February 23, 2011
ERNESTINE THEOFANIS, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
EFTHIMIOS N. THEOFANIS, A/K/A TIM N. THEOFANIS, DEFENDANT-APPELLANT/ CROSS-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Bergen County, Docket No. FM-02-1298-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 8, 2010
Before Judges Axelrad and Lihotz.
Defendant Efthimios Theofanis appeals from two post-judgment orders entered by the Family Part on April 17, 2009 and June 17, 2009, which denied his motion to vacate or modify a final Judgment of Divorce (JOD) and the incorporated Property Settlement Agreement (PSA).
On appeal, defendant argues:
THE TRIAL COURT BELOW ERRED BY NOT VACATING THE AMENDED JUDGMENT OF DIVORCE AND PROPERTY SETTLEMENT AGREEMENT DATED JANUARY 8, 2008 AND BY NOT DENYING PLAINTIFF'S NOTICE OF MOTION WITHOUT PREJUDICE TO ALLOW DEFENDANT SUFFICIENT TIME TO OBTAIN AN EXPERT'S REPORT FROM A FORENSIC ACCOUNTANT.
THE COURT BELOW ERRED BY NOT VACATING THE AMENDED JUDGMENT OF DIVORCE AND PROPERTY SETTLEMENT AGREEMENT DATED JANUARY 8, 2008 BECAUSE IT WAS SIGNED UNDER THE THREAT OF DURESS AND COERCION AND SCHEDULING AN EVIDENTIAL HEARING THEREON.
THE COURT BELOW ERRED BY NOT FINDING THAT THE CIRCUMSTANCES OF DEFENDANT'S CASE WARRANTED REVIEW OF THE PARTIES' AGREEMENT. POINT IV
THE COURT BELOW ERRED BY NOT FINDING THAT THE PARTIES' PROPERTY SETTLEMENT AGREEMENT SHOULD NOT BE MODIFIED PURSUANT TO CHANGED CIRCUMSTANCES AND SCHEDULING THE MATTER FOR A PLENARY HEARING.
THE COURT BELOW ERRED BY NOT COMPELLING PLAINTIFF TO PROVIDE AN ACCOUNTING OF THE ITEMS SHE REMOVED FROM THE MARITAL HOME. POINT VI
THE COURT BELOW ERRED BY COMPELLING DEFENDANT TO PAY PLAINTIFF'S COUNSEL FEES AND COSTS.
Plaintiff filed a cross-appeal challenging the amount awarded for attorney's fees.
We have reviewed each of these arguments in light of the record and the applicable law. We affirm.
Plaintiff and defendant were married on July 25, 1980 and have two children. In 1973, defendant started a floral business on Madison Avenue in New York City, known as "Alexander Florists, LLC." He continued to work in that business throughout the marriage. In addition to the flower shop, the parties amassed significant assets. Their realty holdings included the marital home in Alpine, NJ (the Alpine property), a six-unit rental property in Astoria, NY (the Astoria property), a vacation home in Greece (the Greece property), and a commercial strip mall in Canada (the Canada property). They also owned four luxury vehicles, two vans related to the business, and a boat.
Plaintiff filed her complaint for divorce on December 4, 2006. In the course of discovery, a joint expert was engaged to value defendant's business. Defendant retained a separate business valuation expert who concurred with the joint expert's opinion of the LLC's value of $1,264,000. Ultimately, the parties accepted the value and negotiated a resolution of all collateral issues incident to the request for divorce. The settlement terms were placed on the record on December 6, 2007 and the court granted plaintiff's request for divorce, incorporating the parties' settlement into the final JOD.
An Amended JOD was filed on January 8, 2008, which incorporated the parties' contemporaneously executed written PSA. The PSA included this recital of the parties' understanding:
The parties acknowledge that there shall be a permanent waiver of alimony by both the Wife and the Husband in consideration of those assets specifically allocated between the parties by virtue of equitable distribution. The Wife acknowledges that the assets she will receive are in lieu of spousal support and shall provide her with sufficient means to enjoy a comparable lifestyle with that which the parties enjoyed during the marriage. . . .
The parties fully understand that the terms of this Agreement and the Wife's permanent waiver of her right to seek alimony/support from the Husband is predicated upon the Wife's receipt of the equitable distribution which is provided to her under this Agreement, and which is otherwise consistent with the form and nature of that level of support she may otherwise have required.
The PSA also detailed the disposition of the parties' assets. We will briefly describe that allocation. Defendant retained the Astoria property and the business. In exchange for her waiver of any claim in respect of the business and alimony, plaintiff accepted a lump sum distribution of $1,000,000.
