On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hunterdon County, Docket No. FM-10-352-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Gilroy and Simonelli.
Defendant Kayanna Dewey appeals from those provisions of the June 30, 2008 Family Part order that denied her motion seeking an order to compel plaintiff Christopher Dewey to pay interest on two promissory notes at the contract default rate.
We reverse and remand for further proceedings consistent with this opinion.
Following twenty-four years of marriage, the parties were divorced pursuant to a dual judgment of divorce (JOD) entered on May 9, 2007. One day prior to the entry of the JOD, the parties entered into a marital settlement agreement (MSA) addressing alimony, custody, child support, parenting time and equitable distribution of marital assets and liabilities. Pursuant to Paragraph Nos. 5.7C and 5.9 of the MSA, plaintiff executed two promissory notes in favor of defendant.
Under the promissory note referenced in Paragraph No. 5.7C (the "Collateral Assignment of Investments Note"), plaintiff agreed to pay defendant $1,372,000, with interest calculated at the rate of 7% per annum. This note requires interest to be paid quarterly, commencing July 1, 2007; and then on the first day of October, November and April for five years. On April 1, 2012, the entire balance of principal and accrued interest is due and payable.
Under the second promissory note referenced in Paragraph No. 5.9 (the "Appaloosa Note"), plaintiff agreed to pay defendant $5,685,000, together with interest calculated at the rate of 7% per annum. This note requires that the principal be repaid in four equal installments, commencing January 15, 2009, and then on the same day each year for the next three successive years. This note also requires interest to be paid quarterly on the same day when interest is due and payable under the Collateral Assignment of Investments Note.
Both notes contain defined default events. Among other defined events, the notes provide that the plaintiff shall be in default upon the failure to pay when due any interest or principal payments in accordance with the terms of the notes. Each note also contains defined remedies, and obligations upon default. Paragraph 6 of the Appaloosa Note provides in pertinent part:
... [U]pon such Default, Payee [(defendant)] shall provide written notice of Default to Maker [(plaintiff)] (specifying the Default) by hand or by recognized overnight courier (the "Default Notice"). Maker shall have twenty (20) days from the date of service of the Default Notice to cure the Default, provided, however, if a default of non-monetary obligation cannot be cured within said twenty (20) day period, maker may have an additional sixty (60) days to cure provided he is diligently pursuing such cure. Interest during the period of Default (measured from date of Event of Default) accrues at 15% or the maximum amount permitted by law if less than 15% (rather [than] at 7%) until the date the Default is cured (the "Default Penalty"). The Default Penalty is due and payable to Payee on the next quarterly interest payment date following the cure of the Default. If the Default is not cured, payment of all sums due under this Appaloosa Note automatically accelerates and are immediately due in full to Payee.... [(emphasis added).]
The Collateral Assignment of Investments securing the Collateral Assignment of Investments Note contains a like provision.
Under the MSA, defendant agreed to resign as trustee of an insurance trust that owned a life insurance policy on plaintiff's life. Because defendant failed to timely execute and submit her resignation papers as trustee, plaintiff withheld the October 1, 2007 interest payments on both notes totaling $123,497.50, and wired the funds to his attorney to hold in escrow pending defendant's execution of the necessary documents resigning her position as trustee. On October 18, 2007, after receiving the resignation documents from defendant, plaintiff notified his counsel to wire transfer the interest payments to defendant. Although plaintiff had failed to make the interest payments by October 1, 2007, defendant never served him with a notice of default.
The next quarterly interest payments became due on January 1, 2008. Plaintiff again owed $123,497.50 in interest on the two notes. Plaintiff paid that amount on January 14, 2008, again without ...