DONNA S. SECK VS. THEODORE R. SHALACKÂ (FM-12-1303-11, MIDDLESEX COUNTY AND STATEWIDE) ( 2017 )


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    APPROVAL OF THE APPELLATE DIVISION
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    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-1563-15T2
    DONNA S. SECK,
    Plaintiff-Respondent,
    v.
    THEODORE R. SHALACK,
    Defendant-Appellant.
    ____________________________________________
    Submitted May 2, 2017 – Decided May 31, 2017
    Before Judges Yannotti and Gilson.
    On appeal from Superior Court of New Jersey,
    Chancery Division, Family Part, Middlesex
    County, Docket No. FM-12-1303-11.
    Law Office of Edward Fradkin, LLC, attorneys
    for appellant (Edward P. Fradkin, of counsel
    and on the briefs).
    George G. Gussis, PA, attorneys for respondent
    (George G. Gussis, of counsel and on the
    brief; Puya Joseph Nili, on the brief).
    PER CURIAM
    Defendant appeals from provisions of an order entered by the
    Family Part on June 16, 2015, which determined defendant's share
    of plaintiff's retirement account, and gave plaintiff credits for
    the   value   of   a   discarded   household     rug,   and   her   share    of
    defendant's retirement accounts. Defendant also appeals from an
    order entered by the court on November 16, 2015, which awarded
    plaintiff attorney's fees. We affirm in part, reverse in part, and
    remand the matter to the trial court for further proceedings.
    I.
    The parties were married on October 6, 1996, and no children
    were born of the marriage or legally adopted. On December 20,
    2010, plaintiff filed a complaint for divorce. The trial court
    entered a dual final judgment of divorce dated October 25, 2011,
    which   dissolved      the   marriage    and   incorporated   the   parties'
    matrimonial settlement agreement (MSA).
    Article VII of the MSA addresses equitable distribution.
    Section 7.4 of the MSA states in pertinent part that the parties
    had certain pension, retirement, or deferred-income accounts,
    which would be distributed or retained solely by one party in the
    manner specified. The MSA provides that the marital portion of
    plaintiff's TIAA/CREF account would be split on a fifty-fifty
    basis.1 Section 7.4 states that the marital portion of this account
    consists of the funds accumulated through the date upon which
    1
    "TIAA-CREF" is the Teachers Insurance and Annuity Association,
    College Retirement Equities Fund.
    2                             A-1563-15T2
    plaintiff filed her complaint for divorce, plus or minus any
    fluctuation   in     value   due    to   the     market,   "less    [plaintiff's]
    premarital portion of $39,444.92 (plus/minus any fluctuation in
    value attributable to the premarital portion)."
    Section 7.4 of the MSA further provides that defendant had
    an E-Trade Roth Individual Retirement Account (IRA) and a Wells
    Fargo IRA. The MSA states that plaintiff was entitled to one-half
    of the contributions to the E-Trade IRA made from the date of the
    marriage to the date upon which the divorce complaint was filed,
    "together with the market gains and losses thereon." In addition,
    the   MSA   states    that   plaintiff       is   entitled    to    "the    marital
    coverture" portion of the Wells Fargo IRA "together with market
    gains and losses thereon."
    Section 7.4 also states that plaintiff's TIAA/CREF account,
    and   defendant's     E-Trade      and   Wells    Fargo    IRAs    each    would    be
    distributed in accordance with a Qualified Domestic Relations
    Order (QDRO). The MSA states that pension appraisers would prepare
    the QDROs, and the parties would equally share the costs of
    preparing the QDROs.
    In addition, Section 7.3 of the MSA provides that the parties
    would each keep the household furnishings and personalty in their
    possession, but plaintiff would be entitled to certain items listed
    on Exhibit A to the MSA. Exhibit A states that, among other items,
    3                                   A-1563-15T2
    plaintiff was to keep possession of a "multi-color rug" with a
    size of approximately five-by-seven feet.
