NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-2271-21
MARGARET S. FREY,
Plaintiff-Appellant/ Cross-Respondent,
v.
THOMAS G. FREY,
Defendant-Respondent/ Cross-Appellant. ________________________
Submitted February 26, 2024 – Decided March 28, 2024
Before Judges DeAlmeida and Berdote Byrne.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-0789-18.
Deborah A. Rose, attorney for appellant/cross- respondent.
Andril & Espinosa, LLC, attorneys for respondent/cross-appellant (Antonio R. Espinosa, on the briefs).
PER CURIAM The parties both appeal from the trial court's November 16, 2021 order
entering a Dual Judgment of Divorce (DJOD) and two subsequent orders entered
after motions for reconsideration, issued February 16, 2022, and October 19,
2022, respectively. The appeals stem from the case's long procedural history
and an eleven-day trial, spanning twenty-one months.
Plaintiff asserts the trial court erred by (1) awarding her only four years
of limited duration alimony in the amount of $1,500 per month after the
dissolution of the parties' thirty-three-year marriage; (2) determining the marital
estate and its subsequent division after subtracting for monies owed to her; and
(3) awarding defendant $10,000 in "consequential" attorney fees. Defendant
contends the trial court should not have awarded any alimony given each parties'
financial circumstances. Defendant also appeals the denial of several credits he
maintains should have been awarded in his favor.
After reviewing the record in light of the arguments advanced by the
parties, and applying the law to the facts found, we reverse and remand for new
findings with respect to equitable distribution, alimony, and attorney fees.
I.
We glean the following facts from the record. The parties married in
August 1988. Plaintiff owned a dance studio for approximately twenty-four
A-2271-21 2 years. The studio was purchased at the beginning of 1986, two years prior to
the marriage. Defendant was a certified public accountant and became an
attorney in the early years of the parties' marriage. For most of the marriage,
defendant was responsible for managing the parties' taxes and household
expenses, although the two always kept their finances separate. Defendant
eventually started his own tax and accounting business in the early 2000s.
Outside of their primary occupations, plaintiff and defendant amassed
extensive real estate holdings in New Jersey. These properties were purchased
and sold throughout the marriage, and the proceeds deposited into the parties'
joint investment accounts. The parties jointly paid for the college educations of
both their now-adult daughters, took annual vacations domestically and abroad,
dined extensively in the greater New York City area, owned three timeshares,
purchased a home for over $800,000 in 2005, were members of a local country
club, and accumulated over two million dollars in liquid assets.
The marriage began to deteriorate in the 2000s, and defendant moved out
of the marital home in September 2010. In 2011, defendant was charged, and
later pleaded guilty to, one count of extortion and one count of attempt and
conspiracy to commit mail fraud, for which he served a twenty-seven-month
A-2271-21 3 prison term from 2015 to 2017. Defendant's CPA license was revoked, and he
was disbarred.
Plaintiff's dance school gradually declined over the past decade.
Plaintiff's health deteriorated after being diagnosed with multiple sclerosis,
which limits her ability to teach dance.
Because of defendant's incarceration, plaintiff was left to manage the
parties' finances. Plaintiff utilized proceeds she received from the sale of a
property in Elizabeth, New Jersey. Defendant sold his tax and accounting
business to John Strydesky (Strydesky), of Strydesky & Company (the Asset
Purchase Agreement), just prior to his incarceration. As part of the sale,
Strydesky agreed to pay twenty percent of the monies collected from defendant's
clients for a three-year period, payable in quarterly installments to plaintiff.
Strydesky duly mailed checks to plaintiff, but there was no accounting sent
accompanying the payments to ensure twenty percent of the cash received from
defendant's former clients was actually paid to plaintiff.
The Asset Purchase Agreement also specified Strydesky was purchasing
"All of the following physical assets: office/computer equipment, etc." After
the sale, Strydesky certified he destroyed defendant's computer once he obtained
all the necessary information from it. Strydesky brought the paper files he did
A-2271-21 4 not need to the marital residence. Plaintiff kept these belongings in the marital
home's garage along with defendant's other business files.
Upon inspection of these files, plaintiff discovered defendant's letters
confirming a company defendant had told her and others to invest in was
bankrupt. One of those persons was Greg Parker (Parker), who lent defendant
money to invest in the company. Around this time, plaintiff filed for divorce in
October 2017.
Plaintiff told Parker about the bankruptcy, and Parker subsequently sued
defendant. Because plaintiff and defendant continued to live separately after his
release from prison, defendant did not receive the summons and complaint
mailed to the marital home. A final judgment by default was subsequently
entered against defendant on November 7, 2018 (the Parker Judgment). Parker
then placed a judgment lien on the marital home.
