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Gayagoy v. Edith Matela & Germindes Matela


March 12, 2009


On appeal from Superior Court of New Jersey, Chancery Division, Camden County, Docket No. C-215-05.

Per curiam.


Submitted January 29, 2009

Before Judges Axelrad and Lihotz.

In this partition action, plaintiff moved for the release of escrowed funds realized from the sale of the subject realty. The Chancery judge denied the motion, concluding a previously filed consent order, which set forth the agreed provisions for the sale of the residential realty, closed the case. We reverse. The consent order was not a final judgment concluding all disputed issues. The matter was inadvertently closed. Therefore, a plenary hearing must be held to finalize the parties' claims to the escrowed funds.

These are the essential facts. On October 10, 1986, plaintiff Grace Hoop and defendant Edith Matela purchased a residence located at 1627 44th Street, Pennsauken, New Jersey (the property). Title was vested in the parties as joint tenants with rights of survivorship. Plaintiff vacated the property and requested defendant either purchase her interest or sell the home. Defendant continued to reside in the residence. At some point, defendant's sister, Germindes Matela, moved into the property. On April 16, 2005, by quitclaim deed, defendant transferred her interest in the property to her sister.

Plaintiff commenced a Chancery action seeking sale of the property, which was not subject to partition, see Rule 4:63-1, and determination of the parties' respective interests in the proceeds realized from sale. Plaintiff filed an order to show cause to enjoin Germindes Matela from transferring or encumbering the realty.

Without the benefit of a hearing, the parties resolved the immediate matters raised in the order to show cause. On March 9, 2006, a consent order was filed, agreeing to obtain an appraisal of the property and provide for the buyout of plaintiff's interest. Defendant was given twenty days from receipt of the appraisal to purchase plaintiff's interest for one-half of the appraised value, subject to any claims by either party that would "add to her interest in the property." If defendant did not purchase the property, it would be sold. The consent order further stated:

In the event that the property is sold to a third party, any party may make claims for credits she believes should be taken from the net proceeds of sale. In the event of a disagreement as to the amount of proceeds due each party, an amount necessary to cover such claims shall be held in escrow by a person agreeable to all parties.

Ultimately, on July 31, 2007, the parties sold the residence to a third party. The parties could not resolve the claims raised for reimbursement of monies paid with respect to the property, so they agreed to escrow $50,000 of the sale proceeds pending resolution of the claims.

Plaintiff filed a motion, supported by her certification, for credits against defendant's share of the escrowed funds. In response, defendant filed a certification, objecting to plaintiff's demands for payment and stating the basis of her claim against the escrow.

Without oral argument, the Chancery judge denied plaintiff's motion stating:

This matter has been closed because it's resolved by consent order. Both parties are moving for their share of the proceeds that were held. This is summary judgment like in [the] way it's crafted. I don't know who's paid what and who deserves what based on what I have here.

There was a consent order. The consent order should be abided by. If it can't, counsel can reach the [c]court and we'll try and figure something out here. Maybe we'll send them, even though the case is closed, to mediation or arbitration to see if they can resolve it. But at this point, the

[c]court's denying this motion[.]

On appeal, plaintiff argues a plenary hearing should have been scheduled to determine the parties' respective claims to the escrow fund. Defendant did not participate in the appeal.

We review whether the trial court erred in finding the consent order rendered the case closed. The scope of appellate review is limited and the trial court's factual determination and legal conclusions shall not be disturbed, except where "they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998); Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).

In this matter, the Chancery judge acknowledged the parties' competing certifications reflected a factual dispute over respective entitlement to the escrowed funds. The judge deferred to the terms of the parties' consent order. We examine whether the claims were adjudicated by that order.

In reviewing the express terms of the consent order, we are guided by the general rules for contract interpretation. Stonehurst at Freehold v. Freehold Twp. 139 N.J. Super. 311, 313 (Law Div. 1976). We must evaluate the common intention of the parties and the purposes they tried to achieve. Tessmar v. Grosner, 23 N.J. 193, 201 (1957).

The consent order provided the methodology to secure the sale of the property. This resolved the first prayer for relief sought by plaintiff in her complaint. Additionally, the consent order prohibited Germindes Matela from independently acting to encumber or transfer the property, which conclusively determined the second count of the complaint. Also, paragraph six of the consent order created an escrow of monies to satisfy the parties' respective "claims for credits." What was not expressed was a methodology to determine the parties' interests in the proceeds realized from sale, as sought in plaintiff's second prayer for relief.

Where the parties' intention is unclear or ambiguous, we cannot merely add terms to their consent agreement. Long v. Mertz, 21 N.J. Super. 401, 403 (App. Div. 1952). Instead, we must adopt the most fair and reasonable construction, imposing the least hardship on either party, "so that neither will have an unfair or unreasonable advantage over the other." Tessmar, supra, 23 N.J. at 201; Talcott v. H. Corenzwit and Co., 76 N.J. 305, 313 (1978).

Reviewing the entirety of the consent order, as well as the parties' certifications supporting claimed entitlement to the escrowed funds, we safely assume the parties recognized the need for court determination of their competing claims. Even though the agreement provided no vehicle for resolving a conflict as to claimed credits, it would be an absurdity to suggest that while the consent order permitted the parties to assert claims, but failed to allow for their resolution, the claims remain unsettled.

The record does not support the Chancery judge's determination that the consent order intended to conclusively resolve this matter upon sale of the property without a determination regarding distribution of the proceeds. Abiding such an interpretation leaves the parties without a remedy. Therefore, we conclude the consent agreement was not intended to act as a final judgment of all disputes. A judicial determination of the parties' entitlements is required.

The administrative closure of the case was premature and cannot override the necessity of disposition of the remaining material issues in controversy yet unresolved following entry of the consent order. The order of the Chancery Division, dated February 21, 2008, is reversed. We remand the matter for further proceedings, including a plenary hearing as needed. See Esteves v. Esteves, 341 N.J. Super. 197, 201-02 (App. Div. 2001) (adopting the rules to follow to effectuate the proper division of the proceeds of sale of a one-family house held by a tenancy in common by unmarried parties, recited in Baird v. Moore, 50 N.J. Super. 156, 172 (App. Div. 1958)). The use of available alternative dispute resolution programs, such as mediation, is not foreclosed.

Reversed and remanded.


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