NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-3217-15T2
NEIL ROSS,
Plaintiff-Respondent/ Cross-Appellant,
v.
GIULIANA ROSS,
Defendant-Appellant/ Cross-Respondent. __________________________
Argued December 12, 2018 – Decided January 17, 2020
Before Judges Koblitz, Ostrer and Currier.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Essex County, Docket No. FM-07-1240-07.
Karin Duchin Haber argued the cause for appellant/ cross-respondent (Haber Silver & Simpson, attorneys; Karin Duchin Haber, of counsel; Jani Wase Vinick, on the briefs). Bonnie C. Frost argued the cause for respondent/cross- appellant (Einhorn Barbarito Frost & Botwinick, PC, attorneys; Bonnie C. Frost, of counsel and on the brief).
The opinion of the court was delivered by
OSTRER, J.A.D.
In this post-judgment matrimonial litigation, defendant Giuliana Ross
appeals from the trial court's order, entered after a plenary hearing, reducing the
alimony and child support obligations of her former husband, Neil Ross. Neil1
suffered a vestibular stroke in July 2012. It left him unable to continue earning
an income as an anesthesiologist. Giuliana argues the court erred in finding a
permanent, significant change in circumstances. She contends that
notwithstanding Neil's stroke, he could have earned enough income to meet his
support obligations had he not transferred his practice without compensation
after the stroke. The trial court determined that even after imputing income to
Neil for the transfer, he was unable to meet his previous obligations and a
reduction was justified. Although we depart from some of the trial court's
reasoning, we affirm the trial court's modification. We also affirm the court's
denial of attorney's fees to both parties, which Neil challenges on cross-appeal.
1 For convenience, and without intending any disrespect, we refer to the parties by their first names. A-3217-15T2 2 I.
The parties divorced in 2008. Then in his late forties, Neil was a
successful anesthesiologist in a multi-physician practice, Summit Anesthesia.
His gross income was roughly $550,000 a year. Under their property settlement
agreement, Neil agreed to pay Giuliana $13,000 in monthly alimony for four
years, dropping to $11,000 thereafter. They agreed that Neil's retirement at age
62 would be a change of circumstances that would justify terminating or
modifying alimony. Neil also agreed to pay $60,000 a year in child support for
the parties' three children, which would drop $20,000 a year as each child
became emancipated. The parties divided a substantial amount of assets,
including Neil's interest in his practice and three other entities, which they
agreed to value at $880,000.
After the divorce, Neil struck out on his own. Rather than receive payment
for his interest in his old practice, he took with him one significant client, an
out-patient surgical center. Metropolitan Surgery Center, LLC (Metropolitan),
agreed to exclusively use Neil's new practice, Pinnacle Anesthesia Consultants,
LLC (Pinnacle) for anesthesiology services. But each entity could terminate the
arrangement without cause on ninety days' notice. Under their agreement, Neil
served as Metropolitan's Director of Anesthesiology.
A-3217-15T2 3 Pinnacle hired other physicians to help Neil meet Metropolitan's needs.
Included among those was Dr. Chirag Shah. In 2011, Neil brought him in as a
future member of the LLC. If all went well, they agreed Dr. Shah would become
an equal owner of the practice after four years. If Neil sold the practice to a
third party, Dr. Shah would receive 12.5 percent after his first full year under
the agreement, twenty-five percent after the second, and fifty percent after the
third. The employment agreement also provided incentives for Dr. Shah to bring
in new clients.
However, Neil and Dr. Shah were unable to broaden Pinnacle's client base
and reduce dependence on Metropolitan. In May 2012, Neil entered into a multi-
year contract with Bloom Metro, Inc. (BMI), run by Henry Bloom. BMI agreed
to provide Pinnacle "turnkey management services," and to seek additional work
for the practice. In return, BMI would receive seventy percent of Pinnacle's net
cash flow. But the parties effectively left open the actual amount of BMI's fee,
and Neil's subsequent income. That is because their contract defined "net cash
flow" as the gross cash receipts minus expenses, such as Neil's salary, as
identified in an annual budget that both BMI and Pinnacle would have to
approve later.
