ADOPTION

 

Marshall v. Lauriault, 372 F.3d 175 (3d Cir. 2004) Before Judges Rosenn, Greenberg, and Scirica.  Opinion by Rosenn, C.J.

Issue: Whether the New Jersey adult adoption statute, N.J.S.A. 2A:22-1, is constitutionally invalid as a violation of due process for failure to require notice to third parties.

Holding: The New Jersey adult adoption statute, N.J.S.A. 2A:22-1, does not violate due process by not requiring notice to third parties. 

The deceased, one of ten beneficiaries of a trust, adopted her four adult cousins pursuant to the New Jersey adult adoption statute, N.J.S.A. 2A:22-1.  Pursuant to the trust, if any of the trust beneficiaries died, his or her one-tenth share would be paid to his or her “issue.”  Pursuant to the terms of the trust, an adopted child would be considered an “issue.”  If a beneficiary died without issue, then his or her one-tenth share would be divided among the other beneficiaries.  In other words, the deceased’s adoption of her four adult cousins caused her share of the trust not to be divided among the other nine beneficiaries.  Although the New Jersey adoption statute requires notice to the spouse of an adopting parent, it does not require notice to third parties. N.J.S.A. 2A:22-1.  As a result, the other trust beneficiaries sought to declare the adoption invalid, arguing that the deceased failed to notify the other beneficiaries and that the adoption statute violated due process because it did not require notice to third parties. 

The District Court dismissed appellants’ claim that the New Jersey adult adoption statute violated due process.  First, the court stated that no case law supported the claim that they were entitled to notice of the adoption.  Second, the court articulated that appellants were not deprived of due process because they would have an opportunity to defend their interests in the Trust action.  The Circuit Court affirmed the dismissal, agreeing with the District Court’s second rationale.

The Circuit Court noted that Fed. R. Civ. P. 24(c) requires a party that facially challenges a statute to notify the state Attorney General of the suit so that the state has an opportunity to intervene.  Appellants, in the present case, failed to notify the Attorney General.  The court did not dismiss the suit on these grounds, however, because it accepted appellants’ argument that they were not facially challenging the statute but challenging its application to this particular case.

Because a statute is presumptively constitutionally valid, the challenger bears the burden to show that a statute is unconstitutional. See I.N.S. v. Chadha, 462 U.S. 919, 944, 103 S. Ct. 2764, 77 L. Ed. 2d 317 (1983).  A challenger claiming a violation of due process must show: (1) a protected property interest has been deprived, and (2) the procedures do not comport with due process.  “The fundamental requirement of due process is the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’” Quoting Mathews v. Eldridge, 424 U.S. 319, 333, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545, 552, 85 S. Ct. 1187, 14 L. Ed. 2d 62 (1965)).  Appellants will have a meaningful opportunity to be heard when the trust disposition occurs in the state court or in the district court upon remand.  In addition, the court noted that appellants’ interest in the trust was not a present ownership interest and, therefore, they had no right to notice of the adoption proceedings.  Therefore, the adoption statute and the deceased’s decision not to notify appellants of the proceedings did not deprive them of their due process rights.

 

ALIMONY/PALIMONY

 

Steneken v. Steneken, 367 N.J. Super. 427 (App. Div. 2004) Before Judges Havey, Parillo, and Hoens.  Opinion by Parillo, J.A.D.

Issue: Whether it is an impermissible “double-dip” for a trial court to use a supporting spouse’s income from his business in calculating his alimony obligation when the same income is used to value the business.

Holding: In calculating a defendant’s alimony obligation, a trial court can include defendant’s business income even though the same income was used to value the business which was divided in equitable distribution; this practice does not result in double-counting an asset.

Plaintiff wife and defendant husband were married for twenty-four years and had three children.  Defendant was the sole-shareholder of Esco Corporation.  During their marriage, they lived a lavish lifestyle with a large house, expensive cars, and numerous vacations.  After their oldest child graduated from college, plaintiff worked as a school teacher earning $42,465 per year.  Defendant’s gross salary around the time of the divorce equaled approximately $150,000.  The trial judge distributed thirty-five percent of the value of the business to plaintiff in the amount of $268,800 and awarded sole ownership of the business to defendant.  Ultimately, on remand, the trial judge awarded plaintiff $65,000 per year in alimony. 

On the second appeal, defendant contended that using his actual income to calculate his alimony obligation resulted in “double-dipping” because this included the “excess earnings” which were considered in valuing the business for purposes of equitable distribution. 

The Appellate Division articulated that the purposes of alimony and equitable distribution differ, but they serve closely related goals.  Alimony, the Appellate Division explained, aims to allow the dependent spouse to maintain a lifestyle reasonably resembling the marital lifestyle.  The Appellate Division instructed that the trial court should apply several factors, in its discretion, to determine the alimony award such as “the actual need and ability of the parties; the duration of the marriage; their earning capacities; and their contributions to the marriage.”  In contrast, equitable distribution seeks to divide marital assets fairly and justly.  Notably, a trial court must consider the equitable distribution of marital property in establishing alimony obligations. 

The double-dipping rule prohibits a court from counting an asset once for property distribution and a second time in spousal support awards.  The rule most commonly applies in the context of pension income, and in fact, New Jersey courts have never applied the rule beyond the pension context.  In N.J.S.A. 2A:34-23(b), the Legislature codified the holding of D’Oro v. D’Oro, 187 N.J. Super. 377 (Ch. Div. 1982), precluding double-dipping for pension income.  The statute provides: “When a share of a retirement benefit is treated as an asset for purposes of equitable distribution, the court shall not consider income generated thereafter by that share for purposes of determining alimony.”  N.J.S.A. 2A:34-23(b).  The Appellate Division determined that in New Jersey the double-dipping rule is limited to pension benefit income.  However, pension income can be considered in evaluating alimony if post-divorce earnings increase the pension’s value.

The Appellate Division rejected defendant’s argument that the trial court’s award of alimony to plaintiff resulted in double-dipping by counting his “excess earnings” in his business both for equitable distribution (in terms of valuing the business) and for setting the alimony award in determining his income level.  Given the statutory prohibition specifically applying in the pension context, the Appellate Division declined to extend the double-dipping rule beyond the statutory provision.  The Appellate Division explained that pension income is unique and unlike defendant’s “excess earnings.”   

However, in this action, defendant’s “excess earnings” were calculated using a capitalization method that averaged defendant’s past earnings over several years.  “Excess earnings” are determined by comparing defendant’s actual salary to the likely salary of a chief executive officer of generally the same experience and skill level.  Despite the capitalization method’s use of defendant’s past earnings to calculate “excess earnings,” the Appellate Division determined “excess earnings” were not a divisible asset like a pension fund because “excess earnings” represent only one factor in valuing the business.  The Appellate Division explained:

Unlike the pension scenario where a specific stream of future income is converted into an asset that is then distributed, and therefore may no longer be calculated in the alimony formula, here the trial court did not really distribute the future stream of defendant’s earnings, but rather the value of the business at a fixed point in time. 

 

Therefore, the Appellate Division held that plaintiff’s alimony payments did not result in double-dipping.

            In addition to the distinguishable features of pension benefits and “excess earnings,” the Appellate Division reasoned that the State’s legislative and judicial policy supported its decision.  The court noted the strong policy in favor of sufficiently supporting a dependent spouse in light of the needs of the parties and their ability to earn future income.  Finally, the Appellate Division concluded that to place an absolute ban on all double-dipping for any marital asset considered in alimony obligations would be too broad.  The trial court must be able to consider all relevant factors in determining an appropriate equitable distribution and spousal support obligation.  Accordingly, the trial court’s award of spousal support was proper.

 

Konczyk v. Konczyk, 367 N.J. Super. 512 (App. Div. 2004)  Before Judges Kestin, Cuff, and Lario.  Opinion by Cuff, J.A.D.

Issue: Whether plaintiff ex-wife may receive defendant’s life insurance proceeds in excess of defendant’s remaining alimony obligation.

Holding: Plaintiff may receive defendant’s life insurance proceeds only up to the amount of defendant’s remaining alimony obligation, where the divorce judgment used life insurance proceeds to secure defendant’s alimony obligation.

Plaintiff and defendant’s divorce judgment provided that defendant would pay plaintiff alimony of $200 per month for five years and then $100 per month until plaintiff reached the age of sixty-five.  For the first five years, the divorce judgment required defendant to maintain $20,000 in life insurance for plaintiff and then $15,000 until plaintiff was sixty-five years old.  Prior to defendant’s death, he removed plaintiff as a beneficiary on his life insurance policy.  When defendant passed away, plaintiff filed a motion seeking to acquire the $15,000 in life insurance proceeds.

