Opinion
DOCKET NO. A-0072-12T1 DOCKET NO. A-0228-12T1
04-27-2015
JOSEPH E. MCGRATH, Plaintiff-Respondent, v. LISA K. REILLY-MCGRATH, Defendant-Appellant. NANCY ANN TAYLOR and THOMAS B. TAYLOR, Plaintiffs-Appellants, v. LISA K. REILLY-MCGRATH, Defendant-Respondent.
Peter C. Paras argued the cause for appellant in A-0072-12 (Paras, Apy & Reiss, P.C., attorneys; Mr. Paras, of counsel and on the brief). Joseph E. McGrath, respondent in A-0072-12 argued the cause pro se. Henry F. Wolff, III, attorney for appellants in A-0228-12. Respondent has not filed a brief in A-0228-12.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fisher, Nugent and Accurso. On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-54-05. Peter C. Paras argued the cause for appellant in A-0072-12 (Paras, Apy & Reiss, P.C., attorneys; Mr. Paras, of counsel and on the brief). Joseph E. McGrath, respondent in A-0072-12 argued the cause pro se. Henry F. Wolff, III, attorney for appellants in A-0228-12. Respondent has not filed a brief in A-0228-12. PER CURIAM
In July 2004, plaintiff Joseph McGrath commenced a divorce action against his wife of three years, defendant Lisa Reilly-McGrath (Reilly), that mainly concerned whether six pieces of real estate titled in Reilly's name, two of which were purchased prior to the marriage, should be equitably distributed. In July 2006, while the divorce action was still pending, Nancy and Thomas Taylor filed a Law Division suit to collect on a $169,000 note executed by Reilly at the time of closing on their sale of real property, which was alleged in the divorce action to be marital property; in 2007 they commenced in the Chancery Division a foreclosure suit, which, in 2008, was transferred to and consolidated with the divorce action.
Although these suits were consolidated, the issues were the subject of separate bench trials presided over by different judges. At the conclusion of the trial in the Taylors' action, the judge found the mortgage and note unenforceable against Reilly, primarily because the judge determined that McGrath, and not the Taylors, was the real party in interest in the suit and because the Taylors failed to prove they ever possessed the intent to enforce the alleged debt.
In the divorce action, the other judge determined that all six pieces of real estate were subject to equitable distribution and should be equally divided between Reilly and McGrath.
The Taylors appeal the decision in their part of the case, and Reilly appeals the equitable distribution determinations. In light of the standard of appellate review that guides our examination of the findings made by both judges at the conclusion of these bench trials, Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974), we affirm.
We turn, first, to the Taylors' appeal.
I
In their appeal, the Taylors argue there is no factual basis for the judge's determination that McGrath was "the real party in interest" and, also, that the judge erred by "rais[ing] an affirmative defense sua sponte." We reject these arguments.
The subject of this action was a single family home on Bayside Parkway in Middletown. In a transaction which was the subject of extensive testimony, title to this property was transferred by the Taylors to Reilly in December 2002. We first attempt to concisely describe the evidence adduced with regard to this transaction, and we then discuss the judge's findings of fact and conclusions of law in light of our standard of review.
A
McGrath and Reilly met in 2000. McGrath was then in his mid-forties and self-employed in various aspects of real estate since 1978. Throughout the years, McGrath had relied on private mortgages from friends and family to acquire various pieces of real estate he had owned and sold in his business ventures. In more recent years, he was unable to obtain a bank mortgage because of bad credit as a result of two earlier bankruptcies. He also owned about 250 acres of land that "no longer had any value," and he had spent a significant amount of money in a divorce proceeding with his first wife.
Reilly had worked in travel management for about twenty years when she met McGrath. She had no experience in real estate other than through ownership of her home. When she met McGrath, she became interested in purchasing investment real estate to provide a more stable source of income than the travel business provided, and she wanted to generate income in this manner so as to allow her to stay home and begin a family. According to McGrath, Reilly was "quite interested in joining" him in a plan to acquire properties.
They married in May 2001, and soon thereafter they purchased, in Reilly's name, a house on Clinton Street in Middletown. A few months later, as they were walking in the neighborhood, they encountered Nancy and Thomas Taylor in the yard of their nearby home on Bayside Parkway. Nancy and McGrath had grown up in the same neighborhood and were friendly. Before long, Nancy said she and her husband were trying to sell their home, as well as four neighboring bungalows, because they wanted to retire and move to Florida.
