New Jersey has a strong policy in favor of enforcing property settlement agreements (PSAs). PSAs are generally approached by courts with the presumption that they are valid and enforceable, and they will be enforced if they are fair and equitable. Massar v. Massar, 279 N.J. Super. 89 (App. Div. 1995). Once signed, PSAs become binding and are often incorporated into final judgments of divorce (FJOD). Posner v. Weiss, a recent case decided by the Appellate Division, addressed the enforcement of a PSA and may provide a glimpse into how your PSA or potential agreement might be enforced.
In Posner, the parties divorced in 2009 when a FJOD was entered incorporating the terms of their PSA. The PSA provided that the ex-husband (defendant) was allowed to keep his business interests and his rights in a separate litigation (Richter litigation), and that the ex-wife (plaintiff) was to have no contact with any parties adverse to defendant in the Richter litigation. To provide context, defendant had an ongoing lawsuit against Richter and his business entity during the divorce proceedings.
After the parties separated but before the divorce, the Family Part judge issued the following three orders relevant to this appeal: (1) an order that barred the parties and their counsel from having ex parte communications with any adverse parties or their attorneys in the Richter litigation; (2) an order in response to an Order to Show Cause (OTSC) application by defendant, which prevented plaintiff from distributing any documents or information related to the matrimonial proceeding to any adverse parties or their counsel in the Richter litigation; and (3) an order prohibiting plaintiff from communicating in any way with any adverse parties in the Richter litigation and from disseminating any information to anyone connected to the Richter litigation.
In March 2014, counsel for Richter subpoenaed plaintiff and sought that she testify and produce certain documents at a deposition. Plaintiff’s counsel, understanding there was a no-contact provision in the PSA, was hesitant to let plaintiff participate in the deposition without time for defendant to object. Plaintiff’s counsel also sent Richter’s counsel a copy of the PSA allegedly for the purpose of showing the no-contact provisions. However, plaintiff’s counsel backed off entirely when defendant’s counsel filed a motion to quash the subpoena. Defendant immediately filed an OTSC with temporary restraints, which sought sanctions against plaintiff and her counsel for having communicated with Richter’s attorney, and asked for a plenary hearing to understand the extent of the communication that took place between plaintiff and the adverse parties in the Richter litigation. The judge denied the OTSC and converted it into a motion to enforce litigant’s rights.
In May 2014, plaintiff filed a cross-motion for (1) counsel fees, (2) reimbursement from defendant for his portion of the children’s medical costs, and (3) authorization from the court to enroll the children in day camp for the following summer. Defendant responded by disagreeing on the amount owed for medical expenses and contending that the court did not have jurisdiction to modify the parties custody agreement because there was an ongoing appeal on the issue.
The judge heard both arguments, and asked specifically how Richter was aided by obtaining the PSA. Defendant asserted that Richter had come to knowledge of enough information concerning his other business interests to support a counterclaim in the Richter litigation. Plaintiff’s counsel, on the other hand, argued that they did not reveal any information that could not have been obtained by other means.
The judge denied defendant’s motion and partially granted plaintiff’s cross-motion. Specifically, the judge found no harmful disclosures in the PSA and that plaintiff’s counsel sent the PSA “in good faith,” by allowing defendant the opportunity to quash the subpoena. The judge also partially granted plaintiff’s cross-motion in awarding her $4,624.50 in counsel fees because defendant failed to provide sufficient proofs and acted in bad faith in filing a “frivolous motion.” A subsequent order also granted her other requested relief, including reimbursement of $451.61 for the children’s medical expenses and authorization for the children to attend camp during the summer, provided that defendant would be entitled to make-up parenting time.
In a later motion to the court, defendant asked the court to enforce the make-up parenting time and to reconsider the previous orders. The judge merely granted defendant an extra weekend of parenting time but denied his motion for reconsideration.
Defendant appealed all three orders and argued that the judge improperly denied his motion to enforce litigant’s rights because plaintiff’s counsel violated the PSA by sending a copy of the document to Richter’s counsel. He further maintained the denial of his motion for reconsideration was improper and that plaintiff should not have been awarded counsel fees because he brought his motion in good faith.
On appeal, the Appellate Division started from the preface that courts are generally bound to enforce the terms of a PSA where the provisions are clear, unambiguous, and mutually understood by the parties. The Appellate Division found that the terms of the PSA here clearly prohibited plaintiff or her counsel from any contact with defendant’s adversaries in the Richter litigation, and that her contact with them by sending a copy of the PSA was a clear violation of its terms. The Appellate Division was satisfied, however, that plaintiff’s counsel did not intend to divulge any prohibited information. Moreover, the Appellate Division was unable to see how defendant was harmed by the limited communications of plaintiff’s counsel with Richter’s counsel and the disclosure of the PSA. Specifically, defendant stated there was a chance that Richter may have used the information gleaned from the PSA in his bankruptcy proceeding that served to undermine his claim, but also conceded that there was substantially more information provided to the bankruptcy court than was contained in the PSA. Thus, while the Appellate Division agreed that plaintiffs’ communications with Richter’s counsel violated the PSA, it found no basis for sanctions because there was no harm.
Having found a violation of the PSA’s terms, the Appellate Division was obligated to overturn the award of counsel fees to plaintiff. Usually, the Appellate Division does not disturb the award of counsel fees, but there was a clear error in judgment here; that is, the Appellate Division found that defendant’s motion was made in good faith and was not completely without merit.
If you have any questions regarding property settlement agreements, please contact the skilled matrimonial attorneys at Sarno da Costa D’Aniello Maceri LLC. Call us today at (973) 274-5200.
