Court Opinion

ID: 2722563
Source: CourtListenerOpinion
Date Created: 2014-09-02 14:06:06.294632+00
Date Added: 2024-06-11T15:38:08.819796
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-2300-12T2

KATHLEEN KRUPINSKI,
n/k/a KATHLEEN GOCKLIN,                 APPROVED FOR PUBLICATION

     Plaintiff-Respondent/                 September 2, 2014
     Cross-Appellant,
                                          APPELLATE DIVISION
v.

MICHAEL KRUPINSKI,

     Defendant-Appellant/
     Cross-Respondent.

_____________________________________

         Argued May 21, 2014 – Decided September 2, 2014

         Before Judges Fuentes, Fasciale and Haas.

         On appeal from Superior Court of New Jersey,
         Chancery   Division,  Family   Part,  Sussex
         County, Docket No. FM-19-352-90.

         John V. McDermott, Jr., argued the cause for
         appellant/cross-respondent.

         Chris H. Colabella argued the cause for
         respondent/cross-appellant (Gruber, Colabella
         & Liuzza, attorneys; Mr. Colabella and
         Kristen C. Montella, on the brief).

         The opinion of the court was delivered by

FUENTES, P.J.A.D.

     Defendant Michael Krupinski appeals from the order of the

Family Part denying his motion to terminate his obligation to
pay permanent alimony to his former wife, plaintiff Kathleen

Krupinski, n/k/a Kathleen Gocklin.                  Plaintiff cross-appeals the

court's decision to deny her application for an award of counsel

fees incurred defending defendant's motion.                    After reviewing the

record before us, we hold the Family Part mistakenly exercised

its discretion when it denied defendant's motion to terminate

alimony without affording the parties discovery and thereafter

determining whether an evidentiary hearing was warranted.

      Defendant's motion requires the trial court to address and

answer     one     key   question    it       did    not     address        in     denying

defendant's motion to terminate alimony in 2010 and again in

2012.      Specifically, the court must discern what part of the

$1,871     monthly    pension   benefits       plaintiff       has    been       receiving

since      defendant's    retirement          in    2010    is      attributable         to

defendant's post-dissolution efforts, and thus may be considered

income to plaintiff for purposes of determining alimony, outside

the bar imposed in N.J.S.A. 2A:34-23(b).                    The trial court erred

in   denying     defendant's    motion        without      making     this       threshold

determination.

      We    thus     remand   for   the   Family        Part     to   enter        a   case

management order to afford the parties the right to engage in

limited discovery to ascertain each other's current financial

status,     including    medical    and       social    needs.         We    leave      the

                                          2                                       A-2300-12T2
precise method and scope of discovery to the discretion of the

trial court.       We suggest, however, that the judge confer with

counsel and thereafter enter a case management order limiting

the form of discovery to written interrogatories, requests for

admissions,       production      of    documents,       and    updated      Case

Information Statements (CIS) supported by copies of filed income

tax returns for the past three years.                   At the conclusion of

discovery, and after consultation with counsel, the court will

then be in a position to determine whether it is necessary to

conduct an evidentiary hearing to resolve any factual issues in

dispute.

                                         I

       The    parties    were   both   twenty-two       years   old   when    they

married in 1968, and had two children who are both emancipated

adults.      They separated twenty years later on October 24, 1988.

With the assistance of independent counsel, they negotiated and

entered into a comprehensive property settlement agreement (PSA)

that    covered    all    of    the    key   issues     associated    with     the

dissolution of marriage, including child support, the cost of

college      education   for    the   children,   and    most   relevant     here,

alimony, and equitable distribution.              The PSA was incorporated

by the court to the final judgment of divorce (JOD) dated June

27, 1990.

                                         3                              A-2300-12T2
    Defendant    was   a    public   school   teacher    at   the    time    the

parties   separated    in    1988,    earning   an      annual      salary    of

$45,798.28.   He was enrolled in the Public Employment Retirement

System (PERS).    With respect to the equitable distribution of

defendant's pension benefits, Paragraph 14 of the PSA provided

in relevant part as follows:

          It is agreed that at such time as the
          Husband starts to draw his pension, the Wife
          shall be entitled to one-third of each of
          the periodic pension payments made to the
          Husband.    The Husband further agrees to
          execute such qualifying domestic relations
          order [QDRO] as may be necessary to direct
          the organization administering the pension
          to make the Wife's one-third share of each
          pension payment directly to the Wife.

    At the time the court entered the JOD in 1990, the PERS

recognized defendant had accumulated nineteen years and eleven

months of service as a public school teacher.              The QDRO, which

for reasons not disclosed in the record was not filed until

October 5, 2000, provided, in relevant part, for the Division of

Pension and Benefits

          to withhold from [defendant']s gross monthly
          retirement    allowances    for    equitable
          distribution payments to [plaintiff] an
          amount to be computed by multiplying the
          gross monthly retirement allowances by Fifty
          Percent (50%) and a coverture fraction in
          which the numerator will be the total number
          of years that the spouses were married while
          the member was a member of the retirement
          system (from September 1, 1969 to July 21,
          1989 or 19 Years 11 Months), and the

                                     4                                 A-2300-12T2
            denominator will be stated to be the total
            years of service credit accrued within the
            retirement system at the time of retirement.
            After payments commence to the Alternate
            Payee, they shall continue until the death
            of the Participant or the Alternate Payee.

            The Alternate Payee shall receive a pro-rata
            share of any cost of living adjustments or
            other economic improvements made to the
            Participant's retirement allowance on or
            after the date of his retirement. Such pro-
            rata share shall be calculated in the same
            manner as the Alternate Payee's share of the
            Participant's   gross   monthly   retirement
            allowance is calculated pursuant to Section
            2 above.

    Defendant was sixty-four years old when he retired on April

1, 2010.    He had accumulated forty-one years and five months of

service in the PERS.         Of particular importance here, defendant

continued his education after the parties separated, and was

promoted    to    an    administrative      position,     resulting     in     a

significant increase in salary.            The Division of Pensions and

Benefits calculated his retirement benefits based on an annual

salary of $132,210.97, nearly three times the $45,798 salary he

was making as a teacher when he separated from plaintiff.

    With respect to alimony, Article II, Paragraph 4 of the PSA

obligated     defendant     to   pay   plaintiff   $100    per   week,       the

equivalent of $430 per month ($100 X 4.3 weeks), subject to

termination      only     upon   plaintiff's    death,     remarriage,       or

cohabitation "with an individual to whom she is not related by

                                       5                              A-2300-12T2
blood or marriage."       No provision was made for any adjustment of

alimony based on an increase in the cost of living.                   Plaintiff

accepted this arrangement without protestation until defendant

filed   his   second     motion   seeking    to   terminate     his    alimony

obligation.      Stated    differently,     defendant    paid   plaintiff       a

total of $113,520 in alimony over a period of twenty-two years

without any cost of living adjustments and without objection

from plaintiff.

      According to defendant, he did not keep in contact with

plaintiff after the divorce.          He does not know anything about

her   personal   life,    including   whether     she   was   employed    on    a

fulltime basis, what kind of work she performed, or if she has

cohabitated with a person other than a family member.                 The only

communication defendant received from plaintiff after 1990 came

in the form of a letter dated June 9, 2009, which stated:

           Dear Michael:

           I   hear  you   are   retiring   this month.
           Congratulations!!   I hope you enjoy it as
           much as I have been enjoying it even though
           I do work 2 days a week to keep my mind
           sharp and for the socialization.

           I am writing to inquire about what your
           plans are regarding your pension.        The
           pension of which I am entitled to a portion.
           It is my understanding that I will start
           receiving my portion when you start to
           collect your portion.

                                      6                                A-2300-12T2
          Please advise me as to what needs to happen
          or what is happening concerning my portion.

          Thank you.

