Opinion
DOCKET NO. A-0201-13T1
02-04-2015
DIANNE L. KURBEL, Plaintiff-Respondent, v. JOHN G. KURBEL, JR., Defendant-Appellant.
Michael F. Rehill argued the cause for appellant. Amy F. Gjelsvik argued the cause for respondent (Daggett, Kraemer & Gjelsvik, attorneys; Ms. Gjelsvik, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Ostrer and Hayden. On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Sussex County, Docket No. FM-19-447-01. Michael F. Rehill argued the cause for appellant. Amy F. Gjelsvik argued the cause for respondent (Daggett, Kraemer & Gjelsvik, attorneys; Ms. Gjelsvik, on the brief). PER CURIAM
Defendant, John G. Kurbel, Jr., appeals from the July 30, 2013 Family Part order modifying the terms of the parties' property settlement agreement (PSA) and the August 29, 2013 order awarding counsel fees to plaintiff, Dianne L. Kurbel. For the reasons that follow, we reverse.
The record reveals that plaintiff and defendant were married in 1970 and had one child. Plaintiff filed for divorce in 2001, and subsequently began to cohabitate with her boyfriend. The court entered a final judgment of divorce on November 6, 2002, which incorporated the parties' PSA.
In a section called "Support and Maintenance," the PSA contained a provision requiring defendant to pay plaintiff "limited duration alimony" from September 2002 until June 2023 for the ten months of each year that defendant worked as a school teacher. The alimony payments began at $150 per month and were scheduled to increase periodically by $25 increments over the next twenty-one years to $650 per month in 2023. The parties acknowledged that "[t]he provisions of this paragraph recognize that both parties, subject to the payment above, have the ability to contribute towards their own support and maintain a life style commensurate with one enjoyed during the marriage." The section had a handwritten addition, initialed by the parties, reciting that "[p]ursuant to current law, alimony shall terminate upon the death of either party or marriage of wife."
During the PSA negotiations, plaintiff had requested a provision that the alimony was "non-terminable, notwithstanding any changed circumstances of either party" but defendant had refused to agree.
The equitable distribution section of the PSA contained provisions which equalized the parties' respective shares of the marital home, personal retirement accounts, vehicles, and bank accounts. The parties also agreed that defendant retained his baseball memorabilia collection and his vested teacher's pension "free of any interest of [plaintiff]." In "consideration" of the above provisions, defendant agreed to make monthly payments according to a second payment schedule identical in time span and amount to the alimony payment schedule. The parties acknowledged in the equitable distribution section that "the aforesaid [a]greement is in full and complete satisfaction of any and all claims which [plaintiff] may have against [defendant] or which [defendant] may have against [plaintiff], including their rights to equitable distribution under N.J.S.A. 2A:34-23." This section also provided instructions on the payments continuing in the event plaintiff or defendant died before the full amount was paid.
In the miscellaneous section, the parties acknowledged that both were represented by counsel during the creation of the PSA and they had each carefully read and understood the document. They also asserted that they were "satisfied that this Agreement is fair and equitable."
On October 1, 2010, defendant filed a motion seeking to terminate his alimony obligations due to changed circumstances. Defendant certified that he was forced to retire from his physical education teaching position due to a physical disability and no longer had the ability to pay alimony. Defendant also asserted that plaintiff's salary had more than doubled from the time of the divorce and that she was cohabitating with her boyfriend, which eliminated her need for alimony. Plaintiff filed a cross-motion requesting that the court deny defendant's motion and requesting that, if terminating or modifying alimony, the court modify the PSA to increase equitable distribution payments. Plaintiff did not deny that her income had greatly increased or that her boyfriend paid a significant amount of her housing expenses.
After an evidentiary hearing, the trial court entered an order on July 30, 2013, which granted defendant's motion to terminate his alimony payments and granted plaintiff's motion to modify the PSA. In terminating alimony, the trial court found that the alimony payments were no longer warranted because of plaintiff's lack of financial need, shown by her increase in income from approximately $29,500 to $74,000, and her significantly reduced expenses due to her continued cohabitation.
