Oral Equitable Distribution Agreement Enforced By Court
- September 8, 2015
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In Ahlstrom v. Monteferrario, a case coming out of Bergen County, the Plaintiff appealed from a dual judgment of divorce with regard to the parties’ oral agreement concerning the equitable distribution of their marital home. The Appellate Division affirmed the Family Court’s judgment. In 2007, prior to the parties’ 2008 marriage, they purchased a house for $759,000. The deed of the home stated that the parties were owners as tenants in common, “each owner with a 50% ownership share.” The Plaintiff advanced $314,559.20 as a down payment. The balance of the purchase price was covered by a mortgage on which both parties were the borrowers, but only the Plaintiff was on the note due to the Defendant’s credit issues. After the house was purchased the parties entered into a Co-Ownership Agreement (COA) in 2007, which was prepared by the Defendant’s attorney. This agreement detailed the parties’ ownership and provided that if the house was sold each party would receive 50% of the net profits. The marriage fell apart and by 2011, the parties reached an oral agreement resolving all issues related to the divorce, alimony, and equitable distribution. The Plaintiff’s lawyer sent a draft PSA to the Defendant’s lawyer that provided that “[e]ffective with the date [defendant] vacated the martial residence, he has had and shall not have any obligation for the mortgage,” and that the Plaintiff would hold the Defendant harmless in connection with the mortgage. In the end, the parties failed to mutually execute the PSA. Soon thereafter, the Plaintiff filed a Complaint for Divorce and subsequently filed a Motion to enforce the COA, demanding that the Defendant repay her the $37,652.40 mortgage payments she made and to repay the mortgage in the future. The Family Court Judge held a ten day trial and a plenary hearing under Harrington v. Harrington, 281 N.J. Super. 39, 656 A.2d 456 (App. Div.), certif. denied, 142 N.J. 455 663 A.2d 1361 (1995). In the 2013, dual judgment of divorce, the trial court discredited the Plaintiff, credited the Defendant, and found that the parties had reached a binding oral agreement. The Plaintiff appealed arguing that the parties’ discussions never resulted in a binding verbal agreement. According to the Appellate Division, New Jersey courts strain “to give effect to the terms of a settlement agreement wherever possible.” Brundage v. Estate of Carambio, 195 N.J. 575, 601, 951 A.2d 947 (2008). An agreement to settle “is a contract, which like all contracts, may be freely entered into and which a court, absent a demonstration of ‘fraud or other compelling circumstances,’ should honor and enforce.” Pascarella v. Bruck, 190 N.J. Super. 118, 124-25, 462 A.2d 186 (App. Div.), certif. denied, 94 N.J. 600, 468 A.2d (1983). The Appellate Court in Harrington, held that “to be enforceable, matrimonial agreements, as any other agreements, need not necessarily be reduced to writing or placed on the record.” Harringon, 281 N.J. Super. 39 at 46. “Where the parties agree upon the essential terms of settlement, so that the mechanics can be ‘fleshed out’ in a writing to be thereafter executed, the settlement will be enforced notwithstanding the fact that the writing does not materialize because a party later reneges.” Id. In this case, the Appellate Court found that the parties entered into a binding oral agreement based upon the evidence submitted into the record and therefore the Family Court’s judgment was correct. If you believe that a post-judgment modification to your settlement agreement or divorce judgment regarding the equitable distribution of your property may be beneficial to you it is critical that you 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.