June 3, 2010
DONNA M. HANNON, PLAINTIFF-RESPONDENT,
JOHN J. HANNON, JR., DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Atlantic County, Docket No. FM-01-834-90.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted May 24, 2010
Before Judges R. B. Coleman and Baxter.
Defendant John J. Hannon, Jr. appeals from an April 9, 2009 order that established the valuation date for the sale of the former marital home as the date of sale rather than the date the judgment of divorce (JOD) was entered, which was September 28, 1990. Defendant also appeals from a provision of the April 9, 2009 order that ordered him to pay counsel fees to plaintiff,
Donna M. Hannon, in the amount of $8,150. As to the valuation date, we reject defendant's contention that the judge erred by refusing to apply the doctrine of laches. We additionally conclude that defendant has presented no evidence to overcome the presumption established by Pacifico v. Pacifico, 190 N.J. 258, 269 (2007), that in the absence of contrary evidence, the valuation date for the sale of the former marital home should be the date of sale, not the date of the JOD. We likewise reject defendant's claim that the judge abused his discretion by awarding counsel fees to plaintiff. We affirm.
Married in 1971, the parties were divorced on September 28, 1990. Their JOD contains extensive provisions respecting the sale of the marital home and how the proceeds from the sale, and the distribution of the marital debt, were to be divided. The JOD is, however, glaringly silent as to what the valuation date would be if the sale of the marital home were to be deferred for a period of years.
In relevant part, the JOD specifies that the former marital home in Collings Lake would be listed for sale no later than September 17, 1990. Defendant was responsible for retaining a realtor who would establish the listing price, subject to plaintiff's right to object to such price. The JOD further provided that subsequent to September 1990, defendant would be solely responsible for paying the mortgage and real estate taxes, as well as all payments due the bankruptcy trustee stemming from the parties' earlier bankruptcy filing.
Any mortgage balance, unpaid real estate taxes, income tax payments penalties and all remaining debt owed the bankruptcy trustee were to be satisfied from the proceeds of the sale of the marital home, with any remaining balance to be a joint debt paid monthly by the parties. In the event that any proceeds of the sale remained after satisfaction of these debts and obligations, such proceeds were to be applied to unpaid medical bills incurred during the marriage.
The JOD afforded defendant the opportunity to purchase plaintiff's interest in the marital home by satisfying her share of the financial obligations we have described. Rather than list the property for sale no later than September 17, 1990, or provide plaintiff with a proposal for purchasing her interest in the marital home, as required by the JOD, defendant simply continued to reside there and make the monthly mortgage payments.
In the early part of 1993, plaintiff filed a motion to compel the sale of the marital home. The resulting June 9, 1993 order required defendant to either refinance the property "or to otherwise arrange to have plaintiff relieved from [sic] her obligation under the mortgage encumbering the property." The order provided that if defendant failed to do so by July 15, 1993, plaintiff would be entitled to arrange for the sale of the home.
Defendant violated that order by refusing to even let a realtor inside the house. Obviously, without entering the house the realtor could not determine the appropriate sales price and could not list the property for sale. According to plaintiff, "[defendant] had his dogs out, wouldn't let realtors in."
For the next fifteen years, plaintiff took no action to enforce her rights under the June 9, 1993 order. Finally, on March 27, 2008, she filed the motion that is the subject of this appeal. The motion sought an order permitting her to sell the property without defendant's signature, to make any necessary repairs and to obtain police assistance if defendant interfered with her efforts to gain access to the property. Plaintiff submitted an appraisal of the property in which the appraiser opined that the property was worth $65,000 in 1993 and had a current value of $155,000.
Plaintiff also supported her March 2008 motion with a certification from the attorney who represented her at the time of the divorce, Ralph B. Hill, III. Hill certified that neither party anticipated there would be any proceeds from the sale of the marital home. He stated, "the essential problem was that [defendant] wanted to do anything he could to hold on to the marital home when, in reality, there was no equity in the home and, in any event, the marital debts greatly eclipsed any hope there would be in the equity." Hill also certified "[t]here is absolutely no doubt in my mind, that if the home had been sold and we thought there was going to be a possibility of equity, it would have been shared equally . . .," adding "What no one knew at the time was that this matter would 'hang around' for eighteen years and that there would be a great increase in the value of real estate in the meantime."
On March 26, 2009, the judge heard argument on the issue of which of the two valuation dates would govern the distribution of the proceeds from the sale of the marital home. Defendant argued that both the JOD and the 1993 order demonstrated the parties' belief that at the time of the divorce, the marital home had no equity. He asserted that the court consequently lacked authority to create a potentially better result for plaintiff than what the divorce decree would have afforded her. Defendant also argued that the doctrine of laches applied because he alone had been making the mortgage payments in the time since the divorce while plaintiff had done nothing to enforce her rights under the June 1993 order. For all of those reasons, he argued that the judge was obliged to permit him to retain all proceeds from the sale of the marital home in excess of the $65,000 that the property was worth in 1993.
The judge rejected defendant's laches argument, reasoning that defendant had not been harmed in any way by plaintiff's delay and that, if anything, both parties, including defendant, had benefited by the fifteen-year passage of time because the house "seems to be worth drastically more . . . today than it was" at the time of the divorce. The judge ruled in plaintiff's favor, requiring defendant to list the home for sale immediately with any proceeds from the sale to be split evenly between the parties after the satisfaction of all outstanding debts. The judge reasoned:
[T]he windfall . . . and the burdens have to be shared. It seems to me, given all the confusion here, seems to be the fairest thing to do. It just seems to me to be wholly inequitable at this point in time . . . [to] say, okay, she blew it, she waited too long. Even though the property's still there, he's been living in, the defendant's been living in the property that she should not . . . be entitled to anything to which she was entitled at the time of the final judgment of divorce. That seems to me to be a very draconian solution . . . . It seems to me to be the fairer approach to say okay, even 18 years later let's do what should have been done . . . . Let's have him sell the house, pay off all the debts and after the payment of all debts they split it 50/50. . . . [I]t was the fair thing to do in the final judgment of divorce. It was the fair thing to do with Judge Todd in 1993. And I'm popping up 15 years later and saying it's . . . the fair thing to do now.
The judge signed a confirming order on April 9, 2009, requiring the property to be listed for sale within sixty days at a price of $155,000, with the proceeds of the sale to be split evenly after all marital debts were satisfied. At plaintiff's request, the judge awarded her attorneys fees in the amount of $8,150.*fn1 In rendering that award, the judge applied the factors specified by Rule 5:3-5(c).
On appeal, defendant argues that the April 9, 2009 order should be reversed because: 1) plaintiff's motion was barred by laches, as she did not pursue her claims for fifteen years; 2) the judge impermissibly modified the JOD by adding a provision on the sharing of the proceeds of sale when the JOD was silent on the subject; 3) value should have been determined as of the date of the divorce in 1990; and 4) plaintiff did not demonstrate any entitlement to an award of attorneys fees.
We turn first to defendant's claim that plaintiff's 2008 motion to compel the sale of the former marital home was barred by laches. Laches is "an equitable defense that may be interposed in the absence of the statute of limitations and has been defined as an inexcusable delay in asserting a right." Nw. Covenant Med. Ctr. v. Fishman, 167 N.J. 123, 140 (2001) (internal quotations and citations omitted). "But 'laches involves more than mere delay, mere lapse of time. There must be delay [that] . . . has been prejudicial to the other party.'" Ibid. (quoting W. Jersey Title & Guar. Co. v. Indus. Trust Co., 27 N.J. 144, 153 (1958)). Indeed, the presence or absence of prejudicial harm is the core equitable consideration when a court decides whether to apply the doctrine of laches. Knorr v. Smeal, 178 N.J. 169, 181 (2003). Prejudice exists when the party asserting laches has changed his position or condition in reliance upon the other party's inaction. Lavin v. Bd. of Educ., 90 N.J. 145, 152 (1982). Prejudice may also be shown where a party has sustained actual financial harm due to the delay. Knorr, supra, 178 N.J. at 181.
The application of the doctrine of laches depends on the facts and circumstances of the particular case and rests within the sound discretion of the trial court. Mancini v. Twp. of Teaneck, 179 N.J. 425, 436 (2004). Therefore, we review a laches determination for an abuse of discretion. Ibid.
We are satisfied that Judge Sandson's refusal to apply the doctrine of laches was not error, much less an abuse of discretion. Defendant has not been harmed by plaintiff's inaction. He has had the opportunity to remain in the marital home ever since the 1990 divorce. Additionally, at the time of the divorce, any accumulated equity in the marital home was vastly exceeded by the marital debt. Since that time, the value of the home has increased considerably, as it was appraised in February 2009 at $155,000, which is more than double its value in 1993. Thus, defendant has suffered no harm or prejudice from the delay, and in fact he now stands to benefit financially from plaintiff's delay.