The motion judge determined that the life insurance policy “was clearly and unequivocally designed to secure plaintiff’s alimony obligation.”  Therefore, defendant was obligated to maintain the life insurance policy for plaintiff’s benefit if he passed away before his alimony obligation terminated.  Significantly, defendant’s obligation to maintain a life insurance policy would terminate if his obligation to pay alimony terminated.  At the time of his death, defendant only owed plaintiff $2,000 in alimony payments.  If plaintiff received $15,000 from life insurance, it would result in a windfall to her.  Therefore, the motion judge awarded plaintiff life insurance in the amount of $2,000 to cover plaintiff’s remaining alimony payments.  The Appellate Division affirmed the motion judge’s holding and reasoning.

            Furthermore, the motion judge determined, and the Appellate Division agreed, that plaintiff should be awarded counsel fees.  The motion judge explained that defendant wrongfully changed the name of the beneficiary under his life insurance policy, causing plaintiff to expend funds seeking enforcement of the divorce judgment.  The motion judge also found counsel fees to be reasonable in amount and time.  Thus, the Appellate Division affirmed plaintiff’s award of $2,000 of life insurance plus counsel fees.

 

 Weishaus v. Weishaus, 180 N.J. 131 (2004)  Opinion by Justice LaVecchia.

Issue: Whether trial courts must continue to determine the marital lifestyle in accordance with Crews before approving a consensual agreement for spousal support at the time of the divorce judgment.

Holding: Trial courts must be permitted to exercise discretion in uncontested divorce cases to approve settlement agreements for spousal support without making a finding on the marital standard of living.

Plaintiff wife filed a divorce action against defendant husband after fifteen years of marriage.  Plaintiff’s Case Information Statement (“CIS”) listed an annual marital lifestyle of $436,140 as compared to defendant’s CIS listing $210,732 as the family’s annual lifestyle.  Plaintiff incorporated the $41,000 that defendant’s mother gave to the family toward expenses for the children and expenses paid by a company owned by defendant.  Plaintiff and defendant executed a Property Settlement Agreement (“PSA”), which set forth defendant’s limited duration alimony payments and child support obligations for three years.  At the final hearing, both plaintiff and defendant testified that they understood the agreement and believed it was fair and reasonable.  However, plaintiff testified that she would not be able to achieve the marital standard of living with her potential earning capacity and the alimony payments.

Because plaintiff stated she could not maintain the marital lifestyle and the parties could not agree on the standard of living during their marriage, the court made findings establishing the marital lifestyle as required under Crews v. Crews, 164 N.J. 11 (2000).  In its determination, the court evaluated the parties’ average income but excluded any gifts from defendant’s mother and an investment account that became worthless.  Based on its calculations, the court found that plaintiff would be able to maintain a reasonably comparable lifestyle to the marital standard of living with the alimony payments and equitable distribution.  Plaintiff appealed the court’s findings, and subsequently, the parties agreed to discontinue the appeal and submit a Consent Order.  The Consent Order acknowledged the parties’ disagreement over their standard of living during the marriage and plaintiff’s assertion that she could not maintain the marital lifestyle with the alimony payments.  The court rejected the proposed order, reasoning that Crews required courts to make findings establishing the marital standard of living before entering a final divorce judgment.  The Appellate Division held that the trial court was proper in making findings to establish the marital standard of living but held that the trial court improperly calculated the lifestyle by relying solely on defendant’s income while excluding other sources of income such as gifts and investments. 

Alimony’s purpose is to assist the dependent spouse in maintaining a lifestyle that is reasonably comparable to the marital standard of living.  Id. at 16.  A party seeking to modify an alimony award must show “changed circumstances.”  See Lepis v. Lepis, 83 N.J. 139, 146 (1980).  The changed circumstances test uses the marital lifestyle as a starting point from which to measure any change.  Crews, 164 N.J. at 16.  In Crews, the Court held that a court must make findings to establish the marital lifestyle and to determine whether the dependent spouse is able to maintain that lifestyle with the alimony payments.  Id. at 26.  Notably, the Crews decision involved a contested divorce unlike the present action, which is an uncontested divorce.  However, in dicta, the Court in Crews offered guidance for courts in uncontested divorce cases.  The Court’s decision in encouraging courts to establish the marital lifestyle was rooted in the rationale that “information necessary to such determinations was fresh and could be presented readily” at the time of the divorce judgment.

Here, the Court found valid reasons to revisit the issue in Crews in the context of an uncontested divorce.  Because divorce is highly emotional and can easily erupt into contentious interactions, settlement is particularly encouraged in divorce cases.  Konzelman v. Konzelman, 158 N.J. 185, 193 (1999).  In addition, settlement agreements between divorcing spouses are generally upheld unless there is evidence of “unconscionability, fraud, or overreaching in the negotiations of the settlement.”  Miller v. Miller, 160 N.J. 408, 419 (1999).  Although there was no evidence of any improper influence in executing the agreement, the trial court rejected the parties’ agreement solely based on Crews.  The Weishaus Court held that Crews does not require a trial court to render marital lifestyle findings before entering a divorce judgment in an uncontested divorce.  However, the Crews requirements are not dispensed with and there are guidelines to be applied.  If the parties are advised of the potential problems inherent in a settlement that does not establish the marital lifestyle, the trial court may enter judgment without making a finding on the marital lifestyle.  However, the Court noted that a trial court should aim to gather and preserve the information necessary to make a lifestyle determination in the future.

Furthermore, the Court affirmed the Appellate Division’s holding that the trial court improperly calculated the parties’ marital lifestyle.  The trial court should not have excluded gifts made by defendant’s mother or investment earnings.  The marital standard must encompass all of the parties’ income during the marriage, regardless of whether it still exists at the time of divorce.  The trial court should consider if there are sufficient funds to attain the marital standard of living but should not consider a lack of current funds as a basis to reduce the marital lifestyle.

 

 Glass v. Glass, 366 N.J. Super. 357 (App. Div. 2004) Before Judges Carchman, Wecker, and Weissbard.  Opinion by Carchman, J.A.D.

Issue:  Whether termination of defendant wife’s alimony was warranted based on the fact that she could maintain the marital standard of living on her current income.

Holding:          Termination of defendant wife’s alimony was not warranted because the parties’ Property Settlement Agreement anticipated the wife’s future employment; the wife had a “reasonable expectation of permanent alimony in planning her financial future”; and the wife’s frugal lifestyle was maintained “not out of economic necessity, but as a matter of self-determination in the allocation of her resources.”

Plaintiff husband moved to terminate his alimony payments to defendant wife due to changed circumstances, contending that defendant wife presently earned sufficient income to maintain the marital standard of living.  The trial court agreed and terminated the alimony payments because it found that defendant’s income allowed her to live at the marital standard.  The trial court also found that there were no equities weighing in defendant’s favor.

Plaintiff and defendant were married for thirteen years and maintained a frugal, middle-class lifestyle.  On June 1, 1986, the couple entered into a Property Settlement Agreement (“PSA”) that was ultimately incorporated into the final divorce judgment on January 7, 1987.  The PSA divided the stocks, bonds, and cash equally, but defendant waived her interest in plaintiff’s law degree, practice, and business.  Under the PSA, plaintiff husband was required to make monthly child support payments of $665 and alimony payments of $500 for two and a half years and to make direct payments for the household expenses and the children’s school expenses.  After two and a half years, the PSA fixed alimony at $1,000 per month and continued his child support and children’s school expenses.  When the parties executed the PSA, the alimony and child support payments constituted defendant’s only means of support.  A few years after the divorce, defendant began working at AT&T and subsequently sold the marital home to move to a smaller house in the same neighborhood because it was too expensive. 

In April 1999, the trial court granted plaintiff’s motion to terminate spousal support for defendant wife because she failed to demonstrate that she needed the support to maintain the marital standard of living. 

Defendant argued on appeal that plaintiff failed to establish changed circumstances, that the trial court failed to consider the intent of the parties when executing the PSA and the equities in defendant’s favor, and that the trial court improperly assessed the defendant’s standard of living. 

