Deborah Spangenberg v. David Kolakowski ( 2015 )

  •                       NOT FOR PUBLICATION WITHOUT THE
                                                    SUPERIOR COURT OF NEW JERSEY
                                                    APPELLATE DIVISION
                                                    DOCKET NO. A-2655-14T1
                                                      APPROVED FOR PUBLICATION
                                                          October 14, 2015
                                                          APPELLATE DIVISION
               Submitted September 21, 2015 - Decided October 14, 2015
               Before Judges Lihotz, Fasciale and Nugent.
               On appeal from Superior Court of New Jersey,
               Chancery   Division,  Family   Part,  Morris
               County, Docket No. FM-14-976-10.
               David Kolakowski, appellant pro se.
               Deborah Spangenberg, respondent pro se.
           The opinion of the court was delivered by
    LIHOTZ, P.J.A.D.
           Defendant     David   Kolakowski        appeals   from    a    September   19,
    2014   Family   Part     order    denying       his   motion     to   terminate    or
    suspend   his   obligation       to     pay    alimony   to     his   former   wife,
    plaintiff Deborah Spangenberg.                Defendant maintains plaintiff's
    cohabitation,      combined      with    his    decreased       earnings,    require
    termination     of    alimony    under        newly   enacted     subsection      (n),
    amending N.J.S.A. 2A:34-23.           Defendant also moved to recalculate
    child support and the parties' obligation for college costs.
    Finally,   defendant      appeals     from    the       November    7,     2014     order
    denying reconsideration.
           We have considered the arguments in light of the record and
    applicable     law.      We    reject    defendant's         argument        to     apply
    N.J.S.A.     2A:34-23(n)       as     the      statutory           provisions         are
    inapplicable      to    post-judgment        orders      finalized         before     the
    statute's effective date.           However, we agree a plenary hearing
    is    necessary   to    determine     whether       a    substantial        change     in
    economic circumstances warrants a modification of alimony and
    child support.
           The essential facts are not disputed.                   The parties were
    divorced in June 2012, twenty years after they married.                               All
    collateral   issues     were   resolved       and   set     forth     in    a     marital
    settlement agreement (MSA) incorporated into the final judgment
    of divorce (FJOD).
           Specific to the issues on appeal, the MSA at paragraph 16
    provided defendant's agreement to pay $2200 per month alimony,
    calculated using imputed annual incomes for plaintiff of $45,000
    and   defendant    of   $125,000.       The    parties       agreed      the      alimony
    amount would be reviewed "on or about June 7, 2014," based on
    the    "expectation     that    the     [plaintiff]'s         income        will     have
                                            2                                       A-2655-14T1
    increased by that time as a result of additional training or
    other factors."       Toward this objective, the parties consented to
    exchange income information including "their 2013 tax returns,
    W-2s,    K-1   from     [defendant's   business]      and   other    supporting
    documents, and their current paystubs, no later than June 1,
    2014."    Further, plaintiff agreed to inform defendant "when she
    [wa]s    cohabiting     with   another,"   which     triggered   a    review    of
    alimony "consistent with the Gayet1 case and evolving caselaw
          Regarding child support, paragraph 7 included the parties'
    agreement for defendant to contribute $122 per week to support
    the   parties'    two    children.     Anticipating     future      events,    the
    parties' MSA set forth specific modified support amounts, using
    the child support guidelines and a "blended rate" of support in
    anticipation     of     college   attendance   and    emancipation.        These
    included:      if one child was living at college and one was living
    with plaintiff and both were unemancipated, weekly child support
    would be $91; if one child was emancipated and the other was
    living at home, child support would be $78; and if one child was
    emancipated and the other was living at college, the weekly
    child support would be $52.
         Gayet v. Gayet, 
    92 N.J. 149
    , 155 (1983) (addressing the
    impact of cohabitation on alimony).
                                           3                                A-2655-14T1
         Paragraph 13 addressed college expenses, stating:
                The parties agree that, at the present time,
                neither party has the ability to pay for
                college for the children . . . .       In the
                event   that   the   parties'   circumstances
                change, they shall revisit the issue of
                college contribution with a view toward a
                contribution    proportionate     to    their
                respective      financial      circumstances.
