Deborah Spangenberg v. David Kolakowski

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2655-14T1
DEBORAH SPANGENBERG,
APPROVED FOR PUBLICATION
Plaintiff-Respondent,
October 14, 2015
v.
APPELLATE DIVISION
DAVID KOLAKOWSKI,
Defendant-Appellant.
_______________________________
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
[sic]."
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.
1
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
2
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
3
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
expenses.
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
4
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
order.
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
intent.
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
dissolution;
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
final.
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'
5
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 (2006).
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
6
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