To modify permanent spousal support obligations, the party seeking to alter the payments “bears the burden of making a prima facie showing of changed circumstances.”  Miller v. Miller, 160 N.J. 408, 419 (1999) (citing Lepis v. Lepis, 83 N.J. 139, 157 (1980)).  The supporting spouse must contribute support to the dependent spouse so that the dependent spouse can maintain the standard of living enjoyed by the couple during their marriage.  Lepis, 83 N.J. at 150, 152.  “[A] decrease is called for when circumstances render all or a portion of support received unnecessary for maintaining that standard.”  Id. at 153.  Accordingly, to modify a support award, a trial judge must make a determination to establish the marital standard of living.  Crews v. Crews, 164 N.J. 16-17, 35 (2000).  Furthermore, a trial court can award a modification where there is “a significant change for the better in the circumstances of the dependent spouse.”  Stamberg v. Stamberg, 302 N.J. Super. 35, 42 (App. Div. 1997). 

In assessing defendant’s need for spousal support, the trial judge compared the frugal, middle-class standard of living during their marriage with defendant’s lifestyle based on her earned income.  The judge concluded that a comparison of the “numbers” revealed that defendant no longer needed the spousal support to maintain the marital standard of living.  The Appellate Division explained that a “numbers” analysis was insufficient to make a determination on the termination of alimony payments.  The Appellate Division instructed that other factors must be considered in such an application.  Specifically, “a judge’s determination must be based not only on numbers, but also on ‘what . . . is equitable and fair, giving due weight to the strong public policy favoring stability of arrangements.’”  Rolnick v. Rolnick, 262 N.J. Super. 343, 353 (App. Div. 1993) (quoting Smith v. Smith, 72 N.J. 350, 359-60 (1977)). 

To assess whether the PSA was fair and equitable, the court explained that the following factors must be considered:

adequacy of the agreement at inception, the presumed understanding of the parties at that time, the reasonable expectation of the parties during the life of the agreement, the manner in which the parties acted and relied on the agreement as well as previously stated principle that agreements by their very nature carry with them a stability . . . .

 

See Konzelman v. Konzelman, 158 N.J. 185, 193 (1999); Petersen v. Petersen, 85 N.J. 638, 645 (1981); Ozolins v. Ozolins, 308 N.J. Super. 243, 249 (App. Div. 1998); Saverese v. Corcoran, 311 N.J. Super. 240, 248-49 (Ch. Div. 1997). 

            The Appellate Division first considered the parties’ intent when executing the PSA.  The Appellate Division found that the couple contemplated and understood that defendant wife would obtain employment in the future.  Furthermore, under the PSA, defendant waived any interest in plaintiff’s business and agreed to low support payments in return for permanent alimony.  In other words, defendant provided adequate consideration under the PSA for permanent alimony.  The Appellate Division concluded that the trial court was erroneous in its determination that there were no equities in defendant’s favor because the trial court failed to consider the above factors.

The Appellate Division found that the trial court’s determination of defendant’s standard of living largely rested on defendant’s ability to contribute to her savings fund.  The Appellate Division articulated that defendant should not be penalized for living modestly and saving portions of her income.  The change in defendant’s income, the court concluded, was not significant enough to grant plaintiff’s motion to terminate support.  The Appellate Division noted that modification of permanent alimony is an exception to the rule, not the norm.  Therefore, the Appellate Division reversed the trial court’s termination of support.

 

  Storey v. Storey, 2004 WL 2871755 (N.J. Super. App. Div)  Before Judges Grall, Collester, and Skillman.  Opinion by Grall, J.A.D.

Issue:  Whether an obligor who loses his job through reduction in force, and then obtains a substantially lower-paying job in a different employment field is entitled to a reduction in alimony based upon his lower wages.

Holding:  To obtain a reduction in alimony based upon current earnings, an obligor who has chosen a new, less lucrative career must establish that the benefits derived from the career change substantially outweigh the disadvantages to the supported spouse.  Absent that showing, an application for a reduction in support must be denied, unless the obligor establishes, in the alternative, that capacity to earn is diminished, in which case the court should impute income consistent with the obligor’s capacity to earn in light of the obligor’s background and experience.  The burden of persuasion is on the obligor.

            The parties were divorced in 1999.  At the time, Mr. Storey had been earning approximately $111,000 per year at Bellcore as a computer service technician, employed through a consulting firm.  Mrs. Storey was working 12 to 15 hours per week, earning seven dollars per hour.  The parties agreed to an alimony award of $480 per week.

            On August 7, 2001, Husband was given notice that August 17 would be his last day at work.  On August 19, 2001, without asking his consulting firm about other job opportunities, he moved to Florida to join a woman “with whom he had developed a relationship.”  He had no job prospects when he moved to Florida.  Upon arriving in Florida, he obtained a job as a massage therapist, claiming to earn $300 per week.  One month after arriving in Florida, he filed his application for a reduction in alimony.

            After a remand from the Appellate Division, the trial court held that Mr. Storey was voluntarily underemployed.  The trial court took judicial notice that wages of computer service technicians with Mr. Storey’s experience had declined, and therefore imputed income at that reduced rate of $60,000 per year.  Based upon that imputed income, the trial court reduced Mr. Storey’s alimony obligation to $280 per week.

            Mr. Storey appealed.  The Appellate Division affirmed.

 

            Before applying these facts to the law, the Appellate Division reviewed the case law that has developed since Lepis and drew distinctions between the types of proofs needed for a successful application for a reduction in support, and the reasons for the claimed change in circumstances.

            First, the court noted that, when an alimony obligor changes career, the existing duty of support cannot be ignored.  Rather, when an obligor seeks a reduction in support due to his/her career change, the court must consider the reasonableness and relative advantages of that career change.  The factors to consider include, but are not limited to, the reasons for leaving prior employment; the reasons for selecting the new employment; the disparity between prior and present earnings; efforts to find work at comparable pay; the extent to which the new career draws or builds upon education, skills, and experience; the availability of work; the extent to which the new career offers opportunities for enhanced earnings in the future; age and health; and the former spouse’s need for support. 

            While the court noted that reasons such as lack of work in one’s field or loss of professional license are factors to be given significant weight, reasons such as a desire for a less demanding lifestyle or better working conditions are entitled to less weight.

            Most importantly, however, the court noted that the issue cannot be resolved by simply inquiring into whether the loss of prior employment was “voluntary” or “involuntary.”  Rather, the “reasonableness” and “relative advantages” of the career change must be evaluated under the totality of the circumstances.

            Thus, where an obligor who changes careers meets his/her burden of persuasion and convinces the trial court that he/she is working at capacity in employment consistent with skills and experience, i.e., that he/she is not voluntarily underemployed, absent evidence undermining the supporting spouse’s proofs, there is no need for further inquiry and alimony should be recalculated based on current financial circumstances.

            In contrast, the application for reduction in support based upon current financial conditions must be denied if the payor fails to carry the burden of proof on reasonableness and relative advantages of the career change.  The denial of relief, as a practical matter, results in imputation of prior earnings.

            After reaching this conclusion, however, the Appellate Division left open a window of opportunity for the supporting spouse:  the ability to persuade the court that if the benefits he/she derives from the career change do not substantially outweigh the disadvantages, then imputation of income based upon current prevailing wages in the payor’s prior field of employment would be appropriate.

            Of interest is the Appellate Division’s comment that the supported spouse does not have the burden of identifying a better paying job that would have been available to the obligor as a precondition to imputation of income.  Rather, it is the obligor who must establish that he/she is earning at capacity in order to avoid imputation.  An obligor who fails to present persuasive evidence of earnings consistent with capacity faces imputation based on a realistic assessment of capacity to earn. 

            In this case, the court determined that Mr. Storey failed to meet his burden of persuasion that he was working at capacity in employment consistent with skills and experience.  Based upon the analysis of the facts set forth in the opinion, the trial court determined that Mr. Storey was voluntarily underemployed.  However, since prevailing wages of computer service technicians with Mr. Storey’s experience had declined, the court imputed income at that reduced rate of $60,000 per year.  Based upon that imputed income, Mr. Storey’s alimony obligation was reduced to $280 per week.

            Of interest to note is that, based upon the factors set forth in the opinion, it would appear that Mr. Storey failed to carry the burden of proof on reasonableness and relative advantages of his career change.  As a result, his application for a reduction in alimony should have been denied.  However, Mrs. Storey did not appeal and the issue on appeal was the propriety of the trial court’s imputation of income at current wages of computer service technicians, rather than Mr. Storey’s actual income.  This decision appears to have placed great weight on the uncontested fact that Mr. Storey had been involuntarily terminated from employment. 

