JONATHAN M. THOMPSON v. CHRISTINA THOMPSON

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5690-04T15690-04T1

JONATHAN M. THOMPSON,

Plaintiff-Respondent,

v.

CHRISTINA THOMPSON,

Defendant-Appellant.

__________________________________

 

Submitted December 12, 2005 - Decided January 27, 2006

Before Judges Lintner and Gilroy.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Gloucester County, FM-08-735-05.

Michael J. Pimpinelli, attorney for appellant.

Hoffman DiMuzio, attorneys for respondent (Craig W. Kugler, on the brief).

PER CURIAM

Defendant, Christina Thompson, appeals from a June 10, 2005, order enforcing the property settlement agreement (PSA) she entered into with her husband, plaintiff, Jonathan Thompson, and denying her motion to set aside default judgment, file an answer, and schedule a plenary hearing to reform the PSA. We reverse and remand for further proceedings.

On March 28, 2005, Jonathan filed a complaint for divorce from Christina. Both parties signed the PSA prepared by Jonathan's counsel on March 31, 2005. At the time, Christina claims she was not represented by counsel. On April 4, 2005, Christina signed an acknowledgement of service prepared by Jonathan's counsel, which also waived her right to file an answer.

On April 12, 2005, Jonathan requested entry of default, R. 4:43-1. On the same date, Jonathan filed a request to list the matter for trial, indicating that it was an uncontested matter and that the parties had entered into a PSA. Default was entered and an uncontested hearing was scheduled for April 27, 2005. On April 19, 2005, Jonathan's counsel sent a letter to Christina concerning an omission from the PSA respecting a Visa debt and a proposed consent order amending the PSA to include her obligation to pay one-half the debt. The letter also indicated that if she did not agree, the uncontested hearing would have to be adjourned to allow Jonathan time to file a motion. By April 22, 2005, Christina had retained counsel, who faxed a letter to Jonathan's counsel advising that he had recently reviewed the PSA signed by Christina without the aid of counsel, and believed it to be unfair and not in accordance with the laws of equitable distribution. He requested that Jonathan's counsel consent to permit him to file an answer on Christina's behalf. On April 25, 2005, Jonathan's counsel sent a letter to Christina's counsel stating, "We will not consent to releasing your client from her default" or the PSA.

On April 27, 2005, Christina appeared with her attorney and sought the court's permission to file a motion to vacate the default and file an answer. On the same day, the Family Part judge issued a handwritten order adjourning the uncontested hearing to permit Christina to file a motion "to vacate default" and "to vacate the property settlement agreement." The Order also entered defense counsel's appearance and required Christina to file a proposed answer and/or counterclaim with the motion.

Although default judgment had not been entered, Christina's attorney, on May 3, 2005, filed a notice of motion to "vacate default judgment," file and answer and schedule a plenary hearing to reform the PSA. A certification by Christina was filed in support of the motion. Jonathan responded with a cross-motion seeking enforcement of the PSA and assessment of counsel fees and costs, and a certification in support of his position.

Oral argument was scheduled for June 10, 2005. On June 8, 2005, the judge issued a tentative order and written decision. Apparently believing a default judgment had been entered, the judge denied Christina's motions to "vacate default judgment," file an answer, and schedule a plenary hearing. The judge granted Jonathan's cross-motion to enforce the PSA, but denied his request for counsel fees and costs. An order memorializing the decision was entered on June 10, 2005. Christina filed her notice of appeal June 29, 2005. While this appeal was pending, Jonathan appeared with counsel before the judge, who entered a Final Judgment of Divorce on September 20, 2005. The Judgment incorporated the PSA, provided that the PSA survive the judgment, and directed the parties to comply with its terms. It also confirmed that the court did not take testimony "as to the merits" of the PSA, but "merely finds that it was entered into freely and voluntarily by the parties."

The facts, established by the certifications, are as follows. Christina and Jonathan began living together in June 1996 and were married on October 13, 2001. According to Christina, "[f]rom the very beginning," the parties "shared all expenses. During 2002, Jonathan executed a deed transferring title to his condominium to both parties. Following the transfer, the parties refinanced the property. They also decided to purchase a one-acre lot in Harrison Township. Both parties signed a construction loan for $300,000 to build a new home. According to Jonathan, he and Christina made four payments toward the construction loan before they separated.

