December 2, 2008
ANTHONY DILAURI, PLAINTIFF-RESPONDENT,
LINDA DILAURI, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FM-10-394-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 22, 2008
Before Judges Payne and Lyons.
This case arises from a dispute between former spouses, defendant, Linda DiLauri, and plaintiff, Anthony DiLauri. Defendant appeals an order requiring her to pay for damage she caused to the parties' marital home; denying her cross-motion for liquidated damages; and permitting plaintiff to let the parties' adult daughter's health coverage lapse. The following factual and procedural history is relevant to our consideration of the issues advanced on appeal.
Plaintiff and defendant divorced on April 16, 2007. As part of their Property Settlement Agreement (PSA), which was incorporated into the judgment of divorce, the parties agreed that plaintiff was to become the sole owner of the marital home upon payment of $140,000 to defendant for her interest in the property. Plaintiff was obligated to refinance the current mortgage on the marital home no later than June 23, 2007. Defendant agreed to vacate the property by the refinancing deadline. Plaintiff was to pay $35.00 in liquidated damages for every day after June 23, 2007 that he failed to pay defendant the $140,000.
The PSA provided that defendant could reside in the marital home prior to the closing, provided she maintained it. She was responsible, under the PSA, for any damage beyond "normal wear and tear." Plaintiff was permitted to "walk through" the home prior to closing to verify that defendant had maintained the property.
On June 18, 2007, plaintiff, in anticipation of closing on the home on June 20, 2007, did such a "walk through" and determined that there was property damage. Plaintiff claims he contacted the parties' daughter and asked her to relay to defendant that he expected her to have the home "broom clean" by the closing date. Defendant contends that plaintiff made no complaints about the condition of the property on that date. On the closing date, plaintiff claims the home was "filthy, with a urine soaked carpet, missing fixtures, a broken air conditioning system, leaking roof, and damaged landscape."
Plaintiff closed on the property and on June 25, 2007, tendered a check for $130,000 to defendant, $10,000 less than agreed upon in the PSA. Plaintiff placed $10,000 in escrow in order to cover the cost of the damage to the property. Defendant claims that this was the first time she was made aware of plaintiff's dissatisfaction with the condition of the house. Plaintiff filed a notice of motion on July 24, 2007, seeking to compel defendant to pay for the damage. In support of that motion, plaintiff included his own certification, the certification of a witness, several photographs documenting the damage and several estimates and receipts for repair and cleanup work.
The parties' PSA also addressed support for the parties' daughter, who was twenty-one years old at the time plaintiff filed his notice of motion. Plaintiff agreed to cover the daughter under his insurance policy "for so long as possible."
The PSA stated that "the child may be required to provide certain information periodically" in order to maintain her coverage. In plaintiff's notice of motion, he also moved to compel defendant to provide him with documentation confirming their daughter's college enrollment. Plaintiff claimed that his insurance company required this information.
Defendant opposed the motion, arguing that the repair estimates attached to plaintiff's motion were hearsay and should not be considered. She also argued that when plaintiff accepted the deed, he accepted the property "as is" and therefore his damage claims did not survive the closing. Defendant also opposed plaintiff's request for proof of their daughter's college enrollment, arguing that the court could not compel the parties' adult daughter to provide any personal information. Defendant filed a cross-motion for damages pursuant to the PSA, arguing that the liquidated damages clause applied because she had not been paid the full $140,000 by June 23, 2007.
The motion judge held that he could consider plaintiff's receipts for the work he already had paid for because they documented the out-of-pocket damages plaintiff had paid. He also determined that plaintiff was entitled to seek relief for damage to the home after the closing because the PSA, not the law of real property, was the controlling authority.
In a written opinion, the motion judge determined that plaintiff was entitled to the following damages: $200 for the cost to remove damaged plants and shrubbery; up to $6,304.80 for the cost to replace the damaged carpet and flooring; up to $775 to replace insulation, drywall and a damaged heating unit; $71 for one-half of the cost to repair the air conditioning unit; and $800 for one-half of the cost to repair the roof of the house.
The motion judge held that defendant was immediately responsible for $1,846, which represented the current out-of-pocket expenses plaintiff had incurred and paid. The judge also found that defendant was liable for any costs for the repair of the carpet and flooring up to the $6,304.80 set forth above. However, the motion judge held that "[u]ntil the final invoice for the work on the carpets and flooring has been submitted to the defendant, the $10,000 currently being held in escrow shall continue to be held in escrow except" for the $1,846, which was to be paid out immediately.
The motion judge also denied plaintiff's request to compel the parties' daughter to provide her college enrollment information, stating that because she was twenty-one years old, he could not compel her to provide such information. But the judge acknowledged that if she did not provide the information, her coverage may be lost. This appeal ensued.