                However, neither party shall be called upon
                to contribute to college if that party has
                not been consulted with regard to the cost
                of same and the selection of college.
         Defendant moved to modify his alimony obligation, alleging
    plaintiff   was    cohabiting.      Also,    he   sought   to    reduce   child
    support because the parties' oldest child was residing with him.
    Plaintiff admitted she moved to her boyfriend's residence on
    August 31, 2013.        She objected to a reduction in child support
    because the older child resumed living with her and the younger
    child was attending college in Washington, D.C.
         The     Family      Part      judge     considered         "the   parties
    submissions[,] as well as their testimony" and the testimony of
    plaintiff's boyfriend.2        As reflected in the statement of reasons
    accompanying      the   December   18,     2013   order,   the    judge   found
    plaintiff    received     an    economic     benefit   from      cohabitation,
    warranting modification of alimony.           He found plaintiff's actual
    income was higher and defendant's was lower than the amounts set
         The hearing transcripts are not included in the record.
                                          4                                A-2655-14T1
    forth in the MSA; however, when he calculated alimony and child
    support,    the    judge       used    the    MSA's    imputed     income    figures.
    Defendant was ordered to pay $1350 per month alimony and $339
    per week child support, until the older child                        commenced the
    spring 2014 semester in mid-January 2014, at which time child
    support would decrease to $150 per week.3
         Defendant's motion for reconsideration seeking to review
    plaintiff's   need       for    alimony      was   denied   on    March     26,   2014.
    Finding    defendant's         request    "premature,"      the    judge     concluded
    "review shall take place in June of 2014."                       Reconsideration of
    that order was also denied.
         On July 21, 2014, defendant moved to modify or terminate
    alimony, as provided by the MSA's two-year review provision.                         He
    sought    enforcement      of    prior       orders,    application    of     the   MSA
    provisions, emancipation of the older child, and a concomitant
    recalculation      of    child        support.        Plaintiff    cross-moved      for
    enforcement       of    litigant's       rights    because       defendant    stopped
    paying alimony.
         The Family Part judge did not entertain oral argument prior
    to filing the September 19, 2014 order under review.                       Relying on
         The order included various computations resulting in
    credits to the parties. As is the case with this and the other
    orders under review, these computations for credits are
    indirectly subject to appeal to the extent they relate to
    alimony and child support calculations modified by our opinion.
                                                 5                                A-2655-14T1
    the reduction in alimony ordered upon a finding of plaintiff's
    cohabitation       and     stating    defendant's       asserted        reduction       in
    income was "surely not a permanent situation," the judge denied
    further modification, despite plaintiff's "slight increase" in
    earned     income.           Without        elaborating,     the        judge      found
    "[d]efendant       has     'chosen'     not       to   divulge      his     financial
    documentation"       and    "[p]laintiff         has   graciously       consented      to
    emancipate [the older child]."                   Accordingly, using the MSA's
    imputed    level    for    defendant    and      plaintiff's     "actual"       income,
    child support for the younger child was reset at $99 per week
    and defendant was ordered to pay 59% of the child's college
          Defendant's subsequent motion for reconsideration of these
    determinations resulted in the November 7, 2014 order, which
    denied    his   requests      to     reduce      alimony,   child       support,      and
    college costs.           In the accompanying statement of reasons, the
    judge found "[d]efendant produced page 1 of his 2012 tax return
    and pages 1 and 2 of his 2013 tax return.                    No W-2[]s, K-1[]s,
    1099[]s [or] tax schedules were produced," nor did he supply the
    income tax return for his sub-chapter S corporation.                        The judge
    concluded: "Defendant continues to focus on the calculation of
    his   income[,]     but     has    failed    and/or    refused     to    present      his
    complete    financial       picture.            Self-employed    individuals          are
                                                6                                   A-2655-14T1
    always     subject   to    more       scrutiny          when    it     comes    to      their
    finances."     Acknowledging income averaging may be appropriate
    when determining the earnings of self-employed individuals for
    support    purposes,      the    judge    nonetheless,            declined      to     do   so
    because     defendant     "failed        to       provide       sufficient      financial
    documentation."      This appeal ensued.4
        When reviewing a trial judge's order, we defer to factual
    findings     "supported          by    adequate,            substantial,         credible
    evidence."     Gnall v. Gnall, __ N.J. __ (2015) (slip op. at 14)
    (citing     Cesare   v.    Cesare,        
    154 N.J. 394
    ,    411-12    (1998)).
