October 22, 2010
LUCIA EJIOFOR, PLAINTIFF-APPELLANT,
CARLOS EJIOFOR, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Burlington County, Docket No. FM-03-1513-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 29, 2010
Before Judges Gilroy and Ashrafi.
Plaintiff Lucia Ejiofor appeals from a post-judgment order dated September 25, 2009, directing that she pay $51,876.88 to defendant Carlos Ejiofor as his share of her retirement accounts equitably distributed in their judgment of divorce.*fn1 We reverse and remand to the Family Part to determine the current value of Carlos's share of Lucia's retirement accounts.
The parties were married in 1989. They separated in December 2004 and were divorced in April 2007. Their final judgment of divorce incorporated an oral property-settlement agreement placed on the record in open court on March 15, 2007. We have not been provided a transcript of the proceedings of that date, but there is no dispute that the parties agreed to share equally their retirement and pension accounts. Paragraph 11 of the Dual Judgment of Divorce, dated April 12, 2007, stated:
Pension Retirement Accounts: All Account(s) are to be evaluated as of 12/15/04, or as close to that date as possible. The parties agree if any loan has been taken out against any plan, that 12/15/07 is the value for the 50/50 distribution. The defendant acknowledges that he surrendered his 401k plan and he will give that surrender value in documentation to the other side as a credit towards any payment by the plaintiff from her plan(s). Primerica Account, as of statement date of 12/15/04 will be divided on a 50/50 basis between the parties.
Shortly after the judgment of divorce was entered, disputes arose about other equitable distribution provisions of the parties' agreement, including the equity available in real property that was subject to distribution. The Family Part held a plenary hearing on June 19, 2008, and issued a written decision dated September 30, 2008, ruling on a multitude of economic issues in dispute. The court's decision was embodied in an order dated October 21, 2008. Relevant to the appeal before us, paragraph 9 of the court's order stated:
The parties will share the cost on an equal basis (50/50 basis) of an expert appraiser to value any of the Pension/Retirement accounts, as well as equally (50/50 basis) sharing the cost of the preparation of any QDRO's (Qualified Domestic Relations Order).
The distribution of the defendant's share will be from the AIG VALIC account in the plaintiff's name after receiving a credit in the amount of the defendant's surrendered 401K plan.
In August 2009, Carlos filed a motion requesting that the court set his share of Lucia's retirement accounts at $51,876.88 and to order that a QDRO be prepared directing payment of that amount to him from Lucia's AIG VALIC account. Lucia filed a cross-motion in opposition. The motions were heard by a different Family Part judge from the one that had entered the October 21, 2008 order. Rejecting Lucia's opposition, the judge entered the September 25, 2009 order stating in relevant part:
Defendant's request for an Order directing Plaintiff to pay $51,876.88 as the value of the QDRO is GRANTED. The FJOD [final judgment of divorce] provides all Pension Retirement Accounts "are to be evaluated as of December 15, 2004, or as close to that date as possible." Defendant has provided sufficient proof establishing the amount available in plaintiff's retirement account as of the above date was $104,875.88 for payment of Pension funds pursuant to equitable distribution.
Lucia filed a notice of appeal from that provision of the order. Carlos has not filed a brief responding to Lucia's appeal but has sent a letter stating that he relies on the motion record before the Family Part.
Our standard of review from a decision of the Family Part equitably distributing marital assets is generally limited to determining whether the order was an abuse of the discretion entrusted to the judge. See La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000), certif. denied, 167 N.J. 630 (2001). We must affirm the Family Part's ruling as long as the court "could reasonably have reached [the] result from the evidence presented, and the award is not distorted by legal or factual mistake." Ibid. (citing Perkins v. Perkins, 159 N.J. Super. 243, 247-48 (App. Div. 1978)).
Where, however, the Family Part did not give an adequate explanation or reasons for exercising discretion as it did, and where the factual record is not affected by any first-hand fact-finding or credibility decisions made by the judge, we may exercise a broader standard of review. See Esposito v. Esposito, 158 N.J. Super. 285, 290-91 (App. Div. 1978).
We have reviewed all documents submitted on this appeal, which include the transcript of oral argument before the Family Part and its order of September 25, 2009, the exhibits in support of the motions, and the earlier written decision and order of the different Family Part judge dated September 30, 2008, and October 21, 2008, respectively.
