KATHY LONDON v. JODY LONDON
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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3217-16T2
KATHY LONDON,
Plaintiff-Appellant,
v.
JODY LONDON,
Defendant-Respondent.
_____________________________
Submitted March 21, 2018 – Decided April 20, 2018
Before Judges Currier and Geiger.
On appeal from Superior Court of New Jersey,
Chancery Division, Family Part, Atlantic
County, Docket No. FM-01-0205-10.
Ford, Flower, Hasbrouck & Loefflad, attorneys
for appellant (Robert Loefflad, on the brief).
Goldenberg, Mackler, Sayegh, Mintz, Pfeffer,
Bonchi & Gill, attorneys for respondent
(Michael A. Gill, on the brief).
PER CURIAM
Plaintiff Kathy London appeals from a March 1, 2017 post-
judgment order: compelling the parties to list their condominium
unit in a short-sale, with each party being equally liable for any
deficiency balance and tax consequences; denying plaintiff's
request to equally divide the net rental income and profits
generated by the condominium unit; and denying the parties'
respective requests for counsel fees and costs for the motion.
For the reasons that follow, we affirm.
We glean the facts from the record. The parties were married
on November 4, 2000. During the marriage, they purchased a
condominium unit in Galloway Township, New Jersey (the
condominium) as an investment property. On October 18, 2011, the
trial court entered a dual final judgment of divorce with
stipulations (FJOD). As part of their stipulations, the parties
agreed
to maintain the condominium . . . . Any and
all repairs associated with the [c]ondominium
shall solely be [defendant's] responsibility.
If the condominium is the subject of a short
sale, both parties shall cooperate fully to
accomplish the short sale. Each shall share
equally in the short fall amount or tax
consequences. The parties acknowledge there
is currently a tenant occupying the
[condominium]. [Defendant] receives all the
rental monies from same. [Defendant] shall
be solely responsible to maintain all the
expenses associated with the condominium. The
property shall continue to be listed for sale.
The parties agree to share equally in the
short fall or profits from the sale of the
condominium. [Defendant] shall provide a
quarterly accounting to [p]laintiff] of the
expenses/profits for the [condominium].
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On October 5, 2012, the parties entered into a consent order.
Under paragraph twelve of the consent order, the parties agreed
to the following additional terms regarding the condominium:
Both parties will retain joint ownership of
[the condominium]. Defendant shall manage and
retain any profits or bear any losses. On
June 30th and December 31st of each year
beginning 2012, [d]efendant shall provide
[p]laintiff with a spreadsheet accounting for
the property. If at any point a party believes
the property has increased in value such that
a sale will not result in a loss or short-
sale, such party may obtain a [comparative
market analysis (CMA)] to support a listing
of the property. If the parties cannot agree
on the listing, they shall first mediate the
issue and if mediation fails, either party may
file a motion.
Plaintiff alleges that in 2015, she discovered defendant had
forged her name to an escrow refund check issued by the mortgage
lender and deposited the check into his checking account. The
escrow refund check resulted from defendant's successful real
estate tax appeal of the condominium's assessed value, which
occurred sometime after entry of the October 5, 2012 consent order.
Plaintiff concedes defendant was entitled to retain the proceeds
of the escrow refund check pursuant to the terms of the consent
order. Plaintiff moved to compel defendant to either refinance
the condominium to remove her name from the mortgage loan
obligation or sell the condominium by way of a short sale. On
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2 September 22, 2015, defendant filed a responsive certification,
stating:
The [c]onsent [o]rder states that if at any
point a party believes the property has
increased in value and a sale will not result
in a loss or short sale, such party may obtain
a comparative market analysis to support a
listing of the property. . . . The whole
purpose of [p]aragraph [twelve] of the
[c]onsent [c]rder was to keep us from having
to lose money on a sale or short sale. The
reason that this was negotiated was due to the
fact that neither one of us wanted to force
the other to sell the property at a loss and
each come up with [fifty percent] of the
differential at closing.
The results of plaintiff's motion is not part of the record.
On March 28, 2016, defendant moved to compel a short sale of
the condominium. On May 6, 2016, the court denied defendant's
motion and directed the parties "to confer on the issue of
allocation of profits, losses, and tax liability on a short sale
of the property."