A-3217-15T2 4 Less than two months after signing the BMI contract, Neil suffered the
stroke that left him significantly disabled. He was a month shy of his fifty-
second birthday. His physician opined that his neurological deficits made him
unable to return to work or practice medicine.2 He was ineligible for malpractice
insurance. Consequently, he could no longer serve as Metropolitan's Director
of Anesthesiology. Dr. Shah and other physicians stepped in to meet
Metropolitan's needs.
In 2011, the year before his stroke, Neil's total income topped $1.5
million, consisting of more than $558,000 in salary, and over $1 million in
business income from Pinnacle. After his stroke, his income dropped
precipitously. His salary for January to August 2012 was over $442,000, but he
earned no salary for the rest of the year. His 2012 business income dropped to
$365,000 – as Pinnacle had to hire physicians to take his place. Neil's total 2012
adjusted gross income was roughly $724,000.
2 Over a year after his stroke, Neil testified that he had difficulty reading and writing; he was plagued with dizziness and vertigo; he could not drive a vehicle; half his face was persistently numb; he could not drink and eat at the same time; his dysphasia led to pneumonia twice in a nine-month period; he lacked temperature sensation on one side of his body; and he walked with a slap gait that caused joint pain. A-3217-15T2 5 In 2013, his income fell even more. He earned no salary, and, according
to his tax return, he received no business income from Pinnacle. BMI managed
the administrative side of the practice, although Neil remained minimally
involved, signing checks that BMI had prepared. He paid BMI $280,000 in
2013, although he received no invoices. By the middle of the year, Dr. Shah
became board certified, which qualified him to become Metropolitan's Director
of Anesthesiology. Dr. Shah also took over the check signing. A forensic
accountant testified, on Giuliana's behalf, that Pinnacle and its billing affiliate
generated $270,000 in pretax cash flow in 2013. The affiliate handled the out-
of-network billing for patients Pinnacle's physicians treated. In the meantime,
Neil began receiving Social Security Disability income of roughly $29,000 a
year, as well as payments from two private disability insurance policies, which
totaled roughly $15,000 a month.
On December 31, 2013, Neil transferred his interest in Pinnacle and the
billing affiliate to Dr. Shah for a nominal $2. Neil retained liability for a $71,000
loan he had taken. Neil argued that he did not believe that Pinnacle had value
because Metropolitan could terminate the contract for no reason on ninety days'
notice.
A-3217-15T2 6 Metropolitan's medical board president testified that Metropolitan
renewed its contract with Pinnacle after Neil's stroke, and saw no reason to
terminate it. The contract did not prevent Neil from retaining ownership. But,
Dr. Shah testified that he was unwilling to remain at Pinnacle if he did not
assume ownership, because he was performing all the work that Neil used to do.
He also opposed paying Neil a salary if he was unable to work.
Giuliana's income was quite modest compared to Neil's. Although she
held an M.B.A., she worked part-time in medical billing for an orthopedic
practice, earning $19,422 in 2012. Once Neil started receiving Social Security
Disability, Giuliana began receiving dependent benefits of roughly $400 a
month for each child. She was the CEO or director of several real estate
investment firms owned by her brother-in-law and a friend, who did not live in
the United States. She received $1000 a month for thirty to forty hours of work
performing various tasks for the firms. She also inherited properties in Italy and
Israel after her mother passed away. No valuation of those properties was
provided. An employability expert Neil retained testified that Giuliana was
capable of earning $89,000 to $175,000 a year.
A-3217-15T2 7 II.
The trial court concluded that Neil satisfied his burden of demonstrating
a permanent change in circumstances that negatively affected his ability to pay
support. The court reviewed Neil's physical limitations and his need for ongoing
care and therapy. Although his post-divorce income rose substantially before
the stroke, he was now disabled, his condition "imped[ed] his ability to work,"
and he could not practice anesthesiology. The court stated, "[T]he real issue is
whether or no[t] plaintiff has the ability to continue to operate and generate
income from his two businesses and what he did with the businesses post-stroke
. . . ."