We conclude that the September 25, 2009 order was based on legal error. The court failed to apply principles of contract law to interpret an ambiguous or missing term of the parties' agreement. The agreement did not set a date for actual distribution of the retirement accounts by means of cash payout and did not indicate who bore the risk of a decrease in value of the accounts after December 2004. Reading the agreement in the most reasonable and fair manner to resolve the absent terms or ambiguity, we conclude that the parties did not intend a fifty percent cash payout to Carlos of the value of Lucia's retirement accounts as of December 15, 2004, but that both parties bore the risk and benefit of either a decrease or an increase over time in the value of their equal shares of the pension accounts.
In support of his motion, Carlos provided documents to establish the value of Lucia's three retirement accounts at or near December 15, 2004, and a mathematical calculation of his share. The documents showed that Lucia's AIG VALIC account had an ending value of $104,205.65 as of December 31, 2004. As of the same date, Lucia's Primerica account had an ending balance of $5,236.33. Lucia's New Jersey State Pension account showed total contributions as of December 24, 2004, of $3,819.00, but an appraisal prepared by Pension Appraisers, Inc. in accordance with the court's October 21, 2008 order set a value of $2,386.70 as the basis for Carlos's share of that account. Carlos accepted that figure.
In addition to the documents establishing the value of Lucia's accounts, Carlos attached a statement showing that his own New Jersey State Pension contributions and accumulated interest totaled $10,093.92 as of March 4, 2005, and that he had withdrawn the entire balance of $8,074.92 after twenty percent of the total was withheld for payment of income taxes.
Carlos proposed a mathematical calculation that can be summarized as follows to arrive at the cash payout he sought:
Lucia's AIG VALIC $104,205.65 Lucia's Primerica 5,236.33 Lucia's NJ State Pension 2,386.70
SUBTOTAL $111,828.68 Carlos's NJ State Pension 8,074.92
Carlos's 50 percent share $59,951.80 Less withdrawal of 3/4/05 (8,074.92)
BALANCE OF CARLOS'S SHARE $51,876.88
In opposition to Carlos's motion, Lucia submitted an account statement for her AIG VALIC account showing that the ending value of that account as of June 30, 2009, was $61,977.66. She stated that the economic downturn of 2008-2009 had substantially diminished the value of her retirement account, and that the ending balance shown on the June 30, 2009 statement also included her contributions to that account since the time of the parties' separation in December 2004. She argued that payment of $51,876.88 to Carlos out of that account would unjustly leave her with a much smaller share of her retirement accounts than the equal split agreed upon at the time of divorce.
Carlos replied that Lucia had taken out a loan of $35,000 from her AIG VALIC account on April 1, 2005, and that the balance due on that loan was $33,753.30. He claimed that the loan accounted for reduction in the value of the AIG VALIC account, not the recession of 2008-2009.*fn2
Before oral argument on the motions in the Family Part, the court issued a tentative decision awarding Carlos the $51,876.88 he sought. At oral argument, counsel for Lucia argued that the value of her AIG VALIC account had decreased substantially since the end of 2004, but that Carlos refused to permit an appraisal of that account, as the court had ordered on October 21, 2008.
Counsel also contended that the judgment of divorce required that the account be valued as of December 15, 2007, not December 15, 2004, because Lucia had taken a loan from that account. In response, counsel for Carlos argued that the parties' agreement required valuation of the retirement accounts as of December 2004, and that the December 15, 2007 date in the judgment of divorce was a typographical error. He also argued that nothing in the agreement stated Carlos's share would be diminished in the event of an economic downturn. The court accepted Carlos's argument and confirmed its tentative decision granting Carlos the full amount derived by his calculation. The court did not state orally or in writing its reasons for that ruling, other than the brief statement contained in the previously-quoted paragraph of its order. Ante at 3-4.
Initially, we find no error in the court's ruling that the valuation date set by the parties' agreement was December 15, 2004, not December 15, 2007. Lucia has not provided a transcript of the March 15, 2007 proceedings, at which time the terms of the parties' agreement were spread on the record. At the motion hearing on September 25, 2009, counsel for Carlos represented that both parties were in possession of an audio recording of those proceedings, and that the recording showed the December 15, 2007 date was placed into the judgment in error. Without an adequate record on appeal, we cannot determine whether the 2007 date was a typographical error or a term of the parties' agreement. Independently of a factual record, we can discern no good reason that one party's deriving personal benefit from a loan taken after December 2004 should have reduced the other party's share of the retirement accounts. In her appellate brief, Lucia has not specifically argued that the Family Part erred in valuing the retirement accounts as of December 15, 2004. We conclude December 2004 was the correct beginning date for valuation.