Plaintiff was awarded the Greece property, subject to her payment to defendant of $80,000. The parties agreed to sell the Alpine marital home and the Canada property, equally splitting the net proceeds. Defendant would pay plaintiff so much of his share of the sale proceeds from these two properties to satisfy the one million dollar payment.*fn1 Finally, the parties divided their depository and stock accounts, personal property and household furnishings.
Less than one month following the execution of the PSA, plaintiff filed an order to show cause to enforce litigant's rights. As provided in the PSA, she sought the appointment of a designee to act as defendant's attorney-in-fact to fulfill the obligations outlined in the PSA. Defendant opposed the motion. After consideration, the court ordered defendant to cooperate with the sale of the Alpine property, noting his continued non-compliance would result in the appointment of an attorney-in-fact to effectuate the closing of title.*fn2
In a later order, entered on plaintiff's request, the court imposed a February 1, 2009 deadline for defendant to complete the obligations regarding the division of the realty. If he failed to comply, a self-executing provision of the order granted defendant's power-of-attorney to Robert Kane to act on his behalf in the transfer, sale, or distribution of the parties' properties and proceeds from any sales.
Defendant's continued recalcitrance prompted plaintiff's February 10, 2009 motion to enforce litigant's rights. She sought an order appointing Kane to list the Astoria and Canada properties for sale, complete the transfer of the Greece property and restrain defendant from the location, execute documents to effectuate the transfer of plaintiff's interest in the parties' financial accounts, and pay attorney's fees related to her request for enforcement.
Defendant cross-moved to modify the PSA or vacate the JOD, alleging he signed it under duress. In his certification, defendant contended he was pressured by plaintiff's emotional instability and coerced by the trial judge's expressed desire to conclude the case prior to retiring from the judiciary.
Defendant's objection to the JOD and PSA focused on the value used for his business and the $1,000,000 he agreed to pay defendant as her interest in that asset and to waive alimony. Defendant offered a statement from a new expert, who suggested the joint expert's evaluation "had several flaws" because it relied on 2006 revenues that were uncommonly high thus causing an inflated assessment. Essentially, defendant asserted the downturn in the economy had impinged gross revenues and the increased rental costs strangled profits so the flower shop was not worth the amount used in the PSA.
Judge Melchionne heard oral argument on the cross-motions and rendered his order on April 17, 2009. Starting with defendant's application, the court rejected the allegations of coercion and duress, finding defendant's general assertions were insufficient to warrant vacation of the JOD, pursuant to Rule 4:50-1(f). Therefore, the court denied defendant's motion to modify the PSA. Judge Melchionne reasoned defendant was represented by highly competent counsel, had employed his own expert to evaluate his business and actively negotiated the equitable distribution issues. Further, the judge found "[t]he transcript speaks for itself. There was plenty of opportunity for the [d]efendant to object[,] to voice his opposition. And the signing of the agreement weeks later is another indication."
Further, defendant's fifteen month delay in filing his application reinforced the court's finding there was a lack of coercion. The court also rejected defendant's request for modification of the equitable distribution provisions based on a theory of changed circumstances. Finding the PSA was the result of an "arms length transaction," that was "not subject to modification," Judge Melchionne noted plaintiff "gave up . . . any claims for alimony [and] received a [lump sum for] equitable distribution."
Also in the April 17, 2009 order, the court reserved its decision on plaintiff's requests for the sale of the Astoria property, the appointment of an attorney-in-fact to transfer the property in Greece and sell the property in Canada,*fn3 and the award of counsel fees. Following additional argument on these issues, the court entered the June 17, 2009 order. Determining defendant offered "nothing to show that he made any good faith effort to . . . effectuate the equitable distribution[,]" Judge Melchionne appointed Kane as defendant's attorney-in-fact to refinance the Astoria property in order to pay plaintiff her interest within thirty days, at which time the court would consider ordering the sale of the property. Also, plaintiff was ordered to prepare the deed to transfer the Greece property. Finally, the court, after reserving the issue for additional consideration, awarded plaintiff $13,500 in counsel fees.
Defendant's appeal of these two orders was timely filed. Plaintiff cross-appealed challenging the amount of the attorney fee award.*fn4
Our review regarding modification of a PSA's equitable distribution provisions is narrow. Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985). We are guided by well-established principles governing this issue.
Matrimonial agreements, found to be fair and just, "fall within the category of contracts enforceable in equity." Petersen v. Petersen, 85 N.J. 638, 642 (1981) (citations omitted). New Jersey public policy favors the stability of marital agreements, Glass v. Glass, 366 N.J. Super. 357, 372 (App. Div.), certif. denied, 180 N.J. 354 (2004), and necessarily considers the "presumed understanding" and intentions of the parties in making the agreement. Glass, supra, 366 N.J. Super. at 372. A court is required to enforce the parties' agreement as written.
