College Costs After Divorce: Agreement for Child to Take Out Loans Rendered UnenforceableAugust 9, 2018


Once again, New Jersey provides a conflicting remedy for a child of divorce attending college compared to a child in an intact family. In an unpublished (non-precedential) decision, the Appellate Court affirmed a trial court order finding that a child was not bound by a property settlement agreement requiring her to apply for college loans. Carl J. Soranno, Esq. of the Family Law Department previously wrote on this issue for the New Jersey Law Journal in January of 2015. Unfortunately, it appears that the situation for divorced parents has only gotten worse.

The parents in M.F.W. v. G.O. were divorced in 2003. At the time their daughter was five years old. The parties entered into a property settlement agreement which required both parents to contribute toward college expenses. The Agreement also required their daughter to apply for all “loans, grants, aid, and scholarships available to her, the proceeds of which shall be first applied to college costs.” In 2016, the daughter was accepted at Georgetown University – a school with a first semester tuition of over $30,000. The parties then filed motions over the payment of the daughter’s education costs and child support (among other issues not addressed in this post).

On the issue of college costs, the trial court ruled that it was “unfair and unjust” to require the child to apply for and utilize “loans, grants, aid, and scholarships” before the parents would be required to contribute. The court also found a change in circumstances warranting a modification of the Agreement; i.e., both parents’ incomes and assets had increased since the divorce. Consequently, the court determined that the parties could afford to send their daughter to Georgetown University without requiring their daughter to apply for loans first. The Appellate Division affirmed the trial court’s decision, which was reached without a plenary hearing. The Court wrote that “because it was the parents’ obligation to pay for college and they had the ability to do so” it was unfair for the daughter to obtain loans.

The M.F.W. v. G.O. decision is another blow to divorced parents. While intact families can make the decision about whether and how they want to contribute to their child’s college education, divorced parents are forced to abide by a judge’s determination on how to finance college. The parents in M.F.W. v. G.O. tried to make their own decision in their settlement agreement on how to pay for college, only to have the court reject their agreement in favor of the child. The provision included in the parties’ settlement agreement was standard and is included in many settlements. Although the parents’ income had increased (from approximately $130,000 per year combined to $300,000 per year combined), it will still be difficult to pay tuition of over $30,000 per semester with no financial contribution from the daughter. It is discouraging that parties could enter into these terms only to find out years later that they are unenforceable. In sum, divorced parents who litigate over college costs have little to no control over the outcome.

Although the bulk of the M.F.W. v. G.O. decision creates a legal headache for divorced parents and family law practitioners, the opinion did affirm the trial court’s decision not to hold a plenary hearing on the issue of college costs and child support. Most prior decisions on similar issues confirmed the need for a plenary hearing – and thus created a significant cost to any litigant seeking the relief. Nevertheless, the M.F.W. v. G.O. decision confirms the risk for parents litigating college costs. Although avoiding a plenary hearing can save money for a client, the risk over what the judge will order regarding college costs outweighs any benefit.

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Tax Reform Bill Puts Alimony Deductibility on the Chopping BlockNovember 3, 2017

Hidden deep within the proposed Republican tax bill entitled the “Tax Cuts and Jobs Act” (Sec. 1309, Pages 122-126) published yesterday is a scarcely publicized provision that eliminates the long-standing tax deductibility of alimony payments. While this prospective provision will impact agreements/judgments entered after January 1, 2018, the provision, if adopted, amounts to a significant paradigm shift in the way that alimony payments have been treated by both the payor and payee. Those individuals currently in negotiations and practitioners should be aware of this possible legal landscape change.  If adopted, it is unknown how this would impact alimony and child support calculations going forward. To view the entire bill, please click on the attached hyperlink: https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

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Tax Reform Bill Eliminates Tax Benefits Related to Adoption by Taxing Employer Assistance and Eliminating Tax CreditNovember 3, 2017