 

CHILD CUSTODY/PARENTING TIME

 

P.B. v. T.H., 370 N.J. Super. 586 (App. Div. 2004) Before Judges Kestin, Cuff, and Axelrad.  Opinion by Axelrad, J.T.C.

Issue: Should the standard of V.C. v. M.J.B., 163 N.J. 200, cert. denied, 531 U.S. 926 (2000) be applied in a custody dispute involving a neighbor and aunt of the child?

Holding: A third-party non-relative must satisfy the four-part psychological parent test of V.C. v. M.J.B. to acquire standing to seek custody of a child.

V.H. was placed in foster care shortly after her birth.  With her mother’s consent, V.H. and her brother were then placed in the custody of their maternal aunt, T.H.  After giving birth to her second child, the aunt sought help in caring for the children from a neighbor, P.B..  The neighbor and friend contended that she became primarily responsible for V.H.’s physical, educational, and emotional well-being.  The aunt, however, argued that she maintained responsibility for V.H. but that the neighbor and other friends “operated as a large extended family.”  It was undisputed, however, that V.H. moved with the neighbor to a single family home.  A few months after the relocation, the aunt informed the neighbor that she intended to return custody of V.H. and her brother to their mother, which resulted in the aunt and the neighbor’s relationship deteriorating and becoming antagonistic.  This dispute arose because the neighbor sought custody of V.H.

The aunt sought to dismiss the neighbor’s action seeking custody of V.H., arguing that the neighbor lacked standing because she was a third-party non-relative.  After eight days of testimony, the trial court concluded that it was unnecessary to determine whether the neighbor satisfied the four-prong psychological parent test in V.C. v. M.J.B. because the neighbor and the aunt were not a couple and did not intentionally share their family life.  Because the V.C. test was inapplicable, the trial court found the neighbor had standing based on the best interests standard.  The trial court noted that the dispute was between an “aunt and a non-family member,” and therefore, the best interests standard applied because the dispute was not between a parent and a non-family member.  In addition, an expert testified that the neighbor was V.H.’s psychological parent and entitled to standing.  The aunt appealed, arguing that the neighbor lacked standing to seek custody.

The following is the four-prong test established in V.C. to determine if a third party is a psychological parent:

1) the biological or adoptive parent consented to, and fostered, the petitioner’s formation and establishment of a parent-like relationship with the child; 2) the petitioner and the child lived together in the same household; 3) the petitioner assumed the obligations of parenthood by taking significant responsibility for the child’s care, education and development, including contributing to the child’s support, without expectation of financial compensation; and 4) the petitioner had been in a parental role for a length of time sufficient to establish with the child a bonded, dependent relationship parental in nature.

 

Id. at 223.

            The Appellate Court disagreed with the trial court that the V.C. test only applied between a legal parent and a third-party.  In this case, the aunt’s permanent custody of V.H. rendered her the legal parent for purposes of the first prong of the V.C. test.  Furthermore, the V.C. test was not intended to apply only between domestic partners or step-parents, as the trial court interpreted, but intended to extend standing for custody to any third-party who had formed a “unique ‘parent-like’ relationship voluntarily created by the parties.”  The Appellate Court remanded the issue of standing to the trial court.

On remand and based on written submissions only, the trial court found that the neighbor met all four requirements under the V.C. test, and therefore had standing to seek custody.  Defendant appealed.  The Appellate Court, however, concluded that there was credible evidence to support the trial court’s finding that the neighbor met each of the four prongs and that the trial court did not abuse its discretion.  The Appellate Court determined that the trial court’s findings were amply supported by credible evidence in the record.

Specifically, the neighbor satisfied the first prong of the V.C. test because, at the aunt’s request, the neighbor cared for V.H. as a primary residential parent, provided V.H.’s housing, food, clothing, and medical needs, hosted V.H.’s first and second birthday parties, presented evidence of spending holidays and vacations with V.H. with the aunt’s permission, received a Mother’s Day card and gift from V.H. addressed as “To Mom” and was told by the aunt on several occasions that V.H. could continue to live with the neighbor. 

Second, the trial court found, and the Appellate Court agreed, that V.H. lived with the neighbor for most of her life until the aunt took her away, establishing the second prong.   

Third, the neighbor was significantly responsible “for V.H.’s care, education, and development,” satisfying the third prong. 

Fourth, the Appellate Court agreed with the trial court’s finding that the neighbor developed a bonded, dependent relationship with V.H.  by involving herself in every aspect of V.H.’s life and development.  The trial court was also impressed by V.H.’s anxiety and unhappiness at being separated from the neighbor  Accordingly, the trial court’s determination that the neighbor had standing to seek custody and its finding that it was in V.H.’s best interest to remain in the neighbor’s custody was proper and amply supported by the record.

 

 In re Application of Sasson, 327 F.Supp.2d. 489 (D.N.J. 2004)  Opinion by Judge Bassler.

Issue:  Whether the habitual residence of the Petitioner’s child was Israel, and, if so, whether the Respondent –Mother had wrongfully retained the child in the United States pursuant to the Hague Convention on the Civil Aspects of International Child Abduction (“the Hague Convention”) and the International Child Abduction Remedies Act, 42 U.S.C. §11601, et seq. (“ICARA”), where Petitioner is an Israeli citizen and the child, an Israeli citizen, was living in the United States with her mother, an Israeli citizen, for eight consecutive months at the time the Petition was filed.

Holding:  Petitioner failed to prove by a preponderance of the evidence that Israel was the habitual residence of the child since the parties had evidenced a shared intent to relocate to the United States.  Thus, the Respondent did not wrongfully retain the child in the United States and all future custody proceedings would take place in New Jersey.

            Petitioner and Respondent, both Israeli citizens, were married in Israel in April 1995.  Their daughter, Maya, was born there in 1996.  In July 2002, Petitioner retained an attorney in Florida to apply for the “Immigration Lottery”[1] on behalf of himself and his wife, to file an L-1 business visa[2] for himself, to incorporate a company in the United States, to prepare a business plan for his company and to prepare a work visa for his wife. 

            In October 2002, the family, including Petitioners’ two sons from a prior marriage returned to the United States on B-1 non-immigrant tourist visas scheduled to expire in April 2003.  Immediately prior to the trip, Petitioner sold his house, two cars, most furnishings, and business equipment, all located in Israel.  According to their round trip plane tickets, the parties were to return to Israeli in October 2004.

            After arriving in the United States, Petitioner signed a one year lease for an apartment in  New Jersey, purchased two vehicles, two cell phones, and a television, obtained car insurance and cable television service, opened a savings and checking account at a local bank, and paid his monthly bills by check.  In January 2003, the parties purchased a one year family membership at the local Jewish Community Center.  All three children were enrolled in local public schools. 

            The parties’ marriage began to deteriorate.  In April 2003, Petitioner traveled to Israel with his two sons after telling Respondent he would return to the United States in three weeks but would reside separately from Respondent.  Petitioner testified that he told his wife “he intended to take all three of his children back to Israel and therefore had taken Maya’s passport with him.”

            In May 2003, Respondent filed for custody of Maya in New Jersey and was awarded sole legal and residential custody pendente lite.  Instead of responding, Petitioner filed a Request for return of his daughter pursuant to the Hague Convention with the U.S. Central Authority and on September 17, 2003, he filed a Petition with the U.S. District Court, District of New Jersey, for return of his daughter pursuant to the Hague Convention and ICARA.  

            Following a three day hearing, the Court acknowledged that pursuant to the Hague Convention, as implemented by ICARA, 42 U.S.C. §11601, et seq., courts in the United States must “determine only rights under the Convention and not the merits of any underlying child custody claims.”  42 U.S.C. §11601(b)(4).  Petitioner bears the burden of showing by a preponderance of the evidence that “the child has been wrongfully removed or retained within the meaning of the Convention.”  42 U.S.C. §11603(e)(1)(A).  The Hague Convention considers a child’s removal wrongful when:

a) it is in breach of rights of custody attributed to a person, an institution or any other body, either jointly or alone, under the law of the State in which the child was habitually resident immediately before the removal or retention; and

b) at the time of removal or retention those rights were actually exercised, either jointly or alone, or would have been so exercised but for removal or retention.

 

            While the Hague Convention does not define “habitual residence,” the Third Circuit has defined it as follows:

the place where [the child] has been physically present for an amount of time sufficient for acclimatization and which has a “degree of settled purpose” from the child’s perspective…. [A] determination of whether any particular place satisfies this standard must focus on the child and consists of an analysis of the child’s circumstances in that place and the parents’ present shared intentions regarding their child’s presence there. 