Moreover, the defense of laches is not available to defendant because his own actions caused or contributed to the delay. It is an established rule of equity that a party forfeits the right to claim laches when his own actions have contributed to, or caused, the delay. Rolnick v. Rolnick, 262 N.J. Super. 343, 364 (App. Div. 1993). The record demonstrates that when plaintiff attempted to list the home for sale in 1993, as the order of June 1993 authorized her to do, defendant refused to allow realtors or appraisers onto the property and used his dogs to keep them at bay. Thus, his own actions contributed to the delay.
Last, the defense of laches cannot be used to achieve an inequitable result. Linek v. Korbeil, 333 N.J. Super. 464, 475 (App. Div.), certif. denied, 165 N.J. 676 (2000). Here, as Judge Sandson properly found, application of the defense of laches would allow defendant to reap an unjust windfall. Therefore, under all of the circumstances, we are satisfied that the judge's refusal to apply the doctrine of laches was not an abuse of discretion. In fact, Judge Sandson's treatment of the laches issue represented a sound application of equitable principles to the facts before him.
We turn next to defendant's claim that by establishing the date of sale as the relevant date for purposes of valuation, the judge improperly added a provision to the JOD that the parties themselves had not negotiated. Defendant argues that the trial court added this new term, thereby creating a new and "better agreement than that for which [plaintiff] bargained at the time of [the] divorce." Our review of the record convinces us that defendant is correct when he asserts that the judge's April 9, 2009 order did supply a provision that the parties had not included; however, we reject defendant's corollary argument that doing so was error.
Where the parties' JOD or property settlement agreement omits an essential term, the court may supply "'a term which is reasonable in the circumstances.'" Pacifico, supra, 190 N.J. at 266 (quoting Restatement (Second) of Contracts § 204). The Restatement explains the circumstances under which an omission of an essential term typically occurs:
The parties to an agreement may entirely fail to foresee the situation which later arises and gives rise to a dispute; they then have no expectations with respect to that situation . . . . Or they may have expectations but fail to manifest them, either because the expectation rests on an assumption which is unconscious or only partly conscious, or because the situation seems to be unimportant or unlikely, or because discussion of it might be unpleasant or might produce delay or impasse. [Restatement (Second) of Contracts § 204(b).]
A court should supply an omitted term whenever the parties "fail to agree regarding an issue, generally because they did not anticipate that it would arise or [they] merely overlooked it." Pacifico, supra, 190 N.J. at 266.
The situation confronting Judge Sandson during the March 26, 2009 motion hearing required him to supply a term that the parties' JOD had omitted. As is evident, once the house is sold, there will be proceeds. In the absence of a ruling by the court, the parties would have had no way to determine whether defendant was entitled to keep all proceeds in excess of the 1993 value, as he claimed, or whether instead he should be required to share the excess proceeds equally with plaintiff, as she contended. The situation facing the parties cried out for resolution. Under the circumstances, the judge acted entirely properly by supplying the omitted term.
Moreover, Judge Sandson's order requiring an even split of the proceeds was eminently fair. The JOD demonstrates that the parties considered themselves to have an equal right to the benefits and burdens of the assets and debts of the marriage. That being so, the judge did not err in concluding that defendant should not be entitled to the windfall that a 1993 valuation would have created. This is not a case where defendant's actions in any way contributed to the increase in value. Defendant made no improvements to the home and presented no proof demonstrating that the increase in value was attributable to any efforts on his part. Defendant presented no evidence establishing that the increase in value was due to anything other than changes in the real estate market. Under those circumstances, the judge's April 9, 2009 order requiring an equal split of the proceeds was an entirely fair and proper resolution of the issue that was presented.
Moreover, as the Court observed in Pacifico, when the parties' property settlement agreement or JOD is silent on the valuation date, the date of sale is presumed to be the appropriate date for valuation purposes in the absence of any contrary evidence. Supra, 198 N.J. at 269. Defendant has presented no evidence to overcome the Pacifico presumption. For all of these reasons, we affirm the judge's conclusion that upon the sale of the marital home, the proceeds should be split evenly.
Last, we address defendant's claim that the judge erred by requiring him to pay plaintiff's attorneys fees in the amount of $8,150 from the proceeds of the sale of the marital home. Defendant's arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A) and (E).