The Ten Most Important Family Law Cases Reported in 2011
By John P. Paone, Jr.
2011 was a banner year for reported family law decisions. The New Jersey Supreme Court alone decided fivecases that made the top ten. With Justice Long’s retirement scheduled for March 2012, be on the lookout for Supreme Court cases with family law implications to be decided soon, including Segal v. Lynch, 207 N.J. 190 (2011) and Gere v. Louis, 205 N.J. 271 (2011).
The following are my selections for the tenmost important reported cases decided in 2011. These cases addressed significant issues relevant to the practice of divorce and family law. This presentation will review each opinion and the impact that it will have upon our practice and future Family Court matters. Practice tips will also be discussed as to how matrimonial attorneys can best utilize these decisions.
Tannen v. Tannen, 208 N.J. 409 (2011)
Issue: When a divorcing party is the beneficiary of a discretionary trust, may a Family Part judge impute income from that trust for the purposes of determining alimony and child support?
Holding: No. Where the party’s beneficial interest in the trust cannot be considered an asset held or controlled by that party, it is improper to impute income from the trust in determining an alimony obligation.
Discussion: During the course of the parties’ eighteen-year marriage, the wife’s parents established an irrevocable trust (“the Trust”) with the wife as the sole beneficiary and the wife and her parents as co-trustees. The Trust corpus included the home wherein the parties resided mortgage free, commercial property and over $1 million in stocks and mutual funds. The Trust paid the annual real estate taxes on the parties’ home (where they lived rent-free), half the annual cost of a housekeeper, as well as capital improvements on the home. The Trust also paid for the parties’ children’s private school tuition for two years. The trust generated $124,000.00 per year in income.
Prior to the commencement of trial, the Family Part judge ordered the husband, as the plaintiff, to file a third-party Complaint against the Trusts. The trial judge then determined that “[d]ivorcing spouses have a fiduciary duty toward each other[,]” and that the wife had a fiduciary duty to her husband to seek income under the terms of the Trust. Her failure to do so, the trial judge reasoned, constituted a breach of her fiduciary duty. Accordingly, the trial judge held that income from the Trust was treatable as income to the wife for the purpose of determining alimony to be paid by the husband. The trial judge relied mostly on the Restatement (Third) of Trusts in reaching his determination, which states that benefits from a trust must first be considered before an alimony obligation is determined.
The Appellate Division disagreed with the trial court’s assessment of the issue. The Panel held that while public policy requires divorcing spouses to deal fairly with each other and not dissipate assets, that obligation is not the equivalent of a fiduciary duty. The Appellate Division held that “no reported decision in this State has ever characterized each party’s obligation to the other in a divorce proceeding as a ‘fiduciary duty,’ the essence of which is to ‘act primarily for another’s benefit’” (citing Black’s Law Dictionary, 563 (5th ed. 1979)).
The Appellate Division then examined the issue of whether the income available to the wife from the Trust could be considered for alimony purposes. Citing Aronson v. Aronson, 245 N.J. Super. 354, 364-65 (App. Div. 1991), in which the Appellate Division held that “[s]o long as the spouse has the ability to tap the income source . . . whether he or she actually obtains the cash in hand is inconsequential,” the court noted that the answer is not dependent on actual receipt of the funds, but rather access to them. The Appellate Division reviewed the specific language of the Trust, as well as the testimony of the wife’s father, who indicated that his intention in settling the Trust was that the wife would not be able to compel distributions nor that the husband would be relieved of his obligations to support the wife or the children. The Appellate Division also acknowledged that the Family Part relied extensively on the Restatement (Third) of Trusts, but declined to do the same. The Appellate Division indicated that no court in the State of New Jersey (other than the Tax Court) acknowledged any provision of the third edition of the Restatement and “[a]s a court of intermediate appellate jurisdiction, we do not presume to adopt the Restatement (Third) of Trusts as the law of this state and apply its provisions to the facts of this case.” Instead, the Appellate Division deferred such a determination to the New Jersey Supreme Court. Accordingly, the Appellate Divison concluded that the wife’s “beneficial interest in [the Trust] was not an ‘asset[] held by’ her” and that the trial court improperly imputed income from the Trust for the purpose of determining the husband’s alimony obligation.
