NANCY DANIELS VS. THOMAS DANIELS (FM-18-0886-07, SOMERSET COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-5001-17T3
NANCY DANIELS,
Plaintiff-Appellant,
v.
THOMAS DANIELS,
Defendant-Respondent.
Submitted September 10, 2019 - Decided August 28, 2020
Before Judges Accurso and Gilson.
On appeal from the Superior Court of New Jersey,
Chancery Division, Family Part, Somerset County,
Docket No. FM-18-0886-07.
Eric J. Warner, attorney for appellant.
Heymann & Fletcher, attorneys for respondent (Alix
Claps, on the brief).
PER CURIAM
Plaintiff Nancy Daniels and defendant Thomas Daniels were divorced in
2007 after a sixteen-year marriage and two children. Although they amicably
resolved their divorce, entering into a forty-page marital settlement agreement
(MSA), a separate custody and parenting time arrangement, and a
supplemental agreement several months after the divorce, clarifying that
defendant would be one hundred percent responsible for the children's college
expenses, after exhaustion of any trust funds, custodial accounts, scholarships,
grants, and the like, both parties agreeing the children should not be required
to obtain loans, their post judgment relations have been acrimonious, resulting
in at least thirteen substantive orders, predating those on appeal, arising out of
repeated disputes over compliance with the financial terms of the MSA.
In 2017, defendant filed a motion to emancipate the parties' younger
child and obtain reimbursement for child support he claimed he overpaid after
their older child was emancipated. Plaintiff opposed that motion and filed her
own motion in aid of litigant's rights, seeking to compel defendant "to pay all
amounts previously ordered by the court" and "the numerous amounts that he
has contracted to pay or is otherwise obligated to pay," and compelling
defendant to provide the necessary authorizations "required to obtain any and
all financial records over the last ten years for any and all financial accounts
and/or services" he has held or utilized, along with over fifteen other specific
requests for relief. The court granted defendant's emancipation motion and
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ordered a plenary hearing to resolve the issue of child support and to
"determine a final schedule of the amounts due and owing between the
parties."
Judge Michael J. Rogers presided over a seven-day plenary hearing at
which only the parties testified. Referencing the many post-judgment motions
the parties had filed, Judge Rogers declared his "desire and hope to put an end
to this constant litigious acrimony once and for all and to make as compl ete a
record as is necessary and possible." To that end, the judge delivered a
comprehensive decision from the bench, consuming nearly fifty p ages of
transcript, recapping the history of the parties' marriage and divorce, and the
many post-judgment motions and orders affecting the current dispute. The
judge expressed his view of the credibility of the parties and their positions,
and carefully addressed the issues presented, making clear findings and
explaining his resolution of each issue.
As for the history of their marriage, the judge noted that defendant had
been a hedge fund manager until the Securities and Exchange Commission
sued him and his fund for fraud, and he agreed to pay $1,553,945 in civil
penalties and disgorgement and accepted a permanent bar from association
with any investment advisor in 2004. The parties immediately teamed up with
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one of defendant's partners in the hedge fund and his wife to form a limited
liability company, Woodstone Custom Contractors, to develop residential real
estate. Woodstone would not turn a profit for several years, although it
weathered both the parties' divorce in 2007 and the recession. The judge noted
that defendant certified in 2006, that the parties had $400,000 in unearned
income in 2005, a joint marital lifestyle of $44,836 per month, and a net worth
of nearly $6,000,000.
The judge described the positions of the parties in the plenary hearing as
existing "at a four-way intersection of financial inaccuracy, issue confusion,
misstatements of so-called facts, and often unreasonable interpretations of
various documents and orders." Plaintiff claimed that defendant owed her
$941,857.55. Defendant claimed that plaintiff owed him $218,487.12. At the
conclusion of the hearing, Judge Rogers found defendant owed plaintiff
$305,634.87 and was due credits of $242,296.74, leaving a net amount due
from defendant to plaintiff of $63,338.11.
The judge described the "backdrop of this entire case . . . is generally the
unwillingness and/or inability of the defendant to comply with his obligations
under the marital settlement agreement and subsequent agreements and court
orders." Reviewing the post-judgment history, including "the many orders and
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judicial findings," the judge noted "defendant was typically the offending
party," was "often in clear violation of litigant's rights" and "filed motions that
were without merit." Regarding the testimony of the parties at the hearing, the
judge found defendant, "at times appeared savvy and knowledgeable, but was
often untrustworthy in his testimony, positions and conclusions." As for
plaintiff, the judge found, she "seemed credible at times but was frequently ill-
informed and offered bare, unsupported conclusions and opinions."
