MARY C. SHOFFLER v. WILLIAM W. SHOFFLER

Annotate this Case

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0


MARY C. SHOFFLER,


Plaintiff-Respondent,


v.


WILLIAM W. SHOFFLER, SR.,


Defendant-Appellant.

_____________________________

May 13, 2014

 

Submitted October 22, 2013 Decided

 

Before Judges Ostrer and Carroll.

 

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Cape May County, Docket No. FM-05-234-08.

 

Hornstine & Pelloni LLC, attorneys for appellant (Brian A. Pelloni, on the brief).

 

Borger Matez, P.A., attorneys for respondent (Deena L. Betze, on the brief).


PER CURIAM


This is an appeal from a post-judgment order regarding equitable distribution. Having reviewed defendant's argument in light of the record and applicable principles of law, we affirm.

I.

The parties were divorced in March 2010 after over twenty-six years of marriage. The judgment of divorce incorporated a marital settlement agreement (MSA). The parties' dispute arises out of the MSA's equitable distribution provisions that addressed disposition of the proceeds of the sale of a marina. The parties had owned, operated, and sold the marina during their marriage. The parties, as sellers, took back a mortgage from the buyers in October 2007, securing a loan amount of $1.55 million. The mortgage apparently provided for quarterly payments, with a final balloon payment on October 18, 2012.

In their MSA, the parties agreed that plaintiff would be entitled to receive the entirety of eleven scheduled quarterly payments of $30,162.01 due between April 1, 2010, and October 1, 2012. The parties agreed to divide the balloon payment, as well as any additional quarterly payments if the maturity date of the mortgage was extended. The parties would also divide the tax liability from the gain of the sale, including the taxable portion of the eleven payments allocated to plaintiff.

The agreement stated:

b. The . . . Marina was sold by the parties to [Buyers]. The parties are jointly entitled to receive future payments pursuant to their agreement. Husband agrees that wife shall be permitted to receive and retain as her sole and exclusive property the next eleven quarterly payments which are due on the following dates, each scheduled payment to be in the amount of $30,162.01. The following are the due dates of the payments: 2010 April 1st, July 1st, October 1st. 2011 January 1st, April 1st, July 1st, October 1st. 2012 January 1st, April 1st, July 1st, October 1st.

 

The parties agree that any other quarterly payments (if extended pursuant to the parties['] contract with the [Buyers]) and any and all other payments including the final balloon payment shall be divided equally between husband and wife. (Each shall receive 50%).

 

Neither party will do anything to interfere with this mortgage arrangement or take any action against the [Buyers] or as mortgagor without the express written consent of the other party.

 

The parties agree that they shall each be responsible for 50% of the taxable gain from the sale of . . . [the] Marina. This includes the taxable portion of the next eleven quarterly payments to be received by wife pursuant to this settlement agreement.

 

The parties will each be required to declare 50% of the taxable portion of all payments received from the sale of . . . [the] Marina on their respective Federal/ State tax returns.

 

The MSA also included a fee-shifting provision, making a party responsible for the other's reasonable fees incurred in enforcing rights under the agreement as a result of the other's breach. The parties expressly waived any consideration of the ability to pay or other factors encompassed in Rule5:3-5(c).

In October 2011, the buyers refinanced most, but not all, of their indebtedness to the parties. The buyers secured bank financing for $1.25 million. The parties entered into a mortgage modification agreement with the buyers on October 26, 2011. Pursuant to their new agreement, the buyers' indebtedness of $1.55 million was "to be reduced to $219,678.64 by a payment of" $1.25 million. The new agreement provided for quarterly payments, based on a twenty-five-year payment schedule, starting January 18, 2012, until a new balloon payment was due on October 26, 2016. The parties' mortgage became subordinate to the mortgage held by the bank.

According to the HUD-1, at closing, the buyers paid $1,219,837.99 to both parties, as "paydown on mtg," and paid $30,162.01 to plaintiff, as "partial payment on mtg as direct[ed]." That was the seventh such payment to plaintiff.

Plaintiff asserted that, pursuant to the MSA, she was entitled to receive distribution of an amount equal to defendant's fifty percent share of the remaining four quarterly payments that had been scheduled for 2012. That amount totaled $60,324.02. (Four times $30,162.01 equals $120,648.04. Fifty percent of that is $60,324.02.) Plaintiff argued the amount should be paid out of defendant's fifty percent share of the balloon payment of $1,219,837.99. Alternatively, she proposed that $120,648.04 be paid to her, before dividing the remaining balance.1

Plaintiff asserted that the agreement regarding the eleven quarterly payments settled her claim to a share of the proceeds of other property that defendant sold before the divorce. She asserted that in the course of negotiating equitable distribution, defendant refused to pay her in a lump sum. Instead, he agreed to pay her over time. Plaintiff pointed to correspondence from defendant's attorney proposing to use defendant's share of the payment stream as a form of equitable distribution. She also pointed to an analysis of the parties' assets for equitable distribution, which originally provided that all payments on the buyers' note would be "split 50-50." Plaintiff alleged that defendant agreed to transfer to her the value of what would otherwise have been defendant's fifty percent share of the eleven quarterly payments $165,891.05. She insisted that defendant's relinquishment of his share of the quarterly payments was simply a means to pay, over time, an amount due to plaintiff. Consequently, the buyers' acceleration of their payments and the lost interest income that resulted was unrelated to defendant's obligation.