Reilly later told McGrath she wanted to purchase the Taylors' home to live in and their bungalows as investment property. In March 2002, Reilly and McGrath met with the Taylors to discuss this possibility. Nancy testified she wanted to sell the house along with the bungalows as a "package deal"; the sale would also have to be conditioned upon the Taylors remaining in the Bayside Parkway home after the sale until construction of their Florida home was complete. Reilly and McGrath agreed. As a result of additional discussions on a host of subjects and permutations of the deal, however, it appeared Reilly would not have sufficient funds to accomplish the transaction. According to Reilly, Nancy said she would provide Reilly a $169,000 gift of equity, which would constitute Reilly's down payment on the purchase of the Bayside Parkway property, and, in exchange, Reilly would not charge the Taylors rent while they lived there after closing. Reilly said she was unfamiliar with the term "gift of equity," but McGrath told her it meant she would not have to actually pay the $169,000 in question; it would be considered a down payment on the purchase price. In their testimony, Nancy and McGrath denied Nancy ever offered to give Reilly a "gift of equity" toward the purchase price. According to them, the total purchase price for the bungalows and house was $600,000 ($200,000 for the bungalows and $400,000 for the house).
At trial, Nancy produced the contract she drafted for the sale of the Bayside Parkway property that listed the sale price as $400,000, identified McGrath and Reilly as the buyers, and provided that buyers would give a $19,000 deposit to the Taylors on January 22, 2002; it made no mention of a gift of equity. This document also provided that after closing the Taylors would live in the home for a five-month period and would pay McGrath and Reilly $1500 monthly rent. The Taylors signed the contract on January 15, 2002; it was not executed by anyone as buyer. Reilly testified she refused to sign this contract because she was named as the sole buyer and because she never agreed to provide a $19,000 deposit. She also testified that in exchange for the gift of equity, she had agreed to forego the monthly rent due from the Taylors while they continued to live in the house after closing.
On April 30, 2002, Reilly and the Taylors closed the sale of the four bungalows. Both sides were represented by counsel. According to a deed prepared by the Taylors' attorney, Reilly purchased the bungalows for a total of $200,000, financed through a private mortgage that the Taylors provided to Reilly, who testified she did not obtain a bank mortgage because the Taylors wanted the closing to occur quickly instead of waiting for Reilly to obtain a mortgage loan. Reilly made timely monthly payments to the Taylors and eventually obtained a bank mortgage to pay the balance in full.
Reilly retained the same attorney for the closing on the Bayside Parkway property. The Taylors did not utilize the services of an attorney. The closing occurred at the offices of Reilly's attorney. The deed and HUD-1 form, both of which Reilly's attorney prepared, memorialized a purchase price of $400,000. The HUD-1 form also stated that Reilly had given the Taylors a $169,000 deposit on the property. The attorney testified Reilly told him she had paid this amount, and the Taylors confirmed they had received it, but he did not see any money exchanged, which "bothered" him. Because of his concern, he asked the Taylors to sign an affidavit stating they had received the down payment, and they signed this document at the closing. The attorney also testified he was "absolutely certain" there was no mortgage other than that obtained by the bank that had given Reilly a loan. And he did not recall anyone discussing a gift of equity.
Nancy testified that when she read the HUD-1 form at the closing she told the attorney it was incorrect and she would not close because Reilly had never paid the $169,000 deposit. She claimed Reilly then leaned over and whispered she had the money in the bank and would give it to her the following day. Nancy said she trusted Reilly, and the transaction was closed.
McGrath testified that when he went to the closing, he thought Reilly had the funds to pay the Taylors the $169,000. When he learned otherwise, he asked the Taylors what he and Reilly could do to save the deal. Because he wanted to assure the Taylors the $169,000 debt would be paid, and because he believed Reilly would be able to pay the balance the following day — and while the attorney was in another room — McGrath retrieved his computer and printer from his car and printed a note and a mortgage, "hastily" filling in the blanks. McGrath testified no one told the attorney that Reilly and the Taylors had entered into this second mortgage.
He testified that because no one had a calculator or amortization schedule to compute the monthly payments, he left that part blank.
This second mortgage provided that Reilly would repay the $169,000 debt to the Taylors and that the eight percent yearly interest would be calculated on a thirty-year payout. Reilly, however, denied she owed the Taylors $169,000 at the time of closing or any time thereafter. She said she and the Taylors had agreed the Taylors would give her a $169,000 gift of equity and she would not have to use her funds to make a down payment. Reilly denied she whispered anything to Nancy and denied McGrath gave her a note and mortgage to sign or that she signed it.