The court reviewed Neil's agreement to transfer Pinnacle to Dr. Shah, and
Pinnacle's contracts with Metropolitan and BMI. The court found the BMI
agreement "somewhat suspect" because it transferred seventy percent of
Pinnacle's net cash flow; and "curious" because Neil entered the agreement
around the time defendant had requested increased support. But, the court
ultimately declined to find, as defendant had urged, that Neil's post-stroke
payments to BMI proved that he intended to draw income from Pinnacle, after
he transferred ownership. The court noted that Neil could have used his
$180,000 payments to BMI to pay support, but did not impute that as income.
A-3217-15T2 8 The court concluded that it also did not "make sense" and was "quite
suspect" that Neil "gave away" Pinnacle for $2. It was also "curious" that he
retained liability for a $71,000 loan. Noting that Metropolitan's contract
remained in force for four years, generating significant business income, the
court rejected Neil's argument the contract lacked value because either side
could terminate on ninety days' notice. The court concluded that Neil "should
have preserved this asset or gotten some value for it," which he could have used
to pay support. Instead, Neil failed to "use . . . even reasonable efforts, to
maximize or preserve this asset . . . ."
The court declined to find the transactions with BMI and Shah were shams
and that Bloom or Dr. Shah had secretly agreed to share income with him, or
that Dr. Shah had promised to return Pinnacle to him in the future. But, the
court required Neil to disclose his tax returns for six years, to enable defendant
to discover evidence of any such agreement if it existed.
The court decided "to impute some income" to Neil for the sale of the
business. But, absent any expert valuation testimony, the court struggled to
value Neil's interest in Pinnacle. The court ultimately set a value of $800,000.
The court derived that figure by averaging 2011 and 2012 net profits of $1
million and $600,000, respectively. The court presumed that Dr. Shah would
A-3217-15T2 9 share equally in the proceeds of a hypothetical sale, leaving $400,000 gross for
Neil, which would be reduced to $200,000 after tax. The court added that
amount to Neil's $213,000 in income from Social Security and his disability
policies, to arrive at an estimated imputed total income of $413,000 for 2013.
The court then further reduced the amount by taxes, and found his total actual
and imputed after-tax income in 2013 to be "somewhere in the range of
$300,000."3
The court then scrutinized Neil's expenses as set forth in his case
information statement. After numerous reductions, the court found Neil needed
$199,164 to cover his expenses. That left over $100,000 for support payments
in 2013.
The court then reviewed Giuliana's income and expenses, to determine her
needs. The court imputed income to her based on working thirty hours a week,
as Giuliana failed to justify working only fifteen hours a week. After including
investment income, the court calculated 2013 gross income to be $68,560, and
net income $51,420. The court omitted the $1200 a month, $14,400 a year, in
3 The court noted that by the time Neil suffered his stroke in July 2012, he had already earned $766,634 that year, which exceeded his annual income when the parties entered into the PSA. Therefore, the court found no change of circumstances for 2012, and continued the preexisting support obligations for 2012 established by the PSA. A-3217-15T2 10 disability payments she received for the children. Although the court found it
"curious" that she received only $12,000 as the CEO or director of several real
estate companies, the court declined to find she earned more and rejected Neil's
request that the court impute a higher income for her work. Yet, the court
ordered Giuliana to disclose her tax returns for the next six years, to enable Neil
to monitor her income.
After scrutinizing and reducing various items in Giuliana's case
information statement, the court found that Giuliana's annual budget totaled
$148,632 for 2013. That left a deficit of roughly $100,000, which matched
Neil's imputed surplus. For that year, the court set alimony at $7500 a month
($90,000 for the year) and child support at $178 a week ($9256 for the year).