    On March 17, 2014, plaintiff filed a motion in the trial
    court which sought, among other relief, a determination that
    defendant's share of plaintiff's TIAA/CREF account is $144,037.17;
    application of plaintiff's portion of defendant's E-Trade and
    Wells Fargo IRAs as an offset to defendant's share of the TIAA/CREF
    account; a credit of $2395 for a "Persian Rug" defendant had
    discarded; and the award of attorney's fees.
    In support of her motion, plaintiff submitted a certification
    in which she stated that a pension valuation had been performed,
    which indicated that as of December 27, 2013, the value of the
    TIAA/CREF    account   was    $524,366.41,        of    which   $327,519.26          was
    eligible    for   distribution       based   upon      application    of    a     .6246
    "reduction for marital coverture." Plaintiff asserted that the
    equitable    distribution      amount       of   the    TIAA/CREF    account         was
    $327,519.26, less $39,444.92 for her premarital contributions, or
    $288,074.34.      Plaintiff    stated    that     defendant's       share    of      the
    account was one-half of this amount, or $144,037.17.
    Plaintiff      noted     that    defendant        had   objected       to      this
    calculation and stated that he believed plaintiff's premarital
    portion of the account was limited to $39,444.92. Plaintiff stated
    4                                       A-1563-15T2
    that defendant claimed that he was entitled to $242,460.75, which
    is one-half of $524,366.41, minus $39,444.92, or $484,921.49.
    Plaintiff noted that she began her employment at a university
    on April 4, 1988, and married defendant on October 6, 1996. She
    stated that she had contributed to the TIAA/CREF account for eight
    years before the marriage, and her premarital contributions were
    "substantially more than $39,444.92." She asserted that defendant
    would be unjustly enriched if he was entitled to $242,460.75, as
    he claimed.
    In addition, plaintiff stated that defendant's E-Trade IRA
    was "all marital" and had a value of $7659.91. She asserted that
    her   share   of   the   account   was       $3829.96.    She   also   said    that
    defendant's Wells Fargo IRA was "all marital" and had a value of
    $43,239.80.    She   stated   that   her       share     of   this   account   was
    $21,619.90.
    Plaintiff further asserted that defendant had not turned over
    the "Persian Rug" to her, as required by the MSA. She noted that
    defendant had acknowledged he discarded the rug. Plaintiff stated
    that she went to the department store where the rug was purchased
    and obtained an estimate of "the approximate value of the rug."
    According to plaintiff, the store had provided a note indicating
    the rug "was worth" $2395.
    5                                A-1563-15T2
    Defendant opposed plaintiff's motion, and filed a pro se
    cross-motion seeking an order finding that he was entitled to
    47.94 percent of plaintiff's TIAA/CREF account. In a certified
    statement dated June 4, 2014, defendant asserted that plaintiff
    was bound by the terms of the MSA, which stated that her premarital
    portion of the TIAA-CREF account was $39,444.92. He stated that
    this provision of the MSA had been negotiated, reviewed, and agreed
    upon by the parties and their attorneys.
    Defendant also stated that as of December 31, 2010, the
    marital portion of the TIAA/CREF account was $484,921.49, which
    was the balance of $524,366.41, less the agreed-upon premarital
    portion of $39,444.92. He asserted that his share of the account
    was one-half of the marital portion of the account, or $242,460.74.
    Defendant asserted that he would be entitled to 46.24 percent of
    the account.
    He noted, however, that a QDRO had been prepared and submitted
    to the TIAA/CREF using the "transfer percentage" of 46.24, but
    this    was   "problematic."   Defendant   said   plaintiff's   account
    consisted of a Transfer Payout Annuity (TPA) in the amount of
    about $18,000, plus six other non-TPA certificates. Defendant
    stated that the TPA had certain restrictions that affected its
    division. Defendant therefore asserted that plaintiff should be
    6                            A-1563-15T2
    permitted to retain 100 percent of the TPA, and he should be
    awarded 47.94 percent of the other six certificates.
