Husband’s Reduced Salary Due to Attempt to Save Failing Business Allowed Alimony Modification by New Jersey Family Court Judge

business-graph-failureAn Appellate Division case from last year (June 2014) offers some clarity regarding when an alimony payor spouse’s financial setbacks are involuntary as opposed to voluntary or permanent as opposed to temporary. In this particular case, the husband whose reduced salary for more than three years was the result of his efforts to save his failing business was entitled to seek a reduction in his alimony payments. Since this decision occurred in June of last year, New Jersey’s sweeping alimony reform statute was enacted when Governor Christie signed a bill on September 10,2014 that addressed many aspects of alimony, giving guidance to the family bench and bar with respect to such issues as the type of alimony that may be appropriate, as well as the duration of any such alimony. The new legislation also set forth specific factors which a judge must now consider (after September 10, 2014) in deciding a modification application of a payor’s support as occurred in this case.

Michael and Tracy D’Alessandro married in 1985 and separated 22 years later. During the marriage, they had two children. When the couple completed their property settlement agreement in 2009, the husband was a one-half owner of a business, which was valued at the time at $1.25 million, and was receiving a $240,000 annual salary. The wife worked in a school cafeteria and made $15,000 per year.

In the couple’s agreement, the husband agreed to pay the wife $2,212 per month. However, by the summer of 2012, he had reduced those payments to $1,712 per week. The wife asked the trial court to enforce the agreement as written and to compel the husband to make the full $2,212 weekly payments. The husband, in return, asked the court to modify (reduce) his obligations. The husband alleged that his business had experienced a severe financial downturn since 2009, which led to the business merging with another company. The husband was only a 25% owner of the merged entity, as opposed to a 50% owner of the original company, and his salary was much less than it had been in 2009, falling to $165,600.

The wife did not dispute that the husband’s income had declined, but she argued that the setback was the result of the husband’s own poor business decisions, and he should not receive a reduction in his alimony obligations. The trial court concluded that the husband’s nearly-one-third reduction in income was a substantial change in circumstances and reduced the husband’s alimony by $842 per week.

The wife appealed, but the appeals court upheld the reduction in alimony. Contrary to the wife’s assertions, the husband’s reduction in income was not considered to be voluntary. While the husband did voluntarily reduce the amount of his ownership interest, it was accepted by the court as a legitimate step on the part of the husband in his attempt to prevent his business from failing and closing, effectively concluding that the decision to merge was voluntary, but the husband’s steep drop in income was not voluntary.

The wife also argued unsuccessfully that the husband’s alimony should remain unchanged because he failed to show that his reduced income was not temporary. While the law does not create a specific minimum period of time between what is a temporary drop in income versus a permanent one, the husband in this case showed that his income drop had persisted from August 2009 to September 2012. Three years, the appeals court ruled, was not so short a time that the trial court could not rule that the change was not temporary.

Alimony reduction cases can involve offering many types of proof to the court to meet each of the required elements for modification. The new alimony reform statute signed into legislation in New Jersey on September 10, 2014 introduces new, specific factors that must be presented to a court in a cohesive manner to succeed in obtaining or defending against a reduction or modification of alimony. To make sure you have the evidence you need to make your case for or defend against a modification, talk to the New Jersey family law attorneys at Goldstein Law Group. Our attorneys have the experience and ability needed to help you achieve a workable result. Contact us online or by calling 732-967-6777 to request a confidential consultation.

More blog posts:

New Jersey Wife’s Improved Income Still Not Enough to Warrant Termination of Alimony, New Jersey Divorce Lawyers Blog, Jan. 14, 2015

Man Failed to Prove He Wasn’t Underemployed in New Jersey, Loses Effort to Reduce Alimony, New Jersey Divorce Lawyers Blog, Dec. 19, 2014