As a matter of public policy, New Jersey Courts favor the enforcement of agreements reached between parties. Since Marital Settlement Agreements (“MSA”) are entered into consensually and voluntarily, they are often approached with a predisposition in favor of their validity and enforceability. That notwithstanding, these agreements are enforceable only if they are fair and equitable. A bedrock principle of New Jersey divorce jurisprudence is that parties may be able to modify support provisions within their divorce agreements if they are able to show a continuing change of circumstances.
Although the ability to modify agreements based on a change of circumstances is essentially the default so to speak, parties are free to contract around same. Often times in exchange for additional financial considerations, such as unequal asset division or a “discount” on alimony, parties will agree that the amount of years alimony is paid and/or the actual amount of alimony paid each year is non-modifiable regardless of a change of circumstances, foreseeable or otherwise.
Unfortunately all too often parties are entering into agreements that are “non-modifiable” without really thinking through the consequences of same in an effort to “get the deal done” only to have it come back to haunt them. This is exactly what happened to Mr. Fiorenza in the recent unpublished (non-precedential) case of Fiorenza v. Fiorenza.
In Fiorenza, the parties were married for 24 years and had three children. At the time of their divorce, they were able to come to a resolution regarding the Husband’s alimony and child support payments and agreed that Husband would pay $100,000 per year in alimony ($8,333/per month) and $833.00 per month in child support. Shortly after the divorce however, Husband stopped paying support and Wife filed an application to enforce the support provisions of the parties’ divorce agreement.
The parties were able to resolve their differences and entered into a Consent Order, which lowered Husband’s total support obligation to $5,000 per month ($833.00 of which would be considered child support), included an escalation clause that support would go up if his income did and vacated $10,000 in support arrears. The parties also agreed however that the new support amount would be non-modifiable and included that if there was a default on this new payment structure, that the total support amount would revert back the original amount under the parties initial MSA. Specifically, the parties agreed:
“No matter defendant’s annual gross income, at no time shall monthly support be lower than $5,000, except after the emancipation of [the parties’ youngest child] when the child support component may be reduced”.
After the entry of the Consent Order, Husband made the new support payments for a period of one year but then again stop paying altogether. Wife immediately filed an application to enforce the terms of the Consent Order and asked that the initial amount of support be reinstated. In response, Husband cross-moved for a reduction in alimony.
Both the trial Court and Appellate Court upheld the parties’ agreement and increased the support payment back to the original amount in the parties’ MSA (due to Husband’s default on the new support payments) noting that each party got the “expected benefit and burden of the contract”. Because of Husband’s current inability to pay the full support amount however, the Court set a reduced alimony and child support figure of $2,500 per month and allowed the difference between the MSA support award of $8,333 and the $2,500 to accrue as arrears.
The take away from this case is that you should think long and hard before you include any non-modifiable provision in your divorce agreements and consult with an experienced attorney to discuss the ramifications of same. Although you might feel you are getting a tangible benefit in the present by agreeing to a non-modifiable provision, it is important to think through all the circumstances that may occur in the future that would complicate your ability to comply with same (such as loss of income/employment) as you cannot expect a Court to simply invalidate the terms of your settlement agreement because you now view them as unfair with the benefit of hindsight.
Lauren Koster Beaver is a contributor to the New Jersey Family Legal Blog and a member of the Family Law Practice Group of Fox Rothschild LLP. Lauren practices in Fox Rothschild’s Princeton, New Jersey office and focuses her state-wide practice on representing clients on issues relating to divorce, equitable distribution, support, custody, premarital agreements and Appellate Practice. You can reach Lauren at (609) 844-3027, or firstname.lastname@example.org.