    Defendant     also    asserted     that     market    fluctuations        had
    increased the account balance by forty percent as of February 28,
    2014. He asserted that this increase would apply to the marital
    and premarital portions of the account. He said the increase in
    value would not affect the percentage of his share of the TIAA/CREF
    account as of the date of distribution.
    The court entered an order dated July 8, 2014, which granted
    plaintiff's    motion      and   determined      that   defendant's     share    of
    plaintiff's TIAA/CREF account was $144,037.17. The court deducted
    plaintiff's premarital portion of $39,444.92 from the equitable
    distribution amount of $327,519.26, leaving $288,074.34 to be
    divided equally between the parties.
    The court also gave plaintiff a credit of $2395 for the
    "Persian Rug" that defendant had discarded, noting on the order
    that plaintiff's application for this credit had been unopposed.
    In addition, the court denied without prejudice plaintiff's motion
    to   apply   her   share    of   the   E-Trade    and   Wells   Fargo    IRAs    to
    defendant's share of the TIAA/CREF account. The court ordered
    defendant to prepare QDROs regarding these accounts within ten
    days.
    7                                 A-1563-15T2
    Thereafter, defendant retained counsel, and on July 28, 2014,
    defendant's attorney filed a motion for reconsideration of the
    court's   determination         of   defendant's      share    of       the   TIAA/CREF
    account, and the decision to grant plaintiff a credit of $2395 for
    the rug. In support of the motion, defendant submitted a statement
    from TIAA/CREF, which indicated that as of September 30, 1996,
    plaintiff's account had a value of $39,444.92.
    Defendant also stated he did not know the rug that plaintiff
    identified for the department store's salesperson. He pointed out
    that the note provided to the court indicated that a five-by-
    eight-foot     rug    had   a   price   of    $995.    In   response,         defendant
    submitted a certified hand-written note from the salesperson, who
    wrote that when plaintiff came to the store, she did not have a
    receipt for the rug. The salesperson wrote that plaintiff did not
    have his permission to use the price quote in a court filing.
    Plaintiff       opposed     the    motion   and    filed       a    cross-motion
    seeking, among other relief, attorney's fees for responding to the
    motion.   In    her    certification,         plaintiff       asserted        that   the
    provision of the MSA regarding the TIAA/CREF account might be
    ambiguous, but it could only be interpreted in one of two ways.
    She asserted that
    [t]he equitable distribution portion is either
    $327,519.26 minus $39,444.92 or $288,074.34,
    or merely [one-half] of $327,519.26. It is
    8                                     A-1563-15T2
    clearly not more than one-half of the marital
    share     of      $327,519.26.     Therefore,
    [d]efendant's share is either $144,037.17 or
    $163,759.63. Either way, it is significantly
    less than what the [d]efendant is trying to
    receive.
    Plaintiff further asserted that her premarital contributions
    to the TIAA/CREF account had grown over twenty-two years, and
    those contributions were worth substantially more than $39,444.92.
    In addition, plaintiff noted that defendant had not submitted the
    QDROs for the E-Trade and Wells Fargo IRAs, as required by the
    court's order.
    Plaintiff also addressed the court's decision giving her a
    credit for the rug. She stated that the rug mentioned on the list
    in the MSA was the rug she had previously referred to as a "Persian
    Rug." Plaintiff said defendant had discarded the rug after the
    divorce, and she went to the department store to find a similar
    rug.
    Plaintiff stated that the rug was on sale the day she went
    to the store, but there was "no guarantee that it would be on sale
    if [she] were to purchase it again in the future." She said the
    rug that defendant discarded was in good condition. She stated
    that the court should adhere to the prior decision, giving her a
    credit of $2395 for the rug.
    9                         A-1563-15T2
    The court entered an order dated June 16, 2015, which granted
    defendant's motion in part. The order states that defendant's
    share of the TIAA/CREF account was $163,759.63, less the credit
    to plaintiff of $2395 for the "Persian Rug," or $161,364.63. The
    court directed defendant to provide copies of statements related
    to the E-Trade and Wells Fargo IRAs within five days after the
    date of the order. The court reserved the decision on plaintiff's
    application for attorney's fees.