However, the trial court determined that the termination of alimony payments resulted in a windfall to defendant. The trial court observed that if the PSA had been equitably negotiated, plaintiff would have received more than three times the amount she was scheduled to receive under the full payout of the payment schedules in the PSA. Accordingly, the trial court ordered defendant's equitable distribution payments to plaintiff be doubled until the conclusion of the payment schedule in 2023. The court also ordered defendant to pay $2500 towards plaintiff's counsel fees. This appeal followed.
The court calculated that the total payout on the equitable distribution schedule payments over 23 years amounted to $90,375. Assuming that plaintiff was entitled to a 39.5% coverture share of defendant's $5162 monthly pension payment, the judge calculated that plaintiff would have received $2039 per month if she had not waived her interest in defendant's pension. The judge also calculated that from the time defendant retired through the termination of the equitable distribution payment schedule, plaintiff would have received $342,561 as opposed to the $90,375 she agreed to receive. The judge also noted that pension payments would not necessarily cease in 2023.
On appeal, defendant argues that the trial court abused its discretion by modifying the PSA and awarding counsel fees to plaintiff. We agree.
Plaintiff has not appealed the termination of alimony payments under the PSA.
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We begin with a review of the legal principles that guide our analysis. Applications for relief from equitable distribution provisions found in a PSA incorporated in a judgment of divorce are subject to review under the guidance of Rule 4:50-1. Pressler & Verniero, Current N.J. Court Rules, comment 6.1 on R. 4:50-1 (2015) (citing Miller v. Miller, 160 N.J. 408, 418 (1999)); see also Larbig v. Larbig, 384 N.J. Super. 17, 24 (App. Div. 2006). Such a motion is "addressed to the sound discretion of the trial court, which should be guided by equitable principles in determining whether relief should be granted or denied." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). Hence, we will leave a trial court's determination on an application to open a judgment "undisturbed unless it represents a clear abuse of discretion." Ibid. Because the motion was made almost eight years after the entry of the judgment at issue, the only relief available to plaintiff was under Rule 4:50-1(f), which contains no time limitation, but requires a showing of truly exceptional circumstances. Id. at 286.
In matrimonial actions, settlement agreements, which are "essentially consensual and voluntary in character[,]" are "entitled to considerable weight with respect to their validity and enforceability," provided they are fair and just. Petersen v. Petersen, 85 N.J. 638, 642 (1981); see also Lepis v. Lepis, 83 N.J. 139, 153 (1980). The courts generally encourage settlement agreements "as a peaceful means of terminating marital strife and discord so long as they are not against public policy." Konzelman v. Konzelman, 158 N.J. 185, 194 (1999) (quoting Gordon v. Gordon, 675 A.2d 540 (1996)).
Courts should rarely modify or set aside a PSA "absent clear and convincing evidence of fraud or other compelling circumstances." N.H. v. H.H., 418 N.J. Super. 262, 280 (App. Div. 2011) (quoting Ocean Cnty. Chapter Inc. v. Dep't of Envtl. Prot., 303 N.J. Super. 1, 10 (App. Div. 1997)); see also Glass v. Glass, 366 N.J. Super. 357, 379 (App. Div.), certif. denied, 180 N.J. 354 (2004) ("An application to modify an agreement is an exception, not the rule."). For example, a court may reform a PSA based upon egregious circumstances sufficient to demonstrate that the agreement was so inequitable that it was unconscionable. See Miller, supra, 160 N.J. at 418. Other compelling circumstances have been found to include "coercion, deception, fraud, undue pressure, or unseemly conduct, or if one party was not competent to voluntarily consent . . . ." Peskin v. Peskin, 271 N.J. Super. 261, 276 (App. Div.), certif. denied, 137 N.J. 165 (1994). Absent "unconscionability, fraud, or overreaching in the negotiations of the settlement . . . no legal or equitable basis exists to reform the parties' property settlement agreement." Miller, supra, 160 N.J. at 419.
