STACEY S. FRANGELLA v. JAMES FRANGELLA

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6112-11T4

STACEY S. FRANGELLA,

Plaintiff-Respondent,

v.

JAMES FRANGELLA,

Defendant-Appellant.

__________________________________

Telephonically argued March 8, 2013 - Decided September 10, 2013

 

Before Judges Messano and Ostrer.

 

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Sussex County, Docket No. FM-19-594-10.

 

Richard D. Schibell argued the cause for appellant (Schibell, Mennie & Kentos, L.L.C., attorneys; Mr. Schibell, of counsel and on the briefs; Ellen D. Fertakos, on the briefs).

 

Andrew M. Epstein argued the cause for respondent (Lampf, Lipkind, Prupis & Petigrow, P.A., attorneys; Mr. Epstein, on the brief).

PER CURIAM

This appeal presents an issue of contract interpretation. The parties dispute the meaning of the insurance paragraph of their property settlement and support agreement (PSSA), which was incorporated into their September 19, 2011, final judgment of divorce. When he entered the PSSA, defendant owned two insurance policies on his life a $2 million policy with Metropolitan Life Insurance Co. (MetLife), with his mother as the sole beneficiary, and a $1 million policy with John Hancock (Hancock), with his mother and the parties' three children as named beneficiaries. The trial court ordered defendant, pursuant to its interpretation of the provision, to maintain the $3 million in insurance, and change the beneficiaries so that plaintiff was a fifty percent beneficiary of the total, and the parties' three children were made joint beneficiaries of the other fifty percent. The court denied defendant's motion to reconsider. Defendant's appeal is limited to the order denying reconsideration. We affirm.

I.

The disputed insurance provision states:

15. In addition to the foregoing, Husband shall be responsible for maintaining at his cost and expense his existing life insurance (represented to have no less than $1,000,000 as a death benefit) for the benefit of Wife and the children. 50% of the amount maintained shall be for the benefit of Wife for however long Husband has an obligation to pay alimony, and 50% shall be for the benefit of the children. Should Wife die or should Husband's alimony obligation terminate, while Husband still has a child support obligation, the amount Husband had been carrying for Wife shall be added to the amount Husband is to carry for the benefit of the children. Husband shall immediately provide Wife with proof as to the amount of insurance Husband has.

 

The PSSA also requires plaintiff to obtain and maintain $250,000 of life insurance for the benefit of the children.

Before entering the PSSA, the parties agreed in mediation to a binding written Outline of Economic Settlement (the Outline), which also addresses the life insurance obligation. The PSSA stated it was a "fuller statement" of the parties' agreement, but the PSSA referenced the Outline, which was annexed. The PSSA did not expressly provide a rule of interpretation if the two documents conflicted. The Outline provided:

Defendant shall continue in effect his existing face amount of insurance on his own life of not less than 1 million. 50% shall be for the benefit of plaintiff, and 50% shall be for the benefit of the children. Should [plaintiff] die before child support ends, or should plaintiff's right to alimony terminate before child support ends, the amount of insurance maintained for plaintiff shall be added to the amount maintained for the children.1

The Outline also required plaintiff to obtain $250,000 of life insurance for the children's benefit.

Post-judgment, plaintiff repeatedly, but unsuccessfully, attempted to ascertain whether defendant had changed the beneficiary designation on his policies. She then filed a motion in aid of litigant's rights, to compel compliance.

Defendant argued before the trial court that the PSSA required him to preserve whatever insurance he already owned that designated plaintiff or the children as beneficiaries, which he represented to be at least $1 million. Defendant asserted, to the best of his recollection, when he negotiated the agreement, he believed that plaintiff and the children were the beneficiaries of the $1 million Hancock policy, and his mother was the beneficiary of the $2 million MetLife policy. He claimed he therefore agreed to maintain what he thought was the $1 million of existing coverage for his wife and children.

Defendant also asserted that the MetLife policy was a term policy, which would expire when he was seventy-three years old. He asserted he learned after the divorce that the Hancock policy was a term policy as well. Counsel argued that it would be prohibitively expensive for defendant to maintain $3 million of insurance after the existing term policies expired.

