GINGER PACIFICO v. JAMES PAUL PACIFICO

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3279-04T23279-04T2

GINGER PACIFICO,

Plaintiff-Respondent,

v.

JAMES PAUL PACIFICO,

Defendant-Appellant.

____________________________

 

Submitted December 6, 2005 - Decided June 21, 2006

Before Judges Coburn and Collester.

On appeal from Superior Court of New Jersey,

Chancery Division, Family Part, Middlesex

County, FM-12-330-96.

Lanza & Lanza, attorneys for appellant (John

E. Lanza, of counsel and on the brief).

George G. Gussis, attorney for respondent.

PER CURIAM

Plaintiff Ginger Pacifico (Ginger) and defendant James Pacifico (James) were divorced in 1997, and the final judgment of divorce incorporated a property settlement agreement (PSA) dated December 2, 1996. At that time the parties' two sons, ages fourteen and twelve, were living with Ginger in the marital home. Pursuant to the PSA, James agreed to pay Ginger child support of $435 per week as well as $100 per week in permanent alimony beginning in 2001. Ginger was to remain in the marital home and pay the mortgage and property taxes while James received the tax benefits for the mortgage interest and property taxes as well as the tax deductions for each son. The PSA further provided that the home would be sold when the youngest child reached nineteen, at which point,

[T]he Wife shall have the first option to purchase the interest of the Husband. Should the Wife not choose to exercise this option, the Husband shall then have the same option. If neither party desires to purchase the other's interest the Real Estate shall be listed with a licensed Real Estate broker to be sold and the Real Estate shall be sold.

After the youngest son turned nineteen in 2003, James filed a post-judgment motion to compel the listing and sale of the property. Ginger made a cross-motion to compel James to sell to her his interest for one-half of the $167,000 value established by a broker's market analysis in 1996, which she said was prepared to fix the value for her future buyout. She certified that the PSA gave her the first right of purchase at the 1996 value in return for her obligation to pay all the carrying charges on the house while allowing James to take all the tax benefits. However, James certified that the 1996 market analysis prepared prior to the divorce to establish the value of the house in the event the parties agreed to a sale to a third party at that time. He claimed that the PSA provision giving him the tax benefits was in exchange for the amount of child support he was paying, his agreement to pay alimony, and permitting Ginger to live in the house until his youngest son turned nineteen.

The Family Court judge decided the matter on the filed certifications, concluding that the PSA contemplated that Ginger's right to a buyout was to be at current market value when exercised. Ginger appealed, and we reversed and remanded for an evidentiary hearing for the following reasons:

The agreement is ambiguous in that it does not specify the price or value at which Ginger or James may exercise their respective buyout options. The parties offered conflicting proofs concerning the proper construction of the buyout provision and the purposes of the 1996 broker's analysis. Since James' attorney drafted the agreement, any ambiguity would be construed in Ginger's favor. See e.g., In re Estate of Miller, 90 N.J. 210, 221 (1982). Giving Ginger the benefit of all favorable inferences from the evidence, a factfinder could conclude that the agreement should be construed as she contends. Therefore, the trial judge should have held a plenary hearing on this issue.

A plenary hearing was conducted in December 2004. Both parties testified and reiterated the factual contentions set forth in their prior certifications. James testified that the 1996 market analysis appraised the marital residence pursuant to an order of discovery to establish value of the asset. He wished to have his boys remain in the marital home until their emancipation, and it was his understanding was that the house was then to be sold at current market value with the proceeds equally divided. Ginger testified to the contrary that it was her understanding that she would have the right to buy out James at the 1996 market analysis value in return for solely paying the carrying charges of the mortgage, taxes, and repairs up to $100 in exchange for James receiving tax credits and the benefit of her reduction of the mortgage.

Four proposed drafts of the PSA were received in evidence at the plenary hearing. Although the previous attorneys who participated in the negotiations and drafting were present under subpoena, neither were called to testify. The first draft was prepared by James' attorney and provided for rehabilitative alimony to Ginger of $350 per week for five years as well as $315 per week for child support with a $50 credit for college fund. It further specified that Ginger had the first option to purchase James' interest at the "Best Price Attainable Standard."

