Court Opinion

ID: 9955353
Source: CourtListenerOpinion
Date Created: 2024-03-28 14:08:00.036226+00
Date Added: 2024-06-11T08:15:34.722975
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-2271-21

MARGARET S. FREY,

         Plaintiff-Appellant/
         Cross-Respondent,

v.

THOMAS G. FREY,

     Defendant-Respondent/
     Cross-Appellant.
________________________

                   Submitted February 26, 2024 – Decided March 28, 2024

                   Before Judges DeAlmeida and Berdote Byrne.

                   On appeal from the Superior Court of New Jersey,
                   Chancery Division, Family Part, Middlesex County,
                   Docket No. FM-12-0789-18.

                   Deborah A. Rose, attorney for appellant/cross-
                   respondent.

                   Andril & Espinosa, LLC, attorneys for
                   respondent/cross-appellant (Antonio R. Espinosa, on
                   the briefs).

PER CURIAM
      The parties both appeal from the trial court's November 16, 2021 order

entering a Dual Judgment of Divorce (DJOD) and two subsequent orders entered

after motions for reconsideration, issued February 16, 2022, and October 19,

2022, respectively. The appeals stem from the case's long procedural history

and an eleven-day trial, spanning twenty-one months.

      Plaintiff asserts the trial court erred by (1) awarding her only four years

of limited duration alimony in the amount of $1,500 per month after the

dissolution of the parties' thirty-three-year marriage; (2) determining the marital

estate and its subsequent division after subtracting for monies owed to her; and

(3) awarding defendant $10,000 in "consequential" attorney fees. Defendant

contends the trial court should not have awarded any alimony given each parties'

financial circumstances. Defendant also appeals the denial of several credits he

maintains should have been awarded in his favor.

      After reviewing the record in light of the arguments advanced by the

parties, and applying the law to the facts found, we reverse and remand for new

findings with respect to equitable distribution, alimony, and attorney fees.

                                        I.

      We glean the following facts from the record. The parties married in

August 1988. Plaintiff owned a dance studio for approximately twenty-four

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years. The studio was purchased at the beginning of 1986, two years prior to

the marriage. Defendant was a certified public accountant and became an

attorney in the early years of the parties' marriage. For most of the marriage,

defendant was responsible for managing the parties' taxes and household

expenses, although the two always kept their finances separate. Defendant

eventually started his own tax and accounting business in the early 2000s.

      Outside of their primary occupations, plaintiff and defendant amassed

extensive real estate holdings in New Jersey. These properties were purchased

and sold throughout the marriage, and the proceeds deposited into the parties'

joint investment accounts. The parties jointly paid for the college educations of

both their now-adult daughters, took annual vacations domestically and abroad,

dined extensively in the greater New York City area, owned three timeshares,

purchased a home for over $800,000 in 2005, were members of a local country

club, and accumulated over two million dollars in liquid assets.

      The marriage began to deteriorate in the 2000s, and defendant moved out

of the marital home in September 2010. In 2011, defendant was charged, and

later pleaded guilty to, one count of extortion and one count of attempt and

conspiracy to commit mail fraud, for which he served a twenty-seven-month

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prison term from 2015 to 2017. Defendant's CPA license was revoked, and he

was disbarred.

      Plaintiff's dance school gradually declined over the past decade.

Plaintiff's health deteriorated after being diagnosed with multiple sclerosis,

which limits her ability to teach dance.

      Because of defendant's incarceration, plaintiff was left to manage the

parties' finances. Plaintiff utilized proceeds she received from the sale of a

property in Elizabeth, New Jersey. Defendant sold his tax and accounting

business to John Strydesky (Strydesky), of Strydesky & Company (the Asset

Purchase Agreement), just prior to his incarceration.        As part of the sale,

Strydesky agreed to pay twenty percent of the monies collected from defendant's

clients for a three-year period, payable in quarterly installments to plaintiff.

Strydesky duly mailed checks to plaintiff, but there was no accounting sent

accompanying the payments to ensure twenty percent of the cash received from

defendant's former clients was actually paid to plaintiff.

      The Asset Purchase Agreement also specified Strydesky was purchasing

"All of the following physical assets: office/computer equipment, etc." After

the sale, Strydesky certified he destroyed defendant's computer once he obtained

all the necessary information from it. Strydesky brought the paper files he did

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not need to the marital residence. Plaintiff kept these belongings in the marital

home's garage along with defendant's other business files.

      Upon inspection of these files, plaintiff discovered defendant's letters

confirming a company defendant had told her and others to invest in was

bankrupt. One of those persons was Greg Parker (Parker), who lent defendant

money to invest in the company. Around this time, plaintiff filed for divorce in

October 2017.

