Over the years, I have had countless folks come to visit me regarding modifying their New Jersey child support obligation. As a family law attorney, I understand that I must ask many questions not only about my client’s income but that of the other parent as well. Furthermore, my associate lawyers and I always direct our clients to the landmark decision of Lepis v. Lepis, where the court held that “a supporting spouse is as much entitled to a reconsideration of child support where there has been a significant change for the better in the circumstances of the dependent spouse, as where there has been a significant change for the worse in the supporting spouse’s own circumstances.” The new case of Heard v. Dunbar illustrates this point perfectly.
In the case the parties were married in July 1992. They separated in August 2000 and divorced in March 2004. One child was born of the marriage. From 1988 to October 1997, the husband worked for Goldman Sachs. He earned as much as $800,000 per year throughout the nine-year period. In 1997, the husband left Goldman after he was accused of unauthorized discretionary trading. Even though no disciplinary action was taken against him, the husband stated that the allegation barred him from finding comparable employment in the financial management field.
After resigning from Goldman, the husband started to manage the funds in the parties’ investment account on a full-time basis. By the time the parties separated in August 2000, their portfolio had increased from $800,000 to over $8 million. Yet, soon after the parties separated, the husband’s investments weakened and by 2002, the account balance had decreased to a mere $304.
In August 2003, the parties entered into a property settlement agreement. At that time, the husband was working as the managing director of a start-up hedge fund. He earned $15,011 in 2003. On the other hand, throughout the marriage the wife was employed as a psychologist at a university. In 2003 she earned $52,000. Pursuant to the settlement agreement, the husband agreed to pay his ex-wife $1885 per month in child support; however, the method of calculating that figure was not explained in the agreement. Furthermore, the husband agreed to pay for the child’s college expenses up to $250,000 by regularly contributing to a college fund. Moreover, he agreed to maintain a $2 million life insurance policy to secure his support and equitable distribution obligations.
Years later in October 2011, the wife filed a motion to enforce the support and equitable distribution requirements of the property settlement agreement. In particular, she stated that her ex-husband was $57,660 in arrears on child support. Additionally, the wife alleged that her ex failed to start and contribute to a college fund for the parties’ child and that he failed to maintain a $2 million life insurance policy. As a response, the husband argued that the settlement agreement should be set aside because he did not voluntarily enter into it.
If the court chose not to set it aside though, the husband argued that, at the very least, his child support obligations should be reduced because his income had drastically changed. He certified that his child support obligation was calculated based upon the assumption that he would be able to earn a high salary like he had earned prior to his resignation from Goldman. However, he argued that this was improper because he never returned to that income range. Instead, after the divorce the husband began working in real estate and expected to earn only $119,000 in 2011. Additionally, the husband argued that his ex-wife’s income had significantly increased throughout the years. She was now the Director of Counseling at the university she worked for and earned $101,900 per year. She also earned $3000 annually from her private counseling practice.
Yet, the trial judge granted the wife’s motion and denied the husband’s motion in its entirety. The court found that the husband failed to meet his support obligations and granted the wife a money judgment against her ex for $81,957.40. Furthermore, the trial court held that the husband failed to establish that he entered into the settlement agreement unwillingly. Moreover, the trial court held that the husband failed to prove that there was a permanent change in his income. As a result, the husband appealed.
On appeal, the husband argued that the trial court erred in denying his motion in its entirety and the Appellate Division agreed. The Appellate Division quoted the infamous case of Lepis v. Lepis, stating “despite the presence of a property settlement agreement, a court should reexamine existing support orders if the movant can establish that there has been a substantial change of circumstances.” Additionally, the Appellate Division noted that the failure to address “a supporting spouse’s claims of changed circumstances based on an enhancement in his former spouse’s income is error warranting reversal of the denial of relief and a remand for further proceedings.”
In the case at hand, the trial court erred because it only looked to the husband’s income. The court found that because the husband was earning more than he had in 2003, his financial situation had improved and therefore a reduction in his child support obligation was unnecessary. Yet, the trial court failed to consider that the wife’s income significantly increased by 2011. Looking to Lepis for guidance, the Appellate Division stated that “a supporting spouse is as much entitled to a reconsideration of child support where there has been a significant change for the better in the circumstances of the dependent spouse, as where there has been a significant change for the worse in the supporting spouse’s own circumstances.”
As a result, the Appellate Division reversed the decision of the lower court and remanded the case for further proceedings. The court held that both of the parties’ changes in income should have been considered in order to determine whether a support modification was warranted due to a change of circumstances.
If you or a loved one has a question about their child support, please contact my office.