Under the proposed Republican tax bill entitled the “Tax Cuts and Jobs Act” (Sec. 1406, Page 142) published yesterday, families seeking to adopt a child will suffer two significant cuts. First, the employer assistance credit for adoption will be eliminated.  Currently, if an employer provided assistance to a worker adopting a child up to $13,750, the employee pays no taxes on that assistance.  The proposed bill eliminates that provision and the assistance would be taxed as income.  Second, the adoption credit of up to $13,750 per eligible child will be repealed.  Currently, the credit is applicable for taxpayers with adjusted gross income of between a range of approximately $200,000 to $240,000.  To view the entire bill, please click on the attached hyperlink: https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

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Court Rules that Title 9 (abuse and neglect) hearsay exception does not apply to Title 30 (termination of parental rights).May 22, 2017

In a case of first impression, the Appellate Division has ruled that the Title 9 hearsay exceptions that are authorized for abuse and neglect investigations is not applicable to parental termination cases under Title 30 and that D.C.P.P. may not rely solely upon that uncorroborated hearsay from children to support a termination of parental rights. In the matter entitled Division of Child Protection and Permanency v. T.U.B. and J.E.C. (https://www.judiciary.state.nj.us/attorneys/assets/opinions/appellate/published/a2565-15.pdf), the Court ruled that Title 30 (which outlines process for termination of parental rights) does not allow the Court to rely uncorroborated hearsay statements from children when considering the termination of a parent’s rights.  In the case, a man identified only as J.E.C. was living with his son, identified by the fictitious name of Calvin, with J.E.C.'s girlfriend, T.C., and her two minor female daughters, given the fictitious names of Jenny and Sandy.  At one point, the girls alleged that they were raped by J.E.C., and the DCPP launched an investigation.  Following a hearing, the trial court terminated J.E.C.'s parental rights after relying heavily on the girls' uncorroborated hearsay testimony (which is permitted under Title 9).  In reversing, the Appellate Division ruled that the trial court committed reversible error by relying upon the Title 9 hearsay exception as the plain statutory language of Title 30 does not extend the exception to trials involving the termination of parental rights. The court held that such an expansion would violate a parent’s due process rights.  

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A Warning to Parents Litigating College Expenses in the Family CourtFebruary 24, 2017

In a recent decision, Ricci v. Ricci, the Appellate Division addressed emancipation and parents’ obligation to pay college costs for a child who has left the parent’s home. This case is unique in that it involved divorced parents who agreed their daughter, Caitlyn, should be emancipated. Caitlyn disagreed and legally intervened, causing years of litigation which – according to the Appellate Division – has only just begun.

There was no dispute that Caitlyn had disciplinary problems which began in high school.  These issues, which continued after Caitlyn graduated in 2012, caused significant family strife.  In February 2013, at the age of nineteen (19), Caitlyn moved from her mother’s home to reside with her grandparents.  Based on Caitlyn’s conduct and what the Ricci parents perceived to be an obvious desire to be independent of their control, Caitlyn’s parents agreed it was no longer necessary or appropriate to continue supporting their daughter financially.  The parents signed a Consent Order emancipating Caitlyn and stopping child support.

Legal action followed, and Caitlyn asked the Court to vacate the Consent Order and require her parents to provide financial support for college. The parents objected, but two Orders were subsequently entered against them “un-emancipating” Caitlyn and requiring them to contribute towards her college tuition.  The Ricci parents appealed.

The Appellate Division’s decision outlined the law governing emancipation and college contribution in New Jersey, and found that neither issue was properly considered.  The Court first advised there should have been an examination of the events triggering Caitlyn’s departure from her mother’s home in 2013 and her subsequent emancipation.  Following existing law, the Court advised: when determining if a child should be emancipated, judges must focus on whether that child has moved beyond the influence of his or her parents and obtained total independence from them.

Second, the Court could not uphold the conclusion that Caitlyn had been un-emancipated, since the trial court did not make the required findings or hold a plenary hearing (essentially a shortened trial) on the issue. Because there was no requisite finding of un-emancipation, the Order requiring the Riccis to pay for Caitlyn’s college expenses was also improper and had to be vacated.   In remanding the matter back to the trial court for a hearing, the Court underscored that the threshold question of emancipation is fact-sensitive and must precede any consideration of a parent’s obligation to contribute towards the cost of college. In other words, Caitlyn will first have to prove she was un-emancipated before the trial court can conduct an analysis about whether her parents should be required to contribute towards her college expenses.