"The agreement between the parties -- the contract upon dissolution -- is entitled to significant consideration[,]" because agreements, by their very nature, carry with them a certain stability to be respected at the time of enforcement or in the event modification is at issue. Glass, supra, 366 N.J. Super. at 372. See also Konzelman v. Konzelman, 158 N.J. 185, 193 (1999) (stating that voluntary agreements "enabl[e] parties to order their personal lives consistently with their post-marital responsibilities" and, therefore, are given "prominence and weight"); Conforti v. Guliadis, 128 N.J. 318, 323 (1992) (recognizing that "[m]arital property settlement agreements 'involve far more than economic factors' and must serve the strong public and statutory purpose of ensuring fairness and equity in the dissolution of marriages"). Such agreements ordinarily include trade-offs as determined between the parties. Ozolins v. Ozolins, 308 N.J. Super. 243, 249 (App. Div. 1998). Although a court generally has the "equitable authority" to modify PSAs executed in connection with divorce proceedings, granting "[a]n application to modify an agreement is an exception, not the rule." Glass, supra, 366 N.J. Super. at 379.
However, when circumstances arise where enforcement of the agreement becomes inequitable, an exception may be made. Ibid. Accordingly, applications for relief from equitable distribution provisions contained in a JOD and PSA are subject to review under the guidance of Rule 4:50-1. Pressler & Verniero, Current N.J. Court Rules, comment 6.1 on R. 4:50-1 (2011) (citing Miller v. Miller, 160 N.J. 408, 418 (1999)).
Under Rule 4:50-1, relief from a final judgment is not granted lightly. Such a motion is "addressed to the sound discretion of the trial court, which should be guided by equitable principles in determining whether relief should be granted or denied." Housing Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). In our review of the exercise of discretion it is not the appellate function to decide whether the trial court took the wisest course, or even the better course, since to do so would merely be to substitute our judgment for that of the lower court. The question is only whether the trial judge pursued a manifestly unjust course. [Gittleman v. Cent. Jersey Bank & Trust Co., 103 N.J. Super. 175, 179 (App. Div. 1967), rev'd on other grounds, 52 N.J. 503 (1968).] Accordingly, the trial court's "decision granting or denying an application to open a judgment will be left undisturbed unless it represents a clear abuse of discretion." Little, supra, 135 N.J. at 283 (citations omitted).
Defendant sought relief from the terms of the PSA pursuant to subsection (f) of Rule 4:50-1, which provides:
On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: . . . (f) any other reason justifying relief from the operation of the judgment or order.
Factors for granting relief on a Rule 4:50-1(f) motion include the "extent of the delay in making the application for relief, the underlying reason or cause, fault, or blamelessness of the litigant, and any prejudice that would accrue to the other party." In re Guardianship of J.N.H., 172 N.J. 440, 474 (2002) (quoting C.R. v. J.G., 306 N.J. Super. 214, 241 (1997)). Relief under subsection (f) is available only when truly exceptional circumstances are present. Little, supra, 135 N.J. at 283.
Justifying his position that the JOD cannot stand, defendant suggests our opinion in Weingarten v. Weingarten, 234 N.J. Super. 318 (App. Div. 1989) holds that a flawed evaluation of assets serves as exceptional circumstances warranting relief from a final judgment of divorce. We reject defendant's interpretation of Weingarten as it is not only misleading, but also incorrect.
Weingarten, supra, discussed the scope of the attorney-client privilege and what circumstances constitute a waiver of the privilege. 234 N.J. Super. at 324-25. The defendant-wife moved to set aside the JOD stating she relied upon a listing of assets and their value given to her by the plaintiff-husband during settlement negotiations. Id. at 321-22. The list significantly understated the values of the assets listed and completely omitted information regarding others. Ibid. Because the wife claimed "the husband's misrepresentations prompted her to ignore or not follow the recommendations of her attorney[,] which might have enabled her to learn his full net worth before considering the settlement[,]" we concluded the privilege had been waived. Id. at 327. We did not analyze the merits of the wife's assertions in support of her request to vacate.
No parallels can be drawn between Weingarten and this matter. Besides the obvious issue that here there are no asserted privileged communications, there was no fraud or misrepresentation. As Judge Melchionne noted, defendant was represented by independent counsel and given ample opportunity to review the joint expert evaluation with his lawyer and a separately retained business evaluation expert.*fn5 Moreover, defendant was in the best position to evaluate the accuracy of the joint expert's evaluation because he had full knowledge of all business operations, having solely owned and operated the flower shop for over thirty years and supplied the financial information to the evaluator. See Weingarten, supra, 234 N.J. Super. at 327-28.