For 2014, the court assumed that Neil's only income would consist of his
Social Security and disability insurance payments. The court also assumed that
Neil and his wife would move into a less expensive home, reducing his shelter
costs by $24,000, resulting in an annual budget of $179,000. The court held that
left an excess of "around 35, 40,000," although his $213,000 income was
actually only $34,000 more than his needs. The court found that Giuliana's
needs remained the same as the previous year. The court ordered that, as of
January 1, 2014, Neil was obliged to pay $3500 a month in alimony and $159 a
A-3217-15T2 11 week in child support, which amounted to an annual total of almost $51,000 –
$42,000 in alimony and $8268 in child support. That exceeded Neil's $34,000
surplus by $17,000, resulting in a deficit in his ability to cover his own expenses.
Effective March 1, 2014, the child support obligation was further reduced
to $135 a week to account for the fact that one of the children began to live with
Neil. The court also ordered the parties to split children-related expenses on a
sixty-forty percent basis beginning January 1, 2014, and to share those expenses
equally beginning on March 1, 2014.
After the court issued its decision, each party moved for counsel fees. The
court rejected both applications for reasons we discuss below.
This appeal followed.
III.
Giuliana contends Neil failed to suffer a permanent and significant change
in circumstances warranting a modification of support because his loss of
substantial business income was "wholly voluntary and unjustifiable."
Alternatively, if the court correctly found a change in circumstances, she argues
the court erred in how it imputed income to Neil. She contends the court should
have imputed business profits to Neil on an ongoing basis, rather than attributing
the proceeds of an imputed sale in a single year. Even so, she contends the court
A-3217-15T2 12 used a flawed methodology in valuing Pinnacle; miscalculated and double-taxed
Neil's share of the imputed share proceeds; and improperly compared Neil's pre-
divorce gross income with his post-stroke net income.
We discern no error in the court's determination that Neil proved the
prerequisite change in circumstances. For reasons that do not entirely coincide
with those Giuliani presents, we agree that the court's method of valuing
Pinnacle and imputing income was flawed. But we conclude Giuliana did not
suffer prejudice.
The court is "authorized to modify alimony and support orders 'as the
circumstances of the parties and the nature of the case' require." Halliwell v.
Halliwell, 326 N.J. Super. 442, 448 (App. Div. 1999) (quoting N.J.S.A. 2A:34-
23). We review the trial court's modification ruling for an abuse of discretion,
with deference to the Family Part judge's expertise. Costa v. Costa, 440 N.J.
Super. 1, 4 (App. Div. 2015).
Neil had the burden to show the prerequisite changed circumstances. See
Lepis v. Lepis, 83 N.J. 139, 157 (1980). Not any change in circumstances
suffices; rather the changed circumstances must be such "as would warrant
relief" from the obligations involved. Ibid. Since Neil, as the supporting spouse,
sought a reduction in his obligation, the central issue was his ability to pay. See
A-3217-15T2 13 Miller v. Miller, 160 N.J. 408, 420 (1999). In assessing Neil's ability, the court
was obliged to consider not only his earned income, but also investment income
from his assets. Id. at 422.
Without dispute, Neil suffered a permanent loss of functioning due to the
stroke that disabled him from earning an income practicing anesthesiology. Cf.
Lepis, 83 N.J. at 151 (stating that "[c]ourts have consistently rejected requests
for modification based on circumstances which are only temporary"). His
disability benefits were less than the income upon which his support obligations
were based. Nonetheless, Giuliana argues that Neil failed to satisfy the
threshold showing for a modification because, she contends, he voluntarily
reduced his business income by shedding Pinnacle. She cites, among other
cases, Aronson v. Aronson, 245 N.J. Super. 354, 360-61 (App. Div. 1991), in
which the court declined to find the prerequisite change in circumstances
because the obligor, a dentist, could have earned more despite pressures on his
practice, but he voluntarily chose not to do so. Giuliana contends that if the
business income Neil allegedly gave up were added to his disability benefits, his
total income and ability to pay support would not have suffered a change from
the pre-divorce level.
A-3217-15T2 14 The argument rests on factual premises that the trial court simply did not
make.4 The court did not find that Neil could physically continue to run the
business-side of the practice, while BMI handled the administration and Dr.