The Appellate Division got it right in the Ricci case; i.e., the Court identified a series of procedural mistakes and ultimately remanded the case to the trial court for the proper proceedings. That’s because under New Jersey law, any time there is a significant factual dispute between the parties (which almost always occurs in Family Court matters), a plenary hearing is required. But there is some truth to the legal maxim “justice delayed is justice denied”, and plenary hearings often take months or even years to complete. Therein lies the issue. By affording the Riccis their “day in court”, the Appellate Division effectively ensured this litigation won’t be ending soon. Practically speaking, the Riccis could be sharing the cost of Caitlyn’s wedding before they resolve college costs.

Despite its holding, the Appellate Division acknowledged the trial court judges in this case made the best equitable decisions based on what was before them. They did so without requiring a plenary hearing – recognizing the limited resources of the parties and the court. This type of “swift justice” is something practitioners demand on a regular basis. However, judges will often avoid this because it’s technically contrary to applicable law and leaves most litigants feeling unsatisfied. The bottom line: litigation in Family Court is often a “no-win” for both parents and children. Although easier said than done, a family feud is best resolved without involving the courts and it’s worth exploring mediation or other forms of dispute resolution.

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Domestic (physical) Violence Warrants Issuance of FROOctober 31, 2016

In the published decision of A.M.C. v. P.B., the New Jersey Appellate Division reviewed and reversed a trial court’s denial of a final restraining order (FRO) under the New Jersey Prevention of Domestic Violence Act. In so doing, the Court reviewed the seminal case Silver v. Silver which required the victim to establish (1) a qualifying relationship with the abuser; (2) that the abuser committed one or more of the predicate acts of domestic violence identified in the Prevention of Domestic Violence Act; and (3) there is a need for the protection of an FRO going forward.  In the recent decision, the Appellate Division reviewed the step three.  In the A.M.C. v. P.B. trial, the trial court determined that the victim satisfied the requirements of (1) and (2), but failed to meet (3).  Consequently, the trial court determined that a final restraining order was not necessary to protect the victim from future acts of domestic violence.  On appeal, the Appellate Division reviewed and reversed this finding. 

In rejecting the trial court’s finding, the court opined that the trial court misapplied (3) to the case and improperly created mitigation factors (length of relationship and lack of children) that were not contained within the New Jersey Prevention of Domestic Violence Act to find against the issuance of a FRO.  Consequently, the Appellate Division exercised original jurisdiction and issued a FRO.  This case stands for the general proposition that when there exists a physical assault on a victim, the general presumption weighs in favor of the issuance of a FRO.  From a practitioner’s standpoint, this case represents a tool for victims of domestic violence to guarantee that they receive the strongest civil protection available under the New Jersey Prevention of Domestic Violence Act.

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Palimony Statute Ruled Constitutional Comes as no SurpriseAugust 3, 2016

A recent Chancery Division case upheld New Jersey’s new palimony statute as constitutional. The fact that the court upheld the palimony law as constitutional was not surprising, but it did confirm the shift away from the prior case of Devaney v. L’Esperance which held cohabitation was not necessary for a palimony claim and reinforced the requirement that palimony agreements be in writing.  The case also criticized the Plaintiff for her frivolous claims and may serve as support for awarding sanctions in future cases where a plaintiff attempts to utilize creative arguments to circumvent the palimony statute.

The Plaintiff in the Chancery Division case of Lee v. Kim brought a suit against her ex-boyfriend and the Attorney General of New Jersey alleging a palimony claim and that the new palimony statute violated her rights to equal protection, privacy, and due process under the Constitution.  Ms. Lee filed her suit after the conclusion of a two year relationship with Dr. Kim.  Since the parties began dating after the enactment of the palimony statute, Ms. Lee’s claim for palimony was subject to the requirements of the statute; that the agreement be in writing and that the parties to the agreement be represented by counsel.  However, Ms. Lee and Dr. Kim never entered into a written agreement.  Therefore, Ms. Lee’s complaint for palimony was based solely on alleged oral promises made by Dr. Kim.  The court denied each of Ms. Lee’s constitutional arguments and ultimately dismissed her complaint with prejudice.