Feder v. Evans-Feder, 63 F.3d 217, 222 (3d Cir. 1995).

 

            Arguing that the parties’ trip to the U.S. was intended only as a visit, Petitioner relied on the roundtrip plane tickets and the fact that they arrived on a B-1 tourist Visa.  The Court rejected Petitioner’s argument, finding that the parties shared the intent to abandon Israel as their habitual residence.  In reaching its decision, the Court acknowledged that the parties gave conflicting testimony regarding the circumstances surrounding their trip and their reasons for coming to the United States.  The Court found Respondent to be the more credible witness because Petitioner presented little if any evidence to support his contentions and provided numerous inconsistencies or contradictions between statements in his affidavit and his testimony. 

            The Court concluded that Petitioner’s actions and testimony clearly reflected an intent to settle in the United States.  The Court further rejected Petitioner’s argument that “a change in Maya’s habitual residence ‘could only have occurred if [the parties] received immigration status permitting them to reside in the United States permanently,” noting that the Ninth Circuit has clearly instructed that “an unlawful or precarious immigration status does not preclude one from becoming a habitual resident under the [Hague] Convention.”

            The Court ultimately denied Petitioner’s application, finding that the parties had intended to settle in the United States, that Maya’s habitual residence had become the United States and that any subsequent unilateral change in Petitioner’s intent was insufficient to alter their daughter’s status.  By the July 2004 hearing, Maya had been living in this country for nearly two years, “an amount of time that the Court finds is sufficient for acclimatization and a ‘degree of settled purpose’ from the child’s perspective.”   

           

 Poluhovich v. Pellerano, 373 N.J. Super. 319 (App. Div. 2004)  Before Judges Wefing, Fall and C. S. Fisher.  Opinion by Fall, J.A.D.

Issue: Whether the Family Part has subject matter jurisdiction over plaintiff’s application to modify the parties’ custodial agreement, which was incorporated into a Judgment of Divorce entered by the Dominican Republic.

Holding: The Family Part’s exercise of “emergency jurisdiction” pursuant to N.J.S.A. 2A:34-31a(3) was proper because plaintiff alleged that it was necessary to protect the children from mistreatment, abuse, or neglect by defendant.  However, once the Family Part determined that plaintiff’s allegations of an “emergency” were without merit, the court lacked subject matter jurisdiction to consider plaintiff’s contention that it was in the best interests of the children to modify the existing custodial arrangement and transfer residential custody to him.

            The parties, both United States citizens, were married in the Dominican Republic in 1992.  They were living in New Jersey in 1994 and 1995 when their two children were born.  In November 1995, the family moved to Santo Domingo.  In 2001, the parties separated and plaintiff relocated to New Jersey, while the children and defendant remained in the Dominican Republic.  The parties were divorced in the Dominican Republic on March 24, 2003, pursuant to a Property Settlement Agreement which was negotiated through counsel.  Defendant retained custody of the children in the Dominican Republic and plaintiff obtained liberal parenting time. 

            During the children’s 2004 summer visit with their father in New Jersey, he informed defendant via email that the children decided they wanted to live in New Jersey and he would be keeping them there.  The father filed a Complaint seeking sole legal and physical custody.   He alleged that defendant was neglectful, occasionally abusive, and that she intended to move to Norway with her boyfriend, a move that would drastically reduce his parenting time and to which the children strenuously objected.  Plaintiff asked the Family Part to exercise its “emergency jurisdiction” pursuant to N.J.S.A. 2A:34-31a(3) of the Uniform Child Custody Jurisdiction Act (UCCJA) to grant him temporary physical custody of the children pending a plenary hearing.

            The trial judge exercised “emergent jurisdiction” pursuant to N.J.S.A. 2A:34-31a(3), granting plaintiff temporary legal and physical custody of the children and restraining the parties from removing the children from New Jersey. 

            Plaintiff filed a supplemental brief arguing that New Jersey had jurisdiction to decide custody pursuant to N.J.S.A. 2A:34-31A(2), because plaintiff and the children have significant connections with New Jersey, including being United States citizens and carrying United States passports.  Plaintiff also emphasized his own connections to New Jersey, including continuous residence since 2001.  Alternatively, plaintiff argued that New Jersey courts may exercise jurisdiction pursuant to N.J.S.A. 2A:34-31a(4), where there is no other court with jurisdiction over the issue of custody, on the basis that defendant intended to move with the children to Norway.

            On August 13, 2004, based on the testimony of Dr. Montgomery, the trial court concluded that there is no basis for the court to assert jurisdiction under the child abuse and neglect aspects of the jurisdictional statute.  The court denied defendant’s motion to dismiss the Complaint,  but transferred custody of the children to her in New Jersey pending a hearing.  She then filed an application in the Dominican Republic to enforce her custody rights under the Judgment of Divorce.  Plaintiff filed an application in Family Part for transfer of custody, claiming interference with his visitation.

            After speaking with Judge Blandino of the Dominican Republic, the Family Part judge expressed concern that the Dominican Republic is not a signatory to the Hague Convention, and “there are no legal constraints on the Dominican Republic to honor the orders of this court nor are there constraints on this court to honor the orders of the Dominican Republic.”  The Judge was also concerned because “I have no evidence here which would suggest that in Santo Domingo these children or their removal to Norway would receive any kind of judicial scrutiny in any way, shape or form, analogous, similar or comporting with this court’s concept of due process in that sense.   Indeed, I have indications to the contrary.” 

            Invoking the “best interests” provision of N.J.S.A. 2A:34-31a(2), the Judge found that the statute permits the court to exercise its jurisdiction on the custody issue and the court scheduled a hearing to determine whether it is in the best interests of the children to relocate to Norway.  In the interim, the parties were to have joint legal and physical custody of the children in New Jersey.  Defendant’s application for a stay was denied.

            On appeal, the Appellate Division noted that the UCCJA has been replaced by the Uniform Child Custody Jurisdiction and Enforcement Act (“UCCJEA”), L. 2004, c. 147, codified as N.J.S.A. 2A:34-53 to 95, enacted September 14, 2004, effective as of December 12, 2004.  The Appellate Division enumerated the four circumstances in which the Family Part could exercise jurisdiction pursuant to N.J.S.A. 2A:34-31a as follows:

(1)        Where New Jersey is the “home state” of the children;

(2)        Where it is in the “best interest” of the children that New Jersey assume jurisdiction because the children and at least one parent have a “significant connection” with New Jersey and there is available in New Jersey “substantial evidence” bearing upon the children’s present or future care, protection and personal relationships;

(3)        Where the children are present in New Jersey and either the children have been abandoned or there is an “emergency” requiring action by the court to protect the children because they have been subjected to or threatened with mistreatment or abuse or otherwise neglected; or

(4)        “Default jurisdiction” where no other state would have jurisdiction under the criteria set forth in (1), (2) or (3) above, or another state “has declined” to exercise jurisdiction because New Jersey is the more appropriate forum, and it is in the “best interests” of the children that New Jersey assume jurisdiction.

            The Appellate Division agreed with the trial court that New Jersey does not have authority to exercise home state, emergency, or default jurisdiction.  Therefore, the Appellate Division considered whether the Family Part had authority to assume jurisdiction under the significant connection/substantial evidence/best interests criteria in N.J.S.A. 2A:34-31a(2).   The Appellate Division concluded that when read together, N.J.S.A. 2A:34-31(a) and N.J.S.A. 2A:34-42(a), “make clear that when  faced with an application to modify the custody order of another state, here a foreign country, the Family Part must first determine whether the state/country that issued the order to which modification is sought has ‘jurisdiction under jurisdictional prerequisites substantially in accordance with this act or has declined to assume jurisdiction to modify the decree.’”  Although the final judgment entered in the Dominican Republic specifically permitted plaintiff to file an application in the Dominican Republic to modify custody or to prevent defendant from relocating to Norway, plaintiff failed to do so.

            The Appellate Division recognized that the Dominican Republic courts “continue to have jurisdiction over the modification of its custodial order ‘under jurisdictional prerequisites substantially in accordance with the UCCJA, N.J.S.A. 2A:34-42a.’”  The court acknowledged that the Dominican Republic is the children’s home state and therefore the Dominican Republic has subject matter jurisdiction.  As a result, plaintiff has not established the first prong contained in N.J.S.A. 2A:34-42a(i).

