Appellate Division Finds Binding MSA

May 05, 2017

At a mandatory pretrial settlement conference on August 7, 2014, the husband and wife reached a settlement that resolved property and child support issues.  The judge did not participate in the conference, and the spouses did not place the settlement terms on the record, but they were directed to appear for an uncontested divorce hearing on September 23, 2014.

On August 8, 2014, the spouses began preparing to sell the marital home in accordance with the settlement.  They listed the home with a realtor, and the husband borrowed money from his pension to pay the roughly $22,200 to bring the mortgage current.  The husband’s lawyer memorialized the settlement terms in a marital settlement agreement (MSA) and sent the MSA to the wife’s attorney on August 19, 2014.  On September 2, 2014, the wife unilaterally pulled the home off the market due to a dispute about custody arrangements.  The husband and wife did not sign the MSA, but nevertheless appeared at the hearing on September 23, 2014.  The judge adjourned the hearing to give the spouses time to resolve their differences, and told the wife’s attorney to send a letter describing the wife’s concerns to the husband’s attorney.

Rather than the minor language changes the spouses’ attorneys had discussed in an August telephone call, the wife’s letter requested additions and material changes to the settlement terms.  The husband filed a motion to enforce the MSA based on the agreement reached at the settlement conference or, alternatively, to hold a hearing to determine if they had reached an agreement sufficient to enforce the MSA.  The wife opposed the motion, claiming that they reached a tentative agreement that was subject to the husband showing the same care and concern for their 2 children that she does.

On October 31, 2014, the Family Part judge granted the husband’s motion to enforce the MSA, rejecting the wife’s contention that the settlement conference resulted in an agreement conditioned on the husband’s behavior respecting the children.  The judge found no factual dispute regarding that they reached a settlement, noting that the wife acknowledged that an agreement existed.  The court also pointed out that both the husband and wife partially performed the agreement’s obligations, and that the wife complained that the husband failed to perform other obligations.  In addition, the judge found that the attorneys’ handwritten term sheet and notes from the conference demonstrated that the MSA prepared by the husband’s counsel accurately set forth the agreement.  Accordingly, the judge concluded that a plenary hearing was unnecessary.  The judge also granted the husband’s request to have the wife pay the $2,280 in counsel fees he incurred in filing the motion, and scheduled an uncontested hearing for November 17, 2014.

The wife asked to adjourn the hearing so she could file a motion for reconsideration, but she did not actually file a motion. Accordingly, the judge proceeded with the hearing, at the end of which the judge entered a dual judgment of divorce (DJOD) that incorporated the MSA.  On December 15, 2014, the wife moved to vacate the DJOD under Rule 4:50-1(f) because she claimed it incorporated an MSA that was not agreed upon.  Alternatively, she requested amendment of the MSA to address 13 issues. The husband opposed the motion and requested attorney fees.

The Family Part judge denied the motion on February 2, 2015, observing that parts of the motion sought untimely reconsideration of parts of the October 31, 2014 order.  The judge also found the wife did not present exceptional circumstances that would justify vacating the DJOD or changing the MSA, and went through each issue the wife raised to explain why she was rejecting it.  The judge also ordered the wife to pay the husband’s $3,280 counsel fee because she showed bad faith in prosecuting the motion by raising issues she could have raised earlier, essentially filing an untimely motion for reconsideration, and taking contrary positions from those in her previous certifications.

The wife appealed both the November 17, 2014, and February 2, 2015 orders, but the Appellate Division dismissed the former as untimely.  The Appellate Division permitted appeal of the February 2, 2015 order only as to the denial of the wife’s motion to vacate the DJOD, as the rest of the order was interlocutory.  The wife raised 3 arguments: (1) the MSA is void because the husband failed to perform a condition precedent; (2) she did not agree to the MSA terms; and (3) the husband’s fraud in the inducement entitles her to relief from the DJOD.

The Appellate Division initially noted that it will not consider questions or issues not properly raised before the trial court, and neither the wife’s first nor third arguments were mentioned in the Family Part.  The wife’s assertions at oral argument, in her brief, and in her certification regarded revisions she wanted in the MSA.  The wife’s motion to vacate was based on Rule 4:50-1(f), which allows a court to grant relief from a final judgment for “any other reason justifying relief . . . .”  Her motion said nothing about subsection (c), which permits vacating a judgment based on fraud, misrepresentation, or other misconduct.  In fact, the Appellate Division pointed out that the wife did not object or otherwise respond when the Family Part judge stated during oral argument, “[t]here’s no fraud, there’s no misrepresentation.”  The Appellate Division thus declined to consider those arguments.

Nevertheless, the Appellate Division concluded that the arguments lacked merit, finding no indication in the record that the MSA was subject to a condition precedent.  The Family Part judge found that both the husband and wife performed material parts of the agreement in listing the marital home for sale and bringing the mortgage current.  The Appellate Division explained that the wife’s partial performance belied her claim that the MSA was subject to an unmet condition precedent.  The Appellate Division also affirmed the lower court’s conclusion that a plenary hearing to determine the existence of an agreement was unnecessary because there was no factual dispute that the settlement conference had produced a binding MSA.

The Appellate Division further concluded that the Family Part judge did not abuse its discretion in denying the wife’s motion to vacate the DJOD.  The Appellate Division explained that Rule 4:50-1(f) is intended to achieve equity in exceptional scenarios that are not easily categorizable, and the wife thus had to show that enforcing the DJOD would be “unjust, oppressive or inequitable.”  The Appellate Division found that the wife failed to demonstrate exceptional or compelling circumstances that warranted concluding that the spouses did not enter the MSA.

If you have an issue with a marital settlement agreement, contact the skilled matrimonial attorneys at Sarno da Costa D’Aniello Maceri LLC.  Call us today at (973) 274-5200.