Jonathan negotiated the purchase of the Harrison Township lot. He went alone to speak with the seller, a farmer and friend of Jonathan's grandfather. The parties disagree on the price paid for the lot. Jonathan asserts that they paid $35,000 while Christina claims they paid $30,000. According to Jonathan, because of his family's relationship with the farmer, he was able to purchase the lot at one-third of its market value (between $90,000 and $110,000). The builder was also a "personal family friend" of Jonathan's.

The parties entered into a contract to sell their condominium for $50,000. They agreed that 100% of the proceeds would be earmarked for the construction of the new home. By January 2005, Christina had left the marital residence. In February 2005, she informed Jonathan that she wanted a divorce.

On March 4, 2005, Jonathan met with his attorney, who drafted the PSA. Applicable portions of the PSA provided that the parties agreed that the entire $50,000 realized from the sale of the condo would be earmarked for the construction of the new house, which was anticipated to be completed in May 2005. Christina waived any and all interest in the new home and agreed that she would receive $12,500 as her equity interest.

After signing the PSA, Christina claims that Jonathan informed her that the new home would be worth at least $400,000, and "perhaps even more in today's market." She further claims that she never received any of the mortgage paperwork or the building contract for the new home, but understands that the mortgage on the property is "approximately $242,843 . . . ." Therefore, she asserted her equity in the home is approximately $157,000.

In her certification, Christina claimed that her husband, a police officer, "was very dominant and controlling, which is one of the reasons that [she] separated from him," and that she signed the PSA without representation. Christina sought counsel after she received the consent order from Jonathan's attorney to pay $3430 towards the Visa bill, thereby reducing the $12,500 to $9070 for her share of equity in the new home, which she then believed had a net value of approximately $157,000. Her reply certification states:

10. In his Certification, my husband asserts that because he got a good deal on purchasing the land and the cost of building the home that we had jointly contracted for, that I was not entitled to share in the equity of the new home. I am sure that if we had lost money as a result of entering into that contract, he would be demanding that I paid for my share of the debt.

According to Jonathan, Christina demanded $15,000 from the $50,000 received from the sale of the condo. Jonathan told her that he needed that money for the construction loan and offered $10,000 in response. The parties agreed to a $12,500 buy-out of Christina's interest in the $50,000, which Jonathan would pay over a period of two years because she stated that she did not need the funds immediately. He claimed Christina "pushed" him and his attorney to complete the paperwork so that the divorce would be completed by May 1, 2005.

The parties also asserted contradictory facts respecting an Acura MDX leased in Jonathan's name. The PSA provided that the Acura leased in Jonathan's name and primarily used by Christina would be retained by Christina who would hold Jonathan harmless to any claims or obligations on the vehicle. According to Christina, Jonathan demanded that she return the Acura because he was concerned she would not pay the lease, which resulted in a $7000 penalty. When she purchased a new vehicle, the $7000 penalty was added to the loan on a new car. Jonathan claimed that he wanted Christina to keep the Acura, but she did not want to. He asserted that she voluntarily chose to trade it in early and assume the $7000 termination cost.

We note initially that the June 10, 2005, Order appealed from was obviously interlocutory. Such interlocutory adjudications are appealable only on leave granted pursuant to R. 2:5-6. Granting leave is within our exclusive authority as an exercise of our discretion "in the interest of justice . . . ." R. 2:2-4. Moreover, R. 2:9-1(a) provides "supervision and control of the proceedings on appeal or certification shall be in the appellate court from the time the appeal is taken . . . ." Normally, the filing of the Notice of Appeal deprives the Family Part of jurisdiction to act further. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 376 (1995). Here, however, the notice of appeal was improvidently filed because the order appealed from was not a final order, but interlocutory. R. 2:2-3(a).

Despite these procedural errors, we nevertheless choose to decide this appeal on its merits. The questions presented have been extensively briefed. The issues presented deal with the validity of the PSA and the judge's decision to enforce it without a plenary hearing. Neither party seeks to set aside the judgment of divorce. In light of these facts, we will put the procedural irregularity aside, and resolve the issues presented as if raised on appeal as a matter of right following entry of the September 20, 2005, Judgment of Divorce.

