August 15, 2011
DINA KAUL, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
RICHARD KAUL, DEFENDANT-RESPONDENT/CROSS-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Somerset County, Docket No. FM-18-254-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued June 8, 2011
Before Judges Wefing, Payne, and Koblitz.
Plaintiff, Dina Kaul, appeals from an order of Family Part Judge Anthony F. Picheca enforcing a property settlement agreement (PSA) between her and her former husband, defendant Richard Kaul. On appeal, plaintiff raises the following arguments:
THE PURPORTED PROPERTY SETTLEMENT AGREEMENT WAS UNCONSCIONABLE AND THE COURT ERRED IN FAILING TO RECOGNIZE THE DISPARITY WITHIN THE PURPORTED AGREEMENT.
Non Disclosure of Real Estate and Business Support Allocation Child Support Alimony POINT II
THE COURT'S DEFICIENCY IN FAILING TO RECOGNIZE PROCEDURAL UNCONSCIONABILITY IS REVERSIBLE ERROR.
THE COURT'S CREDIBILITY FINDINGS MANDATE A REMAND TO A NEW JUDGE.
Defendant cross-appeals from an award of attorney's fees. We affirm both orders on appeal.
Plaintiff is a graduate of Muhlenberg College; defendant is an anesthesiologist, originally from the United Kingdom. Plaintiff and defendant met in late 2001 and began cohabiting in New York in December 2001. Their first child, a son, was born in November 2002. After multiple breakdowns in the parties' relationship, they reconciled and were married in November 2003. Thereafter, they purchased a residence in Bernardsville for approximately $2.3 million, obtaining a mortgage of approximately $1.5 million. The parties' second child, a daughter, was born in December 2004.
In May 2005, the parties purchased a townhouse in New York City for approximately $3.7 million, but at about that time, they separated. Despite the separation, plaintiff did not seek a divorce until 2007. Testimony in this matter suggests that the delay was occasioned by defendant's need to obtain permanent resident status in the United States.
Commencing in October 2004, the parties began planning for their separation. At that time, plaintiff typed a seven-page outline of conditions pertaining to a settlement agreement with defendant. That rough document was followed by five draft PSAs, prepared by lawyers for defendant, but substantially dictated by the parties. Plaintiff was not represented by counsel at the time.
On August 5, 2005, the parties executed Draft #5 of their PSA, and their signatures were notarized. In addition to signing the agreement, the parties placed their initials in close proximity to the document's title, next to a change in the agreement's date, and on two occasions in connection with an increase in unallocated alimony and child support from $8,000 per month to $10,000 per month.
The agreement contains certain provisions where there are blanks. However, it is substantially complete. In it, the parties waived formal discovery. They agreed to joint legal custody of the children with plaintiff as the parent of primary residence. A parenting schedule was established. Additionally, the parties agreed that defendant would pay plaintiff unallocated tax-free support of $10,000 per month, secured by term life insurance. The agreement provided that this amount would enable plaintiff to maintain herself and the children at a standard of living comparable to that enjoyed during the course of the marriage. The support, which was deemed to fulfill defendant's alimony and child support obligations, was to be paid, regardless of defendant's economic status, until the youngest child reached the age of eighteen. Defendant assumed the obligation to maintain medical insurance for the children and the obligation to pay for their private secondary school education. Additionally, defendant was responsible for college tuition, after the use of loans, grants, aid, and scholarships available to them.
In a provision titled "equitable distribution," the parties agreed that plaintiff would convey the Bernardsville house to defendant, but that she would be permitted to remain in that house, without cost to her until the youngest child reached eighteen years of age. Defendant was to maintain full responsibility for all of the carrying costs associated with the property including mortgage payments, repairs, capital repairs, upkeep, homeowner's insurance, maintenance, landscaping, and real estate taxes. Additionally, plaintiff was to receive a $100,000 cash payment within sixty days of the execution of the agreement. The parties each were to retain their own bank accounts, including defendant's business checking account, their own cars, and their own investment and pension accounts. The agreement stated that defendant was to retain his unspecified interest in his employer, Interventional Pain Associates and Pompton Anesthesia Associates free and clear of any and all claims or interest by plaintiff. She waived any interest in property owned in Costa Rica by defendant. The Manhattan town house was not mentioned in the agreement.
A further provision of the agreement stated that defendant would be responsible for plaintiff's legal fees "extended in connection with the matter known as Kaul v. Kaul up to a maximum amount of $5,000 to be paid within six (6) months of the execution of this agreement."