On appeal, defendant presents that following arguments for our consideration:
POINT I: THE TRIAL COURT COMMITTED HARMFUL ERROR IN PERMITTING PLAINTIFF TO RAISE THE ISSUE OF DAMAGES TO THE HOUSE AFTER THE CLOSING HAD ALREADY OCCURRED.
A. All defects and underlying covenants merged with the deed.
B. The defects plaintiff complains of were not latent, therefore the court's ruling allowing him to modify the bargain between the parties constitutes harmful error.
POINT II: THE TRIAL COURT ERRED IN NOT AWARDING DEFENDANT DAMAGES IN THE AMOUNT OF $35.00 PER DAY AS SPECIFIED IN THE AGREEMENT.
POINT III: THE TRIAL COURT ERRED IN ACCEPTING HEARSAY TESTIMONY IN THE FORM OF ESTIMATES OF CONTRACTORS AND IN AWARDING DAMAGES TO PLAINTIFF BASED ON SAID HEARSAY ESTIMATES.
POINT IV: THE TRIAL COURT ERRED IN ALLOWING PLAINTIFF TO UNILATERALLY TERMINATE HIS DAUGHTER'S MEDICAL INSURANCE WITHOUT A PLENARY HEARING.
As a preliminary matter, we must determine if plaintiff properly appealed from a final judgment. It is well established that an appeal may be taken only from a final judgment, R. 2:2-3(a)(1), and a judgment is final only if it is final both as to all issues and all parties. Caggiano v. Fontoura, 354 N.J. Super. 111, 123 (App. Div. 2002). If there is no final judgment, we may grant leave to appeal in the interest of justice, R. 2:2-4, but this discretion is "exercised only sparingly." State v. Reldan, 100 N.J. 187, 205 (1985). If the judgment or order is not final and no leave for appeal has been filed, the action will generally be dismissed by the court. However, Rule 2:4-4(b)(2) authorizes the Appellate Division to treat a notice of appeal as an application for leave to appeal and to grant leave nunc pro tunc in extraordinary circumstances and in the public interest, provided only that the notice of appeal was filed within the time required for appeals from final judgment. Pressler, Current N.J. Court Rules, comment on R. 2:2-4 (2008).
In this case, the motion judge's order compels defendant to pay plaintiff $1,846; however, the order goes on to state that defendant "shall be solely responsible for the cost of repair of the carpet and flooring, based upon the actual invoices submitted after the work is completed." Should we uphold the motion judge's order, in the future, defendant may still contest expenses not yet incurred and paid for. See Clarke v. Clarke, 349 N.J. Super. 55, 61-62 (App. Div. 2002) (holding that an order proposing to equitably distribute a pension plan not yet in pay status is interlocutory until the distributive formula is determined). Because all issues are not resolved, this is clearly not an appeal from a final judgment.
Though defendant improperly filed a notice of appeal on an interlocutory order, we opt to treat defendant's notice of appeal as an application for leave to appeal pursuant to Rule 2:4-4(b)(2). We do this to promote "fairness in administration and the elimination of unjustifiable expense and delay." R. 1:1-2.
We begin our consideration of defendant's arguments with her contention that plaintiff should not have been permitted to raise issues concerning the condition of the marital home after the closing because "all defects underlying covenants merged into the deed at closing." The motion judge concluded that the doctrine of merger did not apply because the PSA, not the law of real property, was the controlling authority. We agree and therefore affirm.
Our Supreme Court has made it clear that the PSA is generally the controlling authority for disposition of disputes between divorced parties. For example, in Conforti v. Guliadis, the respondent's former wife moved for reformation of a lease that had been incorporated into their divorced decree. 128 N.J. 318, 320 (1992). The Court was asked to determine whether the issue should be resolved by principles of matrimonial law applicable to judgments of divorce, or, contract law applicable to lease agreements. Ibid. The Court held that matrimonial law applied, stating: although plaintiff seeks modification of what appears to be a standard lease for retail space, the lease was but one component of a much broader agreement encompassing a host of domestic issues that arose when [the parties] ended their marriage. Consequently the lease [...] cannot be viewed merely as a conventional property transaction. [Id. at 323-24.]
In other words, the PSA, as the overarching judgment that governed the parties' post-divorce obligations, was the focal point for resolving their dispute.
Moreover, the rule of merger holds that the acceptance of a deed for lands is considered "prima facie full execution of an executory contract to convey, unless the contract contains a covenant collateral to the deed." Caparrelli v. Rolling Greens, Inc., 39 N.J. 585, 590 (1963). The merger rule extinguishes all previous covenants that relate to the "title, possession, quantity or emblements of the land." Id. at 591. Covenants in an antecedent contract that the parties do not intend to incorporate into the deed or are not necessarily satisfied by execution and delivery of the deed are collateral agreements and are preserved from merger. Id. at 592.