          Kathy

     In a certification plaintiff filed in opposition to the

motion   to   terminate   alimony   filed   by   defendant   in   2012,

plaintiff made clear that when she decided to retire in 2008,

she "reviewed [her] finances to be sure I could afford to do so

before [she] made that final decision."          That review included

alimony of $430 per month from defendant, as it was agreed in

the original divorce settlement of 1990 that she would receive

alimony until she died, remarried or cohabited, and she had

"done none of these."

     Conspicuously, yet understandably missing from plaintiff's

careful review of her finances in anticipation of retirement,

was any mention or reliance on her equitable distribution share

of defendant's pension benefits.        This omission makes it clear

that plaintiff's share of defendant's pension benefits was not a

factor in her carefully considered decision to retire in 2008.1

1
  We characterize this omission by plaintiff as understandable
because when she would start receiving her share of defendant's
pension, and the dollar amount of that share, were factors
totally and exclusively within defendant's control.    That is,
because defendant was not compelled to retire at any particular
age, he and he alone would choose when to retire. Furthermore,
the amount of defendant's monthly pension benefits, including
                                                    (continued)

                                    7                         A-2300-12T2
    Defendant's retirement automatically triggered plaintiff's

right to receive her coverture share of defendant's PERS pension

benefit.   Defendant began receiving his monthly pension payments

on May 1, 2010.   In a letter dated April 22, 2010, the Division

of Pensions and Benefits explained to defendant that based on

the distribution formula described in the QDRO, he would receive

$5,929.90, resulting in a monthly benefit payment to plaintiff

in the amount of $1,871.

    Defendant filed his first motion seeking to terminate his

alimony obligation to plaintiff in April 2010.    In a Statement

of Reasons attached to the order denying defendant's motion, the

judge, who was not the same judge who entered the order under

review here, noted that plaintiff objected, claiming her gross

income for the year 2009 was $18,282.     Although plaintiff did

not break down the source of this income, the judge found that

she received $430 per month from defendant in alimony, and $205

per week in Social Security benefits.      These two sources of

income amount to $10,760 per year.    We thus infer that before

she began receiving her share of defendant's pension, plaintiff

earned $7,522 per year from undisclosed employment.

(continued)
plaintiff's share, would be based on defendant's years          of
service and his annual salary on the date of retirement.

                                8                        A-2300-12T2
      After      acknowledging          the       standard        applicable        for

modification of spousal support under N.J.S.A. 2A:34-23 and the

Court's seminal decision in Lepis v. Lepis, 83 N.J. 139, 145

(1980), the judge found that "[o]n this record, defendant has

proven    that     his        retirement         constitutes       a   change        of

circumstances."          The     judge      nevertheless       found       "critical"

defendant's failure to disclose his income in 1990 or provide "a

description of the marital lifestyle in 1990. Cf. Weishaus v.

Weishaus, 180 N.J. [131], 145 (2004)."2

      Based on an alleged inconsistency between what defendant

expected to receive from his pension, the judge found the record

was   "unclear"    as    to    what   his       actual   income    would     be   after

retirement.       Despite       these    factual         misgivings    and    alleged

inconsistencies, the judge found "clear" that "defendant will

2
  The motion judge's contrasting reference to Weishaus for the
proposition that the parties' failure to have determined their
marital lifestyle at the time of their divorce, created an
insurmountable impediment to the adjudication of defendant's
motion seeking modification of spousal support was misplaced.
Indeed, as Justice LaVecchia explained in Weishaus, supra, the
Court was relaxing what some perceived was an inflexible
directive in Crews v. Crews, 164 N.J. 11, 26 (2000), requiring a
determination of the marital lifestyle, even in settled cases.
180 N.J. at 134. The Court in Weishaus thus wanted to make clear
that "[a] trial court may forego the findings [of a marital
lifestyle] when the parties freely decide to avoid the issue as
part of their mutually agreed-upon settlement, having been
advised of the potential problems that might ensue as a result
of their decision." Id. at 144.