In January 2008, defendant moved in the Family Part to enforce the PSA. Plaintiff challenged its validity, alleging that the agreement was unconscionable, unfair and inequitable, and invalid because obtained through fraud. Following a two-day testimonial hearing, at which plaintiff, defendant, and defendant's attorney testified, Judge Picheca rejected plaintiff's arguments in a comprehensive opinion.
The judge commenced his opinion by noting the provisions of the PSA that benefited plaintiff, while acknowledging that she was not allocated any of the equity either in the New York townhouse purchased in 2005 or defendant's professional property. He noted as well that the PSA had been drafted without the benefit of formal discovery, but he did not regard that fact to be dispositive of plaintiff's challenge.
The judge then addressed and rejected plaintiff's claim that she did not know what she was signing when she signed and initialed the PSA. The judge acknowledged that plaintiff did not have counsel during the negotiations, but he nonetheless found that plaintiff understood by signing the document that she agreed to waive her discovery rights and to bind herself to the agreement's terms. In this regard, the judge found that plaintiff had been married previously and had drafted a PSA in connection with the break-up of that marriage, and thus she understood the significance of such agreements. The judge found additionally that the parties had conferred about the agreement's terms before the PSA was executed in August 2005 - a fact demonstrated by the typed prototype agreement prepared by the parties for the use of defendant's attorney and by the fact that the parties attended a mediation session with respect to the division of their marital assets. Additionally, the judge found that plaintiff's awareness of the agreement's terms was evidenced by her receipt of a $93,000 check from defendant marked "Separation Agreement" and by her evident negotiation of defendant's support payments to effect an increase of $2,000 per month. Finally, the judge noted that no one prevented plaintiff from hiring an attorney, and that the fact that she did not do so did not diminish her responsibility to know the contents of the document she signed.
Turning to the validity of the agreement, the judge noted that plaintiff claimed that it was unconscionable, unfair and inequitable, and invalid because obtained through fraud. He rejected each of these arguments.
Addressing unconscionability, the judge found that plaintiff's bargaining power was not grossly disproportionate to defendant's and that the contractual provisions to which she agreed were not grossly unfair, particularly in light of defendant's somewhat uncertain economic status at the time that the agreement was executed. The judge concluded that the exclusion of the New York townhouse from the agreement did not render it grossly disproportionate, particularly since plaintiff was well aware of its purchase before signing the agreement and thus had the ability to negotiate for its inclusion in the parties' equitable distribution.
The judge found additionally that, in light of plaintiff's opportunity to reflect on the agreement's terms, it should be considered fair and equitable, despite the fact that defendant received more assets than did plaintiff. In this regard, the judge found that plaintiff did not have a "weak or subservient" personality, that she was fully capable of standing up for her own points of view. Thus, he concluded that plaintiff had not been pressured to sign the agreement. Because the parties had separated at the time of the PSA, the judge found that the value of their marital assets should be measured at that point, and at that time, the division of assets was not so unequal as to cause the agreement to be unfair or inequitable. In that connection, the judge rejected the plaintiff's assertion of the enhanced value of the New York townhouse, finding that it lacked support.
The judge also rejected plaintiff's claim of fraud, holding that she had not produced clear and convincing evidence that would support the elements of that cause of action.
In reaching his decision, the judge was required to assess the credibility of the parties. While acknowledging that defendant had a somewhat troubled personal history that in the past had impacted on his credibility, the judge found defendant's testimony regarding the PSA to have been credible, whereas plaintiff's testimony was not. Multiple testimonial examples were set forth to support the judge's conclusion.
As a consequence, the judge held the PSA to be valid and ordered that an uncontested divorce be calendared as soon as possible. Counsel fees in connection with the challenge to the validity of the PSA were denied.
Following receipt of the judge's order, plaintiff filed an appeal. However, we questioned the finality of that order and declined to consider the matter. On October 7, 2009, a dual judgment of divorce was issued that incorporated the PSA. On that same day, the judge signed a second order requiring defendant to pay $61,153 to plaintiff's attorney in pendente lite attorney's and expert's fees. Plaintiff again appealed, and defendant cross-appealed.
On appeal, plaintiff again claims that the PSA was unconscionable and the product of unequal bargaining power, and that the judge's credibility findings were tainted.
We reject plaintiff's arguments. In doing so, we note that public policy favors the enforcement of settlements. Dep't of Pub. Advocate v. N.J. Bd. of Pub. Utils., 206 N.J. Super. 523, 528 (App. Div. 1985). However, we recognize that settlement agreements in a divorce matter must be fair. Edgerton v. Edgerton, 203 N.J. Super. 160, 172 (App. Div.), certif. denied, 101 N.J. 293 (1985). As a result, they can be voided upon evidence of fraud, unconscionability and overreaching. Harrington v. Harrington, 281 N.J. Super. 39, 46 (App. Div.), certif. denied, 142 N.J. 455 (1995). They can also be voided if found to be inequitable. Conforti v. Guliadis, 128 N.J. 318, 323 (1992).
Whether conditions sufficient to void an agreement exist is a mixed issue of law and fact. As to the factual aspects, we will affirm a trial judge's holding if it is supported by credible evidence in the record. Rothman v. Rothman, 65 N.J. 219, 233 (1974); Borodinsky v. Borodinsky, 162 N.J. Super. 437, 443-44 (App. Div. 1978). In particular, we give great deference to the trial judge's credibility determinations. Cesare v. Cesare, 154 N.J. 394, 412-13 (1998). However, we owe no deference to the judge's legal conclusions. Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995).
On the basis of our careful review of the record in this matter, we are satisfied that Judge Picheca's factual findings and credibility determinations were well supported by the testimony given by the three witnesses at the hearing and the exhibits produced. We are also satisfied that his legal conclusions were soundly based on applicable precedent. As a result, we affirm, substantially on the basis of Judge Picheca's thoughtful and well-supported opinion. We are satisfied that, despite plaintiff's lack of an attorney, she knowingly and voluntarily entered into the PSA with sufficient knowledge of defendant's assets to waive her rights to some, while bargaining effectively for others. We thus do not find the PSA to have been unfair or unconscionable, or the product of fraud or overreaching. The judge's order is therefore affirmed.
We also deny defendant's cross-appeal. We note in that regard that
fees were not awarded with respect to the hearing on the PSA, but
rather with respect to pendente lite motions filed prior to the time
that the PSA was declared to be valid. Further, we note that the
record of the argument held on October
7, 2009 discloses a concession by both attorneys that it would be
inequitable to implement the $5,000 cap on attorney's fees set forth
in the PSA.
While arguments were raised by defendant's counsel that many of the motions filed by plaintiff had been filed in bad faith, the judge found otherwise, noting that many of the motions were necessary to obtain enforcement of prior orders. Our review of the record affirms the validity of that conclusion, although, as the judge acknowledged, a number of motions related to child custody issues as to which plaintiff's good faith was less clear.
After considering the factors required prior to making an attorney fee award, the judge determined, pursuant to Rule 4:42-9(a)(1) and Rule 5:3-5(c), to impose upon defendant the obligation to pay an additional $61,153 - a portion of the fees incurred by plaintiff. In doing so, the judge determined that defendant was in a better position to make that payment than plaintiff, having made over $1 million in 2007, in addition to receiving $360,000 in rental income for the New York townhouse and likely an additional $686,858 in the form of a business loan from Interventional Pain Associates, an entity in which he was the sole shareholder.
A determination to award counsel fees in a matrimonial action lies within the Family Part judge's discretion. Heinl v. Heinl, 287 N.J. Super. 337, 349 (App. Div. 1996); Von Pein v. Von Pein, 268 N.J. Super. 7, 20 (App. Div. 1993); Guglielmo v. Guglielmo, 253 N.J. Super. 531, 544-45 (App. Div. 1992). Rule 5:3-5(c) requires the judge, when awarding such fees, to consider the following factors:
(1) the financial circumstances of the parties;
(2) the ability of the parties to pay for their own fees or to contribute to the fees of the other party;
(3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial;
(4) the extent of the fees incurred by both parties;
(5) any fees previously awarded;
(6) the amount of the fees previously paid to counsel by each party;
(7) the results obtained;
(8) the degree to which fees were incurred to enforce existing orders or compel discovery; and
(9) any other factor bearing on the fairness of an award.
Defendant argues on appeal that his obligation to pay plaintiff's attorney's fees should have been limited to the $5,000 set forth in the PSA. However, we have previously held that, despite agreements to the contrary, an award of fees can be made when the parties have unequal financial positions. Frankel v. Frankel, 274 N.J. Super. 585, 589-90 (App. Div. 1994); Kelly v. Kelly, 262 N.J. Super. 303, 307 (Ch. Div. 1992). We assume that counsels' acknowledgment that the judge was not bound by the PSA in this regard reflected, in part, their proper acknowledgment of this precedent. Further, we perceive nothing punitive in the award, but instead a reasoned analysis of the legal and financial positions of the parties. The fee award is therefore affirmed.
The orders on appeal and on cross-appeal are affirmed.
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