May 7, 2009
SUSAN J. TRIECE, N/K/A SUSAN J. KLAAS, PLAINTIFF-RESPONDENT,
JOHN R. TRIECE, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Somerset County, No. FM-18-929-98.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 21, 2009
Before Judges Wefing, Parker and Yannotti.
Defendant appeals from a post-judgment order entered by the trial court. After reviewing the record in light of the contentions advanced on appeal, we reverse and remand for further proceedings.
The parties were married in 1980 and divorced pursuant to a judgment of divorce entered on February 8, 1999, which incorporated their property settlement agreement. The parties had three children during the marriage, the oldest of whom is now emancipated. Their second child was born in 1988 and had just started college at the time plaintiff filed her post-judgment motion in October 2007. The third child, born in 1992, was fifteen at the time.
At the time of the divorce, defendant was employed by Prudential Insurance Company and entitled to participate in its Long Term Incentive Plan ("LTIP"), a program open to executive and senior investment officers and managing directors that was designed to tie the compensation of the participants to multi-year results and thus covered five-year performance cycles. A participant would be awarded "performance shares," the value of which would fluctuate in accordance with the performance of a participant's business unit. A participant's shares could not be redeemed until the end of the five-year cycle, save for death, disability, retirement or downsizing. In the event of a participant's death, disability, retirement or downsizing prior to the completion of a five-year cycle, a participant's distribution would be "prorated to reflect the number of completed months of service in the five-year performance period." A participant had no right to accelerate the time of distribution and, according to a memorandum from the Director of Prudential's Human Resources Department to defendant dated February 3, 2003, a participant in a LTIP did not have a right, on any particular date, to distribution of the amounts allocated to his participation.
Defendant was terminated from his position with Prudential in 1999. At the time of his termination, he held participation shares in five LTIPs:
1) for the years 1994-1998, with a payout year of 1999;
2) for the years 1995-1999, with a payout year of 2000;
3) for the years 1996-2000, with a payout year of 2001;
4) for the years 1997-2001, with a payout year of 2002; and
5) for the years 1998-2002, with a payout year of 2003.
Paragraph 31E of the property settlement agreement made the following provision for the equitable distribution of defendant's participation shares in his LTIPs.
E. Long Term Incentive Plan
The parties acknowledge that the Husband has been previously awarded various long term incentive plans (LTIP). Included in the LTIP's is the 1994-1998 LTIP  payout year 1999; the 1995-1999 LTIP, payout year 2000; the 1996-2000 LTIP, payout year 2001; the 1997-2001 LTIP payout year 2002; and the 1998-2002 LTIP, payout year 2003. The parties understand that each plan is payable to the Husband five (5) years after having been awarded to him and vests on a pro rata basis over such five (5) year period (i.e. 20% per year). Within 5 days of the payout of each of the respective LTIP's the Wife shall receive 27.5% of the gross amount of the payout, which was vested as of December 31, 1997, plus any earnings accrued thereon (before or after), tax free, regardless of the timing of said payout. At the time of the payout to the Husband, the entire amount is to be treated as taxable compensation to the Husband. The Husband shall be responsible for 100% of the taxes attributable to the entire payout. The parties understand that any such payouts are contingent upon the Husband meeting certain employment conditions.
The parties agree that from their respective payouts of the LTIP's, each shall contribute funds towards the children['s] custodial accounts described in paragraph 23. The Wife's [sic] shall contribute to said accounts the first $50,000 of such received payouts, and the Husband shall simultaneously contribute to said accounts an amount equal to the sum contributed by the Wife multiplied by 1.6. All money in excess of those sums shall be retained by the respective parties. If for some reason the Wife's distributions do not total $50,000, she shall not be required to make any contribution to the custodial accounts beyond that which was distributed to her under the LTIP's. In addition, the Husband shall not be required to make any contributions to said accounts beyond the amounts contributed by the Wife, multiplied by 1.6.
The Husband shall notify the Wife promptly upon his receipt of any and all LTIP payments and provide her with whatever documentation and proof is necessary to confirm the amount of his gross receipt of any particular LTIP award.
Over the course of the years, the parties had several disputes as to the proper interpretation of Paragraph 31E and calculation of the amounts, if any, that were due to plaintiff. In January 2003, for example, defendant was ordered to supply plaintiff with an accounting of his LTIPs that were vested as of December 31, 1997, together with a calculation of the sums that had been deposited in the children's bank accounts. The attorneys who represented the parties at the time exchanged correspondence setting forth their respective calculations and methodologies. We infer that the memorandum from the human resources director to which we referred was written in connection with those efforts.
In October 2007, plaintiff filed a motion in which she contended that she was entitled under Paragraph 31E to 27.5% of the gross payouts that defendant had received under the LTIPs. Defendant resisted her application, first taking the position that plaintiff was not entitled to share in any of the proceeds of the LTIPs because none had vested as of December 31, 1997. The trial court rejected that interpretation, finding that it would render Paragraph 31E a nullity.
