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Is award for malpractice in divorce trial a change in circumstances justifying reduction in alimony?

By Tim O'Brien

After 19 years of yo-yoing up and down the court system, the infamous Crews v. Crews divorce action, which has set precedent in family law, is ready to settle yet another novel issue.

Superior Court Judge Ellen Koblitz in Bergen County will rule next week on whether a big legal malpractice settlement won by a wife for bad lawyering during the divorce trial can constitute a change of circumstances justifying a cut in alimony.

Almost a year ago, Barbara Crews settled her seven-year malpractice suit against her original attorney, Stephen Roth, receiving $1.5 million from his carrier. Roth, a Hackensack solo practitioner, triggered the bizarre and twisting tale when, in 1994, he walked out of trial with his client in tow after the presiding civil judge denied his request for a 13th adjournment.

He argued that he couldn't adequately proceed and carry the case without upfront payment of fees that had been ordered by Judge Roger Kahn but not paid by the husband. After the walkout, Kahn held an ex parte trial.

In 2001, Crews' alimony was dramatically increased, including a $133,500 lump-sum retroactive payment. That followed the state Supreme Court's holding, in Crews v. Crews, 164 N.J. 11 (2000), that the supported spouse's standard of living during the marriage dictates alimony and any future modifications due to changed circumstances by either party.

Crews extended the doctrine of Lepis v. Lepis, 83 N.J. 139 (1980), which said the goal of alimony is to assist the supported spouse in achieving a lifestyle "reasonably comparable" to the one during the marriage.

But now that Crews is flush with her malpractice settlement - $940,000 after fees and expenses - it is her ex-husband who is seeking, through a Lepis application, a reduction in his ex-wife's alimony. He says it is a windfall that gives her more than enough to maintain what the original trial judge called an "upper middle-class Bergen County lifestyle."

Robert Crews' lawyer, Gail Mitchell, of Union's Schwartz, Barkin & Mitchell, argues in court papers that aside from the settlement "bonus," Barbara Crews' alimony deserves to be cut because she has bought a $596,000 townhouse when she should have purchased a home worth about $350,000 and banked $250,000 for savings that would earn interest.

The case has been up to the Appellate Division three times and is headed there for a fourth once Koblitz rules.

Last year, in its latest remand of the case, the Appellate Division retained jurisdiction and ordered Koblitz to make findings of fact on the change of circumstances for both sides to determine whether the alimony should be changed. She heard oral argument on March 8.

The $1.5 million settlement check paid by Liberty Mutual Insurance Co. in Crews v. Roth, BER-L-8529-00, was just a footnote in that last appellate opinion. The court noted the settlement, saying that Koblitz should also assess its impact.

It took several months for the amount to be disclosed because the settlement was sealed and was subject to a protective order in the divorce action by Barbara Crews' lawyer in the malpractice case, Princeton solo practitioner Glenn Bergenfield.

Her divorce lawyer, Kingston solo practitioner Dale Console, said she couldn't respond to discovery requests for the number because of the protective order. She said her adversary, Mitchell, finally got the settlement figure through discovery in the malpractice case.

Court papers in the malpractice case show that Liberty Mutual could have settled for the policy limit of $1 million, but battled Bergenfield for years and ultimately took the position that the $1 million offer by plaintiff Barbara Crews was a deal. Bergenfield countered that he had a time limit on his $1 million offer. (He prevailed in squeezing another $490,000 out of the carrier.) In March 2002, Roth was found liable for deviating from the standards of practice by a judge for his stunt of walking out of court with his client's assent on the first day of trial.

Whose Windfall?

While Mitchell alternatively calls the settlement a windfall or bonus to Barbara Crews, Console counters in her papers that it is Robert Crews who received a windfall.

Console reasons that had Barbara Crews been adequately represented in the divorce trial in 1994, she would have gotten that $1.49 million in her divorce judgment and would have had use of it for a decade. Instead, she was only able to get such a settlement by proving how much she lost due to Roth's bungling of her case by his faulty strategy of walking out.

Console argues, in effect, that Robert Crews got to keep and use that extra money, which is belatedly helping Barbara live the lifestyle she was accustomed to before the 1991 breakup of the 14-year marriage. Moreover, the new money isn't coming from the ex-husband's pocket.

What makes the case problematic is that it was Barbara Crews' own courtroom walkout that made it difficult to determine her standard of living during the marriage. Judge Kahn decided to go forward with the trial rather than hold Roth in contempt. He cross-examined witnesses for the plaintiff husband's side and he used the reports of a court-appointed expert and of Barbara Crews' expert in determining the equitable distribution of Robert Crews' business.

Barbara Crews initially was awarded $800 a month in rehabilitative alimony for three years; $1,500 a month in child support; the marital home in Ridgewood, with equity value at the time of $417,000; $43,000 in counsel fees, which was eventually paid; and a note valued at $91,490, with 8 percent interest, in equity distribution of her husband's airport bookstore business. She had been working in that business, but after the divorce began working in retail stores at about $18,000 a year, which has gradually risen to about $40,000. Mrs. Crews was also allowed to keep more than $21,000 of $60,000 she had cleaned out of a bank account just before the split. The account was in both names but was actually from the business.

The first appeals panel denied Barbara Crews' appeal, noting that she could not walk out and then cry about the results. The Supreme Court denied certification.

But in early 1998, 10 months after her rehabilitative alimony of $800 a month for three years had run out, Barbara Crews returned to court, arguing she couldn't live on the amount, along with the child support for the couple's two children.

She lost again, this time before Judge Harold Hollenbeck, and an appeals panel affirmed. But the state Supreme Court, in its 2000 ruling, found there were not enough facts to determine the marital standard of living as well as any modifications to which Barbara Crews may be entitled.

The next year, Koblitz upped the alimony to $3,500 a month, made it permanent and awarded Barbara Crews the $133,500 in retroactive alimony to cover the three years plus since she filed for an increase. Barbara Crews also received an increase in child support along the way, and Robert Crews was ordered to pay for their daughter's graduate studies in Europe after she had turned 21.

Koblitz must now revisit everything, from the malpractice settlement to the legal fees paid by the husband to the wife.

There are other assets and income to be considered. Robert Crews kept the couple's vacation home on Martha's Vineyard, valued then at $117,500 in equity, as well as his business, which according to court papers has grown nicely since the divorce. His income, $100,000 to $150,000 at the time of the divorce, climbed to $250,000 to $400,000, excluding perks, says Console.

Robert Crews' attorney, Mitchell, says the ex-wife has more than enough to match her prior lifestyle while building savings for her retirement.

Console says Barbara Crews' newfound savings, from the malpractice award, is needed to grow a nest egg, arguing that the couple never had savings because all the profits were plowed back into the business.