New Jersey Appellate Division Considers Application of Amended Alimony Statute in Retirement Case Involving Pre-Amendment Marital Settlement Agreement

In Amzler v. Amzler, (Docket No. A-3384-18), 2020 N.J. Super. LEXIS 38 (App. Div. 2020), the  retirement-300x200Appellate Division provided direction on the effect of the September 2014 amendments to New Jersey’s alimony statute, N.J.S.A. 2A:34-23 as it relates to a litigant’s desire to retire before his full retirement age and stop paying alimony.   Before the 2014 amendments, a party seeking to modify an alimony obligation was required to “demonstrate that changed circumstances have substantially impaired the ability to support himself or herself.” Landers v. Landers, 444 N.J. Super. 315, 320 (App. Div. 2016) (quoting Lepis v. Lepis, 83 N.J. 139, 157(1980)).  The Legislature amended the alimony statute to add subsection (j), which applies in situation applies in situations involving “the prospective or actual retirement of the obligor.”

In  the Amzler case, the parties in 2009 signed a matrimonial settlement agreement (MSA) that required the plaintiff to pay alimony.  The MSA contained an “anti-Lepis” provision, meaning that a “voluntary reduction in income of either party” would not constitute a substantial change in circumstance for the purpose of reviewing alimony.  After the parties’ divorce, the plaintiff continued to work, but due to medical reasons, retired before reaching full retirement age. The defendant filed a motion seeking to enforce the MSA and the plaintiff’s alimony obligation; the plaintiff filed a cross motion seeking to terminate or reduce his alimony obligation due to his retirement.

The trial court granted the plaintiff’s motion to terminate alimony, relying on section N.J.S.A. 2A:34-23(j)(2) of the alimony statute, which applies when a payor spouse retires before reaching full-retirement age. The defendant argued that the judge incorrectly applied subjection (j)(2) of the statute rather than subsection (j)(3), which governs the review of final alimony orders or agreements that were established before the effective date of the 2014 statutory amendments.

Before the decision in Amzler, it was unclear whether subjection (j)(2) of the statute applied to orders or agreements for support that were established before the 2014 statutory amendments, and how subsection (j)(3) would apply.  Subsection (j)(2) says that when an alimony obligor is contemplating retirement or retires before reaching full retirement age, he or she must demonstrate that retirement is reasonable and in good faith.  Subsection (j)(3) provides: “When a retirement application is filed in cases in which there is an existing final alimony order or enforceable written agreement established prior to the effective date of this act, the obligor’s reaching full retirement age as defined in this section shall be deemed a good faith retirement age.” The Appellate Division concluded that “[s]ubsection (j)(3) plainly states that it applies to matters ‘in which there is an existing final alimony order or enforceable written agreement established prior to the effective date of this act.’”

The Appellate Division discussed its decision in Landers v. Landers, 444 N.J. Super. at 323, in which it  determined that the statutory amendent was designed to address orders entered after the statutory amendments differently. In Landers, the Appellate Division considered the circumstances under which subsection (j)(1) of the statute should be applied.  In construing subsection (j), the Appellate Division held that although subsection (j)(1) does not explicitly state that it refers to orders or agreements entered after the 2014 amendments, “the particular language used in subsection (j)(3) clarifies the Legislature’s intent to apply (j)(1) only to orders entered after the amendments’ effective date.” In reaching that conclusion, the Appellate Division considered a provision included in the legislation:

“This act shall take effect immediately and shall not be construed either to modify the duration of alimony ordered or agreed upon or other specifically bargained for contractual provisions that have been incorporated into:

a. a final judgment of divorce or dissolution;
b. a final order that has concluded post-judgment litigation; or
c. any enforceable written agreement between the parties.”

The Appellate Division in Landers, 444 N.J. Super. at 323,  stated that “this additional statement signaled the legislative recognition of the need to uphold prior agreements executed or final orders filed before adoption of the statutory amendments.” However, the Appellate Division at that time declined to address the applicability of subsection (j)(2) because the payor spouse in Landers had reached full-retirement age.

In Amzler, the Appellate Division reasoned that subsection (j)(2), when construed with the entirety of subsection (j), applies only to orders or agreements established after the 2014 amendments. The Appellate Division found that there was no reason to depart from their reasoning in Landers, because to “hold otherwise would seriously undermine the ability of parties to rely on the otherwise binding agreements entered into under their MSAs based on the law in effect at the time of their entry.”

Additionally, the Appellate Division stated that applying subsection (j)(3) rather than subsection (j)(2) requires the court to consider an additional factor not present in subsection (j)(2). Specifically, subsection (j)(3) requires the court to “consider the ability of the obligee to have saved adequately for retirement.” In Landers, 444 N.J. Super. at 324, the Appellate Division found that the elevation of this factor was one of the notable distinctions between subsections (j)(1) and (j)(3), revealing the Legislature’s intent to treat pre-amendment orders and agreements differently which the trial judge did not consider. As a result, the Appellate Division concluded that subsection (j)(3), rather than subsection (j)(2), governs the issue of whether plaintiff is entitled to a modification or termination of his alimony obligation.

The Appellate Division also took issue with the trial judge not having considered  the anti-Lepis provision in the MSA. Noting that Plaintiff’s own vocational expert conceded that Plaintiff could continue working in a different capacity, the Appellate Division emphasized his ability to supplement his pension in order to be able to continue to meet his alimony obligation,  but left it to the trial judge on remand to consider whether the anti-Lepis provision bars any reduction of alimony.

The relationship between retirement and alimony can be complex.  The attorneys at the office of James P. Yudes, A Professional Corporation are here to advise and to help.