    Reversal is warranted only when a mistake must have been made
    because the trial court's factual findings are "'so manifestly
    unsupported by or inconsistent with the competent, relevant and
    reasonably    credible     evidence       as       to    offend       the   interests       of
    justice . . . .'"       Rova Farms Resort, Inc. v. Investors Ins. Co.
    of Am., 
    65 N.J. 474
    , 484 (1974) (quoting Fagliarone v. Twp. of
    N. Bergen, 
    78 N.J. Super. 154
    , 155 (App. Div.), certif. denied,
    40 N.J. 221
     (1963)).            On the other hand, a "trial judge's legal
    conclusions, and the application of those conclusions to the
         On May 12, 2015, plaintiff filed a Family Part case
    information statement with accompanying financial documentation,
    with her merits brief.   Certainly the facts set forth in these
    documents are relevant; however, because this information was
    not presented in the motions before the Family Part, we will not
    consider it in our review.
                                                  7                                      A-2655-14T1
    facts, are subject to our plenary review."                Reese v. Weis, 
    430 N.J. Super. 552
    , 568 (App. Div. 2013).
          Defendant    maintains   the    judge     abused    his   discretion    in
    ignoring the terms of the MSA when denying his request to modify
    alimony   and     child     support     despite     evidence      of   changed
    circumstances.     Further, he argues the judge erroneously imposed
    college expense obligations using an artificially high imputed
    income.   Arguing he should have been granted a plenary hearing
    on these issues, defendant also asserts adopted amendments to
    the   alimony     statute   addressing        cohabitation      were   ignored.
    Finally, he asserts the determinations regarding the inadequacy
    of his financial disclosures and plaintiff's continued need for
    support were unfounded.
          The Family Part judge's authority to modify alimony and
    support orders is found in N.J.S.A. 2A:34-23, which states:
              Pending any matrimonial action . . . brought
              in this State or elsewhere, or after
              judgment of divorce . . . the court may make
              such order as to the alimony or maintenance
              of the parties, and also as to the care,
              custody, education and maintenance of the
              children, . . . as the circumstances of the
              parties and the nature of the case shall
              render fit, reasonable and just . . . .
              Orders so made may be revised and altered by
              the court from time to time as circumstances
              may require.
          Our courts have interpreted this statute to require a party
    who   seeks   modification     to     prove    "changed    circumstances[.]"
                                           8                               A-2655-14T1
    Lepis v. Lepis, 
    83 N.J. 139
    , 157 (1980) (citation omitted).
    Other circumstances considered include "whether the change in
    circumstance is continuing and whether [an] agreement or decree
    has   made    explicit         provision       for    the       change."       Id.    at    152.
    Accordingly, each and every motion to modify support "rests upon
    its own particular footing and the appellate court must give due
    recognition       to    the    wide     discretion[,]           which    our    law    rightly
    affords      to   the    trial     judges       who    deal       with     these     matters."
    Martindell v. Martindell, 
    21 N.J. 341
    , 355 (1956).                                    See also
    Innes v. Innes, 
    117 N.J. 496
    , 504 (1990) ("The modification of
    alimony    is     best    left     to    the    sound       discretion        of    the    trial
    court.").         While an "abuse of discretion . . . defies precise
    definition," we will not reverse the decision absent a finding
    the   judge's       decision      "rested       on    an        impermissible        basis[,]"
    considered        "irrelevant      or    inappropriate            factors[,]"        Flagg    v.
    Essex Cnty. Prosecutor, 
    171 N.J. 561
    , 571-72 (2002) (citations
    and   internal         quotation      marks     omitted),          "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).
