X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
It took a decade, but Adele Ciasulli has won what appears to be the biggest divorce award from a judge in New Jersey history, $35.8 million plus alimony and fees for her lawyers and experts. The win by her attorney, Paul Rowe, is also notable for another reason: Essex County Superior Court Judge James Convery made a rare departure from the rule of valuing marital assets at the time of the divorce filing. Instead, the judge found the wife entitled to some of the huge growth of her husband’s business eight years after she filed her complaint. Convery said the increase was largely due to the economic boom, not the husband’s management acumen. In Ciasulli v. Ciasulli, FM-07-201-95, Convery also blasted the defendant husband, car dealer Robert Ciasulli Jr., for litigation strategies he characterized as being in bad faith. Specifically, the judge attacked Ciasulli for hiring a valuation expert with the sole motive of undervaluing his business to deprive his wife of her fair share of the equitable distribution. That is why, the judge said, he was awarding plaintiff Adele Ciasulli counsel and expert fees. The judge, in fact, ruled against Ciasulli on almost every argument, and accused him of concocting a story that the 50 percent interest of the business he had by 1983 was gifted to him by his father, who founded the business. Gifts are exempt from equitible distribution in a divorce. The judge said the evidence was clear that Ciasulli earned his 50 percent share by working tirelessly for his father for more than 20 years, and by putting up some cash to boot. When his father died in 1984, Ciasulli exercised an option to buy the remaining 50 percent from his father’s estate, court papers show. Ciasulli, 61, was out of the country last week and not available to comment, according to an assistant in his office. The value expert whose testimony the judge found to be “incredulous,” David Duryee of Moss Adams of Seattle, is retired and could not be reached, Moss Adams marketing chief Karen Kenyon said Friday. Ciasulli’s attorney, Francis Donahue of Donahue, Hagan, Klein & Newsome in Short Hills, N.J., was on vacation and unable to be reached, according to his office. In finding that the economy was the main factor in the business’ growth, Convery did give car dealer Ciasulli some credit for “better” managing his dozen or so dealerships during the go-go years of 1994 through 2002, awarding him 65 percent of the increased value. Still, with Bob Ciasulli Auto Group of Little Falls growing in net value by $28.69 million during those eight years, Adele Ciasulli’s 35 percent garnered her an extra $10.04 million. A FAMILIAR PRECEDENT Plaintiff lawyer Rowe, of Woodbridge, N.J.’s Greenbaum, Rowe, Smith, Ravin, Davis & Himmel, was well prepared to argue for the post-complaint valuation because he was in the case that set the precedent, Goldman v. Goldman, 248 N.J. Super. (App. Div. 1994). There, the court recognized there can be special circumstances that call for using a later date to value a spouse’s business to achieve equity. Rowe, in fact, lost Goldman, which also dealt with a husband who owned a car dealership. Rowe represented the wife who tried unsuccessfully to have the value date remain at the time of the filing because the business had subsequently dissolved. But Superior Court Judge Herbert Glickman, who handled the 1991 trial, found that the husband made a good faith effort to save the business by pouring in other family investments, only to lose everything. So Glickman used a later date, resulting in the wife getting no distribution from the car operation. An appeals court agreed. In Ciasulli, decided in an 85-page opinion by Convery on July 30, the circumstances were the opposite. After Adele Ciasulli filed for divorce, ending a 30-year marriage on July 1, 1994, BCAG’s business took off. With 16 dealerships at the time, the company’s revenues jumped by 23 percent from 1994 to 1995, and continued to grow in sales and profitability at a lesser pace up to mid-2002. The expert for Adele Ciasulli estimated that the stockholders’ equity for BCAG grew from $4.93 million in 1994 to $17.5 million in 2002. More important, Ciasulli, the sole stockholder, reported a gross income for 1994 of $144,180, jumping to $1.36 million by 1996, $3.32 million by 1998, $8.6 million for 1999 and 2000; and $10.69 million for 2001 with unearned income included. The business prospered even though fewer cars were sold in 2001 than in 1994 because the dealerships were pushing up profit margins by selling popular cars in good locations during a time of low inflation, low interest rates, manufacturer’s incentives and eager buyers, the judge concluded. PASSIVE V. ACTIVE ASSETS Convery, at Rowe’s urging, also applied another precedent, Savone v. Savone, 230 N.J. Super 482 (App. Div. 1990), which drew the distinction between “active” and “passive” assets. Passive assets are those whose value fluctuations