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Economic Abuse is Recognized as a Form of Domestic Violence

Month: November 2016

Economic Abuse is Recognized as a Form of Domestic Violence

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Following the August 2015 amendments to New Jersey’s Prevention of Domestic Violence Act, a New Jersey trial court has recognized economic abuse as a form of domestic violence predicating the issuance of a final restraining order. This decision provides hope to victims who may suffer from historically unrecognized forms of domestic violence, such as economic abuse, which is designed to harass, intimidate and wield improper control over a partner or former partner.

In C.G. v. E.G., the plaintiff sought a final restraining order against her estranged spouse for interfering with her choice to return to work following a period of time when she was unemployed and collecting disability. Upon deciding to resume waitressing at the restaurant where she formerly worked, the plaintiff’s husband began sending derogatory messages, threatening the plaintiff about going back to work. The defendant intentionally attempted to interfere with her renewed employment by repeatedly calling the plaintiff’s employer and the employer’s spouse and by alleging that the plaintiff was having an affair with her employer. At the hearing, the plaintiff further represented that the defendant had punched her and had given her a black eye many years prior. The defendant did not admit to the plaintiff’s allegations, but he neither refuted them nor offered a credible defense.

The court noted that there are few threats more harassing or coercive than a threat to one’s livelihood or employment, especially considering that most people are financially dependent upon earned income from work. Moreover, the court found that, as a matter of common sense and social decency, the workplace is implicitly entitled to a line of sanctity which former partners are expected to honor rather than improperly cross.

The court deemed such behavior to be economic abuse that constituted domestic violence in the form of harassment and coercion. The court noted that harassment is a criminal offense and is recognized as a form of domestic violence under the criminal code. The court found it is difficult to imagine any employee voluntarily consenting to an estranged partner contacting his or her employer with malicious and unwelcome comments. Moreover, where the defendant has no legitimate objective to contact the plaintiff’s employer, the potential damage to the employee’s employment stability can naturally cause significant anxiety and distress, constituting economic abuse.

The court found that the defendant’s action also constitutes coercion. For example, a victim may feel forced to engage with his or her abuser or submit to certain demands if made in public at the victim’s place of work, in an effort to “save face” and preserve his or her professional reputation. The court recognized that the 2015 amendments to the Prevention of Domestic Violence Act incorporated additional definitions of domestic violence, including “coercion” as defined in the criminal code. Criminal coercion sets forth the following categories of threats:

(1) Inflict bodily injury on anyone or commit any other offense, regardless of the immediacy of the threat;

(2) Accuse anyone of an offense;

(3) Expose any secret which would tend to subject any person to hatred, contempt or ridicule, or to impair his credit or business repute;

(4) Take or withhold action as an official, or cause an official to take or withhold action;

(5) Bring about or continue a strike, boycott or other collective action, except that such a threat shall not be deemed coercive when the restriction compelled is demanded in the course of negotiation for the benefit of the group in whose interest the actor acts;

(6) Testify or provide information or withhold testimony or information with respect to another's legal claim or defense; or

(7) Perform any other act which would not in itself substantially benefit the actor but which is calculated to substantially harm another person with respect to his health, safety, business, calling, career, financial condition, reputation or personal relationships.

The court found that the defendant’s behavior met the definition of coercion because he (1) threatened to expose malicious information about the plaintiff which might impair her business repute; and (2) performed an act which in itself did not benefit the defendant but was calculated to harm the plaintiff with respect to her business, career and financial condition. By enacting the 2015 amendments and incorporating this definition of coercion, the court noted the  Legislature’s inferential emphasis that an abuser may wrongfully coerce, intimidate, control and harass a target through not only physical abuse, but economic abuse as well.

New Jersey’s recognition of economic abuse as a form of domestic violence is in line with the United States Department of Justice, as well as various national advocacy groups. It reinforces the notion that domestic violence incorporates the subtleties of abuse that encompass far more than physical violence. As set forth by the National Center of Domestic and Sexual Violence, at its core, all domestic violence is driven by power and control. Click here to view the "Power and Control Wheel" created by the National Center on Domestic and Sexual Violence. The recent statutory amendments and this decision offer hope to victims who suffer from all forms of domestic violence. While socially some may still perceive traditional concepts of domestic violence, such as physical violence, as the exclusive actionable offenses, it is promising that New Jersey has embraced a more nuanced definition of domestic violence and expanded the offenses that present a legally cognizable claim.

 Katherine A. Nunziata is an associate in the Family Law Practice Group of Riker Danzig Scherer Hyland & Perretti LLP and a contributor to the Riker Danzig Family Law Blog. Katherine’s interest in family law stems from a desire to help others while navigating a difficult process, and she brings a high level of compassion and zeal to her practice. Katherine is a resident in the Morristown, New Jersey office and can be reached at 973-451-8445 or knunziata@riker.com.

Savings Component as Part of Marital Lifestyle Under NJ Amended Alimony Statute

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In a recent decision, the Appellate Division of the Superior Court in New Jersey found that a divorcing party’s history of regular savings as part of their marital lifestyle requires the inclusion of savings as a component of alimony even where there is no need to create savings to protect the future payment of alimony to the recipient spouse.

In Lombardi v. Lombardi, the divorcing parties were college sweethearts married for twenty years. The husband was a financial analyst, making anywhere from $1 million to $2.2 million annually in the years preceding the divorce. The wife had initially worked at Bear Stearns making approximately $80,000 a year, but became a full-time caregiver after the birth of their first child early in their marriage. At the time of divorce, the wife worked part-time as a fitness instructor, making approximately $10,000 annually. 

Despite their substantial combined marital income, the parties routinely saved the better part of the husband’s salary. The parties agreed to forego an extravagant lifestyle in the hopes of living comfortably after retirement. At the time that a final judgment of divorce was entered, the parties had approximately $4 million in savings. With their penny-wise lifestyle, the parties also managed to accrue minimal debt and to fund college savings accounts for all three of their children. 

During the divorce, the parties settled issues of custody and parenting time, agreed to an equal division of the marital estate through equitable division and concurred that the wife would be entitled to long-term alimony, but disputed the amount of support. The unresolved issues were addressed during the parties’ twenty-eight day trial. The wife asserted that she required $16,291 in monthly support for herself and the three children to maintain the marital standard of living. She additionally sought $30,000 per month for savings. After considering the evidence, the trial court established an alimony award in the amount of $7,600 per month, without including an amount for savings. The court concluded that a monthly budget of $14,516, excluding savings, was reasonable. After deducting the $5,000 it was awarding for child support, the $3,610 monthly after-tax income it estimated could be generated by investment of the wife’s equitable distribution share and the $583 after-tax monthly earnings from her part-time work, the trial court concluded that the wife would need another $5,323 to meet her budget. Accounting for taxes, the trial court concluded that a gross award of $7,600 would cover the shortfall. 

The trial court reached this support amount by reasoning that the wife would be receiving approximately one half of the $5.5 million dollar marital estate in equitable distribution. Moreover, the trial court found that the children’s education expenses were previously provided for, the husband would cover unaccounted-for child costs and the wife was retaining the marital home, unencumbered by a mortgage. 

In declining to include a component of savings in the support award, the trial court concluded that savings was only a necessary component of alimony where it was required to ensure a recipient spouses’ economic security in the face of a later modification or cessation of support. It cited to, among other things, the fact that there was “overlap” in the alimony and child support budgets, the fact that the wife could claim the children as exemptions on her income tax return and the wife’s ability to work and retain savings in light of the fact that the parties’ children were older. The trial court further relied on the husband’s substantial assets, stating the unlikelihood that the husband would seek modification of his obligations. 

The Appellate Division rejected much of the trial court’s reasoning in declining to consider savings as a component of the alimony award. The Appellate Court reiterated that maintaining the marital standard of living is the touchstone of the initial alimony award. While noting that the recipient spouse's need for insurance of the alimony benefit is one justification for incorporating a savings component, the Court asserted that it is not the only reason why a supported spouse requires savings, especially where regular savings have been a part of the established marital lifestyle. By way of example, the Court highlighted that there is no demonstrable difference between one family’s habitual use of its income to fund savings and another family’s use of its income to regularly purchase luxury cars or enjoy extravagant vacations – both go to the marital standard of living and should be equitably preserved to the extent possible by alimony. 

The Appellate Court also relied on the inclusion of a line item for savings in Schedule C of the Case Information Statement, required to be filed in all family actions, as evidence of the need to recognize regular savings as part of the marital standard of living. 

The husband asserted that the savings component was adequately addressed in equitable distribution. The Appellate Division rejected this argument, as equitable distribution is intended to supplement, but not substitute for, alimony awards. Moreover, the Court found it was not equitable to require the wife to rely solely on assets received through equitable distribution to support the standard of living while the husband was not confronted with the same burden. In setting forth this decision, the Appellate Division recognized that New Jersey is in the minority of jurisdictions which recognize savings as a component of the alimony award. The Appellate Court vacated the alimony award and remanded to the trial court for adjudication.

This decision impacts every divorcing party – from the coupon clippers to the impulse shoppers – where alimony may be an issue. While many think of the marital standard of living as accounting for how income is expended, this decision reinforces the notion that a marital lifestyle also consists of how income is saved. Therefore, parties should consider the overall allocation of marital income to negotiate alimony awards.

How Cohabitation Impacts Alimony in Review of the 2014 Amendment to NJ’s Alimony Statute

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Ambiguities related to the interaction between cohabitation-based alimony modifications and the 2014 amendments to New Jersey’s alimony statute have abounded until the Appellate Court weighed in with a fairly recent decision. This decision affects any ex-spouses who pay or receive alimony, when the recipient spouse has entered a new relationship that is serious enough to be considered tantamount to marriage.

In Robitzski v. Robitzski, the ex-spouses were divorced in 2004. As part of their property settlement agreement (“PSA”) the ex-husband agreed to pay the ex-wife $30,000 annually in alimony. The parties agreed in the PSA that alimony would terminate upon the happening of specified events. For example, the PSA provides that alimony “shall be modified or terminated pursuant to New Jersey statutes and case law” in the event it is proven that the ex-wife cohabits with another person. The PSA neither defines cohabitation nor makes clear whether the law as it existed in 2004 or the current law should be applied at the time when the ex-husband files a motion for modification or termination. This ambiguity is relevant because, since 2004, New Jersey’s alimony statute has been amended.

Prior to the Legislature’s adoption of amendments to the alimony statute in 2014, the legal criteria for cohabitation was embodied exclusively in case law. Cohabitation was typified by the existence of a marriage-like relationship requiring more than a common residence or sexual relationship. The standard did not provide black and white criteria, but required factors, such as living together and sharing joint finances, to be viewed in the totality of the circumstances.

In 2014, the Legislature codified factors to be used to determine whether cohabitation exists:

(1) Intertwined finances such as joint bank accounts and other joint holdings or liabilities;

(2) Sharing or joint responsibility for living expenses;

(3) Recognition of the relationship in the couple's social and family circle;

(4) Living together, the frequency of contact, the duration of the relationship, and other indicia of a mutually supportive intimate personal relationship;

(5) Sharing household chores;

(6) Whether the recipient of alimony has received an enforceable promise of support from another person within the meaning of subsection h. of R.S.25:1-5; and

(7) All other relevant evidence.

The statute further provides that “in evaluating whether cohabitation is occurring and whether alimony should be suspended or terminated, the court shall also consider the length of the relationship. A court may not find an absence of cohabitation solely on grounds that the couple does not live together on a full-time basis.”

The procedural requirements for proving cohabitation are the same pre- and post-2014 amendments. The payor spouse must make a prima facie showing of cohabitation. If the payor spouse meets his or her burden, it creates a rebuttable presumption that cohabitation is occurring. The parties then engage in mutual discovery, through which the recipient spouse has the opportunity to overcome the rebuttable presumption by demonstrating that the need for spousal support remains.

In Robitzski, it was undisputed that the ex-wife maintained a longstanding relationship with a significant other. However, the ex-wife asserted that she did not cohabit with her significant other, as they maintained separate residences, only spent approximately 100 nights per year together and maintained separate finances. The ex-husband offered proof of cohabitation in part through Facebook posts, showing the ex-wife and significant other attending various family and social events together.

The trial court found that the ex-husband failed to make a prima facie showing of cohabitation, but granted him limited discovery. Moreover, the trial court disregarded the Facebook posts as unauthenticated, inadmissible hearsay. On appeal, the ex-husband argued that: (1) the trial court should have ordered full discovery; (2) the Facebook posts should have been admissible; and (3) the 2014 amendments to the alimony statute should have applied retroactively to his request for modification.

With respect to the first issue, the Court found that the trial judge did not abuse his discretion in ordering limited discovery, as the ex-husband had failed to make a prima facie showing under either the pre- or post- 2014 standard. In so holding, the Court noted the unrefuted evidence that the ex-wife spent less than a majority of nights with her significant other and that there was no comingling of finances. The Court did not reach the merits of the hearsay issue because, even considering such evidence, the ex-husband had failed to meet his burden of proof.

Similarly, the Court did not reach the merits of the retroactivity issue, finding that the ex-husband had failed to meet his burden under either standard. The Court noted that the PSA is arguably ambiguous as to whether the phrase in which the parties agreed to allow alimony to be modified or terminated “pursuant to New Jersey statutes and case law” encompasses future statutory changes in the law, such as the 2014 amendments, or whether it freezes the parties’ obligations to be governed by the law as it existed when the PSA was executed. The Court noted that the Appellate Division had recently declined to apply the retroactivity provisions of the alimony statute to a PSA where the parties agreed that alimony would be subject to review “consistent with the Gayet v. Gayet case and evolving case law.” The court therefore alluded to the fact that it would honor clear language within the PSA with respect to retroactivity.

Ultimately, the Appellate Division substantially affirmed the trial court’s ruling, noting that nothing precludes the ex-husband from making a future attempt to establish a prima facie case with supplemental proofs showing, for example, that the couple resides together for a more substantial proportion of time than two nights a week or that their lives and finances are more intertwined than the present record reflects.

This decision offers a number of practice points for divorcing or divorced parties where cohabitation may become an issue. First, the decision notes that the 2014 amendments do not change the fact that a payor spouse has a significant burden with respect to proving cohabitation. Even a serious romantic relationship will not rise to the level of cohabitation sufficient to modify an alimony obligation unless the relationship is tantamount to marriage. Second, a payor spouse must offer sufficient proof that cohabitation exists. It is possible that a party may gather all or most information related to their ex-spouse’s current lifestyle through social media, such as Facebook posts. Whether such evidence is admissible to prove cohabitation was not determined in Robitzski, but it is clear that photos and posts evidencing shared experiences alone will be insufficient to meet the payor’s burden. Third, and in my opinion most important, divorcing parties should carefully consider the language of their PSA and decide whether alimony modifications should be governed by then-existing or future law. By drafting the PSA to address possible retroactivity of changed laws, the parties can bargain for the law they would like to apply, if and when a motion for alimony modification or termination is made.

Arbitration: What Happens When One Party is Dissatisfied with the Outcome?

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In a divorce, arbitration can be an efficient and effective way to narrow and resolve the many issues that may arise. But what happens when a party disputes the outcome of an arbitrator’s award or the scope of an arbitrator’s power? In the unpublished decision of Sirigotis v. Sirigotis, the Appellate Division reiterated the Court’s limited power to review or vacate arbitrators’ awards under New Jersey’s version of the Uniform Arbitration Act.

In Sirigotis, the parties resolved the bulk of issues related to their dissolution action by Marital Settlement Agreement (MSA) and agreed to submit the remaining unresolved issues to final and binding arbitration. The MSA provided that the husband would pay $250,000 annually in alimony but enumerated unresolved issues related to alimony, including the wife’s request for future additional alimony in excess of $800,000. Specifically, the wife proposed language in the MSA asserting that while she would not be able to maintain the marital standard of living based on the assets and support received under the MSA, she accepted the MSA as fair and reasonable. The husband objected to her requests, asserting that the $250,000 annual alimony met the marital standard of living as set forth in Crews v. Crews and that future additional alimony should be denied.

The arbitrator ultimately rejected the wife’s requests pertaining to “the Crews issue” and made a determination on whether the award met the marital standard of living. The arbitrator reasoned that it was within his power to issue such a ruling because (1) the husband’s objection to the wife’s proposed language put the issue before him; (2) the trial court would be expected to make such a ruling and the parties had granted the arbitrator the same powers as a Family Part judge; (3) a ruling on the Crews issue was necessary to avoid sowing the seeds of future litigation; and (4) if the partial MSA was ambiguous, he had the authority to resolve the ambiguity. The proposed judgment of divorce included the arbitrator’s Crews finding that the award (consisting of alimony, imputed income and equitable distribution) enabled the wife to maintain the marital standard of living.

The wife moved in the Family Part to vacate the arbitrator’s award. In rejecting the wife’s argument, the trial court found that the arbitrator had the power to issue a ruling on the Crews issue but nonetheless vacated the award, finding that the wife did not have adequate opportunity to present proofs on the issue at arbitration.

The Appellate Division affirmed that the arbitrator had the authority to issue a ruling on the Crews issue, finding that the wife had put the Crews issue before the arbitrator by proposing language related to the adequacy of alimony to satisfy the marital standard of living. At a minimum, the Court held, whether the Crews issue was before the arbitrator was ambiguous and it was within the scope of the arbitrator’s power to decide the issue.

The Appellate Court discussed the trial court’s power to vacate an arbitrator’s award, noting that the State preference for alternative dispute resolution and the express language of the arbitration statute enumerates specific grounds upon which the court can vacate an award, which were not present here. Moreover, the Appellate Court admonished the trial court for faulting the arbitrator for addressing the Crews issue in a summary fashion. The Appellate Court made clear that the arbitrator is not compelled to provide an explanation of an award absent a contractual obligation with the parties to do so. To require such an explanation, the Court opined, would thwart the expedient nature of arbitration and undermine confidence in the arbitrator’s abilities. The Court further reiterated that arbitration awards cannot be vacated due to an error of law; there must be a statutory ground, such as fraud or acting beyond the scope of contractual duties.

Ultimately, the Appellate Division reversed and remanded the decision of the trial court to reinstate the arbitrator’s award, finding that the plaintiff had the opportunity to present proofs on the Crews issue at arbitration. This decision reinforces the court’s reluctance to interfere with the arbitration process. Sirigotis also reminds parties to carefully consider the powers they confer to arbitrators in arbitration agreements and to also be cognizant of the issues they place before the arbitrator during the arbitration process.