McGrath testified that the day after the closing, Reilly was unable to obtain the $169,000 for the Taylors. He claimed he spoke to Nancy, who was very understanding, and that, according to the note, Reilly had one month to pay the balance, during which she would try to obtain the money. Nancy testified Reilly provided one monthly $759 payment, which was conveyed electronically, in January 2003 towards the $169,000 balance. Nancy thereafter suggested Reilly allow the Taylors to remain in the house a few months longer than expected, forgo the $1500 monthly rent the Taylors had agreed to pay Reilly, and consider it "a wash." This way, the Taylors would not have to pay Reilly and Reilly would not have to pay them each month. Reilly denied any such arrangement and claimed that, in exchange for the gift of equity, she agreed to not charge the Taylors rent.
The judge noted in his opinion that this payment was not documented at trial.
In about September 2003, the Taylors moved into their home in Florida. Around the same time, Reilly and McGrath were having marital troubles, and Reilly moved into the house without McGrath. On May 14, 2004, McGrath provided the Taylors with a check from his business account for $1513.40, which Nancy said was for two months of mortgage payments.
On cross-examination, Nancy acknowledged that two monthly payments of $759 - the alleged proper monthly sum due on the note - did not amount to $1513.40; she did not know who decided $1513.40 was the correct amount or why the discrepancy. In any event, the check bounced, although the following month the Taylors traveled to New Jersey and McGrath allegedly then paid them $1513.40 in cash.
In July 2004, McGrath filed his divorce complaint. A few months later, McGrath told Nancy she should demand payment on the mortgage loan. He also suggested the Taylors obtain legal advice, and he provided the name of an attorney. On October 18, 2004, the Taylors wrote to Reilly, declaring their entitlement to $3036, i.e., four months' mortgage payments of $759 each. In September 2005, the Taylors retained the attorney recommended by McGrath and met with him on one or two occasions between September and November 2005. On September 27, 2005, the attorney notarized a sworn statement which McGrath signed and which stated McGrath had witnessed Reilly sign the December 19, 2002 mortgage. McGrath recorded the mortgage on October 24, 2005.
B
After hearing all this conflicting testimony over the course of eight days in January and February 2009, the trial judge rendered a written opinion containing his thorough findings of fact and conclusions of law. He found that Reilly had in fact signed the mortgage and the note and that the Taylors never gave her a gift of equity. The judge, however, refused to enforce the mortgage and note against Reilly because he determined that McGrath was the real party in interest in the suit and because the Taylors had failed to prove they ever intended to enforce the debt against Reilly.
The judge's determinations rested largely on his credibility findings. It appeared to the judge that Reilly and McGrath had an "arrangement of convenience" whereby Reilly would "be the record owner [of the properties] and McGrath would 'manage and maintain'" the properties because they both wanted to acquire rental properties to generate income but McGrath had bad credit and needed someone with a good credit rating to be the record owner of the real estate; Reilly had good credit, but needed someone with "connections and real estate savvy" to find and manage the properties. The judge found McGrath was an "experienced and sophisticated businessman in real estate matters," and Reilly was "unquestionably" aware of this and "relied upon McGrath's expertise to advance her objective." Although Reilly claimed McGrath took advantage of her good credit rating and finances, the judge noted that, to the extent this was true, "Reilly allowed him" to take advantage of her "and, indeed, may have welcomed it for as long as the relationship was on good terms" because Reilly "benefited by and from that arrangement."
The judge determined that the Bayside Parkway property "was one such property acquired under this 'arrangement.'" Thus, while McGrath was not named as a party in the Taylors' lawsuit, he was, in the judge's view, "very much a party-in-interest with respect to the subject property, more so, in the [c]ourt's view, than . . . the Taylors."
The judge did not find Nancy a credible witness. He observed that "throughout the proceedings" she appeared "uncomfortable" and "[a]t several key moments in her testimony" she "averted her eyes from the [c]ourt and the questioner; her body language bespoke evasiveness." The judge also noted that neither Nancy nor her husband "stayed for the duration of the trial," whereas McGrath "was an active, interested participant at these proceedings" despite his non-party status. He sat at counsel table with the Taylors' attorney, to whom he regularly conferred and passed notes. The judge also observed it was "no coincidence" the Taylors initiated this action after McGrath had filed his complaint for divorce, and he and Reilly "had drawn their respective battle lines in the matrimonial action, with the issue of equitable distribution looming."