Since his release from prison, defendant works as a bookkeeper, and
claims he earns approximately $1,500 to $2,200 a month. In 2020, defendant
applied for and received two SBA loans to start a stock trading business. These
funds were deposited into one of the marital joint accounts. Plaintiff closed her
dance school in March 2020. The marital home was sold in February 2020 for
A-2271-21 5 $525,800. The Parker Judgment was satisfied from the proceeds obtained from
the sale of the marital home.
II.
In reviewing appeals of a family court's rulings after trial, we defer to the
trial court, barring an abuse of discretion. S.W. v. G.M., 462 N.J. Super. 522,
530 (App. Div. 2020). The Supreme Court has held the findings of a trial court
"are binding on appeal when supported by adequate, substantial, credible
evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). Further, "[d]eference
is especially appropriate 'when the evidence is largely testimonial and involves
questions of credibility.'" Id. at 412 (quoting Rova Farms Resort, Inc. v. Invest.
Ins. Co., 65 N.J. 474-484 (1974)). Reversal is appropriate "only if the findings
were 'so manifestly unsupported by or inconsistent with the competent, relevant
and reasonably credible evidence as to offend the interests of justice.'" Amzler
v. Amzler, 463 N.J. Super. 187, 197 (App. Div. 2020) (quoting Rova Farms, 65
N.J. 484). The same standard applies to appeals from a trial court's equitable
distribution award, see M.G. v. S.M., 457 N.J. Super. 286, 293-94 (App. Div.
2018), and denials of reconsideration, S.W., 462 N.J. Super. at 530. An award
of counsel fees will only be disturbed "on the 'rarest occasion,' and then only
because of clear abuse of discretion." Slutsky v. Slutsky, 451 N.J. Super. 332,
A-2271-21 6 366 (App. Div. 2017) (quoting Strahan v. Strahan, 402 N.J. Super. 298, 317
(App. Div. 2008)). Mistakes of law, however, are reviewed de novo. S.W., 462
N.J. Super. at 530.
III.
A. The Equitable Distribution Award
Equitable distribution is governed by N.J.S.A. 2A:34-23(h) and involves
a three-step process. Thieme v. Aucoin-Thieme, 227 N.J. 269, 284, 284 n.4
(2016). The court must first identify which marital assets are subject to
equitable distribution, ascertain each asset's value, and then determine the most
equitable allocation of each asset. Slutsky, 451 N.J. Super. at 355 (quoting
Elrom v. Elrom, 439 N.J. Super. 424, 444 (App. Div. 2015)).
"[F]or purposes of the equitable distribution of marital assets, a marriage
is deemed to end on the day a valid complaint for divorce is filed that
commences a proceeding culminating in a final judgment of divorce." Genovese
v. Genovese, 392 N.J. Super. 215, 225 (App. Div. 2007) (quoting Portner v.
Portner, 93 N.J. 215, 225 (1983)). Assets subject to equitable distribution
should share the same evaluation date. Bednar v. Bednar, 193 N.J. Super. 330,
332 (App. Div. 1984). Generally, this should be the date the complaint is filed,
A-2271-21 7 although a later date is permissible under extraordinary circumstances
compelling equitable considerations. Ibid.
The allocation of distribution is guided by the factors delineated in
N.J.S.A. 2A:34-23.1. Slutsky, 451 N.J. Super. at 355. There is a rebuttable
presumption each spouse "made a substantial financial or nonfinancial
contribution to the acquisition of income and property" during the marriage.
N.J.S.A. 2A:34-23.1. However, equitable distribution does not necessarily
entail equal distribution. M.G, 457 N.J. Super. at 294. Its goal "is to effect a
fair and just division of marital [property]." Ibid. (alterations in original)
(quoting Steneken v. Steneken, 183 N.J. 290, 299 (2005)). Trial courts must
weigh each case's unique considerations and circumstances rather than rely upon
mechanical division. Ibid. (quoting Stout v. Stout, 155 N.J. Super. 196, 205
(App. Div. 1977), overruled on other grounds by Petersen v. Petersen, 85 N.J.
638, 643 n.2 (1981)). This is best effectuated "by evaluating the facts and
evidence associated with each asset." Ibid.
Courts are also empowered to either "deduct marital debts from the total
value of the estate[] or allocate the obligations between the parties." Slutsky,
451 N.J. Super. at 348. The division of the marital estate should account for the
A-2271-21 8 allocation of debts and be based on the same principles as the division of assets.
Id. at 348, 366; N.J.S.A. 2A:34-23.1(m).
The trial court erred by failing to perform the first step and calculate which
assets were subject to equitable distribution. This is especially important as
there was testimony from both parties that they kept their finances separate
throughout the marriage. Instead, the trial court added up all of plaintiff's assets
with all of defendant's assets and divided the amount by two, distributing all
assets equally. Because the trial court failed to make findings with respect to
the statutory factors, we reverse the award of equitable distribution and remand
for findings consistent with this opinion.
