Morris County Divorce Attorneys

Every day I represent people who believe that they are never going to move on from their divorce. These incredibly strong people have a difficult time understanding that there is, in fact, a light at the end of the tunnel because the divorce has understandably become the primary focus of their everyday existence. One of the hardest parts of the divorce process is oftentimes not getting to the end, but, rather, coming to a question of what to do next?  As you go through the divorce process, there are a few people who can help you make your way once the divorce is finalized and can help you find that light at the end of the tunnel.

The therapist – For you, for the kids, or perhaps for the entire family, a licensed and well-trained therapist with whom you are comfortable can be critical to helping you/your kids move beyond the divorce. A therapist can also help you work through what happened during the marriage, the divorce, and how to adapt to a brand new future.

The divorce coach – Different from a therapist in many ways, a divorce coach is trained to help you get through the divorce process and move forward with your life from a more practical perspective. A good divorce coach can assist you in developing a positive, forward-looking and goal-oriented strategy either early on in the divorce process, in the midst of its occurrence, or even after its completion.

The parenting coordinator – No one said co-parenting after a divorce is easy, and a parenting coordinator can help transition parents into more workable co-parenting roles or, in cases where high acrimony exists render recommendations on anything from where the parenting time exchanges should occur to when there should be make-up parenting time, and so much more.  For those parents who have seen their parenting role minimized by the other parent, the parenting coordinator’s existence and recommendations on these types of issues can help preserve your ability to have a say, and ideally protect your relationship with the children.

The accountant and the financial advisor – After years of the other spouse handling the household finances and making financial decisions, you are now faced with having to tackle these issues on your own.  The situation may be even more complicated if you were not involved in the financial decisions and do not have an understanding of your monthly expenses, assets and any debts you were left with. A sharp accountant and financial advisor can help put your mind at ease as you try to figure out where to go from here.

The personal support system – Ultimately, your family and friends will be your strongest support system both during the divorce process and after its conclusion.  Never hesitate to turn to those with whom you feel comfortable to help get you through what may be a very difficult, but finite time in your life.

Everyone has their own way of moving on once the divorce is over.  How you get to where you want to be at the end of that tunnel, however, is ultimately up to you.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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On a daily basis, I’ll go online and search for the latest in divorce news to see what people are talking about. Two recent stories were of particular note not for the facts involved but, rather, for the newsworthy legal outcomes. Each story is a reminder that in New Jersey almost every case proceeds on a no-fault basis, even though, on occasion, a spouse may want to proceed on a claim of adultery, extreme cruelty, or another fault-based ground depending on the situation.

U.K. Wife Denied Divorce after Forty Years of Marriage

In the first story out of the United Kingdom, the Supreme Court dismissed an appeal from a woman seeking to divorce her husband after almost 40 years of marriage when they separated in 2015. The husband contested the petition (which apparently does not occur often) on the basis that the marriage was a success and that they still had a “few years” to enjoy together.

The wife’s application was denied because U.K. law provides that a quick divorce cannot be granted unless the party seeking the divorce claims adultery, desertion or “unreasonable behavior” by the other spouse. Otherwise, a divorce can only occur in the U.K. if the parties have lived apart for two years and the parties consent to the divorce, or, if one spouse objects, after five years of separation. In other words, since the husband was contesting the divorce the wife has no choice but to remain separated from him until 2020 for the divorce to occur.

North Carolina Man Ordered To Pay $9 Million to Man with Whose Wife He Had an Affair

The next story involves a boyfriend who was ordered to pay a husband approximately $9 million for having an affair with the husband’s wife. The award was comprised mostly of punitive damages designed to punish the boyfriend, and approximately $2 million in compensatory damages. The husband commenced a lawsuit with claims of criminal conversation, alienation of affection, intentional infliction of emotional distress, negligent infliction of emotional distress, and assault and battery. He specifically claimed that after learning of the affair his business lost both revenue and an employee (the wife).

