September 3, 2008
RONALD QUATSE, PLAINTIFF-RESPONDENT,
JACQUELINE QUATSE, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County, Docket No. FM-12-12063-91.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted August 26, 2008
Before Judges Lisa and Simonelli.
Defendant, Jacqueline Quatse, appeals from a post-judgment order determining her share of the pension plan of her former husband, plaintiff, Ronald Quatse. Judge Cantor concluded that under the terms of the parties' Property Settlement Agreement (PSA), defendant's entitlement was to one-third of the marital portion of plaintiff's pension, and not one-third of the entire pension benefit he received upon retirement. We agree with the judge's determination and affirm.
The parties were married on September 10, 1966, and they had three children, born in 1968, 1969 and 1973. Plaintiff began working for Bakery Driver's Local 802 on July 17, 1972, and began participating in the union pension plan on September 17, 1972. The parties were divorced by judgment entered on March 22, 1991, which incorporated the PSA. Each party was represented by counsel in the negotiations, preparation and execution of the PSA.
The PSA provided for equal division of most assets acquired by the parties during the marriage. There were two exceptions, both dealing with plaintiff's employment benefits. Paragraph 4.4 awarded defendant fifty percent of plaintiff's annuity through the union, but without consideration of the tax liability. Therefore, because defendant received this payment (which she later estimated to be $11,000) "up front," plaintiff was burdened with the tax liability, while defendant received one-half of the gross amount of the asset free of taxes. Accordingly, her effective share was more than one-half. The other exception was the pension plan. Paragraph 4.5 of the PSA provided:
4.5. The Wife does recognize that the Husband has a pension plan through the Bakery Salesman Union Local 802. For the mutual promises and covenants contained in this Agreement, the parties agree that the Wife shall have a One-Third (1/3) interest at such times that payments are made to the Husband upon his retirement.
After the divorce, plaintiff continued working for the same employer and continued his participation in the pension plan for an additional seventeen years until his retirement (in addition to the eighteen years he participated in the plan during the marriage). In connection with the preparation of a Qualified Domestic Relations Order (QDRO), the parties realized that they disagreed as to the meaning of paragraph 4.5. Plaintiff contended that defendant was entitled to one-third of the marital portion of his pension plan. Defendant contended she was entitled to one-third of the entire pension benefits he would begin receiving upon retirement.
The parties filed cross-motions seeking a judicial determination. They were both represented by counsel. They filed certifications setting forth their respective understandings of the meaning of paragraph 4.5. Defendant contended that in consideration of her waiver of alimony, she understood that when plaintiff ultimately retired, she would receive one-third of his full pension benefit. Defendant argued that the language of paragraph 4.5 defined the amount she would receive by referring to the times that the payments would be made to plaintiff upon his retirement. Plaintiff argued that this was not a "clear alimony" case as contended by his former wife, because she was working as a real estate agent and earning sufficient income at the time of the divorce to support herself. He further certified that the children were living with him at the time of the divorce, and he did not seek child support. Defendant did not refute these assertions. Plaintiff stated his understanding that defendant was receiving more than a fifty percent effective share of his annuity because she wanted "up front" money, and therefore agreed to a less than fifty percent share of the marital portion of his pension plan.
Both parties relied on their certifications. Neither party requested a plenary hearing or proffered any evidence of specific representations that were made at the time they entered into the PSA. In essence, they were stating, many years later, their contentions as to what they understood paragraph 4.5 to mean.
Judge Cantor heard oral argument. She issued an order on October 19, 2007 granting plaintiff's motion and denying defendant's. The order contained this statement of reasons:
a. The pension benefits of an employed spouse are subject to equitable distribution when they are related to the joint efforts of the parties. Thus, a divorced spouse is entitled to a share of pension benefits from employment during the years of the marriage. Faulkner v. Faulkner, 361 N.J. Super. 158, 165 [(App. Div.), certif. denied, 178 N.J. 28 (2003)]. Reading the pension provision of the Judgment of Divorce to apply to pension benefits earned after the marriage would run contrary to the general practice of equitable distribution of pension benefits. In the absence of clear evidence to the contrary, the language in the pension should be given the normal reading. Thus, only the marital portion of the Plaintiff's pension is subject to division among the parties.
b. The marital portion of pension is eighteen thirty-fifths (18/35) of the pension. The coverture fraction is generally "the appropriate tool to determine an appropriate allocation of spouses' respective interests in a pension." The numerator is the number of years of service during the marriage and the denominator is the total years of service. Id. at 165-66. Defendant['s] share of the pension is one-third of this fraction.
The judge rejected defendant's argument that the language in paragraph 4.5 defined the amount of the benefit, concluding that it merely related to the timing of the payment.
On appeal, defendant repeats the same arguments she made in the trial court. The issue before us is a legal one, which we review de novo. Manalapan Realty, L.P. v. Twp. of Manalapan, 140 N.J. 366, 378 (1995). We agree with Judge Cantor's legal analysis and affirm substantially for the reasons set forth in her written order (quoted above) and her comments in the colloquy during oral argument on October 19, 2007. We add the following brief comments.
Assets subject to equitable distribution are those "legally and beneficially acquired by them or either of them during the marriage." N.J.S.A. 2A:34-23h; Painter v. Painter, 65 N.J. 196, 217-18 (1974). Thus, as a matter of law, a party to a divorce is entitled to seek equitable distribution only with respect to property acquired during the marriage. With respect to the pension benefits of one spouse, the entitlement of the other spouse is determined thusly:
The coverture fraction is the proportion of years worked during the marriage to total number of years worked. The numerator represents that portion of the benefit, enhanced or not, that was "legally and beneficially acquired" during the marriage. The denominator is the total number of years worked up to retirement. The coverture fraction insures that the equitable distribution pot includes only that portion of the working spouse's labor which constitutes a "shared enterprise." It also assures the employee spouse the benefits of his or her pre or post coverture labors. [Eisenhardt v. Eisenhardt, 325 N.J. Super. 576, 580-81 (App. Div. 1999) (citations omitted).]
Therefore, "[t]he longer the employee spouse works, the larger the denominator, thus reducing the non-employee spouse's percentage share and assuring the employee spouse the benefits of his or her post-divorce labors. In general, 'the non-employee spouse will receive a decreasing percentage of an increasing benefit.'" Reinbold v. Reinbold, 311 N.J. Super. 460, 466-67 (App. Div. 1998) (quoting William M. Troyan, Pension Evaluation and Equitable Distribution, 10 Fam. L. Rep. 3001, 3007 (1983)).
We agree with Judge Cantor that absent an explicit contrary statement in an agreement between divorcing parties, the controlling legal principles dictate the outcome, namely that the "property" means that which was acquired during the marriage.
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