Res judicata

On March 12, 2009, the Appellate Division issued a reported decision in the case if Sweeney v. Sweeney..  RBC Dain Rauscher Inc was also involved in the appeal.  To view the case, click here.

The parties were married in 1991.  In 1999, the wife sold a premarital business and building for $555,000 and kept the proceeds as her separate property.  She invested the proceeds with RBC, signing a standard agreement containing an arbitration clause in the event of a dispute.  The husband was a broker at and he became the broker for the wife’s account. He was already
the broker for the couple’s joint account and for two accounts held by RBC on behalf of the couple’s minor children.

The parties divorce in 2004.  Their divorce agreement does not mention any of the parties’ brokerage accounts, but it contains a standard mutual release clause in which the
parties give up any and all claims that each might have against the other by reason of any matter.

In 2006, the wife filed with NASD (now FINRA) a Statement of Claim for Securities Arbitration against RBC, alleging, among other things, mismanagement of her accounts, breach of contract,
breach of fiduciary duty and breach of the duty to supervise. In response, RBC filed in the family court where the divorce was heard a  post-judgment motion to intervene in the divorce action and to stay arbitration. RBC contended that as a result of the Judgment of Divorce, her arbitration claims were barred by res judicata and by the entire controversy doctrine. RBC also claimed that it is a third-party beneficiary of the Judgment of Divorce and that  the release of the husband released RBC. The Wife filed a notice of cross-motion to compel arbitration.

Both the trial court and Appellate Division ruled in the wife’s favor.

Continue Reading The Intersection Between Divorce Law and Securities Law

Can a prior judicial determination regarding an ex-spouse’s employment situation preclude the other party from subsequently making an issue out of it when faced with a motion to modify child support? That was the unique issue taken on by the Appellate Division in Simon v. Simon, where the Appellate Division gave preclusive effect to a prior judicial holding regarding the reason why the ex-spouse husband left his job and his resulting subsequent income in deciding a motion to reduce child support.

The parties entered into a Property Settlement Agreement in 2001, wherein the husband agreed to pay child support for their three children at a set amount through the end of 2005, at which point his support obligation would be reevaluated pursuant to the Child Support Guidelines. In 2006, the husband left his employer and obtained a job in Florida because he was allegedly unable to find suitable work in the Princeton, New Jersey area where he lived. As his new job was in Florida, the husband initially lived there with his father, thereby substantially reducing his parenting time with his biological children. 


In spring 2006, the wife moved for a child support increase, alleging that the husband provided no justification for his relocation to Florida, that her parenting time and related expenses increased due to the husband’s reduced parenting time attributable to the move, and because such expenses would only increase as her alimony was ending. The husband cross-moved to modify his support obligation, arguing that he involuntarily left his employer and was forced to take a substantial salary reduction in Florida because he was unable to obtain a position in New Jersey at a salary higher than that he received from his Florida employer. Responding to the husband’s claims, the wife asserted that he left his employment voluntarily so that he could commence his retirement in Florida and, as a result, the Court should use his 2004 and 2005 income to determine support. She submitted no evidence, however, of the husband’s ability to earn a higher salary in the metropolitan area. Ultimately, the Court found that the husband’s 2006 income should apply.


Continue Reading Applying Res Judicata and Collateral Estoppel to Child Support Modifications