are based on market conditions, such as art or real estate. An active asset involves contributions and efforts that directly increase the value, such as a business. The judge accepted the opinion of the wife’s value expert, Allen Winters of Rosenfarb Winters & Co. of Roseland, N.J., who argued that most of the growth was not due to Ciasulli’s management but to the economy and related factors, such as having the right brands and locations. Moreover, he noted that Ciasulli had been able to use $7.5 million from the 1997 sale of a dealership that he did not include in the marital assets — though the judge did — and also had use of millions of dollars in real estate, some for investment but most for his dealership locations. The result, Convery found, was that Ciasulli was able to pull out a total of $41 million from his operation during those eight years while Adele Ciasulli was waiting for her day in court. The trial did not start until March 2003 because longstanding efforts at settlement talks, including use of a mediator, failed. It ended in October 2003 after 34 days of testimony. Convery ultimately accepted plaintiff expert Winters’ opinion that there were “overwhelming factors” showing that the increase in value was more passive than not. That was partly because Ciasulli continued doing the same thing, and in fact, sold dealerships but did not buy any new ones during the eight years. RICH LIFESTYLE Rowe, who tried the case with fellow partners Mark Sobel and Jacqueline Printz, says “there certainly have been bigger divorce actions but they were always settled before the end of a trial.” He adds, “We could not settle this case. There are many successful men who don’t accept the reality of equitable distribution.” Both sides were arguing over a huge pot. Bob Ciasulli’s business eventually reached sales of more than $360 million, and the couple lived large. There was dinner with Prince Rainer; the Grand Prix with Mario Andretti; a box at Giants stadium for Jets and Giants games; a box at the PNC Bank Arts Center; vacations at five-star hotels on the French Riviera and first-class seats on the Concorde; and more than $9,000 a year spent on a pet of Adele Ciasulli. Their shore home on the water in Mantoloking, N.J., has 10 bedrooms; seven baths; a dock with slips for four of their boats, including a 33-footer and a 22-footer with a captain; and servants, private schools and camps for their two sons. The shore home and boats were in the name of one of the business entities. When they married in 1964, Ciasulli was driving a parts truck for his father’s business while his wife was a clerk at Prudential Insurance Co. Gradually, he learned the business and became a trouble-shooter for his father. In 1979, after what his father called “hard bargaining,” he dropped plans to buy his own dealership and stayed on with his father, helping to grow the business. Convery rejected Ciasulli’s testimony that he was given 37.5 percent of the business, or half of his father’s 75 percent share, around 1979. Rather, he pointed out that Ciausulli conceded that he bargained with his father and that he put in “sweat equity” for all those years. “The raising of the gifting issue was not an honest mistake as to one’s rights and duties and required discovery and a trial resulting in a finding that there was clearly no evidence to support the defendant’s attempt to immunize part of BCAG from equitable distribution,” the judge wrote. Convery further blasted Ciasulli for initially submitting a report of his net worth at the time the divorce papers were filed — mid-1994 — at $47 million, only to revise that to $19.6 million six months later. The judge went on to chide Ciasulli for using an expert that folded the real estate values of the dealerships into the auto sales business while most experts, the judge found, separated out real estate. The result of folding the real estate values into the operating business was to lower the overall valuation of Ciasulli’s assets. The $38.8 million judgment awarded to Adele Ciasulli will be deducted by $700,000 she has received by court order. Ciasulli has also been paying her $10,000 a month for the past nine-plus years, and has been buying her two new, fully insured cars annually. He has also been maintaining all their properties. As for alimony, Convery awarded her $26,000 a month for living expenses. But the judge made clear that when Ciasulli produces a “fully disclosed financial equitable distribution pay plan,” alimony could be reduced or eliminated. The judge further ordered Ciasulli to pay his ex-wife $2.5 million by late next month as the first payment. Ciasulli told the court he has spent $8.66 million on professional fees and litigation costs and has paid three-fourths of the mediator’s $94,950 bill. That includes $1.83 million in legal fees he has paid for his ex-wife. Rowe expects to file an application for the balance of fees soon.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.