Because the respective positions of the parties leading up
to the applications under review have been extensively briefed and
are relevant to the issue of counsel fees, we briefly recount
them. On May 31, 2016, plaintiff's counsel wrote to defendant's
counsel stating plaintiff was willing to "consent to the short
sale so long as the net profits are evenly divided between the
parties; or, alternatively, [defendant] agrees to be solely
4 A-3217-16T2
responsible for the tax liability related to the short sale." On
June 3, 2016, defendant's counsel responded by providing tax
documents and other information related to the condominium's
rental income and expenses. Counsel also stated he would "be
responding to [plaintiff's] proposals shortly." On July 7, 2016,
plaintiff's counsel demanded a response to the settlement
proposal, indicating that if a response was not received from
defendant by July 15, 2016, plaintiff would move to enforce
litigant's rights and seek reimbursement of her attorney's fees
and costs.
On July 15, 2016, defendant's counsel communicated that
plaintiff's settlement proposal was rejected. He then proposed
"a deed in lieu of foreclosure" and stated that "[a]ccording to
the mortgage company, completing this process allows us to release
the property back over to the mortgage company and releases us
from having to pay the tax consequences of a short sale." On July
25, 2016, defendant's counsel forwarded documents related to the
deed in lieu of foreclosure process to plaintiff's counsel. On
July 27, 2016, plaintiff's counsel responded, expressing
skepticism that the deed in lieu of foreclosure would "release the
parties 'from having to pay the tax consequences of a short sale.'"
Counsel also stated that "[i]f [defendant] wants to assume sole
5 A-3217-16T2
responsibility for any possib[le] tax consequences, then he may
keep 100% of the profits."
On August 19, 2016, counsel sent an e-mail stating plaintiff
"remains ready, willing and able to cooperate with the Deed-in-
Lieu process so long as [defendant] agrees that if the mortgage
lender does issue a 1099, he will be solely responsible for the
taxes." On September 22, 2016, plaintiff moved to enforce the May
5, 2016 order and the October 5, 2012 consent order. Plaintiff
sought to compel defendant to cooperate with the short sale or
deed-in-lieu of foreclosure of the condominium. She also sought
to make the parties equally responsible
for any deficiency balance left on the
mortgage loan obligation following the short-
sale or [d]eed-in-[l]ieu of [f]oreclosure, or,
to the extent the mortgage company forgives
any such deficiency balance, each of the
parties shall be [fifty percent] responsible
for any tax consequences related to the short
sale, deed-in-lieu of foreclosure of debt
forgiveness.
Plaintiff's motion also sought an award of attorney's fees and
costs.
Defendant filed a cross-motion to enforce litigant's rights
by requiring plaintiff to cooperate in the short sale process
pursuant to paragraph thirteen of the FJOD. Defendant also sought
an award of attorney's fees and costs.
6 A-3217-16T2
On March 1, 2017, the trial court issued the following oral
decision:
The parties were divorced some seven
years ago and under their divorce agreement
the defendant assumed sole responsibility for
the maintenance, operation and maintenance of
the condominium which was being rented and he
would assume all the profits and losses
associated with that. There's some language
in dispute as to sale of the condominium – can
it be sold or should it be sold – it's now
operating at a loss because there was an
increase in the mortgage rate, and the
plaintiff's position is that the defendant
cannot sell the condominium, and if he does,
. . . then he should bear all the losses
involved since he has all the, quote, profits
from the operation. The defendant's position
is that he's been losing money and this thing
will continue to lose money for, you know,
[seven] to [ten] years and the plaintiff
virtually conceded that it might take that
long until the equity actually is more than
the mortgage.
So the plaintiff – first request is the
property to be sold, and I have decided that
it should be sold and that if there's a short
sale or if there is a deficiency it will be
divided equally between the parties. As I
explained on the record and I maintained, that
there is a difference between operating losses
and profits and as an operator and what
happens with regard to the equity owners in
the property, they're two different things.
[During the divorce] they disputed about
everything and one of them was the operation
of the condominium and it pretty much was
agreed okay, [defendant] would operate the
condominium as a rental property but you have
all the headaches but you also take the profit
if there's profit but if there's loss . . .
7 A-3217-16T2
you have to deal with that. Which is different
than the language about the . . . sale.