With respect to the Bayside Parkway transaction, the judge determined: "The picture that emerges from these facts is one of murky self-dealing by [Nancy] Taylor, McGrath and Reilly." The judge rejected Reilly's claim that the Taylors gave her a $169,000 gift of equity as a deposit towards the purchase price, but he also found the note unenforceable against Reilly, citing numerous ambiguities in the document and concluding:
Under all the attendant circumstances, the [c]ourt concludes that, whatever the "understanding" was with respect to any monetary shortfall, supposed "loan" due Taylor, or any other contemplated arrangements, it was McGrath, not Reilly, who was the primary obligor with Taylor; and that McGrath devised the [n]ote and [m]ortgage for his own protection, not for the protection of the Taylors, and wielded it through Taylor for his own purposes when it suited him to do so.The judge was further persuaded to this conclusion by the fact that McGrath, not the Taylors, "urged that the note and mortgage be executed," and, also, that after the closing "it was McGrath, not Reilly, who made two sporadic 'payments' to [Nancy] ostensibly to pay down the [n]ote." For these and other reasons, the judge concluded that "McGrath, not Taylor" was the "real party-in-interest" and that McGrath had
through Taylor, orchestrated a sequence of events without a paper trail to now divest Reilly of any ownership interest in the property for purposes of asserting a claim for equitable distribution in the pending matrimonial action and, by implication, to obtain at least an equitable interest in the [Bayside Parkway] property through further arrangements with Taylor outside the scrutiny of the matrimonial [c]ourt.
The judge's findings more than amply established his ultimate conclusion, which rested largely on the clean-hands doctrine, see Faustin v. Lewis, 85 N.J. 507, 511 (1981); A. Hollander & Son, Inc. v. Imperial Fur Blending Corp., 2 N.J. 235, 246 (1949), that it would be inequitable to permit enforcement of the mortgage and note against Reilly. The judge's findings are entitled to our deference and his conclusion rested well within his considerable equitable discretion in ably sorting out the many strands of this tangled web.
We reject the Taylors' arguments and affirm the order under review in this appeal.
II
In her appeal from a December 6, 2011 order resolving the parties' equitable distribution disputes, Reilly argues:
For reasons not illuminated by the record on appeal, the same order was entered again on July 24, 2012, and the September 5, 2012 notice of appeal filed by Reilly seeks review only of the July 24, 2012 order. Because the parties attach no significance to this, neither will we.
I. THE TRIAL JUDGE FAILED TO PROVIDE ADEQUATE FINDINGS OF FACT AND CONCLUSIONS OF LAW IN ACCORDANCE WITH R. 1:7-4.We find most of these arguments to be of insufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We hereafter separately consider — and reject — only Reilly's arguments that the judge erred: (a) in equitably distributing the properties acquired in Reilly's name both before and during the marriage; (b) in rejecting the significance of the quitclaim deeds executed by McGrath in Reilly's favor; and (c) in failing to apply the doctrine of judicial estoppel to the fact that McGrath did not initially advise a bankruptcy trustee of his interest in the six properties.
II. THE TRIAL JUDGE FAILED TO MEET THE REQUIREMENTS OF N.J.S.A. 2A:34-23.1 TO MAKE SPECIFIC FINDINGS OF FACT ON ASSET ELIGIBILITY, ASSET VALUATION AND EQUITABLE DISTRIBUTION.
III. THE TRIAL JUDGE IMPROPERLY INCLUDED THE DEFENDANT'S PREMARITAL ASSETS IN HIS ORDER FOR EQUITABLE DISTRIBUTION.
IV. THE TRIAL JUDGE'S DECISION IS SO CONTRARY TO THE WEIGHT OF THE EVIDENCE THAT IT CONSTITUTES AN ABUSE OF DISCRETION.
V. THE PLAINTIFF'S CLAIM FOR EQUITABLE DISTRIBUTION OF THE DEFENDANT'S SIX PROPERTIES IS BARRED BY THE DOCTRINE OF JUDICIAL ESTOPPEL.
VI. THE FOUR QUITCLAIM DEEDS SIGNED BY THE PLAINTIFF CONSTITUTE A WAIVER OF ANY AND ALL CLAIMS TO AND INTERESTS IN SAID PROPERTIES AND THE PLAINTIFF CANNOT NOW ASSERT SUCH A CLAIM.