Katherine A. Nunziata is an associate in the Family Law Practice Group of Riker Danzig Scherer Hyland & Perretti LLP and a contributor to the Riker Danzig Family Law Blog. Katherine’s interest in family law stems from a desire to help others while navigating a difficult process, and she brings a high level of compassion and zeal to her practice. Katherine is a resident in the Morristown, New Jersey office and can be reached at 973-451-8445 or knunziata@riker.com.

When Final Restraining Orders Are Not So Final

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Despite their name, final restraining orders are not always final. Final restraining orders (FROs) can be dissolved or modified upon good cause shown by the applicant. However, because of the important role FROs play in protecting victims of domestic violence, legal safeguards are in place to ensure that FROs are not vacated imprudently or prematurely. In a decision by the Appellate Division, the Court reiterated the test for determining good cause shown and remanded to the trial court for a plenary hearing on the matter.               

Defendant J.A. moved to vacate a ten-year-old FRO which prohibited any contact with Plaintiff B.R. and possessing firearms. The parties appeared before a family court judge to hear the motion but the hearing was adjourned. At that time, the first judge entered an amended FRO excusing B.R. from attending the scheduled hearing and acknowledged her request to keep restraints in place.             

At the second hearing before a new judge, the second judge permitted the court clerk who was present at the first hearing to comment on B.R.’s fear at the first hearing, despite the fact that the clerk was not sworn in as a witness. J.A.’s counsel objected to the unsworn testimony as well as the inability to cross-examine B.R. at the hearing. After listening to a recording from the first appearance, the second judge denied J.A.’s motion, holding that J.A. had not shown good cause and a change of circumstances significant to warrant dismissal of the FRO.

The second judge subsequently amended his opinion, omitting his reliance on the clerk’s unsworn testimony, but did not change his disposition of the motion. He noted the physical altercations that formed the basis of the issuance of the FRO, the two contempt convictions from 2004 and 2005, and concluded that B.R. “objectively and subjectively” feared the movant.

On appeal, the Appellate Division reversed, holding that J.A. had made a prima facie showing of good cause and change in circumstances sufficient to warrant a plenary hearing on the issue. The court recited that the Carfagno standard for determining good cause involves a non-exhaustive factors test, including:

(1) whether the victim consented to lift the restraining order;

(2) whether the victim fears the defendant;

(3) the nature of the relationship between the parties today;

(4) the number of times that the defendant has been convicted of contempt for violating the order;

(5) whether the defendant has a continuing involvement with drug or alcohol abuse;

(6) whether the defendant has been involved in other violent acts with other persons;

(7) whether the defendant has engaged in counseling;

(8) the age and health of the defendant;

(9) whether the victim is acting in good faith when opposing the defendant's request;

(10) whether another jurisdiction has entered a restraining order protecting the victim from the defendant; and

(11) other factors deemed relevant by the court.

The Court noted that the test accounts for the victim’s objective fear of the defendant. The Court stated that if an objective standard of fear were applied, the scope of the injunction might be broader than reasonably necessary to protect the victim and might unnecessarily infringe on the defendant’s rights.

In reversing the trial court’s order, the Appellate Division considered the defendant’s assertion that he had had no relationship with the victim for at least nine years, had no record of violent acts with other persons, possessed no firearms, was employed and married with children. Moreover, the Court was concerned with the second judge’s inability to observe B.R.’s demeanor at the first appearance. According to the Court, this raised a genuine issue of fact as to the objectivity of B.R.’s fear and whether her refusal to consent to the dismissal of the FRO was done in bad faith. Accordingly, the Court remanded for a plenary hearing and instructed that B.R. be advised of the hearing date if she wishes to object.

This decision presents a cautionary tale and shows the importance of a victim’s participation in all proceedings related to an existing FRO. While a victim may be reluctant to confront the defendant or address traumatic past events, the standard for dissolving or modifying an FRO considers a victim’s wishes, emotions and behavior. Therefore, it is necessary to remain engaged in the legal process, sometimes even years later, to ensure that protectionist measures remain in place if they are still warranted. 

Divorced and thinking about relocating with your child? Read this!

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In Bisbing v. Bisbing, the parents of then-aged-seven twin girls separated and began negotiating dissolution in 2013. Shortly after the separation, the mother began a long-distance relationship with a Utah resident. In March 2014, the parties entered into a marital settlement agreement (“MSA”), which afforded the mother primary residential custody. The parties agreed to broad and reasonable timesharing of the children and provided the father with significant parenting time. Pursuant to the provisions governing relocation, the parties agreed to live within a reasonable distance from one another (within a 15 minute drive) and that any relocation more than 20 miles from the other parent would require mediation to review the custody agreement. Each party agreed not to move out of state without written consent of the other parent.

A Final Judgment of Divorce was entered in April 2014, incorporating the MSA. In January 2015, the mother notified the father of her intent to remarry and move to Utah, and requested permission to relocate with the children. Upon the father’s refusal, the mother filed a motion for relocation in March 2015. The trial court granted the mother’s motion without a plenary hearing on the condition that a visitation schedule be established through mediation. After unsuccessful mediation, the court supplemented the order with a visitation schedule largely set forth by the mother.

In reversing the trial court’s order and remanding for a plenary hearing, the Appellate Division set forth the various legal standards that may apply in a relocation action. The first step is to determine the pre-existing custodial relationship. Where the parents truly share both legal and physical custody, the party seeking relocation must show that the best interests of the child would be served by residential custody being primarily vested with the relocating parent. In situations similar to this case where the requesting party already has primary residential custody, the request is governed by the two-part Baures test, which is more favorable to the custodial parent. Baures requires: (1) a good faith reason for the move; and (2) that the move will not be inimical to the child’s interests. On its face, the mother’s request should have been analyzed under Baures.

However, the Appellate Court grappled with the complications posed by the MSA. The father alleged that the mother manipulated the negotiation of the MSA to obtain primary physical custody and avail herself of the more favorable Baures standard. The Appellate Court held that the short time between execution of the MSA and the mother’s decision to relocate raised a genuine issue of fact as to whether the mother negotiated the MSA in good faith, warranting a plenary hearing.