          In     Lepis,      the    Court    described          a    test    to    discern      when
    financial circumstances have significantly changed from those
    underpinning an order under review, in this way: "The supporting
                                                   9                                       A-2655-14T1
    spouse's   obligation   is   mainly     determined   by    the    quality   of
    economic life during the marriage, not bare survival.               The needs
    of the dependent spouse and children contemplate their continued
    maintenance at the standard of living they had become accustomed
    to prior to the separation."            Lepis, supra, 83 N.J. at 150
    (citations and internal quotations omitted).
        For    decades   this    standard    has   guided     the    exercise   of
    reasoned discretion of our Family Part judges.                  Recently, the
    Legislature adopted amendments to N.J.S.A. 2A:34-23, designed to
    more clearly quantify considerations examined when faced with a
    request to establish or modify alimony.           L. 2014, c. 42, § 1.
    Apt to this matter, the amendments include provisions regarding
    modification of alimony and the effect of a dependent spouse's
    cohabitation, stating:
               l.   When   a   self-employed   party   seeks
               modification   of  alimony   because  of   an
               involuntary reduction in income since the
               date of the order from which modification is
               sought, then that party's application for
               relief must include an analysis that sets
               forth the economic and non-economic benefits
               the party receives from the business, and
               which compares these economic and non-
               economic benefits to those that were in
               existence at the time of the entry of the
               m.   When assessing a temporary remedy, the
               court may temporarily suspend support, or
               reduce support on terms; direct that support
               be paid in some amount from assets pending
               further   proceedings;   direct  a   periodic
               review; or enter any other order the court
                                       10                                A-2655-14T1
                  finds appropriate to assure              fairness      and
                  equity to both parties.
                  n.   Alimony may be suspended or terminated
                  if the payee cohabits with another person.
                  Cohabitation involves a mutually supportive,
                  intimate personal relationship in which a
                  couple has undertaken duties and privileges
                  that are commonly associated with marriage
                  or civil union but does not necessarily
                  maintain a single common household.
                  [N.J.S.A. 2A:34-23(l)-(n).]
    The statute also lists factors to be examined "when assessing
    whether cohabitation is occurring[.]"              N.J.S.A. 2A:34-23 (n)(1)
    to (7).
          Here, plaintiff conceded she began cohabiting on August 31,
    2013.     Accordingly,     our     review    is    limited      to    whether        the
    statute's      cohabitation      amendments,      requiring     alimony         to   be
    terminated      or   suspended,     apply.        To    examine      whether         the
    Legislature intended N.J.S.A. 2A:34-23(n) to affect agreements
    or   orders    adopted   prior    to   its   enactment,    we     turn     to    rules
    guiding statutory review.
                  The goal of all statutory interpretation "is
                  to give effect to the intent of the
                  Legislature." Aronberg[ v. Tolbert], 207
                  N.J. [587,] 597 [2011].    We first look to
                  the statutory language, which generally is
                  the "best indicator" of the Legislature's
                  intent. DiProspero v. Penn, 
    183 N.J. 477
                  492 (2005).    Only if the language of the
                  statute is shrouded in ambiguity or silence,
                  and   yields    more  than   one   plausible
                  interpretation, do we turn to extrinsic
                                            11                                  A-2655-14T1
                sources, such as legislative history.                     Id.
                at 492-93.
                [Maeker v. Ross, 
    219 N.J. 565
    , 575 (2014).]
    Courts generally will enforce newly enacted substantive statutes
    prospectively,   unless    the    laws       clearly        expresses    a   contrary
        The     amendments    to   N.J.S.A.           2A:34-23     themselves     do   not
    contain   language   specific      as        to     implementation,      except      to
    provide the amendments are effective immediately, on September
    10, 2014.     However, the bill adopting the alimony amendments
    adds this provision:
                This act shall take effect immediately and
                shall not be construed either to modify the
                duration of alimony ordered or agreed upon
                or   other    specifically   bargained  for
                contractual   provisions   that  have  been
                incorporated into:
                a.   a   final       judgment           of      divorce     or
                b.   a final order that has concluded post-
                judgment litigation; or
                c.   any   enforceable                written     agreement
                between the parties.
                [L. 2014, c. 42, § 2.]
    This additional statement signals the legislative recognition of
    the need to uphold prior agreements executed or final orders
    filed before adoption of the statutory amendments.
