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Leff v. Leff

March 26, 2009


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FM-10-314-06.

Per curiam.


Argued March 4, 2009

Before Judges Fisher, C.L. Miniman and Baxter.

In this appeal, we review the findings and conclusions reached by the trial judge in construing a settlement agreement in this matrimonial action. We reverse in part and remand for additional findings.

The parties were married in 1981. Four children were born of the marriage; they are now twenty-six, twenty-three, nineteen and seventeen years of age.

Plaintiff Karen Leff filed this action for divorce in 2006, and the parties began negotiating in earnest a settlement of their financial disputes on January 8, 2007. They orally agreed, as a general matter, to equally divide their property subject to certain excepted assets, and reported to the trial court that the matter had settled.

Soon thereafter, counsel for defendant Alan Leff drafted an agreement. According to the judge's findings of fact, upon receipt of the draft agreement, Karen "had second thoughts," which prompted a four-way meeting with the parties and their attorneys on January 27, 2007. At that meeting, three issues --(1) distribution of $125,000 from the so-called Fidelity account, (2) ownership of life insurance policies, and (3) disposition of the children's 529 accounts -- were identified as being in controversy.

When Karen refused to execute the settlement agreement drafted by Alan's attorney, Alan moved for enforcement or, in the alternative, for a Harrington*fn1 hearing. Karen argued in opposition that the lack of an agreement regarding the three items in controversy demonstrated that the parties did not have a meeting of the minds and the case was not settled. The judge scheduled a plenary hearing.

Over the course of seven days in March, April and June 2007, the trial judge heard testimony from Alan, Karen, their attorneys, and Karen's accounting expert. Alan and his attorney testified that a settlement had been reached; as for the three issues, they testified that the parties agreed that Alan was entitled to the extra $125,000 in the Fidelity account, Alan would be entitled to retain ownership of at least one of the five life insurance policies, and any disputes about the 529 accounts would be resolved in arbitration.

After Alan and his attorney testified in support of Alan's contention that a settlement agreement was reached, Karen was called to testify and, as the judge recounted in his written opinion,*fn2 she "[s]urprisingly" agreed that a settlement concluding the litigation had been reached. Her attorney similarly testified. As a result, the judge determined that the Harrington hearing had morphed into a Pacifico*fn3 hearing; that is, the judge concluded he was no longer required to determine whether there was a settlement as to all essential terms, but instead was only required to ascertain the content of the parties' agreement on these three limited issues.

In resolving the three disputed issues, the trial judge found that: Alan failed to sustain his burden of persuading the court that $125,000 of the Fidelity account should be exempt from the parties' general agreement to equally divide all assets; the parties agreed at their January 27, 2007 meeting that Karen would retain ownership of the five insurance policies; and, although the parties agreed to arbitrate disputes regarding the 529 accounts, each spouse should be named the alternate participant in the other's 529 account.

On July 26, 2007, a dual judgment of divorce, which memorialized the agreement and the judge's findings, was entered.

Alan appealed, arguing, with regard to the three issues, that: (1) the trial judge's decision on the $125,000 issue was inconsistent with the parties' agreement and based upon a legal misconception regarding the burden of persuasion; (2) the judge's distribution of the life insurance policies was contrary to the general agreement that non-exempt assets would be equally divided; and (3) the judge did not adhere to the parties' agreement to arbitrate disputes concerning the 529 accounts but instead enforced his own view as to what was most appropriate. Alan also argues that: (4) the judge failed to ...

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