Defendant's alternative position was that the participation shares in his LTIPs vested at a rate of 20% per year. He argued, by way of example, that he would have been only 40% vested as of December 31, 2000, in the LTIP for years 1996-2000 because 20% would have vested in 1996 and another 20% in 1997. Using that methodology, defendant contended that plaintiff should only get 27.5% of 40% of that LTIP because only 40% of that LTIP was vested as of the cut-off date. The trial court rejected that position as well.
The trial court found for plaintiff and entered an order directing defendant to deposit $66,700 into the existing trust for the two younger children and to pay $48,022.65 to plaintiff. Defendant thereafter filed a motion for reconsideration. He submitted in support of his motion the correspondence exchanged between counsel in connection with plaintiff's 2003 motion. He contended that the calculations put forth by plaintiff's then-attorney correlated with his position that his shares vested at the rate of 20% per year and that plaintiff was entitled to 27.5% of the amount vested as of December 31, 2000. The trial court denied defendant's motion for reconsideration, noting that it viewed defendant as putting forth a new argument on the reconsideration motion, which would not be proper practice under the applicable rules.
A review of the record discloses, however, that defendant had made this argument in opposing plaintiff's motion. The only new element was the submission of the corroborative correspondence, which defendant's attorney had not obtained by the time the motion was first heard.
Defendant makes two arguments on appeal: that the trial court erred in its interpretation of paragraph 31E and that the trial court erred in awarding counsel fees and costs to plaintiff. He contends that the trial court disregarded the clear language of the agreement and provided plaintiff with better terms than had been negotiated and agreed upon. Plaintiff, on the other hand, argues that the trial court's decision was correct and that defendant is attempting to avoid the obligations to which he earlier agreed.
Courts favor the settlement of litigants' disputes. Pascarella v. Bruck, 190 N.J. Super. 118, 125 (App. Div.), certif. denied, 94 N.J. 600 (1983). That is particularly true with respect to matrimonial matters.
Settlement agreements in matrimonial matters, being essentially consensual and voluntary in character, . . . are entitled to considerable weight with respect to their validity and enforceability in equity, provided they are fair and just. Separation agreements . . . are generally favored by the courts as a peaceful means of terminating marital strife and discord so long as they are not against public policy.
And while incorporation of a [property settlement agreement] into a divorce decree does not render it immutable, nor its terms solely governed by contract law, nevertheless, if found to be fair and just, it is specifically enforceable in equity. [Dolce v. Dolce, 383 N.J. Super. 11, 20 (App. Div. 2006) (citations and quotations omitted).]
A court called upon to interpret a property settlement agreement should, as a general rule, enforce it in the manner the parties intended. Pacifico v. Pacifico, 190 N.J. 258, 266 (2007). However, "'the law grants particular leniency to agreements made in the domestic arena,' thus allowing 'judges greater discretion when interpreting such agreements.'" Ibid. (quoting Guglielmo v. Guglielmo, 253 N.J. Super. 531, 542 (App. Div. 1992)). A court is not, on the other hand, called upon to insert new terms into a property settlement agreement because one party later contends that doing so would make the agreement fairer. Dworkin v. Dworkin, 217 N.J. Super. 518, 523 (App. Div. 1987).
We consider Pacifico, supra, instructive. The parties in that matter executed a property settlement agreement dated December 2, 1996, which was incorporated into their judgment of divorce that was entered in 1997. That agreement permitted the plaintiff to remain in the marital home with the couple's two children until the youngest child turned nineteen. 190 N.J. at 261-62. The agreement provided that upon that occurrence the Wife shall have the first option to purchase the interest of the Husband.
Should the Wife not choose to exercise this option, the Husband shall then have the same option. If neither party desires to purchase the other's interest the Real Estate shall be listed with a licensed Real Estate broker to be sold and the Real Estate shall be sold. [Id. at 262.]
When the youngest son turned nineteen, the plaintiff sought to purchase her former husband's interest for one-half the value of the home at the time they executed the property settlement agreement. Ibid. The defendant objected, contending that the option to buy out the interest of the other was to be exercised at the current market value of the home, not its value at the time the agreement was executed. Ibid. The Court noted that neither party argue[d] that no agreement existed regarding the valuation date when the [property settlement agreement] was executed. On the contrary, both contend[ed] that, when they signed the agreement, there was a clear understanding between them regarding the buy-out value to be ascribed to the house. The problem [was] that they disagree[d], in retrospect, over what that understanding was. It thus fell to the trial judge to discern the parties' intent at the time of the divorce by probing their positions at an evidentiary hearing. [Id. at 266-67.]
Here, the parties do not contend that there was no understanding at the time they executed their property settlement agreement as to the proper method and computation to distribute the LTIPs. Rather, they dispute what that understanding was, and each has presented evidential material in support of his or her respective position. In such a posture, there is "no alternative but to conduct an evidentiary hearing at which the parties' credibility could be assessed and their intentions gleaned." Id. at 267.
Defendant has also appealed from the trial court's award of $4054.50 to plaintiff for counsel fees. In light of our determination on the substantive issue, we also reverse that award and direct that the question of counsel fees abide the result of the proceedings on remand.
The order under review is reversed, and the matter is remanded to the trial court for further proceedings in accordance with this opinion.
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