The Appellate Division in the recently published case of Bermeo v. Bermeo, A-1312-17, addressed a post-judgment application by a supported spouse seeking to modify alimony based on her inability to maintain the marital lifestyle after entering into a marital Property Settlement Agreement and the lack of findings by the court of what the marital lifestyle was pursuant to Crews v. Crews, 164 N.J. 11 (2000).
In this matter, the parties divorced in 2015 after entering into a Property Settlement Agreement that was incorporated into their Final Judgment of Divorce. The issue raised post-judgment by the Plaintiff, the supported spouse, was the extent of alimony that she was receiving and her inability to maintain a lifestyle comparable to the marital lifestyle. During the marriage, the parties had a middle class lifestyle. The Plaintiff was a homemaker while the Defendant earned an average income of $471,000 in the last several years of the marriage. By the time of the divorce, however, the Defendant had changed jobs. The parties negotiated a property settlement agreement through counsel that provided that the Husband would pay $4,000 per month in alimony. The Plaintiff was earning $6,000 at the time of the divorce but the Agreement was based on an imputed income to her of $25,000 per year. The Agreement also was based on an imputed income of $160,000 to the Defendant. In addition, the Agreement required the Defendant to pay a percentage of supplemental income earned by the Defendant in the form of commissions, deferred compensation, stock options and bonuses. The Agreement expressly stated that neither party would be able to maintain a lifestyle that was reasonable comparable to their marital lifestyle and that the parties “freely and voluntarily waive determination of the joint marital lifestyle at this time.”
Plaintiff in 2017 filed a post-judgment application seeking an increase in alimony to $6,000 per month, arguing that the Defendant was voluntarily underemployed and that alimony should be based on imputed annual income of $220,000 to Defendant. After the divorce, Plaintiff had not received supplemental alimony because the Defendant earned $120,000 which was less than the $160,000 of imputed income upon which alimony was based. The family court judge denied the Plaintiff’s application without ordering a plenary hearing or additional discovery and without making a finding as to marital lifestyle pursuant to Crews v. Crews. The Plaintiff appealed.
The Appellate Division agreed with the trial court’s decision and affirmed. The Appellate Division pointed out the policy in New Jersey of encouraging settlements by not disturbing fair settlement agreements. The Appellate Division found that the trial court had not abused its discretion in denying the Plaintiff’s application without ordering additional discovery or a hearing because she did not establish a change in circumstance warranting a review of alimony. The Appellate Division noted that Plaintiff had not proffered any evidence to show that the Defendant was voluntarily underemployed or that his income was concealed and hidden. The Court noted that the Plaintiff had the opportunity in the divorce case to assert that the Defendant was under employed through having a trial, but that she instead settled the case and entered into the written settlement agreement. Plaintiff was aware at the time of the divorce that Defendant had changed jobs and was earning $120,000 per year, and she chose at that time not to assert that he as voluntarily under employed. The Appellate Division did not find a basis to impute income to the Defendant based on his earnings history when his earnings history was already considered at the time of the divorce during settlement negotiations. There was no indication that the settlement agreement was not well negotiated or that it was not voluntarily entered into.
Additionally, the Appellate Division disagreed that the trial court had erred by not making a determination as to the marital standard of living, noting that the parties in the settlement agreement itself expressly waived the need to make that determination. As such, the Appellate Division saw no obligation to make that determination post-judgment, especially when Plaintiff had not established or alleged any change in circumstance. The Appellate Division held that it would be “improvident” to impute $220,000 of income to the Defendant, noting that the decision to impute income is discretionary and that Defendant had produced documentation to confirm his $120,000 annual income. The court further noted that Defendant had met his alimony obligation which was based on his earnings of $160,000 even though he was earning $120,000.00.
Cases such as this demonstrate the fact sensitive nature of matrimonial settlement agreements and the difficulty in revising agreements once they are entered into. The office of James P. Yudes, A Professional Corporation is available to assist in negotiation fair resolutions of Property Settlement Agreements.