When addressing a request to modify a PSA, a court must consider several factors, including the policy of this State to encourage settlements and maintain stable agreements as well as determining whether the PSA was fair and equitable. Glass, supra, 366 N.J. Super. at 372. Concerns of fairness and equity take into account "the adequacy of the agreement at inception, the presumed understanding of the parties at that time, the reasonable expectation of the parties during the life of the agreement, [and] the manner in which the parties acted and relied on the agreement . . . ." Ibid. Courts must also read the provisions of the PSA as a whole as "[n]o one element stands alone . . . ." Id. at 373.
While the trial court found the terms of the PSA to be "excruciatingly" unfair to plaintiff because of the low-dollar value of her equitable distribution payout under the agreement, a voluntary and knowing agreement to accept less than the full value of an asset is not sufficient to modify the PSA. PSAs often involve trade-offs that the parties make, some of which are tangible, while others are intangible. See Ozolins v. Ozolins, 308 N.J. Super. 243, 249 (App. Div. 1998). Plaintiff's decision to settle for a lower amount than that to which she was otherwise was likely entitled if she did not waive distribution of defendant's pension appears to be such a trade-off. Indeed, plaintiff testified that one of the reasons she signed the PSA was to end negotiations, as it was clear to her that defendant would not settle the case unless she made certain concessions such as waiving her right to defendant's pension. As plaintiff had the right not to settle and to proceed to trial, her decision to agree to settle for less appears to be knowing and voluntary.
Furthermore, plaintiff introduced no evidence that defendant engaged in fraud, deception, or other unseemly conduct that would justify a modification of the PSA. See Ocean Cnty., supra, 303 N.J. Super. at 10; see also Addesa v. Addesa, 392 N.J. Super. 58, 72-73 (App. Div. 2007) (setting aside the settlement agreement where a spouse expressly misrepresented his considerable assets); Guglielmo v. Guglielmo, 253 N.J. Super. 531, 542 (App. Div. 1992) (finding that the PSA was unconscionable as the financially-naive plaintiff was represented by an attorney who was not only the defendant's close relative, but had also represented the defendant before and after the divorce). Plaintiff was fully aware that defendant, a teacher for over thirty years, was entitled to a substantial pension, which was an asset subject to equitable distribution. While plaintiff testified that during negotiations defendant refused to settle certain issues and told her not to "f**k with [his] pension[,]" these circumstances were not of such an "egregious" or "compelling" nature that would permit the trial court to modify the PSA. See Miller, supra, 160 N.J. at 418-19; see also N.H., supra, 418 N.J. Super. at 280.
Here, both parties were represented by attorneys during the divorce proceedings, including the negotiations and execution of the PSA. The parties had ample opportunity to review and understand the provisions of the PSA. The parties also asserted that adequate financial disclosures had been made and that the terms of the PSA were "fair, reasonable and equitabl[y] resol[ved] . . . all issues dividing the parties." "The agreement between the parties - the contract upon dissolution - is entitled to significant consideration" because such agreements "by their very nature carry with them a stability that must be respected . . . ." Glass, supra, 366 N.J. Super. at 372. Here, the PSA, as written, represented the parties' freely-negotiated and voluntarily entered agreement as to how to distribute their assets and was not inequitable or unconscionable. Thus, plaintiff did not demonstrate grounds for opening the judgment under Rule 4:50-1(f). As such, the trial court mistakenly exercised its discretion in modifying the equitable distribution payment schedule in the PSA.
Defendant also argued that the court abused its discretion in awarding plaintiff $2500 in counsel fees. We agree. The court based the counsel fee award on its "premise that [defendant] negotiated an unbalanced [PSA] for himself," which was inequitable to plaintiff. Hence, the court felt "compelled to shift some of the fees in her favor, while recognizing she actually lost the alimony issue." In light of our ruling reversing the court's modification of the PSA, we vacate the counsel fee award.
Reversed and remanded for the entry of an order consistent with this opinion. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION