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Whissell v. Whissell

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


October 20, 2010

LORIE WHISSELL, PLAINTIFF-RESPONDENT,
v.
GREGORY WHISSELL, DEFENDANT-APPELLANT.

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Cape May County, Docket No. FM-05-17-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted September 21, 2010

Before Judges Graves and Messano.

Defendant Gregory Whissell appeals from the October 21, 2009 order of the Family Part that denied his motion for reconsideration of an earlier post-judgment order entered on August 27. After consideration of the record and applicable legal standards, we reverse and remand the matter for further proceedings consistent with this opinion.

Defendant and plaintiff, Lorie Whissell, were married in 1990 and had two children together -- a daughter born in 1991, and a son born in 1993. In January 2004, the parties separated and in June, plaintiff filed a complaint for divorce. That complaint was dismissed in October when plaintiff filed an amended complaint. On May 17, 2005, the parties, represented by counsel, entered into a property settlement agreement (PSA) that provided for the division of their various assets and liabilities. The PSA acknowledged that the parties had "already equally divided their Merrill Lynch investment account and other bank accounts[,]" with each "receiv[ing] the accounts in their own names free from any claims from the other."

Pursuant to Section 1.29 of the PSA, the parties warranted that prior to execution of the agreement, "a full disclosure was made of all assets," that the PSA "described . . . all assets acquired by either of them during the marriage," that each had acted with due diligence, and that each was relying upon the disclosures made prior to executing the PSA. Section 1.30 of the PSA provided:

NON-DISCLOSURE OF ASSETS: The parties agree that in the event it is discovered at any time in the future that assets were not disclosed by one party to the other prior to the execution of this Agreement, then the party from whom the non-disclosed assets were withheld shall have the right to apply to any Court of competent jurisdiction for any and all relief to which he or she may be entitled under the law, including but not limited to a modification of this Agreement.

Section 1.32 provided:

BREACH OF AGREEMENT: In the event either of the parties breaches a provision of this Agreement resulting in the offended party having to bring the subject of the breach before a Court . . . in order to enforce the terms of this Agreement, the party breaching this Agreement shall be responsible for reasonable counsel fees and costs of that offended party.

The final judgment of divorce (JOD), entered on July 11, 2005, incorporated the terms of the PSA.

Subsequently, plaintiff obtained an order dated April 17, 2009 that granted judgment in her favor as against defendant in the amount of $106,020, appointed her receiver for certain real property, and compelled defendant to produce "a variety of documents."*fn1 Apparently post-judgment discovery ensued, presumably as plaintiff attempted to discover assets available to satisfy her judgment.

In July, plaintiff brought a motion to enforce litigant's rights. In part, she alleged that during a deposition conducted in June, defendant revealed that he "had invested in a theatrical movie production by contributing $150,000 of marital funds in connection with a [s]ubscription [a]greement to 'Southern Belles[,] LLC (Southern Belles).'" Plaintiff denied knowing about the investment. The subscription agreement was dated June 28, 2004, after the parties had separated but before they executed the PSA. Defendant testified at deposition that he had not disclosed this asset to plaintiff because it "came after [the] separation." Plaintiff argued that since "all other assets in the divorce were [split] essentially fifty-fifty," she was entitled to a judgment in the amount of $75,000, and counsel fees for having to bring the motion.

Defendant opposed the motion. He contended that he had not failed to disclose anything because the money he used to invest in Southern Belles was from assets already divided by the parties. Additionally, defendant produced financial records indicating that some of the monies contributed to the film venture came from his construction business. He also produced the records of his Merrill Lynch account that showed deductions for payments to Southern Belles made during July and August 2004.*fn2

Without entertaining oral argument, the judge filed an order on August 27, 2009, entering judgment in plaintiff's favor for $75,000 and ordering defendant to pay $4,963.34 in counsel fees.*fn3 In his written statement of reasons, the judge recounted each party's contentions. Resolving the obvious factual disputes regarding the Southern Belles investment presented, the judge simply said:

In the Court's view, [p]laintiff's request should be granted. Defendant has not provided a basis for failing to disclose the investment as required. Accordingly,

[p]laintiff's request for a [j]udgment against [d]efendant for $75,000 as a result of his failure to disclose all assets at the time of the divorce is granted.

As to counsel fees, the judge concluded that defendant had failed to "complete[] a Case Information Statement or assist[] with the discovery . . . as required." He ordered defendant to pay $4,963.34 in counsel fees.