The Appellate Court opined that if the trial court finds that the mother negotiated in bad faith on remand, the court should analyze the relocation request under a “best interests” analysis. Even if the trial court finds good faith, however, it must still consider the impact of the carefully considered non-relocation provisions in the MSA. The court held that the State’s policy of favoring consensual agreements to resolve marital controversies requires the court to afford the bargained-for relocation provisions special weight in the overall relocation analysis. Because consensual agreements are subject to the changed circumstances doctrine, the mother must show changed circumstances and that the MSA is no longer in the child’s best interests before a modification can be effected.

In sum, the Appellate Court outlined the procedures on remand as follows: if the father is unable to demonstrate bad faith, the mother has the opportunity to prove a substantial unanticipated change in circumstances to trigger the court’s application of the Baures factors. A critical factor is the effect of moving away on the children. If the mother is unable to demonstrate an unanticipated substantial change in circumstances, even if the MSA was negotiated in good faith, the court must apply the “best interests” standard to determine removal.

So if you are divorced and considering an out-of-state move with your child, review of your Judgment of Divorce and the standards set forth in Bisbing is a must if there is no consent.

 Katherine A. Nunziata is an associate in the Family Law Practice Group of Riker Danzig Scherer Hyland & Perretti LLP and a contributor to the Riker Danzig Family Law Blog. Katherine’s interest in family law stems from a desire to help others while navigating a difficult process, and she brings a high level of compassion and zeal to her practice. Katherine is a resident in the Morristown, New Jersey office and can be reached at 973-451-8445 or knunziata@riker.com.

Updated Protocol for Grandparent Rights Cases

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In the January 2016 decision Anthony C. Major v. Julie Maguire, the New Jersey Supreme Court clarified the pleading standards and case management procedures in grandparent visitation actions. The paternal grandparent plaintiffs in this case sought an order compelling visitation under New Jersey’s Grandparent Visitation Statute. The grandparents were significantly involved in the child’s life from birth, through the parents’ divorce and through the father’s cancer diagnosis. While the parents had joint legal and physical custody of the child, the grandparents spent significant time with the child while in the father’s custody. The grandmother enjoyed increased involvement with the caregiving in the latter stages of the father’s illness. After the father passed away, the mother decreased the paternal grandparents’ access to the child, prompting the grandparents to commence the visitation action.

Pursuant to the New Jersey Supreme Court’s directive in Moriarty v. Bradt, a grandparent must make a prima facie showing of harm to the child at the pleading stage. The trial court in Major alleged that the grandparents had failed to make the prima facie showing in their pleadings and, after permitting the grandparents to supplement their complaint with non-expert testimony, granted the mother’s informal motion to dismiss. The trial court further found that the complaint was premature because the mother had not yet denied visitation “with finality.”

In reversing the trial court’s decision, the Appellate Division relied on its own recent decision in R.K. v. D.L., which advocates a fact-sensitive case management strategy designed to assist the judge in determining whether the prima facie showing has been made and in gauging the need for discovery. R.K. set forth a non-exhaustive list of issues to be considered at a case management conference including: the harm to the child, the possibility of settlement, whether pendente lite relief is warranted and whether expert testimony will be required. Importantly, the R.K. court held that grandparent visitation actions should not be treated as summary in nature.

The New Jersey Supreme Court affirmed the R.K. decision in part, clarifying the appropriate procedures for case management in grandparent visitation actions. Striking a balance between the grandparents’ opportunity to meet their burden under the statute and case law with the burdens imposed on families in such actions, the Court turned to the New Jersey Court Rules for instruction. The Major Court held that the approach reflected in Rule 5:5-7(c) strikes the appropriate balance: the trial court must hold initial and final case management conferences and enter an order addressing the full list of issues set forth in R.K. only in grandparent visitation cases that warrant assignment to the complex track. Visitation cases that are not complex may be handled as summary actions, with or without case management and discovery at the judge’s discretion.

Without elaborating on what types of grandparent visitation cases would be considered “complex,” the Court held that a party seeking complex designation may file a non-conforming complaint to supplement the form pleading required in non-dissolution matters, permitting the party the opportunity to make a prima facie showing of harm at the pleading stage. Informed by the pleadings, the trial court may then make a considered judgment about the complexity of the case and the need for discovery.

The Court further reiterated its preference for alternative dispute resolution and noted that all parties should make efforts to resolve the issues without resorting to litigation. However, the Court held that there is no requirement that visitation be denied with finality before grandparents threaten or institute litigation. Accordingly, the Court remanded to the trial court with instruction to permit the matter to proceed beyond the pleading stage and to manage the case as a complex matter.

The Court’s permission to deviate from the form pleading required in non-dissolution matters provides grandparents with a meaningful opportunity to make their prima facie showing at the pleading stage. While grandparent plaintiffs may request that their action be treated as complex, the designation is ultimately decided by the trial court, which continues to exercise significant discretion in shaping case management strategies. It remains to be seen what types of grandparents visitation actions will be considered “complex” by the trial court.

Financial Support While Your Divorce is Pending: Interpretation of the New Statute

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A recent decision by the New Jersey Superior Court (Ocean County) dispels a common misconception in how parties argue (and judges decide) pendente lite (while the divorce is pending) applications for alimony. This decision enunciates a standard with which pendent lite alimony applications could be adjudicated in light of the 2014 amendments to New Jersey’s alimony statute.

In Malek v. Malek, the parties were married in 2012 and had two children prior to their respective filings for divorce in 2016. The husband, a teacher, earned approximately $90,000 annually while the wife, a hairdresser, has imputed income of approximately $20,000 a year. Due to her limited financial resources, the wife moved into her mother’s home following the parties’ separation and filed a pendente lite application for alimony to secure financial assistance from her husband during the pendency of the litigation. The trial court seized the opportunity to expand on the limited case law on the subject, providing guidance on how such applications should be adjudicated in light of the 2014 amendments to New Jersey’s alimony statute, N.J.S.A. 2A:34-23.

The court opined that during a lengthy pre-trial period in divorce actions, economic chaos may result if there is no interim support agreement or order defining the financial rights and obligations of the parties. The need for an interim arrangement is apparent, but it can be difficult for a court to make preliminary decisions, especially at the infancy of litigation, where discovery has not been completed and the financial information before the court is limited or incomplete. Because a court’s decision depends largely upon a review of limited available evidence, a pendente lite support order is entered without prejudice to further review and (possibly retroactive) modification.