The judge criticized both parties for their failure to marshal evidence,
noting that both promised to call fact witnesses, particularly an attorney who
had represented both parties and had extensive knowledge of the amounts
owed and how credits were supposed to flow and the accountant who served as
both a mediator and arbitrator for the parties on several occasions and "was
intimately familiar with the complex set of facts at issue," but did not do so.
Judge Rogers also noted the parties' failure to produce several post-judgment
orders "that were relevant and material" and their failure to even realize until
after the parties had testified that "[a] critically important document that both
sides interpret differently," but urged the court to rely on, an unsigned, undated
consent order following economic mediation in 2008, was missing a page that
contained important information.
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The judge found that in their testimony, "the parties rarely confronted
the financial issues in their case head on. Rather, they selectively set forth
their respective positions with blinders on to the arguments of the other." The
judge found the parties' acted as "if the other side didn't exist, so certain and
righteous they each were in their opinions." He found "[t]hey each described a
convoluted set and series of arguments, events, expenses, payments, motions,
orders, alleged agreements and more arguments." Judge Rogers concluded:
The point is that the litigation tactics of the parties
throughout the tumultuous litigation history between
them caused them to reveal only what they wished to
see. A genuine search for truth is irrelevant to these
litigants insofar as it concerns themselves. They want
what they want and will generally say whatever it
takes to achieve their respective goals.
Hampered by the failure of the parties to produce all relevant evidence at
the plenary hearing, the judge noted he could, under the Court Rules, "opt to
deny all requests for relief and impose sanctions, but to what end? The parties
would just return for more rounds of motions and little would be
accomplished." The court accordingly determined to decide the issues
presented for resolution on the evidence adduced at the hearing, holding "each
party accountable for their evidentiary deficiencies" in accordance with the
burdens of proof on each issue.
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The issue at the heart of the parties' dispute arose out of defendant's
obligation undertaken in the MSA to pay plaintiff $500,000 in lieu of alimony,
fifty percent of which was to be paid from defendant's share of the net
proceeds of sale of the marital home, with the remaining fifty percent from his
share of the sale of the Woodstone properties. The MSA called for simple
interest of 5.72% on the daily outstanding balance, payable monthly, to begin
to accrue on July 1, 2007. The 2008 consent order changed the interest on past
due payments to ten percent.
The parties agreed that another judge found in March 2011 that the
outstanding principal balance on defendant's obligation was then $230,788.50,
although neither party presented any evidence establishing what payments
were made and when in order to arrive at that figure. They also agreed that
$143,288.50 remained owing as of March 24, 2011, when defendant tendered
his $87,500 share from the sale proceeds of one of the Woodstone properties to
plaintiff, and that was the sum to which credits and debits were applied.
Although the parties agreed as to the principal owing as of that date, they
disputed the interest due, largely because of the timing and extent of credits
defendant claimed he was due against that principal balance.
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Judge Rogers noted that in order to "properly analyze the [interest] issue
one must be certain of what amount was due, when it was due, what interest
rate applies, and for what time period." The judge found "[t]he parties
provided very little useful testimony" to assist in clarifying the issue, "other
than their own extreme interpretations of the MSA, the consent order, and the
various orders entered by the court over the years." Plaintiff sought ten
percent interest on every sum she claimed was due and had been due over the
years, while defendant claimed he reduced the outstanding balance to zero
when he gave plaintiff the entire benefit of his retirement assets in 2014,
instead of just her coverture fraction. The court found the lack of detailed
forensic accounting prevented it from accurately determining when amounts
were due, how much was due, how much defendant had paid off, and how
much interest had accrued.
Turning first to the credits defendant claimed he was owed, the judge
agreed with defendant that he established his entitlement to credits of $52,400
from sale of another of the Woodstone properties; $34,497.82 from Woodstone
credit card charges attributable to plaintiff; $37,737 from Woodstone cr edit
card interest attributable to plaintiff; and $113,392.92 for transferring the
entire benefit of his Citibank pension to plaintiff.