            The Appellate Division noted that the official comment to the UCCJEA provides that “a court of this state may refuse to apply this act when the child custody law of the other country violates basic principles relating to the protection of human rights and fundamental freedoms.”  The Appellate Division concluded that plaintiff’s fundamental due process rights were not violated when the Dominican Republic entered the custodial order incorporated into the parties’ March 2003 Judgment of Divorce.  In fact, plaintiff was given reasonable notice of the divorce action in the Dominican Republic, was afforded an opportunity to be heard, was represented by counsel, entered into a Property Settlement Agreement resolving issues of custody and parenting time, and “he consented to the continuation of custody jurisdiction in the Dominican Republic.”

            The Appellate Division recognized that the Family Part properly assumed temporary emergency jurisdiction to assure the safety and protection of the children.  However, as the proceedings continued, it became clear that the claim of an emergency lacked merit.  The Appellate Division reasoned as follows:

Under the UCCJEA, a court determining jurisdiction does not reach the “significant connection” and “substantial evidence” tests unless the court of the other state does not have home state jurisdiction or – having home state jurisdiction – has declined to exercise custody jurisdiction because it has determined that New Jersey is the more appropriate forum.  Here, those prerequisites to the assertion of custody modification jurisdiction have not been established.

            The Appellate Division further acknowledged that it is irrelevant that the Dominican Republic is not a signatory to the Hague Convention in this case since this is not an abduction.  The Appellate Division stated that it has no basis to conclude that the Dominican Republic courts violate principles of human rights or that they do not base custody decisions on the best interests of the children.  The Appellate Division noted that while their criteria and procedures may not be as detailed or sophisticated as those contained in New Jersey statutes and case law, “a finding that those procedures and criteria are the substantial equivalent of those in New Jersey is not the test to be applied when determining whether the jurisdictional criteria set forth in the UCCJA or UCCJEA should be given application.”  Especially in the instant case, “where defendant voluntarily subjected himself to the jurisdiction to the courts of the Dominican Republic in the divorce action.”

            The Appellate Division ultimately concluded that its jurisdictional analysis comports with the UCCJA and UCCJEA’s central policy that “custody litigation occur in the place where the children and their family have the closest connection.”  The court reversed the trial court’s Order assuming jurisdiction over custody and relocation of the children and remanded for entry of an order dismissing plaintiff’s Complaint.  

 

Ronan v. Adely, 182 N.J. 103 (2004)  Opinion by Justice Wallace, writing for a unanimous Court.

Issue:  Whether the trial court applied the proper standard in denying plaintiff’s (primary caretaker) application to change her son’s surname.

Holding:  When a primary caretaker seeks to change a child’s surname, “there is a presumption in favor of the primary caretaker that the name selected is in the best interests of the child.”  The secondary caretaker may rebut that presumption by offering proof that the name change is not in the child’s best interests.  Since the lower courts applied an improper standard, the trial decision is reversed.

            On October 29, 1998, Brendan Peter Adely (“Brendan”) was born to unmarried parents, plaintiff, Kathleen F. Ronan, and defendant, Peter Adely, Jr.  While the parties lived together for a short time, in December 1999, the parties’ relationship ended, and plaintiff, who was always Brendan’s primary caretaker, moved into her parent’s home with Brendan.

            Subsequently, plaintiff filed a complaint for child support and sole legal custody of Brendan.  Defendant filed a counterclaim for joint legal custody.  The trial court entered an order awarding the parties joint legal custody, awarding defendant supervised visitation, and ordering defendant to pay child support.  Thereafter, defendant moved for increased visitation and other relief.  Plaintiff cross-moved for permission to change Brendan’s name from Brendan P. Adely to Brendan P. Adely Ronan. 

            The trial court denied plaintiff’s request to change the child’s surname, emphasizing that he had been referred to as “Adely” for the past two years.  Plaintiff appealed from the Order, arguing that Brendan used the surname “Ronan.”  At the time of the appeal, Brendan was more than four years old.

            The Appellate Division issued an unreported decision affirming the trial court’s determination.  The Appellate Division reasoned that “plaintiff failed to demonstrate how assuming the surname Ronan would promote Brendan’s best interests without risking damage to a significant connection with his father.” 

            The Supreme Court granted certification solely limited to the question of Brendan’s surname.  The Court reversed the Appellate Division and remanded to the trial court to reconsider plaintiff’s application in light of the “presumption in favor of the primary caretaker that the name selected is in the best interests of the child,” as set forth in Gubernat v. Derember, 140 N.J. 120, 141-145 (1995).  The Supreme Court instructed that defendant may rebut that presumption by offering proof that the name change is not in the child’s best interests.  Id.

            The Court emphasized that plaintiff’s request to add Ronan after the surname Adely, rather than to remove Adely all together, is “consistent with the public policy expressed in the regulations issued by the New Jersey State Department of Health for resolving disagreements concerning the selection of a surname at birth.”  N.J.S.A. 8:2-1.3(a)(2).

 

 Whiting v. Krassner, 391 F.3d 540 (3^rd Cir. 2004)  Before Circuit Judges Rendell, Fuentes, and Smith. Opinion by Rendell, C.J.

Issue #1 :  Whether an appeal from a petition to return a child to her Habitual Residence pursuant to the Hague Convention is rendered moot once the child has been returned pursuant to the lower court decision.

Holding #1:  The appeal is not moot as the court can still render effective relief.

Issue #2:  Whether defendant is judicially estopped from asserting that the appeal is not moot when he argued a contrary position both in the District Court and the Court of Appeals.

Holding #2:  Defendant is not judicially estopped from asserting that the case is not moot since judicial estoppel does not apply to jurisdictional issues.

Issue #3:  Whether the District Court properly determined that the child’s place of Habitual Residence was Canada when parties had previously agreed that she would be returned to the United States after two years and under certain conditions.

Holding #3:  The District Court properly determined that the child’s place of Habitual Residence was Canada since the parties had a “shared intent” and “settled purpose” that the child would reside in Canada with the mother, even though it was for a limited period of time.

            Christina was born in New York on September 6, 2000, to unmarried cohabitants.  The parties separated on October 19, 2001, with plaintiff and the child relocating to Canada, in large part as a result of the events of September 11, 2001.  The parties simultaneously executed a written custody agreement, drafted by defendant, as a condition of the relocation.

            The Agreement provided for joint custody and permitted plaintiff and the child to live in Canada.  Defendant was to have 30-45 days of summer parenting time.  The Agreement further provided that plaintiff and the child will return to the United States “no later than October 19, 2003 as long as there is no imminent danger of constant terroist [sic] attacks” and as long as plaintiff was legally allowed to live and work in United States.

            A few months after the relocation, defendant came to Canada to visit with the child for Christmas.  On Christmas Eve Day, plaintiff learned that defendant had checked out of the hotel in the pre-dawn hours and taken the child with him to New York.  Plaintiff filed a Petition in Canada under The Hague Convention on the Civil Aspects of International Child Abduction, October 25, 1980, T.I.A.S. No. 11670, 19 I.L.M. 1501 (“Hague Convention”) for the return of her daughter.  Following an expedited hearing, the Canadian Court found that Christina was a resident of Canada and that her removal was wrongful under Canadian law and ordered her return to Canada.  The Court also ordered defendant to pay plaintiff’s counsel fees and costs of $46,441.68.  Defendant’s request for a stay was denied.  He then filed for an expedited appeal and a stay, which requests were also denied.

            The child was returned to Canada on February 5, 2003, pursuant to the Court Order.

Defendant subsequently filed a motion to re-open the appeal and for appointment of counsel as an indigent, which motion was granted.  The Court asked the parties to address the issue of mootness in their briefs.  While the parties agreed that the appeal was not moot, plaintiff argued that defendant was judicially estopped from arguing that it is not moot since he had previously argued to both the District Court and the Court of Appeals that any appeal would be rendered moot if the child were returned to Canada.

            The Court opined that judicial estoppel is intended to prevent parties from taking different positions on matters in litigation to gain an advantage.  U.S. v. Hook, 195 F. 3d 299, 306 (7^th Cir. 1999).  However, in the instant case, defendant should not have been forced to forego the argument that, once the child was returned to Canada, his appeal would be moot.  To do so would have either barred him from arguing that a particular legal result could follow or else force him to risk that his later opposition to this result would be barred.  The Court noted that it had expressly asked the parties to address the issue of mootness, and, as a result, defendant could not be accused of acting in bad faith.  Further, the Court held that a party’s position on jurisdictional facts should be considered an exception to the general concept of judicial estoppel.