Setting forth how such applications have been historically decided, the court noted there often appeared to be a dominant, and sometimes exclusive, focus on maintaining the dependent spouse’s prior standard of living during pendente lite litigation, with comparatively less focus on the financial needs of the supporting party. The court admonished such a one-sided approach as failing to take the equitable needs of both parties into consideration under the statutory framework for determining alimony, both pre- and post-2014 amendments to New Jersey’s alimony statute.

Even before the enactment of the 2014 amendments, the court held “marital lifestyle” or “status quo” of one or both parties was never appropriately the sole and exclusive factor in the alimony analysis because the statutory framework provided thirteen factors to consider in determining alimony:

(1) The actual need and ability of the parties to pay;

(2) The duration of the marriage or civil union;

(3) The age, physical and emotional health of the parties;

(4) The standard of living established during the marriage or civil union and the likelihood that each party can maintain a reasonably comparable standard of living, with neither party having a greater entitlement to that standard of living than the other;

(5) The earning capacities, educational levels, vocational skills, and employability of the parties;

(6) The length of absence from the job market of the party seeking maintenance;

(7) The parental responsibilities for the children;

(8) The time and expense necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, the availability of the training and employment, and the opportunity for future acquisitions of capital assets and income;

(9) The history of the financial or non-financial contributions to the marriage or civil union by each party, including contributions to the care and education of the children and interruption of personal careers or educational opportunities;

(10) The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair;

(11) The income available to either party through investment of any assets held by that party;

(12) The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment; and

(13) Any other factors which the court may deem relevant.

In 2014, however, the Legislature amended the alimony statute, clarifying and supporting the concept of a court considering all applicable statutory criteria under N.J.S.A. 2A:34-23 in an alimony analysis, rather than mostly or only on the alleged marital lifestyle and needs of the supported spouse to maintain the prior “status quo.” The court held that several amendments help diffuse the misconception that: “(a) maintaining the prior standard of living is the paramount consideration in a pendente lite alimony case, and/or that (b) only the supported spouse is entitled to maintain the marital lifestyle, either on a pendente lite basis or otherwise.”

First, the amended statute directs family courts to consider, among other factors, the practical impact of the parties’ need for separate residences on the ability of both parties to maintain the marital standard of living. Second, the amended statute expressly provides that neither party has a greater entitlement to that standard of living than the other. Third, the statute declares that all factors should be weighed equally unless equity requires otherwise. Fourth, the statute now states that pendente lite support should be considered by the court when rendering a final alimony award.

Turning to the practical implications of separation on the marital standard of living, the court astutely commented that “the blunt economic reality is that separation and divorce often render impossible the ability of either party to financially maintain the prior marital lifestyle, or the same standard of living to which they formerly became ‘accustomed’ during the marriage [because]… [a]s a matter of simple mathematics, there may not be enough money to support two separate households at the same financial level or lifestyle that they could jointly afford, and became accustomed to living, while they were pooling their incomes and benefitting from the economies of shared living expenses.” The court prudently noted that litigation costs associated with the divorce proceedings will often exacerbate the difficulty in maintaining the status quo once living separate and apart.

Offering a pragmatic solution, the court held that a mutually equitable resolution will often require both parties to adapt to interim lifestyles which are financially lower than that enjoyed during the marriage. Acknowledging that there is no exact formula to shape relief, the court held that the determination will depend on the specific facts of the case, application of the statutory factors and the discretion of a court to shape equitable relief on a pendente lite basis. The court emphasized that fair relief must not, and often may not, approach equalization (i.e., 50/50 sharing of combined income).

The court addressed specific facts implicated in Malek, which provides guidance to any divorcing party who “voluntarily” downgrades his or her lifestyle during divorce proceedings. The wife in Malek moved in with her mother during the litigation. The husband sought to use this fact as justification for not providing support, alleging that the wife had no roof expenses and therefore no need for pendente lite alimony. The court rejected this argument, highlighting the irony of denying alimony because limited financial circumstances essentially required the wife to move back in with her mother in the first place. Moreover, the court opined that the mother’s willingness to open her home to her daughter was most likely intended to economically benefit her daughter, not her soon-to-be ex-son-in-law.

Conversely, the court reasoned that it would be inappropriate to impoverish the husband with an unreasonably top-sided alimony award which maintained the wife’s marital standard of living. The court held that “the economic pain very often must be fairly and equitably shared by both parties, and not just shouldered by the supporting or supported spouse.”

Applying all of the statutory factors to the wife’s application, the court awarded pendente lite relief which, after taxes, resulted in the husband being left with approximately sixty percent of the combined net incomes and the wife receiving approximately forty percent of same plus pendente lite child support.

While this decision stems from a trial court opinion and is not considered binding, it is suspected that it is only a matter of time before the Appellate Division weighs in and provides their guidance on interpretations of the amended alimony statute.  Until then, Malek provides some needed guidance for litigants and practitioners alike.

ALIMONY & RETIREMENT: WHEN IS THE RIGHT TIME UNDER NJ‘S AMENDED ALIMONY STATUTE?

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The issue of when to retire and how retirement will affect a payor’s alimony obligation is not new to family law practitioners, judges or litigants.  What has evolved is the consideration of when to retire under New Jersey’s recently amended alimony statute.  Under New Jersey's recently amended alimony statute, a party may seek to terminate or modify his or her spousal support obligation based upon an actual or prospective retirement.  In the recent decision Mueller v. Mueller, a New Jersey trial court (Judge Jones) has clarified what “prospective retirement” means for alimony-paying spouses who are nearing retirement and for alimony-receiving spouses who may lose some or all of their spousal support when their ex-spouse retires.

In Mueller, the parties were married for twenty years and divorced in 2006. Pursuant to their matrimonial settlement agreement, the husband agreed to pay his ex-wife $300 per week in permanent alimony. The agreement contained no provision expressly addressing retirement.

At the age of 57, the husband filed a post-judgment motion regarding his alimony obligation under New Jersey’s alimony statute, N.J.S.A. 2A:34-23(j). The husband asserted that he intends to retire in five years when he turns 62 and becomes eligible for his full pension benefit.

