Post by Jim on Jun 12, 2009 16:06:22 GMT -5
The Three Pony Rule and a New York Giant
In the 1990's, a Kansas Appellate Court opined on a child support case involving parents of financial means that "no child, no matter how wealthy the parents, needs to be provided [with] more than three ponies." In that case, the court was attempting to define what is reasonable especially in cases where the family has access to virtually unlimited wealth.
This week, the Appellate Division of the Superior Court of New Jersey quoted the "three pony rule" in a child support case involving Michael A. Strahan, a New York Giants football player. You can read the complete Opinion here .
Apparently, Michael met Jean in 1994. At the time, she earned income as a model and a manager for a cosmetics company in the neighborhood of approximately $70,000 per year. They married in 1999 and become the parents of twin girls in 2004. According to the Opinion, Jean signed a Prenuptial Agreement prior to the marriage.
Michael filed a Complaint for Divorce in March 2005, before the twins were six months old. The parents apparently agreed that Jean would have primary residential custody of the girls. Although the Opinion does not specifically state so, presumably Michael’s football schedule precluded him from even considering being the primary residential parent during a good part of the year. The parties divorced after an 11 day trial in the summer of 2006. As 11 days is an extraordinary amount of time for a divorce trial, one can presume it was both expensive and acrimonious.
The parties engaged in significant post judgment bickering over the Prenuptial Agreement, equitable distribution, child support, disability insurance for Michael and counsel fees. The parties resolved some issues but could not agree on child support, disability insurance for Michael and counsel fees.
The trial court in this matter entered Orders on all three issues which were soundly overturned by the Appellate Court. Notably, an Appellate Court will usually not overturn a trial judge’s ruling in a domestic relations matter absent a significant abuse of discretion. Here, the Appellate Court obviously felt the trial judge was simply wrong.
In New Jersey, in high income cases, courts may supplement the guideline child support amounts based on the discretionary income available to the family and the children’s reasonable needs. Here, the trial court calculated that the basic child support amount under the guidelines was approximately $3,000 per month but these children have a supplemental need of approximately $17,000 per month so that the reasonable monthly needs of these twin girls, who are now toddlers, is slightly less than $20,000 per month. The court calculated that Michael earned 91% of the parties combined net monthly income and Jean earned 9%, thus ordering Michael to pay approximately 91% of the slightly less than $20,000 per month in child support, in addition to medical insurance, unreimbursed medical expenses, 80% of the agreed upon extracurricular activities and college expenses. (Jean’s income came from the interest and dividends she receives from the millions of dollars she received in the divorce settlement.) You can review the Opinion for the exact numbers.
Notably, during 2006, Michael earned approximately $5.87 Million dollars per year. Accordingly, he certainly had the ability to pay much more than the court ordered child support so ability to pay is not really the issue here. Rather, the Appellate Court found that the basis on which the numbers were calculated was simply not reasonable and not based in fact. Thus, the court cited the Kansas "three pony rule."
Just because Michael could afford to pay $20,000 per month (or even $50,000 or $100,000 per month), that does not mean that amount would be reasonable. While children should share in the good fortunes of their parents, parents also have a right to determine the lifestyle of their children which may include not spoiling them with every luxury available. Here, the Appellate Court was specifically critical of Jean’s claim that the "children" sent their nanny and her family to Jamaica for a 10 day vacation. Additionally, $27,000 per year for clothing for the girls was deemed unreasonable (even though Jean claimed that one of the three year old girls insisted on having her own purse when she left home). Jean apparently also included $30,000 worth of landscaping per year and the court obviously wondered how that benefitted the children.
In addition to the amounts claimed as reasonable for the children, the Appellate Court was concerned that the trial court did not impute any type of earned income to Jean. Apparently she has two college degrees and had been able at one time to earn $70,000 per year. The Appellate Court specifically noted that the children have had nannies since their birth, obviously freeing up Jean’s time to engage in at least some work. Notably, Jean had received $10.5 Million dollars in liquid assets at the divorce, which would result in a conservative yearly return of approximately $500,000 annually or, after considering taxes, approximately $28,000 per month. Clearly, this is not a case of a destitute mother.
Curiously, the trial court also ordered that Michael maintain a "disability policy" in the amount of $7.5 Million dollars, apparently concerned that should he become injured or disabled, he would lose his income. Apparently, while the case was pending, Michael announced his retirement from professional football which the Appellate Court noted in its decision. As that was not necessarily a matter of record in the case, the Appellate Court most likely improperly commented on that fact. However, the court’s decision in denying the need for disability insurance rested in the fact that if a trial court intends to secure child support, that must be in a reasonable manner. Here, the trial court had required $4 Million dollars in life insurance, yet $7.5 Million dollars in disability insurance and did not explain why a potential disability should be insured to that extent. Additionally, and perhaps most importantly, Michael had provided evidence that he was simply unable to secure that type of disability policy, considering his age and injuries.