We begin by reciting well-settled principles applicable to property settlement agreements. New Jersey has a strong public policy favoring enforcement of settlements in marital litigation. In a long line of decisions, our Supreme Court has "emphasized repeatedly that matrimonial agreements between spouses relating to [equitable distribution], alimony and support, which are fair and just, fall within the category of contracts enforceable in equity." Petersen v. Petersen, 85 N.J. 638, 642 (1981) (citing Carlsen v. Carlsen, 72 N.J. 363, 370-71 (1977)); Berkowitz v. Berkowitz, 55 N.J. 564, 569 (1970); Schlemm v. Schlemm, 31 N.J. 557, 581-82 (1960)). "Marital agreements are essentially consensual and voluntary and as a result, they are approached with a predisposition in favor of their validity and enforceability." Massar v. Massar, 279 N.J. Super. 89, 93 (App. Div. 1995); see also Dworkin v. Dworkin, 217 N.J. Super. 518, 524 (App. Div. 1987).

Strong public policy considerations mandate that marital settlement agreements be closely scrutinized. Any marital agreement that is unconscionable or is the product of fraud or overreaching may be set aside. Guglielmo v. Guglielmo, 253 N.J. Super. 531, 541 (App. Div. 1992); Capanear v. Salzano, 222 N.J. Super. 403, 407 (App. Div. 1988). "[T]he law affords particular leniency to agreements made in the domestic arena." Massar, supra, 279 N.J. Super. at 93. Our cases similarly confer broad discretion upon judges in interpreting and enforcing these agreements. Ibid. (citing Guglielmo, supra, 253 N.J. Super. at 542). "[A]lthough marital agreements are contractual in nature," it has been said that "'contract principles have little place in the law of domestic relations.'" Guglielmo, supra, 253 N.J. Super. at 542 (quoting Lepis v. Lepis, 83 N.J. 139, 148 (1980)). "Marital property settlement agreements 'involve far more than economic factors' and must serve the strong public and statutory purpose of ensuring fairness and equity in the dissolution of marriages." Conforti v. Guliadis, 128 N.J. 318, 323 (1992) (quoting Rothman v. Rothman, 65 N.J. 219, 229 (1974)). "Even when a divorce order incorporates agreements reached privately between the parties, such orders can be modified 'in light of all the facts' bearing on what is 'equitable and fair.'" Ibid. (quoting Smith v. Smith, 72 N.J. 350, 360 (1977)).

It is against this backdrop that we consider Christina's contentions. Christina asserts that the PSA is unconscionable and unfair, and should not be enforced. She argues that by its terms she received only $12,500 for a net equity having an approximate value of $157,000. A serious question concerning the fairness of the agreement has been raised. Jonathan's certification does not take issue with the value of the property but instead asserts that the equity acquired was the result of his and his family's efforts. Indeed, he confirms that the lot they purchased was worth three times its cost. In reaching his decision, the motion judge found that the agreement was not unconscionable or the result of overreaching, without delving into the value of the Harrison Township property and the completed home. Instead, he essentially accepted Jonathan's assertion that Christina received $12,500 out of the $15,000 she wanted. In revisiting the question of equitable distribution and the fairness of that aspect of the agreement, the starting point should have been a determination of the values to be assigned to the various assets, such as the Harrison Township property. See Edgerton v. Edgerton, 203 N.J. Super. 160, 174-75 (App. Div. 1985); Esposito v. Esposito, 158 N.J. Super. 285, 291 (App. Div. 1978).

Christina also contends that she raised questions of fact requiring a plenary hearing as to the voluntariness of the PSA. Her certification presented a genuine issue of fact respecting duress and fraud. She claimed that her husband was controlling and convinced her that she had lost her right to the marital property by leaving him and that she was not aware of its true value. She also asserted that she was unrepresented and believed her husband when he told her if she did not sign the PSA, she would not be entitled to anything because she deserted him. Jonathan expressly denied Christina's claims that he forced her to sign the PSA.

When there has been moral compulsion sufficient to overcome the will of a person otherwise competent to contract, any agreement made under such circumstances is considered to be lacking in voluntariness and therefore invalid. Rubenstein v. Rubenstein, 20 N.J. 359, 365 (1956). The legal concept of duress is based upon the "unreality of the apparent consent" of a consenting party. Id. at 366. "In determining whether a contracting party is entitled to be absolved from his [or her] contractual obligations due to duress, the court must . . . look to the condition of the mind of the person subjected to coercive measures." Shanley & Fisher, P.C. v. Sisselman, 215 N.J. Super. 200, 212 (App. Div. 1987). "'The question is whether consent was coerced; that is, was the person complaining induced by the duress or undue influence to give his consent, and would not have done so otherwise.'" Ibid. (quoting Rubenstein, supra, 20 N.J. at 366). "[T]he test for duress is subjective, rather than objective, and does not turn on whether the duress is of 'such severity as to overcome the will of a person of ordinary firmness.'" Id. at 212-13 (quoting S. P. Dunham & Co. v. Kudra, 44 N.J. Super. 565, 570 (App. Div. 1957)). All the attendant circumstances must be considered. Id. at 212. In addition to considering the subjective mindset of the complaining party, the pressure imposed must be wrongful. Rubenstein, supra, 20 N.J. at 367. "The act or conduct complained of . . . [must be] 'so oppressive under given circumstances as to constrain one to do what his free will would refuse.'" Ibid. (quoting First State Bank v. Fed. Reserve Bank, 219 N.W. 9008, 909 (Minn. 1928); see also Segal v. Segal, 278 N.J. Super. 218, 223-24 (App. Div. 1994).