Plaintiff argued there was no agreement that defendant would be limited to $1 million of insurance for her and the children. She explained that defendant had not fully disclosed the details of his life insurance before the mediation. As a result, the provision required him generally to maintain, for her and the children's benefit, whatever he already owned. She noted that in his July 30, 2010 affidavit of insurance accompanying his answer to the complaint, defendant asserted he possessed $2 million of coverage on each of the two policies a total of $4 million in insurance but he omitted the beneficiaries. In defendant's answers to interrogatories, he then asserted the MetLife policy provided $2 million of coverage, and the Hancock policy $1 million, but he again did not disclose the beneficiaries. Also, although he produced a declaration page for the MetLife policy, reflecting the total coverage, he did not do the same for the Hancock policy, instead disclosing a statement of the investments held within the policy.

Plaintiff also argued that she sought the substantial amount of insurance because two of their three children are autistic and it was unclear whether they would ever be emancipated.

Judge Robert J. Gilson held the PSSA was unambiguous. On May 11, 2012, the court issued a post-judgment order granting plaintiff's request that defendant name her and the children as beneficiaries of defendant's two life insurance policies, and awarded plaintiff counsel fees.

Defendant moved for reconsideration on May 30, 2012, seeking an order limiting his insurance obligation to $1 million. Plaintiff cross-moved for counsel fees.

In support of his motion for reconsideration, defendant argued there was no uncertainty about the total amount of his insurance. He noted that plaintiff herself had asserted in her affidavit of insurance that she believed defendant possessed $3 million in life insurance, although she lacked details. The uncertainty pertained to the beneficiaries. He argued that if the parties intended to convert all $3 million of insurance for plaintiff's and the children's benefit, then there would have been no need to include the parenthetical clause "represented to have no less than $1,000,000 as a death benefit[.]" Rather, he argued, the representation was included to assure plaintiff that at least $1 million of the insurance would be for her and the children's benefit.

He asserted for the first time that plaintiff's counsel inserted the parenthetical clause. He also argued that his $3 million in coverage was disproportionate to plaintiff's $250,000 obligation, given the ratio of their incomes. The PSSA set plaintiff's income at $25,000 a year, and defendant's at between $125,000 and $150,000.

Defendant also asserted it would be inequitable to require him to maintain $3 million in insurance because it would over-secure his obligation to pay alimony and child support, which were $500 and $284 weekly. He claimed he understood that his insurance obligation "should relate to my support obligations." He argued there was no meeting of the minds, and the provision should be deemed void based upon mistake.

Defendant's attorney, who represented defendant in negotiating the agreement, certified he was not a matrimonial practitioner; he could not determine the nature of defendant's policies; and he "would never have agreed to obligate [his] client to provide $3,000,000.00 knowing that one or more of the policies may have been term" and defendant would then be obligated to pay excessive premiums after the terms expired. He stated he believed the agreement obligated defendant "to provide not less than $1,000,000.00 of insurance coverage."

In response, plaintiff reiterated her interest in requiring defendant to maintain as much insurance as possible, and again noted defendant's failure to disclose the details of his insurance before entering the PSSA. She asserted that in mediation,

When we addressed the insurance issue in the mediation, defendant's advice was that he wasn't sure what he had, but he had at least $1,000,000. Accordingly the deal that was struck was that he would maintain whatever he had for the benefit of myself and the children, and that what he had was at least $1,000,000. At no time was there an agreement that all defendant had to maintain was $1,000,000.

 

[(Emphasis omitted).]

 

Her counsel also argued it was premature to consider defendant's claim the insurance obligation would be unduly burdensome in the future, when a policy's term expired and premiums became significantly more expensive. He argued defendant could seek relief from the court at a later date if circumstances so warranted.

After oral argument on June 29, 2012, the court denied the motion and issued a statement of reasons. Judge Gilson again found the provision unambiguous, and rejected defendant's claim of mistake. The court noted that, on a motion for reconsideration, defendant was obligated to identify the matters or controlling decisions the court allegedly overlooked, and was not permitted to rely on facts not raised initially that were known or available to the movant.

