Over the years, I have blogged several times about the Appellate Division's opposition to a court's use of a formula to calculate alimony as opposed to a detailed consideration of statutory alimony factors. I have blogged about cases in which the use of formulas was rejected both for initial alimony awards and when the issue of modification was argued in court. In fact, the only case I've ever seen where the use of a formula was, so to speak, approved was an unreported decision in a 2011 malpractice case that said the so-called “rule of thumb” was an appropriate method of calculation of maintenance is a settlement.
This was true until February 21, 2024, when the Appellate Division released the unreported (non-priority) decision in Geary v. Geary. In this case, the court alluded to and tacitly endorsed a formulaic approach to a modification case.
The relevant facts are as follows. The parties married in 1993 and divorced in 2014. According to their Marital Settlement Agreement (MSA), the husband was required to pay limited alimony of $120,000 per year for nearly 16 years, ending 12/31/30. Apparently, the husband's income at the time of the divorce was less than before because the MSA provided that the wife was entitled to arrears in the event that the husband did not notify her that his income had returned to $325,000 or more. The agreement also included provisions for alimony/arrears if the husband's income returned to $300,000 or more. Additionally, the MSA provided that a downward adjustment could occur if the wife's income increased above $100,000.
During the marriage, the husband was employed as the managing director of an advertising agency in New York, earning $325,000 per year. He claimed he was terminated in September 2019 and received severance pay until the end of the year. The wife earned $55,000 at the time of the divorce and $97,000 at the time of the hearing, although she earned more than $100,000 in 2019 and 2020.
At the alimony reduction hearing, the husband testified that despite diligent job searching throughout the United States, including a spreadsheet of 1,000 entries, he was unable to land a job in advertising, marketing, media or sales. He then moved to Hilton Head and decided to become a real estate agent, earned his license, formed an LLC, created a website and began promoting his business on social media. However, he never began working as a real estate agent for himself or anyone else.
At the hearing, the trial court concluded that the husband had established a prima facie change in circumstances, “but only for a temporary change in maintenance,” and therefore the maintenance from the date on which he filed his application , the plenary hearing (approx. 15 months) was only reduced to 100,000 US dollars per year until maintenance began. The trial court then imputed the husband's income of $180,000 per year as a real estate agent in South Carolina as of the first day of the hearing, finding:
“…given [plaintiff’s] Acceptance as a real estate agent in Hilton Head and the thriving real estate market during the pandemic. . . [p]“Plaintiff certainly could have been earning a substantial salary as a real estate agent in Hilton Head when he testified after moving to South Carolina two years ago,” citing knowledge of market reports and other commercial publications in South Carolina, according to NJRE 801(c)17 took real estate market in South Carolina. Similarly, the court noted the average salary of real estate agents in Hilton Head and took it into account by imputing the plaintiff an income of $180,000 per year as of September 2021.
As a result, the trial court reduced alimony to $60,000 per year through the end of 2022 while the husband “builds his career.” However, the court maintained the reduction in alimony for the remainder of the term unless he returns to a salary of $300,000 or more. The court also added that in the event that the husband “…earns $325,000, at or near the end of the limited alimony period, the period may be extended at the defendant's request upon presentation of all financial resources,” the court requested In addition, the annual exchange of tax returns until 2035, i.e. five years after the end of the maintenance.
Regarding this blog post, the husband argued that the trial court erred in determining alimony by using a mathematical formula. The Appellate Division disagreed and affirmed the trial court's decision.
Regarding the arguments regarding the mathematical formula, the Appellate Division stated the following:
“We disagree with plaintiff’s argument that the court “improperly” used a mathematical formula to determine his support obligation. The court explained that the plaintiff's alimony obligation of $60,000 per year in 2021 and 2022 was “33.3 percent.” [$180,000] Attributed to him as a real estate agent in South Carolina.” The court then noted that the MSA provided $120,000 per year in temporary alimony, which was “36.9 percent of his income for purposes of the statute.” [MSA.]” Based on the sufficiently credible evidence in the record, we see no factual or legal basis for concluding that the court abused its discretion by using the same percentages used in determining his income in the MSA. (emphasis added).
While this decision is factually different, it conflicts with another unreported Appellate Division decision that I linked to above. In some ways, the trial court's decision resembles prairie justice given the limited facts presented in the opinion. One gets the impression that the court assumed that the husband had not lost his job voluntarily, but was not convinced that his job search was exaggerated or, as the common saying goes, completely honest. It probably didn't help that he moved to a well-known retirement hotspot and never found a job there, either in advertising or real estate. Additionally, all of the things the judge took judicial notice of regarding the South Carolina job market were interesting compared to the woman having to prove those things.
It seems clear that the finding regarding job search contributed to the unusual order allowing an extension of temporary maintenance where these do not necessarily constitute “exceptional circumstances” within the meaning of the Act. Given these findings, it seems odd that the wife's request for attorney's fees was denied.
In any event, this was an interesting issue with interesting findings from both the trial court and the Appellate Division.
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