Posted on November 2, 2009 by Larry Cutler

Agreement for Cutoff Date in Lieu of Filing for Divorce

As is widely known, the filing date of the complaint for divorce which actually leads to a divorce is the “cutoff date” for equitable distribution, that is, assets acquired up to that date are generally subject to equitable distribution, and assets acquired after that date are generally not. This is a general rule and cannot be taken as a total brightline test since there are no notable exceptions. Among these are: (1) assets acquired by way of gift or inheritance or intestate succession (death without a will) not from a spouse; (2) assets acquired with other assets which were either from a third party as in the first example of acquired by one party prior to the marriage. An exception to the cutoff date would be an asset acquired by one party after the cutoff date but with assets which were subject to equitable distribution. Again, these are general rules and there are always exceptions or other fact situations which render a general rule inapplicable. Obviously, it is best to consult qualified counsel since each circumstance is fact-sensitive, and the result usually turns on very specific development of the facts.

One exception to the timing of “cutoff date” rule is advantageous to the parties. Say that (for one reason or another) the parties are cooperative and want to attempt to negotiate an agreement before filing for divorce. Their hope is that they can amicable provide the other, through counsel, with sufficient documentary information upon which to adequately understand their financial circumstances and based on that understanding, negotiate an agreement, in which case, they can then file for divorce and obtain an uncontested termination of their marriage within a few weeks. Using this methodology, they can avoid certain judicial systemic entanglements.

 

 

Problem: if they were to file for divorce, as stated above, the general rule is that post-complaint asset acquisitions are not subject to being divided in the divorce process. If they try to negotiate without filing, if the negotiations should fail to bear fruit and they must thereafter file and implicate the court system in their settlement process, any assets acquired between the time that they start negotiating and the time it fails and one of the files is subject to equitable distribution.

 

One party may wish to avoid this problematic result. One way to accomplish is to stipulate a particular date as the agreed-upon cutoff date in the event that they might have to later file without an agreement. Needless to say, such an agreement should be in writing, and for safety sake, signed by both parties, not just their attorneys.

 

Thus, under this scenario, the parties would be free to continue their efforts but with the effect (relative to equitable distribution) that a complaint had been filed.

 

A cut off date can similarly be used to fix the end date of the marriage for alimony purposes.
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Posted on March 2, 2009 by Robert A. Epstein

APPELLATE DIVISION DENIES EX-WIFE'S CLAIM REGARDING BUY-OUT VALUE OF MARITAL HOME

Recently, in the unreported decision of Pacifico v. Pacifico, the Appellate Division reversed a trial court’s ruling establishing that an ex-wife provided sufficient proof to overcome a presumption established by the New Jersey Supreme Court that “current market value as of the time of the triggering event” should govern the value to which the ex-wife could exercise her option to purchase her ex-husband’s one-half interest in the marital home. 

The parties executed a Property Settlement Agreement in December 1996, which was incorporated into the final judgment of divorce. The PSA provided that the marital residence was to be sold upon the youngest child reaching age 19 and that, at that time, the ex-wife had the first option (and then the ex-husband) to buy-out the former spouse’s interest in the home. If neither party wanted to exercise said option, it was to be sold. Once the youngest child turned 19, the ex-husband filed an application to compel the listing and sale of the property. The ex-wife then filed a cross-motion to buy out the ex-husband’s interest at the value determined by a broker’s market analysis in 1996 – long before the ex-wife application. 

At a plenary hearing in 2004, the trial judge ruled in the ex-wife’s favor and the Appellate Division affirmed. The Supreme Court, however, reversed the determination to apply the 1996 value and remanded so that the trial court could: (1) evaluate the parties’ credibility regarding their intentions at the time the PSA was drafted; and also (2) perform a “close, textual analysis” of the PSA drafts to determine the parties’ “common” intent. Notably, the Supreme Court also held that it was the ex-wife’s burden of proof to establish that her purchase of the ex-husband’s interest in the home should be at the 1996 value and that, should she be unable to do so or her evidence constituted equally sufficient proof merely countering the ex-husband’s position, she would fail. 

