Opinion
DOCKET NO. A-1374-14T1
06-05-2015
P.W.H., Plaintiff-Respondent, v. B.J.H., Defendant-Appellant.
Adinolfi and Lieberman, P.A., attorneys for appellant (Robin M. Hauth, on the brief). Louis & Russell, attorneys for respondent (Frank A. Louis, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Koblitz and Haas. On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-523-13. Adinolfi and Lieberman, P.A., attorneys for appellant (Robin M. Hauth, on the brief). Louis & Russell, attorneys for respondent (Frank A. Louis, on the brief). PER CURIAM
Wife appeals from that portion of an August 28, 2014 order enforcing a Memorandum of Understanding (MOU) between the parties, awarding husband $5600 in counsel fees and, in conformance with the MOU, requiring the parties to resolve the remaining issues between them in their pending divorce by participating in arbitration. We affirm.
We refer to the parties as husband and wife to avoid confusion.
Although the parties are not yet divorced, an order compelling arbitration is a final order for appeal purposes. R. 2:2-3(a)(3).
The parties were married in 1988 and had five children. In 2000, husband obtained approximately twenty-one million pre-tax dollars from his share of the sale of his family's business, Henderson Brothers, Inc. Wife had obtained a master's degree in nursing. In recent years, the family lived off of assets. Irrevocable trusts were established for the children, which prohibited disbursements to pay for legal support obligations. After approximately twenty-five years of marriage, husband filed a complaint for divorce in 2012.
In March 2013, husband filed a motion that sought, among other things, a determination that the court could not, as a matter of law, direct the children's trusts to disburse funds for their education and support. Wife's cross-motion sought to direct the trustee to pay for the children's college expenses from their respective trusts. In the alternative, wife sought reformation of the trusts. Among other things, she also sought an accounting of husband's cash withdrawals totaling $56,000 and charitable contributions for 2012 and 2013; a non-overlapping visitation schedule at the parties' two country clubs; and counsel fees.
In the statement of reasons accompanying its May 3, 2013 order, the court found that it could not order the trustees to distribute funds because: 1) the trusts are separate legal entities, which were not parties in this action; 2) the trusts' language prohibits distributions "to pay for something that the parties already have a legal obligation to pay for on behalf of [their] children[;]" 3) "a court cannot order a trustee to take an action that is within his discretion under the terms of the trust agreement absent a showing that the trustee has breached his fiduciary duty or abused his discretionary powers [,]" which was not proven here; 4) and, the parties previously paid their children's education costs out of their own funds, noting that husband's case information statement (CIS) stated that the parties owned approximately $16 million worth of assets subject to equitable distribution. The court denied wife's request to reform the trusts, stating that she had provided no "basis in law or fact" as to why the court should do so. Husband was ordered to provide the accountings; the country club visitation schedule and request for counsel fees were denied. By consent, wife was granted exclusive possession of the marital residence.
See Tannen v. Tannen, 416 N.J. Super 248, 269 (App. Div. 2010) ("'A discretionary power conferred upon the trustee to determine the benefits of a trust beneficiary is subject to judicial control only to prevent misinterpretation or abuse of the discretion by the trustee.'" (quoting Restatement (Third) of Trusts, § 50 (2003))), aff'd 208 N.J. 409 (2011).
A CIS must be "filed and served in all contested family actions . . . in which there is any issue as to . . . support, alimony or equitable distribution." R. 5:5-2(a).
In October 2013, after mediation with a retired judge, the parties entered into the hand-written MOU with the assistance of counsel. It required: equally dividing all marital assets; payment of $200,000 tax free from husband to wife in return for a waiver of alimony; wife's retention of the marital home, at a total distributable value of $2.3 million; "in kind" equal division of personal property; and a provision that any issue not set forth in the partial property settlement agreement would be decided in arbitration, with a "right to appeal."
A document entitled "Kid Expenses Going Forward" was attached to the MOU, listing general categories without indicating how much the expenses were or how they would be paid.
