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Rosemary Ferraro v. Guy Ferraro

June 27, 2011


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1115-98A.

Per curiam.


Argued January 19, 2011

Before Judges Carchman, Graves and Messano.

Defendant Guy Ferraro appeals from certain portions of the Family Part's order of April 16, 2010 that required defendant to provide plaintiff, Rosemary Ferraro, with $250,000 in certified funds made payable to the parties' two children, and further awarded plaintiff $6722 in counsel fees. We glean the following facts from the record.

Plaintiff and defendant were married from 1988 to 1998 and had two children: Peter, born in 1988, and Gina, born in 1990. On June 6, 1998, the parties executed a property settlement agreement (PSA) providing for joint custody of the children and designating plaintiff as "custodial parent." The PSA obligated defendant to "pay secondary school (private) education costs for the children." Additionally, in section 2.9, the PSA contained the following language:

[Defendant] has established and paid for two zero coupon accounts [(the Accounts)] -Account #71011327 for Gina . . . and account #71D11326 for Peter . . . with Merrill Lynch . . . to meet the post[-]secondary school educational needs of the children -both accounts are in an amount of $125,000.

The marriage was dissolved by final judgment of divorce on August 21, 1998.

Although not necessitated by the language of the PSA, it is undisputed that defendant opened the Accounts, named himself custodian and made them subject to the Uniform Gift to Minors Act (the UGMA), L. 1963, c. 177, since repealed and replaced by the Uniform Transfers to Minors Act (UTMA or the Act), N.J.S.A. 46:38A-1 to -57. See N.J.S.A. 46:38A-57 (repealing the UGMA); and N.J.S.A. 46:38A-53(a) (applying the UTMA to any transfer made after July 1, 1987, that "purports to have been made under the [UGMA]"). When defendant later transferred the Accounts to Morgan Stanley Dean Witter, he again named himself as custodian and made the Accounts subject to the "UTMA/NJ."

It suffices to say that the parties engaged in frequent post-judgment motion practice, much of which is irrelevant to this appeal. In October 2007, defendant moved for a downward modification of child support. In an accompanying certification, defendant claimed that he was in severe financial straits as a result of tax penalties levied against him and the decline in value of his real property.*fn1

Plaintiff responded with a cross-motion seeking, among other things, the denial of defendant's request for modification and an order designating her as "custodian of any accounts in either of the children's names . . . and that Defendant turn over to Plaintiff said accounts immediately." In an attached certification, plaintiff asserted that "[t]hese accounts were started when the children were born and it was always [the parties'] intent that the children would receive these accounts upon turning age twenty one." She also expressed a fear that defendant would "liquidate the accounts and use the money for himself."

In a reply certification dated November 15, 2007, defendant provided his interpretation of the PSA:

[P]aragraph 2.9 . . . clearly states that I established and paid for each of the two zero coupon accounts for our children to meet post-secondary school expenses. There is absolutely no language in our PSA that indicates that those accounts were established for any other purpose . . . . Nor is there any other language that indicates that the . . . remaining balances in the accounts . . . should be turned over to the children if, ultimately, they did not attend post-secondary school or did not utilize all the funds. These accounts belong to me to manage as I see fit and any remaining balance belongs to me. I will use them for the children's college expenses as I agreed. I did not agree to turn over any unused portion. That was not our agreement.

On November 30, 2007, the judge denied defendant's motion for modification and plaintiff's cross-motion. At some point in December, plaintiff closed the Accounts and took the remaining funds for his own use.

Further motion practice ensued throughout 2008 and 2009. While resolution of some issues remained outstanding, plaintiff's counsel informed the judge in a letter dated April 17, 2009, that the parties had "reached a global resolution." As a result, on April 21, 2009, the judge entered a "Consent Order Resolving Outstanding Claims" (the Consent Order).

The Consent Order noted that "the parties hav[e] resolved the outstanding claims either may have (past, present or future) against the other arising out of the Judgment of Divorce, existing court orders, pending motions, or Appellate Division order." Among other things, the Consent Order required defendant to provide plaintiff with $500,000. Furthermore, the parties withdrew all pending motions, or motions previously argued but undecided, and defendant was:

[A]bsolved from any further obligation, past, present, or future, to pay child support to the plaintiff . . . . He is further absolved from any obligation, past, present or future, to pay any existing or future child-related expenses for any unemancipated child (including, but not limited to, health insurance, unreimbursed medical bills and college costs). These are now the plaintiff's obligations.

Nearly one year later, in February 2010, plaintiff filed a motion seeking an order compelling defendant to pay $106,730 in certified funds to each child, these amounts "representing the money [d]efendant removed" from the Accounts, together with an additional $18,270 in interest that would have been earned through December 2010. Among other things, the motion requested that: (1) if defendant failed to produce the funds within seven days of the order, a parcel of real property he owned would "be immediately listed for sale with a multiple listing realtor to be appointed by the Court"; (2) plaintiff be ordered to open a custodial account for Gina within seven days of receiving the $125,000 from defendant; (3) defendant provide plaintiff with information regarding Gina's Morgan Stanley account and the liquidation thereof; (4) the court permit Peter "to use the $125,000[] upon his receipt of these funds from Defendant, for his college expenses," with any balance belonging to Peter; (5) plaintiff be permitted to use Gina's custodial account to pay for her college expenses; (6) the court order the balance of Gina's account to be turned over to her at age twenty-one; and (7) the court grant plaintiff counsel fees and costs.

In her certification, plaintiff indicated that Peter, now twenty-one years old, was "in his second year at Brookdale Community College," and Gina, now nineteen, was "a freshman" at the same school. Plaintiff further certified that the Accounts were "opened" when the children "were very small" and were intended to pay for each child's college expenses, with the balance being paid to each child at age twenty-one. Plaintiff alleged that defendant unilaterally closed the Accounts in December 2007 and "appropriated the monies for himself."

Plaintiff also furnished a certification from Joseph M. Donahue, the parties' former accountant, in further support of the motion. Donahue stated that he had filed tax returns on behalf of plaintiff, defendant, Peter and Gina, and described plaintiff and defendant's intention regarding the accounts:

During the years that I filed a joint return for [plaintiff] and [defendant], both [plaintiff] and [defendant] each made me aware on more than one occasion, that they had established custodial accounts for each of the children pursuant to The Uniform Gift to Minors Act . . . . Both [plaintiff] and [defendant] advised me that the "accounts" they established for each of their two children were the property of the children and that the money in the accounts would be turned over to the children upon their reaching the age of twenty one (21).

Defendant filed a cross-motion seeking the denial of plaintiff's motion and the award of attorneys' fees and costs. In an attached certification, defendant asserted that the Consent Order disposed of any issues regarding the Accounts:

[The PSA] does not say that those accounts belong to the children or that the children or the plaintiff are entitled to any funds that are not used for the children's post-secondary school educational needs.

[] These are accounts I set up with my own separate funds to ensure that my children's educations would be provided for. They were not intended for any other purpose and were certainly not ...

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