Wondering how this type of lawsuit can be possible? Well, in North Carolina a person can sue a someone with whom his or her spouse has engaged with outside of the marriage for alienation of affection, and for criminal conversation, which involves extramarital sexual acts. Interestingly, this type of law still remains on the books of five other states. Incredibly, the claims held because there was no proof that the parties’ marriage was failing prior to commencement of the extramarital relationship, and third person being sued need not even have meant to harm the marriage to be found liable.

What Happens in New Jersey?

Had these situations occurred in New Jersey, the results would have been very different. As I mentioned before, most divorces in New Jersey proceed on the no-fault grounds of irreconcilable differences where, after six months of such differences, it is no longer reasonable for the spouses to remain married. As a result, the wife in the first story would have been able to divorce her husband without issue and without having to wait out the five-year separation period. As for the North Carolina man wondering how he is going to pay $9 million to the jilted husband, such claims could not have been brought against him in New Jersey with any sort of legitimacy.

Ultimately, while fault can – on very rare occasions – come into play in a New Jersey divorce, it is almost always an irrelevant factor to the outcome other oftentimes playing a significant role in the spouses’ emotions. New Jersey, like most other states, is more focused on allowing people to move on with their lives without pointing fingers, and without the time and expense involved in having to address these types of issues.

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Robert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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Demonstrating yet again that cohabitation cases are almost always a creature of their specific facts and circumstances, the Appellate Division in the recently unpublished, Salvatore v. Salvatore, reversed a trial court’s decision denying a payor former husband’s motion to terminate his alimony obligation based on his payee former wife’s cohabitation in a manner defined by the parties’ Marital Settlement Agreement (MSA).

Here are the facts that you need to know:

  • The parties entered into a settlement agreement and were divorced in early 2011.
  • As to alimony, the agreement provided that the payer’s alimony obligation would terminate upon payee’s remarriage, payer’s 66th birthday, or either party’s death.  As to cohabitation, the agreement provided that payee’s “cohabitation with an unrelated adult in a relationship tantamount to marriage [would] be a re-evaluation event”.
  • In an outright rarity in cohabitation matters, which often involve payee spouses concealing the cohabitation from the payor spouse so as to preserve the support obligation, here the payee advised the payor of her planned cohabitation.
  • Even more rare is that the parties then entered into an addendum to the MSA, wherein: (1) they agreed to the cohabitation; (2) recognized they were “without sufficient knowledge to determine whether the cohabitation [would] be temporary or permanent”; (3) reduced monthly alimony payments by $850 “during the period of cohabitation”; and (4) provided that, “[b]ecause the [p]arties cannot determine the permanency of the cohabitation,” alimony would be reinstated “at the full amount in the [MSA] . . . for the remainder of the term” if the cohabitation terminated.
  • Approximately six years later, the payor filed a motion to terminate his alimony based on the payee’s continued cohabitation.  The trial judge denied the motion, finding that the cohabitation was admitted to at the time of the addendum and, as a result, its continued existence – in and of itself – was not a change in circumstances.  Payor appealed.

Reversing the trial court, the Appellate Division held that the trial judge:

  1. “misapprehended that the change of circumstances involved only defendant’s cohabitation, failing to consider the terms of the MSA that provided cohabitation ‘in a relationship tantamount to marriage’ triggered the ‘re-evaluation event.'”
  2. erred in considering the payer’s failure to allege a financial change in circumstance.
  3. held that financial changes were “of no moment” when considering the MSA language at issue.

In so doing, the Appellate Court reiterated seminal pre-2014 statute case law mandating that the “economic needs” of the payee spouse need not be considered so long as the cohabitation provision meriting an alimony modification is fair.

Addressing the subject addendum to the MSA – really the unique feature of this particular cohabitation case – the Appellate Division found that the trial court:

  1. ignored the cohabitation provision of the MSA by finding that the addendum was the very “re-evaluation” called for by the settlement agreement;
  2. in so doing, relegated the addendum as the benchmark event from which a change in circumstance would have to occur to merit further relief for the payor.  In other words, it was in error for the trial court to find that the payee’s ongoing cohabitation was not a change in circumstance simply because the cohabitation was initially acknowledged by the parties six (6) years earlier in the executed addendum to the MSA.  Specifically, “the trial judge ignored the agreement – and the Konzelman Court’s definition – that more than a casual, perhaps temporary, cohabitation was needed to precipitate a review of the plaintiff’s alimony obligations.”
  3. the cohabitation here was neither short-term, nor temporary.
  4. there was no indication in the executed addendum that it in any way superseded the cohabitation provision of the MSA.

As a result, the matter was remanded to the trial court for a period of discovery and ultimate plenary hearing on the payor’s motion to terminate alimony.  While not shedding further light on the 2014 cohabitation statute (since this matter applied pre-statute case law), the unique factual scenario at issue only further highlights how cohabitation matters are often unpredictable, and rise and fall on the case-specific circumstances at issue.

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Robert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey and Manhattan.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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After much debate and, ultimately, a change in the governor’s mansion, New Jersey last week became only the second state (Delaware was the first) to ban – without exception – marriages involving individuals under 18 years of age.  Four other states ban the practice, but allow for a path to such marriage under certain exceptions, while similar legislation is under consideration in Ohio and Pennsylvania.  19 states still do not have a minimum marriage age, and 7 states allow for marriages involving children of 14 or 15 years of age.

The law, which, from a general perspective, is designed to protect minors (especially women) from being forced into arranged marriages, changes New Jersey’s prior law that allowed 16 and 17 year olds to procure marriage licenses with parental consent (16 year olds also required judicial approval).

*Photo courtesy of Alpha Stock Images – link to – http://alphastockimages.com/

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

In the midst of our ongoing quest for guidance as to how and when to apply the 2014 cohabitation statute, comes the Appellate Division’s recent unpublished (not precedential) decision in J.S. v. J.M.  While the decision does not reveal much in the way of noteworthy substance beyond what we have already seen in other post-statute decisions, the Appellate Division did opine on a couple of points that this author found interesting, one of which is addressed herein.

Briefly, the parties were divorced in 2010, with a cohabitation provision contained in the subject settlement agreement providing that alimony would “[t]erminate upon [defendant’s] cohabitation . . . with an unrelated male in lieu of remarriage for a period of [thirty] days or more.”  The payor ex-husband moved to terminate in alimony in September 2015 on the basis that the former wife was cohabiting with the payor’s brother.  While somewhat salacious in and of itself, the payor’s request to terminate support was ultimately denied by way of order and decision following a hearing.  Thereafter, the payor filed a motion for reconsideration of the order and decision, as well as an application to set aside same under Rule 4:50-1, each of which was denied.  The payor then only appealed the trial court’s order denying the motions for reconsideration and for relief under 4:50-1 (and not the original order following trial).

The first interesting point in the Appellate Division’s decision focused on the trial judge’s hypothetical question posed during oral argument: “whether it was necessary for [payor] to have filed his motion to terminate [alimony] during [payee’s] relationship with [the alleged cohabitant].”  In other words, from my interpretation of the trial court’s question that was not the central issue on appeal and, thus, not fully fleshed out in the decision, is whether the payor can procure relief if he files his application after the alleged cohabitation comes to an end, rather than during the relationship.  Briefly referencing the Supreme Court of New Jersey’s 2016 decision in Quinn v. Quinn, the Appellate Division here provided:

In Quinn, 225 N.J. at 39, the court held that if a PSA provided for the termination of alimony upon the dependent spouse’s cohabitation, the court should enforce the terms of the agreement and terminate alimony, rather than suspend it during the period of cohabitation.  Again, even if we assume the judge’s question evidenced a palpably wrong understanding of the issue, and we do not think it did, Quinn has no application to this case because the judge found there was no cohabitation.

