October 26, 2012
LANETTE ROZIER, PLAINTIFF-APPELLANT,
TERENCE L. BYRD, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-1017-09A.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 11, 2012
Before Judges Nugent and Haas.
In this post-judgment matrimonial matter, plaintiff Lanette Rozier appeals from the trial court's order denying her motion to enforce a provision in the parties' Matrimonial Settlement Agreement (MSA) that required defendant Terence Byrd to pay her $25,000 as an advance against her share of the net proceeds of the future sale of their former marital home. After reviewing the record in light of the contentions advanced on appeal, we reverse and remand for further proceedings.
The long-term marriage between plaintiff and defendant was terminated by a judgment of divorce entered on November 19, 2009. They have four children, with one being unemancipated at the time of the divorce. Their final judgment of divorce incorporates the parties' thirty-six page MSA.
The MSA is a comprehensive agreement and it clearly sets forth the parties' mutual promises and obligations. Among other things, the MSA covered child custody and support, spousal support, health and life insurance, and equitable distribution.
Defendant's child and spousal support obligations were based upon his imputed income of $235,000 per year and plaintiff's annual imputed income of $40,000. Defendant was required to pay plaintiff $4,273 per month as "permanent base alimony"*fn1 and $1,560 per month in child support. Defendant's obligation to pay child and spousal support would not become effective until plaintiff vacated the former marital home.
The MSA has several provisions that relate to the home. According to paragraph 65, the parties owned the home as tenants by the entirety at the time of the divorce and had listed it for sale for $899,000. However, the parties agreed "to decrease this amount upon advice of the real estate broker, or on the basis of an appraisal." Once the property was sold, paragraph 65 provides that the net proceeds shall be distributed between the parties on a 50/50 basis, with various credits and adjustments set forth [in the MSA] to be paid from each party's share of the net proceeds. The net proceeds shall be defined as the gross sale price less the mortgage balance, real estate commissions, realty transfer fees, and the usual costs of closing, including legal fees.
Pursuant to paragraph 66, the parties' "educational debt" of approximately $125,000 was to "be satisfied in full using net proceeds from the sale of the marital home." This loan had to be "satisfied prior to distribution of the net proceeds from the sale to either party."
Plaintiff vacated the home on January 6, 2010, thus leaving it in defendant's sole possession. Paragraph 67 of the MSA states that defendant "shall be permitted to refinance the current mortgage with Provident Bank and obtain a mortgage solely in his name, thereby releasing [plaintiff] from her legal obligations and holding her harmless on the existing mortgage."
He was also "permitted to borrow up to $85,000.00 in equity through the refinance. From those equity funds," defendant was required to "fully satisfy the Princeton Parent Loan in the approximate amount of $60,000.00." Paragraph 67 goes on to provide that defendant shall utilize the remainder of these funds to provide [plaintiff,] at the time of the closing on the refinance of the marital home, with a $25,000.00 advance payment of her share of the net proceeds from the sale of the marital home, which shall be deducted from her equitable share of the net proceeds from the sale.
Defendant refinanced the mortgage in his own name and borrowed $85,000 in additional funds. He paid off the parent loan and he paid plaintiff the $25,000 due her.*fn2
The following provision in paragraph 67 is the crux of the issue presented on appeal. This provision provides:
In the event the marital home is not sold within one year of the date of [plaintiff] vacating the marital home, [defendant] shall provide [plaintiff] with a second $25,000.00 advance payment of her share of the net proceeds from the sale of the marital home, which shall be deducted from her equitable share of the net proceeds from the sale.
The one-year anniversary of plaintiff leaving the home was January 6, 2011. However, defendant did not pay plaintiff the "second $25,000 advance payment of her share of the net proceeds from the sale of the marital home." By that time, he had also taken the home off the market.
When defendant continued to refuse to pay her, plaintiff retained counsel and filed a motion to enforce paragraph 67 of the MSA.*fn3 Defendant did not respond and, in a December 30, 2011 order, the trial judge granted plaintiff's motion. Because he had not paid plaintiff the $25,000 due under paragraph 67 on January 6, 2011, the judge found that defendant "is in violation of the Agreement and shall pay to [p]laintiff the sum of $25,000 within sixty (60) days of the date" of the order.
