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Money received by a wife in a legal malpractice settlement stemming from the divorce trial can be used to reduce or eliminate alimony, a Bergen County, N.J., judge ruled last week. Superior Court Judge Ellen Koblitz also found that a supported spouse could not pay an excessive amount for a new home and then complain she does not have enough money for savings. Koblitz’s ruling ended alimony of $42,000 a year for the wife in Crews v. Crews, which has been in the courts for 13 years and is about to go to the Appellate Division for a fourth time. Barbara Crews received a $1.49 million malpractice settlement in March 2003, which netted her $940,000 after counsel fees and expenses. Koblitz concluded that the award negated the need for further alimony, since — even at 5 percent interest — Crews would earn $45,000 annually on that sum, more than the $42,000 in annual alimony. “Therefore, she does not need that alimony, and therefore her alimony will end as of the date she received that settlement,” As a result, Crews must pay her ex-husband 13 months of alimony, or $45,500. The case’s bizarre journey up and down the court system was triggered at the original divorce trial in 1994, when Barbara Crews’ lawyer walked off her case because he said he needed more time for discovery and counsel fees from the husband, which had been ordered but not yet paid, to continue the case. The lawyer, Hackensack solo practitioner Stephen Roth, had received 12 adjournments over three years but the presiding judge denied his request for a 13th. The trial judge said he would interrupt the trial for Roth to conduct more discovery, but Roth, with Crews’ assent, walked out the first day and the trial proceeded ex parte. Years later, Crews sued Roth for malpractice. Meanwhile, the divorce case set new precedent. Crews v. Crews, 164 N.J. 11 (2000), held that the supported spouse’s standard of living during the marriage dictates alimony and modifications due to changed circumstances. The case extended the doctrine of Lepis v. Lepis, 83 N.J. 139 (1980), that the goal of alimony is to assist the supported spouse achieve a “reasonably comparable” lifestyle to that existing during the marriage. The Supreme Court remanded the case to the trial level to determine Crews’ standard of living, which could not have been established completely in 1994 because she walked out with her lawyer. In the original trial, Crews was awarded $800 a month in rehabilitative alimony for three years; $1,500 a month in child support; the couple’s home in Ridgewood, with a net value of $417,000; $43,000 in counsel fees; and a $91,490, six-year note at 8 percent, which ultimately yielded $129,600, as equitable distribution of her husband’s business. She was also allowed to keep $21,000 of $60,000 she had cleaned out of a joint account just before her husband filed for divorce. The husband kept his airport bookstore business as well as a vacation home on Martha’s Vineyard with a net value of $117,000. He was earning about $150,000 a year, which later grew to $250,000 to $400,000, according to evidence produced by Barbara Crews’ lawyer, Kingston solo practitioner Dale Console. Crews appealed her alimony after the 1994 trial, but in 1995 the Appellate Division turned her away, saying she couldn’t walk out and then complain about the results. The Supreme Court denied certification. Then, 10 months after her alimony ran out, Crews sought permanent alimony on the grounds that she could not continue what the original trial judge had labeled an “upper middle class Bergen County lifestyle.” She lost again, although Superior Court Judge Harold Hollenbeck did increase her child support. Later, her former husband was ordered to pay for a daughter’s graduate studies in Europe. During the second trial in 2001, Koblitz increased the alimony to $3,500 a month (though she had asked for $12,000) and made it permanent. Koblitz also awarded retroactive alimony of $133,500 to cover the 40-month period from the time her rehabilitative alimony expired, in late 1997, to July 2001. Last December, the Appellate Division upheld Koblitz on most fronts but remanded for reconsideration on four points: whether the $133,500 in retroactive alimony was justified; whether the counsel fees paid by the husband were necessary; whether Crews was entitled to money based on savings during the marriage and, in a footnote, what impact the anticipated malpractice award would have on alimony. The husband’s lawyer, Gail Mitchell of Union’s Schwartz Barkin & Mitchell, subsequently argued, in a Lepis application, that Crews’ circumstances had undergone “major” changes, which is required under Lepis. Mitchell cited the pending malpractice settlement, Barbara Crews’ purchase of the townhouse and her new job as a manager at a Chico’s clothing store. Koblitz ordered briefs, and conducted oral argument in mid-March. TOWNHOUSE MAKES IT A ‘WASH’ Koblitz ruled in Crews’ favor, concluding that there was a “savings component” to the 14-year marriage. Console argued the couple did not save, but rather plowed everything back into the airport bookstore business. Even the $60,000 in the joint account in 1991 when the marriage ended was in reality money that belonged to the business, Console claimed and the judge agreed. In finding that the re-investment in the business was in fact savings, Koblitz pointed to the success of the business as evidence. She said records show that the husband’s business, valued at $2.5 million in 1991, was sold in 2000 for $19 million. “I have to believe this was a tremendously successful business,” Koblitz said. But then the judge turned the tables on Crews, who two years ago had sold the four-bedroom marital home in Ridgewood for $613,000 and bought a $594,000 Paramus townhouse. Koblitz found that the purchase of an expensive townhouse offset Crews’ rights to be compensated for the savings component of the divorce settlement, since she could have found a cheaper home and banked $150,000 to $250,000 for retirement. “The savings component is a wash with regard to the increase of the investment in the [new] home,” Koblitz said. As for the effect of the net $940,000 malpractice award on alimony, Koblitz said that in computing the earnable yearly interest she must use a 7.3 percent rate, based upon a formula developed by the Appellate Division in Miller v. Miller, 160 N.J. 408, 422 (1999). That rate produces $68,620 a year. Koblitz said she realized it may be difficult to obtain 7.3 percent today but said her ruling is for the long term, noting that rates will rise again. Console argued that her client had only $840,000 to use because she had spent $100,000 to pay off their daughter’s student loans, paid counsel fees, paid off another loan and made down payments on cars for her two children. But the judge said that was her choice. The judge also rejected Barbara Crews’ argument that she lost interest on the use of the $940,000 over a decade because she would have had that money if not for the walk-out stunt of her divorce lawyer. But Koblitz said she assumes interest was factored in to the settlement. The judge did not disturb the $133,500 Barbara Crews received in 2001 as retroactive alimony, nor did she order Barbara Crews to return the counsel fees paid by her ex-husband. Console says she is disappointed, adding that she does not have to appeal because the appeals panel has retained jurisdiction. Mitchell, the lawyer for the husband, Robert Crews, says she believes the decision “is fair and just.” Lepis, she says, “opened the floodgates for more and more post-judgment motions,” and she fears Crews will ultimately lead to even more post-judgment litigation. That is because while Lepis requires “a major change, Crews says you can come back for a much more modest change of circumstances.” “Now you have Crews lifestyle experts and soon we’ll be talking about Crews applications routinely,” she says. Ironically, Mitchell adds, “ Crews has had a huge impact on the entire statewide court system, a big impact on alimony, but for the Crews themselves, they are walking away and won’t be impacted because now they both have enough to live on at their marital lifestyle.”

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