ANNIKA AHLSTROM v. TODD J. MONTEFERRARIO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ANNIKA AHLSTROM,

Plaintiff-Appellant,

v.

TODD J. MONTEFERRARIO,

Defendant-Respondent.

__________________________________

August 18, 2015

Argued November 10, 2014 Decided

Before Judges Sabatino and Leone.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-2733-11.

Brendan Walsh argued the cause for appellant (Pashman Stein, attorneys; Michael S. Stein and Mr. Walsh, on the briefs).

Katherine G. Houghton argued the cause for respondent (Ms. Houghton, on the brief).

PER CURIAM

Plaintiff Annika Ahlstrom appeals from a dual judgment of divorce from defendant Todd J. Monteferrario. She challenges the trial court's decision after a lengthy trial concerning the parties' oral agreement regarding the marital house, and the court's award of fees. We affirm.

I.

We summarize the factual findings set forth in the trial court's written opinion accompanying the dual judgment of divorce. In June 2007, prior to their June 2008 marriage, the parties purchased the house for $759,000. The deed stated the parties were owners as tenants in common, "each owner with a 50% ownership share." Plaintiff advanced $314,559.20 as the down payment. The balance of the purchase price was covered by a mortgage on which both parties were borrowers, but only plaintiff was on the mortgage note due to defendant's credit issues.

After the parties purchased the house, they entered into a Co-Ownership Agreement (COA) dated June 28, 2007. The COA was prepared with the help of defendant's attorney. The COA detailed the parties' ownership, made defendant responsible for the monthly payments under the mortgage note, gave each party the right to buy the house, and provided that, if the house was sold, each party would receive 50% of the net proceeds after plaintiff was repaid for the down payment.1

Difficulties arose in the marriage. By January 2011, the parties reached an oral agreement resolving all issues relating to divorce, alimony, and equitable distribution. In particular, the parties orally agreed that plaintiff would take over the monthly payments under the mortgage note; that defendant would not assert any claim for the contributions he had made to the house, including approximately $178,000 he had paid on the mortgage note; and that defendant waived any claim to the proceeds of any sale of the house. The parties agreed the oral agreement would supersede the COA. Plaintiff was to retain counsel and draft a written property settlement agreement (PSA) consistent with the oral agreement.

Based on the oral agreement, defendant moved out of the house in February 2011 at plaintiff's request, and incurred housing costs. Plaintiff made the mortgage payments beginning March 2011. The parties further implemented the oral agreement by dividing a tax refund and items of personal property.

On February 8, 2011, defendant's lawyer emailed plaintiff's lawyer confirming that the parties had reached an oral agreement that defendant would move out of the house and plaintiff would take over paying the mortgage. Plaintiff's lawyer drafted a PSA stating that defendant would vacate the house by April 1 and thereafter would have no obligation for the mortgage, and that plaintiff would hold defendant harmless in connection with the mortgage. That first draft was not provided to defendant. Instead, plaintiff terminated her lawyer's services, and hired a new lawyer.

On April 25, 2011, plaintiff's new lawyer transmitted to defendant's lawyer a draft PSA, which similarly provided that "[e]ffective with the date [defendant] vacated the marital residence, he has had and shall not have any obligation for the mortgage," and that plaintiff would hold defendant harmless in connection with the mortgage. However, the parties failed to mutually execute a written PSA.

In May 2011, plaintiff filed a complaint for divorce. In November 2011, plaintiff filed a motion to enforce the COA, demanding defendant repay her the $37,652.40 mortgage payments she made from March through November 2011, and pay the mortgage in the future.2 Judge William R. DeLorenzo, Jr. held a ten-day trial and plenary hearing under Harrington v. Harrington, 281 N.J. Super. 39 (App. Div.), certif. denied, 142 N.J. 455 (1995).

In its May 2, 2013 dual judgment of divorce, the trial court discredited plaintiff, credited defendant, and found the parties had reached a binding oral agreement. The court awarded defendant $25,000 in counsel fees. Plaintiff moved for reconsideration, which the court denied in an August 8, 2013 order. Plaintiff appeals the judgment and order.

II.