On or about January 17, 2012, defendant filed a motion for reconsideration. In an accompanying certification, he explained that he had received plaintiff's motion shortly after it was filed on October 4, 2011. He alleged he believed he had resolved the matter with her and, therefore, he did not respond to the motion. After the October 30, 2011 return date of the motion had passed, however, defendant realized the case had not been resolved and he retained an attorney. His attorney attempted to contact plaintiff's counsel, but received no response. Defendant also stated that his attorney contacted the judge the parties believed had been assigned to review the motion and was told a decision on the motion was pending. Defendant and his attorney then decided to wait for the order, which was finally issued on December 30, 2011.
On the merits of his motion, defendant acknowledged that, after he refinanced the mortgage on the home, he paid plaintiff the first $25,000 advance on her share of the net proceeds from the future sale of the home. He also acknowledged refusing to pay her the second $25,000 payment on January 6, 2011.
Defendant explained he had obtained an appraisal of the home indicating that, as of January 18, 2010, the appraised value of the home was $755,000. After subtracting out the current mortgage balance of $575,000, outstanding student loans of $136,523, estimated real estate commission and closing fees of $37,750, and the first $25,000 advance payment to plaintiff, defendant asserted that there was no longer any equity in the home. Since there was no current equity in the home, defendant argued he had no obligation to pay plaintiff any further advance on her share of the net proceeds from the future sale of the home. Plaintiff opposed the motion, asserting that paragraph 67 of the MSA was clear and required defendant to pay her $25,000 on January 6, 2011.*fn4
Following oral argument, the trial judge issued an order on February 21, 2012 granting defendant's motion. The judge found that the earlier order should be reconsidered, based upon defendant having been unsure which judge was handling the matter. As to the merits, the judge found the second $25,000 was not "guaranteed" and "was not a solid payout amount." The judge ruled that defendant's obligation to make this payment was conditioned upon there being equity in the home at the time payment was due. Accepting defendant's calculations, the judge found there presently was not enough equity in the home to cover another $25,000 advance of net proceeds to plaintiff and, therefore, the payment did not yet have to be made.
On appeal, plaintiff first argues that the trial judge erred in granting defendant's motion for reconsideration. We disagree.
A motion for reconsideration is addressed to the "'sound discretion of the court to be exercised in the interests of justice.'" Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996)(quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990).
Here, defendant did not respond to plaintiff's enforcement motion in a timely manner. However, he alleged he believed the matter had been resolved and there was no need for a response. When he learned otherwise, he retained counsel, who attempted, without success, to contact plaintiff's attorney to discuss the matter. The judge found there was also some confusion as to whether another judge had been assigned to hear the motion. Significantly, the judge also ordered defendant to pay plaintiff $3,000 in counsel fees and this order remained in effect even after reconsideration was granted.
Under these circumstances, we cannot find that the judge abused her discretion in granting defendant's motion for reconsideration so that his contentions could be reviewed.
Plaintiff next argues that the judge erred in interpreting the terms of the MSA to include a condition on the second $25,000 advance payment that was not part of the MSA. We agree.
Matrimonial agreements are contractual in nature. Pacifico v. Pacifico, 190 N.J. 258, 265 (2007). Our standard of review recognizes that interpretation of a contract "is a matter of law for the court subject to de novo review." Fastenberg v. Prudential Ins. Co., 309 N.J. Super. 415, 420 (App. Div. 1998).
Although we apply principles of equity to ensure that a matrimonial settlement agreement is fair and just, see, e.g., Petersen v. Petersen, 85 N.J. 638, 642 (1981), we apply contract principles to ascertain an agreement's meaning. Pacifico, supra, 190 N.J. at 266 (applying to property settlement agreement the "basic rule of contractual interpretation that a court must discern and implement the common intention of the parties"). "'[F]undamental canons of contract construction require that we examine the plain language of the contract and the parties' intent, as evidenced by the contract's purpose and surrounding circumstances.'" Highland Lakes County Club & Cmty. Ass'n v. Franzino, 186 N.J. 99, 115 (2006) (quoting State Troopers Fraternal Ass'n v. New Jersey, 149 N.J. 38, 47 (1997)).
