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Kay v. Kay


April 21, 2009


On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-309-06 and C-457-06.

Per curiam.


Argued April 1, 2009

Before Judges Payne and Newman.

Plaintiff Grace Kay appeals from an order denying her motion to vacate the settlement she entered into with her former husband George Kay. She contends that the trial judge should have vacated the settlement because she did not enter into it freely with informed consent, and further that the judge's findings were not supported by adequate, substantial or credible evidence. We reject her contentions and affirm.

The facts may be summarized as follows. The parties divorced in 1993. The matrimonial separation agreement was entered in the State of New York. The current issue arises from a dispute over legal ownership of a condominium.

Defendant purchased the Cliffside Park condominium after he and plaintiff divorced. Defendant had been using the condominium as his sole residence for the past several years. In 2003, he transferred title of the condominium to his son, James Kay ("James") for no consideration. James subsequently transferred the deed to his mother, again for no consideration. Defendant and James had actions pending against each other in New Jersey. However, pursuant to the settlement, all claims were withdrawn, and James is not involved in the appeal now before this court.

Following the transfer of title, plaintiff filed a complaint in order to obtain clear title to the condominium. A court order was subsequently entered directing that the parties engage in mediation. Retired Judge Gerald Escala conducted the mediation sessions which were ongoing for months leading up to the trial date, set for October 15, 2007. From the initial discussions, Judge Escala recommended the pursuit of a global settlement in order to resolve the New York matrimonial case and also the Chancery case in New Jersey regarding title to the condominium. In furtherance of the mediation sessions, defendant's counsel sent plaintiff's counsel a letter dated September 17, 2007, proposing settlement terms. At the trial date, counsel requested time to continue negotiations which the trial judge granted. Following a three-hour negotiation, a settlement was reached and was placed on the record before the judge, dismissing all pending actions with prejudice.

Prior to the settlement, defendant was obligated to pay five years of alimony at $30,000 per year to be paid to plaintiff on a monthly basis. Defendant was also obligated to maintain $700,000 in life insurance, naming plaintiff as the beneficiary. Defendant had filed a notice of appeal from imposition of the life insurance requirement. Defendant further intended to file an application in New York based on changed circumstances to reduce or terminate alimony as he had since lost his Asian travel business.

Under the terms of the settlement, the parties agreed that the litigation pending in New Jersey and New York was to be settled for the total amount of $262,500. This amount was to be paid from the proceeds of the sale of the condominium.

Specifically, the separation agreement was to be modified such that all past and future alimony was to be deemed fully and completely satisfied by the provisions of the settlement agreement. It was further agreed that the disbursement would be structured not as alimony or maintenance but as equivalent to equitable distribution such that plaintiff would not have to pay taxes on the proceeds.

To implement the settlement, plaintiff was to convey a quit claim deed or equivalent deed to defendant so that he could convey clear title. The deed was to be held by defendant's counsel in trust. Following the sale, said payment would be transferred to the trust account of defendant's counsel. Counsel was then responsible for paying the $262,500 to plaintiff's counsel, who upon receipt was to distribute the payment to plaintiff. It was agreed that the payment was to take care of any legal fees owed to counsel by plaintiff or James.

Additionally, defendant agreed to maintain life insurance, consisting of two policies, on his life for the benefit of plaintiff. The first policy was for $500,000 and was to be maintained by defendant until May 18, 2009. The $200,000 policy was to be maintained by defendant through 2011. At the conclusion of those respective years, plaintiff would have the option of continuing payments on the policies, with defendant executing the proper documentation permitting her to do so. As a result, all life insurance obligations under the separation agreement were to be deemed satisfied by the provisions of the settlement agreement.

The settlement was placed on the record by counsel on October 15, 2007, before Judge Robert P. Contillo. When asked by the judge if she understood the terms of the settlement placed on the record, plaintiff responded "yes." Judge Contillo further probed plaintiff with the following series of questions:

Judge: [D]o you understand that this is a binding settlement and if it's being agreed to it's as binding as any other contract? Do you understand?

Plaintiff: Yes.

Judge: It's binding upon George Kay and also binding upon your son and it fully resolves all matters outstanding between you and your husband both here and in New York. Do you understand?

Plaintiff: Yes, I understand.

Judge: Do you intend to be bound by the settlement?

Plaintiff: Yes, by the settlement. Only one thing I was not happy about, the insurance, but that was -- my matrimonial lawyer, he never told me how much he was paying for the $500,000. . . . I was very upset about that and I just found out about that this morning.

Judge: I understand that not everything you would have wanted to happen has occurred in this settlement and you had to compromise and that's what happens when you settle. Are you willing to enter into this settlement even though it has those terms that concern you?