Plaintiff argues that the parties' discussions never resulted in a binding verbal agreement, and that they intended to be bound only by a written PSA they never signed. We must hew to our limited standard of review

[F]indings by the trial court are binding on appeal when supported by adequate, substantial, credible evidence. Deference is especially appropriate "when the evidence is largely testimonial and involves questions of credibility." Because a trial court "'hears the case, sees and observes the witnesses, [and] hears them testify,' it has a better perspective than a reviewing court in evaluating the veracity of witnesses." Therefore, an appellate court should not disturb the "factual findings and legal conclusions of the trial judge unless [it is] convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice."

[Cesare v. Cesare, 154 N.J. 394, 411-12 (1998) (citations omitted).]

Moreover, "[w]e accord particular deference to the judge's factfinding because of 'the family courts' special jurisdiction and expertise in family matters." Clark v. Clark, 429 N.J. Super. 61, 70 (App. Div. 2012) (quoting Cesare, supra, 154 N.J. at 413). We may reverse only if there is "a denial of justice because the family court's conclusions are clearly mistaken or wide of the mark." Parish v. Parish, 412 N.J. Super. 39, 48 (App. Div. 2010) (quotation and deletion marks omitted).

"Public policy favors the settlement of disputes." Willingboro Mall, Ltd. v. 240/242 Franklin Ave., L.L.C., 215 N.J. 242, 253 (2013). "Advancing that public policy is imperative in the family courts where matrimonial proceedings have increasingly overwhelmed the docket." Puder v. Buechel, 183 N.J. 428, 438 (2005). Thus, "'the use of consensual agreements to resolve marital controversies' is particularly favored in divorce matters." Weishaus v. Weishaus, 180 N.J. 131, 143 (2004).

New Jersey "courts 'strain to give effect to the terms of a settlement wherever possible.'" Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008). An agreement to settle "'is a contract, which like all contracts, may be freely entered into and which a court, absent a demonstration of "fraud or other compelling circumstances," should honor and enforce.'" Ibid. (quoting Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div.), certif. denied, 94 N.J. 600 (1983)).

That the agreement was to be memorialized in writing makes it no less a contract where, as here, the parties concluded an agreement by which they intended to be bound. . . . [P]arties may orally, by informal memorandum, or by both agree upon all the essential terms of the contract and effectively bind themselves thereon, if that is their intention, even though they contemplate the execution later of a formal document to memorialize their undertaking.

[Id. at 126; Bistricer v. Bistricer, 231 N.J. Super. 143, 147 (Ch. Div. 1987) (quoting Pascarella, supra, 190 N.J. Super. at 126).]

We stated in Harrington, supra, "to be enforceable, matrimonial agreements, as any other agreements, need not necessarily be reduced to writing or placed on the record." 281 N.J. Super. at 46. "'[W]here the parties agree upon the essential terms of a settlement, so that the mechanics can be "fleshed out" in a writing to be thereafter executed, the settlement will be enforced notwithstanding the fact that the writing does not materialize because a party later reneges.'" Ibid.

A court must hold a plenary hearing to determine "whether there was an agreement." Id. at 42, 46-47. The trial court here held such a plenary hearing, and considered ten days of testimony. After that extensive hearing, the court found the parties' oral agreement "resolved all issues" and "was complete as to all material and essential terms." "[A]n [oral] agreement to resolve a matter will be enforced as long as the agreement addresses the principal terms required to resolve the dispute." Willingboro Mall, Ltd. v. 240/242 Franklin Ave., L.L.C., 421 N.J. Super. 445, 453 (App. Div. 2011), aff d, 215 N.J. 242 (2013).

"If the parties intend to be bound by their preliminary agreement and view the later written contract as merely a memorialization of their agreement, they are bound by the preliminary agreement." Morales v. Santiago, 217 N.J. Super. 496, 501-02 (App. Div. 1987). Here, there was ample testimony the parties intended to be bound by the oral agreement. Indeed, plaintiff's own emails cited "our verbal agreement," accused defendant of going back on it, and asked her new lawyer to get defendant "to abide by our verbal agreement." Moreover, the trial court found the parties implemented the oral agreement. In particular, defendant moved out of the house in February 2011, and plaintiff paid the mortgage commencing March 2011. This performance under the oral agreement was additional evidence that the parties intended to be bound by that agreement.3

Plaintiff notes defendant's lawyer stated in the February 8, 2011 email that, subject to checking with defendant, she "believe[d] the settlement terms" required "[defendant] to vacate within ten (10) days, within reason (he has not found a place yet) of the signing of the marital settlement agreement (which I understand you have already started preparing) and once he is no longer contributing to any mortgage payments[.]" Plaintiff argues this email conditioned defendant's vacating the house on execution of a written agreement.

