JULIE EILEEN AARON v. PAUL RICHARD AARON

 

 
NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1531-05T21531-05T2

JULIE EILEEN AARON,

Plaintiff-Respondent/

Cross-Appellant,

v.

PAUL RICHARD AARON,

Defendant-Appellant/

Cross-Respondent.

________________________________

 

Argued: March 20, 2007 - Decided April 9, 2007

Before Judges Coburn, Axelrad and Gilroy.

On appeal from the Superior Court of New Jersey, Chancery Division - Family Part, Essex County, FM-07-1845-03.

Lynn Fontaine Newsome argued the cause for appellant/cross-respondent (Donahue, Hagan, Klein, Newsome & O'Donnell, attorneys; Ms. Fontaine Newsome, of counsel and on the brief; Francis W. Donahue and Debra S. Weisberg, on the brief).

Neil S. Braun argued the cause for respondent/cross-appellant (Gomperts & Braun, attorneys; Mr. Braun, of counsel and on the brief; Judith A. McDermott, on the brief).

PER CURIAM

In this post-judgment matrimonial matter, defendant Paul Aaron appeals from the trial court's order modifying his alimony obligation under the parties' property settlement agreement (PSA). Plaintiff Julie Aaron cross-appeals from denial of her requests for relief from a provision of the PSA that the counsel fee she received from former husband would be additional alimony and for attorneys' fees on the motion. We reverse on the appeal and affirm on the cross-appeal.

After fourteen years of marriage, the parties, each represented by counsel, entered into a PSA on June 11, 2004, which was incorporated into a final judgment of divorce entered on June 18, 2004. The PSA was reached after extensive negotiations, mediation, and one week of trial. Article IX, Spousal Maintenance (Alimony), provides that husband will pay wife alimony "in the sum of [$11,500] per month" terminating at the latest, August 30, 2019. This Article further contains an anti-Lepis provision that alimony cannot be altered based on changed circumstances, with the exception of husband's involuntary reduction in income. Article XI, Child Support, provides that husband will pay to wife the sum of $3000 per month for the parties' two children, then ages five and three, with periodic automatic increases beginning in 2009.

Article XIV, Taxes, Paragraph 14.3, provides, in pertinent part:

The alimony payments made by the Husband to the Wife pursuant to Article IX above shall be reportable by the Wife and deductible by the Husband for income tax purposes in accordance with . . . the Internal Revenue Code and corresponding state law. In the event of a change in tax law that limits or eliminates the deductibility of alimony, the support obligation shall be adjusted so as to place the parties as closely as practicable in the respective net positions contemplated by this Agreement, provided that the Wife's net receipt shall, under any circumstances, be at least $13,000 per month. (Emphasis added).

Paragraph 1 of the supplement to the PSA, Professional Fees, provides that husband will pay to wife, "as additional alimony," $75,000 toward payment of her professional fees incurred in prosecuting the divorce action. The PSA also includes boiler-plate language that it contains the entire understanding of the parties and there were no representations other than those expressly set forth in the agreement.

Husband made payments in accordance with the PSA. On July 6, 2005, wife filed a motion to modify the gross alimony figure of $11,500 set forth in the PSA to provide for a guaranteed $13,000 net per month in combined alimony and child support. She also sought Rule 4:50-1(f) relief to nullify the provision of the PSA regarding husband's one-time contribution towards her legal fees and require the parties to renegotiate the issue, and requested additional counsel fees on the motion. In a certification, Wife claimed the parties' agreement was that she would have $13,000 "spendable dollars" per month until the children graduated from high school, which was close to the $12,500 per month she was living on during the litigation, and that the parties' accountant advised her the $11,500 alimony (given her deductible expenses) and $3000 child support would provide her with that amount. Wife also claimed that husband's $75,000 counsel fee contribution was structured as alimony based on the anticipation that he would receive the deduction and she would have no tax liability because their accountant advised that her legal and accounting fees would be deductible to her. However, because of having to pay the alternate minimum tax, and not having received a deduction for the professional fees, she incurred a $47,000 tax liability in 2004, and was left with less than $13,000 per month in spendable dollars.

