I recently wrote a blog entitled "Sloppy Drafting of Marital Settlement Agreements Can Cause Great Harm, Usually to Only One of the Parties."   I am reminded why I wrote that post because as I read the new cases decided each day, it fortifies my belief that settlements must be clearly reduced to writing and that every effort should be made so that the document can only be interpreted in one possible way. I say this because as I read these cases and see the results based upon interpretations of agreements, I think that this could not be what the parties really intended.  

Specifically, two cases decided in the last two days jumped out at me and left me thinking "I see what the agreement says, but that really cannot be what the parties’ meant."

In Schaefer v. Kamery, an unreported (non-precedential) case decided on November 19, 2012, the holding of the trial court, that limited duration alimony continue even after the recipient remarried was upheld.  How can that be you ask since there is a statute (N.J.S.A. 2A:34-25) that says alimony terminates on remarriage?  How can that be you ask because you know that there is case law that says that rehabilitative alimony many continue after remarriage, because the rehabilitation plan is goal oriented (i.e. to get someone back in the workforce or improve their earning ability), which goal exists irrespective or remarriage.

The reason that alimony did not terminate on remarriage in this case is that the Property Settlement Agreement contained the following language:

Payment of alimony shall cease only upon the first to occur of: (1) the
expiration of the alimony term set forth above; (2) Husband’s death; or (3) Wife’s
death. The parties agree Wife’s involuntary termination from her current employer or
permanent disability preventing her continued employment shall be a changed
circumstance justifying review of Wife’s alimony obligation. No change in Husband’s
circumstances other than death shall constitute a changed circumstance affecting Husband’s right to alimony.

Part of the rationale for denying the motion was the aforementioned language and the fact that there may have been other interrelated financial terms.  Not also, the payor previously sought and was denied modification based upon cohabitation.  In fact, the current motion was the third motion to modify.

Having the benefit of 50-50 hindsight, unless someone was trying to pull a fast one and was planning on filing the motion because they knew that the support recipient was in a relationship, the better practice might have been to specifically say that remarriage and/or cohabitation would not impact the alimony, especially if there was not a real meeting of the minds on this issue.  Doing so may have saved the legal fees for 3 motions and an appeal.


Continue Reading Mean What You Say, Write What You Mean

 Virtually every interspousal agreement contains a modification clause whereby the parties set forth procedures for subsequent enforceable modification. Many are constructed as follows:

No modification or waiver of any of the terms of this Agreement shall be valid unless: (1) in writing and executed by the party to be charged; or (2) ordered by a court of competent jurisdiction upon appropriate notice and upon an appropriate showing of changed circumstances as and if allowed under New Jersey law. The failure of either party to insist upon strict performance of any of the provisions of this Agreement shall not be deemed a waiver of any subsequent breach or default of any provision contained in this Agreement.

Note that there are two ways under this clause in which an agreement may be modified: (1) a subsequent writing; or (2) ordered by a court. As to the second, a court, generally, has the inherent power to modify support provisions of an agreement. Where an agreement restricts this power (such as would be the case in an agreement which contains a “non-modifiable” alimony obligation), the restriction will be upheld as long as it does not violate public policy.

However, for the purposes of this article, it is the first – modification by writing – as to which this article is addressed. Let’s take a look at the elements of the writing methodology:

(a)         A writing; and

(b)         Executed by the party to be charged.


Continue Reading Modification of Support Clause: Not Just Simple Boilerplate

When parties resolve their divorce via a settlement agreement, can they agree that neither party will seek to modify the agreed upon terms of alimony and child support?  In New Jersey, a court may generally modify a support obligation at any point in time to achieve equity inherent in this State’s alimony law.  For instance, as detailed countless times on this blog, a party must establish that they have experienced a substantial and continuing change in circumstances under the seminal case of Lepis v. Lepis, 83 N.J. 139 (1980), in order to merit some form of support modification. 

An "anti"-Lepis clause, however, attempts to limit the court’s ability to modify via a waiver by the parties to seek such modification.  To be enforceable, the clause must fulfill several conditions.  First, the parties must include such language in the settlement agreement "with full knowledge of all present and reasonably foreseeable future circumstances," and second, "must bargain for a fixed payment or establish the criteria for payment to the dependent spouse, irrespective of circumstances that in the usual case would give rise to Lepis modifications of their agreement."

However, consistent with my assertion above that such clauses are enforceable – until they are not enforceable – the overriding legal principle in New Jersey is that "If circumstances have made the parties’ standards unreasonable, they can in extreme cases be modified.  In less extreme cases . . . the payments can be accrued with enforcement conditioned upon the payment of reasonable periodic payments."


Continue Reading What Is An Anti-Lepis Clause And Can It Be Modified?