      Plaintiff told Parker about the bankruptcy, and Parker subsequently sued

defendant. Because plaintiff and defendant continued to live separately after his

release from prison, defendant did not receive the summons and complaint

mailed to the marital home. A final judgment by default was subsequently

entered against defendant on November 7, 2018 (the Parker Judgment). Parker

then placed a judgment lien on the marital home.

      Since his release from prison, defendant works as a bookkeeper, and

claims he earns approximately $1,500 to $2,200 a month. In 2020, defendant

applied for and received two SBA loans to start a stock trading business. These

funds were deposited into one of the marital joint accounts. Plaintiff closed her

dance school in March 2020. The marital home was sold in February 2020 for

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$525,800. The Parker Judgment was satisfied from the proceeds obtained from

the sale of the marital home.

                                        II.

      In reviewing appeals of a family court's rulings after trial, we defer to the

trial court, barring an abuse of discretion. S.W. v. G.M., 462 N.J. Super. 522,

530 (App. Div. 2020). The Supreme Court has held the findings of a trial court

"are binding on appeal when supported by adequate, substantial, credible

evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998). Further, "[d]eference

is especially appropriate 'when the evidence is largely testimonial and involves

questions of credibility.'" Id. at 412 (quoting Rova Farms Resort, Inc. v. Invest.

Ins. Co., 65 N.J. 474-484 (1974)). Reversal is appropriate "only if the findings

were 'so manifestly unsupported by or inconsistent with the competent, relevant

and reasonably credible evidence as to offend the interests of justice.'" Amzler

v. Amzler, 463 N.J. Super. 187, 197 (App. Div. 2020) (quoting Rova Farms, 65

N.J. 484). The same standard applies to appeals from a trial court's equitable

distribution award, see M.G. v. S.M., 457 N.J. Super. 286, 293-94 (App. Div.

2018), and denials of reconsideration, S.W., 462 N.J. Super. at 530. An award

of counsel fees will only be disturbed "on the 'rarest occasion,' and then only

because of clear abuse of discretion." Slutsky v. Slutsky, 451 N.J. Super. 332,

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366 (App. Div. 2017) (quoting Strahan v. Strahan, 402 N.J. Super. 298, 317

(App. Div. 2008)). Mistakes of law, however, are reviewed de novo. S.W., 462

N.J. Super. at 530.

                                      III.

      A.     The Equitable Distribution Award

      Equitable distribution is governed by N.J.S.A. 2A:34-23(h) and involves

a three-step process. Thieme v. Aucoin-Thieme, 227 N.J. 269, 284, 284 n.4

(2016).    The court must first identify which marital assets are subject to

equitable distribution, ascertain each asset's value, and then determine the most

equitable allocation of each asset. Slutsky, 451 N.J. Super. at 355 (quoting

Elrom v. Elrom, 439 N.J. Super. 424, 444 (App. Div. 2015)).

      "[F]or purposes of the equitable distribution of marital assets, a marriage

is deemed to end on the day a valid complaint for divorce is filed that

commences a proceeding culminating in a final judgment of divorce." Genovese

v. Genovese, 392 N.J. Super. 215, 225 (App. Div. 2007) (quoting Portner v.

Portner, 93 N.J. 215, 225 (1983)). Assets subject to equitable distribution

should share the same evaluation date. Bednar v. Bednar, 193 N.J. Super. 330,

332 (App. Div. 1984). Generally, this should be the date the complaint is filed,

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although a later date is permissible under extraordinary circumstances

compelling equitable considerations. Ibid.

      The allocation of distribution is guided by the factors delineated in

N.J.S.A. 2A:34-23.1. Slutsky, 451 N.J. Super. at 355. There is a rebuttable

presumption each spouse "made a substantial financial or nonfinancial

contribution to the acquisition of income and property" during the marriage.

N.J.S.A. 2A:34-23.1.    However, equitable distribution does not necessarily

entail equal distribution. M.G, 457 N.J. Super. at 294. Its goal "is to effect a

fair and just division of marital [property]."    Ibid. (alterations in original)

(quoting Steneken v. Steneken, 183 N.J. 290, 299 (2005)). Trial courts must

weigh each case's unique considerations and circumstances rather than rely upon

mechanical division. Ibid. (quoting Stout v. Stout, 155 N.J. Super. 196, 205

(App. Div. 1977), overruled on other grounds by Petersen v. Petersen, 85 N.J.

638, 643 n.2 (1981)). This is best effectuated "by evaluating the facts and

evidence associated with each asset." Ibid.

      Courts are also empowered to either "deduct marital debts from the total

value of the estate[] or allocate the obligations between the parties." Slutsky,

451 N.J. Super. at 348. The division of the marital estate should account for the

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allocation of debts and be based on the same principles as the division of assets.

Id. at 348, 366; N.J.S.A. 2A:34-23.1(m).

