June 25, 2012
RICHARD GANNON, PLAINTIFF-APPELLANT,
LAUREN RUSSELL, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Sussex County, Docket No. FM-19-39-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted May 2, 2012
Before Judges J. N. Harris and Koblitz.
Plaintiff Richard Gannon appeals from the April 29, 2011 order of the motion judge enforcing the Agreement [B]etween Parties (PSA) incorporated into the Judgment of Divorce [JOD]. After reviewing the record in light of the contentions advanced on appeal, we affirm.
At the end of August 2004, the parties drafted their own divorce agreement after twenty-one years of marriage. Plaintiff obtained sole custody of the four children. Defendant gave up all rights in a piece of property*fn1 and the family excavation business, Gannon Enterprises. In exchange, plaintiff agreed to provide defendant with $7500 for one year's rent and $300,000 after selling the marital home. The one-page agreement specified:
Richard Gannon agrees to sell the [marital] home . . . within 5 years of July 19, 2004, and upon the sale, pay Lauren Gannon the amount of $150,000.00 upon the sale of the home and a second payment of $150,000.00 made in payments of $20,000 per year until balance of $150,000.00 is paid in full for a total amount of $300,000.00.
At the October 25, 2004 divorce hearing, plaintiff testified that the "fair market value" of the house was $650,000 with a $443,000 mortgage. Plaintiff asked the judge, "as long as [defendant] gets the $300,000, I don't have to sell the house if I don't want to, right?"
The parties also agreed that the $300,000 figure was set after considering that defendant would ordinarily have to pay child support for the two unemancipated children and plaintiff would have to pay alimony. The parties waived these payments.*fn2
In 2010, defendant sought to modify the PSA. Plaintiff cross-moved for relief. On February 17, 2011, the parties, now represented by counsel, agreed to dismiss all issues with prejudice. Both parties agreed that:
The existing property settlement agreement shall remain in full force and effect and both parties reserve their rights to enforce (but never modify) the existing terms of said property settlement agreement and raise all defenses, if any, relating thereto in the future should the need arise.
The following month, on March 19, 2011, defendant filed a motion seeking unpaid equitable distribution. Plaintiff cross-moved, claiming that defendant was responsible for one-half of the mortgage against the house at the time of the sale of the home, which amount should be credited to him against the $300,000 he owed her. He alleged that the principal balance of the mortgage at that time was $342,074 and the total amount netted from the sale was $108,458. Plaintiff argued that the agreement between the parties did not deal with their debts and therefore the division of the mortgage on the marital home would not be contrary to the agreement.
The judge indicated that he "was recently involved with these parties in a post judgment [action] where it was the [p]laintiff's position that the agreement was fair, negotiated at arm's length and must be enforced." He proceeded to enforce the agreement as urged by defendant, without consideration of the mortgage. He also awarded interest on the overdue balance. Plaintiff argues that the parties' differing interpretations of the PSA mandate a plenary hearing.
"The contractual nature of matrimonial agreements has long been recognized" in New Jersey. Pacifico v Pacifico, 190 N.J. 258, 265 (2007) (citations omitted). As a general rule, a contract's terms should be enforced as the parties intended. Id. at 266.
Plaintiff alleges that the motion judge was biased by his view, obtained through handling the earlier post-judgment application, that the settlement agreement was not fair to defendant, who waived alimony after a long-term marriage and waived her interest in the family business, as well as another property, without representation by an attorney. The judge indicated on the record:
[T]his agreement from the very beginning, in my view, stunk. He had the huge advantage in terms of equitable distribution out of this agreement and she got, for lack of a better word, hammered. And he got everything, she got virtually nothing. The only thing she got was this $300,000.
The judge noted in his written supplemental opinion provided pursuant to Rule 2:5-6(c) that he had information from prior proceedings that the value of the investment property and business was significant at the time of the settlement.
We need not address the issue of the propriety of the judge using information he obtained through a prior proceeding between the parties to decide the current issues, although we see nothing inherently wrong here with such limited use.
Although the written agreement does not address debt, and plaintiff's argument that the mortgage debt on the marital home should be considered seems reasonable at first glance, the intention of the parties becomes clear upon review of the divorce transcript, thus obviating the need for a plenary hearing.
Plaintiff informed the judge that the home had approximately $200,000 in equity at the time of the divorce, and inquired whether he had to sell the home if he gave defendant $300,000. These comments clarify that plaintiff understood the agreement as requiring him to pay defendant $300,000, regardless of the equity in the home at the time of sale.