At the time of divorce proceedings, many of my clients ask if they can “lock” the other party to whatever support amount is rendered. If the person asking is going to be paying support, they are asking because they do not want to have to pay more in the future. If the person asking is going to be receiving the support, they are asking because they intend to rely upon the amount indefinitely. My response in most circumstances is that it can be done but it should only be done with great caution and only done by way of agreement. For example, while a litigant’s intent may be to “lock” the support amount because they are anticipating earning more in the future and do not wish to pay more in the future, once locked and the litigant is faced with unanticipated detrimental financial circumstances, they may be unable to obtain a decrease of their support obligation. In other words, it goes both ways – being bound to a specific number regardless of changed circumstances can be very beneficial in some circumstances and in other circumstances very disastrous.

N.J.S.A. 2A:34-23 recognizes the equitable power of the Courts of the State of New Jersey to modify alimony and support orders at any time. Specifically, N.J.S.A. 2A:34-23 states:

 

Pending any matrimonial action brought in this State or elsewhere, or after judgment of divorce or maintenance, whether obtained in this State or elsewhere, the Court may make such order as to the alimony or maintenance of the parties . . . as the circumstances of the parties and the nature of the case shall render fit, reasonable and just, and require reasonable security for the due observance of such orders. . . . Orders so made may be revised and altered by the court from time to time as circumstances may require. 

 

Based upon the mandates of the statute, “alimony and support orders define only the present obligations of the former spouses.” Lepis v. Lepis, 83 N.J. 139, 146 (1980). Alimony and support obligations are always subject to judicial review and modification upon a showing of a change in circumstances. Id.    A type of “‘changed circumstance” that warrants modification of a support order is an increase or decrease in the supporting spouse’s income.” Innes v. Innes, 117 N.J. 496, 504 (1990). However, what happens when the parties agree at the time of the divorce that the support provisions cannot be modified?

 

The Appellate Division decision discussed whether or not a non-modifiable clause (also called an “anti-Lepis” clause) is enforceable in the decision of Morris v. Morris, 263 N.J. Super. 237 (App.Div. 1993). The Morris Court did find that an anti-Lepis clause could be found unenforceable in some circumstances, although the particular anti-Lepis clause in Morriswas upheld. In Morris, the defendant husband sought a reduction in alimony payments despite an anti-Lepis clause in the alimony agreement stating that the agreement was not modifiable for any reason except for the husband’s physical disability. The husband based his request for reduction on a claim that the his annual income was $49,000 while his annual alimony payment was $35,000. The wife argued that husband kept all of the assets pursuant to the parties agreement and in exchanged for non-modifiable alimony, she agreed to a support amount of much less than the amount needed to sustain the marital standard of living. In holding that the husband was not entitled to a reduction in alimony payments, the court addressed a conflict between two chancery court decisions. In Smith v. Smith, 261 N.J. Super. 198, 199-200 (Ch. Div. 1992), the court determined that “an ‘anti- Lepis’ clause, which seeks to preclude the exercise of [the] Court’s equitable responsibility to review and, if warranted, to modify support obligations in response to changed circumstances, is contrary to the public policy of this State as reflected in its Legislative Acts and its judicial decisions.” In Finckin v. Finckin, 240 N.J. Super. 204, 206 (Ch. Div. 1990), the court concluded that public policy did not prohibit the use of an anti- Lepis clause.
 


Continue Reading The Good, the Bad and the Ugly: Locking in Support Obligations

One issue often looming over the preparation of a Property Settlement Agreement is whether or not the parties agree to waive statutory rights to seek a modification of support.  Otherwise known as an "anti-Lepis" clause, such language seeks to essentially overcome the courts’ "equitable power . . . to modify alimony and support orders at any time," under N.J.S.A. 2A:34-23 and the New Jersey Supreme Court’s seminal decision in Lepis v. Lepis, 83 N.J. 139, 145 (1980).  Drafting such an enforceable anti-Lepis clause is not as easy as it sounds, as found by the Appellate Division in Stefanacci v. Stefanacci.  

The facts of the case are relatively straightforward, as it was the language of the Property Settlement Agreement at issue that formed the basis of the dispute.  After a 20-year marriage, the parties filed for divorce.  The parties ultimately resolved the matter, memorialized in an oral settlement stated on the record.  Included in the oral stipulation was Joseph’s agreement to pay Marcia limited duration alimony for 13.5 years or until Marcia’s cohabitation with another person unrelated by blood or marriage for 120 days; Marcia’s remarriage; Joseph’s death; or Marcia’s death.  Provision was also made for the commencement of payments and Marcia’s ability to seek child support should alimony cease and the children are unemancipated.


Continue Reading Anti-Lepis Clauses – Say What You Mean And Mean What You Say