April 13, 2009
AYNUR CATTO, PLAINTIFF-RESPONDENT,
KEMAL CATTO, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-1343-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 6, 2009
Before Judges Wefing and LeWinn.
Defendant Kemal Catto appeals from the December 21, 2007 order of the Family Part, requiring him to pay to plaintiff Aynur Catto $21,426.29 in interest imposed as a result of his failure to make timely payment to plaintiff of $780,000 in equitable distribution pursuant to the Property Settlement Agreement (PSA) incorporated into the parties' judgment of divorce. For the reasons that follow, we reverse.
The parties were divorced on June 7, 2006. Their PSA contained an equitable distribution provision requiring defendant to pay plaintiff the sum of $780,000 by July 1, 2006. The PSA further provided that, commencing on or about July 1, 2006, assuming defendant had made payment in full by that date, he would pay plaintiff monthly child support of $1,148.33 and monthly alimony of $2,000. The PSA further provided that, until defendant paid plaintiff the full amount of $780,000, he would be obligated to continue to pay plaintiff the support amount entered in a pendente lite order on March 18, 2005, which required him to pay plaintiff unallocated support of $6,500 per month.
Defendant was unable to meet the July 1, 2006 deadline for payment of the $780,000, due to financial reversals. With the assistance of his brother, defendant ultimately paid that amount in full to plaintiff in five payments between May 8 and August 2, 2007.
Plaintiff had brought a series of motions to enforce litigant's rights in an effort to secure her equitable distribution payment. On August 21, 2006, plaintiff filed a motion seeking payment of the $780,000, "together with interest at the rate of 5% per annum from July 1, 2006 . . . ." In his opposing certification defendant stated:
It would be grossly unfair if I were required to pay: (a) the full amount of $6,500.00 per month (non-taxable) and (b) interest on the $780,000.00, inasmuch as I am already paying approximately $3,300.00 per month in excess of my obligation after the $780,000.00 is paid.
Defendant contended that plaintiff "would be unjustly enriched" if she received "five percent interest in addition to the extra $3,300.00 per month . . . ." Nonetheless, on November 20, 2006, the trial court entered judgment against defendant in the amount of $780,000 and calculated interest on that amount from August 23, 2006.*fn1
On May 25, 2007, the court entered an order requiring defendant to make final payment on the $780,000 no later than June 22, 2007; however, the order made no mention of interest payments. Thereafter, on December 21, 2007, the court entered the order which is the subject of this appeal, calculating interest on defendant's $780,000 obligation to plaintiff at $21,426.29.
On appeal, defendant contends that he should not be required to pay interest on the $780,000, since the PSA required him to pay plaintiff a monthly unallocated support amount that was $3,351.67 higher than the alimony/child support amounts that became effective upon full payment of that obligation. Since defendant had paid the pendente lite support amount for a total of thirteen months after execution of the PSA, he had paid plaintiff $43,571.89 in excess of the PSA support levels.
Therefore, defendant argues, he incurred a "penalty" for his delay in paying the $780,000 by July 1, 2006, through his increased monthly support payments to plaintiff. Defendant further contends that the trial judge "made a different contract from" the parties' PSA, which did not contain a provision for interest on the $780,000 in the event of late payment; rather, as noted, the PSA provided for continued support payments at the pendente lite level.
Plaintiff contends that she is entitled to interest on the $780,000 because she was "deprived of the use of [that money]" until defendant paid it. Plaintiff further contends that the $6,500 pendente lite amount was not a penalty; rather, it was an "interim arrangement until [d]efendant completed the refinance" that was to generate the $780,000 payment.
The trial court rejected defendant's contention that the excess monthly support payments constituted a "penalty" imposed until defendant made full payment on his $780,000 equitable distribution obligation. The court stated: "What he has called a penalty is in fact the agreement, the order of the [c]court pendente lite as to the amount of monies to pay. It's not a penalty." The trial court apparently concurred with plaintiff's contention that she was entitled to interest on the $780,000 payment because she was "deprived" of its use until payment was made.
It appears, however, from the express terms of the parties' PSA that they considered defendant's enhanced support payments to be in the nature of a "penalty" in order to "motivate" defendant to comply with his equitable distribution payment in a timely manner, as the trial court noted at the time the parties placed their divorce agreement on the record. At that hearing, the following colloquy occurred between the court and defendant:
Q: In fact, it's in your interest to get that money as soon as possible, isn't it?
Q: [Bec]ause instead of paying 6,500 a month, you'll pay 2,000 a month.
Q: So you['re] motivated.
The following colloquy with plaintiff at the divorce hearing is also of particular significance:
THE COURT: Counsel, what about standard of living, should we put that on the record since we have permanent alimony, right[?]
Q: Are you going to be able to, based upon the amount of money, the amount of assets and the amount of money that you['re] going to be generating, and the amount of alimony that you['re] going to be receiving from [defendant], are you going to be able to maintain the same or a . . . reasonably similar standard of living, the same sort of a lifestyle that you had . . . while you were married to [defendant]? Yes?
Nowhere in the parties' PSA was there an agreement that, in addition to his enhanced monthly support obligation, defendant would pay plaintiff interest on his $780,000 obligation if he failed to meet the July 1, 2006 deadline. Moreover, as just noted, plaintiff testified that she would be able to maintain a lifestyle reasonably comparable to the marital level with the support levels set forth in the PSA. Although plaintiff was "deprived" of the use of the full amount of $780,000 until August 2007, she was nonetheless compensated for that deprivation by the additional $3,351.67 per month in unallocated, non-taxable support she received, which was significantly beyond the level of support she had acknowledged as sufficient to maintain the marital lifestyle.
Under these circumstances, we concur with defendant that the trial judge impermissibly "draft[ed] a new agreement for the parties." Massar v. Massar, 279 N.J. Super. 89, 93 (App. Div. 1995) (citing Aarvig v. Aarvig, 248 N.J. Super. 181, 185 (Ch. Div. 1991)) ("once the parties have reached an agreement, no court may create a 'new or better' contract for them. That general rule applies . . . to agreements made in a dissolution context").
Notwithstanding the general deference we accord to the "special expertise" of the Family Part "in the field of domestic relations[,]" Cesare v. Cesare, 154 N.J. 394, 412 (1998), we are not so constrained where, as here, the trial court's decision was based not upon the assessment of the witnesses' credibility, but rather upon the court's own creation of a remedy outside the parameters of the parties' negotiated agreement.