Does the Appellate Division’s indication, provided as dicta, renew or revive the argument that, but for an agreement calling for the termination of alimony upon cohabitation, an alimony obligation may be suspended during the period of cohabitation and then restored should the relationship come to an end?  Was this argument dead at all, and was Quinn limited to its facts?  For a reminder, the Supreme Court held in Quinn:

In sum, we reiterate today that an agreement to terminate alimony upon cohabitation entered by fully informed parties, represented by independent counsel, and without any evidence of overreaching, fraud, or coercion is enforceable. It is irrelevant that the cohabitation ceased during trial when that relationship had existed for a considerable period of time. Under those circumstances, when a judge finds that the spouse receiving alimony has cohabited, the obligor spouse is entitled to full enforcement of the parties’ agreement. When a court alters an agreement in the absence of a compelling reason, the court eviscerates the certitude the parties thought they had secured, and in the long run undermines this Court’s preference for settlement of all, including marital, disputes. Here, there were no compelling reasons to depart from the clear, unambiguous, and mutually understood terms of the PSA. We therefore reverse the judgment of the Appellate Division.

While this holding primarily focused on the fact that the subject agreement provided that alimony would terminate upon cohabitation (regardless of when the cohabitation occurred), did the Supreme Court more broadly find inconsequential that the cohabitation period ended in determining whether alimony should be reduced?  In other words, can a payee litigant still argue: (1) alimony should only be impacted, if at all, during the period of cohabitation; and (2) the payor has to file the application during the period of alleged cohabitation in order for it to have any merit?

Family law practitioners recently heard one of our State’s most esteemed (and now retired) Appellate Division judges opine that once cohabitation occurs, a modification/termination of support application should be considered even if the cohabitation came to an end, just as it would not matter if a payee remarried and then divorced the new spouse.  It is uncertain whether Quinn closed the door on this issue, and certain arguments perhaps thought dead may still exist, especially since no court has yet to interpret what the word “suspend” truly means in the confines of the cohabitation statute, and whether a suspension of support should be implemented beyond what may be a suspension, or partial suspension during the cohabitation proceeding itself.

In other words, as we await a more definitive interpretation and application of the cohabitation statute, practitioners will continue to creatively and zealously argue on behalf of litigants embroiled in such disputes.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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As New Jersey law on cohabitation continues to evolve after passage of the 2014 amendment to the alimony statute, a review of cases released since that time provides insight as to several components of the cohabitation discussion.

My new article on this topic in the New Jersey Lawyer’s Family Law issue can be found by clicking on the link below.

http://www.foxrothschild.com/robert-a-epstein/publications/a-review-of-cohabitation-law-in-a-post-amendment-landscape/

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

 

While we await guidance from the Appellate Division on how to interpret that portion of the amended alimony statute’s cohabitation provision, N.J.S.A. 2A:32-23n, indicating that alimony may be “suspended or terminated” in the event of a payee former spouse’s cohabitation, and whether the pre-statute “economic benefits” test remains alive and well, we are seeing newer cases that address the issue of cohabitation under the statute, rather than under pre-statute case law.

In Gille, Jr. v. Gille, an unpublished decision from the Appellate Division released in January, the Appellate Division affirmed the trial court’s Order denying the payor former spouse’s motion to terminate alimony to his former wife based on her cohabitation.  There, wife was receiving $130,000 in base alimony, subject to an upward adjustment based on whether the husband’s annual income exceeded $500,000 annually.

As to cohabitation, the parties settlement agreement provided that cohabitation would be a basis for modification or termination of the alimony obligation, “governed by the existing law at the time the application is made.”

During a 90-day period from February 9, 2015 to April 4, 2015, the husband paid a private detective to observe the wife’s home.  The detective recorded his observations over 29 days.  On 13 of those occasions, the wife’s boyfriend was present overnight.  He was also observed retrieving mail, assisting with snow removal, and entering the home when the wife or children were not present.  Immediately prior to oral argument on the motion, the husband had not obtained an update of the detective’s report immediately prior to filing his motion.

In denying the husband’s motion to terminate alimony, the trial court made the following findings:

Wife and boyfriend had no intertwined finances, did not share living expenses, and although they were dating, they did not even refer to themselves in conversation as “boyfriend and girlfriend.”  Also, the court found that instances of the boyfriend helping around the home were limited instances of “chivalry” – not the performance of household chores on a continuous basis.  It was ultimately deemed a dating relationship, but “nothing more.”

In analyzing the statutory cohabitation factors on appeal, the Appellate Division deferred to the trial court’s findings that the husband’s evidence did not meet the statutory elements required for him to fulfill his initial (prima facie) burden that would entitle him to relief and/or a future hearing to determine what, if anything, should happen to alimony.  In so affirming, the Appellate Division noted how the husband only managed to demonstrate that the boyfriend spent a limited number of nights at the wife’s home.

Since the husband failed to fulfill even his initial burden based on his limited proofs, the court did not need to address “suspend or terminate” language, or the question of whether the economic benefits test still applies.  Notably, the trial judge also made no mention of the fact that the new statute does not require the cohabitant to live full-time with the payee in order for cohabitation to exist.  These cases are always highly fact-sensitive and could depend, in part, on the judge deciding the issue.  To that end, the Appellate Division interestingly noted how the same trial judge had previously presided over post-Judgment litigation where the husband had engaged in misconduct with respect to his income, the disclosure thereof to the wife, and, in connection therewith, any upward adjustment of alimony.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

 

One of the most common questions posed by clients is – how is alimony determined?  Unfortunately, there is no easy answer to that question, and it is often dependent upon the facts and circumstances of a given matter.  The law does not provide for a formula, even in the final version of the amended alimony statute that passed in late 2014, and requires that trial judges consider each of the factors outlined in New Jersey’s alimony statute (N.J.S.A. 2A:34-23(b)) in rendering an award.

As seminal New Jersey case law provides, the standard of living established during the marriage serves as the “touchstone” for alimony, with, whenever possible, the alimony award to be set at an amount that will “enable each party to live a lifestyle ‘reasonably comparable’ to the marital standard of living.”  The amended alimony statute confirms that both parties are entitled to such a lifestyle, which is often determined based on a review of the parties’ Case Information Statements, testimony and supporting financial documentation.  Experts may even be utilized to prepare what is commonly referred to as a “lifestyle analysis” to help provide a more accurate indicator of what the marital lifestyle actually was, and how expenses were divided between the parties and children, if any.

When negotiating an alimony resolution, however, practitioners often employ a so-called “rule of thumb” whereby the ultimate alimony figure is based on a certain percentage of the difference between the parties real/imputed levels of income.  Debate between practitioners in applying this approach remains alive and well, especially in high income cases where utilizing a formula may undermine the notion of ensuring that the marital lifestyle is taken into consideration.  Additionally, the formulaic approach oftentimes utilized in negotiating an alimony resolution takes into consideration the alimony deduction to be received by the payor on his or her tax returns.  With the new tax law eliminating the deduction for alimony agreements/awards reached after December 31, 2018, even this approach will likely undergo significant changes.

To that end, case law confirms that a trial judge cannot employ an income-based formula when determining an initial alimony award or modifying one previously established (even if the initial alimony award was reached in settlement based on a formula).  This principle was recently affirmed in Waldbaum v. Waldbaum, wherein the Appellate Division reversed a trial judge’s use of a formula in determining alimony in a post-divorce proceeding.  Specifically, despite generally describing the lifestyle as one of “high-class”, and analyzing the alimony factors, the trial court employed a formula utilized in the parties’ settlement agreement when alimony was first agreed upon.  In reversing the trial court, the Appellate Division held that “by setting alimony using a formula the alimony became untethered from the marital lifestyle and defendant’s needs.”  The resulting alimony amounts had “no reasonable correlation to the evidence adduced regarding the marital lifestyle or needs.”