    The court entered another order dated July 27, 2015. The
    order states that defendant had not provided the court with the
    statements regarding the E-Trade and Wells Fargo IRAs, as required
    by the prior order. The July 27, 2015 order authorized plaintiff's
    counsel   to   obtain   copies   of   the    statements    with     a   power   of
    attorney.
    Defendant then filed a notice of appeal from the June 16,
    2015 order. The clerk of this court advised defendant's attorney
    that,   because   the   trial    court     had   not   ruled   on   plaintiff's
    application for attorney's fees, the order was not a final order
    and not appealable as of right pursuant to Rule 2:2-3(a). Defendant
    withdrew his appeal.
    In October 2015, plaintiff's attorney provided the trial
    court with copies of the statements he had obtained for the E-
    Trade and Wells Fargo IRAs. The court then entered an order dated
    10                                 A-1563-15T2
    November 16, 2015, which granted plaintiff's motion for a fifty
    percent share of the E-Trade and Wells Fargo accounts. The court
    determined     that   plaintiff's      share   of    these       accounts     totaled
    $25,573.01, which would be deducted from defendant's share of the
    TIAA/CREF account. The court also awarded plaintiff counsel fees.
    This appeal followed.
    On appeal, defendant argues that the trial court erred in the
    equitable distribution of plaintiff's TIAA/CREF account. He argues
    that the court should not have given plaintiff a credit for her
    share of his IRAs because these accounts should have been divided
    by   QDROs.   He    further   argues   that    the       court   erred   by    giving
    plaintiff credit of $2395 for the rug. In addition, defendant
    argues that the court erred by awarding plaintiff attorney's fees.
    II.
    We turn first to defendant's contention that the trial court
    erred   in    the   equitable   distribution        of    plaintiff's    TIAA/CREF
    account and defendant's E-Trade and Wells Fargo IRAs. Defendant
    contends the court erred by failing to enforce the relevant
    provisions of the MSA with regard to these assets. We disagree
    with these arguments.
    Generally, decisions allocating marital assets in equitable
    distribution are committed to the sound discretion of the trial
    court. La Sala v. La Sala, 
    335 N.J. Super. 1
    , 6 (App. Div. 2000),
    11                                     A-1563-15T2
    certif. denied, 
    167 N.J. 630
    (2001). We will not reverse a trial
    court decision on equitable distribution unless shown to be a
    mistaken exercise of discretion. 
    Ibid. We will affirm
    the trial
    court's decision if it "could reasonably have reached its result
    from the evidence presented, and the award is not distorted by
    legal or factual mistake." 
    Ibid. A. The TIAA/CREF
    Account
    As we have explained, the record shows that as of December
    27, 2013, plaintiff's TIAA/CREF account had a present value of
    $524,366.41. The appraisal determined that the marital portion of
    the account was $327,518.26. In its order of June 16, 2015, the
    trial court found that defendant's share of the account was fifty
    percent of $327,518.26, or $163,364.53. In reaching that decision,
    the trial court accepted the calculation in the pension appraisal,
    which determined the marital portion of the account       using a
    coverture percentage of .6246.
    It is well established that a coverture fraction can be
    employed to determine the portion of a marital asset that is
    subject to equitable distribution. Barr v. Barr, 
    418 N.J. Super. 18
    , 34 (App. Div. 2011). The coverture fraction is
    the proportion of years worked during the
    marriage to total number of years worked. The
    numerator represents that portion of the
    benefit, enhanced or not, that was "legally
    and   beneficially   acquired"   during   the
    12                        A-1563-15T2
    marriage. The denominator is the total number
    of years worked up to retirement. The
    coverture fraction insures that the equitable
    distribution pot includes only that portion
    of   the   working   spouse's   labor   which
    constitutes a "shared enterprise." It also
    assures the employee spouse the benefits of
    his or her pre and post coverture labors.
    [Eisenhardt v. Eisenhardt, 
    325 N.J. Super. 576
    , 580-81 (App. Div. 1999) (citations
    omitted).]
    On appeal, defendant contends the court erred by failing to
    enforce the provision of the MSA pertaining to the distribution
    of the TIAA/CREF account. He argues that under the MSA, plaintiff's
    premarital contributions to the account are limited to $39,444.92,
    plus or minus fluctuations due to the market.
    The MSA states that the marital share of the TIAA/CREF account
    would be subject to equitable distribution. The pension appraisal
    reasonably determined the marital share of the account using a
    coverture fraction. By using the coverture fraction, and applying
    it to the present value of the account, the appraisal reasonably
    determined the amount of plaintiff's premarital contributions and
    amount by which those contributions had increased in value, due
    to market fluctuations.
    We reject defendant's contention that by using the coverture
    fraction in the pension appraisal, the trial court erroneously
    failed to enforce the relevant provision of the MSA. Defendant
    13                           A-1563-15T2
    argues that plaintiff's contributions were limited to $39,444.92,
    but he failed to give plaintiff any credit for any increase in
    value attributable to market fluctuations. The court reasonably
    based its analysis on the evidence before it, and defendant
    provided the court with no credible evidence to determine the
    marital portion of the account differently.
    Accordingly,      we    affirm    the   trial   court's   finding   that
    defendant's share of the TIAA/CREF account is $163,759.63.
    B.     The E-Trade and Wells Fargo IRAs
    We turn to defendant's contention that the trial court erred
    by giving plaintiff a credit for her share of the E-Trade and
    Wells Fargo IRAs, rather than having the parties prepare and submit
    QDROs for later distribution of these assets. Defendant argues
    that the court erred by departing from the distribution scheme
    spelled out in the MSA.
    We reject these arguments for several reasons. The record
    shows that the trial court ordered defendant to prepare QDROs for
    the distribution of these accounts, and he failed to comply with
    the court's order. The court then ordered defendant to provide
    statements for these accounts. Defendant again failed to comply
    with    the    court's        order.    The    court   ultimately   authorized
    plaintiff's counsel to obtain the information about the accounts,
    with a power of attorney.
    14                            A-1563-15T2
    We conclude that, by repeatedly failing to comply with the
    court's orders regarding these accounts, defendant waived any
    right he may have had to enforce the provision of the MSA requiring
    division of the IRAs using QDROs. Furthermore, granting plaintiff
    a setoff for the present value of the accounts was appropriate
    because   it   would   eliminate   further   disagreements   between   the
    parties concerning these accounts, and avoid the need for the
    parties to return to court to address any issue that may arise.
    Defendant argues that giving plaintiff a credit for her share
    of the IRAs could have unintended tax consequences, but defendant
    never raised that issue in the trial court. Defendant also asserts
    that at the very least, the trial court should have conducted an
    evidentiary hearing on this issue. However, defendant did not
    request such a hearing, and he did not provide the trial court
    with any evidence regarding the alleged adverse tax consequences
    that may result by granting plaintiff the setoff.
    We conclude that, in determining the amount of defendant's
    share of the TIAA/CREF account, the trial court did not abuse its
    discretion by granting plaintiff a credit for her share of the E-
    Trade and Wells Fargo IRAs.
    III.
    We next consider defendant's contention that the trial court
    erred by giving plaintiff a credit of $2395 for the so-called
    15                           A-1563-15T2
    "Persian Rug." Defendant contends there was insufficient credible
    evidence to support the court's finding that the rug had a value
    of $2395. We note that, when plaintiff first sought compensation
    for the rug, defendant did not oppose her application.
    Indeed, the record shows that defendant did not raise this
    issue until he filed a motion seeking reconsideration of the July
    8, 2014 order, which granted plaintiff the $2395 credit. We
    nevertheless conclude that the decision to grant plaintiff this
    credit was erroneous.