The trial court had also awarded Jean approximately $14,000 in counsel fees but the Appellate Court overturned that, finding that Michael had not litigated in bad faith and, moreover, the parties’ Prenuptial Agreement was clear that neither party would be responsible for the other’s counsel fees.
Finally, out of apparently frustration, Michael had requested that if the Appellate Court had decided in his favor (which they clearly had), that the case be sent back to the trial court but assigned to a different judge based on what Michael perceived as bias. The Appellate Court refused this one request, so the trial court in this matter will no doubt have to face these parties again. Of course, the severe wrist slapping from the Appellate Court should keep the trial court in line.
One may wonder why a professional football player, who had his wife sign a Prenuptial Agreement, still had to go through such extensive and expensive litigation. Assuming the Prenuptial Agreement was airtight, exposure to litigation expense always exists when children enter the scene. Because child support and child custody decisions are determined in the best interests of the children, based on the circumstances at the time of the litigation, it is virtually impossible to contractually protect oneself from child support liabilities or losses in a child custody fight. Simply put, most, if not virtually all, child support and custody language in Prenuptial Agreements is unenforceable. One can at least attempt to limit exposure, by tying the hands of the less financially secure party by insisting on a waiver of alimony and/or equitable distribution, which will potentially leave the party without the funds to litigate a child support and custody matter. However, in this case, Jean received millions upon millions of dollars even after a short term marriage.
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The father appealed the New Jersey divorce judge's order declaring the parties' two sons emancipated but denying retroactive modification of child support. One son was born in 1981 and died in a car accident. The judge ruled this son emancipated as of the date of death. The second son was born in 1983 and was declared emancipated as of the filing date of the motion. Concluding the trial judge misapplied the retroactivity bar in N.J.S.A. 2A:17-56.23(a) and the statute imposes no bar to termination of child support retroactive to emancipation, the appellate panel reversed. Petruzzi v. Petruzzi, New Jersey App. Div., September 9, 2008
In the 1990's, a Kansas Appellate Court opined on a child support case involving parents of financial means that "no child, no matter how wealthy the parents, needs to be provided [with] more than three ponies." In that case, the court was attempting to define what is reasonable especially in cases where the family has access to virtually unlimited wealth.
This week, the Appellate Division of the Superior Court of New Jersey quoted the "three pony rule" in a child support case involving Michael A. Strahan, a New York Giants football player. You can read the complete Opinion here .
Apparently, Michael met Jean in 1994. At the time, she earned income as a model and a manager for a cosmetics company in the neighborhood of approximately $70,000 per year. They married in 1999 and become the parents of twin girls in 2004. According to the Opinion, Jean signed a Prenuptial Agreement prior to the marriage.
Michael filed a Complaint for Divorce in March 2005, before the twins were six months old. The parents apparently agreed that Jean would have primary residential custody of the girls. Although the Opinion does not specifically state so, presumably Michael’s football schedule precluded him from even considering being the primary residential parent during a good part of the year. The parties divorced after an 11 day trial in the summer of 2006. As 11 days is an extraordinary amount of time for a divorce trial, one can presume it was both expensive and acrimonious.
The parties engaged in significant post judgment bickering over the Prenuptial Agreement, equitable distribution, child support, disability insurance for Michael and counsel fees. The parties resolved some issues but could not agree on child support, disability insurance for Michael and counsel fees.
The trial court in this matter entered Orders on all three issues which were soundly overturned by the Appellate Court. Notably, an Appellate Court will usually not overturn a trial judge’s ruling in a domestic relations matter absent a significant abuse of discretion. Here, the Appellate Court obviously felt the trial judge was simply wrong.
In New Jersey, in high income cases, courts may supplement the guideline child support amounts based on the discretionary income available to the family and the children’s reasonable needs. Here, the trial court calculated that the basic child support amount under the guidelines was approximately $3,000 per month but these children have a supplemental need of approximately $17,000 per month so that the reasonable monthly needs of these twin girls, who are now toddlers, is slightly less than $20,000 per month. The court calculated that Michael earned 91% of the parties combined net monthly income and Jean earned 9%, thus ordering Michael to pay approximately 91% of the slightly less than $20,000 per month in child support, in addition to medical insurance, unreimbursed medical expenses, 80% of the agreed upon extracurricular activities and college expenses. (Jean’s income came from the interest and dividends she receives from the millions of dollars she received in the divorce settlement.) You can review the Opinion for the exact numbers.