However, as the trial court stated in denying reconsideration, "[t]he parties started to perform based on their [oral] agreement despite the fact that the email provided the Defendant was to move out of the [house] within 10 days after the signing of the PSA." Without waiting for a PSA to be prepared, defendant vacated the house in February, and plaintiff assumed the mortgage payments starting in March, without any protests to defendant or his lawyer.

Plaintiff cites the Statute of Frauds, which provides that "[a]n agreement to transfer an interest in real estate or to hold an interest in real estate for the benefit of another shall not be enforceable unless" it is "in a writing" or "proved by clear and convincing evidence." N.J.S.A. 25:1-13. "[A] mortgage, as a contractual obligation in real estate, had to be in writing as a conveyance of an interest in land under the statute of frauds." Estate of Hammerle v. Dir., Div. of Taxation, 22 N.J. Tax 342, 348 (Tax 2005). However, the oral agreement provided that defendant would ultimately sign a quitclaim deed to transfer the house to plaintiff, who was already the sole payor on the mortgage note.

In any event, "it is well settled that an oral contract or agreement which might otherwise be barred by the Statute of Frauds is enforceable where there has been performance by one party and to do otherwise would work an inequity on the party who has performed." Graziano v. Grant, 326 N.J. Super. 328, 341 (App. Div. 1999) (citing Klockner v. Green, 54 N.J. 230, 236 (1969)). The trial court found defendant "relied on the Oral Agreement and vacated the" house, and "incurred housing costs based on the Oral Agreement," so that "to require the Defendant to compensate the Plaintiff as requested would not be equitable."

Plaintiff notes that on April 4, 2011, her lawyer requested defendant sign a quitclaim deed. Plaintiff argues the rejection of this request by defendant's lawyer demonstrates the absence of an oral agreement. However, plaintiff's lawyer requested the deed "as per the agreement between the parties." Defendant's lawyer agreed "that our clients previously agreed to a global settlement," but said plaintiff's lawyer was mistaken that it required defendant to sign the quitclaim deed before a written PSA was signed. The trial court found no evidence that the oral agreement required defendant to execute the quitclaim deed before the written PSA was executed. Parties may intend to be bound by their preliminary agreement about a property even though transfer of the property cannot occur until a formal document is signed. See, e.g., Berg Agency v. Sleepworld-Willingboro, Inc., 136 N.J. Super. 369, 373-74 (App. Div. 1975).

Plaintiff testified that she would not have agreed to start making the mortgage payments before defendant provided the quitclaim deed because that was the condition her father placed on helping her with refinancing the mortgage. The trial court discredited this testimony. The court found that no such condition on her father's assistance was ever stated by her father or conveyed to defendant, and that her father did help her make the monthly mortgage payments beginning in March 2011, and helped her buy a new home. The court also found that neither plaintiff nor her lawyers ever said a quitclaim deed was required for refinancing, and that she did not apply for refinancing.

Indeed, in detailed credibility findings, the trial court explained that plaintiff was not a credible witness, finding her testimony unreasonable, her certifications concededly erroneous, and her manner on cross halting and flushed. We must "'defer to the factual findings of the trial court because it has the opportunity to make first-hand credibility judgments about the witnesses who appear on the stand; it has a feel of the case that can never be realized by a review of the cold record.'" N.J. Div. of Youth & Family Servs. v. M.C. III, 201 N.J. 328, 342-43 (2010).

Plaintiff notes that in August 2011, defendant's lawyer responded to plaintiff's April draft of a PSA with a "counterproposal," in which defendant now asked plaintiff to pay $10,000 in return for his waiving his interest in the house, and to pay $3679.50 in reimbursement for repairs and improvements he had made to the house. However, defendant testified that he really meant to encourage compliance with the oral agreement. The trial court credited defendant's testimony. Moreover, the court found that the parties had already reached an oral agreement, and that defendant's August requests for new payments were "additional adjustments" not contemplated by the oral agreement and "new terms in an effort to resolve on a global basis all issues as between the parties." The court found defendant was not entitled to those new payments.