                                            9                                 A-2300-12T2
continue   to   be     able   to    pay    expenses,   including    alimony

obligation, following his retirement."

                                      II

    Defendant waited two years before attempting to once again

seek judicial relief from his obligation to pay alimony.                This

time,   however,     defendant     presented   two   years   of   retirement

history to a different judge.             The record before the judge in

2012 showed that after plaintiff began receiving her share of

defendant's pension benefits, her annual gross income increased

from $18,282 in 2009 to $40,734 in 2010.               In his decision in

support of his August 12, 2012 order denying defendant's second

motion for termination of alimony, the judge found that "[o]n

this record, and as noted on the previous record, defendant's

retirement constitutes changed circumstances."

    The judge also noted that defendant had addressed the issue

raised by the previous judge in 2010 by submitting evidence of

"his 1990 marital lifestyle."          This evidence includes copies of

the tax returns filed by the parties from 1988 to 1990, the

three years immediately preceding their divorce, and a detailed

certification from defendant.          We can reasonably describe this

evidence as substantial.           If accepted as truthful, defendant

established through these documents that from 1968 to 1988, the

parties enjoyed a "frugal, modest" marital lifestyle.

                                      10                            A-2300-12T2
      As an appellate court, it is not our function to weigh

evidence or determine defendant's credibility.                       The trial judge

must carefully review and evaluate this evidence and determine

first whether there is a basis to dispute defendant's account of

his     life    with     plaintiff      or     question        his     socio-economic

characterization        of   their     lifestyle.       If     there    are   disputes

about    these    and    other    issues,       the   judge      must    conduct     an

evidentiary hearing and make detailed factual findings supported

by the record.         Many of these findings will require the judge to

make credibility determinations based on the judge's personal

assessment of the parties' testimony.                   The tools necessary to

carry out this charge are uniquely available to the trial judge.

Only the trial judge "has the opportunity to make first-hand

credibility determinations about the witnesses who appear on the

stand. . . [and] has a 'feel of the case' that can never be

realized by a review of the cold record."                    N.J. Div. of Youth &

Family Servs. v. R.G & J.G., 217 N.J. 527, 552 (2014) (quoting

N.J. Div. of Youth & Family Servs. v. E.P., 196 N.J. 88, 104

(2008)).

      After reviewing defendant's financial status, the motion

judge denied defendant's motion to terminate alimony because he

found    that    defendant       "is    still    able     to     pay    his   alimony

obligation."      Defendant argued that the PSA created a reasonable

                                          11                                  A-2300-12T2
expectation     that     his     alimony      obligation           would    end    upon      his

retirement.        In     rejecting          defendant's          argument,       the     judge

accepted at face value plaintiff's claim "that there was never

any discussion or debate at the time of the original divorce as

to   alimony    ending        when    [defendant]           retired       and    his    income

changed."      This clearly constitutes a disputed issue of fact

concerning     what     may     or     may    not       have      been     anticipated        or

discussed      that     cannot       be    resolved         without        an    evidentiary

hearing.

      The    motion      judge        principally            relied       on     defendant's

financial    condition        after       retirement         to    deny    his    motion      to

terminate      alimony.          Although         the       judge     found      defendant's

retirement      created        "changed         circumstances,"             he     concluded

defendant    was      still    financially          able     to     pay    alimony.        This

conclusion, however, overlooks the second part of the analysis:

whether plaintiff's financial status has improved to such an

extent upon receiving defendant's share of his PERS pension,

that she no longer needs alimony from defendant to maintain her

former   marital       lifestyle.            This      is    the     central      thesis      of

defendant's     argument.            However,     in    concluding         that    defendant

remains capable of paying alimony, the motion judge did not

adequately address this issue.

                                             12                                        A-2300-12T2
    N.J.S.A.       2A:34-23(b)        provides         that:   "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."         This   legislative         injunction        codified       an    earlier

decision reached by the Chancery Division in D'Oro v. D'Oro, 187
N.J. Super. 377 (Ch. Div. 1982), aff'd, 193 N.J. Super. 385

(App. Div. 1984), which held that income flow from a pension

cannot be considered as income for alimony modification purposes

if the value of the marital asset had previously been equitably

distributed by the court.             That took place here in the form of a

QDRO.