Defendant moved for reconsideration on September 16, 2009. Plaintiff filed opposition and cross-moved for additional relief. In addition to arguing that the Southern Belles investment was made from funds already distributed to the parties after separation, defendant claimed that plaintiff knew of the investment before she signed the PSA. He claimed that in February 2005, nearly three months prior to the execution of the PSA, he informed plaintiff of a trip to Austin, Texas where the movie was being filmed. He claimed to have spoken to his children while he was away, and provided copies of his airfare and hotel reservations confirming that he made the trip. Defendant claimed plaintiff was aware of the project and never pursued any claim to a share of it because the investment was made with "non-marital funds."

In her opposition, plaintiff noted that defendant's statements regarding the source of the monies used for the Southern Belles investment kept changing. First, he claimed the monies were derived from his construction and real estate business; subsequently, he claimed they came from the Merrill Lynch account already divided between the parties. Plaintiff also contended that even if the investment was made after the parties separated in 2004, any division of property made and recognized in the PSA as having pre-dated the agreement was only temporary and not a final agreement regarding equitable distribution of assets.

Plaintiff also denied knowing "anything substantive" about the Southern Belles investment. She recalled that her children told her that defendant had taken "them to a premier of a movie," but she could not recall when that occurred or any other details. Plaintiff argued that "such a one-time incident is [in]sufficient justification to rule that [she] made a knowing waiver of a substantial asset."

On October 21, 2009, again without oral argument, the judge entered an order denying defendant's motion for reconsideration. In a written statement of reasons that accompanied the order, the judge outlined the parties' contentions. He reasoned that defendant "ha[d] not included any statements or evidence . . . which would cause the court to change its decision." The judge concluded: "The fact that Defendant made the investment after the parties separated and after the complaint for divorce was filed is not relevant. Under the [PSA], Defendant was required to disclose all of his assets. He did not do so." On November 16, 2009, the judge entered judgment in favor of plaintiff and against defendant 1) in the amount of $75,000, together with costs and interest since August 27, 2009; and 2) in the amount of $4,963.34, together with costs and interest since September 26, 2009. This appeal followed.

Defendant argues on appeal that the trial court erred in not granting his request for oral argument. Pursuant to Rule 5:5-4(a), while the grant of oral argument remains discretionary, "the court shall ordinarily grant requests for oral argument on substantive and non-routine discovery motions and ordinarily deny requests for oral argument on calendar and routine discovery motions." "This provision has generally been interpreted to require oral argument 'when significant substantive issues are raised and argument is requested.'" Palombi v. Palombi, 414 N.J. Super. 274, 285 (App. Div. 2010) (quoting Mackowski v. Mackowski, 317 N.J. Super. 8, 14 (App. Div. 1998) (citing Filippone v. Lee, 304 N.J. Super. 301, 306 (App. Div. 1997)); and see Pressler, Current N.J. Court Rules, comment 1.1 on R. 5:5-4 (2011) (noting "there is a strong presumption favoring argument of motions other than calendar matters and routine discovery application"). "The denial of such argument deprives litigants of an opportunity to present their case fully to a court." Mackowski, supra, 317 N.J. Super. at 14.

We have, in other circumstances, refused to reverse the orders of the Family Part simply because the litigants were not afforded the opportunity to orally argue their positions. As we have noted:

The inquiry does not end because the nature of an issue presented can be labeled as pertaining to a substantive issue or because the parties do not agree on all facts. Other circumstances, such as the sufficiency of the supporting facts alleged are also relevant to the exercise of discretion. This is particularly true in the case of motions that seek a modification of financial obligations or reconsideration of a prior order because the movant must satisfy certain requirements before these motions are ripe for decision by the court. When the record presented to the court in support of a motion is deficient on its face to satisfy such requirements, oral argument does not afford litigants an opportunity to cure such evidentiary deficiencies. [Palombi, supra, 414 N.J. Super. at 286 (citations omitted).]

Here, however, the certifications presented by both parties established that material facts were in dispute regarding: the source of the monies used by defendant to make his investment; when he obtained those monies; whether plaintiff was aware of the investment; and, if so, when she became aware. These disputed facts were supported by adequate proofs from both sides. Thus, the requests for oral argument of the original motions and the motion for reconsideration were not attempts to "cure . . . evidentiary deficiencies," and the judge mistakenly exercised his discretion by not entertaining argument.

Moreover, the factual disputes, and the legal consequences flowing from their resolution, should not have been determined solely upon the parties' dueling certifications and the exhibits submitted with the various motions and cross-motions. Resolution of the issues required a hearing.

Defendant essentially presented two reasons why plaintiff was not entitled to 50% of the $150,000 he admittedly invested in Southern Belles. First, in opposition to the original motion, defendant contended that the monies he used to make the investment were either from the previously-divided assets recognized explicitly by the PSA, or from various construction draw-downs acquired after the separation. He urged that the legal conclusion to be drawn was that the investment was not a "marital asset." Second, in his motion for reconsideration, defendant argued that plaintiff knew of the investment before the PSA was executed, and, therefore, any failure on his part to specifically include the asset in the PSA did not warrant its equitable distribution to plaintiff.

