Catching Up With the Supreme Court

This has been a busy past ten days for the Supreme Court.  Unfortunately, that busy period coincided with one of my own busy periods.  So here is a very brief recap of some of the actions that the Court took since April 26: In Innes v. Marzano-Lesnevich, ___ N.J. ___ (2016), a closely-watched case, the […]

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Stark & Stark Sponsors the 2016 Central New Jersey Kidney Walk

Stark & Stark is pleased to sponsor the 2016 Central New Jersey Kidney Walk.  This year the walk will take place on May 22, 2016 in Mercer County Park in West Windsor Township.  Check-in time for the event is 8:30 a.m.   Stark & Stark attorneys Joseph Lemkin and Rachel Stark will be participating in the walk with a client-supported team.

The Kidney Walk is held nationwide every year to raise awareness and funds to fight kidney disease.  Donations are used for community screenings, patient services and education on kidney conditions, diseases, and cures. Eighty percent (80%) of all funds raised are directed to these programs.  The fundraising goal this year is $120,000.  Signing up to join a team or as an individual walker is simple and free.   Volunteers are appreciated as well—for more information contact mary.sullivan@kidney.org or sign up online.

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Say What You Mean – 3 Easy Steps to Avoid Ambiguous Agreements

Have you ever read a confusing contract and scratched your head? Whether it is a lease, operating agreement, or other contract, it is imperative to understand what you want. It is also important to negotiate and draft agreements quickly to avoid losing opportunities. Failure to clearly say what you mean can result in unexpected costs, disputes and lawsuits.

1. Avoid Ambiguous Words

Black’s Law Dictionary states that language in a contract is “ambiguous” when it is reasonably capable of being understood in more than one sense. An easy tip is to avoid ambiguous words. However, this can be a challenge, since even words that seem clear to you, may not be clear to others.

For example, Black’s Law Dictionary includes two (2) different definitions of the word “shall.” The first definition is generally mandatory and can mean “must,” but the second definition is merely permissive and can mean “may.” These different definitions of the same word can lead to confusion. Even one small ambiguity with a word like “shall,” could be a big problem, since it is often used many times in many agreements. To prevent problems, some businesses, government agencies, and others, have recently replaced or defined ambiguous words in their agreements to ensure that their agreements say exactly what they mean.

2. Avoid Ambiguous Drafting

Another way to avoid ambiguity is to ensure that all of the language in your agreements is clear. In addition to carefully choosing your words, you can also ensure that your other language is capable of clearly being understood. For example, an agreement that simply states that one party “must make repairs” can be ambiguous if it is not clear exactly what repairs are required, and whether maintenance and replacements are also required.

3. Include Adequate Legal Language

It is also important to include adequate protections in your agreements to reduce risks and limit losses. For example, you can include a clause with sufficient language to ensure that any ambiguity will not be interpreted against you as the drafter of the document. You can also seek to include other protections, such as a remedy in the event a portion of your agreement is deemed invalid or unenforceable, and protections to limit your liability, legal fees and expenses in the event of a dispute.

If you want to avoid any ambiguity, you can improve and update your agreements. This is a good idea, since avoiding ambiguity can prevent problems, save time and money, and strengthen relationships. Experienced counsel can help you to avoid ambiguities and achieve your goals.

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When it Comes to Enforcement, Act NOW Not Later

A recent unpublished decision, Strunck v. Figueroa, serves as a not-so-gentle reminder that sometimes an enforcement application can be “too little, too late,” and that it is imperative to be proactive to protect your rights under a divorce decree or agreement, especially when your adversary acts in bad faith.  In Strunck, a 2011 divorce decree awarded the plaintiff $23,369, which was to be transferred from the defendant’s retirement account.  Before the plaintiff could act to collect the $23,369, however, the defendant withdrew the money from the retirement account.  In fact, the funds were withdrawn by the defendant before the divorce decree was entered, and the defendant did not disclose this.

Any family law attorneys out there may be thinking that this is an “easy” enforcement motion given there was a clear violation of the decree and an obvious bad faith attempt to shortchange the plaintiff his $23,369.  And that may have been true but for what happened next.

The defendant in Strunck didn’t just keep the money and go on her merry way.  About four months after the entry of the divorce decree, she filed for bankruptcy and, significantly, listed the plaintiff as a creditor with a claim of $23,269 incurred as a result of the August 2011 divorce decree.  The plaintiff was appropriately notified of the bankruptcy petition and the inclusion of the $23,369 as an unsecured claim in that petition.  He sought the counsel of a bankruptcy attorney, and claimed that the bankruptcy attorney told him not to pursue legal action against the defendant.  If the plaintiff is to be believed in this regard, then, incredibly, the bankruptcy attorney failed to advise him that the Federal Rules of Bankruptcy Procedure, Rule 4004(b), allow a creditor to contest the dischargeability of a debt by filing “a complaint . . . objecting to the debtor’s discharge . . . no later than 60 days after the first date set for the meeting of creditors under section 341(a)” or as extended by the Court.  In other words, the plaintiff had the opportunity to contest the discharge of the debt the defendant owed him in the amount of $23,369, but did nothing to prevent the discharge of the debt.  As a result of his failure to contest it, the debt was discharged by the Bankruptcy Court.

