What Happens If My Divorce Settlement Agreement Has Mistakes By Both Sides?
In Six v. Six, the parties were married for twenty-eight years before divorcing in 2015 here in New Jersey. The lawyers for both parties’ Final Judgment of Divorce (“FJOD”) included a marital settlement agreement that was negotiated by the parties and their respective attorneys. A marital settlement agreement sets the terms of the divorce including equitable distribution, child support and custody, alimony, and any other terms relating to the divorce. Typically, a New Jersey family court will uphold and enforce the parties’ marital settlement agreement unless it is unfair or made under duress or coercion, especially when each spouse had a divorce attorney representing them. A court will also set aside a marital settlement agreement when there is mutual mistake, which is when both parties make a mistake of fact in the agreement. In order to set aside the agreement for mutual mistake, the party wishing to set aside the agreement must demonstrate that the mistake was substantial, that the mistake related to the marital settlement agreement, and that the other party would not be unfairly prejudiced by setting aside the agreement. In this case, the parties’ marital settlement agreement stated that Mr. Six had a retirement account valued at $1,417,035.98, approximately $400,000 of which is pre-marital. The agreement also stated that Mrs. Six would receive $627,673 from the account and Mr. Six would receive the remainder, totaling $789,362.98. Additionally, the agreement stated that Mr. Six would keep his IRA account valued at $248,220, and that the parties’ property would be divided with Mrs. Six returning certain jewelry to Mr. Six. Lastly, the marital settlement agreement stated that Mr. Six would keep his pre-marital AT&T retirement accounts. The parties’ assets were to be equitably distributed with Mrs. Six keeping $1,050,207.50 and Mr. Six keeping $1,130,984.90.
Mr. Six filed a motion in the Superior Court of New Jersey Family Part to vacate specific aspects of the marital settlement agreement because the marital settlement agreement contained mistakes. Mr. Six claimed that the equitable distribution chart in the marital settlement agreement erroneously included the exempt $400,000 pre-marital funds from the retirement account. Mr. Six claimed that the account should have been valued at $1,017,035.98. Mr. Six also alleged that his IRA account was mistakenly counted twice in the equitable distribution chart. Additionally, Mr. Six claimed that his pre-marital AT&T stock was mistakenly added to the chart. Lastly, Mr. Six claimed that Mrs. Six kept $120,000 in jewelry and other items that were not listed in the marital settlement agreement.
The motion court granted Mr. Six’s motion in part and denied it in part. The court found that the AT&T stock is a pre-marital asset, which is exempt from equitable distribution. The court stated that $400,000 of the retirement account is pre-marital, but found that the issue was already settled in the parties’ marital settlement agreement and included in the amount that Mr. Six was to receive. Additionally, the court found that the IRA account was mistakenly counted twice. Therefore, the court ordered that amount be removed from the parties’ equitable distribution chart. The court ordered that the AT&T and IRA issues be sent to mediation to determine what modifications need to be made. Lastly, the court denied Mr. Six’s request for $60,000 for half the value of the jewelry and other items that Mrs. Six retained. The court denied the request because the issue of the division and distribution of personal property was addressed in the parties’ marital settlement agreement.
Mr. Six appealed the motion court’s decision and the motion court issued a supplemental opinion on February 23, 2016. The court stated in its supplemental opinion that the parties’ personal property was divided in accordance with the marital settlement agreement. The court also stated that Mr. Six claimed that the $400,000 pre-marital asset should have been deducted from the account on the equitable distribution chart, but the court found that there was no evidence to support that position. The court reasoned that marital settlement agreements are typically upheld unless there was fraud, mutual mistake, or coercion. The court also reasoned that the word “approximately” was used to describe the amount to be deducted; therefore, the court found that Mrs. Six was to receive the same amount regardless. The court stated that it would not modify the parties’ marital settlement agreement on that issue. Mr. Six argued that the marital settlement agreement should have been vacated because it contained mutual mistakes that allowed Mrs. Six to receive more than she should have. The motion court accepted that the IRA was wrongly counted twice and that the equitable distribution chart contained the exempted, pre-marital AT&T stock.
On appeal, Mr. Six argued that the court was wrong not to accept that the marital settlement agreement included Mr. Six’s exempt $400,000. Mr. Six also argued that he was entitled to half of the $120,000 worth of jewelry and other items. Mrs. Six claimed that Mr. Six agreed to give Mrs. Six the extra $100,000 from the retirement account because Mr. Six kept the marital home, which Mrs. Six invested $150,000 of her pre-marital savings. Mrs. Six also stated that the change was not a mistake but negotiated, as was the distribution of the jewelry, and that both parties signed the marital settlement agreement with the change incorporated.
The New Jersey Appellate Division stated that the court may discharge a party from a final judgment for mistake for any reason that warrants relief under Rule 4:50-1(a) and (f). The Appellate Division also stated that the trial court’s decision should not be reversed unless there was a clear abuse of discretion. The court noted that marital agreements are presumed to be valid and enforceable and should only be modified if there was fraud, coercion or unfairness. Additionally, the Appellate Division stated that N.J.R.E. 408 states that evidence of statements made during settlement negotiations is not admissible to prove liability or invalidity of an amount when an amount is disputed, but such evidence is allowed for other purposes.
The Appellate Division held that the motion court did not abuse its discretion nor violated N.J.R.E. 408 by reviewing settlement documents. The court reasoned that the motion court did not use evidence of the parties’ settlement negotiations to prove liability but to disprove the claim of mutual mistake. The Appellate Division stated that the record did not indicate that there was mutual mistake with respect to the retirement account or jewelry. The Appellate Division stated that attorneys represented both parties during negotiations and that both parties signed each page of the marital settlement agreement, including the pages that included the equitable distribution chart. Furthermore, the Appellate Division reasoned that Mr. Six testified at the divorce hearing that he understood and agreed to the terms of the marital settlement agreement and understood that he was bound to those terms. Therefore, the Appellate Division affirmed the decision of the motion court.
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