                                            12                                   A-2655-14T1
           Here, the MSA provided for a review of defendant's alimony
    obligation         upon    plaintiff's          cohabitation.              Moreover,         the
    parties'         agreement        anticipated          application           of       "evolving
    case[]law," recognizing their rights and obligations would be
    refined in the event of cohabitation.
           In December 2013, the court conducted such a review of the
    economic effect of plaintiff's admitted cohabitation.                                 In light
    of the then current case law, the judge reduced alimony based on
    the economic benefit received by the dependent spouse.                                   Reese,
    supra,     430     N.J.   Super.     at   570-71.           He    determined          plaintiff
    received      an       economic    benefit          from     cohabiting,          established
    plaintiff's monthly need at $5828, and noted plaintiff's 2013
    gross income increased more than 13.5% and defendant's actual
    2012 income decreased 8.9% from the levels imputed in the MSA.
    However, the judge concluded "the parties agreed and bargained
    for    a     $125,000      imputation          to     [d]efendant       and       a    $45,000
    imputation to [p]laintiff as their annual incomes," which he
    used   and    reduced      alimony    from          $2200   per    month     to    $1350     per
    month.       The order was not appealed, making this determination
           Because      the   post-judgment         order       became     final      before     the
    statutory        amendment's       effective         date,       the   new     cohabitation
    provisions        do    not   apply       or    otherwise         impact       the     alimony
                                                   13                                      A-2655-14T1
    determination.             Accordingly,          the    order     reducing       alimony
    supported by substantial evidence in the record, to which the
    judge correctly applied the law, shall not be altered.
          Defendant       also     challenges       plaintiff's      adequate       need   for
    alimony    and    his     ability    to    pay       support    because    of    changed
    economic circumstances.             When asked to consider this in the
    course of earlier motions, the judge declined because the issue
    was "not ripe[,]" interpreting the MSA to prohibit modification
    based on income reductions prior to June 7, 2014.                          Defendant's
    subsequent motion for a plenary hearing to determine plaintiff's
    needs and his ability to pay were denied.                      Each time, the judge
    reiterated alimony review would not be undertaken until June 7,
    2014.     Once the trigger date passed, defendant again applied for
    relief, which again was denied.
          Concerning        the    rejection        of   defendant's     request       for    a
    plenary hearing, he argues the trial judge ignored both the need
    for   imputation      of      additional    income       to    plaintiff    and     facts
    proving     significant          changes        in     the      parties'      financial
    circumstances since the FJOD's entry.                   Instead, the judge found
    defendant's application was "not justified," and denied relief
    in the September 19, and November 17, 2014 orders.                         He reasoned
    the   business's      loss     of   one    of    two    customers    was    "typically
    indicative       of   a    temporary      change"       and     defendant's      alleged
                                               14                                    A-2655-14T1
    decrease in income was "surely not a permanent situation."                                  The
    judge also concluded defendant had "chosen" not to divulge his
    financial       information,        but    did     not       describe       the    missing
    financial       disclosure.         Finally,      the       judge     did   not     address
    defendant's claim maintaining plaintiff failed to disclose her
    income information as required by the MSA.
          We    find     the     record      does    not       support     these      findings.
    Accordingly, we reverse and remand the challenged orders.
          Defendant      had     been   claiming      a    business       downturn        and   an
    inability to earn $125,000 since entry of the FJOD.                            Plaintiff's
    rejection       of   these      claims    based       on    her      knowledge     of       how
    defendant's business worked creates a material dispute of fact,
    implicating questions of credibility.                      In his motion, defendant
    supplied his case information statement executed on February 10,
    2014, attached pay stubs from June 2 to June 20, 2014, his 2013
    federal Form K-1 recording distributions from his business; and
    his   2013      individual       federal        income       tax     Form    1040,      with
    schedules.           Plaintiff's          cross-motion         included         her     case
    information statement executed on August 12, 2014, and attached
    two pages from her 2013 individual federal income tax Form 1040,
    her 2013 W-2, and pay stubs for the period June 23, 2014 to
    August     3,   2014.      In    their     respective        motions,       both    parties
                                                15                                     A-2655-14T1
    decried the sufficiency of the other's submission.5                    Perhaps oral
    argument would have illuminated whether additional discovery was
    actually    necessary.          Nevertheless,       we    determine     defendant's
    submissions satisfactorily presented a prima facie showing of a
    decrease   in     income.       Further       examination    of   defendant's      and
    plaintiff's change in earnings should have occurred through an
    evidentiary hearing.            We discern no factual support for the
    trial   judge's       finding    that    defendant's        efforts    to    increase
    earnings and reduce expenses following customer losses could be
    assumed    to    be     "temporary"     or    otherwise     within     his   control.