B. The Marital Debt Award.
After splitting the parties' combined assets equally, the trial court applied
credits against each parties' amount of awarded assets to distribute the marital
debt individually. Plaintiff argues her Honda should not have been subject to
equitable distribution because she traded in her old 2004 Volvo for her 2016
Honda. We disagree. The 2004 Volvo was purchased during the marriage and
is presumptively part of the marital estate. Tannen v. Tannen, 416 N.J. Super.
248, 281 (App. Div. 2010), aff'd o.b., 208 N.J. 409 (2011). Plaintiff adduced no
evidence otherwise. Plaintiff is correct, however, in claiming the court erred by
A-2271-21 9 providing defendant with a $13,250 credit against her equitable distribution for
her Honda. The documentary evidence and testimony show plaintiff paid
$19,000 for her Honda after receiving a credit for trading in the 2004 Volvo.
Defendant's first motion for reconsideration did not provide any evidence to
support his valuation of plaintiff's Honda. Medina v. Pitta, 442 N.J. Super. 1,
18 (App. Div. 2015) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch.
Div. 1990)). We conclude although plaintiff's Honda is presumptively subject
to equitable distribution, the percentage of distribution attributable to defendant,
if any, must be calculated after a consideration of all factors enumerated in
N.J.S.A. 2A:34-23.
Further, with respect to defendant's SBA loans, the trial court erred in
finding the SBA loans were marital debt subject to equitable division. Plaintiff
filed the complaint for divorce on October 2, 2017. Defendant did not obtain
the SBA loans until approximately two-and-a-half years later. For the purposes
of equitable division, the SBA loans were debt acquired by defendant after the
marriage. Genovese, 392 N.J. Super. at 225 (quoting Portner, 93 N.J. at 225).
Although the funds flowed into a marital account while the divorce was still
pending, that action alone does not automatically make the debt marital. See
Wadlow v. Wadlow, 200 N.J. Super. 372, 380 (App. Div. 1985) (finding the trial
A-2271-21 10 court erred when it failed to exclude money clearly intended to be separate
property from the marital estate despite the fact the funds were commingled).
Because the court incorrectly calculated certain credits, we vacate the
allocation of marital debt and remand for findings consistent with N.J.S.A.
2A:34-23.
C. The Alimony Award.
Pursuant to N.J.S.A. 2A:34-23(b), courts are permitted to "award one or
more of the following types of alimony: open durational alimony; rehabilitative
alimony; limited duration alimony or reimbursement alimony to either party."
The statute provides a non-exhaustive list of factors that must be considered by
the court in making its determination. N.J.S.A. 2A:34-23(b)(1)-(12). An award
of limited duration alimony is intended to recognize a "dependent spouse's
contributions to a relatively short-term marriage that demonstrated attributes of
a 'marital partnership.'" J.E.V. v. K.V., 426 N.J. Super. 475, 486 (App. Div
2012) (quoting Cox v. Cox, 335 N.J. Super. 465, 486 (App. Div. 2000)).
Because limited duration alimony is not intended to be a replacement for
permanent alimony, a limited duration award is "singularly inappropriate" for
long marriages, typified by significant length and contributions. Ibid. (Cox, 335
N.J. Super. at 482). Indeed, the length of the marriage is the "defining
A-2271-21 11 distinction" between open and limited duration alimony. Id. at 488 (quoting
Cox, 335 N.J. Super. at 483). Open duration alimony is the presumptive award
for lengthy marriages. See Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340,
353 (App. Div. 2009).
However, the length of a marriage alone cannot determine alimony.
Economic dependence is a "crucial finding" necessary to award alimony. Gnall
v. Gnall, 432 N.J. Super. 129, 143 (App. Div. 2013), rev'd on other grounds, 222
N.J. 414 (2015). "The extent of actual economic dependency, not one's conduct
as a cohabitant, must determine the duration of support as well as its amount."
Reese v. Weis, 430 N.J. Super. 552, 571 (App. Div. 2013) (quoting Gayet v.
Gayet, 92 N.J. 149, 154 (1983)). Courts must evaluate all the facts when
determining whether a claim of economic dependence warrants long-lasting
support. Gnall, 432 N.J. Super. at 153.
Although we understand the court did not find either party credible, and
the trial court found the parties took extreme positions regarding their ability to
earn in the future, the trial court's award of limited duration alimony for four
years incorrectly applied the law. The trial court noted defendant was sixty-two
years old, and by the time of the end of the four-year alimony period, "defendant
will reach his retirement age for social security purposes and may well decide
A-2271-21 12 to retire." This is not a basis for awarding limited duration alimony in a long-
term marriage.