Plaintiff: That's okay.

Judge: Have you been satisfied with [your attorney's] services?

Plaintiff: It was excellent.


Judge: Has anyone made any threats against you to force you to sign or enter into the settlement?

Plaintiff: No.

Judge: Are you doing so of your own free will?

Plaintiff: Yes.

The judge was "satisfied that this agreement has been entered into knowingly and voluntarily and while there is not one hundred percent satisfaction of the agreement it is, in fact, a conclusion of both this litigation and the New York litigation."

On November 7, 2007, plaintiff filed a notice of motion to vacate the settlement on the basis that she did not fully understand the terms of the settlement. Defendant cross-moved for counsel fees. On January 18, 2008, Judge Contillo denied the motion to vacate the settlement; however, he ordered a plenary hearing on the issue of duress.

The plenary hearing was held on February 26, 2008, and February 27, 2008. During the hearing, plaintiff admitted to agreeing to the settlement amount of $262,500 and to understanding the terms of the settlement. At the close of the hearing, the judge denied plaintiff's motion to vacate the settlement. Judge Contillo found as a fact that plaintiff understood that the New York and New Jersey litigations were completely concluded by the settlement. Furthermore, based on credibility determinations, the judge did not find that plaintiff was under duress as the judge did not believe that plaintiff's counsel threatened to leave her without an attorney if she failed to settle. The judge also disbelieved plaintiff's claim that she was told the property had already been turned over to defendant. The court further noted that, although plaintiff was not a native English speaker, she had lived in the United States for thirty-eight years and was a college graduate. The judge went on to state that, "I cannot relieve [plaintiff] of the decision that she made to settle this case with her eyes wide open on the very terms that are set forth on the record."

As a consequence of subsequent motions filed by the parties relating to delay in the implementation of the settlement, the court heard argument on May 19, 2008. In rendering his decision, Judge Contillo elaborated further by way of supplement to his earlier decision of January 18, 2008. He had this to say:

I'm going to adopt by reference the findings I made at the time that the settlement was placed on the record and accepted by the court. I'm also going to adopt by reference the findings I made at the conclusion of the hearing that we had on the allegations that Mrs. Kay had raised in her effort to vacate the settlement and I'll just supplement those findings as follows or emphasize portions of those findings as follows.

The court found that Mrs. Kay understood and accepted the settlement terms that were placed on the record; that she was not confused; that she is a sophisticated litigant with an understanding of the issues that were in play throughout the litigation; that she fabricated testimony at the prior proceeding with allegations against her attorneys and allegations relating to her lack of understanding of the settlement in an effort to have the settlement that she had fully agreed to undone because she became dissatisfied with the terms of the settlement after the settlement was reached.

I don't think I made a specific finding of bad faith at the time because it was not germane to the proceedings but I made clear findings that I felt that Mrs. Kay was fabricating allegations in an effort to vacate that settlement.

I found that the settlement was arrived at in a pressure cooker environment but not nearly approaching the circumstance that would cause the court to find duress or fraud or equitable fraud or any other basis for vacating the firm binding agreement that had been reached by the parties in this case.

It was a very illuminating settlement hearing that we had, or rather the application to vacate the settlement because the court did have the opportunity to observe Mrs. Kay testify and respond to the questioning and as I just began to highlight some aspects of my finding in that regard, Mrs. Kay is no wallflower, she's savvy, she understands the nuance of language and the nuances of what was discussed here. She was specifically asked about the very issue or some of the very issues that she sought to have the settlement vacated upon, and while she did say she was not happy, she did understand and she did accept them. If that settlement became undone under those circumstances, all the settlements being reached down the hallway would be worthless.

Now, this was not a simple matter of misunderstanding. This was predicated on an allegation that I found to be contrived precisely to meet the issues of duress and fraud while she is alleging which I found to be completely baseless of attorneys threatening to leave, threatening to have the clients try it themselves. All these allegations which if I did find believable certainly would amount to duress, were manufactured precisely to meet that definition of duress. So I find that the defendant acted - - it was baseless to seek this relief.

On appeal, plaintiff raises the following issues for our consideration:




The timeliness of plaintiff's appeal was not disputed by defendant in his answering brief and for good reason. The appeal was timely filed. With regard to Points I and II, we are satisfied that the judgment of the trial court is based on findings of fact which are adequately supported by the evidence and that the arguments made are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E). Judge Contillo made exhaustive findings of facts, based largely on the credibility of the witnesses who testified before him. We discern no basis to disturb his decision. Cesare v. Cesare, 154 N.J. 394, 412 (1998).



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