November 21, 2007
KATHE JADOS (F/K/A ISKO), PLAINTIFF-RESPONDENT,
IRVING ISKO, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, FM-14-950-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 23, 2007
Before Judges Skillman and Winkelstein.
Plaintiff Kathe Jados and defendant Irving Isko were divorced on July 2, 2004. The issues on appeal arise out of the interpretation of the parties' 1981 prenuptial agreement (the Agreement). Defendant appeals from two orders of the Family Part, dated October 30, 2006, and November 8, 2006, which required him to pay plaintiff the rental value of an apartment in Manhattan for five years pursuant to the terms of the Agreement. Specifically, the court ordered defendant to pay plaintiff a lump sum of $178,000, "as the present value of rent for the apartment benefit"; a lump sum of $20,000, "as the present value of the furniture"; and the court granted plaintiff's request for counsel fees.*fn1 Defendant also appeals from the portion of the November 8, 2006 order in which the court declined to give him credit for his pendente lite payments toward his rental obligation.
We affirm the court's order that defendant pay a sum equal to the value of rent for five years, but reverse that portion of the November 8, 2006 order that requires payment to be in a lump sum; affirm the court's order awarding plaintiff a lump sum of $20,000 for the furniture; and affirm the order denying defendant a credit for pendente lite payments.
On July 20, 1981, in anticipation of their upcoming marriage the following month, the parties entered into the Agreement, which provided, in pertinent part:
NINTH: In the event that the contemplated marriage of the parties hereto shall end in divorce or separation, the parties hereto agree as follows:
(b) Subject to the provisions of subparagraph (c) following, pursuant to which [plaintiff] shall be entitled to other amounts, [defendant] shall provide [plaintiff] . . . with the following:
(1) a furnished apartment in New York City selected by [defendant] equal or better than the present residence of [plaintiff] and pay the rental and all other maintenance charge[s] each year for a period of five years succeeding, and the furnishings thereof provided by [defendant] shall become the property of [plaintiff] upon the expiration of such five-year period; and
. . . . anything to the contrary notwithstanding, the payments provided for in subparagraph
(1) . . . preceding shall terminate upon the death or remarriage of [plaintiff].
(c) If such divorce or separation shall occur after the first three years of the marriage of the parties to each other, . . . and if the parties shall have been living together in good faith as man and wife continuously without fault on the part of [plaintiff] up to such separation or divorce, then in lieu and instead of the amounts provided for in subparagraph (b) preceding, [defendant] shall provide [plaintiff] with the following:
(1) a furnished apartment in New York City selected by [defendant] equal or better than the present residence of [plaintiff] and pay the rental or other maintenance charge thereon for each year of the five years succeeding . . . and the furnishings thereof provided by [defendant] shall become the property of [plaintiff] upon the expiration of such five year period; and . . . . anything to the contrary notwithstanding, the payments provided for in (1) . . . shall terminate upon the death or remarriage of [plaintiff][.]
The parties were married for over twenty-one years before plaintiff filed for divorce in January 2003. Plaintiff decided not to live in New York City following dissolution of the marriage, but instead chose to move to Wisconsin. Nevertheless, she claimed she was entitled to the value of a New York City apartment pursuant to Article NINTH (c) of the Agreement. Defendant disputed her claim, arguing that she was only entitled to the apartment if she lived there.
The trial judge ruled that although plaintiff moved to Wisconsin after the divorce, the Agreement entitled her "to the value of the apartment as mentioned in Article NINTH (c)1, the value of which is to be determined after a subsequent hearing and/or by agreement of the parties." Defendant appealed and we affirmed, stating the following:
On his cross-appeal defendant argues that the judge erred in awarding plaintiff a sum of money representing the value of leasing an apartment in New York City for five years. The pre-nuptial agreement provided that, if the marriage ended by divorce or separation, defendant would lease the apartment for plaintiff, so that she could resume work activities in New York City where she had previously worked. However, plaintiff elected not to move to New York City. Rather, she purchased a home in Wisconsin and moved there. Defendant contends that the judge should not have awarded plaintiff the cost of leasing the apartment because plaintiff chose not to live in a New York City apartment. The judge's decision was an appropriate interpretation of the pre-nuptial agreement, and was not an abuse of discretion. One of the purposes of the agreement was to provide plaintiff a place to live in the years immediately following dissolution of the marriage. Plaintiff is entitled to the value of this benefit, even though she elected to purchase a home in Wisconsin rather than live in an apartment in New York City. [Isko v. Isko, No. A-6137-03 (App. Div. June 8, 2005) (slip op. at 5-6).]
