It has long been held in New Jersey that orders for alimony and child support can be modified at any time based on a showing of changed circumstances. If a parent is experiencing “changed circumstances,” that parent can file a motion with the court to either increase or decrease the award. A court will only grant such a modification, however, where the alleged change in circumstances is substantial, on a permanent basis, and unanticipated. Thus, if your circumstances are temporary or are expected but have not occurred yet, the court will not grant your request for modification. The Appellate Division recently decided the case of Keller v. Keller addressing the issue of modifications to support orders on a motion for reconsideration.
In Keller, the ex-husband (defendant) appealed from an order denying reconsideration of his motion to terminate or reduce his permanent alimony obligation to his ex-wife (plaintiff), and to modify his child support obligation, including college expenses, on the basis of changed circumstances of a reduced income.
The parties in this case were married for 17 years and had two children before divorcing in 2006. One child is now emancipated, and the other is a full-time college student. At the time of the parties’ divorce, they were still living in Hong Kong where defendant was general counsel with Lucent Technologies earning an average salary of $582,000 in the years leading up to the divorce.
It appeared to the trial judge that the parties entered a “Consent Summons” (Agreement) in Hong Kong to settle their divorce. The Agreement granted plaintiff sole custody of the children and required defendant to pay maintenance of $2,887 per month per child until the latter of the children turning eighteen or finishing their education. It also provided that defendant was to pay for the children’s college education and related expenses. He paid all college tuition and expenses for the older daughter, but he only paid for the younger daughter until the end of 2014.
With respect to alimony, the Agreement required defendant to pay plaintiff $10,756 per month (including taxes on this income) unless she remarried. Defendant was fired from his job in November 2014 and received a severance deal valued at one year’s salary of $472,000, or a net income of approximately $300,000. His unemployment benefits terminated in March 2015 and he received nearly $800 per month from a supplemental pension.
Plaintiff filed a motion to transfer venue and to enforce the Agreement’s terms in New Jersey. Defendant responded by filing a cross-motion to reduce or terminate his alimony obligation and reduce child support. He also requested plaintiff’s financial information.
The New Jersey judge enforced the terms of the Agreement and denied defendant’s request to reduce his child support obligation on the grounds that he failed to show a permanent change in circumstances. The judge was unconvinced that defendant could not find alternate employment with a “somewhat comparable” income despite his submission of evidence supporting his due diligence in searching for new employment.
On defendant’s request to modify alimony, the judge pointed to a provision in the parties’ Agreement in which plaintiff waived an interest in a portion of their joint assets in exchange for permanent alimony. The judge found that reducing defendant’s alimony obligation would “deprive [plaintiff] of the benefit of her bargain without just cause.” The judge also emphasized that defendant and his current wife have over $2 million in assets and substantial savings and retirement accounts. Thus, the judge denied his request with respect to modifying alimony because he failed to show that his financial circumstances had changed. Finally, the judge ordered that he continue paying tuition and related college expenses for the youngest daughter in accordance with the Agreement.
Defendant later filed a motion for reconsideration and disclosed that he obtained employment with Pfizer earning a base salary of $250,000 annually with a target bonus of 25%. He contended that this new income was insufficient to satisfy his support obligations. In denying his motion for reconsideration, the judge stated that his bonus could fluctuate as high as $300,000 to $400,000 and noted that he failed to include any information regarding the supplemental pension or restricted stock options he was selling off as additional income.
Defendant appealed the denial of his motion for reconsideration, arguing that there was a considerable decrease in his income on a permanent basis that constituted an involuntary change in circumstances. The Appellate Division reversed and remanded. First, the Appellate Division found that a plenary hearing should have been held in that there was a genuine issue of material fact. Specifically, the Appellate Division stated that the court failed to weigh the factors in N.J.S.A. 2A:34-23(k), which involved examining plaintiff’s finances.
The Appellate Division stated that reconsideration is appropriate where (1) the court made its decision based on a profoundly incorrect or irrational basis, or (2) the court failed to adequately weigh the significance of probative, competent evidence. Reconsideration is also proper when the movant brings new information to the court’s attention that was not initially provided in the original motion.
Here, the Appellate Division agreed with defendant that the judge should have granted his motion for reconsideration with respect to modification of his alimony obligation. The Appellate Division recited the law from the seminal case of Lepis v. Lepis establishing that alimony is always subject to modification upon a showing of changed circumstances. An increase or decrease in income is an example of changed circumstances that might justify a modification of the support obligation. The Appellate Division stressed, however, that a change in income cannot be temporary in order to constitute changed circumstances. Further, under the Lepis analysis, a court should account for the parties’ financial position both currently and at the time the order was entered.
Where the supporting spouse is not self-employed and loses his or her job, a court must look to the 2014 Alimony Reform Act’s amendments set forth in N.J.S.A. 2A:34-23 and consider the following factors: (1) the reason for any loss of income; (2) any “documented efforts” to look for new employment; (3) the income of the dependent spouse; (4) severance compensation; and (5) changes in the respective financial positions of the parties and the reason for any changes. As to the last factor, the consideration must account for increased earnings or financial benefits from any source of income. The Appellate Division found that the judge did not consider these factors and stated that doing so was not inconsistent with the parties’ Agreement.
The Appellate Division agreed that when defendant first applied to modify alimony his income did not diminish substantially because, despite losing his job, his severance package still allowed him to pay support. On his motion for reconsideration, however, the Appellate Division stated that the judge failed to realize that defendant was earning $12,227 per month and a supplemental pension of $700 per month, which was clearly not enough to meet his $20,840 per month support obligations. Notably, defendant was able to prove that his termination was involuntary, which represented new information to the court showing a significant reduction of his income and therefore justified reconsideration.
With respect to the child support and college expenses, the Appellate Division also found that reconsideration should be granted on this issue and asserted that its jurisprudence has consistently recognized a child’s attendance at college as representing a changed circumstance entitling the supporting spouse to a review of the child support amount. However, there is no presumption of an automatic change in child support amount upon the child’s admission to college. The parties’ Agreement also did not prohibit modification of child support based on changed circumstances.
If you have any questions regarding requests for modification of support orders or motions for reconsideration generally, please contact the skilled matrimonial attorneys at Sarno da Costa D’Aniello Maceri LLC. Call us today at (973) 274-5200.