In accordance with this determination, the Appellate Division also concluded that the trial judge erred in compelling the husband to name the Trusts as third-party defendants. The Appellate Division, therefore, remanded the matter for purposes of fixing an appropriate alimony and child support award. In its decision, however, the court directed that the trial judge should take note of the “historical record of payments made by [the Trust]” on the wife’s behalf in determining the wife’s actual needs. The court indicated that failing to take these payments into consideration “would clearly result in a windfall to [the wife] and be entirely inequitable to [the husband].” The issue of child support was also remanded due to the trial judge’s incorrect deviation from the Child Support Guidelines. The trial judge deviated from the Guidelines to reflect that the wife did not pay any mortgage or real estate taxes because the Trust paid these costs. The trial judge, however, overlooked a provision of the Guidelines, which indicates that the “fact that a family does not incur a specific expense in a consumption category is not a basis for a deviation from the Child Support Guidelines.” Furthermore, the trial judge refused to supplement the Guidelines, as required if the combined family income exceeds $187,200.00, and failed to assess the reasonable needs of the children.
The Supreme Court granted a petition for certification and affirmed the decision of the Appellate Division “substantially for the reasons expressed in Judge Messano’s opinion.” SeeTannen v. Tannen, 416 N.J. Super. 248 (App. Div. 2010). The Court did not issue a full opinion in this matter.
Observation: The question before the Superior Court was whether in a conflict between trust law or family law, which would prevail regarding the irrevocable trust. The NJSBA itself was split on the issue doing a brief from both perspectives. By merely affirming the decision of the Appellate Division without a separate opinion, the Supreme Court makes clear that trust law will prevail. In doing so, people will be encouraged to create trusts which pour out funds to the parties during marital bliss – and then hide under the umbrella of a trust device when the marriage turns sour. Have trusts now become the new bulletproof device to shield income in matrimonial matters? Especially in second marriages, is a trust a more effective tool to shield a pre-marital estate and its income than a Pre-Nuptial Agreement?
Although Tannen turns a blind eye to the income generated by the trust and makes clear you can’t get at it – it does make clear that courts must consider the historical payments made by the trust in determining the wife’s needs. Translation: Although you can’t invade the trust or drag them in as parties, there is a backdoor available to considering the trust income to the extent you can remove expenses traditionally paid by the trust from the wife’s budget. So for example in this case, there were effectively no shelter costs as a result of the parties living rent free in a home owned by the trust – this would effectively reduce the wife’s budget and thereby reduce any potential alimony award.
In examining the marital lifestyle, the question is often raised how far back do we need to go to evaluate lifestyle. There is no hard and fast rule. Weishaus v. Weishaus, 360 N.J. Super. 281 (App. Div. 2003), aff’d in part, 180 N.J. 131 (2004) suggested that at least three years of financial data must be considered. In Tannen, only two years of data was evaluated, but the Court held that because there was no claim that the lifestyle had significantly changed over the last few years of the marriage, a two-year review was not improper.
The trial court refused to consider a savings component for the wife in view of the assets and income of the trust. The Appellate Division disapproved this decision (with no further comment on the savings issue). The Supreme Court now passes up the opportunity to weigh in on the controversial subject of the role of savings in determining an alimony award.
J.D. v. M.D.F., 207 N.J. 458 (2011)
Issue: Does the taking of flash photography outside the plaintiff’s home at two o’clock in the morning constitute harassment pursuant to the Prevention of Domestic Violence Act?
Holding: No. The record contained insufficient evidence to show that the defendant acted with the requisite intent to harass the plaintiff to support the entry of a Final Restraining Order (FRO).
Discussion: The plaintiff and the defendant were engaged in a long-term relationship from 1993 until 2006. They resided together and two children were born to them. Following their separation, the plaintiff remained in the home that the parties shared and the children resided with her. The parties’ relationship worsened and they were on the brink of a custody dispute when the events giving rise to this decision occurred.
According to the plaintiff, the incident in question occurred in September 2008, when the plaintiff and her new boyfriend observed the defendant outside of the plaintiff’s home at almost two o’clock in the morning taking flash photographs. The plaintiff alleged that her boyfriend noticed the defendant after he had randomly walked over to the window and pulled the curtain back. According to the plaintiff, as soon as her boyfriend pulled aside the curtain, the defendant realized he had been noticed and drove away. The plaintiff alleged that the defendant did this for the sole purpose of harassing her.
At the FRO hearing, the trial court repeatedly inquired of the plaintiff if there was “anything else” she thought the trial court should know. The plaintiff went on to describe multiple incidents of past history of domestic violence that were not identified in the Complaint. In response, the defendant indicated that he did not know that the plaintiff would be testifying to those previous events and that he was not prepared. He nevertheless proceeded.
With regard to the incident of the flash photography, the defendant testified that he had in fact taken pictures outside the plaintiff’s home at a quarter to two in the morning, but not with an intent to harass the plaintiff. Rather, defendant explained that he was compiling evidence that the plaintiff’s new boyfriend was staying at the residence in order to support a motion to transfer custody that he was in the process of filing. After admitting to this conduct, the trial court declined to hear further testimony from the defendant and did not allow him to question the new boyfriend. The trial court granted a FRO, holding that taking photographs in the middle of the night could not have any other effect but to annoy or alarm the plaintiff and therefore his behavior constituted harassment.