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The judge disagreed that defendant was entitled to a credit of $25,682
for transferring the entirety of his $51,424 Merrill Lynch retirement account to
plaintiff rather than her share of the marital coverture portion. The court noted
that defendant's retirement accounts were to be divided via qualified domestic
relations orders, which were submitted in 2008, but returned by the
administrator of the plans as insufficient. Although numerous orders were
entered directing defendant to resubmit revised orders, defendant delayed
resubmitting the order for the Merrill Lynch account until the end of 2014.
Defendant admitted he withdrew monies from the account before
transferring them to plaintiff, but claimed he only invaded the non-marital
portion and that he did so in order to fund expenses of the children. Judge
Rogers found it was "clear" from the account statements in evidence
that defendant treated these funds as his own and self-
dealt with them over a period of several years. A fair
inference is that the reason he delayed in cooperating
with the 401K QDRO paperwork, despite several court
orders to sign them, was because he was using a
significant portion of the money for himself. His own
"accounting" admits that he withdrew $121,351 from
this account. We do not know what he used this
money for. This was a comingled marital retirement
asset and defendant had no right to deal with the funds
as if he were the sole owner.
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The judge noted that defendant did not provide a "forensic accounting or
competent evidence as to what the value of plaintiff's share would have been if
he had complied with his obligations under the marital settlement agreement
and subsequent court orders." The judge denied defendant any credit on
account of the Merrill Lynch retirement account because "[h]is misconduct in
handling these funds and intentionally denying plaintiff her right" to her share
"makes it completely inequitable to honor his request for a credit against his
alimony obligation."
As to the parties' dispute over child support, the judge noted plaintiff
claimed she was owed $1,684.96 in overdue payments and defendant claimed
he was entitled to a credit in the amount of $20,008.18 for prior overpayments.
Following a lengthy discussion of the evidence adduced on the issue, Judge
Rogers found neither party could prove their claim, and, instead, determined to
rely on a Probation Division determination from December 2017, establishing
defendant had overpaid child support in the amount of $4269. Adding the
$4269 child support credit to the credits defendant established, the court found
total credits to defendant of $242,296.74.
Having established the credits due defendant against his payment in lieu
of alimony, the court returned to the question of interest. Plaintiff, relying on
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the 2008 consent order that changed the interest on past due payments to ten
percent, claimed defendant owed her $340,498.24 in interest, which she
calculated by running interest at ten percent on $500,000 from July 1, 2007
until March 2011, when the outstanding principal balance was determined to
be $230,788.50. To that sum of $170,000, she added sixteen days' interest of
ten percent on $230,788.50, or $1,055.50, until defendant reduced the
outstanding sum owed to $143,288.50 following his $87,500 payment from his
share of the proceeds of sale of one of the Woodstone properties. Finally,
plaintiff added another $100,301.94, which she calculated to be the ten percent
interest on the $143,288.50 balance through the plenary hearing. Defendant
claimed he only owed plaintiff $3846.48, representing two months of interest
at ten percent.
Judge Rogers noted plaintiff's calculation was obviously incorrect.
Interest according to the MSA was only due on past due amounts, and only at
5.72%. Although the 2008 consent order increased the interest rate to ten
percent, it also noted that all accrued interest had been paid as of September
30, 2008. Thus, plaintiff's calculation of ten percent interest on $500,000 from
the date of divorce, which also failed to account for the payments defendant
made to reduce the sum due to $230,788.50 in March 2011, was an overreach.
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The judge found the lack of any forensic accounting detailing when defendant
made payments and when the credits he found defendant entitled to should
have been applied made it "impossible to calculate interest with any reasonable
degree of certainty."
The judge concluded, however, that plaintiff was clearly "entitled to
some relief in the form of interest on her alimony arrears," even if the court
could not calculate the sum due from the evidence in the record. Emphasizing
that it was "a court of equity . . . at liberty to decide issues based on equitable
considerations . . . present in the facts," the judge determined to provide
plaintiff "an equitable, moderate and reasonable interest award that takes into
account each side's position and all the factual circumstances . . . in this very
complicated case to decipher." Accordingly, the court awarded plaintiff
$35,000 in interest for amounts that should have been paid earlier and for
opportunities she lost by not having the funds available for her use.
