Edward R. Weinstein, Esq.Edward R. Weinstein, Esq.

If My Spouse and I Both Make A Mistake In My Divorce Agreement, May I Go Back To Court To Fix It?

            No, probably.  In New Jersey, if both spouses (and their lawyers, respectively), fail to address substantive issues when finalizing your divorce agreement, a judge of the Family Part of the Superior Court of New Jersey will not allow the Property Settlement Agreement to be modified to address them absent proving “mutual mistake.”  An attorney proves a mutual mistake by proving:  1.  A mistake occurred; B. the mistake is essential and significant and; C. the mistake was mutual.  Following is a case wherein the New Jersey Appellate Division did not find “mutual mistake” with respect to a tax issue. 

            In Maurer v. Maurer, ex-husband Eric Maurer appealed from a post judgment matrimonial order of the Superior Court of New Jersey, Family Part of Hunterdon County dated May 22, 2015, that granted his ex-wife, Georganne Maurer’s motion to enforce litigant’s rights, and denied his cross motion seeking to modify and amend the language of their matrimonial settlement agreement. The New Jersey Appellate Division reviewed the record, and the merits of the claim and affirmed the decision of the Family Part. To ensure fairness, the Family Part has the equitable power to modify property settlement agreements. With that said, a Family Part court’s responsibility to ensure fairness does not require it to insert new language in a mutually agreed to matrimonial settlement agreement, just because one party later suggests changes that would make the agreement fairer.

            Eric and Georganne got married on 1989. Eric filed for divorce almost fifteen years later on April 29, 2014. From May to November 2014, the former couple tried to negotiate a settlement agreement, and on November 17, 2014 they went before a early settlement panel at the Family Part courthouse. The parties negotiated for six hours, and eventually signed a handwritten matrimonial settlement agreement.

According to the matrimonial settlement agreement, Georganne would have sole use and possession of the former marital home, located in Hope, NJ, and Eric waived his claim to the house and would sign any document to transfer his rights in the house to Georganne. Also, he would give $ 30,000 from his 401(k) to his ex-wife to equalize the difference in the value of his 401(k), and the value of the former marital home. In exchange for this consideration, Eric would retain balance of a Fulton Bank savings account, free and clear of any claim by Georganne He would also keep all of the stock options he had with his employer, free and clear of any claim by his former partner. Furthermore, each spouse would keep the car they they possessed currently, free and clear of any claim by the other spouse, and each would be responsible for the insurance and costs of maintenance for their own vehicle.

The matrimonial settlement agreement also covered the issue of support, and stated that “alimony shall be taxable to defendant (Georganne), and tax deductible to plaintiff (Eric).” According to the agreement, Eric would be obligated to pay Georganne alimony every week until he turned sixty-six. After the matrimonial settlement agreement was signed, the former couple appeared before the Family Part to make their divorce final. The matrimonial settlement agreement was received into evidence, and both Eric and Georganne answered questions which confirmed that they understood the matrimonial settlement agreement, and found that it was reasonable and fair under the circumstances.

As a result, the Family Part judge found that both Georganne and Eric executed the matrimonial settlement agreement voluntarily, knowingly, and freely, but still made sure to note that he refused to make any findings concerning the actual terms of the matrimonial settlement agreement, because did not have the opportunity to hear any testimony about each party’s circumstances. According to the matrimonial settlement agreement, the marital assets, which did not include each party’s personal property, were to be divided just about evenly, with Eric keeping about $ 200 less in assets than Georganne.

Eric testified that after the divorce hearing, his attorney starting drafting an official amended divorce judgment, because he realized the previous judgment needed to be adjusted to account for the tax consequences stemming from the former couple’s retirement accounts. Eric claimed that if the Family Part failed to make this adjustment, it would result in him receiving a disproportionate share of the former marital assets, which would be contrary to the former couple’s intent to split their assets equally. On January 6, 2015, Eric’s attorney wrote a letter to Georganne’s attorney and expressed this concern, but they were not able to resolve this issue.

As a result, Eric refused to sign a deed to the former marital house, or otherwise abide by the terms of the matrimonial settlement agreement. Consequently, Georganne filed a motion to enforce litigant’s rights.  She opposed her ex-husband’s effort to try and renegotiate the terms of the matrimonial settlement agreement, and reminded the court that she gave up her share of miscellaneous personal property, like a motorcycle and boat, and her claim for $ 20,000 in joint marital expenses in an effort to settle. She further claimed that she agreed to a lower amount of alimony to settle the divorce quickly.

In response, Eric filed a cross-motion in which he sought to amend the matrimonial settlement agreement by modifying the retirement accounts for taxes, terminating his obligation to pay the $ 30,000 offset, and awarding him the entirety of the balance in the Fulton Bank account. Georganne challenged the cross-motion, and argued that she had made good faith compromises in an effort to settle the divorce. She claimed that she was left with household furniture that had no value, and a house that need significant repairs, in contrast with the the unequal division of personal property in Eric’s favor.

The Family Part decided both motions on May 22, 2015. Georganne’s motion to enforce litigant’s rights was granted, and Eric’s cross-motion to amend the matrimonial settlement agreement was denied. The Family Part judge found that both former spouses had the intent to equally distribute the major marital assets. The judge also acknowledged the tax argument, but found that the alleged oversight did not make the matrimonial settlement agreement unfair or unenforceable, because each side had made concessions in an effort to reach a settlement. Furthermore, each party explicitly considered taxes when they negotiated alimony, which showed that the parties did consider the tax consequences of the matrimonial settlement agreement, and thus intended to divide their retirement assets using unadjusted figures. As such, the Family Part refused to to pull apart the mutually agreed to matrimonial settlement agreement, just to re-mold one aspect of it to benefit one spouse to the detriment of the other one. Eric appealed.

On appeal, Eric argued that the matrimonial settlement agreed, as agreed to, was inequitable and unfair, and claimed that it would result in Georganne receiving a $ 72,110 windfall after the offset and taxes. He contended that the failure to consider the tax consequences of the retirement accounts was a mutual mistake, which contravened the intent of the spouses to divide their assets equally.

The New Jersey Appellate Division explained that marital settlement agreements concern more than just economic factors, and must also serve this State’s public policy and statutory requirements to ensure equity and fairness in the dissolution of marriages. To ensure fairness, the Family Part has the equitable power to modify property settlement agreements. With that said, a Family Part court’s responsibility to ensure fairness does not require it to insert new language in a mutually agreed to matrimonial settlement agreement, just because one party later suggests changes that would make the agreement fairer.

According to general contract law, an agreement which is the result of mutual mistake, is not enforceable. Moreover, consent to a matrimonial settlement agreement can not be freely given when it is acquired as a result of mistake. However, modification of an agreement based on mutual mistake requires clear and convincing evidence that the contracting parties’ minds had met in a previous agreement that their written agreement does not express.

The New Jersey Appellate Division found that Eric failed to demonstrate a genuine issue of material fact to warrant a plenary hearing in this matter, and further failed to demonstrate the clear and convincing evidence requirement for modifying a matrimonial settlement based on mutual mistake. The appellate panel affirmed the order, mostly because of the well-reasoned opinion of the Family Part judge, who relied on Georganne’s unrebutted statement that she made various compromises to settle the divorce relying on the language of the settlement agreement as written. She gave up her interest in joint marital property, including a motorcycle and a boat, and accepted a lower alimony amount than she initially wanted in order to reach a settlement. This settlement was freely negotiated and the New Jersey Appellate Division refused to disturb it now just because Eric though a change in terms would make it more fair.

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