We also reject as meritless defendant's argument regarding the date of the evaluation. R. 2:11-3(e)(1)(E). Defendant's generalization of typical cash flow strains resulting from cyclical economic waxing and waning does not meet the exceptional circumstances test set forth in Goldman v. Goldman, 248 N.J. Super. 10, 14-17 (App. Div. 1994).
Defendant's claim of duress fails for a number of reasons. First and foremost, he made no such assertion during the weeks following the final hearing before the PSA was actually signed. In fact, he waited for more than fifteen months following entry of divorce to voice his claims. Second, contrary to his claims, the transcript of the settlement agreement demonstrates defendant was generally unhappy, but fully understood and agreed to the terms of the PSA. He expressed an understanding of his right to go to trial, but stated that the parties "decided to go [in] this direction," which was a "fair resolution . . . [and] a compromise." Further, when asked if he had any complaints he desired to voice, defendant replied negatively.
Based upon our conclusion, there was no error in denying defendant's request for a plenary hearing. Judge Melchionne concluded defendant's submissions did not "even make a prima facie showing" to evince a genuine issue of material fact. Eaton v. Grau, 368 N.J. Super. 215, 222 (App. Div. 2004).
Creatively, defendant also argues that paragraph 4.1 of the PSA, requiring the one million dollar lump sum payment to plaintiff was "non-reviewable and non-modifiable," was similar to an "anti-Lepis clause,"*fn6 which could be set aside if upholding the agreement terms would be unjust as a result of a future unforeseen event. See Morris v. Morris, 263 N.J. Super. 237, 246 (App. Div. 1993) (stating modification of an anti-Lepis clause may be permissible upon a showing of unforeseeable and extreme circumstances that render the continued enforcement of the agreement unreasonable or unjust). Defendant contends the unanticipated economic downturn (authoritatively citing Warren Buffet's quip that the "economy had fallen off a cliff") "resulted in a windfall to plaintiff and financial ruin for [him]." We are unpersuaded.
The clause under review was not limited as an award of alimony. The one million dollar payment satisfied plaintiff's interest in the flower shop and the large amount, along with the remaining equitable distribution award and plaintiff's other sources of income, obviated the need for alimony. Although the depths of the economy's constraints experienced in this country beginning in late 2008 were not foreseeable when the parties struck their agreement the year before, the possibility of financial constraints were known. Over the thirty years defendant operated the flower shop, the business survived economic climates such as inflation, stagflation and lower consumer spending.
Following our review, we discern no abuse of discretion. Schwartzman v. Schwartzman, 248 N.J. Super. 73, 77 (App. Div. 1991) (citations omitted), certif. denied, 126 N.J. 341 (1991). We conclude there is no basis to interfere with Judge Melchionne's finding that defendant failed to demonstrate truly exceptional circumstances warranting relief from the terms of the JOD.
Defendant also argues he was entitled to an accounting of personal property he alleged was improperly removed from the marital home by plaintiff. The claim was recorded in defendant's December 28, 2007 police report. As plaintiff points out, the issue arose prior to the execution of the PSA and the amended JOD. We give deference to the trial court finding there was no factual proof to support defendant's claims. Also, as a matter of law, the claims, known prior to the execution of the PSA and amended JOD, were not preserved and therefore are merged into that judgment.
The final argument raised by defendant challenges the award of counsel fees and costs, claiming the award was error because the court failed to make findings pursuant to Rule 5:3-5(c). In a related argument, plaintiff in her cross-appeal argues the court's fee award, had it tracked the provisions of Rule 5:3-5, would have been higher. We disagree with each of these contentions.
The award of counsel fees and costs in a matrimonial action rests solely in the discretion of the court. Williams v. Williams, 59 N.J. 229, 233 (1971). Rule 1:10-3 provides that "[t]he court[,] in its discretion may make an allowance for counsel fees to be paid by any party to the action to a party accorded relief under this rule." The ability to award attorney's fees to a party who successfully prosecutes a motion for enforcement of a court order or judgment stands independent of a fee award under Rule 5:3-5.
Judge Melchionne determined the amount of the fee award, limited by the enforcement efforts of plaintiff to assure performance of the court's orders, noting "[defendant] didn't do anything he was supposed to do." The judge explained the fee award would not cover things "like the preparation of the QDRO" but only "what efforts were necessary . . . to have compliance[.]" We conclude the award was a proper exercise of the court's reasoned discretion supported by the facts in the record. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386 (2009); Strahan v. Strahan, 402 N.J. Super. 298, 317 (App. Div. 2008). It will not be disturbed.