Notably, during 2006, Michael earned approximately $5.87 Million dollars per year. Accordingly, he certainly had the ability to pay much more than the court ordered child support so ability to pay is not really the issue here. Rather, the Appellate Court found that the basis on which the numbers were calculated was simply not reasonable and not based in fact. Thus, the court cited the Kansas "three pony rule."
Just because Michael could afford to pay $20,000 per month (or even $50,000 or $100,000 per month), that does not mean that amount would be reasonable. While children should share in the good fortunes of their parents, parents also have a right to determine the lifestyle of their children which may include not spoiling them with every luxury available. Here, the Appellate Court was specifically critical of Jean’s claim that the "children" sent their nanny and her family to Jamaica for a 10 day vacation. Additionally, $27,000 per year for clothing for the girls was deemed unreasonable (even though Jean claimed that one of the three year old girls insisted on having her own purse when she left home). Jean apparently also included $30,000 worth of landscaping per year and the court obviously wondered how that benefitted the children.
In addition to the amounts claimed as reasonable for the children, the Appellate Court was concerned that the trial court did not impute any type of earned income to Jean. Apparently she has two college degrees and had been able at one time to earn $70,000 per year. The Appellate Court specifically noted that the children have had nannies since their birth, obviously freeing up Jean’s time to engage in at least some work. Notably, Jean had received $10.5 Million dollars in liquid assets at the divorce, which would result in a conservative yearly return of approximately $500,000 annually or, after considering taxes, approximately $28,000 per month. Clearly, this is not a case of a destitute mother.
Curiously, the trial court also ordered that Michael maintain a "disability policy" in the amount of $7.5 Million dollars, apparently concerned that should he become injured or disabled, he would lose his income. Apparently, while the case was pending, Michael announced his retirement from professional football which the Appellate Court noted in its decision. As that was not necessarily a matter of record in the case, the Appellate Court most likely improperly commented on that fact. However, the court’s decision in denying the need for disability insurance rested in the fact that if a trial court intends to secure child support, that must be in a reasonable manner. Here, the trial court had required $4 Million dollars in life insurance, yet $7.5 Million dollars in disability insurance and did not explain why a potential disability should be insured to that extent. Additionally, and perhaps most importantly, Michael had provided evidence that he was simply unable to secure that type of disability policy, considering his age and injuries.
The trial court had also awarded Jean approximately $14,000 in counsel fees but the Appellate Court overturned that, finding that Michael had not litigated in bad faith and, moreover, the parties’ Prenuptial Agreement was clear that neither party would be responsible for the other’s counsel fees.
Finally, out of apparently frustration, Michael had requested that if the Appellate Court had decided in his favor (which they clearly had), that the case be sent back to the trial court but assigned to a different judge based on what Michael perceived as bias. The Appellate Court refused this one request, so the trial court in this matter will no doubt have to face these parties again. Of course, the severe wrist slapping from the Appellate Court should keep the trial court in line.
One may wonder why a professional football player, who had his wife sign a Prenuptial Agreement, still had to go through such extensive and expensive litigation. Assuming the Prenuptial Agreement was airtight, exposure to litigation expense always exists when children enter the scene. Because child support and child custody decisions are determined in the best interests of the children, based on the circumstances at the time of the litigation, it is virtually impossible to contractually protect oneself from child support liabilities or losses in a child custody fight. Simply put, most, if not virtually all, child support and custody language in Prenuptial Agreements is unenforceable. One can at least attempt to limit exposure, by tying the hands of the less financially secure party by insisting on a waiver of alimony and/or equitable distribution, which will potentially leave the party without the funds to litigate a child support and custody matter. However, in this case, Jean received millions upon millions of dollars even after a short term marriage.
__________________________________________________________________________________________________________________________________________________________________________
The father appealed the New Jersey divorce judge's order declaring the parties' two sons emancipated but denying retroactive modification of child support. One son was born in 1981 and died in a car accident. The judge ruled this son emancipated as of the date of death. The second son was born in 1983 and was declared emancipated as of the filing date of the motion. Concluding the trial judge misapplied the retroactivity bar in N.J.S.A. 2A:17-56.23(a) and the statute imposes no bar to termination of child support retroactive to emancipation, the appellate panel reversed. Petruzzi v. Petruzzi, New Jersey App. Div., September 9, 2008