Thus, while reaching an alimony resolution provides parties with great flexibility in determining the award, a trial judge must follow the above-detailed requirements to ensure that the lifestyle is not only taken into consideration, but that all statutory factors are considered in rendering a final decision.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

Amicably settling your divorce matter is almost always better than taking your chances at a trial before a trial judge who knows almost nothing about your life. Not only can settling save you substantial time and expense as compared to continued litigation, but also it provides you with the opportunity to end the case on your terms while removing the risk associated with an uncertain trial decision.

Spiderman in Lego formTo that end, settling also means potentially agreeing to terms that are not necessarily what the law may provide. As Uncle Ben once said to a young Peter Parker, “with great power comes great responsibility.”  It is critical that you are not only entering into your agreement voluntarily, but also that you actually know what you are agreeing to.  Sounds simple enough, but litigation oftentimes follows when disputes as to the terms of an agreement arise.  This was the situation in T.L.H. v. M.H., wherein the parties’ definition of cohabitation as an alimony-modification event was more expansive than that provided by law. Specifically, the subject settlement agreement there provided that alimony would terminate:

[U]pon the death of either party, or the marriage or cohabitation of [plaintiff]. The term “cohabitation[,”] in addition to its meaning as construed by New Jersey courts, shall also incorporate the scenario if [plaintiff] should take up residence with any family members (other than the children of the parties) or friends.

Solidifying the parties’ respective understanding as to the terms of the agreement, it also provided therein:

In arriving at this agreement both [plaintiff] and [defendant] had an opportunity to obtain the assistance of separate legal counsel and to be advised regarding the legal and practical effects of this [a]greement. . . . The parties have read this agreement in its entirety and each of them has entered voluntarily into this agreement. They have consented to and assume all of the covenants herein contained, having read the same and having fully understood them. They both acknowledge that it is a fair, just and reasonable agreement and [is] not the result of any fraud, duress, or undue influence exercised by either party upon the other or by any other person and that there have been no representations, warranties, covenants, or undertaking other than those as set forth herein.

Post-divorce, the wife moved in with her sister after she was forced out of the former marital home due to a sheriff’s sale. The husband, as a result, stopped paying alimony, which caused the wife to file a motion to enforce the agreement. In response, the husband moved to terminate alimony based on the wife’s cohabitation as defined by the parties’ agreement.

While not necessarily relevant to addressing the unambiguous language of the agreement, the husband argued that he negotiated the cohabitation provision because he knew the wife would ultimately move out of the former marital home and in with family. The wife argued that she negotiated a higher level of alimony because she knew her expenses would increase after she left the home. At the core of the wife’s argument was her position that living with someone is different than cohabitation. Specifically, she argued her understanding that cohabitation meant someone else was, at least to a significant extent, “supporting” her.

Relying on the language of the parties’ agreement, and both public policy and case law supporting the reaching and enforcement of private agreements, the trial court enforced the cohabitation provision and terminated alimony.

On appeal, the wife argued that: (1) a plenary hearing should have been held to address a genuine issue of fact regarding the parties’ intent in agreeing upon the cohabitation provision; (2) the trial court improperly failed to addressed existing economic circumstances at the time enforcement was sought. In affirming the trial court, the Appellate Division reiterated public policy favoring settlement and the enforcement of unambiguous language, while noting how a court cannot rewrite an agreement to provide for terms better than that bargained for by the parties. The Court also referenced cohabitation jurisprudence wherein the voluntarily agreed upon language of an agreement as to such issue can be subject to enforcement even when differing from that provided by law (as to what cohabitation is, the impact of cohabitation on alimony, and the like).

In so holding, the Court noted as to the facts at hand:

Here, there were no compelling reasons to depart from the clear, unambiguous, and mutually understood terms of the MSA. The agreement was voluntary, knowing and consensual, and the alimony-termination event upon cohabitation was fair under the circumstances of the case. We agree with the court’s finding that, while residing with her sister does not rise to the level of cohabitation under Konzelman, supra, plaintiff understood that residing with her sister was an event that could trigger termination of alimony under the description of cohabitation specified in her MSA. In our view, the explicit terms in the MSA obviated the need for a plenary hearing. Accordingly, we find no error in the court deciding the cross-motion on the papers.

