Are “Side-Agreements” Enforceable In A New Jersey Divorce Court?

When appearing at an uncontested divorce hearing in the Family Part of the Superior Court of New Jersey, a common question the either your attorney or the judge shall ask both the parties is, “have you entered into any side agreements other than your Property (or Matrimonial) Settlement Agreement that is before this Court today?” This is because side agreements are almost never enforceable in a New Jersey Family Court. Therefore, only what is written in the Property Settlement Agreement, prepared by one of the lawyers in the case, is what is enforceable. In the following case, the ex-wife tried to argue that she relied on verbal promises and assurances by her ex-husband. The New Jersey Appellate Court agreed with the trial court in rejecting her arguments. Below please find this lawyer’s analysis of this case.

In Corman v. Corman, Jennifer Corman appealed an order of Superior Court of New Jersey, Family Part of Monmouth County that denied her request for a plenary hearing to hear claims of fraud, duress, and detrimental reliance. She further argued that judge incorrectly found that she had waived those claims when he admitted under oath that she understood the property settlement agreement and had intended to be bound by that agreement. Moreover, the Court did not find any The New Jersey Appellate did not agree with Jennifer’s contentions and affirmed the order of the Family Part.

Jennifer and Jeffrey Corman got married in 1994, and had two children together. Their marriage ended on July 2, 2013 when a judgment for uncontested divorce was entered. A marital settlement agreement was incorporated into their final judgment of divorce. About one year later, Jennifer filed a motion to set aside certain provisions of the marital settlement agreement, and also requested a plenary hearing to hear her claims of detrimental reliance, fraud, equitable estoppel, and that the marital settlement agreement was a contract of adhesion. Specifically, she claimed that she only agreed to the terms of the alleged unfair agreement and waived her right to distribution of certain property in Brooklyn, NY only because: (1) her ex-husband promised that he would keep the family intact after the divorce; (2) discovery never took place; and (3) her ex-husband misrepresented his financial circumstances and assets, including their home equity line of credit.

In her supporting certification, Jenifer claimed that Jeffrey told her that six of their Brooklyn properties were “on the verge of collapse,” and that he only wanted to divorce so that he could file a bankruptcy petition without damaging her credit. Jeffery opposed the motion. The Honorable Judge Linda Grasso Jones reviewed both parties’ written submission on August 8, 2014, and found that Jennifer had not submitted enough proof to establish that the alleged promise at issue was ever made, because she testified that she and her ex-husband had not made any side agreements, and she signed the marital settlement agreement which supported the same. Because the existence of a side agreement to live as an intact family after the divorce is contradicted by the actual marital settlement agreement, and Jenifer’s own testimony, the court was not convinced that she satisfied her burden to establish a prima facie showing that the marital settlement agreement was a contract of adhesion. A contract of adhesion is one that is signed by a party who has no choice but to agree to the contract. In this case if the marital settlement agreement was a contract of adhesion, Jennifer would have to prove: (1) that she had no choice but to enter into the agreement to save the marriage; (2) that Jeffrey intended for Jenifer to detrimentally rely on the same alleged promise; or (3) that Jeffrey acquired an “undue advantage by means of some act or omission” that was a violation of good faith or unconscientious.

On August 8, 2014 the Family Part judge denied Jenifer’s motion for a plenary hearing to reopen the judgment of divorce’s provisions relating to alimony and equitable distribution, but did agree with Jenifer that the child support award should be recalculated because Jeffrey’s obligation was set below the New Jersey Child Support Guidelines, without any valid justification. Judge Grasso Jones ordered both parents to submit Case Information Statements within a month, for the purpose of calculating child support. While Jenifer complied with the order, Jeffrey failed to. As a result, Jenifer filed a motion to enforce the August 8, 2014 order, and the court sanctioned Jeffrey in an order dated October 30, 2014. Then, on March 9, 2015, an order was entered that increased Jeffrey’s child support obligation to $ 5,400 a month. Jenifer appealed the August 8, 2014 and the October 30, 2014 order, and contended that the Court committed error by denying her request for a plenary hearing on the issues of duress, detrimental reliance, and fraud, and to set aside the alimony and equitable distribution provisions of the marital settlement agreement. She further argued that the Family Part judge was wrong in finding that she had waived these same issues during her testimony under oath when she stated that she understood that the marital settlement agreement and intended to be bound by it, and the judge should instead have conducted an equitable distribution analysis consistent with Rothman v. Rothmann. The Rothman equitable distribution analysis consist of a three-step inquiry in which the Court: (1) determines what specific property is actually eligible for distribution, (2) the value of that property for purposes of distribution, and (3) decides how a division of the property can most equitably be made. The New Jersey Appellate Division did not find any merit to Jenifer’s claims.

The New Jersey Appellate Division explained that while a Family Part court’s interpretation of law and the legal consequences the flow from the facts of the case are not given any special deference, plenary appellate review generally defers to the Family Part’s determination whether a plenary hearing is necessary. A plenary hearing is only required in certain circumstances where the affidavits suggests that there is a genuine dispute of material fact at issue, and a Family Part judge concludes that a plenary hearing would help to decide such a dispute of material fact.

The Family Part judge reviewed both parent’s written submissions in support of the August 2014 motion, and found that as a matter of law, Jenifer failed to establish a prima facie case that a plenary hearing was actually necessary. Judge Grasso Jones paid special attention to the marital settlement agreement, and Jenifer’s own sworn testimony made during the uncontested divorce hearing that denied the existence of any side arrangement between her and her ex-husband, and acknowledged that she understood the terms and provisions of the marital settlement agreement and had the intent to be bound by it. The New Jersey Appellate Division agreed with the Family Part judge’s reasoning and conclusion.

Jenifer’s certification in support of the motion dated August 2014 included statements that her lawyer advised her against accepting the terms of the marital settlement agreement, and that he had told her it was a “bad deal.” She refused that advice and signed the marital settlement agreement anyway, an act which established that she willingly agreed to the terms of the agreement, which destabilizes the argument that the marital settlement agreement was a product of duress. According to historic legal principles a secret intent of a party that goes unexpressed cannot be used by that party to modify the terms of a marital settlement agreement. A party to a contract is bound by the outward apparent intention that he or she displayed to the other party in the contract. It is of no consequence that he or she may have a different, secret intention than that which was outwardly expressed. The negotiated settlement of matrimonial disputes is supported and preferred by the long-standing public policy of the State of New Jersey.

The New Jersey Appellate Division also found no merit to the claim that the Family Part judge abused her discretion by not conducting a plenary hearing and subsequent Rothman analysis in relation to the properties located in Brooklyn. The appellate panel explained that a Rothman analysis would only be necessary if the Family Part judge had concluded that a reorganization of the marital settlement agreement was necessary for the purposes of equitable distribution, which the judge correctly denied to do. As such, the New Jersey Appellate Division affirmed the order of the Family Part.

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