Applying these criteria, the judge should have held a plenary hearing to determine factually whether Jonathan exerted wrongful pressure on Christina, who was unrepresented at the time, such that she subjectively believed that she was under compulsion to sign the PSA. A plenary hearing was required to determine the credibility of these factual assertions.

The remaining issues raised center around the judge's refusal to set aside default judgment under R. 4:50-1 and whether Christina waived her right to appeal by not accepting the motion judge's tentative decision. Because we are satisfied that a plenary hearing was required, we need not address those issues in great detail. Nevertheless, we make the following observations.

R. 4:50-1 was not the appropriate procedure to be utilized because a default judgment had not been entered. A court may set aside default for "good cause shown." R. 4:43-3. A motion to vacate a default judgment "should be viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached." Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964). "Good cause" under R. 4:43-3, however, "is clearly less stringent than that imposed by R. 4:50-1." See Pressler, Current N.J. Court Rules, comment on R. 4:43-3; O'Connor v. Altus, 67 N.J. 106, 129 (1975). Given our previously expressed view that the certifications submitted created sufficient factual issues concerning the validity of the PSA, good cause was shown to set side the entry of default and consider the matter as contested.

Jonathan's contention that Christina's decision to forego oral argument after the judge rendered his tentative decision amounted to an acceptance of the judge's decision lacks merit. Following receipt of the judge's tentative decision and prior to the scheduled oral argument, defense counsel wrote to the judge advising he was not in agreement with the decision, he intended to appeal, and he felt it would be a waste of time to reargue the same points he had submitted in his briefs. Clearly, there was no waiver. Moreover, although improvidently filed, Christina's filing of the Notice of Appeal, would under normal circumstances automatically stay the proceedings as it deprived the Family Part of jurisdiction. Jonathan's assertion that Christina's failure to move to stay the subsequent proceedings amounted to a waiver or collateral estoppel lacks sufficient merit to warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E).

Finally, we address Christina's contention that a different judge should be assigned to hear the matter on remand. Because the judge decided both the factual and credibility issues raised by the parties in their certifications, upheld the PSA as "freely and voluntarily entered" and subsequently incorporated it into the Final Judgment of Divorce, we are persuaded, out of an abundance of caution, that another judge should be assigned the matter on remand. R. 1:12-1(d).

 
The Judgment of Divorce to the extent that it determined that the PSA was freely and voluntarily entered is reversed and the matter is remanded for further proceedings consistent with this opinion.

There is no transcript for the April 27 hearing.

There were several other factual disputes asserted by the parties, not necessarily relevant to the PSA. First, Christina originally claimed that she wanted a divorce by May 1, 2005, because she did not want her health insurance coverage to lapse before an upcoming surgery scheduled for June 2. She told Jonathan that she needed a "raised seal original divorce" to obtain health insurance from her employer at the beginning of May. She claimed that Jonathan's counsel assured her that she would be covered even if they were not be able to obtain a final divorce judgment in such a short time.

Jonathan asserted that he discovered through Christina's friends and family that she wanted a May 1 divorce because she planned to remarry, and in fact bought a wedding dress to wear on a cruise during the week of May 7, 2005, which she purchased with funds from their joint account.

Christina countered, claiming she bought the dress but did not intend it as a wedding gown, only to wear it on the cruise. She asserted, "[e]ven if [she] did intend to get married, it has no bearing on" Jonathan's alleged misconduct.

Jonathan could have filed a motion to dismiss the Notice of Appeal. The fact that it was filed by Christina establishes that there was no intention on her part to waive her objection to the judge's tentative decision.

(continued)

(continued)

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A-5690-04T1

January 27, 2006