of
property." Thieme v. Aucoin-Thieme, 227 N.J. 269, 288-89 (2016) (quoting
D'Ippolito, 51 N.J. at 589). "Second, the wrongful act must result in a transfer
or diversion of property that unjustly enriches the recipient." Flanigan, 175 N.J.
at 608. "To prove a claim for unjust enrichment, a party must demonstrate that
the opposing party 'received a benefit and that retention of that benefit without
payment would be unjust.'" Thieme, 227 N.J. at 288 (quoting Iliadis v. Wal–
Mart Stores, Inc., 191 N.J. 88, 110 (2007)). "The circumstances in which a
constructive trust may be imposed are as extensive as required to reach an
equitable result." Thompson v. City of Atl. City, 386 N.J. Super. 359, 376 (App.
Div. 2006), aff'd as modified and remanded, 190 N.J. 359 (2007).
A-4267-17T2 26 We agree with the trial court's conclusion that prong one is satisfied by
defendant's "complete disregard, disdain and dismissive conduct towards the
seriousness of court procedures, orders and requirements[,]" his "deficient
efforts to replace income" when he was fired from Tullett, his "unilateral
allocation of marital funds," and his "dissipation of marital assets" by accruing
arrears on the Hoboken property. We also agree the second prong was
established by defendant's decision "to spend money gambling, traveling, and
dissipating assets" amounting to more than $125,000 rather than making
reasonable efforts to comply with court-ordered child support. Imposition of a
constructive trust was warranted.
Affirmed in part, reversed in part, and remanded for further proceedings
consistent with this opinion. We do not retain jurisdiction.
A-4267-17T2 27