The takeaway from this case is that while a litigant has great power to settle a case as the preferred approach over litigation, with great power comes great responsibility to know and understand that to which you have agreed.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

Connect with Robert: Twitter_64 Linkedin

What rights do people have to an equitable distribution of assets stemming from a period prior to the marriage itself?  If there is no right to equitable distribution under those circumstances, then what rights exist and what remedies can be implemented to protect those rights?  In Thieme v. Aucoin-Thieme, a post-Judgment dispute involving several interesting issues including the equitable distribution of marital assets, distribution of assets pursuant to equitable principles stemming from a pre-marital cohabitation period, and the remedy of a constructive trust in connection with an ex-husband’s receipt of a bonus, the Supreme Court of New Jersey primarily held that:

  1. said bonus received by the ex-husband (Michael) was subject to equitable distribution to the extent it was earned during the parties’ marriage; and
  2. the matter’s “extraordinary circumstances” merited imposition of a constructive trust to protect the ex-wife’s (Bernice) claim of unjust enrichment and request for a portion of the bonus earned during the parties’ pre-marital cohabitation period.

Before even getting into the details of what happened, what is, perhaps, most interesting about this matter is not the very specific facts and circumstances at issue and how such circumstances led to an understandably fair result but, rather, how this case addresses the sort of equitable claims that may arise in connection with a palimony claim that were kept alive in Maeker v. Ross.  While the 2010 amendment to the statute of frauds requires that all post-amendment palimony agreements be in writing, this case also provides a window to argue around the amendment in certain cases if no writing exists – in other words, even without a written palimony agreement for a post-amendment case, the equitable arguments discussed in Maeker can still be made to procure relief.  The case certainly is not limited to that sort of analysis, and, in because of the unique circumstances at issue it even seems to overcome prior case law suggesting that the rights of cohabitants come to an end once the marriage occurs.  With that being said, let’s take a look into what happened…

Here are the unique facts you should know:

  • Michael and Bernice cohabited for eight years and were then married for a brief time.
  • During the cohabitation period and marriage, Michael was an employee of a company called IBG.  He had no ownership interest in IBG, but the company’s principals made a written commitment to Michael that IBG would compensate him for his contributions to the company if it sold.  A written Statement of Understanding was executed, and Bernice’s knowledge as to same was the subject of dispute at the subject post-Judgment trial.
  • Based on that commitment, Michael and Bernice “made personal and financial decisions” with the expectation of such future compensation including, but not limited to, Michael working and traveling extensively for the company, Bernice foregoing employment to devote her time to the parties’ child, and the parties purchasing a new home.
  • The parties divorced and the resulting settlement agreement distributed their assets.
  • During the divorce negotiations, the parties discussed Michael’s potential receipt of deferred compensation or some form of ownership stake in the company, with Michael representing that it “may never happen,” and that he did not anticipate a “big cash payment.”  He further indicated to Bernice that they could revisit the issue in the future should something transpire with the company.
  • Three months after the divorce concluded, IBG was sold and paid Michael $2.25 million (described as a “closing bonus”) for his contributions to the company.  The bonus was paid in accordance with the earlier Statement of Understanding and was paid “to show our appreciation for [Michael’s] contributions in helping [IBG] grow into the successful organization that it is today.”  During a deposition, a company representative testified that the bonus was based on Michael’s contribution to the company over thirteen years and that Michael did not know about the sale before its completion.
  • Bernice first learned of the bonus payment when Michael deposited the money into a bank account that, unknown to Michael, remained a joint account despite the divorce.  Bernice, without notice to Michael, withdrew the funds from the account.
  • Bernice then filed an application for a share of the closing bonus.
  • The trial held that Bernice was entitled to distribution of the bonus, but only that portion stemming from Michael’s work during the marriage.  The Appellate Division affirmed the trial court.