The second draft, prepared by Ginger's attorney, set rehabilitative alimony at $230 per week for five years with permanent alimony of $130 per week thereafter as well as $275 per week in child support payments less $25 credit per week for each child for a $50 contribution to a college fund. As to the equitable distribution of the marital home, this draft provided:

For the mutual promises and covenants contained in this Agreement Husband agrees to convey to the Wife by way of quitclaim deed, all right, title, claim and interest he may have in and to this property on . . . At that time the Wife shall give to the Husband a mortgage in the amount of (1/2 of the equity at time of divorce).

The third and final draft were essentially the same. Unlike the previous drafts, Ginger's option to purchase did not specify any time for valuation or price for her buyout. However, for the first time it was stated that Ginger was solely responsible for payments on the outstanding mortgage, property taxes and homeowner's insurance and that James was entitled to declare the children as dependents, and take the deductions for mortgage interest and property taxes paid by Ginger. It is undisputed that James' attorney prepared this final draft of the agreement, which was then executed by the parties and incorporated in their judgment of divorce.

The hearing judge's interpretation of the PSA was that it gave Ginger the right to buy out James at the 1996 valuation price of $167,000 for the following reason:

[I]t appears contrary to the Court's hopes that the history leads us to no particular conclusion that we are left with an ambiguity created by defendant's Counsel in the drafting. Accordingly, the ambiguity must be construed in plaintiff's favor pursuant to the case of In re Estate of Miller, [ 90 N.J. 210 (1982)].

Therefore, the Court's decision is that plaintiff is to buy out defendant's interest in the marital residence for one half of $167,000 less the mortgage balance on May 27, 2003.

On appeal, James argues that the hearing judge applied an improper legal standard in his interpretation of the PSA and should have supplied as the missing term the valuation date as current value when he made his initial motion in 2003 in order to effectuate the intent of the parties. Furthermore, he asserts that even if the applicable provision of the PSA is found ambiguous, equity favors the interpretation that both parties should equally share the benefit of the appreciated value of the property. We disagree.

Contrary to James' argument, consideration of the various drafts of the PSA does not reveal a clear intent of the parties to value the house as of the time the agreement's contingencies triggered a buyout or sale. While the first draft, prepared by James' attorney, did clearly specify that the house was to be sold at the "Best Price Attainable Standard," neither this phrase nor any other reference to current value appears in subsequent drafts. On the contrary, in the second draft, prepared by Ginger's attorney, it provided that James would give Ginger a quitclaim deed and receive a mortgage of "1/2 of the equity at time of divorce." Since the final agreement signed by the parties makes no reference to present value or to 1997 value for the buyout or sale price, we agree with the hearing judge that the final provision is ambiguous.

Notably, the hearing judge made no credibility findings as to the testimony of James and Ginger respecting their understanding of the PSA, and neither attorney involved in the negotiation and preparation of the drafts and final PSA testified. Accordingly, the hearing judge based his decision on the legal inference that since James' attorney drafted the final agreement, he construed the ambiguity of the buyout price in Ginger's favor. See e.g., In re Estate of Miller, 90 N.J. 210, 221 (1982).

We affirm. It was not until the final draft prepared by James' attorney that there was a provision in the PSA that Ginger incur all charges associated with the marital home while James received all the tax benefits as well as the child dependent deductions and the contingent benefit of a post-divorce joint tenancy. The final PSA does not indicate any benefit to Ginger to so agree, which leads us to conclude that the interpretation by the hearing judge was correct and, moreover, that as so interpreted, the PSA provision was fair and equitable. See Guglielmo v. Guglielmo, 253 N.J. Super. 531, 541 (App. Div. 1992).

James' contention that Ginger really gave up nothing by giving him the tax benefits is unconvincing. Admittedly, the mortgage interest and property taxes were not of beneficial value to her at the time of divorce since she was then unemployed. However, the modest alimony of $100 per week and waiver of any right to an increase, together with child support of $435 per week for two teenage boys, meant that she had to be employed to meet the expenses of the household. The record indicates that she was making $31,000 at the time of the plenary hearing. Therefore, at that time and some time prior, tax deductions for mortgage and interest on the home as well as child dependent deductions could have been of significance.

Finally, James argues that this interpretation of the PSA is incorrect because he never would have agreed in the final draft to a buyout at the 1997 value. He would have been better off agreeing to the second draft of the PSA by receiving interest on the proposed mortgage. However, this argument overlooks the fact that the final draft of the PSA prepared by his attorney for the first time made the changes for his economic benefit.

Affirmed.

 

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A-3279-04T2

June 21, 2006