We all know that effective September 10, 2014, N.J.S.A. 2A:34-23 was modified. The courts are still interpreting the statutory amendments. In the current climate, many people are suffering from, at least initially, temporary, involuntary unemployment or underemployment. Practitioners and the trial courts have little guidance in the form of published cases leaving practitioners and litigants adrift to navigate an uncharted course to achieve the ever elusive fair and balanced outcome.
The analysis starts with N.J.S.A. 2A:34-23, specifically (k), (l) and (m), which are new additions to the statute. The two subsections of the amended statute that address changed circumstances in alimony cases are (k) and (l). Subpart (m), unlike (k) and (l), applies to child support and alimony awards. Subpart (k) is applicable “[w]hen a non-self-employed party seeks modification of alimony” and provides 10 factors which courts must consider:
- The reasons for any loss of income;
- Under circumstances where there has been a loss of employment, the obligor’s documented efforts to obtain replacement employment or to pursue an alternative occupation;
- Under circumstances where there has been a loss of employment, whether the obligor is making a good faith effort to find remunerative employment at any level and in any field;
- The income of the obligee; the obligee’s circumstances; and the obligee’s reasonable efforts to obtain employment in view of those circumstances and existing opportunities;
- The impact of the parties’ health on their ability to obtain employment;
- Any severance compensation or award made in connection with any loss of employment;
- Any changes in the respective financial circumstances of the parties that have occurred since the date of the order from which modification is sought;
- The reasons for any change in either party’s financial circumstances since the date of the order from which modification is sought, including, but not limited to, assessment of the extent to which either party’s financial circumstances at the time of the application are attributable to enhanced earnings or financial benefits received from any source since the date of the order;
- Whether a temporary remedy should be fashioned to provide adjustment of the support award from which modification is sought, and the terms of any such adjustment, pending continuing employment investigations by the unemployed spouse or partner; and
- Any other factor the court deems relevant to fairly and equitably decide the application.
Some of these factors are not especially relevant in the context of the pandemic. For example, conducting a job search or accepting alternative employment during a period severe economic contraction is not realistic for the vast majority of litigants.
The pandemic also impacts litigants who suffered an involuntary change prior to the pandemic. The W-2 wage earner who was involuntarily down-sized from a corporate job months ago is now faced with an even bleaker job market.
The length of time of the under or unemployment is not the only controlling factor:
Under circumstances where the changed circumstances arise from the loss of employment, the length of time a party has been involuntarily unemployed or has had an involuntary reduction in income shall not be the only factor considered by the court when an application is filed by a non-self-employed party to reduce alimony because of involuntary loss of employment.
All applications for modification of alimony based on under or unemployment must be based on
all of the enumerated factors, however, no application shall be filed until a party has been unemployed, or has not been able to return to or attain employment at prior income levels, or both, for a period of 90 days.
Therefore, no relief is possible for the first 90 days following an involuntary job loss or furlough. This certainly delays immediate relief considering the abruptness of the onset of social distancing. However, relief pertaining to the payment of alimony can be retroactive to the date of the actual job loss: “The court shall have discretion to make any relief granted retroactive to the date of the loss of employment or reduction of income.” N.J.S.A. 2a:34-23(k).
Self-employed obligors are treated differently under the amended statute. The approach to changed circumstances varies when a self-employed payor seeks a reduction in alimony, which is addressed in (l):
When a self-employed party seeks modification of alimony because of an involuntary reduction in income since the date of the order from which modification is sought, then that party’s application for relief must include an analysis that sets forth the economic and non-economic benefits the party receives from the business, and which compares these economic and non-economic benefits to those that were in existence at the time of the entry of the order.
The statute does not specifically provide for review of the factors in (k) when the application is made by a self-employed obligor seeking to establish a change in circumstance.
Small business owners are at risk of permanent closure of their businesses as a result of the pandemic. Even with Federal funds, many of the businesses cannot continue after months of social distancing and forced closures.
The remedies available under N.J.S.A. 2A:34-23 (m) now include temporary remedies that are not limited to alimony, unlike sections (k) and (l):
When assessing a temporary remedy, the court may temporarily suspend support, or reduce support on terms; direct that support be paid in some amount from assets pending further proceedings; direct a periodic review; or enter any other order the court finds appropriate to assure fairness and equity to both parties.
By the plain language of the statute, it appears that these modifications were tailored to grant temporary relief from both short- and long-term financial hardships and to balance the misfortune of involuntary financial hardships suffered by an obligor between both former spouses. The manner in which courts have interpreted the amended statute may offer some guidance to litigant’s seeking relief in the time of the COVID-19 pandemic.
The best approach to seeking relief in these uncertain times is to move under N.J.S.A. 2A:34-23(m), which permits temporary relief in appropriate circumstances and may be underutilized. Subpart (m) has rarely been referenced in either published or unpublished cases in the nearly 6 years since the amendment.
In addition, there are very few published Appellate Division and only one published trial court case interpreting how these new sections of the statute apply to the financial hardships of real people who walk through our doors.
When Does Enforcement become Punitive?