Defendant filed his notice of appeal on August 17, 2012, seeking to appeal from both the May 11 and June 29 orders. Upon plaintiff's motion, we dismissed the appeal from the May 11 order as untimely, restricting the appeal to the order denying reconsideration.

Defendant argues the agreement was ambiguous. Alternatively, he argues there was no meeting of the minds, and enforcement of a $3 million insurance obligation would be "economically impossible."

II.

A.

We review the trial court's denial of a motion for reconsideration under an abuse of discretion standard. Marinelli v. Mitts & Merrill, 303 N.J. Super. 61, 77 (App. Div. 1997). Reconsideration is "'a matter within the sound discretion of the Court, to be exercised in the interest of justice[.]'" Palombi v. Palombi, 414 N.J. Super. 274, 288 (App. Div. 2010) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990)). Reconsideration is appropriate if "'1) the [c]ourt has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the [c]ourt either did not consider, or failed to appreciate the significance of probative, competent evidence.'" Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (quoting D'Atria, supra, 242 N.J. Super. at 401); see also Fusco v. Bd. of Educ. of City of Newark, 349 N.J. Super. 455, 461-62 (App. Div.), certif. denied, 174 N.J. 544 (2002). Reconsideration is not appropriate as a vehicle to bring to the court's attention evidence that was not presented, but was available, in connection with initial argument. Id. at 463.

On the other hand, we review de novo a trial court's interpretation of a contract. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998). "The determination of whether a contract term is clear or ambiguous is a pure question of law requiring plenary review." In re Teamsters Indus. Emp. Welfare Fund, 989 F.2d 132, 135 (3d Cir. 1993). Although we apply principles of equity to assure that a matrimonial settlement agreement is fair and just, see, e.g., Petersen v. Petersen, 85 N.J. 638, 642 (1981), we apply contract principles to ascertain an agreement's meaning. See Pacifico v. Pacifico, 190 N.J. 258, 266 (2007) (applying to property settlement agreement the "basic rule of contractual interpretation that a court must discern and implement the common intention of the parties"); Aarvig v. Aarvig, 248 N.J. Super. 181, 185 (Ch. Div. 1991) ("The essentially contractual nature of property settlement agreements has always been recognized by our courts and they are to be construed in accordance with contract law.").

The "polestar" of contract construction is "the intention of the parties . . . as revealed by the language used, taken as an entirety. . . ." Atl. N. Airlines v. Schwimmer, 12 N.J. 293, 301 (1953). See also Jacobs v. Great Pac. Century Corp., 104 N.J. 580, 582 (1986). "[I]n the quest for the intention, the situation of the parties, the attendant circumstances, and the objects they were thereby striving to attain are necessarily to be regarded." Atl. N. Airlines, supra, 12 N.J. at 301.

To discover the intention of the parties, and to determine whether a contract is ambiguous, courts may consider extrinsic evidence offered in support of conflicting interpretations. Conway v. 287 Corporate Ctr. Assoc., 187 N.J. 259, 268-69 (2006). See also In re Teamsters Indus. Emp. Welfare Fund, supra, 989 F.2d at 135. "Evidence of the circumstances is always admissible in aid of the interpretation of an integrated agreement, even where the contract is free from ambiguity, not for the purpose of changing the writing, but to secure light by which its actual significance may be measured." Newark Publishers' Ass'n v. Newark Typographical Union, 22 N.J. 419, 427 (1956); Atl. N. Airlines, supra, 12 N.J. at 301-02. "There is no requirement that an agreement be ambiguous before evidence of a course of dealing can be shown[.]" Restatement (Second) of Contracts 223 comment b (1981).

"Extrinsic evidence may include the structure of the contract, the bargaining history, and the conduct of the parties that reflects their understanding of the contract's meaning." In re Teamsters Indus. Emp. Welfare Fund, supra, 989 F.2d at 135. See also Restatement (Second) of Contracts, supra, 214(c) ("[N]egotiations prior to . . . adoption of a writing are admissible in evidence to establish . . . the meaning of the writing, whether or not integrated"); id., 214, reporter's note, comment b (noting jurisdictions that have adopted "the proposition that there need not be a finding of ambiguity before parol evidence is admitted to interpret an integrated agreement").