    Although       there   was       some    initial        ambiguity       about   whether

this legislative injunction in N.J.S.A. 2A:34-23(b) was intended

to apply to modification of alimony, the Supreme Court settled

that question in Innes v. Innes, 117 N.J. 496, (1990), holding

that the statute applied "to both initial alimony orders and

modifications of earlier alimony awards."                            Id. at 508.          The

Court also made clear that the Legislature intended that the

statute    preclude      "double-dipping,"             that    is,    the    practice       of

counting    the    pension      as    both    an       asset   subject       to   equitable

distribution and income.             Ibid.

                                             13                                     A-2300-12T2
    However, what can be considered "income" for purposes of

deciding a motion for alimony modification, or in this case

termination, in the context of pension benefits and the bar

imposed     by    the    Legislature    in    N.J.S.A.      2A:34-23(b),      is     a

question that has not been directly answered.                     Here, defendant

argues that his pension benefits increased significantly as a

result of his post-divorce efforts to continue his education and

training,        which    led    to    his    promotion      to     high    school

administrator.           Thus,   defendant   argues   the    motion     judge      was

required to identify which portion of his pension shared by

plaintiff was a joint effort of the parties during the marriage,

and which part was due to defendant's post-divorce efforts.

    We agree with defendant.             As we recently noted in Barr v.

Barr, 418 N.J. Super. 18, 41 (App. Div. 2011):

            [T]here are some extraordinary post-judgment
            pension increases that may be proven to be
            attributable to post-dissolution efforts of
            the employee-spouse, and not dependent on
            the prior joint efforts of the parties
            during the marriage. In such instances,
            these sums must be excluded from equitable
            distribution and the application of the
            coverture fraction may be insufficient to
            accomplish this purpose.

    What part of a pension benefit is barred from consideration

under   N.J.S.A.        2A:34-23(b)    and   what   part    can    be   considered

"income" for purposes of modification of alimony is not an easy

determination.          In Bednar v. Bednar, 193 N.J. Super. 330 (App.

                                        14                                 A-2300-12T2
Div. 1984), we considered the legal and equitable implications

when a marital asset increases in value pending the entry of a

final order settling its distribution.   Writing for the panel,

our colleague Judge King held that "accretion in value must be

analyzed in terms of whether it was attributable to the personal

industry of the party controlling the asset, apart from the non-

possessory partner, or simply to fortuitous increase in value

due merely to inflation or other economic factors."   Id. at 333

(internal citations omitted).    We faced a similar dilemma in

Wadlow v. Wadlow, 200 N.J. Super. 372 (App. Div. 1985), and

again endorsed Judge King's approach in    Bednar as a guiding

principle:

         [A]n increase in value caused by market
         factors or inflation and an enhancement
         which is the result of the "personal
         industry of the party controlling the asset"
         [are different].    We held [in Bednar] that
         "interim     accretions     pending     actual
         distribution   due   to  the   diligence   and
         industry of a party in possession of an
         asset, independent of identifiable market
         forces," should accrue to that person alone.
         However,   where   the   enhanced   value   is
         attributable to market factors or inflation,
         "each party should share equitably in the
         increment."

         [Id. at 384 (quoting Bednar, supra, 193 N.J.
         Super. at 333).]

    The case that comes closest by analogy to the situation we

confront here is Menake v. Menake, 348 N.J. Super. 442 (App.

