Equitable Distribution In Small Business Divorce Is Contested
- June 17, 2015
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In Hetherington v. Molinaro, a divorce involving a small businesss, the Defendant appealed from a trial court’s confirmation of two arbitration awards, one setting the termination date of the marriage in the parties’ divorce and the other one setting value and equitable distribution of a business formed and operated by the Plaintiff. The Appellate Court affirmed the decision of the lower court. The parties in his case were married in 1996. In 1999, the Plaintiff established Hetherington Information Services, LLC (“HIS”) and was the sole owner. In 2006, she stopped working at this company and started working for a company called AON. After the parties separated in 2008, the Plaintiff returned to HIS and expanded the business. In 2010, the Plaintiff filed a complaint for divorce that did not go anywhere following a series of adjourned case management conferences. The parties both retained the services of forensic accountants to assess the value of HIS. The parties mutually dismissed the first complaint for divorce after deciding not to proceed in 2011. Later that year, the Plaintiff filed a second complaint for divorce and in 2012 the parties agreed to binding arbitration on the termination date of their marriage for equitable distribution purposes as well as the value of HIS. In 2013, in a written decision, the arbitrator made detailed factual and legal findings regarding the issues in his case. Pursuant to Portner v. Portner, 93 N.J. 215, 460 A.2d 115 (1983) and Painter v. Painter, 65 N.J. 196, 218, 320 A.2d 484 (1974), a divorce complaint generally marks the end of a marriage for equitable distribution purposes when the proceeding culminates in a final judgment of divorce. However, the arbitrator relied on Genovese v. Genovese, 392 N.J. Super. 215, 920 A.2d 660 (App. Div. 2007), which held that a marriage is deemed ended for equitable distribution purposes prior to the filing of a divorce complaint where the facts “provide incontrovertible evidence that the marital partnership terminated prior to the filing of the . . . complaint” . . . and where the “facts evidence more than a mere physical separation . . . .” Id. at 226-27. The arbitrator determined, by the parties’ own admissions, the marriage ended by February 11, 2010 and set the termination of the marriage to that date for equitable distribution purposes. The arbitrator also awarded the Defendant with 25% interest in the value of HIS as of February 11, 2010 or $18,750. The Defendant appealed. The Appellate Division affirmed the lower court’s decision to uphold the arbitrator’s decision. According to the court, an arbitrator may “conduct an arbitration in such a manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding.” N.J.S.A. 2A:23B-15(a). The arbitrator’s authority includes the power of “determine the admissibility, relevance, materiality, and weight of any evidence.” N.J.S.A. 2A:23B-15(a). The court concluded that it found no basis to disturb the arbitrator’s award as it was consistent with the arbitrator’s broad authority to conduct the proceeding and the record sufficiently supported the final award. The equitable distribution of assets is of the most emotional and complex aspects of a divorce. If you are involved in a battle over the pre- or post-judgment division of marital property, assets, or debts it is extremely important that you seek out the advice of an experienced attorney before moving forward. For more information about divorce where a party owns a business, high net-worth divorce, equitable distribution, post-judgment modification, contested divorce, alimony, or other family law matters in New Jersey visit DarlingFirm.com. This blog is for informational purposes and in no way intended to replace the advice of an attorney.