    The trial court's findings of fact "are binding on appeal
    when supported by adequate, substantial credible evidence." Cesare
    v. Cesare, 
    154 N.J. 394
    , 411-12 (1998) (citing Rova Farms Resort,
    Inc. v. Investors Ins. Co., 
    65 N.J. 474
    , 484 (1974)). The trial
    court's finding that plaintiff was entitled to a credit of $2395
    for the discarded rug is not supported by sufficient credible
    evidence in the record.
    It is undisputed that in the MSA, the parties agreed that
    plaintiff could retain a household rug, which was described in the
    MSA as a "multi-color rug" with a size of approximately five-by-
    seven-feet. The parties agree that defendant was required to turn
    over the rug to plaintiff, and he failed to do so. It is also
    undisputed that defendant discarded the rug.
    16                          A-1563-15T2
    In granting plaintiff the credit of $2395 for the rug, the
    court relied upon a handwritten note prepared by a salesperson in
    the store where the rug was purchased. There is no evidence showing
    the date when the rug was purchased, or the price paid for the
    rug. The salesperson's note indicates that some rug cost $2395,
    but it was on sale at a sixty percent reduction, for $995. The
    trial court erred by basing its finding on this submission.
    First, there is no indication in this record that the rug
    referred to in the salesperson's note is the same or similar to
    the parties' household rug. Indeed, the note indicates that the
    salesperson provided a price for a rug of a different size.
    Moreover, the price that the salesperson provided apparently was
    for the purchase of a new rug. Plaintiff did not establish that
    she is entitled to the cost to replace the rug, rather than the
    value of the household rug that was thrown out.
    In addition, the salesperson's price quote indicates that a
    new rug could have been purchased on sale for $995. Plaintiff
    asserted that there was no assurance the rug would have been on
    sale when she went to purchase it, but the price quote makes clear
    the that plaintiff could have acquired the rug in the store at a
    price substantially less than $2395.
    We therefore conclude that the trial court's finding that
    plaintiff is entitled to a credit in the amount of $2395 for the
    17                           A-1563-15T2
    discarded rug is not supported by sufficient credible evidence in
    the   record.   We   reverse     the   provision    of   the   order   granting
    plaintiff the credit for the rug and remand the matter to the
    trial court for reconsideration of this determination.
    On remand, the court should afford the parties the opportunity
    to present further evidence regarding the value of the discarded
    rug. If plaintiff fails to present additional evidence on this
    issue, her claim should be denied. If the parties present further
    evidence that raises a genuine issue of material fact, the court
    should conduct a plenary hearing to determine the amount, if any,
    that should be awarded to plaintiff for the discarded rug.
    IV.
    Defendant also argues that the trial court erred by awarding
    plaintiff attorney's fees. Defendant contends the trial court
    failed to consider the factors enumerated in N.J.S.A. 2A:34-23 and
    Rule 5:3-5(1)(c), and did not make adequate findings of fact.
    In its order of November 16, 2015, the court awarded plaintiff
    a total of $3795, which represents the award of $2153 to Veronica
    Norgaard, and $1642 to Kostantin Feldman and George G. Gussis. In
    March 2014, Ms. Norgaard submitted a certification of services
    seeking $4425 for plaintiff's initial motion. In August 2014, Ms.
    Norgaard   sought     an     additional      $4223.50    for    responding      to
    defendant's     motion     for   reconsideration.       It   appears   that   Mr.
    18                                A-1563-15T2
    Feldman and Mr. Gussis later substituted for Ms. Norgaard, and in
    October 2015, sought attorney's fees and costs in the amount of
    $3284.50 for the time they devoted to the case.
    The court did not award plaintiff all of the fees sought, and
    did not explain the reasons for the award. Furthermore, the court
    did not relate the award to specific tasks or results, and did not
    make the necessary findings required by N.J.S.A. 2A:34-23 and Rule
    5:3-5(c). In view of our decision reversing the court's order in
    part, we are convinced that the award of counsel fees must be
    reversed as well. On remand, the trial court should reconsider the
    award.
    Affirmed in part, reversed in part, and remanded to the trial
    court for further proceedings in conformity with this opinion. We
    do not retain jurisdiction.
    19                          A-1563-15T2