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.