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Hawxzhurst v. Hawxhurst

December 29, 1998

STEPHEN B. HAWXHURST, PLAINTIFF-APPELLANT,
v.
PAMELA HAWXHURST, DEFENDANT-RESPONDENT.



Before Judges Petrella, D'Annunzio and Cuff.

The opinion of the court was delivered by: The opinion of the court was delivered by Cuff, J.A.D.

[9]    Submitted: September 14, 1998

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

In this dissolution matter, we must determine whether the pre-nuptial agreement executed by the parties is valid and enforceable and, if so, whether the husband's Individual Retirement Account (IRA), created by a rollover of his pension, is an asset subject to the agreement. A subsidiary issue is whether the furnishings of the parties' two homes were properly valued and appropriately distributed.

I.

Plaintiff Stephen B. Hawxhurst and defendant Pamela Hawxhurst were married on May 11, 1991. It was the second marriage for both. Mr. Hawxhurst's first wife died in August 1990. He has two adult children from that marriage. Ms. Hawxhurst's first marriage ended in divorce. She, too, has two adult children from her prior marriage.

Prior to their marriage, Mr. Hawxhurst initiated Discussions with Ms. Hawxhurst about a pre-nuptial agreement. He wanted to protect a portion of his assets for his children. Both parties met with an attorney. At the end of the hour-long meeting, they instructed the attorney to draft an agreement. Approximately two weeks later, the couple met with the attorney again and reviewed the initial draft. In early May, Mr. Hawxhurst picked up a copy of the agreement. Ms. Hawxhurst met with another attorney to review the agreement. No changes were requested by Ms. Hawxhurst's attorney; however, the parties made minor changes to the document on their own prior to execution. Appended to the agreement are schedules of each party's assets and liabilities. Mr. Hawxhurst's pension is listed, but not valued, on his schedule.

The agreement provides that Ms. Hawxhurst would participate in a greater portion of Mr. Hawxhurst's assets as the marriage endured. In the fifth year of the marriage and thereafter, Ms. Hawxhurst would receive fifty percent of Mr. Hawxhurst's net worth, subject to certain excluded premarital assets, if the parties separated or a divorce action had been filed. However, if Mr. Hawxhurst died at any time after the marriage, Ms. Hawxhurst was entitled to receive fifty percent of his gross estate as calculated for federal estate tax purposes. The relevant provisions are as follows:

"In the event of an annulment, a separation (whether by operation of law or by mutual agreement) or a pending or final divorce between the parties within the first four (4) years after the marriage, then in such event each party agrees that there shall be a property settlement or division of solely-owned property between them as follows, with the effective date being the date either party files legal papers ... or actually vacates the marital residence, whichever occurs first:"

"a) [Defendant] shall be entitled to receive from [plaintiff] ten per cent (10%) of his net worth if the effective date is during the first year; twenty per cent (20%) during the second year; thirty (30%) during the third year; forty per cent (40%) during the fourth year; and fifty per cent (50%) thereafter, not to include anything gifted to her by him before death or separation or divorce, and not subject to offset for any property voluntarily gifted prior to the effective date."

"c) Each party shall keep and retain sole ownership, enjoyment, control and power of disposal of all property of every kind and nature whatsoever now owned (as set forth in Schedules A and B annexed hereto) or hereafter acquired from any source whatsoever by that party, and all increments or increases of value to that property, free and clear of any interest, rights, or claims of the other party, including rights under N.J.S.A. 2A:34-23, the laws of community property, equitable distribution, or similar statutory or case law in any jurisdiction, except as otherwise provided for herein."

"8.3 In the event of [plaintiff's] death any time after the marriage, [defendant] shall be entitled to receive fifty per cent (50%) of the deceased's Gross Estate as calculated for Federal Estate Taxes, not subject to offset for any property voluntarily gifted prior to the date of death."

"Net worth" is not defined in the agreement; however, each schedule annexed to the agreement calculates each party's net worth as the difference between each party's listed and valued assets and liabilities.

On February 23, 1996, Mr. Hawxhurst filed a complaint for divorce on the grounds of extreme cruelty. Because he contested the validity of the May 1991 pre-nuptial agreement, an order was entered bifurcating the trial of the matter. On October 2, 1996, trial commenced on the issue of the validity of the pre-nuptial agreement.

According to Ms. Hawxhurst, the couple discussed the pre-nuptial agreement extensively prior to their marriage. Both were content with the terms of the agreement. Ms. Hawxhurst testified that she believed that Mr. Hawxhurst wanted to make sure that his children would receive fifty percent of his assets. She, in turn, wanted protection in the event Mr. Hawxhurst should die.

At trial, Mr. Hawxhurst testified that the agreement was his idea. He viewed the agreement as a way to protect his children's interest in half his assets. However, he was not aware at the time he signed the agreement that Ms. Hawxhurst would be entitled to fifty percent of his entire estate if they divorced. He believed that she would be entitled to half of only certain unspecified assets. Mr. Hawxhurst also stated that he was not entirely satisfied with the agreement when he signed it, but signed it because "it was a quick type marriage" and he "was in duress from the death of [his] first wife." On cross-examination, he virtually admitted that the agreement was an error in judgment.

On November 21, 1996, the trial Judge rendered his decision. He found that the pre-nuptial agreement was valid and enforceable. He noted that the agreement was Mr. Hawxhurst's idea and was drafted by his attorney after at least two consultations. The trial Judge found that the parties fully disclosed their assets and liabilities; he further found no fraud or duress. He concluded his findings of fact as follows:

"I find that plaintiff's testimony in Court as to his understanding of the agreement is not credible but colored by his current desire to make a better deal for himself now that the marriage has fallen apart."

"I find that he got what he bargained for in the Spring of 1991 and cannot now complain, five years later, that he is dissatisfied with his deal."

On appeal, Mr. Hawxhurst argues that the court erred in finding that he voluntarily entered the agreement. He further contends that the trial Judge should have found the agreement was designed to effect only a portion of his assets, the agreement was ...


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