Following our decision, the parties were unable to reach an agreement as to the fair value of an apartment and its furnishings. Thus, the Family Part judge scheduled a plenary hearing and appointed an expert to evaluate the cost of providing "an unfurnished apartment in Manhattan."
Defendant asserted that pursuant to the Agreement, if the divorce occurred after the first three years of the marriage, he had the option to select an apartment that required payment of monthly maintenance charges, plus real estate taxes, rather than rent. Defendant pointed to the language of paragraph (c)(1) of the Agreement, which states that he was obligated to provide plaintiff with a furnished apartment and pay "the rental or other maintenance charge thereon," whereas if the parties divorced within the first three years of marriage, he was required, under paragraph (b)(1) of the Agreement, to pay "the rental and all other maintenance charge[s]." (emphasis added). Defendant argues, therefore, that if the marriage lasted longer than three years, which it did, his obligation was to pay either rental or maintenance charges, at his discretion. In exercising that discretion, he chose the same condominium that plaintiff lived in when she signed the Agreement, which required payment of monthly maintenance charges, not rent.*fn2 Plaintiff asserted that defendant was obligated under the Agreement to pay her the rental value of an apartment, not an amount based on monthly maintenance charges.
Defendant also argued that he was entitled to a credit for eight months of rent because he paid that amount under a pendente lite order during the divorce proceedings. Plaintiff asserted that defendant's claim for a credit should have been raised before the final judgment of divorce was entered and should therefore be rejected by the court.
The court-appointed expert, Lawrence Sicular, reported that the rental value of the chosen apartment for five years would be $178,000; that the "common charges" for the same apartment for five years would be $32,558.
At the conclusion of the hearing, the judge ruled that under the terms of the Agreement, plaintiff was entitled to the rental value of the chosen apartment. The judge reasoned that pursuant to the Agreement, if defendant chose to purchase the apartment and pay maintenance charges, plaintiff would be entitled to sublet the apartment and receive market rent for it. Accordingly, relying upon the expert report, the court ordered defendant to pay plaintiff a lump sum of $178,000 as the rental value of the apartment. The judge rejected both parties' estimates regarding the value of the apartment furnishings and ordered defendant to pay plaintiff an immediate lump sum of $20,000 as a reflection of "a reasonable interpretation of what these parties in fact intended when they entered into this prenuptial agreement[.]"
We begin with defendant's challenge to the trial judge's order requiring him to pay plaintiff a sum equivalent to the value of renting an apartment in New York City for five years. In addressing defendant's claim, we accord special deference to the factual findings of the Family Part in view of the court's "special expertise." Cesare v. Cesare, 154 N.J. 394, 412-13 (1998). Nonetheless, we review questions of law, such as contract interpretation, de novo. Hutnick v. ARI Mut. Ins. Co., 391 N.J. Super. 524, 528 (App. Div.), certif. denied, 192 N.J. 70 (2007).
The Agreement provides that its terms be interpreted in accordance with New York law. Under New York law, contracts are to be construed with reference to their plain language, and "words and phrases are given their plain meaning." Am. Express Bank Ltd. v. Uniroyal, Inc., 562 N.Y.S.2d 613, 614 (App. Div. 1990), appeal denied, 77 N.Y.2d 807 (1991). Courts should not rewrite unambiguous agreements but should enforce the plain meaning evidenced by the writing. Ibid. New York law on this point is essentially the same as New Jersey law. See Barnett and Herenchak, Inc. v. State, Dep't of Transp., 276 N.J. Super. 465, 472-73 (App. Div. 1994)(stating same principle under New Jersey law and holding that trial court had duty to fully explain why it ignored clear and unambiguous contract terms).
These principles of contract construction also apply to marital agreements. Laurence v. Rosen, 645 N.Y.S.2d 773, 775 (App. Div. 1996). "[T]he intent of the parties to a separation agreement should be found within its four corners, unless the agreement is indefinite or ambiguous, in which case the courts may look to the construction placed upon the agreement by the parties themselves in ascertaining its meaning." Ibid.
