On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Sussex County, Docket No. FM-19-110-00.
The opinion of the court was delivered by: Stern, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, Collester and Messano.
Plaintiff appeals from a post-judgment order of April 7, 2005, which vacated an order of December 27, 2004, corrected certain calculations therein, and awarded defendant $1,706,511.19 in equitable distribution,*fn1 together with counsel fees and costs that were subsequently embodied in orders of June 1, 2005 (for $140,955.17) and October 18, 2005 (for $1,500).*fn2
The orders relating to equitable distribution were based on Judge James Farber's decision of December 27, 2004 and his statement of reasons filed on April 7, 2005, the latter of which also addressed the reasons he decided to award counsel fees. Plaintiff also appeals from the December 27, 2004 order to the extent that it vacates the parties' property settlement agreement ("PSA") "as it relates to equitable distribution of the components of plaintiff's business, i.e., MSI [Communications, Inc.] [("MSI")], Jersey State Properties [("JSP")], and the MSI Employee Stock Option Plan [("ESOP")]."
Defendant cross-appeals from the same orders with respect to the dates used to determine equitable distribution and Judge Farber's failure to find plaintiff liable for equitable and common law fraud.
The December 27, 2004 and April 7, 2005 orders were premised on an evidentiary hearing conducted by Judge Farber as a result of an order of another judge filed on November 8, 2001, setting aside the PSA as to "all issues of equitable distribution and support[,]" and ordering a trial on those issues. Plaintiff argues that (1) "the decision of [the first judge] was plainly incorrect, was based on the mediator's file and the mediator's deposition and, therefore, the agreement reached in mediation should have been enforced";*fn3 (2)"Judge Farber erred in not reconsidering [the first judge's] decision and in not enforcing the mediated agreement" after hearing defendant testify in a manner inconsistent with her certification that resulted in [the first judge's] decision; (3) Judge Farber's findings were erroneous and failed to explain why the real estate, business, and ESOP were divided equally; and (4) counsel fees were improperly awarded to defendant.
On her cross-appeal, defendant contends that (1) "the trial court erred in refusing to use the known value of MSI Communications, Inc. in awarding [her] equitable distribution"; (2) the court also "erred in refusing to consider the contract price and actual proceeds received from the post-complaint sale of the Jersey State Properties[,] LLC building in awarding equitable distribution"*fn4 ; and (3) "judicial estoppel precludes appellant's challenge to the 50/50 distribution of marital property set forth in the parties' agreement."
We conclude that the first judge appropriately ordered that a plenary hearing be conducted as a result of defendant's attack on the PSA resulting from the mediation, even though the order requiring the mediator's deposition and examination of his file was inappropriate. In so holding, we recognize that private mediations must remain confidential or they will have no beneficial impact. State v. Williams, 184 N.J. 432, 444-52 (2005) (stating in dictum that the criminal defendant's need for the mediator's testimony did not outweigh the need for confidentiality); Lehr v. Afflito, 382 N.J. Super. 376, 395 (App. Div. 2006) (in mediation conducted under court rule, R. 1:40-5, confidentiality required by R. 1:40-4(c) "did not substantially outweigh the private and public interests in protecting confidentiality"). This is particularly so because the mediation agreement in this case specifically provided for confidentiality.*fn5 We further conclude that there is no basis for distinguishing between uncounselled mediated agreements and other types of PSAs in terms of evaluating conscionability, and Judge Farber's independent finding of unconscionability after the plenary hearing was, in any event, properly based on the record developed before him, as opposed to the first judge's evaluation of the mediation. As such, we reject the appeal and cross-appeal, believe the result is essentially fair, and, based on our scope of review, affirm the judgment.
On January 22, 1999, the parties entered into a mediation agreement with a private mediator resulting in a PSA executed on June 16, 1999. At the time, neither party was represented by counsel. Plaintiff subsequently filed a complaint for divorce on August 23, 1999, and a judgment was entered on May 24, 2000, which incorporated the PSA.
There is no dispute that courts possess the equitable authority to modify privately negotiated property settlement agreements. Conforti v. Guliadis, 128 N.J. 318, 323 (1992). This is because such agreements "must reflect the strong public and statutory purpose of ensuring fairness and equity in the dissolution of marriages." Miller v. Miller, 160 N.J. 408, 418 (1999). While spousal agreements are presumed valid, only those agreements that are "fair and just" will be enforced. See Petersen v. Petersen, 85 N.J. 638, 642 (1981). A spousal agreement may be reformed when it is "unconscionable," "it is the product of fraud or overreaching by a party with power to take advantage of a confidential relationship," Dworkin v. Dworkin, 217 N.J. Super. 518, 523 (App. Div. 1987), or when, due to "common mistake or mistake of one party accompanied by concealment of the other, the agreement fails to express the real intent of the parties[.]" Miller, supra, 160 N.J. at 419.
We first address whether the first judge erred in ordering discovery of the mediator and if that makes her subsequent order of an evidentiary hearing improper. Plaintiff argues that mediation proceedings are confidential and the first judge inappropriately compelled the mediator to testify regarding what occurred at the mediation proceedings in order to evaluate whether there was a basis for disturbing the PSA. Plaintiff's argument is supported by the parties' mediation agreement, which expressly provided that (c) To preserve the integrity of the mediation process, both clients agree that neither the mediator nor his records shall be subject to subpoena by either or both of the clients or by anyone acting on behalf of either or both clients, should either or both clients choose to litigate this matter subsequent to or in place of mediation. Each of the clients makes this covenant with the other as a condition of their agreement with one another to attempt to resolve this matter through mediation. Each client also makes this covenant with the mediator to induce the mediator to furnish mediation services under this Agreement.
We agree with plaintiff's contention based on the terms of the agreement. Moreover, plaintiff's position is also supported by subsequently developed public policy.
In November 2004, more than five years after the parties signed the agreement and four years after entry of the judgment of divorce, the Legislature enacted the Uniform Mediation Act ("UMA"), N.J.S.A. 2A:23C-1 to -13. The statute applies to mediations required "by statute, court rule or administrative agency rule, or referred to mediation by a court, administrative agency, or arbitrator[.]" N.J.S.A. 2A:23C-3(a)(1). If the agreement before us were entered after the statute was enacted, the UMA would apply to this case by virtue of the parties' agreement. See N.J.S.A. 2A:23C-3(a)(2),(3).
N.J.S.A. 2A:23C-5(a) provides that the confidentiality attaching to a mediation may be waived only if all of the parties to the mediation "expressly" agree to the waiver. However, the UMA provides exceptions to the broad rule of section ...