Modifying Child Support and Alimony on Changed Circumstances After Plaintiff’s Business Was Investigated for Fraud
Docket No. A-0679-18T2
Decided December 22, 2020
Submitted by New Jersey Family Lawyer, Jeffrey Hark.
In a recent unpublished decision the Appellate Division reviewed a trial court’s order modifying child support and alimony on changed circumstances after plaintiff’s business was investigated for fraud and lost a contract.
In T.S., after 14 years of marriage, plaintiff filed divorce. After three years of litigation, the parties entered into a Matrimonial Settlement Agreement (MSA), which was incorporated into the final judgment of divorce. Under the MSA, plaintiff agreed to pay defendant alimony of $120,000 per year for 10 years. In addition, plaintiff agreed to pay defendant child support of $144,000 per year for the parties’ three special needs children.
Plaintiff had an ownership interest in a computer software company, Future Technology Associates, LLC (FTA). FTA signed a contract with New York City Department of Education to provide technology services. FTA was brought under investigation for overinflating costs and misrepresenting services and salaries. It was during this investigation that the parties entered into the MSA. The MSA included language that if FTA lost the contract, it “may” be grounds for a change in circumstances warranting a modification.
FTA did end up losing the contract as a result of the investigation. Plaintiff moved to modify his financial obligations as a result of a change in circumstances. Defendant sought to reopen discovery of plaintiff’s assets after the investigation. The trial court, in a forty page opinion, reduced plaintiff’s alimony and child support in proportion to the loss of income. The trial court also denied defendant’s request to reopen discovery.
Defendant appealed, arguing against the reduction of plaintiff’s financial obligations and denial of the motion to reopen discovery. Plaintiff cross appealed arguing the judge’s imputation of income against him was inappropriate.
The Appellate Division found that the trial judge did not abuse his discretion in modifying plaintiff’s financial obligations as a result of the loss of FTA’s contract and resulting loss of income. The Appellate Division had to remand the issue of child support, only because the judge did not explain the reasoning for not applying the child support guidelines and rationale in computation of the amount. The Appellate Division found no abuse of discretion in imputing plaintiff’s income because plaintiff failed to disclose certain incomes he received from another company he owned. Finally there was no abuse of discretion for denying to reopen discovery.
Making an application for a modification of alimony and/or child support is not an easy task. Under the law, the movant needs to demonstrate a significant non-temporary change in circumstance.
This case is also important to analyze a family judge’s power to decide cases. When it comes to most issues a family judge decides, the Appellate Division’s standard of review is an abuse of discretion. It is a very high standard to overcome, and as long as the judge ties the facts of the case to the law, the Appellate Division will likely affirm the judgment. This solidifies the fact that it is vital to be successful at the trial court level, in front of the family judge the very first time, so an appeal is not even an issue.
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