The statute, amended in September 2014, permits an alimony-paying spouse to seek modification or termination of his support obligation by court order upon actual, early or prospective retirement. The new retirement sections are N.J.S.A. 2A:34-23(j)(1), which covers termination of an alimony obligation established in an order entered after September 10, 2014; N.J.S.A. 2A:34-23(j)(2), which covers termination of alimony based upon early retirement; and N.J.S.A. 2A:34-23(j)(3), which covers termination of an alimony obligation established in an order entered before September 10, 2014.

The law distinguishes applications for modification or termination of alimony obligations established before and after September 10, 2014. For obligations established prior to the amendments, the paying spouse's attainment of full retirement age (the age at which a person is eligible to receive full Social Security benefits) shall be deemed a good faith retirement age. At that point, a court weighs that age attainment against a series of statutory factors to determine whether alimony should be modified, terminated or left intact. For example, a court may consider the recipient spouses’ ability to have saved adequately for retirement. The following additional factors are considered to determine whether the paying spouse has demonstrated, by a preponderance of the evidence, that a change in the alimony obligation is warranted:

(a)The age and health of the parties at the time of the application;
(b)The obligor's field of employment and the generally accepted age of retirement for those in that field;
(c)The age when the obligor becomes eligible for retirement at the obligor's place of employment, including mandatory retirement dates or the dates upon which continued employment would no longer increase retirement benefits;
(d)The obligor's motives in retiring, including any pressures to retire applied by the obligor's employer or incentive plans offered by the obligor's employer;
(e)The reasonable expectations of the parties regarding retirement during the marriage or civil union and at the time of the divorce or dissolution;
(f)The ability of the obligor to maintain support payments following retirement, including whether the obligor will continue to be employed part-time or work reduced hours;
(g)The obligee's level of financial independence and the financial impact of the obligor's retirement upon the obligee; and
(h)Any other relevant factors affecting the parties' respective financial positions.

While the same statutory factors are used to determine any application based on retirement, the burdens of proof on the respective parties is different depending on whether the alimony obligation was established pre- or post-September 10, 2014. For pre-amendment obligations, reaching full retirement is deemed a good faith retirement age with the burden of proof remaining with the paying spouse to demonstrate why alimony should terminate. This can be considered a pro-recipient spouse burden of proof. For obligations established after September 10, 2014, however, there is a rebuttable presumption that the obligation shall terminate upon the paying spouse’s attainment of full retirement age, with the burden of proof shifting to the recipient to demonstrate why alimony should not terminate or be reduced. The burden of proof therefore favors alimony-paying spouses for obligations established after the amendments. 

The amended statute also permits a paying spouse to seek modification or termination when he or she seeks to retire earlier than full retirement age, if he or she can demonstrate by a preponderance of the evidence that the prospective or actual retirement is reasonable and made in good faith.

In all circumstances, the law authorizes a court to consider a paying spouse’s application not only upon actual retirement, but on “prospective retirement” as well. This allows the paying spouse to avoid a Catch 22. Specifically, if the paying spouse is considering retirement, he or she logically benefits from knowing in advance whether the existing alimony obligation will or will not change prior to actually leaving the workforce. Otherwise, that spouse may find him or herself in a precarious financial position without substantial income to support the continuing obligation following retirement if the court does not terminate or significantly reduce the existing alimony obligation.

The paying spouse in Mueller made such an application, five years before his prospective retirement. The Court noted that the statute does not establish or address specific time periods for filing an advance motion based upon a prospective retirement. However, the Court held his application was premature, as it would require significant judicial speculation as to the parties’ respective financial positions in five years’ time. Without imposing specific timelines within which to make an application based on prospective retirement, the Court opined that making an application 12-18 months in advance of anticipated retirement was close enough to actual retirement to provide a court with enough certainty to determine the merits of the application, while affording the paying spouse enough time to plan accordingly.

The Court found that a reasonable interpretation of the statute allows a court to order a prospective termination or modification of alimony based upon future, prospective retirement, when: “(a) the prospective retirement will take place in the near future, rather than many years after the actual application, and (b) the applicant presents a specifically detailed, proposed plan for an actual retirement, as opposed to a non-specific, general desire to someday retire.” The Court elaborated that a detailed plan might include both a proposed specific date of retirement and details of the paying spouse’s plan for economic self-support following retirement.

The Court further noted that in shaping prospective relief, the Order does not take effect automatically upon the paying spouse’s attainment of retirement age. The spouse must actually retire before the modification or termination becomes effective.

This decision provides much needed guidance on when such applications should be made and affects anyone paying or receiving alimony where the paying spouse is approaching retirement age. It is important to remember that a paying spouse continues to enjoy the right to make a post-judgment motion for modification or termination of a present alimony obligation, irrespective of retirement, based on a change in circumstances.

NJ‘S RICO STATUTE IS NOT JUST FOR MOBSTERS; WHAT IT MEANS IN DIVORCE

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New Jersey’s civil RICO statute is an under-utilized tool in New Jersey divorce cases, combating fraudulent business tactics that have the effect of divesting a spouse of marital monies, gains on investment and equitably distributable business interests.  RICO stands for Racketeer Influenced and Corrupt Organizations Act and was originally enacted in 1970 by the United States Congress, ostensibly to curtail the criminal activities of organized crime.  The civil component was designed to allow victims of organized crime to sue potential responsible parties.  The New Jersey counterpart, NJSA 2C:41-1, et seq., has slightly broader provisions.  To state a claim under New Jersey’s RICO Act, a plaintiff must establish five elements:

1. The existence of an enterprise;
2. The enterprise engaged in or its activities affect  trade or commerce;
3. The defendant was employed by or associated with the enterprise;
4. He or she participated in the conduct of the affairs of the enterprise; and
5. He or she participated through a pattern of racketeering activity.

A claim for conspiracy to violate New Jersey’s RICO Act requires both “an agreement to conduct or participate in the conduct of the affairs of the enterprise” and “an agreement to the commission of at least two predicate acts.”  NJSA 2C:41-2 specifically makes it unlawful for “any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which he has participated as a principal . . . to use or invest, directly or indirectly, any part of the income or the proceeds of the income, in acquisition of any interest, or the establishment or operation of any enterprise which is engaged in or the activities of which affect trade or commerce.”

