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Orgler v. Orgler

Decided: November 29, 1989.


Petrella, O'Brien and Havey. The opinion of the court was delivered by Havey, J.A.D.


In this matrimonial litigation defendant, Harry Orgler, appeals from an order which declared invalid an ante-nuptial agreement between defendant and his ex-wife, plaintiff Lisbeth Haines Orgler. Defendant also appeals from the equitable distribution provisions of the divorce judgment as modified by a post-judgment order. Specifically, he challenges the trial court's determination that the pre-marriage value of his businesses and other assets was "zero." He also argues that the trial court erred in not deducting from the value of the marital assets hypothetical taxes he may pay on the future sale of the assets distributed to him. Finally, defendant claims that the $15,600 per year child support is excessive. Plaintiff cross-appeals, challenging those provisions of the judgment and post-judgment order which (1) awarded only 25% of the assets to her; (2) fixed the value of the marital home at $1.6 million; (3) limited the duration of defendant's alimony obligation; (4) denied her request for a lump-sum child support order, and (5) denied her application for counsel and accountant fees.

When the parties first began living together in the summer of 1970, defendant was separated from his first wife. At the time plaintiff was in psychiatric residency at Boston State Hospital in Massachusetts, and defendant held partnership interests in several New Jersey Midas Muffler Shops. He also held interests in various other properties and a pension fund. In October 1970, plaintiff suspended her residency, moved to Paterson to live with defendant, and worked approximately

three days a week at defendant's office performing "clerical work."

In July 1972, defendant was divorced from his first wife. On September 7, 1972, plaintiff and defendant entered into an ante-nuptial agreement under which the parties waived their right "in any of the assets which either of the parties owns at the time of . . . marriage," to "equitable distribution under N.J.S. 2A:34-23" and to "alimony or support at any future time." The parties agreed that in the event of a divorce, property they had purchased in Hunterdon County would be distributed "in direct ratio" to the investment each made in the property. The agreement also stated that each party "has complete knowledge of any and all assets owned by the other party[,]" has been fully advised on all matters by individual counsel, and ample time had been afforded to each party for full and complete consultation with counsel.

The parties were married on September 9, 1972. Plaintiff thereafter resumed her residency at Rutgers Medical School, earning a salary of $12,000 in 1972. The parties have one child.

Upon the parties' separation in December 1984, plaintiff filed a complaint for separate maintenance and defendant counter-claimed for divorce on the ground of "extreme cruelty." At a plenary hearing conducted as to the enforceability of the antenuptial agreement, Monroe Ackerman, Esq., who had represented defendant during the divorce proceedings with his first wife, testified that he discussed preparation of an ante-nuptial agreement with the parties prior to their marriage. He stated that both parties knew "the assets and liabilities which each had." Because plaintiff did not have independent counsel, Ackerman contacted another attorney to represent plaintiff. On September 7, 1972, the parties, with their respective attorneys, met at Ackerman's office, reviewed the agreement and signed it. Ackerman acknowledged he "didn't go into" the parties' assets, and did not attach a list of the assets to the agreement.

Defendant testified that plaintiff, while performing clerical work in his office, was privy to his business dealings and his on-going divorce proceedings with his first wife. He also stated that plaintiff discussed with him her stock holdings worth $100,000, her future potential earning capacity as a psychiatrist, and the prospect that she would receive a "significant inheritance" when her parents died. Defendant claimed it was plaintiff's idea that an ante-nuptial agreement be prepared because plaintiff was "fiercely independent." According to defendant, he and plaintiff each had a net worth of about $100,000 at the time the agreement was signed. However, defendant had fixed his net worth by reference to the "book value" of his business assets, the value utilized during the divorce proceeding with his first wife. He admitted that the fair market value of the assets in 1972 was far in excess of book value.

Plaintiff testified that she met the attorney chosen by Ackerman to represent her for the first time on the day the agreement was signed. It was plaintiff's understanding that defendant was worth approximately $100,000 at the time. She thought that the consequence of the agreement was that she was simply waiving an "automatic 50-50 division of assets," and that waiving of alimony meant only waiving alimony "into perpetuity." As we understand it, plaintiff's assertion is that she did not intend to waive her entitlement to rehabilitative alimony, or alimony if she became disabled or unable to work for any reason. According to plaintiff, her attorney, with whom she consulted for less than one hour, never advised her about her legal entitlement to equitable distribution and possibly to alimony. She did admit, however, that the attorney advised her not to sign the agreement.

In his deposition, entered into evidence, plaintiff's attorney stated he met with plaintiff about an hour before the contract was signed, but did not recall whether "what [plaintiff] was giving up" was discussed.

In concluding that the ante-nuptial agreement was unenforceable, the trial court found:

In the present case, an examination of the evidence respecting disclosure indicated an equivocal situation at best. There is no disclosure by listing of assets. The indications are that defendant did not even know his own wealth and that he understated it realizing that plaintiff would rely on it in entering into the prenuptial agreement. This lack of candor and full disclosure, taken together with the inadequate legal representation and guidance which plaintiff had and her misunderstanding about the legal effect of equitable distribution, all lead this court to conclude that it would be unconscionable to enforce the prenuptial agreement against plaintiff and that it will not be considered in connection with making equitable distribution or support determination in this case.

After a lengthy divorce trial, the trial court fixed the value of the marital assets at $4,038,700. In doing so, the court deducted from value approximately $1.2 million in hypothetical taxes payable upon the future sale of the assets and upon defendant's receipt of his retirement and pension plans. The court included in the marital estate the entire value of defendant's businesses and other assets because, in the court's view, the net value of what defendant owned at the time of the marriage was "zero." The court thereupon distributed 25% of the marital estate ($1,009,675) to plaintiff, and essentially all the remaining assets to defendant. It also ordered defendant to pay alimony for two years in the amount of $25,000 per year and child support in the amount of $300 per week for 20 years. The court then reduced the support and alimony obligation to a lump sum figure and directed that the support, alimony and equitable distribution, totalling $1,266,775, be paid within 60 days.

On motions for reconsideration, the trial court reversed itself and added back into the marital estate for equitable distribution purposes, the sum of $1,220,580, concluding that hypothetical taxes were "incorrectly . . . deducted from the fair market values" of the assets. However, the court did give defendant a credit of $167,951 for taxes actually paid for the sale of his business property in Linden. The court also modified the method of paying alimony and support and ordered defendant

to pay $50,000 in alimony over three years, and child support of $3,900 payable quarterly until ...

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