Shah led the medical providers. Neil had significant difficulty performing even
basic written communications.
Nor did the court expressly find it would have been tenable for Neil to
retain a profitable interest in Pinnacle as an entirely passive investor . Indeed,
the evidence raised serious question that Neil could have done so. Giuliana
highlights that Metropolitan renewed its contract after Neil's stroke, and its
board chair saw no reason to believe that it would not be renewed in the future.
However, the issue was not whether Metropolitan would be content to continue
to pay a Neil-owned Pinnacle, for services that Dr. Shah and his team provided.
The key issues were, first, whether Dr. Shah would tolerate such an arrangement.
He said he would not. Second, whether Metropolitan would have continued to
utilize Pinnacle if Neil passively owned it, but entirely new anesthesiologists
staffed it, while Dr. Shah practiced in a competing group. Metropolitan's board
chair was not asked that question.
4 As we reject Giuliana's argument, we need not address whether Neil's disability insurance benefits would have been reduced to account for his business income. A-3217-15T2 15 The court concluded that Neil "should have preserved this asset or gotten
some value for it" to enable him to pay support. The court determined, in the
exercise of its discretion, that some income should be imputed for Neil's failure
to maximize income from his interest in Pinnacle. See Miller, 160 N.J. at 425
(concluding it was "appropriate to impute a reasonable income from plaintiff's
investments comparable to a prudent use" of them). However, even after the
court's imputation, Neil lacked the ability to pay support at the level agreed in
the PSA.
We therefore turn to the court's imputation. Although imputation of
income is a discretionary matter, we will not hesitate to disturb findings that
apply a rigid formula that overlooks the unique facts and circumstances of the
case. See Overbay v. Overbay, 376 N.J. Super. 99, 108-09 (App. Div. 2005)
(reversing method of imputing investment income to supported spouse).
The court's imputation was closely tied to its valuation of Neil's interest
in Pinnacle. The court calculated the value based on the average net cash flow
over a two-year period. This valuation was untethered to a generally accepted
methodology. See Balsamides v. Protameen Chem., Inc., 160 N.J. 352, 375
(1999) (stating that "'an assessment of fair value requires consideration of proof
of value by any techniques or methods which are generally acceptable in the
A-3217-15T2 16 financial community'") (quoting 1 John R. McKay II, New Jersey Business
Corporations, § 9-10(c)(1) (2d ed. 1996) (additional internal quotation marks
and citations omitted); Bowen v. Bowen, 96 N.J. 36, 49 (1984) (stating that "a
court should not base an opinion on theories of value that lack support in the
record, demonstrated market reliability, or general acceptance"). The three main
methods for valuing an interest in a closely held business are "the income or
capitalized earnings method, the market approach method, and the cost approach
method." Steneken v. Steneken, 183 N.J. 290, 297 (2005). The ultimate
measure of a valuation technique is its reasonableness. Ibid.
Although the trial court's methodology lacked support, we accept the
court's conclusion regarding value. Absent competing expert opinion, we find
sufficient alternative support in the record for the court's $800,000 valuation –
consisting of the parties' own $880,000 valuation of Neil's pre-divorce, partial
interest in Summit Anesthesiology, and three other entities. Neil transferred his
interest in Summit to his former colleagues in return for the contract with
Metropolitan. Assuming that the $880,000 was attributed solely to Neil's share
of Summit, that valuation serves as the basis for setting a market value for the
Metropolitan contract when Neil purchased it.