At issue is the parties' objective manifestations of intent. See Friedman v. Tappan Dev. Corp., 22 N.J. 523, 531 (1956) ("It is not the real intent but the intent expressed or apparent in the writing that controls."); George M. Brewster & Son, Inc. v. Catalytic Constr. Co., 17 N.J. 20, 32 (1954) ("[T]he quest is for the reasonably certain meaning of the language used, taken as an entirety, considering the situation of the parties, the attendant circumstances, the operative usages and practices, and the objects the parties were striving to achieve."); Nestor v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997) ("To determine the meaning of the terms of an agreement by the objective manifestations of the parties' intent, the terms of the contract must be given their plain and ordinary meaning.") (internal quotation marks and citations omitted). "[A] contracting party is bound by the apparent intention he outwardly manifests to the other contracting party. To the extent that his real, secret intention differs therefrom, it is entirely immaterial." Cohn v. Fisher, 118 N.J. Super. 286, 291 (Law Div. 1972).

In interpreting a contract, the court must also consider it as whole, and avoid interpreting one provision in isolation from others pertaining to the same subject.

Disproportionate emphasis upon a word or clause or a single provision does not serve the purpose of interpretation. Words and phrases are not to be isolated but related to the context and the contractual scheme as a whole, and given the meaning that comports with the probable intent and purpose. . . .

 

[Newark Publishers' Ass'n, supra, 22 N.J. at 426.]

 

Resolution of ambiguity, if found, is a fact issue. Michaels v. Brookchester, Inc., 26 N.J. 379, 388 (1958); Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 152-53 (App. Div. 1960), certif. denied, 34 N.J. 66 (1961). A contract is ambiguous if it is susceptible to two reasonable alternative interpretations. Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008); M.J. Paquet v. N.J. Dep't of Transp., 171 N.J. 378, 396 (2002). However, a plenary hearing is required to resolve an ambiguous contract only if, after considering all relevant materials, a genuine issue of fact remains. In re Teamsters Indus. Emp. Welfare Fund, supra, 989 F.2d at 135 n.2.

B.

Guided by these principles, we conclude Judge Gilson did not abuse his discretion by denying defendant's motion for reconsideration. Defendant presented factual assertions in support of his motion that he simply did not present to the court in opposition to plaintiff's initial motion to enforce the insurance provision. He asserted on reconsideration that plaintiff was well aware there was a total of $3 million insurance coverage and the uncertainty pertained to the beneficiary designations. He argued for the first time that the "no less than $1,000,000" parenthetical clause was intended to address that uncertainty. Likewise, defendant's argument that the insurance requirement oversecured his obligation, and his claim he viewed the insurance obligation as security for his support obligation, were not presented initially. As we have noted, a reconsideration motion is not an appropriate vehicle to present evidence or arguments that could have been presented initially.

Moreover, we discern no error in the trial judge's ultimate interpretation of the agreement. Although we discern ambiguity in the PSSA's insurance provision, when we read the provision together with the Outline, the negotiation history, and the surrounding circumstances, we likewise conclude the PSSA required defendant to maintain, for the benefit of plaintiff and the children, the full amount of insurance in force at the time.

We conclude the PSSA provision is ambiguous because, on its face, it may be reasonably interpreted two ways. According to one view, the phrase "for the benefit of Wife and the children" modifies a portion of defendant's existing insurance. Thus, the language "Husband shall be responsible for maintaining at his cost and expense his existing life insurance . . . for the benefit of Wife and the children" could have been more clearly written to state, "Husband shall be responsible for maintaining at his cost and expense his existing life insurance . . . that is now for the benefit of Wife and the children."

On the other hand, "for the benefit of Wife and the children" may be interpreted to modify defendant's overall obligation. That is plaintiff's position. According to this view, the PSSA means, in other words, "Husband shall be responsible for maintaining at his cost and expense, for the benefit of Wife and the children, his existing life insurance . . . ."