The Lee v. Kim decision reflects the trend in family courts to limit protracted litigation and make valuable court time available for other cases.  Today, with the shortage of judges in many of the family courts, access to a judge to determine issues such as palimony is limited.  The court in the Lee matter dismissed Ms. Lee’s case on the papers without oral argument.  The decision also sharply criticized Ms. Lee for wasting time and money with her frivolous palimony litigation.  Many judges are reluctant to critique a lawyer’s creative litigation decision, so the opinion in Lee makes clear that courts are unwilling to indulge cases such as this and stands as a warning to other plaintiffs and attorneys.

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Bankruptcy and Divorce – Where Should You Go To Seek Relief?May 6, 2016

On May 4, 2016, in the unpublished decision of Strunck v. Figueroa, the Appellate Division reaffirmed longstanding jurisdictional jurisprudence involving bankruptcy and divorce. In the case, the parties divorced in August 2011.  As part of the divorce, the Plaintiff was awarded the sum of $23,369 to be transferred from Defendant’s Fidelity account by way of Qualified Domestic Relations Order.  The divorce decree further directed that the Plaintiff be responsible for the preparation and cost of the QDRO. 

However, prior to the amount being transferred, the Defendant withdrew all funds from the Fidelity and filed a Chapter 7 bankruptcy petition.  In the bankruptcy petition, the Defendant listed the Plaintiff’s $23,369 claim as being incurred on August 2011 alleging that the amount was an obligation arising out of a matrimonial judgment and not a domestic support obligation. 

Plaintiff received notice of the bankruptcy petition and the inclusion of the $23,369 as an unsecured claim in that petition.  The Plaintiff chose not to file an adversary proceeding to challenge the dischargeability of the claim.  As no objection was reached by the bankruptcy court, the Defendant was granted a discharge of the claim and all other debts. 

Thereafter, the Plaintiff elected to pursue an alternative course to recover the $23,369.  More than a year after the discharge, the Plaintiff filed a complaint against the Defendant in the Superior Court alleging conversion of the asset.  He contended that the Defendant falsely stated in a bankruptcy petition that she was not holding the property of another and sought to enforce litigants rights based upon the divorce decree. 

On appeal, the Appellate Division held that Plaintiff’s decision to not file an adversary proceeding in the bankruptcy matter resulted in the Plaintiff being estopped from later seeking to collect discharged claim.  Effectively, the Court noted that the Plaintiff failed to protect his rights by not participating in the bankruptcy proceeding, including but not limited to appealing the discharge of the debt.  The decision, while unpublished, should reinforce practitioners close scrutiny of bankruptcy proceedings in a post divorce judgment world.  The warning from the courts of New Jersey is that when such a proceeding is filed, a client should avail themselves of appropriate bankruptcy counsel and appear in the bankruptcy matter if there is any dispute as to the listing of a any obligation that arises out of a divorce judgment. 

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Are Trial Court’s Prohibited From Suspending Alimony Upon Cohabitation?May 3, 2016

Matrimonial settlement agreement alimony termination clauses are one of the most highly negotiated provisions in a divorce proceeding. Often, the parties negotiate a provision that provides for the “termination” of alimony when the supported spouse cohabitates with an unrelated adult.  In consideration cohabitation “termination” post-judgment applications, many trial courts enter awards which “suspend” alimony obligations during the period of cohabitation.  This type of suspension order was often without prejudice which would permit the previously supported spouse to seek the reinstatement of alimony if/when the cohabitation ended.

On May 3, 2016, the Supreme Court of New Jersey in Quinn v. Quinn declared that such a suspension remedy may be impermissible.  In that case, the Court analyzed a marital settlement agreement which included an express provision that terminated alimony upon cohabitation.  After finding that the agreement was entered by fully informed parties represented by independent counsel and without any evidence of overreaching fraud or coercion, the Court reversed the trial court’s equitable remedy of suspending alimony and ruled as a matter of law that the trial court was required to apply the remedy of termination as fashioned by the parties in their marital settlement agreement. 

In so doing, the Supreme Court has now instructed all trial courts to enforce the express language of the property settlement agreement when there is no ambiguity in the provision.  Simply, the court ruled that if the language is clear and unambiguous, the trial court must enforce the agreement as written unless doing so would lead to an absurd result.  In so doing, the court found in Quinn that the parties agreed to the circumstances that would terminate the alimony obligation by contract, to wit: cohabitation = termination. 