Additionally, we agree with the Family Part that Carlos submitted adequate documentary proof of the value of each of Lucia's three accounts in December 2004. There was no error in the trial court's implicit finding that the total value of Lucia's accounts was $111,828.68 at the end of December 2004, or in its implicit conclusion that, under the parties' agreement, Carlos had an equitable ownership interest in half that amount in December 2004.
The court erred, however, in adopting Carlos's position that his equitable rights of ownership permitted him to withdraw, some five years later, the full cash value of his December 2004 interest in the accounts. The AIG VALIC account was subject to market fluctuation. It could grow or diminish over time, even without any further contributions by or on behalf of Lucia. The cash value on a future date of Carlos's one-half share as of December 2004 depended on whether the account had increased or decreased in value.
Carlos argued that nothing in the parties' agreement placed the risk of a decrease in value upon him. But nothing in paragraph 11 of the judgment of divorce, quoted ante at 2, states that each party is entitled to a cash payout equal to one-half the value of the retirement accounts as of December 15, 2004. Rather, the judgment establishes a date for valuation and indicates that each party is entitled to one-half that asset. At best, the judgment is ambiguous with respect to which party, if not both, bears the risk of decrease in the value of the asset before it is converted into a cash payout.
Ambiguities in matrimonial agreements are subject to the same principles of law applicable to interpretation of contracts in general. See Capanear v. Salzano, 222 N.J. Super. 403, 407 (App. Div. 1988). In Pacifico v. Pacifico, 190 N.J. 258 (2007), the Court considered an issue similar to the one in this case - whether a matrimonial agreement giving each spouse the right of first refusal to purchase the other's share of the marital home at a future date required valuation of the house at the time of divorce or at the time of purchase. Recognizing "[t]he basic contractual nature of matrimonial agreements[,]" id. at 265, the Court said: "it is a basic rule of contractual interpretation that a court must discern and implement the common intention of the parties." Id. at 266 (citing Tessmar v. Grosner, 23 N.J. 193, 201 (1957), a non-matrimonial contract case)). Because the parties' disputed what their intention was as to a purchase price, the Court held that an evidentiary hearing was necessary to resolve the dispute about the parties' intent. Id. at 267.
Here, neither party proffered affirmative evidence of intent at the time of the agreement with respect to risk of an economic downturn affecting the value of the accounts. Thus, the Family Part was required simply to interpret the agreement as written without extrinsic evidence of intent. When the parties are on equal footing in bargaining for or preparing their agreement, see Pacifico, supra, 190 N.J. at 267-68, a missing or ambiguous term will be interpreted in the most reasonable and fair manner. See id. at 266-67; see also In re Estate of Miller, 90 N.J. 210, 219 (1982) ("[W]hen parties to a contract have not agreed in respect of a term that is essential to a determination of their rights and duties, a term that is reasonable in the circumstances is supplied by the court.") (citing Restatement (Second) of Contracts § 204 (1981)).
It is not reasonable or fair in these circumstances to allocate the entire risk of diminution in the value of the accounts upon Lucia. Carlos could have sought his share in cash at an earlier time commencing with the judgment of divorce in April 2007. By waiting until August 2009 to move for entry of a QDRO, he bore the risk of the economic circumstances diminishing the value of his share, just as it did Lucia's share.
Also, the record does not support a claim that Lucia unreasonably delayed entry of a QDRO. She did not agree to the terms of the QDRO proposed by Carlos because he insisted on withdrawing the full $51,876.88 he claimed. Lucia was not bound to accept that figure.
The Family Part should have required a professional appraisal and accounting of Lucia's AIG VALIC account, as directed in the October 21, 2008 order, to determine the cash value of Carlos's share. With the account statements available, an appraiser with expertise in the area could determine the cash value, at an appropriate date determined by the court, of Carlos's half share based on a starting value as of December 2004.*fn3 The calculation would take into account subsequent contributions to the fund by or on behalf of Lucia, which are not subject to equitable distribution to Carlos, and the balance of any amounts previously withdrawn or borrowed by Lucia, which should be deducted from her share. Based on a starting value as of December 2004 and market conditions as they affected the fund, the appraiser should determine the cash value of Carlos's share and what amount he is entitled to withdraw from Lucia's account.
We reverse and remand to the Family Part for further proceedings consistent with this decision. We do not retain jurisdiction.