The trial court found that the ex-wife fulfilled her burden of proof overcoming the presumption against use of the 1996 value, but the Appellate Division reversed for several reasons including: 

 

(1) the trial court’s failure to make an adverse inference against the ex-wife that her former attorney would have given unfavorable testimony considering the ex-wife’s failure to call the former attorney as a witness;

 

(2) the absence of any proof (documentary or otherwise) that the parties or counsel had discussed use of the 1996 value and, as a result, no evidence of mutual intent as to this issue;

 

(3) the trial court’s failure to consider elimination from both a later version and final draft of the PSA that, at the time of the divorce, the ex-wife would issue to the ex-husband a mortgage in the amount of one-half of the 1996 equity in the home in exchange for him signing a quit-claim deed, as well as the fact that both parties seemingly agreed to eliminate from the PSA that the home would be sold for the “best price attainable;”

 

(4) the inconsistency posed by using the 1996 value for the ex-wife to buy-out her ex-spouse’s interest, but applying fair market value for a third-party sale;

 

(5) the absence of any language in the PSA as to use of the more favorable value, especially if she obtained agreement as to same by taking less alimony, and the court’s failure to consider the parties’ credibility, which would have more heavily considered the ex-wife’s failure to claim that she took less alimony in exchange for use of the 1996 value during four (4) years of prior proceedings (even making a different claim as to same); and

 

(6) reviewing the alimony component in isolation, considering that the ex-wife also negotiated a generous child support component into the PSA and obtained one-half of the ex-husband’s pension.

 

Accordingly, the Appellate Division held that, at best, the parties’ respective proofs were equal, thereby rendering the wife’s application a failure. The later 2003 value of the home for purposes of a buy-out was therefore to be applied.
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Posted on July 16, 2008 by Sandra C. Fava

CAN AN ATTORNEY'S ETHICAL VIOLATION BE A CLIENT'S PROBLEM AS WELL?

Most people have heard or had experience with an attorney who's behaviors were, one could say, questionable.  What most have not considered is what implications an attorney's unethical or questionable behaviors could have on them.

The New Jersey Supreme Court has provided some guidance on this very topic in the recent decision of Brundage v. Estate of Carl V. Carambio.  Carol Brundage hired her attorney to represent her in her claim for palimony against the estate of her deceased paramour.  She probably had very little knowledge of what other matters her attorney was handling in his office.  Little did she know that her attorney, just months before beginning his representation of Carol Brundage, represented another woman, Jeanette Levine, in a different county, but also for a claim of palimony.  Carol Brundage also is likely not to have known that in Ms. Levine's case, the trial court determined that she would not succeed on her claim for palimony because cohabitation was an essentail element for success on a palimony claim, and those parties had not lived together.  Her attorney filed an appeal raising the question of whether cohabitation is an indispensible element of a cause of action for palimony.  (Click here for  Eric Solotoff's blog entry above on the recent Supreme Court decision in that regard).  Carol Brundage never lived with her now deceased paramour.

Her attorney went on to represent Carol Brundage with his appeal on the Levine matter pending. The Estate filed an application to dismiss Ms. Brundage's Complaint claiming that cohabitation was an essential element.  In his representation of Ms. Brundage, her attorney convinced the trial court that cohabitation was not essential and thus the Estate's application was denied.  In his argument, her attorney failed to mention his experience with the trial court in Ms. Levine's case nor did he mention that the issue was pending on appeal.

The Estate then filed a motion for leave to appeal with the Appellate Division.  In opposing that motion, the attorney did not disclose the contrary conclusion reached by the trial court in Ms. Levine's matter or the fact that an appeal was pending.  The Appellate Division denied the Estate's motion and eventually the parties' settled.

Just prior to the payment to Ms. Brundage being due and owing from the Estate, the Appellate Division published its' opinion in the Levine matter. The Estate filed an application to set aside the agreement reached with Ms. Brundage based upon the concealment of a material fact, same being that the attorney was aware of the pending Levine matter and did not disclose it. The trial court declined the relief sought by the Estate on the grounds that the trial court's decision in Levine would not have been binding upon another trial court and was not required to have been disclosed by the attorney. The Estate filed an appeal.

This time around the Appellate Court heard the matter and determined that pursuant to the Rules of Professional Conduct, which is the code of ethics that govern attorneys practicing law in this state, the Estate would be entitled to relief if the existence of the Levine appeal was a material fact. Because the parties must file a statement with the Appellate Court, which asks specific information and disclosure of existing similar appeals, public policy would have favored granting the Estate's initial motion for leave to appeal. Further, the court held that the existence of the Levine appeal was a material fact, which created an ethical duty for the attorney to have disclosed it and was a duty that he violated.

The Supreme Court in reviewing the record below held that while the attorney "approached but did not exceed the bounds of acceptable behavior identified by our ethical rules. It was a course of conduct the Court neither applauds nor encourages, but one that our rules do not prohibit. Thus, the imposition of a litigation sanction on the attorney's client cannot be condoned."

While attorneys always want to be zealous advocates for their clients, there is a fine line between zeal and inappropriate conduct. In the end, it turned out that the attorney's behavior, which resulted in lengthy, costly and most likely stressful litigation, could have easily been avoided and the disclosure of the Levine appeal would not have hurt Ms. Brundage's case.

Sometimes clients ask or want their attorneys to cross the line because they so desire a certain result. The reality is that not only is the risk not worth it for the client but it is certainly not worth it for the attorney, who faces severe punishment.
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