Simon Law Group: If You Agree that Alimony Terminates on Cohabitation, It Really Terminates on Cohabitation, Even If the Cohabitation Ends

The impact of cohabitation on alimony is often one of the most difficult clauses to negotiate in a marital settlement agreement. The payor always wants the agreement to read that alimony shall terminate upon cohabitation, while the recipient, if they are allowed to agree to anything, might agree to allow the payor to seek to modify alimony “in accordance with the law”. Generally, “the law” would be an economic benefits test – i.e. is the alimony recipient receiving an economic benefit by virtue of the cohabitation and/or is she providing one to her cohabitant.

That said, at least since 1999, when the Konzelman case came was decided by the Supreme Court, that agreements to terminate alimony based upon cohabitation are enforceable if cohabitation is proven and the “the cohabitation provision of the marital settlement agreement [sic] was voluntary, knowing and consensual.”

But what happens in a case with a clear cohabitation clause requiring termination, where the cohabitation ends, perhaps because of the litigation, or simply because the relationship ran its course? Should the alimony recipient be entitled to start receiving alimony again? Today, the Supreme Court answered that question in the negative in the case of Quinn v. Quinn. Put another way, the law is now clear that if you have a termination clause and you cohabit, alimony is over, even if the cohabitation ends.

In Quinn, the parties divorced in 2006 after a 23 year marriage. Per their Property Settlement Agreement (PSA), the wife was to receive permanent alimony of approximately $68,000 per year plus Cost of Living Increases. The PSA stated that “alimony shall terminate upon the Wife’s death, the Husband’s death, the Wife’s remarriage, or the Wife’s cohabitation, per case or statutory law, whichever event shall first occur.” The wife started cohabiting in January 2008. The cohabitation included all of the usual indicia of cohabitation – including the fact that the cohabitant maintained his own home – apparently for appearances only. PRACTICE NOTE: Finally a case that seemingly looks past the fiction of a separate residence that the cohabitant has access to but really doesn’t live at.

About a month after the motion to terminate alimony was filed, the cohabitation allegedly ended. Though cohabitation was found to occur, the trial court’s decision deviated from the PSA. Specifically,

Having determined that Cathleen and Warholak had cohabited, the trial court invoked its equitable powers and suspended alimony for the period of cohabitation — from January 2008 until April 2010 — but declined to terminate alimony permanently. The trial court based its decision on the great difference in incomes between Cathleen and David, concluding that Cathleen was “entirely dependent on her alimony for her support.”

However, because the court found her not credible in her testimony, that she had litigated in bad faith, and that she had falsely denied cohabitation, the payor was awarded $145,536.74 in legal fees. Both parties appealed but the Appellate Division affirmed. Both parties sought Certification from the Supreme Court but only the payer’s Petition was granted on the issue of “whether the trial court properly invoked its equitable power to modify the clear and unequivocal terms of a PSA entered knowingly and voluntarily by both parties.”

The Supreme Court reversed deciding:

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.

In noting that Courts have greater discretion in interpreting marital agreements, the Supreme Court reiterated that, “An agreement that resolves a matrimonial dispute is no less a contract than an agreement to resolve a business dispute.” Of course, the court failed to correlate this statement with the famous quote from the landmark Lepis case that “contract principles has no place in the law of domestic relations” but I digress.

The Supreme Court was clear to point out that this case was decided based upon the law in effect at the time of the Agreement, not the 2014 amendments to the alimony statute. It bears repeating that under the new statute, alimony may be suspended or terminated if there is cohabitation.

In equating this to remarriage, the Supreme Court noted:

Furthermore, Cathleen continued to cohabit with Warholak after David filed the motion to terminate alimony and still cohabited with him when the trial commenced. This record presents a situation no different from a remarriage that terminates by death or divorce. In light of the parties’ agreement that alimony would terminate upon cohabitation, the circumstances here do not call for a different result.

The Supreme Court rejected the notion that this type of provision allows a payor to control the alimony recipient, holding:

Finally, we reject the suggestion that enforcement of this cohabitation agreement permits a former spouse to control the post-marital conduct of the other spouse. Such a contention misconstrues the purpose of identifying cohabitation as an alimony-termination event and also misconstrues this record. When parties to a matrimonial settlement agreement have agreed to permit termination of alimony on remarriage or cohabitation, they have recognized that each are equivalent events. In each situation the couple has formed an enduring and committed relationship. In each situation, the couple has combined forces to mutually comfort and assist the other. The only distinction between remarriage and cohabitation is a license and the recitation of vows in the presence of others. When the facts support no conclusion other than that the relationship has all the hallmarks of a marriage, the lack of official recognition offers no principled basis to treat cohabitation differently from remarriage as an alimony-terminating event.

We do not today suggest that a romantic relationship between an alimony recipient and another, characterized by regular meetings, participation in mutually appreciated activities, and some overnight stays in the home of one or the other, rises to the level of cohabitation. We agree that this level of control over a former spouse would be unwarranted and might violate the no-obligation clause found in many divorce agreements. However, the romantic relationship described above is not the long-term relationship presented in this voluminous record.

Finally, this case is unusual in that Justice Albin filed a strong dissent (which will be the subject of a separate post on this blog), about the harsh result on the recipient here. The majority responded:

Our dissenting colleagues highlight the financial consequences of this decision to Cathleen. To be sure, those consequences are serious. Yet the record demonstrates that she knew that cohabitation would risk the loss of her primary source of income and, recognizing the consequences, she proceeded to cohabit with Warholak. She, not the Court or her former husband, exacerbated her financial situation by quitting her job and fashioning a defense that was found baseless by the trial court. (Emphasis added)

In rejecting the dissent’s feeling that an economic benefit test should always be applied, the majority noted:

We also cannot subscribe to the view advanced by our dissenting colleagues that applying the Gayet economic reliance or dependence rule is somehow less intrusive in the personal life of the former spouse. There are few exercises more intrusive than the need to identify every expenditure and the source of the funds for each expenditure. Such an inquiry reveals a vast amount of personal information about the daily life of the former spouse that is of no concern to the obligor spouse. Moreover, sixteen years ago in Konzelman, this Court declined to import the Gayet economic dependence or reliance rule when the parties have agreed in a marital settlement agreement that cohabitation is an alimony-termination event. We discern no basis to depart from that determination. (Emphasis added)

In the past, and maybe even currently, far too many cases settled with vague language requiring termination in accordance with the law – without setting forth which law. Quinn evidences that that was a dangerous practice for the recipient.

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Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com. Connect with Eric: