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Business Asset Distribution Under Property Settlement Agreement Upheld

Business Asset Distribution Under Property Settlement Agreement Upheld

In Ramirez v. Ramirez, the Plaintiff appealed from trial court Orders that granted the Defendant’s Motion to enforce provisions of the parties’ property settlement agreement (PSA) regarding the equitable distribution of a business that was operated by the Plaintiff during the marriage. The parties in this case were married in 1995 and had two (2) daughters. They obtained a divorce in 2007 and executed a PSA that was incorporated into their final divorce judgment. According to a provision contained in the PSA the parties acknowledged that they owned a note for the sale of a laundry business that each agreed to monthly payments of $1,743 which was to be divided into three (3) equal parts between the Plaintiff, the Defendant , and the Plaintiff’s brother. The Plaintiff also agreed to pay one third of this amount or $581 to the Defendant on a monthly basis for the duration of the life of the note. The business had been sold before the divorce and payments had been made on a note for over two (2) years by the purchaser of the business. The Defendant was unable to vacate the marital property at the time she had agreed to leave therefore the Plaintiff kept the first three (3) $581 payments to compensate him for rent charged to the Defendant. Then he made two (2) payments to her. During this time, the buyer of the business defaulted on his purchase and stopped paying on the note held by the Plaintiff. The Plaintiff demanded that the Defendant return his last two (2) payments because he was not being paid by the defaulting purchaser. The Defendant did not return the money. The Plaintiff responded by offering the Plaintiff one third of the business if she agreed to contribute to the debts and repairs of the business. The Defendant responded that she would simply sell her share of the business. Neither party ever made an attempt to modify or enforce their PSA for seven (7) years. According to the Plaintiff, during that time, he and his brother fixed and operated the business and then leased it to a tenant. Then the Defendant moved to enforce the provisions of the PSA demanding payment of her $581 monthly payments. The Plaintiff never offered her any portion of the rent he was receiving from the new tenant. In response to the Defendant’s Motion, the Plaintiff claimed that the agreement only required him to pay the Defendant if he received payments from the purchaser on the note. According to the Appellate Division, a settlement is essentially a contract which is to be enforced as written, absent a demonstration of fraud or other compelling circumstances. Honeywell v. Bubb, 130 N.J. Super. 130, 136, 325 A.2d 832 (App. Div. 1974). Further, New Jersey has a strong public policy favoring settlement of litigation. Borough of Haledon v. Borough of N. Haledon, 358 N.J. Super. 289, 305 817 A.2d 965 (App. Div. 2003). This policy is especially strong in family disputes. Puder v. Buechel, 362 N.J. Super. 479, 488, 828 A.2d 957 (App. Div. 2003). The Family Court judge who ruled on the Motion found the Plaintiff’s argument to be weak and held that the PSA was an integrated document that reflected the negotiations of the parties, where each had given up rights and compromised claims in return for other benefits and therefore its provisions should be enforced against the Plaintiff. The Appellate Court found nothing in the record to contradict the Family Court judge’s ruling and it affirmed the lower court’s decision. If you believe that a post-judgment modification to your settlement agreement regarding the equitable distribution of a business that you and your spouse owned it may be beneficial to you to seek out the advice of an experienced attorney before moving forward. For more information about post-judgment modification, equitable distribution, alimony, or other family law matters in New Jersey visit the DarlingFirm.com. This blog is for informational purposes and in no way is intended to replace the advice if an attorney.

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