Although a counteroffer may indicate "that a binding contract was never formed," if the parties had already entered into an oral, binding contract, then "their subsequent discussions were merely offers to modify or add to the terms of the binding contract, which, whether accepted or rejected, would not undermine the contract that had formed." See Sun Coast Merch. Corp. v. Myron Corp., 393 N.J. Super. 55, 73-74 (App. Div. 2007), certif. denied, 194 N.J. 270 (2008). That is particularly true "where a valuable consideration has moved" between the parties, including defendant's vacating of the house and plaintiff payment of the rent. McCormick v. Stephany, 61 N.J. Eq. 208, 217 (Ch. 1900). "They have already made a contract upon consideration paid," and the making of a counterproposal does not enable either party "to declare the contract forfeited." Id. at 218.

Finally, plaintiff argues that if there was no binding oral agreement, the COA remained in full force and effect. As set forth above, however, the trial court found the parties had entered into a binding oral agreement. The court also found that the parties agreed to and did abandon the COA, and superseded the COA with the oral agreement, which rendered the COA void. See Wells Reit II-80 Park Plaza, LLC v. Dir., Div. of Taxation, 414 N.J. Super. 453, 466 (App. Div. 2010). The court properly found no basis to invoke the COA or to provide the damages sought by plaintiff.

III.

Defendant also challenges the trial court's award of counsel fees. "Under Rule 5:3-5(c), the trial judge, in her discretion, may award counsel fees in a matrimonial action." J.E.V. v. K.V., 426 N.J. Super. 475, 492 (App. Div. 2012). "An appellate court will disturb a trial court's determination on counsel fees only on the 'rarest occasions, and then only because of a clear abuse of discretion.'" Ibid. (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).

The trial court considered all of the factors under the rule, including "the reasonableness and good faith of the positions advanced by the parties both during and prior to trial." Rule 5:3-5(c)(3). The court found that plaintiff's position was without substantial support, that her testimony was not credible, and that plaintiff changed her position on the oral agreement to suit her own purposes. Plaintiff sought to enforce the COA even though plaintiff's lawyer conceded the COA could be modified by an oral agreement, and plaintiff falsely denied there was an oral agreement, even though she earlier had tried to enforce the oral agreement and ultimately admitted they had an oral agreement. The court believed trial may have been avoided had plaintiff made that admission earlier. Because she did not, defendant was required to go through a lengthy proceeding and proved the oral agreement was binding. R. 5:3-5(c)(7). The court found plaintiff's actions were frivolous.

The trial court considered both parties' counsel fees, and found $65,690.99 of defendant's counsel fees were fair and reasonable. R. 5:3-5(c)(4), (6). The court acknowledged plaintiff's financial circumstances were not as good as defendant's, and gave particular consideration to plaintiff's limited ability to pay counsel fees. R. 5:3-5(c)(1), (2). Nonetheless, the court found it fair and appropriate to order plaintiff to pay a $25,000 portion of defendant's much-higher fees, noting that plaintiff's actions caused defendant to incur unnecessary legal fees greater than that amount.

Plaintiff claims her position in the trial court was not frivolous. Even if true, her position in many respects lacked credibility, consistency, and "reasonableness." R. 5:3-5(c)(3). Plaintiff has not shown a clear abuse of discretion in the court's award of fees.4

1 The COA contained language "that any agreement to alter this Agreement shall be in writing and signed by both parties." However, plaintiff conceded both in the trial court and on appeal that, despite this language, the COA could be modified by a subsequent verbal agreement.

2 Plaintiff contends she made mortgage payments totaling $92,039.02 before she sold the house for $590,000 in December 2012.

3 Plaintiff cites Morton v. 4 Orchard Land Trust, 180 N.J. 118, 128-30 (2004), but there the parties "intended to be bound only by a written contract," the written offer provoked an immediate written counteroffer, and the offer was promptly withdrawn without performance by either party.

4 Plaintiff's appellate arguments, though unsuccessful, are not frivolous.