Here, the pertinent portion of Article NINTH (c)(1) provides that if the parties divorce after the first three years of marriage, which is what occurred, defendant was obligated to provide plaintiff with a furnished apartment in New York City selected by [defendant] equal or better than the present residence of [plaintiff] and pay the rental or other maintenance charge thereon for each year of the five years succeeding . . . and the furnishings thereof provided by [defendant] shall become the property of [plaintiff] upon the expiration of such five-year period.
We construe the word "selected" as giving defendant the right to decide which apartment to buy or rent, not the right to select whether to pay rent or maintenance charges if, as happened here, plaintiff chose to leave New York City and not occupy either a rental or condominium unit. In other words, defendant could buy a condominium unit, let plaintiff live there, and he would pay the maintenance fees and taxes for five years. Alternatively, he could rent an apartment for plaintiff to live in for five years. Because, however, plaintiff moved to Wisconsin, defendant did neither. He did not buy the condominium unit, nor did he rent an apartment for plaintiff.
If defendant had purchased a condominium unit, he presumably would have had to pay for it, either in cash, or with a mortgage. In either event, he would have had to pay an amount out of pocket. In other words, to satisfy his obligation to plaintiff, he would have had to initially pay for the condominium unit, and then pay the maintenance fees and taxes for the next five years. Alternatively, rather than buying a condominium unit, he could have avoided the initial outlay and simply paid rent. His choices were to either make an initial outlay and pay maintenance charges and taxes, or make no initial outlay and pay rent. His choices did not include simply paying maintenance charges and taxes without first purchasing the condominium.
As we explained in our prior decision, plaintiff was entitled to the value of the benefit afforded to her in the Agreement. Isko, supra, No. A-6137-03, (slip op. at 6). The benefit was the use of, or right to use, the unit selected by defendant. Defendant simply paying maintenance fees and real estate taxes would not have provided plaintiff with the benefit she bargained for in the Agreement - that is, a sum sufficient to provide her with a place to live following the dissolution of her marriage. Defendant's construction of the Agreement denies her that benefit.
We do agree with defendant, however, that the Agreement did not call for him to pay the entire rental value in a lump sum. The Agreement provides that the payments would terminate either at the expiration of five years, or upon the death or remarriage of defendant if either of those events occurred sooner. The Agreement does not provide for a single up-front payment.
Though at oral argument defendant's counsel argued that the five years began when plaintiff filed her divorce complaint in January 2003, we disagree. We conclude that the five years did not begin to run until the final judgment of divorce was entered on July 2, 2004. Consequently, the five-year period will not expire until July 1, 2009. We therefore remand to the trial court to consider if a refund is required, and to determine the method of payment for the balance of the five-year term.
The trial court awarded plaintiff a lump sum of $20,000 for furnishings. The Agreement calls for defendant to supply the furniture, which would have become the property of plaintiff after the expiration of five years. Given the broad discretion afforded to trial courts in Family Part matters, Cesare, supra, 154 N.J. at 412-13, we find no abuse of discretion under the circumstances in requiring defendant to pay plaintiff a lump sum for the furnishings.
Finally, we address defendant's claim that he is entitled to a credit for eight months of his pendente lite obligation, which purportedly included $4000 per month attributable to plaintiff's rent. The trial court concluded that defendant should have challenged the pendente lite order before the final judgment of divorce was entered, and he raised his post-judgment application too late. We agree.
Typically, pendente lite orders "do not survive the entry of a judgment of divorce unless expressly preserved in it or reduced to judgment prior to entry of final judgment." Mallamo v. Mallamo, 280 N.J. Super. 8, 12 (App. Div. 1995). Though we are mindful that support orders are also subject to modification both prior to and subsequent to the entry of a final judgment, whether to permit modification rests within the sound discretion of the trial court. Here, we conclude that the trial judge did not abuse his discretion when he ordered that defendant was not entitled to a credit in 2006 for a pendente lite obligation that was ordered by the court in September 2003.
In sum, we affirm both the October 30, 2006, and November 8, 2006 orders, except that we reverse that portion of the November 8, 2006 order that required the rental value to be paid in a lump sum. We remand for further proceedings consistent with this opinion. We do not retain jurisdiction.