Despite doing nothing to contest the bankruptcy petition in December 2011, the plaintiff filed a complaint against the defendant in the Law Division in July 2013.  By this time, over a year had passed after the debt was discharged.  The complaint was dismissed.  Not finding any relief in the Law Division, the plaintiff then filed a motion to enforce the divorce decree in the Family Division.  Apparently ignoring the fact that the debt had already been discharged, the plaintiff argued that the debt COULDN’T be discharged.  He argued that the defendant made a false statement on her bankruptcy petition when she alleged that she was not “holding the property of another.”  The plaintiff contended that, actually, she was holding his property, or the $23,369 that should have been his under the divorce decree…even though the debt to him no longer existed…because it had been discharged…because of his failure to contest the bankruptcy petition.  The plaintiff’s application was denied (actually, it was denied twice; not accepting the Court’s decision, the plaintiff re-filed his application a second time and the Family Court denied it a second time).

As the Appellate Division succinctly put it:  “Plaintiff’s argument rests upon the flawed premise that he could utterly ignore the bankruptcy proceeding and pursue the funds awarded to him in the divorce decree through enforcement proceedings in the family court.”  The Appellate Division reasoned that the plaintiff ignored his recourse to do anything about the bankruptcy proceeding, and he can’t now enforce a debt that was discharged.  It was simply too little, too late.

In this case, try as the plaintiff might, he could not win given his failure to preserve the debt.  Had the plaintiff contested the bankruptcy petition when he was notified of it, he may not only have been able to get the $23,369 he was owed, but perhaps could have obtained sanctions against the defendant for her bad faith theft of the money.  The lesson here is that it is important to proactively preserve your rights under a divorce decree or agreement; it is not enough to later say that you were owed money or that something should have been done pursuant to the agreement, when you ignored your earlier recourse to preserve your rights.

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Jessica C. Diamond is an associate in the firm’s Family Law Practice, resident in the Morristown, NJ, office. You can reach Jessica at (973) 994.7517 or jdiamond@foxrothschild.com.

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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:  

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Michael G. Donahue, III, Esq. Elected Managing Shareholder of Stark & Stark

Stark & Stark is pleased to announce the election of Michael G. Donahue, III, Esq. as Managing Shareholder of the firm, effective May 1, 2016.  In this new leadership role, Mr. Donahue will oversee the day-to-day operations and long-term strategic planning of the firm.  His election to Managing Shareholder coincides with his upcoming June installation as President of the New Jersey Association for Justice (NJAJ) for the 2016-2017 term, where he also serves as co-chair of NJAJ’s Amicus Curiae Committee.

Mr. Donahue, who has been with the firm since 1995, is certified by the Supreme Court of New Jersey as a Civil Trial Attorney and focuses his practice on products liability and serious personal injury litigation. He is a prolific legal presenter, a member of several New Jersey-based law associations, and very active in area charitable and philanthropic organizations, including Boheme Opera New Jersey, the Trenton Area YMCA, the Greater Princeton Youth Orchestra, and Theater Exile in Philadelphia, Pennsylvania.

On his role in helping shape the future of Stark & Stark, Mr. Donahue said, “I’ve spent my entire professional life as a lawyer at Stark & Stark.  I sincerely believe that our strength comes from the values and vision we commonly share—hard work, compassion, unparalleled client service, and extraordinary client results.”

“Michael has a long and distinguished history with the firm, and he has proven time and time again his devotion to our work and our clients,” remarked Shareholder John A. Sakson, chair of the firm’s Personal Injury practice.

“As the firm looks to the future, poised for growth and prosperity, selecting Michael as our new Managing Shareholder was both an obvious and a smart decision for the firm,” said Lewis J. Pepperman, Shareholder and chair of the firm’s Business Group practices.

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Supreme Court Will Review Firemen’s Association OPRA Case

The Supreme Court announced on Friday that it had granted review in In re New Jersey State Fireman’s Ass’n Obligation to Provide Relief Application, 443 N.J. Super. 238 (App. Div. 2015).  The Appellate Division’s decision is discussed here.  The case is also known as New Jersey Fireman’s Ass’n v. Doe.  The question presented, as phrased […]

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