VII. THE EXECUTION OF FOUR QUITCLAIM DEEDS BY THE PLAINTIFF WITHOUT RESERVATION IRREVOCABLY CONVEYED ANY INTEREST HE MAY OTHERWISE HAVE HAD IN THOSE PROPERTIES TO THE DEFENDANT.
A
We start by recognizing that equitable distribution rests in the sound discretion of the family judge and proper findings will not be disturbed on appeal so long as the judge "could reasonably have reached [the] result from the evidence presented, and the award is not distorted by legal or factual mistake." La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001).
In fixing an equitable distribution award,
a trial judge enters upon a three-step proceeding. Assuming that some allocation is to be made, he [or she] must first decide what specific property of each spouse is eligible for distribution. Secondly, he [or she] must determine its value for purposes of such distribution. Thirdly, he [or she] must decide how such allocation can most equitably be made.
[Rothman v. Rothman, 65 N.J. 219, 232 (1974).]Pursuant to N.J.S.A. 2A:34-23.1, "the court shall make specific findings of fact on the evidence relevant to all issues pertaining to asset eligibility or ineligibility, asset valuation, and equitable distribution, including specifically, but not limited to" a number of factors listed in the statute that need not be repeated here.
In this case, after hearing testimony over the course of twelve days, starting in December 2010 and ending in June 2011, the family judge determined that all six properties in question were subject to equitable distribution and should be equally divided between the parties. In so finding, the judge accepted McGrath's testimony that, prior to the marriage, he and Reilly had agreed to partake in a joint real estate venture where they would purchase inexpensive real estate and generate income by improving and renting the properties to tenants.
On June 2, 2011 — the trial's last day — the judge determined, based on the parties' presentations at that time, there were grounds for divorce. We assume a judgment of divorce was also entered at or about that time, although it is not contained in the record on appeal. The judge then stated he was reserving decision on the equitable distribution disputes. He rendered his written decision in that regard on December 6, 2011, and entered an order to that effect on the same day. As we noted earlier, the same order was entered on July 24, 2012, and it is the later order that is under appeal.
As a general rule, property acquired prior to marriage is viewed as the sole property of the owner and not subject to equitable distribution upon divorce. Valentino v. Valentino, 309 N.J. Super. 334, 338 (App. Div. 1998). The public policy underlying equitable distribution, however, recognizes "that marriage is 'a shared enterprise, a joint undertaking, that in many ways . . . is akin to a partnership,'" which the parties may enter prior to the date of marriage. Weiss v. Weiss, 226 N.J. Super. 281, 287 (App. Div.) (quoting Smith v. Smith, 72 N.J. 350, 361 (1974)), certif. denied, 114 N.J. 287 (1988). Thus, in determining whether an asset acquired prior to marriage is subject to equitable distribution, a family judge must consider the particular facts of the case and the context in which they arise. Ibid. Because these are matters invoking the court's equity jurisdiction, the fixing of legal title to property has no great significance. Ibid.; Di Tolvo v. Di Tolvo, 131 N.J. Super. 72, 78 (App. Div. 1974); see also Perkins v. Perkins, 159 N.J. Super. 243, 246 (App. Div. 1978).
As the judge determined, McGrath's role in the venture, which began prior to the marriage, was to find properties based on his "strong familiarity with the area," his connections with property owners, his vast experience in the real estate business, and his knowledge regarding the value of real estate and how to improve it to generate income. What McGrath lacked was good credit and capital. "That," according to the judge "is where Ms. Reilly came into the picture" and how their venture led to the purchase of properties both before and during their marriage. For these and other reasons, the judge found the parties' joint real estate venture began prior to their marriage with the purchases of the Essex Street and Walnut Street properties. Even though these properties were titled in Reilly's name alone, the judge found they were acquired through joint effort and subject to equitable distribution.
Indeed, the evidence clearly revealed McGrath's link to these particular properties. McGrath's cousin had owned the Essex Street property, and McGrath was living there when he told Reilly the property would make a good investment. He was familiar with the work the property required to generate income, and he knew how to get the work done; Reilly provided the funds. And McGrath "discovered" the Walnut Street property, assessed the repairs required, and hired the people to get that work done; again Reilly provided the financing. The judge found McGrath was instrumental in increasing the values of these two properties and received no direct compensation as further evidence that this was a joint undertaking. In making these findings, the judge rejected Reilly's testimony that the profit McGrath's company earned from selling these properties to Reilly compensated him for his interest in the properties; instead, the judge found, as McGrath testified, that McGrath reinvested the majority of those proceeds into rehabilitating these and other properties he and Reilly acquired.