Husband argued that the PSA, encompassing the entire agreement of the parties, contained no provision guaranteeing wife the receipt of combined alimony and child support in the amount of $13,000 net per month other than upon a change in tax law, which had not occurred. Rather, pursuant to the "Alimony" and "Child Support" paragraphs of the PSA, the total amount of support to be paid by husband to wife, prior to periodic child support increases, was $14,500 per month, $11,500 of which was characterized as alimony and taxable to wife as income. Thus, according to the four corners of the PSA, the only guaranteed alimony the parties negotiated was a fifteen-year term at $11,500 per month, not subject to modification based on change of circumstances other than either party's death, wife's remarriage or cohabitation, or husband's involuntary unemployment. Husband further contended the "Professional Fee" provision contained no conditions or guarantees as to wife's tax liability on his $75,000 contribution; the only provision in the PSA requiring tax indemnification was contained in Paragraph 14.1 and pertained to wife's 2003 income tax return. Husband also presented a letter from Sidney Kaufman, the parties' accountant, stating that he gave no tax advice nor tax calculations to wife and did not participate in the negotiations that produced the PSA, nor did he speak with her regarding her taxes other than preparing her 2003 personal income tax return.

In interpreting the PSA, the court reasoned that the parties' reference in the Tax section to their "contemplation [in the] Agreement" of wife having $13,000 in net monthly income should be read into the Alimony section as guaranteed income in that amount. Accordingly, the court entered an order on October l7, 2005, modifying the gross alimony figure of $11,500 per month set forth in the PSA and final judgment of divorce to a guaranteed net alimony and child support figure of $13,000 per month, commencing for the 2005 tax year. The order established a procedure requiring wife to provide husband with her annual tax return and in the event she received less than $156,000 alimony and child support net after taxes ($13,000 x 12), husband was responsible to pay her the difference within thirty days. The court denied wife's request for adjustment on the $75,000 professional fee paid by husband, stating the PSA did not provide the contribution would be tax-free, and also denied her request for attorneys' fees on the motion.

On appeal, husband contends the trial court abused its discretion in rewriting the parties' PSA, which was clear on its face and provided no guarantee to wife beyond the monthly $11,500 alimony and $3000 child support obligation unless there was a change in the tax laws, which undisputedly did not occur. On cross-appeal, wife argues she was entitled to Rule 4:50-1(f) relief and a plenary hearing as to the parties' intent regarding the $75,000 contribution towards her counsel fees. She further contends the court erred in denying her request for counsel fees on the motion.

"Marital agreements are essential 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) (citing Petersen v. Petersen, 85 N.J. 638 (1981); Dworkin v. Dworkin, 217 N.J. Super. 518, 524 (App. Div. 1987)). In interpreting a marital agreement, a court will not draft a new agreement for the parties. Ibid. "[W]hen the parties and their attorneys have bargained at arm's length and there is no showing of unfairness, the trial court should not supply terms which the parties obviously considered and yet did not adopt." Rolnick v. Rolnick, 262 N.J. Super. 343, 352 (App. Div. l993)(quoting Berkowitz v. Berkowitz, 55 N.J. 564, 569 (1970)).

For the reasons argued by husband, we are satisfied the evidence does not support the trial court's finding that the parties' PSA guaranteed wife a minimum of $13,000 "spendable dollars" per month in combined alimony and child support. If the intent of the parties was that wife would receive a guaranteed net monthly income, the PSA could easily have stated, for example, that the alimony and child support figure would be $13,000 "net of taxes" to maintain wife in the marital or pendente lite standard of living and provided a procedure for the annual exchange of tax returns and adjustment by husband similar to that fashioned by the trial court. It did not. Rather, the PSA, which resulted from lengthy negotiations with both parties represented by counsel, expressly required husband to pay $11,500 in alimony for a fifteen-year term with delineated restrictions on its modification, set specific child support payments, and only triggered a guaranteed net income to wife of $13,000 per month "[i]n the event of a change in tax law that limits or eliminates the deductibility of alimony." Thus the court had no basis to reform the parties' agreement and engraft the tax change contingency contained in Article XIV onto the Alimony provision contained in Article IX.

The trial court, however, appropriately declined to modify the express terms of the parties' PSA respecting husband's one-time contribution of $75,000 towards wife's counsel fee.

 
Reversed as to the appeal; affirmed as to the cross-appeal.

Lepis v. Lepis, 83 N.J. 139 (1980).

(continued)

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A-1531-05T2

April 9, 2007