In this case, there was no real estate contract of sale but rather a PSA that had been incorporated in the final judgment of divorce. Therefore, there was no real estate purchase contract to merge into a deed but rather a court order requiring a conveyance under certain conditions. The parties' dispute relates to defects in the condition of the property, which the parties had specifically addressed in the PSA. The deed was not intended to satisfy the PSA's requirement that defendant maintain the property. As such, defendant's obligation to keep the home in an acceptable condition did not merge with the deed upon closing.
As in Conforti, the parties here have a broad PSA. Their agreement addresses alimony, child support, distribution of personal property and, of course, the disposition of the marital home. It is clear from the agreement that the parties intended it to govern any dispute that might arise between them regarding the marital property. See Konzelman v. Konzelman, 158 N.J. 185, 199 (1999) (holding that parties' freedom to mold contract obligations in property settlement agreements "should be assured"). Therefore, the motion judge correctly addressed plaintiff's claims under the lens of the PSA, and not the law of real property.
We next address defendant's contention that because the defects in the house were not "latent," defendant should not have been permitted to seek damages after the closing. In essence, plaintiff argues that she was entitled to notice of her breach of the PSA, and because no notice was given, plaintiff waived his cause of action upon acceptance of the deed.
Plaintiff asserts that he did notify defendant of the damage prior to the closing and, in the alternative, argues that he had no obligation to do so, nor was he required to postpone the closing because of her breach.
As stated above, the PSA controls this dispute between the parties. Paragraph 11 of the agreement states that "[t]he husband shall 'walk through' the home prior to closing to ascertain the condition of the home and ensure only reasonable wear and tear." The PSA does not forbid plaintiff from proceeding with the closing if he finds defects in the property, nor does it state that he waives any claims against defendant regarding the property upon closing.
Furthermore, basic contract law holds that plaintiff waived nothing by performing his end of the bargain despite defendant's breach. We have stated that "[w]hile a substantial defect in the proposed performance of the defaulting party may discharge the innocent party from his duty to perform, or entitle him to rescind, he may also choose to proceed with the contract and recover in damages for the injuries caused by the breach." Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 145 (App. Div. 1960), certif. denied, 34 N.J. 66 (1961) (internal citations omitted). Simply because the non-breaching party has knowledge that the defaulting party will not perform one of his obligations under the contract, the injured party, by choosing to proceed nonetheless, "obviously does not manifest agreement that the performance received is in full satisfaction of all contractual obligations." Ibid. Therefore, "prior notice [is] [...] not required to give rise to defendant's liability for a breach." Caparrelli, supra, 39 N.J. at 594.
It is clear from the terms of the PSA, as well as from established cannons of contract law, that plaintiff did not waive any claims against defendant regarding the condition of the property simply because he proceeded with the closing.
We next address defendant's contention that the motion judge erred when he accepted estimates from various contractors regarding the cost to repair and replace damaged portions of the marital home. She asserts that these written estimates were hearsay and should not have been considered under Rule 1:6-6.
N.J.R.E. 801(c) defines hearsay as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." A "statement" is defined as an oral or written assertion. N.J.R.E. 801(a)(1). N.J.R.E. 802 explains that "[h]earsay is not admissible except as provided by [the Rules of Evidence] or by other law." In other words, "the hearsay rule applies when a declaration is offered to prove the truth of the statement attributed to the declarant." State v. Long, 173 N.J. 138, 152 (2002). The opposite also holds: "if evidence is not offered for the truth of the matter asserted, the evidence is not hearsay and no exception to the hearsay rule is necessary to introduce that evidence at trial." Ibid. (citation omitted).
Rule 1:6-6 states that facts not appearing of record must be presented to the court by affidavit or certification made on personal knowledge and must be admissible as evidence. Because hearsay is not admissible as evidence, it may not be considered by the motion judge when considering a motion unless it meets an exception to N.J.R.E. 801. Under the definition set forth in N.J.R.E. 801(c), defendant is correct that the contractor estimates are hearsay. They are out of court statements, offered "to prove the truth of the matter asserted," that is, to provide evidence of the cost of repairs to the marital home.
However, the motion judge did not use the estimates to determine plaintiff's damages. Instead, he ascertained damages based on plaintiff's certification and the invoices he presented that documented his current out-of-pocket expenses incurred and paid for repairs. In cases involving breach of contract, "either out-of-pocket loss or a demonstration of loss in value will suffice to meet the ascertainable loss hurdle and will set the stage for establishing the measure of damages." Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 248 (2005). Plaintiff hired and paid contractors to perform the needed repairs and could certainly establish his out-of-pocket expenses. While it is true that the motion judge set a cap of $6,304.80 for defendant's future liability concerning repair to the marital home based on the contractors' estimates, he specifically held that defendant would not be ordered to pay any of those damages until plaintiff actually paid for the repairs and submitted the necessary proofs.
The motion judge did not consider any proofs that should have been barred by Rule 1:6-6 because defendant's damages were based on a plaintiff's certification and his personal knowledge. Defendant has not been ordered to pay anything based solely on contractor estimates. If and when damages are claimed for future repairs and are submitted to defendant, she may then challenge the legitimacy of the proofs. However, the motion judge was correct in finding that defendant could be held liable for the costs plaintiff already incurred and paid. Thiedemann, supra, 183 N.J. at 248.
Defendant also contends that the motion judge erred in denying her cross-motion for liquidated damages pursuant to the Final Judgment of Divorce and the PSA. Defendant argues that because plaintiff did not tender $140,000 in total on June 23, 2007, as per the terms set forth in the PSA, she should be awarded $35.00 for each day he has not complied. The motion judge found that because defendant was responsible for the damage to the marital home, it would be improper to apply the liquidated damages clause in the Agreement.
The motion judge was correct to deny defendant's cross-motion because her demand for liquidate damages was made with "unclean hands." This equitable maxim holds that "[a] suitor in equity must come into court with clean hands and he must keep them clean after his entry and throughout the proceedings." A. Hollander & Son, Inc. v. Imperial Fur Blending Corp., 2 N.J. 235, 246 (1949); accord Johnson v. Johnson, 212 N.J. Super. 368, 384 (Ch. Div. 1986); Chrisomalis v. Chrisomalis, 260 N.J. Super. 50, 53 (App. Div. 1992). In other words, "a court should not grant relief to one who is a wrongdoer with respect to the subject matter in suit." Faustin v. Lewis, 85 N.J. 507, 511 (1981). While "[u]sually applied to a plaintiff, this maxim means that a court of equity will refuse relief to [any] party who has acted in a manner contrary to the principles of equity." Rolnick v. Rolnick, 290 N.J. Super. 35, 45 (App. Div. 1996) (quoting Johnson, supra, 212 N.J. Super. at 384).
We are "not [to] disturb the factual findings and legal conclusions of the trial judge" that are supported by "competent, relevant and reasonably credible evidence. . . ." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). The motion judge based his finding that defendant caused the damage to the marital home on certifications, photographs and repair estimates supplied by defendant. His finding is therefore supported by substantial credible evidence and his decision not to apply the liquidated damages clause was not an abuse of discretion.
Lastly, defendant contends, for the first time on appeal, that the motion judge erred in allowing plaintiff to "unilaterally terminate their daughter's medical insurance without a plenary hearing." Defendant opposed plaintiff's motion for some proof of their daughter's college enrollment. Plaintiff claims that he needed the information to supply it to his insurance carrier to continue to include their daughter on his insurance plan. Defendant maintains that neither she nor the parties' daughter wishes to have contact with plaintiff. The motion judge denied plaintiff's motion, stating that because the daughter was twenty-one years old, the court could not compel her to provide such information. Defendant, therefore, won this issue below. She now argues that a plenary hearing was necessary so the motion judge could have considered the intent of the parties in entering into the PSA.
We frequently decline to consider issues that were not presented at trial unless such an issue goes to the jurisdiction of the trial court or concerns matters of substantial public interest. Nieder v. Royal Indem. Co., 62 N.J. 229, 234 (1973). Because defendant did not raise this issue with the motion judge, we are not obligated to consider it on appeal. However, we note that the parties' PSA clearly states that "the child may be required to provide certain information periodically" in order to maintain her coverage. The agreement goes on to state that "if the information is not provided in a timely manner, the husband shall not be responsible for actions taken by the insurance company." "Consistent with familiar canons of construction, the words of an agreement are given their 'ordinary' meaning." Flanigan v. Munson, 175 N.J. 597, 606 (2003). Here, the plain language of the contract is clear. If the parties' daughter does not wish to provide the necessary information for coverage, then plaintiff will not be responsible if her coverage is terminated. The motion judge did not abuse his discretion by applying the plain language of the PSA.
Also, we have stated that a plenary hearing "is not necessary in every case [...], but rather only where a prima facie showing has been made that a genuine issue of fact exists bearing upon a critical question such as the best interests of the children [or] interference with parental rights. . . ." Pfeiffer v. Ilson, 318 N.J. Super. 13, 14 (App. Div. 1999). Here, the motion judge was not faced with such a genuine issue of fact. He was asked to compel the parties' daughter to provide private information, and simply declined to do so based on the PSA and her adult status.
We, therefore, affirm the order of the Chancery Division granting plaintiff's motion for damages and denying defendant's cross-motion for liquidated damages. Should plaintiff present proof of further repair costs up to $6,304.80, defendant may challenge the validity of those proofs upon the filing of the appropriate motion.
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