Husband and wife married for 18 years, during which time wife is a homemaker raising the parties 3 children. During the same time frame, husband and a partner start a business, which towards the later years of the marriage provides him with approximately 500,000.00 - 550,000.00 per annum of salary, bonus and perqs.
In the end of 1998 / beginning of 1999 ( after 18 years of marriage), the parties decide to divorce and husband suggests that they do not need to waste money on divorce lawyers and instead suggests that they use their "friend" - husband's business lawyer to handle the divorce with the lawyer to determine the amount / duration of alimony, child support, distribution of assets, etc. Wife agrees and husband's business lawyer prepares a settlement agreement purporting to resolve all issues outstanding in their matter.
While preparing the divorce settlement agreement, since ( under the terms of the deal) husband is going to retain the marital home, the same lawyer represents wife in connection with the purchase of a replacement home for her and the 3 children, with wife signing a power of attorney authorizing the lawyer to handle all aspects of the home purchase on her behalf including signing off on the HUD statement for her ( so that she did not need the to attend the closing of title for the purchase).
Not surprisingly, an examination of the terms of the agreement reveals that Husband retained at least 93% of the assets of the marriage ( if not more), including retention of his 50% ownership interest in the business operation, the marital home, and both of the parties vacation homes.
As to the support provisions, while acknowledging that husbands income setting was approximately 500K - 550K per annum and acknowledging that wife had no employment nor any formal employment skills, the agreement provided wife with 70,000.00 per year in limited duration alimony for a 12 year duration and 2000.00 per month in total child support for the benefit of the 3 children, which 2,000.00 per month included husband's contribution to their unreimbursed healthcare costs, summer camp, extracurriculars, etc.
As to the 2,000.00 per month child support figure, the agreement stated that the amount was based on the "applicable child support guidelines', despite the fact that the guidelines at the time only went up to a max of 2900.00 net per week or 150,800 net per annum.
As such, after payment of all applicable taxes on the reported portion of his income setting ( 113,000.00) and the payment of the alimony ( 70,000.00), husband was left with an actual net cash flow of approximately 342,000.00 or about 191,200 of net cash flow in excess of the guidelines applicable at the time.
In 2011, after the alimony terminated and wife was heavily in debt and without any form of health insurance coverage, Wife filed an application with the court to set aside the settlement agreement and reexamine the equitable distribution and support provisions of the agreement. The court then set the matter down for a trial on the issues raised.
In early 2015, the court ruled that husband and his business lawyer intentionally defrauded and took advantage of wife and that the terms of the agreement were unconscionable AND that after the agreement was put in place, husband continued to deceive and defraud wife and their 3 children as to his health status, the health status of his business operation and his true income setting.
The court found that while husband repeatedly told wife that he was very sickly, that financially he was on the verge of impoverishment and that his business was on the verge of closing down ( which representations were also put in writing by him), it turned out that husband was earning between 550,000.00 and 710,000.00 per year from that same business operation annually and from 1999 to the present t the revenue of his business operation remained steady as well.
Based on all of the aforementioned, the court has now set a date for retrial to take place on the issues of alimony, child support and distribution of assets.
So, here are my 2 questions:
1. Can the court now go back in time and recalculate what the wife should have received in alimony ( amount and duration) and retroactively credit her with the difference between what was paid to her and what she should have received? Hypothetically, if wife should have received 150,000.00 in alimony during that time period and husband only paid her 70,000.00, can the court now apply a form of Mallamo type ruling and award her the difference 80,000.00 x ___ years (ignoring the tax issues for the moment) and if so, can the court then add to that sum an appropriate interest rate for the loss of that money during that time period?
2. Can the court do the same thing for the child support setting and if so, can the court add an interest rate to it as well?
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Richard Diamond
Managing Partner
Diamond & Diamond P.A.
Millburn, New Jersey
973-379-9292
[email protected]------------------------------