The second page of the MOU states:
The following is intended to be a final binding agreement subject only to execution of a formal partial [property settlement agreement.] Any disputes as to the actual language shall be resolved by [the mediator] who shall resolve any dispute in a fashion to implement the agreement reached by the parties. His fee shall equally be divided between the parties. The parties agree that there are issues [that] remain unresolved.
Regardless of how those issue are resolved[,] that shall not create a right to modify the agreement now reached.Page three states:
The parties have carefully considered the provisions of this partial agreement as to the issues of graduate school. They have agreed that the amount of each parent's contribution to a graduate school expense shall be determined by the principles of Newburg v. Arrigo which are incorporated herein by reference. The parties ack[knowledge] [Newburg v. Arrigo] addresses college but they have agreed to be bound by it[s] principles. The obligation to contribute to Graduate [school] shall apply to [the oldest child] only and not the other [four] children.
88 N.J. 529 (1982).
On December 3, 2013, the court signed a consent order, granting dismissal of the divorce complaint. The order stated:
[T]he Court having been advised [that] the parties have reached an Agreement[,] which they wish to memorialize in this Order[,] which will result in a Stipulation of Dismissal being filed terminating this matter with the express reservation [that] this Order and the May 3, 2013 Order shall survive any Dismissal and remain in full force and effect . . . .The order further stated that "[i]t shall be fully enforceable in the future and shall be binding upon each of the parties, notwithstanding dismissal of the underlying action."
In January 2014, husband filed a motion that sought, among other things, to compel wife to execute the partial settlement agreement and supply related documents to accomplish this task; reimburse legal fees associated with the motion; find wife in violation of litigant's right for failing to supply documents within the requisite timeframe pursuant to the May 2013 order; and schedule firm dates for selecting an arbitrator and the first arbitration session. Wife's cross-motion sought, among other things, an order setting the value of the marital home at $1.99 million rather than $2.3 million, or in the alternative, that the matter be sent back to mediation to resolve the issue. In addition, she requested "that all other terms of the settlement reached by the parties at mediation on October 31, 2013 be enforced by the [c]ourt."
Wife alleged that husband had committed equitable fraud during their negotiations, which affected the home's valuation. In the statement of reasons accompanying its March 12, 2014 order, the court summarized wife's argument as follows:
In so far as the court entertained motions after the divorce complaint was dismissed, the judge implicitly restored the dismissed complaint for that purpose before reinstating the dismissal. Neither party objected, nor objects on appeal to this procedure. Were we to view the court as exceeding its jurisdiction, it would cause the parties to expend further legal costs for no purpose. Rule 1:1-2(a) states in pertinent part:
The rules . . . shall be construed to secure . . . the elimination of unjustifiable expense and delay. . . . [A]ny rule may be relaxed or dispensed with by the court in which the action is pending if adherence to it would result in injustice.
[Wife] certifies that [husband] willfully concealed the fact that he withdrew $50,000 from the parties' joint account, which was used for a down payment on the home [he] purchased for himself . . . because [he] knew that [wife] would 'never have agreed to the distributable value for the former marital residence that was over $300,000 above the most recent appraised value' if [she] was aware that [he] had purchased a home in the neighboring town and thus was unlikely to buy out her interest in the marital home and take possession of [it].
Wife certified that husband
began to insist in July 2013 that the home's value should be set at the highest value that either of us were willing to 'purchase' the home for and he claimed to be an interested 'buyer.' My position throughout this litigation had always been, and husband had previously agreed, that I would receive the former marital residence . . . in equitable distribution and would buy-out [his] equitable interest in same based on the appraised value of the home.She certified that her position changed when she believed husband might buy out her interest.
At oral argument, wife's counsel stated that the allegation of equitable fraud stemmed from husband's omission of the fact that he was buying another home in the area, rather than from a misrepresentation. In its statement of reasons, the court noted that wife's inquiry about husband's $50,000 withdrawal was not in the form of a discovery request and did not create a duty to inform her of the purpose of the withdrawal. The court further noted that because husband had only entered a contract to purchase a home, it did not yet constitute an asset that would have appeared on a CIS, nor did the pending purchase impact his earnings or CIS Schedule A expenses. The court wrote:
Schedule A is an itemization of shelter costs. Family Part Case Information Statement, Pressler & Verniero, Current N.J. Court Rules, Appendix V (2015).