Even if the parties had not acquired the Essex Street and Walnut Street properties in contemplation of marriage, we discern from the judge's decision that he had determined, as a matter of equity, that McGrath still possessed some equitable interest in the property because he had invested significant time and effort into acquiring and improving them.
As a result, we are satisfied the judge's findings were based on the evidence he found credible and his conclusions were logically centered on accepted legal and equitable principles.
B
Reilly also contends the judge erred in giving inadequate consideration to quitclaim deeds executed by McGrath in her favor on some of the properties.
Quitclaim deeds ostensibly suggest the grantor intends to release to the grantee "any claim to or estate or interest in the lands described . . .," without indicating "an intent on the part of the grantor therein to reserve to himself any part of his claim to or estate or interest therein." N.J.S.A. 46:5-3. The judge rejected Reilly's argument in this regard because the evidence did not establish McGrath intended to waive his equitable distribution interest in the properties by signing the quitclaim deeds and because there was no "meeting of the minds evidenced by an offer and acceptance that sufficiently describes the intended bargain between the parties" with regard to these deeds. Moreover, McGrath claimed he signed only three quitclaim deeds, and he did so only because lenders insisted on this condition in making loans to Reilly. McGrath denied he intended to waive any interest in the properties.
Reilly claimed McGrath signed quitclaim deeds to all four properties acquired during the marriage, but the judge did not find that McGrath signed a quitclaim deed for one of the properties.
The judge was entitled to find from the credible evidence that McGrath did not intend to waive his equitable interests in these properties by signing the quitclaim deeds. These findings are entitled to our deference.
C
Reilly contends that McGrath's failure to initially disclose his interest in the six properties to the trustee in bankruptcy should preclude him, pursuant to the doctrine of judicial estoppel, from successfully asserting any claim to the real estate in this divorce action.
This doctrine precludes a party from asserting "a position contrary to a position it successfully asserted in the same or a prior proceeding." Kimball Int'l, Inc. v. Northfield Metal Prods., 334 N.J. Super. 596, 606-07 (App. Div. 2000), certif. denied, 167 N.J. 88 (2001). In order to have been successfully asserted,
[t]he judicial determination does not have to be in favor of the party making the assertion. If a court has based a final decision, even in part, on a party's assertion, that same party is thereafter precluded from asserting a contradictory position."The purpose of the judicial estoppel doctrine is to protect 'the integrity of the judicial process.'" Kimball Int'l, Inc., supra, 334 N.J. Super. at 606 (quoting Cummings, supra, 295 N.J. Super. at 387).
[Cummings v. Bahr, 295 N.J. Super. 374, 387-88 (App. Div. 1996).]
Reilly claims that McGrath has attempted to "play[] fast and loose with the court" by claiming here he had an equitable distribution interest in the real property in question, while failing to initially disclose that property to the trustee in bankruptcy as assets to which he claimed an interest. She asserts his intention in bankruptcy was to portray his liabilities as exceeding his assets in order to discharge his debts, and that it would be inequitable to now allow him to successfully assert an interest in real estate to which he initially claimed no interest. Reilly also claims the trial judge erred in failing to make any findings on this argument or to address it in any way.
McGrath contends that judicial estoppel does not apply here because he did not argue a position in the trial court that was inconsistent with his position in the bankruptcy matter. He admits he initially failed to disclose the six properties to the trustee, but he emphasizes he had no intention of misleading the trustee and, at a later hearing, he answered the trustee's questions regarding his assets, to which the trustee suggested McGrath may have an equitable distribution interest in the six properties. And McGrath later reached a settlement agreement with the trustee that entitled the trustee to the first $100,000 of any equitable distribution award McGrath might receive from these six properties, demonstrating he did not benefit from his initial omission.
Although the judge made no findings on this point, we agree that the record suggests no adequate ground upon which it would be appropriate to activate the judicial estoppel doctrine as the means of barring relief.
III
To summarize, in A-0072-12, we affirm the July 24, 2012 order that evenly distributed between McGrath and Reilly the six properties in question. And, in A-0228-12, we affirm the March 25, 2010 judgment entered in Reilly's favor that dismissed the Taylors' complaint. I hereby certify that the foregoing is a true copy of the original on file in my office.
The stay of that order previously imposed by the trial court is hereby lifted.
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CLERK OF THE APPELLATE DIVISION