From a practical matter, this ruling will have a significant impact in the way that cohabitation clauses and property settlements are negotiated, drafted and presented to trial courts on a going forward basis.  In representing your clients, such a provision should receive close scrutiny before being included in a marital settlement agreement.  

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Sometimes Honesty is Still the Best PolicyApril 15, 2016

In the recently published decision of Taormina-Bisbing v. Bisbing, the Appellate Division examined the effect of a non-relocation agreement on a subsequent request by one parent to relocate to another state.

The case involved a relocation application, which is what a primary custodial parent files when he or she want to move out of state with the children.  These cases are generally governed by a case called Baures v. Lewis, 167 N.J. 91 (2001).  Under Baures, the moving party must first show there is a good faith reason for the move.  Then, they must demonstrate the move will not be “inimical” to the child’s interests.  There are 12 factors a court must assess in conducting a Baures analysis, but overall it’s a relatively easy standard to meet.  A non-custodial parent seeking to relocate with the children is subject to a different standard.  Because he/she is essentially asking the court for a change in custody, the request is determined by conducting a “best interest of the child” analysis.  This is a much more difficult standard.

The parties in Bisbing separated in August of 2013.  A few months later, the Wife began a long-distance relationship with man residing in Utah who had children from a previous marriage.  The parties eventually entered into a Marital Settlement Agreement (“MSA”) in March 2014 and were divorced in April 2014.  In their MSA, they agreed the Wife would have primary residential custody of the parties’ 8-year old twin girls on the condition that she would not relocate out of state.  She also agreed to give the Husband “broad reasonable and liberal parenting time”.

One month after the divorce, the Wife informed the Husband she was quitting her job to become a stay-at-home mom (which she did).  About eight months later, she called the Husband and told him she was marrying her significant other from Utah and asked for his consent to relocate with the children.  The Husband refused and the Wife filed a motion.  Without conducting a plenary hearing – which is usually required in relocation cases – the trial court found in favor of the Wife and allowed her to move to Utah.  The Husband appealed. The Appellate Division reversed and remanded the case back to the trial court with a roadmap for a plenary hearing.

First, the trial court must determine whether the Wife negotiated the MSA in bad faith.  In other words, the court must first decide whether the Wife knew of her plans to move to Utah when she was negotiating the MSA.  If the Wife knew, she essentially manipulated the situation to obtain residential custody so her removal application would be subject to the more favorable (Baures) standard.  Under such circumstances, the Court instructed, the Husband would have to be restored to the position he was in before the Final Judgment of Divorce.  The trial court would then apply the best interest standard and make a new determination on the issue of custody.  This would force the Wife to prove it would be in the children’s best interest to stay with her and move to Utah.

If, however, it is found that she did not negotiate in bad faith, the trial court should next consider whether the Wife proved a substantial unanticipated change in circumstances warranting avoidance of the agreed-upon non-relocation provision in the MSA.  This would trigger a Baures analysis, which would require the Wife to show only that moving with the children is not inimical to the children’s interest. 

The Bisbing decision does not necessarily clarify an ambiguous issue or create a new test or standard to be applied in relocation cases.  However, the Appellate Division did openly acknowledge a somewhat harsh reality of the laws of this State: once a parent obtains primary residential custody, it’s much easier for him or her to obtain an Order permitting an out-of-state relocation (since the burden would be placed on the parent who wants to stay in New Jersey to show that removal/relocation is against the children’s interests).  Matrimonial practitioners should take time to explain this to clients and ask more questions regarding future plans when negotiating settlement agreements.  Moreover, although it’s still not entirely clear where to draw the line, this case seems to suggest that a party who knows or strongly suspects circumstances are likely to change soon after an agreement is signed, may later be accused of “negotiating in bad faith”.  Therefore, it is important for a party to disclose any intentions he or she may have of moving out of state, marrying, etc., prior to signing an agreement, as these major events typically constitute a change in circumstances warranting a modification of custody/parenting time, alimony/child support, or even equitable distribution.

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