We are all prone to feeling our client’s sense of hopelessness and frustration when, despite their best efforts, they are unable to earn income consistent with their history. It is difficult to watch a former spouse, often years after a marriage has ended, continue to deplete hard earned assets to meet support obligations that might not have been established based on today’s standards. Likewise, it is difficult to advise a supported spouse when support can be modified or even eliminated in our uncertain times. It is certainly possible that the urgency of the COVID 19 crisis and the inevitable economic aftermath may bring these issues into sharper focus.
While the balancing of factors and granting of temporary relief is clearly provided for in the amended statute, our courts have been slow in rendering decisions that will assist us in implementing the Legislature’s intent.
It is well established that “alimony is neither a punishment for the payor nor a reward for the payee… but rather is designed for the purpose of assisting an economically dependent spouse.” Mani v. Mani, 183 N.J. 70,80 (2005). Before seeking modification of an existing alimony obligation, the payor must make a prima facie showing of a substantial change in his/ her financial circumstances. Lepis v. Lepis, 83 N.J. 139, 146 (1980).
The few published post amendment cases addressing changed circumstances are summarized below.
The first post amendment case was Spangenberg v. Kolakowski, which involved a trial which occurred prior to the effective date of the statutory amendments. Spangenberg v. Kolakowski, 442 N.J. Super. 529, 533 (App. Div. 2015). In Spangenberg, the Appellate Division gave some insight into interpretation of the amended statute on the issue of cohabitation and held that there was a prima facie showing of changed circumstances for purposes of conducting a plenary hearing on issue of modification of child support and alimony.
In Kolakowski, the Court discussed the amended statute:
Recently, the Legislature adopted amendments to N.J.S.A. 2A:34-23, designed to more clearly quantify considerations examined when faced with a request to establish or modify alimony. Spangenberg v. Kolakowski, supra, 442 N.J. Super. at 536-537.
The amended statute contains language which “signals the legislative recognition of the need to uphold prior agreements executed or final orders filed before adoption of the statutory amendments.” Spangenberg v. Kolakowski, supra, 442 N.J. Super. at 538. As we all already know, the careful drafting of our Settlement Agreements remains critically important.
In Mills v. Mills, Judge Jones specifically addressed changed circumstances considering the 2014 amendments. Mills v. Mills, 447 N.J. Super. 78 (Ch. Div. 2016). Mills specifically analyzed the changed circumstances application under N.J.S.A. 2A:34-23(k). The obligor in Mills lost long-term employment and accepted a lower paying job after making “reasonable attempts to find substitute employment.” Mills v. Mills, supra, 447 N.J. Super. at 80. The analysis:
[I]nvolves two questions of equity: (A) Was the supporting spouse’s choice in accepting particular replacement employment objectively reasonable under the totality of the circumstances? (B) If so, what if any resulting adjustment in support is fair and reasonable to both parties under the facts of this case?
Mills v. Mills, supra, 447 N.J. Super. at 80-81.
Judge Jones in Mills held that N.J.S.A. 2A:34-23(k) is applicable to changed circumstances applications for parties who were divorced prior to September 10, 2014, the effective date of the statutory amendments provided the MSA did not contract for a different standard and that the issue was not previously litigated under the prior version of the statute:
In summary, prior to the 2014 amendments, there were various reported cases and principles that lead to various standards, considerations and conclusions… there was no one-size-fits-all legal analysis for approaching and analyzing these types of issues. Rather all cases were, and continue to be, fact sensitive, and there were no bright-line rules governing applications to modify support based upon a substantial change in circumstances. Mills, supra, 447 N.J. Super. at 86
However, in an unpublished decision, the Appellate Division found that Mills, supra, “was not binding on the trial court and we decline to follow its retroactive application of N.J.S.A. 2A:34-23(k) where the Legislature made no such pronouncement.” MLM v. MWM, 2018 WL 2167393, at 4 (May 11, 2019).
Mirroring a reality that many practitioners and citizens understand all to well, the Court in Mills recognized “the harsh, present day reality… that once they lose a position, they may never return to a similar income, no matter how diligently they try.” Mills v. Mills, supra, 447 N.J. Super. at 89. The obligor in Mills was involuntarily terminated from a job paying $108,000.00 and his decision to accept a job in the same field paying $76,000.00 per year “was objectively reasonable.” Mills, supra, 447 N.J. Super. at 90. The remaining question is “what if any resulting support adjustment should occur that is reasonable and fair to both parties.” Mills, supra, 447 N.J. Super. at 90. While the Mills approach appears reasonable, the Appellate Division has not adopted the approach in any published case.
The focus on the hardship to the obligor is certainly not the only consideration. The impact of the pandemic and the other financial circumstances of the supported spouse must be considered. If for example, both spouses received Federal funds or deferment of mortgage payments, these facts should certainly factor into whether temporary relief is warranted under N.J.S.A. 2A:34-23(m).
The financial crisis brought on by the pandemic may finally prompt the interpretation of the amendments to N.J.S.A. 2A:34-23 in the manner and spirit in which the Legislature intended. While the past 6 years have resulted in relatively little appellate guidance, the aftermath of this unprecedented crisis may prompt the development of new case law which balances the hardships between former spouses as the equities dictate.