    Another issue raised, but never addressed, was whether plaintiff
    complied with the expectations set forth in the MSA to enhance
    her earning capacity.            The failure to consider these crucial
    elements   of     the    parties'     financial    circumstances        require    the
    order denying review of alimony to be reversed.
         The   material       factual     disputes     presented      by   the   parties'
    pleadings bear directly on the legal conclusions required to be
    made and these disputes can only be resolved through a plenary
    hearing.        Hand v. Hand, 
    391 N.J. Super. 102
    , 105 (App. Div.
    2007) (stating a plenary hearing is necessary when the parties'
         Plaintiff's completed case information statement                    filed with
    this court may more comprehensively satisfy the MSA's                    requisites
    for disclosure.   However, this was not provided to                       the trial
    court and the case information statement presented to                    and relied
    upon by the trial judge was incomplete.
                                                 16                              A-2655-14T1
    submissions       show   a   genuine    and    substantial   factual         dispute).
    Importantly, "[t]he credibility of the parties' contentions may
    wither, or may be fortified, by exposure to cross-examination
    and through clarifying questions posed by the court[]" in a
    plenary hearing.         Barblock v. Barblock, 
    383 N.J. Super. 114
    , 122
    (App. Div.), certif. denied, 
    187 N.J. 81
          Further, the level of the parties' respective incomes bears
    directly on the amount of child support, and whether and to what
    extent they are able to contribute to college costs.                      Absent an
    accurate    determination       of     the    parties'   incomes,       the    ordered
    child support and college payments are unfounded and also must
    be reversed.6
          Accordingly, the provisions of the September 19, 2014 order
    denying defendant's motion to review alimony, fix child support,
    and   establish      college    contributions,       must    be   vacated.          The
    matter     is    remanded     for    further     proceedings      and    a     plenary
    hearing.        Provisions in the November 7, 2014 order addressed to
    these same issues are also vacated.                  On remand, a different
         We reject defendant's challenge to the judge's disregard of
    the MSA's child support step-down provisions.      The change in
    alimony, as ordered in December 2013, was sufficient to
    disregard the child support contingencies set forth in the MSA,
    because these levels of child support were not only based on the
    parties' respective imputed incomes, but also the initial level
    of alimony of $2200 per month. Once the latter was changed, the
    MSA support contingencies were no longer applicable.
                                             17                                   A-2655-14T1
    Family Part judge must conduct the proceeding, as prior orders
    incorrectly drew credibility determinations.
           We add these additional comments to arguments raised by
    defendant on appeal.         First, understanding defendant is the sole
    stockholder of his corporate employer, prior to conducting a
    plenary hearing regarding defendant's modification request, the
    court should conduct a case management conference to determine
    the applicability of N.J.S.A. 2A:34-23(l).                      As necessary, the
    judge     may    allow    discovery.          Second,      absent      circumstances
    permitted by law, plaintiff's boyfriend's income is not subject
    to     review,   except     perhaps    as     proof     of    plaintiff's          rental
    payments.        Third,    in   fixing   child    support,        the    court      must
    delineate the expenses determined to be covered by the support
    award.     Finally, when computing college contributions, the court
    must     initially       determine     the     parties'        ability        to    pay,
    acknowledging      defendant's       obligation       to     satisfy    any    ordered
    alimony and child support prior to determining his ability to
    make college contributions.
           Affirmed in part, reversed in part, and remanded for a
    plenary hearing.         We do not retain jurisdiction.
                                             18                                    A-2655-14T1