The court is unable to find that [husband] had an affirmative obligation, under the Court Rules or the applicable case law, to disclose . . . that he had signed a contract to purchase a residential property . . . .
Permitting a litigant to vacate a settlement agreement based on the moving party's subjective belief that s/he would like to know pieces of information that came to light after the agreement has been executed contravenes the strong public policy of this State which favors finality of judgments. . . . . In other words, granting [wife's] request for relief would lead to the inevitable conclusion that no agreement is final.
In its order, the court wrote: "[Wife] seeks an order . . . that the distributable value of the former marital residence be set at . . . $1,990,000 and that all other terms of the settlement reached by the parties at meditation on October 31, 2013 be enforced by the court." The court denied the request to change the distributable value of the former marital residence and also denied counsel fees.
Wife subsequently retained new counsel and filed a motion seeking to set aside the entire MOU, arguing that it was the product of duress and coercion and was unconscionable. For the first time she alleged that a physical altercation between the parties in April 2012 left her traumatized and that she was pressured by the mediator to enter into the MOU.
Both parties sustained physical injuries and wife was arrested. Defendant certified that she suffers from post-traumatic stress disorder, however a submission from her doctor did not specifically address her mental state at the time of mediation.
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In the statement of reasons accompanying its August 28, 2014 order, the court found that the MOU was not unconscionable, noting that it was entered into after discovery was completed and with counsel present. The court also found that the MOU was not overly vague, stating that it was not unusual to leave open exact allocations for children's education expenses, which the parties here could subsequently resolve in arbitration. An agreement is unconscionable where there is "such patent unfairness . . . that no reasonable person not acting under compulsion or out of necessity would accept its terms." Howard v. Diolosa, 241 N.J. Super. 222, 230 (App. Div.), cert. denied, 122 N.J. 414 (1990). Looking at all of the provisions in the MOU, including the equal distribution of the proceeds from husband's share of his family's business, the court did not find that the MOU was patently unfair.
Especially given the late timing of the claim, wife does not allege facts that could meet the clear and convincing requirement to show unconscionability, or any other extraordinary basis to alter the MOU. See Miller v. Miller, 160 N.J. 408, 418-19 (1999). In addition, with many financial terms yet to be decided in arbitration, wife had a particularly difficult task demonstrating that the MOU was itself unconscionable.
The court correctly relied on long-established law encouraging and enforcing property settlement agreements. See Weishaus v. Weishaus, 180 N.J. 131, 143 (2004) ("[W]hile settlement is an encouraged mode of resolving cases generally, 'the use of consensual agreements to resolve marital controversies' is particularly favored in divorce matters." (quoting Konzelman v. Konzelman, 158 N.J. 185, 193 (1999))).
The court awarded husband $5600 in counsel fees, noting that the parties had substantial assets, which had already begun to be distributed. The court stated that it was "unable to find that [wife's] present position is reasonable, as her challenge to the MOU constitutes a repackaging of her legal argument based on information that was readily available to [her] when she filed her [earlier motion in February 2014.]"
"[I]n awarding counsel fees, the court must consider whether the party requesting the fees is in financial need; whether the party against whom the fees are sought has the ability to pay; the good or bad faith of either party in pursuing or defending the action; the nature and extent of the services rendered; and the reasonableness of the fees." Mani v. Mani, 183 N.J. 70, 94-95 (2005) (citing Williams v. Williams, 59 N.J. 229, 233 (1971)). "[T]he award of counsel fees and costs in a matrimonial action rests in the discretion of the court." Williams, supra, 59 N.J. at 233 (citations omitted); see R. 5:3-5(c). We do not disturb the exercise of the sound discretion of the court in awarding husband reasonable counsel fees.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION