Orlowski v. Orlowski
Orlowski v. Orlowski
Opinion of the Court
*3*99In this post-judgment matrimonial appeal, we consider whether a court may compel reimbursement of college tuition, forensic accountant's fees, and counsel fees, through an enhanced wage garnishment and a Qualified Domestic Relations Order (QDRO) against the obligor's individual annuity account funds on deposit in an annuity governed by the Employee Retirement Income Security Act of 1974 (ERISA),
I.
The complex procedural history underlying this appeal necessitates a brief review of the proceedings that led to the arrearages owed to plaintiff Joanna B. Orlowski, her enforcement efforts, and defendant Robert Orlowski's bad faith, unclean hands, frivolous litigation in both state and federal court, and willful, sustained failure to comply with court orders.
Before we discuss the pertinent facts and procedural history, we note defendant appealed numerous orders and directed our attention to several alleged trial court errors. Defendant's appeal, however, was dismissed for failure to timely file a brief, so we do not consider those issues. Accordingly, our review of the facts and procedural history is limited to those relevant to plaintiff's cross-appeal.
*100Defendant is a member of the International Union of Operating Engineers Local 14-14B (the Union). The Union administers a pension fund known as the Annuity Fund of the International Union of Operating Engineers Local 14-14B (the Annuity). Defendant has substantial ERISA protected funds in his individual annuity account (the annuity funds) with the Annuity.
The parties were married in May 1993 and had two sons. Plaintiff's 2014 divorce action was finalized in 2016. The amended final judgment of divorce (amended judgment) required defendant to pay his child support obligations by wage garnishment.
The amended judgment incorporated the parties' "partial" property settlement agreement (PSA), which addressed the equitable distribution of various marital assets, including the former marital residence and a 401(k) investment account. The PSA also provided that plaintiff waived her claim for alimony in exchange for a non-taxable lump sum payment of $ 120,000. Notably, the PSA did not resolve equitable distribution of the annuity funds and plaintiff's IRA. The parties' mediator authored a supplemental letter to the PSA that addressed certain child support and tax issues, and stated two issues remained unresolved: (1) counsel fees; and (2) any claims or credits relating to the fees incurred for the forensic accountant used to investigate the parties' reciprocal claims of dissipation of marital assets.
In a written opinion, the trial court explained the forensic accountant's report demonstrated defendant could not account for $ 118,175 in marital funds. On the other hand, the trial court found defendant did not demonstrate plaintiff dissipated marital funds. As a result, plaintiff was successful in her dissipation claim. The *4court reallocated responsibility for $ 5000 of the fees charged by the forensic accountant from plaintiff to defendant for services related to defendant's meritless dissipation claim.
As for counsel fees, the trial court recognized defendant's greater annual income, assets, and lesser debt relative to plaintiff. It noted plaintiff moved three times for enforcement of prior court orders and served sixteen subpoenas to obtain discovery, which *101defendant obstructed. The court also stated the case featured an "extensive litigious history" and plaintiff's dissipation claim was successful, whereas defendant's was unsubstantiated.
Based on these findings, the trial court awarded plaintiff: one-half of the marital assets dissipated by defendant to be paid from defendant's annuity account via a QDRO; $ 5000 as reimbursement for fees paid to the forensic accountant due to defendant's meritless dissipation claim; and $ 48,194.98 for counsel fees. Defendant was further ordered to pay $ 1150 to the mediator.
Thereafter, defendant refused to comply with the PSA and subsequent court orders. His obstinance prompted plaintiff to move for enforcement in April, May, September, and December of 2016.
Defendant remained noncompliant. Plaintiff sought enforcement of the prior orders, including payment of the previously awarded counsel fees, from defendant's annuity funds through a QDRO. The trial court declined to enforce the counsel fee arrearages "as alimony, by QDRO."
In March 2016, defendant filed two petitions with the United States District Court for the District of New Jersey to remove the *102case to federal court. On March 8 and 10, 2016, the District Court remanded the case to the Superior Court sua sponte.
Defendant also filed a federal civil rights action against sixteen defendants, including plaintiff, her attorney, the forensic accountant, the mediator, Governor Christie, three Superior Court judges, and plaintiff's former attorney. The defendants named in the action moved to dismiss the complaint with prejudice pursuant to Fed. R. Civ. P. 12(b)(6) and for sanctions. District Court Judge Susan D. Wigenton dismissed the action with prejudice but denied the application for sanctions.
Incredibly, in May 2016, defendant filed yet another application for removal, which the District Court denied. The District Court also prohibited defendant from filing any additional pleadings without permission of the court.
On May 30, 2017, the trial court awarded plaintiff counsel fees of $ 63,786.50 for the post-March 31, 2016 state court proceedings. The court explained that plaintiff *5had to file several motions to enforce the terms of the PSA. It recognized defendant acted in bad faith throughout the litigation by engaging in efforts to prevent the enforcement of the amended judgment, PSA, and subsequent orders.
Plaintiff moved to enforce litigant's rights and for sanctions due to defendant's refusal to pay the $ 131,495.48 she seeks on appeal. The trial court ordered defendant to pay his portion of the college tuition expenses but declined to impose coercive sanctions. The trial court declined to impose an enhanced wage garnishment to collect unpaid counsel fee awards and the forensic accountant fee *103reimbursement. Although the court stated on the record that an enhanced wage garnishment would be established against defendant for the college tuition reimbursement, the order does not reflect that an enhanced wage garnishment was ordered. The lump sum amount of $ 14,514 was added to defendant's child support obligations, representing his college tuition responsibility. A subsequent March 23, 2018 amended order provided defendant's disposable earnings would be garnished at fifty-five percent pursuant to
Defendant's appeal, ultimately dismissed, and plaintiff's cross-appeal followed. Plaintiff cross-appealed certain aspects of several orders. She argues: (1) the trial court erred by not enforcing the counsel fee judgments and college tuition award through a QDRO against defendant's annuity funds; and (2) the trial court erred by not enforcing the counsel fee judgments by an enhanced wage garnishment. Plaintiff contends that she will be unable to enforce the counsel and expert fee awards absent a QDRO due to defendant's manipulation of his assets. She argues she is entitled to this remedy as a matter of equity to prevent the injustice she would otherwise suffer.
II.
ERISA was enacted by Congress to protect employees and their dependents who rely on retirement plans. Hawxhurst v. Hawxhurst,
The anti-alienation provision reflects a policy "to safeguard a stream of income for pensioners (and their dependents, who may be, and who usually are blameless ) even if that decision prevents others from securing relief for wrongs done them." Guidry v. Sheet Metal Workers Nat'l Pension Fund,
"The spendthrift provision is mandatory and contains only two exceptions." Hawxhurst,
A QDRO is a domestic relations order, "which creates or recognizes the existence of an alternative payee's right to, or assigns to an alternative payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan."
*105
any judgment, decree, or order (including approval of a property settlement agreement), which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and is made pursuant to a State domestic relations law ....
[29 U.S.C. § 1056 (d)(3)(B)(ii).]
Marital decrees that do not meet the statutory definition of a QDRO are preempted by ERISA. Ross v. Ross,
Notably, our statutes and rules provide for the award of counsel fees in family actions. N.J.S.A. 2A:34-23 (authorizing the award of counsel and expert fees in divorce proceedings, either before or after a judgment of divorce is entered); N.J.S.A. 2A:34-23a (requiring the defaulting party to pay the counsel fees incurred by the custodial party "in any action to enforce and collect child support"); R. 4:42-9(a)(1) (authorizing counsel fee allowances in family actions).
*7A.
We first address enforcement of the counsel fee and forensic accountant awards through a QDRO. We are mindful of our decision in Johnson, which held counsel fee awards were not enforceable against a pension plan through a QDRO that violated *106the terms of the pension plan and was payable directly to the attorney.
In Johnson, the annuity fund appealed from orders requiring it to pay the attorneys' fees incurred by both parties in their divorce action.
None of those disqualifying facts are present here. The alternate payee of the proposed QDRO was defendant's former spouse, by rollover, not her attorney or the forensic accountant. The attorney's fees related to enforcement of child support and equitable distribution obligations, not dissolution of the marriage. The forensic accountant fees related to investigation of defendant's meritless marital asset dissipation claim. And the QDRO payments did not violate the annuity plan, which permits transfers by rollover, as evidenced by the Annuity's approval of the proposed QDRO. Under these starkly different circumstances, the proposed *107QDRO violated neither ERISA nor our holding in Johnson. Entry of the proposed QDRO to enforce the two fee awards is permissible under ERISA's anti-alienation exception.
Other courts have held QDROs may be used to enforce a counsel fee award incurred in obtaining a child support order, Silverman v. Spiro,
The Silverman court distinguished Johnson, noting the alternate payee was the child's father, not the attorney. Silverman,
Necessarily implicit, however, in the Federal law's recognition of a QDRO, is authorization for the reimbursement of attorney's fees incurred in obtaining a proper order. Were it otherwise, a former spouse or party who succeeded in obtaining an appropriate QDRO, would have the order reduced by the necessity *8of paying attorney's fees. In some circumstances, a former spouse or party might even forgo seeking a needed QDRO because of the prohibitive nature of unreimbursed attorney's fees. These results would undermine the intent of Congress in establishing the QDRO exception by denying deserving parties and children a recovery to which they are entitled.
[Id. at 8 .]
We concur with this analysis. A fundamental maxim of equitable jurisprudence is that "equity will not suffer a wrong without a remedy." Crane v. Bielski,
We further note the broad protections afforded to child support orders when Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), 109 P.L. 8,
Ordinarily, QDROs should be utilized to enforce counsel and expert fee awards only when other assets sufficient to satisfy the awards either do not exist or have been made unavailable by the obligor. We find that to be the case here.
For these reasons, we hold plaintiff was entitled to enforce the counsel and expert fee awards through a QDRO naming her alternate payee. The trial court failed to permit that relief.
B.
We next address the enforcement of the college tuition reimbursement arrears through a QDRO naming plaintiff as alternate payee. For the following reasons, we conclude the college tuition reimbursement arrears were enforceable against defendant's annuity funds through a QDRO.
First, the trial court properly classified the college tuition payment as child support. "[I]n appropriate circumstances, the privilege of parenthood carries with it the duty to assure a necessary education for children." Newburgh v. Arrigo,
*109Ricci v. Ricci,
Enforcement of child support arrears by QDRO is allowable under *9ERISA's anti-alienation exception. Second, both plaintiff and the child fall within ERISA's definition of permissible alternate payee because plaintiff is a former spouse and the child is defendant's son. Third, the payment of the college tuition arrears does not violate the Annuity plan and the form of the proposed QDRO was approved by the Annuity.
Therefore, entry of a QDRO in the amount of $ 14,514 payable to plaintiff for college tuition reimbursement is permissible. It falls within the exception to ERISA's anti-alienation provision since it is part of defendant's obligation to support his son. It is also permissible as reimbursement to plaintiff for child support payments, to the extent plaintiff was forced to make them on defendant's behalf, because they "related to" defendant's child support obligation.
We hold plaintiff was entitled to enforce the college tuition reimbursement arrearages through a QDRO naming her alternate payee. The trial court failed to permit that relief.
C.
Last, we address the enforcement of the counsel fee judgments by an enhanced wage execution. Domestic support orders are enforceable through an enhanced wage execution of fifty-five percent of the obligor's disposable income pursuant to
The same reasoning applies to spousal support judgments and attorney's fees incurred to obtain or enforce spousal support. Id. at 186-88,
III.
In sum, we reverse the trial court orders denying entry of a QDRO payable to plaintiff from defendant's ERISA protected annuity funds to enforce the unpaid counsel fee, forensic accountant fee, and tuition reimbursement awards. We also reverse the order denying enforcement of the counsel fee judgments by an enhanced wage garnishment to the extent they related to child or spousal support. We remand for further proceedings consistent with this opinion.
Reversed and remanded. We do not retain jurisdiction.
Remarkably, in the midst of the 2016 enforcement motion practice, defendant advised the court he transferred all of his assets, including the marital residence and annuity funds, to a self-executed trust. This precipitated the entry of a supplemental QDRO to enforce, by rollover, the $ 119,500 equitable distribution settlement owed to plaintiff pursuant to the PSA.
In addition to dissipating and transferring marital assets to a trust, defendant also routinely submitted baseless filings that generated otherwise unnecessary counsel fees and delayed enforcement of plaintiff's rights. For example, defendant filed meritless motions for recusal of the trial judge, to dismiss plaintiff's applications for want of subject-matter jurisdiction, and for leave to appeal.
Reference
- Full Case Name
- Joanna B. ORLOWSKI, Plaintiff-Respondent/Cross-Appellant v. Robert ORLOWSKI, Defendant-Appellant/Cross-Respondent.
- Cited By
- 6 cases
- Status
- Published