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Morris v. Morris

Decided: March 26, 1993.

MAUREEN MORRIS, PLAINTIFF-RESPONDENT,
v.
J. ROY MORRIS, DEFENDANT-APPELLANT



On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County.

Dreier, Skillman, Villanueva.*fn1The opinion of the court was delivered by Dreier, J.A.D.

Dreier

Defendant husband appeals from an order denying reduction of his alimony payments. The parties were divorced on June 27, 1991. Both parties were represented by counsel at the hearing. The children are grown and thus child support is not in issue. Their Property Settlement Agreement, dated the same date as the divorce, was attached to and incorporated into the judgment. The judgment states that the trial Judge "has not taken testimony as to the merits of this Agreement, but merely finds that it was entered into freely and voluntarily by the parties."

The equitable distribution and alimony provisions in the parties' agreement are unusual. With the exception of personal property to be retained by the wife, she relinquished all marital assets to the husband, including the 8,500 square foot marital home, Florida condominiums, a yacht, investment property, business partnerships, mortgage receivable and other investments, all of which were substantially encumbered.*fn2 The husband

was to be liable for all of the debts shown on his case information statement.

It is the alimony section that is here challenged. The "alimony" has many of the usual attributes of equitable distribution. The alimony is not to be taxable to the wife and is not to be deductible by the husband. Further, the alimony is payable to the wife irrespective of her remarriage or cohabitation. The alimony is payable monthly based on the annual amount of $35,000 for a fixed period (until June 1, 2001), after which on July 1, 2001 there is to be a single final alimony payment of $150,000.*fn3 These payments could possibly be looked upon, at least in part, as equitable distribution, except for the parties' specific reference to them as alimony, and the fact that they cease upon the death of either party.

The ordinary use of an agreement such as this is to avoid the discharge of unpaid equitable distribution in a bankruptcy proceeding. If the husband or both parties contemplated bankruptcy and the wife wanted to be sure that her right to payments and arrearages would survive a bankruptcy decree, she would try to invoke the protection of the Bankruptcy Code to collect alimony both during and after a bankruptcy proceeding. See 11 U.S.C.A. § 362 (b)(2) (exempting the collection of alimony from the automatic stay provisions), and 11 U.S.C.A. § 523(a)(5) (providing for the nondischargeability of obligations to a spouse or former spouse for alimony*fn4).

The agreement is explicit that it is not modifiable for any reason except for the husband's physical disability. There is also a specific anti- Lepis provision:

The parties hereby waive their rights for modification based upon changed circumstances as set forth in the case of Lepis v. Lepis, 83 N.J. 139, 416 A.2d 45 (1980).

At the time of the agreement, the husband's economic fortune had taken a downturn so that the parties allegedly had a negative net worth, yet still retained title to substantial assets. As expressed to us at oral argument by the defendant's attorney, the parties' fortunes had declined from a net positive $3,000,000 to a net negative $3,000,000, expected soon to sink even further.

The husband had two sources of income: consulting fees and rental payments, the combination being clearly insufficient to pay the agreed-upon alimony. The wife argues that the parties were therefore obviously looking towards the husband renegotiating with his creditors, effecting a favorable sale of assets, later recouping assets, or at least generating substantial income. By this agreement, she claims, she gave up the potential of being supported in the future as she had been in the past, in exchange for a sure payment of $35,000 per ...


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