                                15                        A-2300-12T2
Div. 2002).      The issue in Menake concerned the valuation of a

deferred distribution pension, similar to the one the parties

share here.      Writing for the panel, our colleague Judge Conley

gave   the    following    summary    of   the   deferred   distribution

valuation formula:

             Under the existing law as we understand it,
             the deferred distribution valuation formula
             utilizes the value of the pension as of the
             date   of    retirement.    That     value   will
             necessarily reflect, to some degree, post-
             divorce work efforts. Thus far, we have
             considered    the   "coverture     fraction"   as
             sufficient to carve out the marital value of
             the asset and have not required that the
             value of the benefits as of the date of
             retirement be analyzed to determine, and
             subtract out, any enhancement due to post-
             divorce work effort. We do not foreclose
             that possibility in the event, on remand,
             the parties choose to pursue this issue and
             establish an appropriate record. Can, for
             instance, such enhancement be mathematically
             determined and factored out? Perhaps more
             importantly, can it be shown that the post-
             divorce enhancing factors, i.e., here, the
             alleged extraordinary overtime, are entirely
             unrelated to plaintiff's prior years of
             service? If, for instance, seniority were a
             dispositive    factor    in   his    ability   to
             obtain the overtime, it would seem that
             would be future enhancement of the marital
             efforts for which it could be said both
             spouses   looked    forward    to.       If  only
             partially a factor, can the post-divorce
             service efforts be mathematically extracted?
             Additionally, did plaintiff work overtime
             during    the    marital    years     such   that
             enhancement of his pension benefits by post-
             divorce overtime efforts could have been
             anticipated and, therefore, would become
             part of the expected "future enjoyment" of

                                     16                          A-2300-12T2
            the marital asset? We leave it to the
            parties, should they chose to, to flesh
            these issues out upon remand and to develop
            the factual record needed for a cogent
            resolution.

            [Id. at 454. (Emphasis added).]

     Using these principles as a guide, the trial court here is

required to determine what Judge Conley in Menake called the

"post-divorce   enhancing    factors."      Defendant    alleges   he    can

establish    that,   but   for   his    educational     and   professional

training that led to his promotion to an administrative position

and other "post-divorce enhancing factors," plaintiff's share of

his retirement benefit would be $665 as opposed to $1,871, a

difference of $1,206.       As the party seeking the elimination of

alimony, defendant has the burden of proof.

     Stated differently, in order for defendant to prevail in

his motion to terminate his permanent alimony obligation, he

must prove that: (1) $1,2063 of the $1,871 plaintiff is receiving

as her equitable distribution share of his pension is the result

of defendant's post-divorce efforts that enhanced the value of

3
   We use $1,206 without prejudice to plaintiff's right to
challenge the validity of this figure before the trial court.
We also emphasize that, as the party seeking to eliminate his
alimony obligation, defendant has the burden of proving that
this or any other figure qualifies as "income" to plaintiff and
thus falls outside of the bar in N.J.S.A. 2A:34-23(b), as it
quantifies the enhanced value of the pension resulting from his
post-divorce efforts.

                                   17                              A-2300-12T2
his overall pension benefits; (2) this $1,206 is "income" to

plaintiff and outside the scope of N.J.S.A. 2A:34-23(b); and (3)

as a result of this additional "income," plaintiff will be able

to live and enjoy a lifestyle equal to, or better than, the

marital     lifestyle    she   enjoyed        while   married    to   defendant,

without the $100 per week permanent alimony defendant has paid

to her for the past twenty-two years.

                                        III

       In conclusion, we reverse the order of the Family Part

denying defendant's motion seeking to terminate his permanent

alimony obligation to plaintiff and remand for the court to

enter a case management order establishing a discovery schedule.

At the conclusion of discovery, the court shall confer with

counsel and determine whether there are material issues of fact

in dispute warranting an evidentiary hearing.                 The order of the

court awarding plaintiff an increase in alimony based on the

rise   of   the   cost   of    living    since    1990   is     vacated    without

prejudice pending the outcome of defendant's motion to terminate

alimony.     The order of the court denying plaintiff's motion for

an award of counsel fees is likewise affirmed without prejudice

pending the outcome of defendant's motion to terminate alimony.

       Reversed   and    remanded   on    defendant's     appeal.         Affirmed

without prejudice on plaintiff's cross-appeal.

                                        18                                A-2300-12T2