The court also found that plaintiff established several claims for sums
defendant was previously ordered to pay that remained unpaid as of the
hearing as well as some items for which she was owed reimbursement. The
judge rejected defendant's claim that the $51,543.75 defendant was ordered to
pay on account of tuition advanced by plaintiff in 2013, encompassed the
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$48,739.15 he was ordered to pay for his share of the children's expenses in
2011, determining there was "no question" after reviewing plaintiff's
certifications in support of both motions that "these two sums [were] for
completely different sets of expenses incurred at different times for different
reasons."
The judge found plaintiff failed to carry her burden to establish her
entitlement to reimbursement for $40,948 in additional tuition payments,
finding plaintiff provided sufficient documentation to establish only two
payments of $10,579.40 and $5807 for which defendant should have been
responsible. The judge also determined that an order awarding plaintiff fees
on a prior motion for $10,750 remained outstanding, as well as $5735.07 for
defendant's portion of certain car expenses for their older child. The judge
determined plaintiff proved defendant owed her $305,634.87. Subtracting
credits to defendant of $242,296.74, left a net award to plaintiff of $63,338.11.
The judge denied both parties request for counsel fees. He found he was
not provided much information about the ability of either party to pay counsel
fees, and that neither party proved entitlement to fees under the Court Rules or
applicable case law. Although the judge harkened back to points already made
about the credibility of the parties and the unreasonableness of certain
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positions each took, he acknowledged the vast amount of confusion
surrounding most of the issues, and determined he could not find that either
party proceeded in bad faith on the issues presented at the plenary hearing.
Both parties appeal. Plaintiff contends the trial court erred: (1) in
failing to calculate interest owed on alimony and instead awarding her an
equitable sum of $35,000; (2) in failing to exercise its equitable powers to
award her "a reasonable sum" to account for defendant's self-dealing and
mismanagement of the Merrill Lynch retirement account; (3) in failing to
cause defendant to assume full responsibility for the children's student loan
debts; (4) in not reimbursing her for college expenses for their children; (5) in
failing to award her $35,000 from the sale of one of the Woodstone properties;
and (6) in failing to grant her attorney's fees. Defendant contends the trial
court erred: (1) in failing to make findings of fact and conclusions of law
regarding his overpayment of child support; (2) in failing to credit him with
the value of the Merrill Lynch retirement account transferred to plaintiff
beyond plaintiff's marital coverture portion; and (3) in treating the 2013 order
directing him to pay plaintiff $51,573.75 for tuition payments as separate from
the 2011 order directing him to pay her $48,738.15.
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Our review of the record convinces us that none of these arguments is of
sufficient merit to warrant discussion in a written opinion. See R. 2:11-
3(e)(1)(E). The parties' arguments reduce to quarrels with the judge's fact-
finding, which we are simply in no position to reject. As the Supreme Court
has unequivocally held, "an appellate court should not disturb the 'factual
findings and legal conclusions of the trial judge unless [it is] convinced that
they are so manifestly unsupported by or inconsistent with the competent,
relevant and reasonably credible evidence as to offend the interests of justice. '"
Cesare v. Cesare, 154 N.J. 394, 412 (1998) (quoting Rova Farms Resort, Inc.
v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 484 (1974)).
"Deference is especially appropriate 'when the evidence is largely
testimonial and involves questions of credibility.'" Ibid. (quoting In re Return
of Weapons to J.W.D., 149 N.J. 108 (1997)). Bearing in mind Judge Jayne's
reminder that "the best and most accurate record (of oral testimony) is like a
dehydrated peach; it has neither the substance nor the flavor of the peach
before it was dried," Trusky v. Ford Motor Co., Lincoln-Mercury Div., 19 N.J.
Super. 100, 104 (App. Div. 1952), our deference to the Family Part's fact-
finding is rooted in "the family courts' special jurisdiction and expertise in
family matters." Cesare, 154 N.J. at 413.
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Having reviewed this entire record, we are convinced our customary
deference is particularly appropriate here. No doubt the trial judge was
confronted with a number of factually convoluted and intertwined claims for
which there was long history and little documentation. There is certainly
sufficient evidence in the record to support his conclusions on each issue
presented. Accordingly, we affirm, substantially for the reasons expressed in
Judge Rogers cogent and comprehensive decision from the bench on May 21,
2018.
Affirmed.
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