The Appellate Division affirmed the trial court, holding that the trial court properly found that the defendant had harassed the plaintiff within the meaning of the applicable statute, N.J.S.A. 2C:33-4c, and that the testimony about prior incidents that were not contained in the Complaint was properly admitted. The Appellate Division also rejected the defendant’s argument that he had been deprived of a full opportunity to present his case and question the boyfriend as a witness.
The Supreme Court reversed and remanded the matter for a rehearing. In so doing, the Court, citing to N.J.S.A. 2C:25-29b, held that “[a]lthough evidence offered by a putative victim may . . . suffice to meet the definition of harassment, courts must be careful not to overlook the statutory requirement that there be a finding that ‘relief is necessary to prevent further abuse.’ Merely concluding that plaintiff has described acts that qualify as harassment and omitting this added inquiry opens the door to potential abuse of the important purposes that the Act is designed to serve and threatens to ‘trivialize the plight of true victims’ in the process.”
The Court warned that not all offensive or bothersome behavior constitutes harassment. Nor are a plaintiff’s mere assertions that the conduct is harassing sufficient. Rather, the Court instructed that when addressing claims of harassment, it is the obligation of the trial courts to consider the testimony and weigh the allegations as against the statutory standards and the case law. The victim’s subjective reaction alone will not suffice.
The Court also concluded that the defendant had been deprived of his due process when the trial court did not permit him additional time to prepare as a result of the plaintiff’s new allegations and when it did not permit him to cross-examine the plaintiff’s boyfriend. The trial court should have ensured that the defendant was afforded an appropriate opportunity to be apprised of all the allegations against him and to prepare. The defendant’s assertion that he needed time to prepare to respond to the plaintiff’s allegations that were not originally listed in her Complaint was sufficient to raise the due process question for the trial court and it should have been granted.
Observation: The proverbial $64,000.00 question is: Why was the defendant taking pictures of plaintiff’s home at two o’clock in the morning? Was it to harass the plaintiff (the mother of his children) who was in the home with her boyfriend? Or was it to compile evidence that the defendant intended to use in furtherance of his impending custody case? Clearly, if you accept the latter explanation, there can be no intent to harass and – without intent, there can be no predicate act of harassment to support entry of a FRO under the Prevention of Domestic Violence Act.
Justice Hoens, in writing this decision for the Supreme Court, made very clear that a finding of harassment could not be sustained on the basis of plaintiff’s subjective views alone. It is often a fine line between the type of behavior that constitutes harassment and that which is only perceived as such by the plaintiff. Practitioners will recognize as all too common the fact pattern where a plaintiff testifying at a domestic violence hearing strays from the four corners of the Complaint and testifies to undisclosed past acts of abuse. This case makes clear that if a court intends to allow such testimony, it is effectively amending the Complaint which thereby entitles the defendant the opportunity to prepare and respond to the allegations. Failure to grant an adjournment in such matters is a denial of due process.
Practitioners must also be mindful of the two-prong test before entering a FRO. The first, was a predicate act of domestic violence established by a preponderance of the evidence. If satisfied, the second prong requires an inquiry into whether restraints are necessary to protect the plaintiff from harm. Here, the Court was suggesting that the predicate act of harassment was shaky at best. The Court seemed dubious about the need for a FRO even if it was harassment to drive by a home and take pictures at 2:00 a.m.
In this case, the defendant argued that harassment could not be found as he subsequently prevailed in municipal court against the same charge. However, the Court pointed out that due to the heightened burden of proof (beyond a reasonable doubt), the municipal court verdict was of no moment to the consideration of a domestic violence Complaint based on the same facts which is determined by a preponderance of the evidence standard.
Morgan v. Morgan, 205 N.J. 50 (2011)
Issue: In an out-of-state removal case, is the amount of time spent with the children the deciding factor in determining whether a parent has a true shared custody arrangement?
Holding: No. What is critical is each party’s responsibility for custodial functions, responsibilities normally reposed in the primary caretaker.
Discussion: The parties were married in 1992 and divorced in 2005. They had twochildren as a result of the marriage born in 1998 and 2001. As part of the Property Settlement Agreement (PSA), the parties shared legal custody of the minor children and the wife was designated as the parent of primary residence. The parenting time schedule provided that the husband would have the children on alternate weekends, with a mid-week overnight every week and a mid-week visit for dinner every week. Holidays would be alternated and each parent would have the children for one week of vacation during the school year and during the summer.