On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Cape May County, Docket No. FM-05-90-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 19, 2011
Before Judges Parrillo and Alvarez.
Defendant Lawrence P. Kosilla, Jr., appeals from a post-divorce judgment order requiring him, as part of equitable
distribution, to make an equalizing payment to plaintiff Lynne Kosilla based on real estate values at time of execution of the January 2007 property settlement agreement (PSA), rather than the reduced value at time of distribution almost three years later. For the following reasons, we reverse.
By way of background, the parties were married on September 14, 1974 and divorced by final judgment on March 3, 2008. Incorporated therein was a PSA executed in late January, 2007.
At that time, the parties owned four properties subject to equitable distribution: the marital home in North Wildwood and three condominium units in Fort Myers, Florida - two on Calusa Palms Drive and one in the Village of Ascot. The PSA provided that the marital residence was to be immediately listed for sale, and until sold, the parties would share equally certain out-of-pocket expenses and carrying costs of the property. From the sale proceeds, the parties were to satisfy jointly incurred liens and closings costs, and to divide the balance of the moneys equally.
Defendant was to retain the two properties on Calusa Palms Drive and plaintiff the condominium at the Villages of Ascot. Because of this lopsided distribution scheme, the PSA provided that defendant would make an equalizing payment to plaintiff upon the sale of the marital residence, utilizing his share of the net proceeds at time of settlement on that property. Thus, paragraph 2 of the PSA provides:
Husband will pay to Wife, from his share of the net sales proceeds from the North Wildwood property, a sum equal to 50% of the difference in value between the Ascot Village property . . . and the combined value of the . . . properties being retained by husband. The payment by Husband to Wife ("Equalizing Payment") will be tendered at the time of settlement on the North Wildwood property.
Commencing February 1, 2007 - one week after the PSA was executed - each party paid the expenses of, and received the income from, the realty individually retained although title to these three jointly-owned properties did not pass by quitclaim deed until after the sale of the marital residence in December, 2009. In the interim, defendant leased his two Florida condominiums, chose his own tenants, collected and retained all rent on his units, and reported all income and deducted all expenses for them on his individual tax returns for 2007, 2008 and 2009. Plaintiff acted similarly with respect to the Village of Ascot unit.
In accordance with the PSA, the parties obtained appraisals for each of the three Florida properties using a mutually agreeable appraiser and sharing the cost. The appraisals were completed on April 25, 2007. Plaintiff's condominium was valued at $180,000 and defendant's two units were appraised at $239,000 and $243,000. The equalizing payment, based on the April 2007 appraisal, was $151,000. Although neither party expressed dissatisfaction with the appraisals at the time, the PSA expressly permitted either of them or both to secure new appraisals until such time as the equalizing payment was made. Accordingly, paragraph 1(d) of the PSA provides in pertinent part: if either party is dissatisfied with any or all of the appraisal figures for the Ascot Village, Unit 104 Calusa Palms or 201 Calusa Palms properties, he or she may secure an alternate appraisal, the cost of which will be solely covered by the party contesting the initial appraisal.
According to defendant, sometime in 2008 and 2009 he suggested to plaintiff that the value of the units had decreased and new appraisals should be secured once the marital residence was under contract for sale, which occurred in the Fall, 2009. To that end, the appraisals commissioned by defendant were completed on October 14, 2009, and revealed a 52% decrease in the value of his two units, newly appraised at $115,000 and $117,000 respectively. Although plaintiff's unit was not included in the appraisal, the parties stipulated that had an appraisal been completed her unit would have realized a similar decrease in value of 52%, resulting in a 2009 value of $82,972. The parties further agreed that the diminution in property values was solely the result of market conditions and was not caused by the actions of either party.
The marital residence sold on December 30, 2009 for $625,000, netting the parties $261,264. Based on the 2009 appraisal, defendant's equalizing payment to plaintiff would have been $74,514. However, utilizing the 2007 appraisal values, as plaintiff insisted upon, would yield an equalizing payment of $151,000. Unable to agree, the parties equally divided the proceeds from the sale of the marital residence, with each to receive $130,632. Plaintiff received that sum at closing and defendant paid her, from his one-half share of the proceeds, ...