            Addressing the issue of the child’s Habitual Residence, the Court of Appeals reviewed the objectives of The Hague Connection as a tool to avoid “the use of force to establish artificial jurisdictional links on an international level, with a view to obtaining custody of a child.”  Stating that the determination of Habitual Residence is fact sensitive and not “formulaic,” the Court found that for a place to be considered a child’s Habitual Residence for purposes of the Hague Convention, there must be “a degree of settled purpose” by the parties to stay in a place, even though it may be for a limited time.

            The Appeals Court extensively reviewed other Hague Convention cases and opined that it is the “settled purpose” and “shared intent” of the parties that controls the Habitual Residence of a young child.  The Court further concluded that an initial relocation from an established Habitual Residence for only a specific, limited duration will not alter the child’s Habitual Residence unless that residence has been “effectively abandoned by the shared intent of the parents,” in which case, a new Habitual Residence may be created.   

            Here, the Court found that, through their Agreement, the parties had a shared intent that their daughter would live in Canada for two years and their intent to return to New York at a later time, subject to certain conditions, did not diminish their original shared intent.  The Court concluded that, for the two year period during which they intended that the child remain in Canada, the parties had “abandoned” New York as the child’s residence.  Therefore, the Appeals Court upheld the District Court and found that defendant had wrongfully removed the child from Canada, which was her Habitual Residence.

 

CHILD SUPPORT

 

Burns v. Edwards, Jr., 367 N.J. Super. 29 (App. Div. 2004)  Before Judges Havey, Fall, and Parrillo.  Opinion by Fall, J.A.D.

Issue: Whether Federal Supplemental Security Income (SSI) benefits can be considered in calculating a disabled parent’s income for determining his child support obligation when the parent has no income other than such benefits.

Holding: Where SSI benefits are a disabled parent’s sole source of income, they cannot be used to assess that parent’s income for calculating his child support payments.

Plaintiff mother sought the establishment of a child support obligation from defendant father.  Defendant, a disabled person diagnosed with schizophrenia, received Supplemental Security Income (“SSI”) benefits as his sole source of income in the amount of $576.25 per month.  Defendant lived in a group home, which cost $495.75 per month, and attended a mental health counseling program five days per week.  The court found that defendant lacked the ability to find employment or earn any additional income. 

The Community Health Law Project, on behalf of defendant, filed a motion to terminate defendant’s obligation, arguing that SSI benefits cannot be calculated toward defendant’s income.  The Family Part judge denied defendant’s motion because it held that SSI benefits could be considered in determining child support obligations; however, the Family Part judge construed 42 U.S.C.A. § 427(a) to preclude garnishment or execution against SSI benefits to enforce child support payments.

The SSI benefit is a “means-tested” federal disability program administered by the Social Security Administration, which differs from a “non-means” tested benefit such as Social Security Disability (SSD).  The government awards “means-tested” benefits on the basis of an individual’s lack of income or resources.  Financing for means-tested benefits derives from general revenues to support disabled individuals at a minimum subsistence level.  SSI benefits are a supplement to a disabled individual’s income, not a substitute for lost earnings.  In contrast, the government awards SSD benefits as a substitute for lost income due to a disability, financed by an employee’s and employer’s contributions into the Social Security Act fund.

On appeal, the Appellate Division began its analysis by recognizing the fundamental obligation of parents to support their children regardless of who retains custody of the children. Dunbar v. Dunbar, 190 U.S. 340, 351 23 S. Ct. 757, 761, 47 L. Ed. 1084 (1903); Cumberland County Bd. of Soc. Servs. v. W.J.P., 333 N.J. Super. 362, 365 (App. Div. 2000).  The court articulated the inconsistent public policy goals of the Personal Responsibility and Work Opportunities Reconciliation Act (“PRWORA”), which promotes the value of maximizing parental support of children to keep children off of welfare, and the SSI program, which intends to provide only enough income to meet one’s essential needs for subsistence.  According to the court, if a recipient of SSI benefits were ordered to pay child support, it would undermine the intent of the SSI program and fail to satisfy the goal of PRWORA.  The court noted that if Congress intended to extend SSI benefits to dependents, it would have expressly included such an extension in the statute as it included for SSD benefits.

Moreover, the court’s conclusion that SSI benefits cannot be included in calculating a parent’s income is further supported by New Jersey’s Child Support Guidelines.  The court explained that the Guidelines specify certain factors to adjust the general calculations for child support. Pressler, Current N.J. Court Rules, Appendix IX-C and Appendix IX-D to Rule 5:6A  (2004).  The Guidelines exclude “means-tested” government benefits from gross income and exclude them from adjustments to child support calculations.  Pressler, supra, Appendix IX-B.  In addition, the Guidelines provide protection for parents with income below or close to the poverty line by stating that income and living expenses must be compared to determine a minimum subsistence level. Pressler, supra, Appendix IX-A.  Finally, the court reviewed the detailed instructions for determining gross and net income of parents.

Applying the child support guidelines that exclude SSI benefits from income, the court determined that defendant would not owe any child support.  The court noted that the Guidelines’ suggestion to establish a minimum child support obligation to allow for upward adjustments in the future should not apply to an individual whose sole source of income derives from SSI benefits.  Contrastingly, a court may impose a child support obligation on a recipient of SSI benefits, who earns or has the ability to earn additional income. 

 

Accardi v. Accardi, 369 N.J. Super. 75 (App. Div. 2004)  Before Judges Pressler, Parker, and Coleman.  Opinion by Parker, J.A.D.

Issue #1:  Whether the trial court’s upward adjustment of defendant’s child support obligations was proper, where defendant paid unallocated support before the children reached six years of age. 

Holding #1:  The trial court’s upward adjustment of defendant’s child support obligations was improper, where defendant paid unallocated support before the children reached six years of age.

Issue #2:  Whether the trial court’s award of child support for extraordinary expenses was proper, where plaintiff did not show that the expenses were reasonable and legitimate. (3) Whether the trial court’s award of counsel fees to plaintiff was proper.

Holding #2:  Likewise, the trial court’s award of child support for extraordinary expenses was improper, where plaintiff did not satisfy her burden of showing that the expenses were reasonable and legitimate.  (3) Finally, the trial court’s award of attorney fees was improper because the court failed to apply the factors set forth in R. 5:3-5(c).

The divorce judgment set defendant’s child support obligations for their three children.  Two years later, the hearing judge granted defendant’s motion to reduce child support payments due to a decrease in his income.  However, the court ordered the parties to exchange tax returns yearly to determine if an increase in future income might warrant an increase in child support in the future.  Plaintiff filed a motion two years later seeking to increase child support after reviewing defendant’s tax returns, which showed an increase in income.  The court heard the motion fifteen months later and ordered defendant to pay retroactive child support payments including an extraordinary expense amount and plaintiff’s counsel fees. 

First, the Appellate Court determined that defendant’s child support payments should not be subject to the upward adjustment because defendant paid unallocated support before the children reached the age of six.  Upward adjustments occur because the Child Support Guidelines averages the cost of a child from age zero through seventeen.  This averaging results in an overstatement for younger children because older children require more expenditures.  Appendix IX-A, paragraph 17.  Because awards are overstated for younger children but understated for older children, the child support payment may be subject to an upward adjustment when the initial award occurs for an older child. Id.  The Guidelines provide that, if a child is under six years old when the initial child support award is made, no upward adjustment is necessary because the child received the higher expenditures for older children throughout the child’s life. Id.  Here, defendant paid unallocated support before the final divorce judgment when all of the children were under the age of six.  Because the Guidelines do not distinguish between allocated and unallocated support and do not require the support award to occur after the final divorce judgment, defendant’s child support award should not be subject to an upward adjustment.

Second, the Appellate Court concluded that the motion judge should have required plaintiff to demonstrate that the expenses she claimed were extraordinary expenses which are not encompassed in the guidelines.  The Appellate Court explained that the moving party must prove that the expenses are legitimate and reasonable. See Curley v. Curley, 37 N.J. Super. 351, 355 (App. Div. 1955).  In addition, the Appellate Court determined that the motion judge failed to accurately characterize the plaintiff’s claimed extraordinary expenses.  The Guidelines include entertainment expenses such as sports, recreational activities, social events, lessons, or hobbies in ordinary child support awards . Appendix IX-A, paragraph 8.  In contrast, extraordinary expenses may include “private elementary or secondary education, special needs of gifted or disabled children and NCP/PAR transportation expenses.”  Appendix IX-A, paragraph 9, subparagraph (d).  The Appellate Court noted that most of plaintiff’s claimed expenses appeared to fall within the entertainment category of basic child support.  Accordingly, the Appellate Court remanded this determination to the motion judge to characterize the expenses and calculate the extraordinary expenses if necessary.