Although we discern plausible ambiguity, the relevant extrinsic evidence supports plaintiff's interpretation of the agreement. The most powerful evidence in support of plaintiff's interpretation is the Outline's provision. While the PSSA included an integration clause, stating the agreement constituted "the entire understanding between the parties," the PSSA also referenced and annexed the Outline. We therefore read the Outline to shed light on the PSSA's meaning. See Restatement (Second) of Contracts, supra, 214 (stating that the meaning of a writing, whether integrated or not, may be illuminated by prior agreements); see also Conway, supra, 187 N.J. at 269 (citing with approval Restatement section 214).

The first sentence of the Outline's paragraph required defendant to "continue in effect his existing face amount of insurance on his own life[.]" Although the sentence added that the existing face amount was "not less than 1 million," the provision did not qualify or limit existing insurance to that already designated for plaintiff's or the children's benefit. Rather, the second sentence of the Outline's provision, referring back to defendant's unlimited "existing face amount of insurance," required that half be for plaintiff's benefit and half for the children's benefit.

The drafting history of the Outline also supports our view. The Outline was apparently a template, with blanks for the parties to complete upon reaching agreement. The parties inserted handwritten text in the blanks, which we underline below; they handwrote insertions in the body of the prepared document, which we italicize; and they crossed-out handwritten insertions, which we have bracketed:

Defendant shall continue in effect his existing face amount of insurance on his own life of not less than 1 million. [25%] 50% shall be for the benefit of plaintiff, and [25%] 50% shall be for the benefit of the children. Should plaintiff2 die before child support ends, or should plaintiff's right to alimony terminate before child support ends, the amount of insurance maintained for plaintiff shall be added to the amount maintained for the children.

With regard to plaintiff's insurance obligation, apparently, the parties initially inserted $250,000, then the number was crossed out and $500,000 was inserted; then that number was crossed out, and $250,000 was inserted again.

We find significant that the parties initially considered requiring defendant to set aside only twenty-five percent of his insurance for plaintiff, and twenty-five percent for the children. We view that fact as reflective of the parties' intention to address all of defendant's insurance, as opposed to insurance already designated for plaintiff's and the children's benefit. It is unlikely the parties would have contemplated reducing insurance already designated for plaintiff and the children by requiring defendant to maintain just fifty percent of that.

Defendant's argument that he would not have committed to maintain $3 million of insurance, because it would over-secure his alimony and child support obligation is unpersuasive. As Judge Gilson observed, the parties clearly viewed the purpose of the life insurance clause more broadly. When defendant's alimony obligation ended, the requirement to maintain insurance for plaintiff's benefit did not expire, but was transferred to the children. Likewise, the insurance requirement was not reduced when one or two of the children were emancipated. The evident purpose was to provide a potential fund to support the parties' two autistic children, who might need support for their lifetimes.

Defendant's argument of disproportionality is also unpersuasive. While defendant was required to maintain $3 million of insurance, the total amount dedicated for the children's benefit at the outset was half of that, or $1.5 million. Plaintiff was required to maintain $250,000, all for the children's benefit. The six-to-one ratio of $1.5 million to $250,000 matches the ratio of the parties' income set in the PSSA, $150,000 for defendant to $25,000 for plaintiff, if one takes the top of the range of defendant's income.3 Moreover, as plaintiff asserts, given defendant's contradictory and incomplete disclosures, plaintiff was uncertain the precise amount of insurance defendant actually maintained.

We also reject as irrelevant defendant's claims that he did not intend to convert all his insurance to the benefit of plaintiff and his children. His subjective intent is of no moment. We look only to the parties' objective manifestation of intent.

D

efendant's remaining arguments on appeal lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

1 As we discuss below, the Outline consisted of printed text and handwritten insertions, which illuminate the parties' intent.

2 The word plaintiff is stricken in part and the Greek symbol for Pi is inserted instead. There is also an illegible crossed-out word above the last mention of plaintiff.

3 We note that under an earlier version of the Outline, plaintiff would have been required to maintain $500,000 of insurance for the children, which would have resulted in a six-to-one ratio of defendant's obligation compared to plaintiff's, although plaintiff's obligation was limited to the children's benefit.