N.J.S.A. 2A:34-23(j) permits an award of alimony to be "modified or
terminated upon the prospective or actual retirement of the obligor." When the
obligor reaches "full retirement age," there is a rebuttable presumption that
alimony will terminate. N.J.S.A. 2A:34-23(j)(1). That presumption may be
overcome for good cause based on a separate list of non-exhaustive factors.
Ibid.
The record does not show defendant sought to retire prior to attaining full
retirement age. Defendant testified he obtained two SBA loans to start a stock -
trading business, in addition to his continued work as a bookkeeper. Thus, it
was reversible error for the court to award limited durational alimony because
defendant "may" seek to retire in the future.
Factually, the amount of the award is also not supported by the evidence.
The trial court awarded $1,500 monthly based on both parties' representations
of limited income but did not ascertain whether either or both parties were
underemployed and whether additional income should be imputed to them for
an award of alimony. Gnall v. Gnall, 462 N.J. Super. 433, 447 (App. Div. 2019)
(quoting Caplan v. Caplan, 182 N.J. 250, 268 (2005)) (requiring courts consider
A-2271-21 13 the "potential earning capacity of an individual, not his or her actual income,"
when determining a party's ability to pay alimony); Lepis v. Lepis, 83 N.J. 139,
156 (1980) ("The need for support must be assessed with a view towards the
earning capacity of the individual . . . in the marketplace.").
The trial court did not explain how it arrived at the $1,500 figure, and
noted only that the aggregate amount, $72,000, "is less than ten percent of the
assets that defendant will receive through equitable distribution." This finding
does not comport with N.J.S.A. 2A:34-23. We therefore vacate the alimony
award and remand for findings consistent with this opinion and the statutory
factors.
D. The Attorney's Fee Award.
Finally, awards of attorney fees in a divorce proceeding are governed by
Rule 5:3-5(c) and are subject to subsections (b), (c), and (d) of Rule 4:42-9. R.
5:3-5(c).
Plaintiff appeals the $10,000 in consequential attorney fees awarded out
of defendant's total attorney fees award of $12,394. In its DJOD, the trial court
engaged in an analysis of the factors set forth Rule 5:3-5(c). The only factor the
court appears to have found in support of any fee award is the reasonableness
and good faith of parties' position during and prior to trial. However, the
A-2271-21 14 $10,000 award is untethered to this analysis and predicated solely on plaintiff's
alleged role as defendant's fiduciary during defendant's period of incarceration.
According to the court, the case, "[t]o some extent, . . . was attenuated because
of that circumstance." On reconsideration, the trial court affirmed its $10,000
award, stating because plaintiff "had access to records and defendant's computer,
which were placed in the garage of the [marital home]," during defendant's
incarceration, "as well as [Strydesky's] testimony" she did not comply with her
fiduciary obligation. Both the trial court's legal conclusion and its factual
findings are incorrect.
Spouses are not fiduciaries to one another. See Tannen, 416 N.J. Super.
at 262-63 (observing that divorcing spouses only have a duty "to deal fairly with
each other"); see also F.G. v. MacDonnell, 150 N.J. 550, 563-64 (1997). Nor
does the Asset Purchase Agreement create a fiduciary relationship between
plaintiff and defendant. The agreement required Strydesky "pay 20% of cash
collected from clients for a three-year period, payable quarterly to [plaintiff] . .
. ." The agreement establishes plaintiff was an intended third-party beneficiary,
not a fiduciary. Ross v. Lowitz, 222 N.J. 494, 513 (2015) (quoting Broadway
Maint. Corp. v. Rutgers, 90 N.J. 253, 259 (1982)).
A-2271-21 15 The court's factual findings as expressed in its motion for reconsideration
on this issue are also unsupported by the record. Plaintiff testified she never
possessed defendant's office computer and did not know what happened to it
after the sale of the business. The Asset Purchase Agreement states defendant
sold the computer to Strydesky, and he testified he acquired defendant's
computer and destroyed it.
The award also appears unrelated to any affidavit of service or statement
of fees submitted by defendant, which are required pursuant to Rule 4:42-9(b)-
(c). The record before us shows those materials were provided to support the
unchallenged award of $2,394. There is nothing to support either the basis or
the amount of the $10,000 award at issue.
In sum, we uphold the entry of the DJOD, but vacate all of the monetary
awards for equitable distribution, distribution of marital debt, alimony, and
attorney fees, except the attorney fee award of $2,394 to plaintiff, which was
not challenged on appeal. We remand this matter to the trial court for findings
consistent with the applicable statutes, case law, and this opinion.
Reversed in part, affirmed in part, and remanded. We do not retain
jurisdiction.
A-2271-21 16