Third, the Appellate Court held that the counsel fee award was improper because the motion judge failed to consider the appropriate factors.  R. 5:3-5(c) provides the following factors to consider in awarding fees:

(1) the financial circumstances of the parties; (2) the ability of the parties to pay their own fees or to contribute to the fees of the other party; (3) the reasonableness and good faith of the positions advanced by the parties; (4) the extent of the fees incurred by both parties; (5) any fees previously awarded; (6) the amount of fees previously paid to counsel by each party; (7) the result obtained; (8) the degree to which fees were incurred to enforce existing orders; and (9) any other factor bearing on the fairness of an award.

 

R. 5:3-5(c).  The Appellate Court found that the motion judge based its fee award solely on the disparity between plaintiff and defendant’s income.  Because the motion judge failed to apply the above factor analysis, the Appellate Court concluded the counsel fee award was improper.

Finally, evaluating the parties’ practice of reviewing the other’s tax returns and exercising its original jurisdiction pursuant to R. 2:10-5, the Appellate Court determined it was financially draining and causing perpetual litigation.  The parties’ review of tax returns caused continual motions for retroactive child support payments, which hindered the parties’ ability to predict their financial future.  The finances spent on litigation, the Appellate Court explained, would be better devoted to the families’ expenses.  Therefore, the Appellate Court ordered the trial court to devise a better plan to deal with the fluctuating income.

 

 Fazilat v. Feldstein, 180 N.J. 74 (2004)  Opinion by Justice Long.

Issue: Whether a paternity and child support action against defendant father’s estate is precluded when it is untimely filed according to the Probate Code.

Holding: The child support action against defendant father’s estate was precluded by the statute of limitations of the Probate Code; however, plaintiff was permitted to pursue the paternity action because it was not subject to the statute of limitations of the Probate Code and it complied with the statute of limitations of the Parentage Act.

Plaintiff had an intimate relationship with defendant, a married man.  During their relationship, plaintiff became pregnant with her daughter.  Defendant was named the father on the birth certificate of the daughter born to them.  The father expressed his commitment to the child, stating that he would treat her the same as he treated his other children.  Defendant died shortly after the child’s birth. 

Plaintiff filed a complaint against defendant’s estate seeking a paternity declaration and child support.  The trial court dismissed plaintiff’s complaint for failure to file within six months as required by the Probate Code.  Because the Probate Code precluded plaintiff from recovering any monetary loss, the trial court reasoned that the paternity action was irrelevant.  The Appellate Court affirmed, and then the New Jersey Supreme Court granted certification.

First, the Court explained that the issue required evaluation of the public policy of the Parentage Act and the Probate Code.  The Parentage Act establishes that “regardless of the marital status of the parents, all children and parents have equal rights with respect to each other and to provide a procedure to establish parentage in disputed cases.” Quoting Assembly Judiciary, Law, Public Safety and Defense Committee, Statement to Senate Bill No. 888, at 1 (Oct. 7, 1982).  The statute of limitations under the Parentage Act is a maximum of twenty-three years or five years after the child reaches the age of majority.  The Probate Code’s purpose is to promote “the speedy settlement of decedent[s’] estate[s].” Quoting Robinson v. Hodge, 4 N.J. 397, 405 (1950).  In other words, the Probate Code advances the State’s interest in finalizing the distribution of estates so that, even if a claim may be meritorious, the code will bar it. 

The Court relied on the only New Jersey authority on the issue in Wingate v. Estate of Ryan, 149 N.J. 227 (1997), where the court determined that plaintiff’s claim to parentage against the estate was barred by the Parentage Act’s statute of limitations.  In that case, plaintiff was in compliance with the statute of limitations of the Probate Code but too old to pursue the parentage action under the Parentage Act.  The Court noted in Wingate that the Parentage Act and the Probate Code’s statutory limitations are distinct, stating that “a late paternity action does not affect laws relating to distribution and closing of decedents’ estates or to the determination of heirship.” Id. at 240.  The Court explained that after Wingate the Legislature modified N.J.S.A. 9:17-45(f) to clarify that “the provisions of the probate code control the limitations for claims on distribution of an intestate estate.”  Senate Women’s Issues, Children and Family Services Committee, Statement to Senate Bill No. 1253, at 1 (Mar. 3, 1997).  Therefore, the statute of limitations of the Parentage Act has no effect on the statute of limitations of the Probate Code. 

However, the Supreme Court held that plaintiff’s paternity claim was not time barred because it was a separate and distinct action.  The Court disagreed with the Appellate Court’s determination that the paternity action was irrelevant after dismissal of the support claim.  Proof of paternity, the Court explained, provides benefits beyond child support such as the psychological well-being of the child, inheritance rights, access to medical history, and social security, veteran’s, or pension benefits.  Applying the best interests of the child standard, the Court determined that the paternity claim is distinct from the child support claim.  Because a paternity claim is not subject to the Probate Code, plaintiff should be permitted to pursue the paternity action. 

 

 

 Heller-Loren v. Apuzzio, 371 N.J. Super. 518 (App. Div. 2004)  Before Judges Stern, Lefelt and Payne.  Opinion by Stern, P.J.A.D.

Issue #1: Whether the post-divorce grant, exercise, or sale of stock options constitutes “gross income” under New Jersey law. 

Holding #1: The exercise of stock options acquired post-divorce may generate "income" for child support purposes “if there is a demonstrated fair market value of the stock above the option price.”  The sale of stock for profit also constitutes “income” for child support purposes.

Issue #2: Whether the trial court erred by ruling that stock options acquired, exercised, and sold for a profit by defendant, post-divorce, were not includable in defendant’s income. 

Holding #2: The Appellate Division affirmed the trial court’s ruling because the provisions of the parties’ Property Settlement Agreement (“PSA”) expressly excluded stock options from equitable distribution; provided that property acquired post-divorce would be treated as separate property; and did not reference post-divorce stock options in the definition of “gross income” for purposes of child support.

Issue #3:

Whether the trial court erred by failing to modify the parties’ PSA to eliminate defendant’s obligation to pay additional child support where defendant alleged that his remarriage and the birth of his twins constituted changed circumstances warranting modification.  

Holding #3:     The Appellate Division affirmed defendant’s obligation to pay additional child support because defendant’s income increased significantly, the PSA is fair and just, and there is no basis to deprive the children of the benefits of defendant’s financial achievement. 

            The parties were married for 12 years, from 1985 to 1997.  They had two children, a son born in 1992 and a daughter born in 1995.  In October 1997, the parties entered into a PSA, which was incorporated into the Judgment of Divorce.  Pursuant to the PSA, the parties shared joint legal custody of the parties’ children, and plaintiff was primary physical and residential custodian.  The parties waived their right to alimony and support, except for defendant’s obligation to pay $2,500 per month in child support.  This amount was based on defendant’s annual income of $180,000 and plaintiff’s annual income of $130,000.  The parties also agreed that defendant would pay additional child support totaling “11.6% of his gross income over $180,000 per year.”  In addition, certain “shared expenses” for the children were to be paid based on the parties’ “proportionate share” of those expenses (62.3% paid by defendant and 37.7% by plaintiff).

            In 1998, both plaintiff and defendant remarried.  In 1999, defendant and his new wife had twins.  In 1998, defendant’s gross income was $87,378, and in 1999 he earned $124,315.  In September 1999, defendant obtained new employment at Interwoven, Inc., where his base salary was $70,000 (subsequently increased to $89,320) plus commission.  Defendant was granted stock options upon being hired.  In November 1999, defendant’s monthly child support obligation was temporarily reduced to $1,300, based on the decrease in his income.  In November 2001, after defendant’s income recovered, an order was entered requiring defendant pay the original amount of $2,500 per month.

            In November 2001, defendant filed a motion seeking a declaration that his Interwoven stock options or any sale proceeds “were ‘not includable as part of defendant’s gross earned income’ for purposes of the PSA and were ‘not includable for purposes of computing defendant’s child support’ obligation.”  Plaintiff cross-moved for a declaration that defendant’s stock options were includable for purposes of child support and that defendant violated the PSA by failing to pay additional child support.  Thereafter, defendant sought an order modifying the PSA by vacating his obligation to pay additional support at the rate of 11.6% of his gross income over $180,000