A-3217-15T2 17 The value of a prior transaction is an accepted basis for valuing an interest
in a closely-held business. "Value is estimated, based on the prior-transactions
method, by examining sales transactions relating to the subject company. These
transactions may provide some of the best evidence of value, provided they are
arm's-length transactions occurring reasonably near the valuation date." Edwin
J. Terry, Jr., Neil J. Beaton & J. Kenneth Huff, Jr., The Nature of the Beast, 25
WTR Fam. Advoc. 35, 37 (2003); see also Rev. Ruling 59-60, 1959-1 C.B. 237,
§ 4.01(g) (I.R.S. Jan. 1, 1959) (stating that the prior "[s]ales of stock and the
size of the block of stock to be valued" are among factors to be analyzed in
valuing an entity). 5
Pinnacle's principal asset was the Metropolitan contract. An imputed sale
would be based primarily on that contract's value. Pinnacle had no other clients,
5 We recognize that other factors may render a prior transaction an unreliable indicator of value. For example, the prior transaction itself may not reflect market value at the time, if it were not arm's length, or were a distress sale. Or the nature of the entity's business may have improved or worsened since the prior transaction. See Robert D. Feder & Todd A. Zigrang, Valuing Specific Assets in Divorce, § 10.04 (2019). We presume that a key factor in Neil's decision to enter the transaction was his confidence in his existing relationship with Metropolitan. A party with no prior relationship with Metropolitan would likely have paid significantly less for the contract. See Donald Sonneman, The Single Customer Business – Valuation of a Captive Business, 19 Business Valuation Review 1, 44 (March 2000) (addressing the difficulty in valuing a single customer business and noting that a significant factor is the st rength of the business's relationship with its customer). A-3217-15T2 18 despite efforts to secure them. Two significant circumstances would tend to
reduce the value of Neil's imputed resale of his interest to a third party. First,
Neil's sale would have been a forced or distress sale, as he had suffered a stroke
and could no longer manage the practice or treat patients. Second, an unrelated
third-party buyer would face a significant risk that Neil did not face when he
acquired the contract: losing the contract to an ensconced competitor . Dr. Shah
testified that he believed he was entitled to assume ownership without any
payment. It is unclear whether Metropolitan would have remained with
Pinnacle, owned by strangers, rather than send its work to Dr. Shah, operating a
different entity. Neil had no opportunity to bring in someone new and assist that
person in building a relationship with Metropolitan as he had with Dr. Shah.
Even if Neil had tried to sell Pinnacle to Dr. Shah, there is no reason to believe
that Neil would have secured from Dr. Shah more than Neil had "paid" himself,
particularly given the promise of a fifty-percent equity interest by 2015. For
these reasons, we do not disturb the trial court's determination that Neil could
have sold his interest in Pinnacle for $800,000 (although the circumstances may
have justified a significantly lower value).
As Giuliana correctly contends, Neil's contract with Dr. Shah required him
to share twenty-five percent of the proceeds of such a sale in 2013 – not fifty
A-3217-15T2 19 percent as the court presumed. That would have reduced the proceeds to Neil
to $600,000. Also, as Giuliana correctly contends, the court overestimated taxes
from the sale. The proceeds would not constitute ordinary income, but would
constitute a capital gain. Assuming a fifteen percent federal long term capital
gains tax and at least a five percent New Jersey bracket (the state gross income
tax does not differentiate between capital gains and earned income), Neil would
be left with $480,000 from an imputed $800,000 sale to a third party. 6
However, the court erred by converting Neil's equity into income. Neil
was entitled to preserve the principal proceeds of the sale. A party's assets are
relevant in the alimony calculation because of the income they could generate.
See Miller, 160 N.J. at 420-21. Notably, Neil's interest in Pinnacle was derived
from his interest in Summit, which was already subject to equitable distribution.
Giuliana was not entitled to distribution a second time.
Neil would have been entitled to invest the proceeds and to conserve the
asset, particularly given his health condition and his loss of earning capacity in
the future. Unlike the obligor in Miller, Neil was not a professional investor
6 We recognize that Neil may have had a basis in the asset that would have resulted in a capital gains tax of a lesser amount. But, neither party provided evidence on this point.