      The trial court erred by failing to perform the first step and calculate which

assets were subject to equitable distribution. This is especially important as

there was testimony from both parties that they kept their finances separate

throughout the marriage. Instead, the trial court added up all of plaintiff's assets

with all of defendant's assets and divided the amount by two, distributing all

assets equally. Because the trial court failed to make findings with respect to

the statutory factors, we reverse the award of equitable distribution and remand

for findings consistent with this opinion.

      B.    The Marital Debt Award.

      After splitting the parties' combined assets equally, the trial court applied

credits against each parties' amount of awarded assets to distribute the marital

debt individually. Plaintiff argues her Honda should not have been subject to

equitable distribution because she traded in her old 2004 Volvo for her 2016

Honda. We disagree. The 2004 Volvo was purchased during the marriage and

is presumptively part of the marital estate. Tannen v. Tannen, 416 N.J. Super.

248, 281 (App. Div. 2010), aff'd o.b., 208 N.J. 409 (2011). Plaintiff adduced no

evidence otherwise. Plaintiff is correct, however, in claiming the court erred by

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providing defendant with a $13,250 credit against her equitable distribution for

her Honda.    The documentary evidence and testimony show plaintiff paid

$19,000 for her Honda after receiving a credit for trading in the 2004 Volvo.

Defendant's first motion for reconsideration did not provide any evidence to

support his valuation of plaintiff's Honda. Medina v. Pitta, 442 N.J. Super. 1,

18 (App. Div. 2015) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch.

Div. 1990)). We conclude although plaintiff's Honda is presumptively subject

to equitable distribution, the percentage of distribution attributable to defendant,

if any, must be calculated after a consideration of all factors enumerated in

N.J.S.A. 2A:34-23.

      Further, with respect to defendant's SBA loans, the trial court erred in

finding the SBA loans were marital debt subject to equitable division. Plaintiff

filed the complaint for divorce on October 2, 2017. Defendant did not obtain

the SBA loans until approximately two-and-a-half years later. For the purposes

of equitable division, the SBA loans were debt acquired by defendant after the

marriage. Genovese, 392 N.J. Super. at 225 (quoting Portner, 93 N.J. at 225).

Although the funds flowed into a marital account while the divorce was still

pending, that action alone does not automatically make the debt marital. See

Wadlow v. Wadlow, 200 N.J. Super. 372, 380 (App. Div. 1985) (finding the trial

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court erred when it failed to exclude money clearly intended to be separate

property from the marital estate despite the fact the funds were commingled).

      Because the court incorrectly calculated certain credits, we vacate the

allocation of marital debt and remand for findings consistent with N.J.S.A.

2A:34-23.

      C.    The Alimony Award.

      Pursuant to N.J.S.A. 2A:34-23(b), courts are permitted to "award one or

more of the following types of alimony: open durational alimony; rehabilitative

alimony; limited duration alimony or reimbursement alimony to either party."

The statute provides a non-exhaustive list of factors that must be considered by

the court in making its determination. N.J.S.A. 2A:34-23(b)(1)-(12). An award

of limited duration alimony is intended to recognize a "dependent spouse's

contributions to a relatively short-term marriage that demonstrated attributes of

a 'marital partnership.'" J.E.V. v. K.V., 426 N.J. Super. 475, 486 (App. Div

2012) (quoting Cox v. Cox, 335 N.J. Super. 465, 486 (App. Div. 2000)).

Because limited duration alimony is not intended to be a replacement for

permanent alimony, a limited duration award is "singularly inappropriate" for

long marriages, typified by significant length and contributions. Ibid. (Cox, 335

N.J. Super. at 482).    Indeed, the length of the marriage is the "defining

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distinction" between open and limited duration alimony. Id. at 488 (quoting

Cox, 335 N.J. Super. at 483). Open duration alimony is the presumptive award

for lengthy marriages. See Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340,

353 (App. Div. 2009).

      However, the length of a marriage alone cannot determine alimony.

Economic dependence is a "crucial finding" necessary to award alimony. Gnall

v. Gnall, 432 N.J. Super. 129, 143 (App. Div. 2013), rev'd on other grounds, 222

N.J. 414 (2015). "The extent of actual economic dependency, not one's conduct

as a cohabitant, must determine the duration of support as well as its amount."

Reese v. Weis, 430 N.J. Super. 552, 571 (App. Div. 2013) (quoting Gayet v.

Gayet, 92 N.J. 149, 154 (1983)). Courts must evaluate all the facts when

determining whether a claim of economic dependence warrants long-lasting

support. Gnall, 432 N.J. Super. at 153.

      Although we understand the court did not find either party credible, and

the trial court found the parties took extreme positions regarding their ability to

earn in the future, the trial court's award of limited duration alimony for four

years incorrectly applied the law. The trial court noted defendant was sixty-two

years old, and by the time of the end of the four-year alimony period, "defendant

will reach his retirement age for social security purposes and may well decide

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to retire." This is not a basis for awarding limited duration alimony in a long-

term marriage.

        N.J.S.A. 2A:34-23(j) permits an award of alimony to be "modified or

terminated upon the prospective or actual retirement of the obligor." When the

obligor reaches "full retirement age," there is a rebuttable presumption that

alimony will terminate. N.J.S.A. 2A:34-23(j)(1). That presumption may be

overcome for good cause based on a separate list of non-exhaustive factors.

Ibid.

        The record does not show defendant sought to retire prior to attaining full

retirement age. Defendant testified he obtained two SBA loans to start a stock -

trading business, in addition to his continued work as a bookkeeper. Thus, it

was reversible error for the court to award limited durational alimony because

defendant "may" seek to retire in the future.

        Factually, the amount of the award is also not supported by the evidence.

The trial court awarded $1,500 monthly based on both parties' representations

of limited income but did not ascertain whether either or both parties were

underemployed and whether additional income should be imputed to them for

an award of alimony. Gnall v. Gnall, 462 N.J. Super. 433, 447 (App. Div. 2019)

(quoting Caplan v. Caplan, 182 N.J. 250, 268 (2005)) (requiring courts consider

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the "potential earning capacity of an individual, not his or her actual income,"

when determining a party's ability to pay alimony); Lepis v. Lepis, 83 N.J. 139,

156 (1980) ("The need for support must be assessed with a view towards the

earning capacity of the individual . . . in the marketplace.").

      The trial court did not explain how it arrived at the $1,500 figure, and

noted only that the aggregate amount, $72,000, "is less than ten percent of the

assets that defendant will receive through equitable distribution." This finding

does not comport with N.J.S.A. 2A:34-23. We therefore vacate the alimony

award and remand for findings consistent with this opinion and the statutory

factors.

      D.    The Attorney's Fee Award.

      Finally, awards of attorney fees in a divorce proceeding are governed by

Rule 5:3-5(c) and are subject to subsections (b), (c), and (d) of Rule 4:42-9. R.

5:3-5(c).

      Plaintiff appeals the $10,000 in consequential attorney fees awarded out

of defendant's total attorney fees award of $12,394. In its DJOD, the trial court

engaged in an analysis of the factors set forth Rule 5:3-5(c). The only factor the

court appears to have found in support of any fee award is the reasonableness

and good faith of parties' position during and prior to trial. However, the

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$10,000 award is untethered to this analysis and predicated solely on plaintiff's

alleged role as defendant's fiduciary during defendant's period of incarceration.

According to the court, the case, "[t]o some extent, . . . was attenuated because

of that circumstance." On reconsideration, the trial court affirmed its $10,000

award, stating because plaintiff "had access to records and defendant's computer,

which were placed in the garage of the [marital home]," during defendant's

incarceration, "as well as [Strydesky's] testimony" she did not comply with her

fiduciary obligation. Both the trial court's legal conclusion and its factual

findings are incorrect.

      Spouses are not fiduciaries to one another. See Tannen, 416 N.J. Super.

at 262-63 (observing that divorcing spouses only have a duty "to deal fairly with

each other"); see also F.G. v. MacDonnell, 150 N.J. 550, 563-64 (1997). Nor

does the Asset Purchase Agreement create a fiduciary relationship between

plaintiff and defendant. The agreement required Strydesky "pay 20% of cash

collected from clients for a three-year period, payable quarterly to [plaintiff] . .

. ." The agreement establishes plaintiff was an intended third-party beneficiary,

not a fiduciary. Ross v. Lowitz, 222 N.J. 494, 513 (2015) (quoting Broadway

Maint. Corp. v. Rutgers, 90 N.J. 253, 259 (1982)).

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      The court's factual findings as expressed in its motion for reconsideration

on this issue are also unsupported by the record. Plaintiff testified she never

possessed defendant's office computer and did not know what happened to it

after the sale of the business. The Asset Purchase Agreement states defendant

sold the computer to Strydesky, and he testified he acquired defendant's

computer and destroyed it.

      The award also appears unrelated to any affidavit of service or statement

of fees submitted by defendant, which are required pursuant to Rule 4:42-9(b)-

(c). The record before us shows those materials were provided to support the

unchallenged award of $2,394. There is nothing to support either the basis or

the amount of the $10,000 award at issue.

      In sum, we uphold the entry of the DJOD, but vacate all of the monetary

awards for equitable distribution, distribution of marital debt, alimony, and

attorney fees, except the attorney fee award of $2,394 to plaintiff, which was

not challenged on appeal. We remand this matter to the trial court for findings

consistent with the applicable statutes, case law, and this opinion.

      Reversed in part, affirmed in part, and remanded. We do not retain

jurisdiction.

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