"Generally, once the parties have reached an agreement, no court may create a 'new or better' contract for them." Aarvig v. Aarvig, 248 N.J. Super. 181, 185 (Ch. Div. 1991) (quoting Commc'n Workers of Am., Local 1087 v. Monmouth Cnty. Bd., 96 N.J. 442, 452 (1984)). A court may not adopt "an interpretation contrary to the . . . plain meaning" of the contract's wording because "[a] party that uses unambiguous terms in a contract cannot be relieved from the language simply because [he or she] had a secret, unexpressed intent" to a different effect. Schor v. FMS Fin. Corp., 357 N.J. Super. 185, 191 (App. Div. 2002). The language of paragraph 67 of the MSA could not be more plain. It states that "[i]n the event the marital home is not sold within one year of the date of [plaintiff] vacating the marital home, [defendant] shall provide [plaintiff] with a second $25,000 advance payment of her share of the net proceeds from the sale of the marital home." This advance payment would then "be deducted from [plaintiff's] equitable share of the net proceeds from the sale." Thus, contrary to the trial judge's interpretation, there was only one pre-condition to plaintiff receiving the second $25,000 advance payment - -defendant's failure to sell the home within the one-year period. Once he failed to do so, he was required to make the $25,000 payment to plaintiff.
There was no provision in the MSA that excused defendant from making the required payment if, at the time it was due, there was no current equity in the home. Significantly, under the MSA, the critical term is "net proceeds," which was the amount the parties would equally divide at the time the home was sold. Paragraph 65 states that the term "net proceeds" means "the gross sale price less the mortgage balance, real estate commissions, realty transfer fees, and the usual costs of closing, including legal fees." Thus, the available net proceeds would not be determined until the sale of the home. The two advance payments to be made to plaintiff were against her share of the net proceeds from the future sale of the home, not from the home's current equity. That term is not even included in the MSA.
Indeed, defendant made the first advance payment to plaintiff even though, under his current interpretation of the MSA, there was no equity in the home at that time. According to the certification he submitted with his motion for reconsideration, defendant made the first $25,000 payment to plaintiff in March 2011. Thus, defendant had the January 18, 2010 appraisal, which he argues demonstrates that there is no equity in the home, in his possession when the payment was made. Yet, he made the payment in accordance with the parties' agreement. Defendant's prior course of conduct in making the advance payment, even though there was no apparent current equity in the home, further demonstrates that current equity was irrelevant in terms of defendant's obligation to make the required advance payments. See State Troopers Fraternal Ass'n, supra, 149 N.J. at 50 (noting that the actual conduct of the parties, as exhibited in their performance of a contract, "may color its interpretation.").
Defendant is obviously unhappy that, because he has not sold the home and the housing market is considered weak, he may not ultimately obtain sufficient net proceeds to cover the advance payments he is required to now make to plaintiff. However, that is the bargain he made with plaintiff and he is required to abide by it.
"[W]hen the parties and their attorneys have bargained at arm's length and there is no showing of unfairness, the trial court should not supply terms which the parties obviously considered and yet did not adopt." Berkowitz v. Berkowitz, 55 N.J. 564, 569 (1970). The parties could have included a provision in the MSA that provided that, one year following plaintiff's departure from the home, the parties would obtain an appraisal and attempt to calculate whether there was current equity in the home. If there was not, the MSA could have provided that defendant was not obligated to make the second advance net proceeds payment to plaintiff. However, these terms were not included and cannot now be included after the fact.
In the MSA, both parties gave up some rights in exchange for others. For example, plaintiff gave up the right to an immediate sale of the marital home and a prompt distribution of the net proceeds. Defendant gained the ability to continue to live in the home, conditioned on him paying a total of $50,000 to plaintiff as an advance against her share of the net proceeds of the future sale. Unquestionably, other terms were bargained for and agreed upon based upon the equitable distribution of the home and all of the other interrelated terms of the MSA. There is simply no basis for re-writing the parties' integrated settlement agreement.
Because defendant has not yet sold the home, and a year has passed since plaintiff vacated it, defendant is required to pay her the second $25,000 advance on her share of the future net proceeds of the home. Accordingly, we reverse and remand to the trial court with instructions to enter an order requiring defendant to promptly pay plaintiff the $25,000 due her.
Reversed and remanded for further proceedings in conformity with this opinion. We do not retain jurisdiction.