In practicing and handling complex matrimonial matters over the years, it became evident that many business owners were routinely cutting corners relating to taxes, reporting requirements, regulations and/or other potentially fraudulent practices aimed at increasing revenue and profit margins.

The civil section of New Jersey’s RICO statute authorizes the Superior Court of New Jersey for the protection of the “rights of innocent persons” the jurisdiction to “prevent and restrain” the acts or conduct which violate the RICO statute.  The Superior Court has the power to “divest” the violator or any interest, direct or indirect, in any enterprise, restrict future activities or investments, order the dissolution or reorganization of the enterprise and issue cease and desist orders which specify acts or conduct which must be “discontinued, altered or implemented by any person.”  The Court also has the power to order restitution and assess civil monetary penalties and require the violator to forfeit any interest that has been acquired as a result of the fraud or violation of the statute.

It was not until a few years ago that I was able to test RICO. I had a case where, throughout the entire litigation, the defendant consistently maintained that he only owned a 49% interest in his business, which had an estimated annual gross revenue of over $16,000,000. The defendant’s position in his divorce was that his 80-year-old, non-English speaking mother was the controlling interest-holder, with 51% interest in the business.  Despite the utilization of a forensic accountant and multiple arguments throughout the litigation that the defendant’s mother’s interest was nothing short of a fraudulent sham, the defendant continued to maintain that she was a 51% interest-holder in the business.  The reason we advanced the argument that it was a sham was because my client, in this 23-year marriage, was fully aware that her non-English speaking, elderly mother-in-law had never been to the business, had never hired or fired anyone and, by all measures, did not even know the nature of her son’s business or any of its operations.  It was clear that a fraud was being perpetrated.  I determined that we could amend the complaint to include fraud counts directly against the defendant.  New Jersey’s civil RICO statute had been used as a powerful tool in other civil cases in which a criminal fraud was occurring, which had the collateral effect of divesting innocent third parties of their business interests.  In this case, not only was the defendant advancing the argument that he only owned a 49% interest in the company and that my client was only entitled, therefore, to a 24.5% equitable distribution interest, he was also drawing $150,000 a year in salary, but providing another $150,000 a year to his mother as her salary from the business. 

During depositions, the company’s vice president indicated that the defendant’s mother was, in fact, a 51% shareholder in the company, but only to receive special status with the Small Business Administration (“SBA”).  It was admitted that this same witness had never seen the defendant’s mother at the location of the business, she did not participate in any of the company’s shareholder meetings or the hiring, firing or day-to-day decision-making of the business, and was virtually nonexistent.  Although that was significant testimony, it was not nearly as significant as the vice president’s testimony that the sole reason that the decision was made to make his mother a 51% shareholder was so that the company could receive preferential treatment through the SBA’s 8(a) Business Development Program for Women Owned Businesses.  With the use of a translator, the defendant’s mother testified to having no knowledge of the business’s day-to-day affairs, the number of individuals employed by the business, the names of the individuals at the business or any of the public contracts the business had at the time or previously.  When asked about her salary, and she indicated that her son decided to give her that salary as a result of her 51% interest in the company.  Yet, she and the company signed the application to certify the business as a minority, woman-owned and controlled company.

Following the deposition, I obtained the 8(a) exemption application through the SBA.  Also obtained directly from the SBA through subpoena was the actual application that had been filed years earlier, signed by the defendant’s mother.  The application required a sworn, certified statement that the applicant was a minority woman who controlled the day-to-day business decisions of the company and owned 51% of the company.  In short, it became apparent that the defendant and the company had conspired to commit a fraud in the application process, which was an ongoing fraud, to obtain numerous public contracts, vis-à-vis the preferential treatment afforded by the SBA exemption program for small businesses owned by women.  Following those discoveries and revelations, we moved for leave to amend the complaint to include a civil RICO claim on behalf of the plaintiff against the defendant as a third-party, and the company and the defendant’s mother as additional third parties.

What became readily apparent when reviewing the statute and the various cases on the New Jersey civil RICO statute was that the decision to utilize the civil New Jersey RICO statute in a matrimonial case would be very effective.  It became apparent that many divorce actions fit very nicely in the framework and requirements of the New Jersey civil RICO statute because the fraud that occurs in many divorce cases as it relates to one spouse’s ownership and operation of a business is often done as part of the business enterprise, and not designed specifically to defraud the divorcing spouse.  In this particular case, the defendant’s decision to name his mother as a 51% shareholder was not done specifically to defraud my client, but, instead, was designed to gain preferential treatment for obtaining public contracts.  This is a classic RICO case.  As collateral damage of that decision, at the time of the divorce, nearly ten years later, the defendant decided that he could utilize the fact that his mother was a 51% interest holder in the business to his benefit in the divorce case to divest my client of her equitable share.

Under both federal and state civil RICO statutes, the first inquiry is whether the enterprise would exist, independent of the damages to the plaintiff.  In other words, a plaintiff cannot plead that the fraudulent enterprise was formed specifically for the purpose of perpetrating a pattern of wrongful acts that were designed to defraud them specifically.  The acts complained of, specifically the pattern or enterprise of wrongful acts, must be “separate and apart” to be adequately pled as a pattern of racketeering acts.  That was precisely what occurred in this case.  The requirement of the statute is designed to address businesses that are engaged in a “pattern of racketeering activity” as a “regular way of doing business”, as opposed to specific instances of fraud and criminal conduct.  Hughes v. Consolidated Pennsylvania Coal Company, 945 F.2d 594 (1991).

In conclusion, the matter went to trial and we were successful in obtaining a default against all third parties.  Just prior to the close of our case, staring down the barrel of treble damages and counsel fees, the defendant abandoned his claim for division of the business based on a 49% interest in favor of a 100% interest.

Allen J. Scazafabo, Jr. Esq., is a contributor to the Riker Danzig Family Legal Blog and is Board Certified by the New Jersey Supreme Court as a Matrimonial Law Attorney.  As a member of the Family Law Practice Group of Riker Danzig Scherer Hyland & Perretti LLP,  Allen practices in Riker Danzig’s Morristown, New Jersey office and focuses his practice on representing clients on issues relating to divorce, equitable distribution, support, custody, domestic violence, premarital agreements and appellate matters. You can reach Allen at 973-451-8428 or ascazafabo@riker.com.

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