In both statements of written reasons, the judge did not reach a conclusion as to either argument. Instead, he determined that defendant failed to disclose his investment in Southern Belles, and that failure, in and of itself, was a violation of the terms of the PSA and justified the relief he ordered.

N.J.S.A. 2A:34-23h provides for the equitable distribution of property "beneficially acquired by . . . either [party] during the marriage." As a general rule, the filing of a divorce complaint fixes the marriage end date for purposes of determining what property will be eligible for distribution. Painter v. Painter, 65 N.J. 196, 218 (1974). However,

[t]he Painter rule was later modified in those instances where the parties entered into a written or oral agreement to separate and distribute marital assets prior to filing a complaint for divorce. See DiGiacomo v. DiGiacomo, 80 N.J. 155, 159 (1979); Smith v. Smith, 72 N.J. 350, 361-62 (1977); Carlsen v. Carlsen, 72 N.J. 363, 370-71 (1977). However, a lengthy separation accompanied by the division of some assets and the payment of support was found insufficient to support a conclusion that the marital partnership terminated prior to the date of a divorce complaint. Brandenburg v. Brandenburg, 83 N.J. 198, 207 (1980). [Genovese v. Genovese, 392 N.J. Super. 215, 224 (App. Div. 2007).]

"[A]ssets acquired after th[e] [marital] enterprise or partnership ceases should not be . . . included" in the equitable distribution calculus. Genovese, supra, 392 N.J. Super. at 226.

Our brief recitation of the applicable law is sufficient to demonstrate why the source of the monies defendant invested in Southern Belles was legally significant in determining whether plaintiff had a right to equitable distribution of the asset. Were those monies acquired by defendant after the marriage ended? Or, were they derived from a partial, pendente lite distribution of assets as plaintiff alleged? Or, was it the intention of the parties that assets distributed prior to the execution of the PSA were not subject to equitable distribution? See Pacifico v. Pacifico, 190 N.J. 258, 269 (2007) ("parties are free to exclude marital property from distribution by agreement"). In our opinion, these issues cannot be resolved without a plenary hearing.

Additionally, defendant alleged that plaintiff actually knew about the Southern Belles investment before executing the PSA. He provided documentary proof that this trip to the movie set in Texas corroborated his claim. Notably, plaintiff denied that she knew "anything substantive" regarding the investment, and, that while she did recall her children going to a movie premiere with their father, she could not recall any details. Plaintiff further argued that these facts could not substantiate her "waiver" of her rights to equitable distribution of the asset.

We fail to see how the judge could determine that defendant failed to disclose the existence of Southern Belles, based upon these contradictory certifications. See Palmieri v. Palmieri, 388 N.J. Super. 562, 564 (App. Div. 2006). Moreover, even though the judge determined defendant did not disclose the asset for purposes of the PSA, any information defendant did disclose, and the actual knowledge plaintiff possessed, were important factors to consider. In other words, before determining that plaintiff was entitled to equitable distribution of an asset simply because it was not included in the PSA, the judge was required to decide whether such a result was "fair and just" under all the circumstances. Addesa v. Addesa, 392 N.J. Super. 58, 66 (App. Div. 2007) (citing Peterson v. Peterson, 85 N.J. 638, 642 (1981)).

Our conclusion that defendant was entitled to a plenary hearing on the issues presented also compels a reversal of the portion of the original order that awarded plaintiff counsel fees. "The award of counsel fees and costs in a matrimonial action rests in the discretion of the trial court." Addesa, supra, 392 N.J. Super. at 78. In deciding to make an award and the amount, the judge must consider the factors enumerated in Rule 5:3-5(c). Ibid. A reviewing court will only reverse the trial court's determination of counsel fees on the "rarest occasion" and only because of a "clear abuse of discretion." Strahan v. Strahan, 402 N.J. Super. 298, 317 (App. Div. 2008) (citing Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).

Here, the judge did not provide a clear explanation for his decision to make the award in the first place, other than noting that defendant failed to complete a Case Information Statement and failed to comply with discovery. While "the degree to which fees were incurred to enforce existing orders or to compel discovery" is one of the factors set forth in Rule 5:3-5(c), the judge discussed none of the other factors set forth in the Rule. We cannot discern whether the judge's conclusion regarding defendant's failure to disclose the Southern Belles investment affected his determination of the fee request. If it did, such a decision should abide the results of the plenary hearing on remand. At that point, the judge is free to exercise his discretion and consider all of the factors set forth in Rule 5:3-5(c) in deciding whether plaintiff is entitled to an award of counsel fees.

Reversed and remanded. We do not retain jurisdiction.


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