Defendant argued that plaintiff was entitled to fifty percent of the balloon payment, and nothing more. He contended that result was consistent with the MSA provision requiring an equal division of the balloon payment. Defendant asserted that the parties "collectively agreed to an accelerated balloon payment" by the buyers. In doing so, he asserted, plaintiff waived her right to his share of the four remaining quarterly payments that would have been due in 2012. He contended they agreed to the acceleration of the loan to guard against a falling real estate market and, apparently, the risk that the buyers might default. He also noted the quarterly payments included interest income that the parties agreed to forego by permitting the accelerated payment. Defendant argued it would be inequitable to require him to reimburse plaintiff for "phantom" interest that was never received.2

In the face of the parties' dispute, the $1,219,837.99 proceeds of the refinancing were held in escrow. Plaintiff filed a post-judgment motion in support of her claim that she was entitled to $60,324.02, paid out of defendant's proceeds of the refinance. She also sought the award of fees under the MSA. Defendant opposed the motion.3

Although defendant requested oral argument, the judge ruled on the papers in February 2012, and granted plaintiff's motion, stating:

[T]he final judgment of divorce is clear. Ms. Shoffler was to receive the benefit of the first eleven periodic payments. The acceleration of the balloon did not modify the clear provisions of the final judgment of divorce which provided that she was to get eleven such payments. Any payments (including any balloon) thereafter were to be split 50/50. Mr. Shoffler's bald assertion that this obligation was somehow modified when the mortgage was paid off early is simply not persuasive.

 

The court also awarded plaintiff fees and directed plaintiff to submit a form of order with an updated certification of fees.

A dispute over the form of order then ensued. Plaintiff submitted a proposed form of order that provided for the distribution of the $1,219,837.99 held by the escrowee as follows: $670,242.97 to plaintiff consisting of $60,324.02 plus $609,918.95; $4362.50 to plaintiff's counsel; and $545,232.52 to defendant. The proposed order was predicated on the payment of $60,324.02 and the attorney's fees from defendant's fifty percent share of the $1,219,837.99.

Defendant asserted that plaintiff's $60,324.02 should be paid from the escrowed proceeds first. He also contended that the escrowee held $1,215,475.49, over $4000 less than recited in the escrow agreement. Defendant also argued that plaintiff's counsel's attorney's fees were more than double what was reasonable.

The court conducted a telephone conference with counsel, which apparently was not recorded. Counsel submitted supplemental written arguments.

The court then entered an order providing that $106,408 be paid directly to plaintiff from the total amount held in escrow, and the remaining proceeds be divided equally. Defendant was then required to pay, from his share, plaintiff's attorney's fees of $4362.50. The judge awarded plaintiff $106,408 instead of $120,648 based on his consideration of the interest income of the escrow.

Candidly, this was a closer call than I thought when I issued my January letter. The issue is further complicated by the fact that some $21,000 of each of the payments at issue was interest which was not paid as a result of the prepayment. The monies are escrowed in an interest bearing account. I assume that account is making about 1%. The issue is further complicated by the fact that the Shoffler's are still holding a second mortgage. (These figures come from Exhibit A after defendant's certification dated January 16, 2011).

 

$35,329.04 of the payments would have been principal. Ms. Shoffler is clearly entitled to that. The interest component is tricky because theoretically Ms. Shoffler has (or could have) the money now and be earning interest on the same. However, as noted above the escrow is probably only earning 1%. The [Buyers'] loan was being paid at 6%. Accordingly, 5/6 of the interest will be awarded or $71,099.00 ($85,319 x 5/6 = $71,099).

 

Accordingly, the "number" is $35,329.04 + $71,099.00 or $106,408.04. This is to be paid first. The remainder is split. Mr. Shoffler pays Ms. Shoffler attorney's fees from his share. I attach my order.

 

Defendant's appeal followed. Defendant renews his argument that plaintiff was only entitled to a fifty percent share of the balloon payment made as part of the refinancing. He contends that plaintiff waived any rights to defendant's share of the four 2012 quarterly payments when the parties agreed to the accelerated mortgage payment.4 Plaintiff did not cross-appeal from the court's order.5 Pending appeal, the parties agreed to disburse $600,000 to plaintiff and $500,000 to defendant, leaving sufficient funds in escrow to cover the amount in dispute.

II.

An appellate court is required to defer to the Family Court's fact-finding because of the court's "special expertise" in family matters and the court's "superior ability to gauge the credibility of the witnesses who testify before it." N.J. Div. of Youth & Family Servs. v. F.M., 211 N.J.420, 448 (2012); see alsoCesare v. Cesare, 154 N.J.394, 413 (1998). However, we may exercise more extensive review of trial court findings that do not involve a testimonial hearing or assessments of witness credibility. Cf.N.J. Div. of Youth & Family Servs. v. G.M., 198 N.J.382, 396 (2009) (stating that deference to Family Court conclusions is not required where "no hearing takes place, no evidence is admitted, and no findings of fact are made"). No special deference is owed to the trial judge's "interpretation of the law and the legal consequences that flow from established facts." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J.366, 378 (1995).

The issue before the court is one of contract interpretation. We must determine whether the MSA, which compelled defendant to pay to plaintiff his share of the marina buyers' quarterly payments, obliged defendant to pay plaintiff the amount involved, once the marina buyers accelerated the balloon payment. We review de novo the trial court's interpretation of a contract. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super.415, 420 (App. Div. 1998). We apply contract principles to ascertain the meaning of a consent order governing domestic relations. Pacifico v. Pacifico, 190 N.J.258, 265-66 (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"). "Voluntary accommodations regarding matrimonial differences are highly desirable and make a major contribution to the fulfillment of 'the strong public policy favoring stability of arrangements.'" Petersen v. Petersen, 85 N.J.638, 645 (1981) (quoting Smith v. Smith, 72 N.J.350, 360 (1977)). Thus, we seek to ascertain "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." George M. Brewster & Son, Inc. v. Catalytic Constr. Co., 17 N.J.20, 32 (1954). Extrinsic evidence includes the parties' bargaining history. Restatement (Second) of Contracts 214(c) (1981) (stating that "negotiations prior to . . . the adoption of a writing are admissible in evidence to establish . . . the meaning of the writing").

Applying these principles, we discern no merit to defendant's interpretation of the MSA. The MSA's plain language, and the extrinsic materials submitted, support plaintiff's characterization of defendant's share of the quarterly payment stream from the marina buyers. Defendant's obligation to pay roughly $15,000 per quarter was simply a means of satisfying equitable distribution to plaintiff over time.

The MSA recited that the parties were "jointly entitled to receive future payments" from the marina buyers. The MSA then proceeded to state that, notwithstanding the parties' joint entitlement, plaintiff alone would retain defendant's share of the remaining quarterly payments due. That language reflected the agreement to pay plaintiff the $60,000.

This interpretation is supported by the supplemental materials provided by plaintiff. The letter from defendant's counsel during negotiations, and the spreadsheet describing the distributable assets, reflect the parties' intention to deem defendant's share of the quarterly payments as a form of equitable distribution granted to plaintiff.

Defendant offers no persuasive evidence to rebut this interpretation. Instead, he asserts that plaintiff waived her right to the four remaining payments, exceeding $60,000, by agreeing to permit the marina buyers to accelerate their balloon payment. It is well-settled that "waiver" is "the intentional relinquishment of a known right" and requires "a clear, unequivocal, and decisive act of the party" and, "to be operative, must be supported by an agreement founded on a valuable consideration." W. Jersey Title & Guar. Co. v. Indus. Trust Co., 27 N.J.144, 152 (1958) (internal quotation marks and citation omitted).

However, defendant posits no rationale for why plaintiff, and plaintiff alone, would agree to suffer a $60,000 loss as a result of the parties' joint agreement to allow the marina buyers to accelerate their payment. To the extent one lends any weight to defendant's argument that the acceleration benefited the parties by guarding against the risk of non-payment, the benefit was enjoyed equally.

The parties also agreed that a waiver of a provision of the MSA would be effective "only if made in writing." Nothing in the agreement with the marina buyers expressly addressed plaintiff's entitlement to her share of what would have been the final four quarterly payments. We therefore find no merit in defendant's waiver argument.

Affirmed.

 

 

 

 

1 Under either proposal, plaintiff would receive approximately $670,000 and defendant would receive $550,000. If the approximately $1,220,000 were split first, providing $610,000 to each party, and defendant paid approximately $60,000 to plaintiff from his share, then he would be left with $550,000 and she would receive a total of $670,000. Alternatively, if $120,000 were paid to plaintiff "off the top," and the remaining $1,100,000 were divided, plaintiff would receive $120,000, plus $550,000 (half of $1,100,000), and defendant would receive $550,000.

2 According to the amortization schedule of the 2007 loan, the $120,648 in 2012 payments consisted of $85,319 in interest, and $35,329.04 in principal.

3 He also cross-moved for limited discovery on unrelated claims that plaintiff failed to disclose assets before entry of the divorce. That is not the subject of this appeal.

4 Although defendant also challenged the award of counsel fees in his case information statement, he did not pursue the issue in his brief. Therefore, we deem it waived. See Liebling v. Garden State Indem., 337 N.J. Super. 447, 465-66 (App. Div.) (stating that "an issue not briefed . . . is deemed waived"), certif. denied, 169 N.J. 606 (2001).


5 Plaintiff nonetheless argues in her brief on appeal that the court erred when it reduced the total amount payable from roughly $120,000 to $106,000, resulting in an underpayment to plaintiff of roughly $7000 (half the $14,000 difference). As plaintiff did not cross-appeal, we do not address this argument. See Seacoast Builders Corp. v. Jackson Twp. Bd. of Educ., 363 N.J. Super. 373, 381 (App. Div. 2003) (declining to consider argument not properly raised on cross-appeal).


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