I think the sale is permitted by the
agreement, it's the only thing that makes some
sense. It seems completely inequitable to
require the defendant to keep taking this loss
for [ten] years or however long it takes until
he possibly can sell it without sustaining a
loss on capital while he has an operating loss
every month. That seems unreasonable. So I am
going to allow – there's a sale and to the
extent there's any remaining liability, it
will be divided equally between the parties.
The trial court ordered the parties to list the condominium
"for sale and cooperate in good faith in a short[-]sale, if
necessary." The trial court denied plaintiff's request to equally
divide any net rental income and profits. The court also declined
to award counsel fees and costs to either party.
This appeal followed. Plaintiff raises the following points:
POINT I
THE [OCTOBER 5, 2012] CONSENT ORDER WAS CLEAR
AND UNAMBIGUOUS. ACCORDINGLY, IT SHOULD BE
ENFORCED ACCORDING TO ITS TERMS.
POINT II
THE EQUITABLE DISTRIBUTION PROVISIONS OF A
MARITAL SETTLEMENT AGREEMENT MAY NOT BE
MODIFIED BASED ON SUBSTANTIAL CHANGED
CIRCUMSTANCES.
POINT III
[DEFENDANT'S] ARGUMENT THAT THE CONSENT ORDER
DID NOT SUPERSEDE THE FINAL JUDGMENT OF
8 A-3217-16T2
DIVORCE SHOULD BE BARRED BY THE DOCTRINE OF
JUDICIAL ESTOPPEL.
POINT IV
[DEFENDANT'S] INTERPRETATION OF THE CONSENT
ORDER WOULD RENDER IT MEANINGLESS.
ACCORDINGLY, THE [DEFENDANT'S] INTERPRETATION
SHOULD BE REJECTED (Not Argued Below).
POINT V
THE TRIAL COURT ERRED IN DENYING [PLAINTIFF'S]
REQUEST FOR AN AWARD OF COUNSEL FEES AND
COSTS.
In Point I, plaintiff argues the October 5, 2012 consent
order expressly obligated defendant to cover all losses related
to the condominium and prohibits its sale if it would result in a
short sale or loss to the parties. Plaintiff contends the consent
order should be enforced according to its clear and unambiguous
terms. Plaintiff asserts that defendant "should not be heard now
to claim the agreement is unconscionable because he may incur
modest operating losses over the course of the next few years."
"A [matrimonial] settlement agreement is governed by basic
contract principles." Quinn v. Quinn,
225 N.J. 34, 45 (2016)
(citing J.B. v. W.B.,
215 N.J. 305, 326 (2013)). "It is not the
function of the court to rewrite or revise an agreement when the
intent of the parties is clear." Ibid. (citing J.B.,
215 N.J.
at 326). "Thus, when the intent of the parties is plain and the
language is clear and unambiguous, a court must enforce the
9 A-3217-16T2
agreement as written, unless doing so would lead to an absurd
result." Ibid. (citing Sachau v. Sachau,
206 N.J. 1, 5-6 (2011)).
However, "the law grants particular leniency to agreements made
in the domestic arena" and vests "judges greater discretion when
interpreting such agreements." Pacifico v. Pacifico,
190 N.J.
258, 266 (2007) (quoting Guglielmo v. Guglielmo,
253 N.J. Super.
531, 542 (App. Div. 1992)). "Nevertheless, the court must discern
and implement the common intention of the parties and enforce [the
mutual agreement] as written[.]" Quinn,
225 N.J. at 46 (first
alteration in original) (citations omitted).
The parties entered into two settlement agreements – the FJOD
stipulations and the October 5, 2012 consent order. Plaintiff
argues because the terms of the October 5, 2012 consent order were
clear and unambiguous, the trial court erred in ruling defendant
did not have to cover all losses related to the condominium and
that he was permitted to sell the condominium through a short
sale. We are unpersuaded by this argument.
Plaintiff relies on paragraph twelve of the consent order,
which states:
Both parties will retain ownership of [the
condominium]. Defendant shall manage and
retain any profits or bear any losses. . . .
If at any point a party believes the property
has increased in value such that a sale will
not result in a loss or short-sale, such party
may obtain a CMA to support a listing of the
10 A-3217-16T2
property. If the parties cannot agree on the
listing, they shall first mediate and if
mediation fails, either party may file a
motion.
However, the language of paragraph twelve of the consent
order does not apply to a sale of the condominium at a loss. Here,
defendant demonstrated he was suffering a net operating loss on
the condominium each month. It is undisputed that the mortgage
loan balance far exceeds the fair market value of the condominium.
The sale of the condominium for a profit is not feasible. Under
these circumstances, paragraph twelve of the October 5, 2012
consent order must be read in light of paragraph thirteen of the
FJOD, which states, in part:
If the condominium is the subject of a short
sale, both parties shall cooperate fully to
accomplish the short sale. Each shall share
equally in the short fall amount or tax
consequences. . . . [Defendant] receives all
the rental monies from [the tenant]. He shall
be solely responsible to maintain all the
expenses associated with the condominium. The
property shall continue to be listed for sale.
The parties agree to share equally in the
short fall or profits from the sale of the
condominium.
The trial court recognized that under paragraph thirteen of
the FJOD there is a difference between operating losses and profits
and what happens with regard to the equity owners in the property
in the event of a sale. Indeed, the clear and unambiguous language
of paragraph thirteen renders each party equally responsible for
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the "short fall or profits from the sale of the condominium,"
including short sales.
Moreover, plaintiff moved to compel defendant to cooperate
with a short sale or deed in lieu of foreclosure. She also
requested the court:
Direct[] each of the parties [to] be [fifty
percent] responsible for any deficiency
balance left on the mortgage loan obligation
following the short-sale or [d]eed-in-[l]ieu
of [f]oreclosure, or, to the extent the
mortgage company forgives any such deficiency
balance, each of the parties shall be [fifty
percent] responsible for any tax consequences
related to the short sale, deed-in-lieu of
foreclosure or debt forgiveness.
The March 1, 2017 order partially granted the relief sought by
plaintiff, compelling the sale of the condominium and equally
dividing the responsibility of any losses resulting from the short
sale or deed in lieu of foreclosure.
In Point II, plaintiff argues the transitioning of the
mortgage loan obligation from interest-only payments to payments
that included principal reduction is not "a sufficient basis under
the law to modify the parties' agreement." Both parties are in
agreement that it is inappropriate to modify an equitable
distribution award based upon changed circumstances. See Rosen
v. Rosen,
225 N.J. Super. 33, 35-36 (App. Div. 1988).
12 A-3217-16T2
The record does not support plaintiff's assertion that
defendant raised the issue of changed circumstances as a basis for
modifying the FJOD. Moreover, paragraph thirteen of the FJOD
envisioned the short sale of the condominium. Accordingly,
defendant need not rely upon a changed circumstances analysis to
request the court to compel a short sale.
Plaintiff further argues defendant's position that the
consent order did not supersede the final judgment of divorce
should be barred by the doctrine of judicial estoppel. Plaintiff
claims the positions expressed by defendant in his September 22,
2015 and November 3, 2016 certifications are inconsistent.
In his September 22, 2015 certification, defendant stated:
"The whole purpose of [p]aragraph [twelve] of the [c]onsent [o]rder
was to keep us from having to lose money on a sale or short sale."
In his November 3, 2016 certification, defendant stated:
I want the [c]ourt to note that Paragraph
[twelve] did not change any language
concerning the short sale of the property.
Paragraph [twelve] was merely inserted as an
addition to [p]aragraph [thirteen] of the
[FJOD] to help resolve issues that were
occurring concerning the listing of the
property and management and costs of the
property. The only change that was made to
the provisions dealing with the condominium
were that if the market increases to the point
where it would not be a short sale that either
party was able to suggest the property be sold
without a loss. Nothing in [p]aragraph
[twelve] modified the [FJOD] wherein the
13 A-3217-16T2
[condominium] was required to be short [sold]
and the parties were supposed to cooperate
with such.
Plaintiff suggests defendant first argued the consent order
superseded the FJOD with regard to the sale of the condominium,
then subsequently changed his position, claiming the consent order
merely supplemented but did not supersede the FJOD.
The doctrine of judicial estoppel bars a party from asserting
contradictory positions in the same or in a subsequent legal
proceeding. Cummings v. Bahr,
295 N.J. Super. 374, 385 (App. Div.
1996). "[J]udicial estoppel is an 'extraordinary remedy,' which
should be invoked only 'when a party's inconsistent behavior will
otherwise result in a miscarriage of justice.'" Kimball Intern.,
Inc. v. Northfield Metal Products,
334 N.J. Super. 596, 608 (App.
Div. 2000) (quoting Ryan Operations G.P. v. Santiam-Midwest Lumber
Co.,
81 F.3d 355, 365 (3d Cir. 1996)).
Here, the purportedly inconsistent positions do not result
in a miscarriage of justice. Both parties made affirmative
requests to the trial court to compel a short sale of the
condominium and to direct that each be fifty percent responsible
for any mortgage loan deficiency balance and tax consequences.
Plaintiff's September 22, 2016 motion addressed the allocation
issue by specifically requesting each party be made responsible
for fifty percent of the losses and tax consequences. During oral
14 A-3217-16T2
argument, plaintiff reiterated her position that she wanted a
short sale or a deed in lieu of foreclosure. Plaintiff’s counsel
went on to state that plaintiff "want[s] a fair allocation of
who's going to take those losses." Thus, even if the terms of the
FJOD were not used to allocate liability for the losses related
to the short sale, the trial court could have relied on both
party's affirmative requests. We find no basis to apply judicial
estoppel in this matter.
We next address plaintiff's argument regarding defendant's
interpretation of the consent order. Plaintiff contends
defendant's cross-motion to force a short sale and compel plaintiff
to share equally in the losses and tax consequences is based on
an interpretation of the consent order which renders it
meaningless. We disagree.
Defendant's interpretation of the consent order does not
render any of its provisions meaningless. Defendant acknowledges
that a CMA and mediation are required by the consent order for a
profitable sale. The divorce settlement contemplated that the
condominium would be sold through a short sale. To that end, the
FJOD allocated the liability of each party equally in the event
that a short sale does occur. In contrast, the consent order
envisioned a circumstance where a party believed the condominium
could be sold profitably and created a process in which a short
15 A-3217-16T2
sale could be avoided. Thus, the consent order provided a method
of avoiding a short sale if a CMA demonstrated the condominium
could be sold profitably. Either party may submit a CMA that
would show the condominium "has increased in value such that a
sale will not result in a loss or short-sale . . . . If the
parties cannot agree on the listing, they shall first mediate the
issue."
Finally, plaintiff argues the trial court erred in denying
her application for an award of counsel fees and costs, contending
defendant acted in bad faith by intending to deceive or mislead
the court. We are unpersuaded by this argument.
A trial court in its discretion may award counsel fees and
costs "to be paid by any party to the action, including, if deemed
to be just, any party successful in the action, on any claim for
. . . enforcement of agreements between spouses . . . and claims
relating to family type matters." R. 5:3-5(c). "In determining
the amount of the fee award, the court should consider . . . the
results obtained[.]" R. 5:3-5(c)(7). "[A] fee award is accorded
substantial deference and will be disturbed only in the clearest
case of abuse of discretion." Yueh v. Yueh,
329 N.J. Super. 447,
466 (App. Div. 2000) (citing Rendine v. Pantzer,
141 N.J. 292, 317
(1995)). The same standard of review applies to the denial of
counsel fees.
16 A-3217-16T2
We recognize "that if 'deemed just,' an award of attorney's
fees may be made in favor of any party, whether or not prevailing."
Pressler & Verniero, Current N.J. Court Rules, cmt. 4.1 on R. 5:3-
5 (2018) (citing Kingsdorf v. Kingsdorf,
351 N.J. Super. 144, 158
(App. Div. 2002)). Additionally, "the reasonableness and good
faith of the positions advanced by the parties" is a factor to be
considered by the trial court. R. 5:3-5(c)(3).
We discern no abuse of discretion by the trial court in
denying an award of counsel fees and costs to plaintiff. Plaintiff
was not a successful party with respect to the issues contested
by defendant either before or during the trial court proceedings
and has not obtained any favorable results on appeal. Nor do we
find evidence that defendant acted in bad faith warranting a
counsel fee award.
Any remaining arguments not specifically addressed in this
opinion are without sufficient merit to warrant discussion in a
written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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