Monday, December 1, 2014

Denial of Alimony Modification in New Jersey

Years ago I had a collateral relationship with a case that has once again been submitted to New Jersey’s Appellate Division. This time, it was for a modification of an alimony award, which the lower court denied to the payor and which the Appellate Division upheld as “based on sufficient, credible evidence in the record and does not amount to an abuse of discretion.”

In the case at hand, the payor spouse returned to the Court on a cross-motion, claiming that she had experienced a significant decrease in income from her only source of revenue. The lower court denied the application on procedural grounds, her failure to provide the court with her prior Case Information Statements, and on substantive grounds, that she “failed to establish a prima facie showing of a permanent change in circumstances.” The payor appealed to the Appellate Division, who reviewed the law regarding modification of alimony awards,
Alimony awards may be modified. N.J.S.A. 2A:34-23. "The party seeking modification has the burden of demonstrating a change in circumstances warranting relief from the support or maintenance obligations." Innes v. Innes, 117 N.J. 496, 504 (1990). The party moving for modification must present a prima facie showing of changed circumstances to justify a plenary hearing on the matter. Miller v. Miller, 160 N.J. 408, 420 (1999). Only after such a showing is made will the court order discovery and conduct a hearing "to determine the supporting spouse's ability to pay." Ibid.
Alimony is generally set based on the marital standard of living. Lepis v. Lepis, 83 N.J. 139, 150 (1980) ("The supporting spouse's obligation is mainly determined by the quality of economic life during the marriage, not bare survival."). Alimony amounts thus "'contemplate [] continued maintenance at the standard of living [the spouse] had become accustomed to prior to the separation.'" Ibid. (quoting Khalaf v. Khalaf, 58 N.J. 63, 69 (1971)). These awards, however, can be modified based on the "changed circumstances" of the parties, which may include
(1) an increase in the cost of living; (2) increase or decrease in the supporting spouse's income; (3) illness, disability or infirmity arising after the original judgment; (4) the dependent spouse's loss of a house or apartment; (5) the dependent spouse's cohabitation with another; (6) subsequent employment by the dependent spouse; and (7) changes in federal income tax law.
[Id. at 151 (internal citations omitted).] Where, as here, the movant is arguing changed circumstances based on a reduction in income (Factor Two) to establish a prima facie case, she must show specifically "'that changed circumstances have substantially impaired the ability to support . . . herself.'" Crews v. Crews, 164 N.J. 11, 28 (2000) (quoting Lepis, supra, 83 N.J. at 157). This "must be understood to mean the ability to maintain a standard of living reasonably comparable to the standard enjoyed during the marriage." Crews, supra, 164 N.J. at 28.
Additionally, "it is not enough that an obligor demonstrate a reduction in income; the obligor must also demonstrate how he or she has attempted to improve the diminishing circumstances." Donnelly v.Donnelly, 405 N.J. Super. 117, 130 n.5 (App. Div. 2009); see also Aronson v.Aronson, 245 N.J. Super. 354, 361 (App. Div. 1991) (finding no prima facie case of changed circumstances when "what [movant] did was to allow his practice to continue to diminish unchecked while bemoaning his fate").
The movant must also show that the reduction in income is not merely temporary. Innes, supra, 117 N.J. at 504. In considering whether the reduction will be long-term, courts have looked at, among other factors, the time between the entry of the JOD and the motion for modification. Larbig, supra, 384 N.J. Super. at 19 (rejecting a motion for modification filed only twenty months after the entry of the JOD). However, there is no brightline rule to measure when a changed circumstance is sufficient to allow relief. Id. at 23. In Donnelly, we affirmed the family court's denial of movant's motion for modification, holding that "the trial judge properly exercised his discretion in concluding that [movant] had returned to court far too soon to obtain relief[,] [c]onsidering that th[e] [] motion [at issue] was filed only nine months after the denial of the first Lepis motion." Donnelly, supra, 405 N.J. Super. at 128. We concluded that the short timeframe meant that the movant "failed to demonstrate that his alleged change in circumstances was anything but temporary." Ibid.
Moreover, courts apply closer scrutiny to "'what constitutes a temporary change in income'" when the movant is self-employed. Ibid. (quoting Larbig, supra, 384 N.J. Super. at 23). In Donnelly, we also noted that a self-employed movant is "'in a better position to present an unrealistic picture of his or her actual income than a W-2 earner[,]'" and thus "'what constitutes a temporary change in income should be viewed more expansively when urged by a self-employed obligor[.]'" Id. at 128-29 (quoting Larbig, supra, 384 N.J. Super. at 23).

In denying the appeal, the Court deferred to the lower court, who “determined that plaintiff mismanaged the business and misused corporate assets during her romantic affairs with clients and [the company’s] business turnaround specialist.

The full text of the opinion can be found here.

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