A-3217-15T2 20 with a multi-million dollar portfolio. Id. at 416. He was a disabled man then in
his early fifties who needed to preserve his assets for the years to come, when
his private disability insurance payments ceased.7
As we noted in Overbay, the corporate bond index rate of return that was
imputed in Miller does not fit every circumstance. Overbay, 376 N.J. Super. at
108. We held that a more conservative investment strategy should be imputed
in that case. Ibid. Even assuming income based on the rate attributable to a
corporate bond index used in Miller, Neil would have generated three or four
percent a year. Moody's Seasoned Aaa Corporate Bond Yield, FRED (Dec. 3,
2019), https://fred.stlouisfed.org/series/AAA). In other words, the court could
have reasonably imputed a gross investment income of $14,400 to $19,200 a
year. Assuming a combined marginal federal and state income tax rate of
roughly forty percent, Neil would have generated after-tax investment income
of $8,640 to $11,520 a year.
Instead of allocating some portion of that annual income to Neil's support
obligation on an ongoing basis, the court required Neil to pay support in 2013
that included $100,000 of the $200,000 proceeds that the court attributed to Neil
from the hypothetical sale, after accounting for Dr. Shah's share and taxes.
7 Benefits under one policy in the record would stop at age sixty-five. A-3217-15T2 21 Giuliana argues that the court erred in providing a one-shot payment. Had the
court attributed to Giuliana's support as much as half of Neil's annual imputed
investment income of $8,640 to $11,520 on the imputed proceeds of the sale,
Giuliana would have received $4,320 to $5,760 a year. We discern no injustice
requiring our intervention, where the court instead shifted $100,000 from Neil
to Giuliana in a single year based on its imputed sale.
Giuliana's remaining points regarding the modification of support require
only brief comment. The court was not compelled to impute income from Neil's
equity in his home, which he owned with his current wife. Nor was a failed
investment in 2010 a basis for imputing additional income. The court properly
considered Giuliana's investment income, because she actually received it.
Although the trial court did not expressly consider that Neil's alimony payments
were deductible to him, and taxable to Giuliana, that does not provide a basis to
alter the support modification, particularly inasmuch as the court allocated all
of Neil's budget surplus, plus $17,000, to Giuliana's support; and the court did
not account for Giuliana's receipt of Social Security Disability payments for the
children. Finally, the court did not abuse its discretion by modifying the
allocation of children-related expenses, including educational expenses, in light
of Neil's changed circumstances.
A-3217-15T2 22 IV.
Lastly, we turn to the issue of attorney's fees. Both parties challenge the
court's order denying their respective applications for fees. "The assessment of
counsel fees is discretionary." Slutsky v. Slutsky, 451 N.J. Super. 332, 365
(App. Div. 2017). Appellate courts "disturb a trial court's 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)). We are satisfied that
the court adequately considered the 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.
[R. 5:3-5(c).]
Regarding factor one, the court found that while Neil's monthly income
was roughly twice Giuliana's, Giuliana's net worth was roughly double Neil's.
Given the parties' substantial assets, and the fact that they already had paid over
A-3217-15T2 23 half their legal expenses, each had the ability to pay his or own fees, but lacked
the ability to contribute to the other's without significantly depleting income or
assets. The court found that both parties asserted reasonable positions prior to
and during the hearing, and rejected each party's contention that the other acted
in bad faith. Both parties incurred substantial fees, although Neil's fees were
significantly higher than Giuliana's. The court noted that both parties obtained
some relief. Neil wanted to terminate support and Giuliana wanted to preserve
it unaltered. The court maintained Neil's support obligation, but modified it.
The court concluded that each party should pay his and her own attorney's fees .
We recognize that the court did not expressly address factor eight, and
that Giuliana incurred legal fees in attempting to enforce a September 2012,
order regarding the proceeds from the sale of plaintiff's property. On the other
hand, Neil points to failures by Giuliana to provide discovery about her
inheritance and other aspects of her finances, which were uncovered only
through Neil's independent investigation.
We also find insufficient support in the record for Neil's contention that
the court overestimated his income. He claims the benefits under one of his
private disability policies ceased in January 2015, but the policy in the record
A-3217-15T2 24 states benefits would continue until age sixty-five. In any event, the court found
that Giuliana could not afford to pay Neil's fees.
To the extent not addressed, the parties' remaining points lack sufficient
merit to warrant discussion. R. 2:11-3(e)(1).
Affirmed.
A-3217-15T2 25