In affirming in part and reversing in part, the Supreme Court, in a decision authored by Justice Anne Patterson, held as follows:

  • It would contravene New Jersey’s equitable distribution statute to find that the portion of the bonus earned prior to the marriage was a marital asset subject to distribution.  As a result, the Court held that the trial court properly allocated the pre-marital and marital periods in determining what portion of the bonus was subject to equitable distribution.  While arguments can be made that this component of the trial court’s decision should not have been upheld based on how the marital portion of the bonus was calculated, that is not the primary focus of the case or this blog post.
  • As Justice Patterson noted, however, the story was not over.  As for that portion of the bonus earned during the parties’ cohabitation period, the Court addressed whether Bernice had made a claim of unjust enrichment.  Addressing a claim for unjust enrichment and its related remedies, the Court provided:

To prove a claim for unjust enrichment, a party must demonstrate that the opposing party ‘received a benefit and that retention of that benefit without payment would be unjust.’

  • Bernice would also have to show that she “expected remuneration” from Michael at the time she “performed or conferred a benefit” on Michael and that “the failure remuneration” enriched Michael “beyond [his] contractual rights”.
  • In the event of unjust enrichment, a court may impose the remedy of a constructive trust to prevent such enrichment.  Legally speaking, a constructive trust is “the formula through which the conscience of equity finds expression.  When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.”  More generally, such a trust is a remedy designed to protect a party harmed by another party’s receipt or retention of property procured through unjust enrichment or some other wrongful means (fraud, mistake, undue influence, and the like).
  • Relying on its prior decision in Carr v. Carr, wherein the trial court equitably imposed a constructive trust awarding a wife a share of the marital assets controlled by the husband’s estate where the husband died during the divorce proceedings, the Court here held:

As the evidence presented at trial made clear, the prospect that [Michael] would be generously compensated was a significant factor in the parties’ personal and financial planning from the early stages of their relationship.  [Michael] and [Bernice] each relied on the expectation of deferred compensation if IBG were sold as they made important decisions for themselves and their family.

The parties’ shared anticipation that [Michael] would be paid deferred compensation was more than wishful thinking.  Given IBG’s written commitment to [Michael], and its owners’ genuine desire to reward their valued employee, both parties had reason to anticipate a significant payment in the event of a sale.

. . .

[I]t is clear that on multiple occasions [Michael] advised [Bernice] about his expectation that any sale of IBG could generate a substantial financial reward for their family.

. . .

[I]BG’s commitment to reward him was an important consideration in the decisions made by the parties throughout their cohabitation and marriage . . . In short, as they planned their finances and personal lives, [Michael] and [Bernice] anticipated that they might someday share in the proceeds of the company’s sale.

During the parties’ eight years of cohabitation, and for most of their brief marriage, [Bernice] undertook significant efforts to support [Michael’s] challenging career.

. . .

Indeed, [Michael] himself recognized that [Bernice’s] contributions to their family should be rewarded.

. . .

Accordingly, the record supports the conclusion that [Bernice’s] decision not to seek further education and employment was made, at least in part, in reliance on [Michael’s] financial commitment to her.

As family law practitioners, Thieme v. Aucoin-Thieme provides guidance as to how to not only bring an equitable claim stemming from a period when parties were not married, but also the sort of appropriate remedy that can be imposed in the event of a viable claim.  In a way, despite its specific factual scenario, it also opens the door to creative lawyering as to when these types of equitable claims could come into play.  Especially in the context of a palimony matter where other related equitable claims are raised, there is, perhaps, more opportunity to overcome an adverse party’s argument that all of the equitable claims are simply palimony claims dressed in different clothes.

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Robert A. EpsteinRobert Epstein is a partner in Fox Rothschild LLP’s Family Law Practice Group and practices throughout New Jersey.  He can be reached at (973) 994-7526, or repstein@foxrothschild.com.

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