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.

Equitable Distribution In Small Business Divorce Is Contested

In Hetherington v. Molinaro, a divorce involving a small businesss, the Defendant appealed from a trial court's confirmation of two arbitration awards, one setting the termination date of the marriage in the parties' divorce and the other one setting value and equitable distribution of a business formed and operated by the Plaintiff. The Appellate Court affirmed the decision of the lower court. The parties in his case were married in 1996. In 1999, the Plaintiff established Hetherington Information Services, LLC ("HIS") and was the sole owner. In 2006, she stopped working at this company and started working for a company called AON. After the parties separated in 2008, the Plaintiff returned to HIS and expanded the business. In 2010, the Plaintiff filed a complaint for divorce that did not go anywhere following a series of adjourned case management conferences. The parties both retained the services of forensic accountants to assess the value of HIS. The parties mutually dismissed the first complaint for divorce after deciding not to proceed in 2011. Later that year, the Plaintiff filed a second complaint for divorce and in 2012 the parties agreed to binding arbitration on the termination date of their marriage for equitable distribution purposes as well as the value of HIS. In 2013, in a written decision, the arbitrator made detailed factual and legal findings regarding the issues in his case. Pursuant to Portner v. Portner, 93 N.J. 215, 460 A.2d 115 (1983) and Painter v. Painter, 65 N.J. 196, 218, 320 A.2d 484 (1974), a divorce complaint generally marks the end of a marriage for equitable distribution purposes when the proceeding culminates in a final judgment of divorce. However, the arbitrator relied on Genovese v. Genovese, 392 N.J. Super. 215, 920 A.2d 660 (App. Div. 2007), which held that a marriage is deemed ended for equitable distribution purposes prior to the filing of a divorce complaint where the facts "provide incontrovertible evidence that the marital partnership terminated prior to the filing of the . . . complaint" . . . and where the "facts evidence more than a mere physical separation . . . ." Id. at 226-27. The arbitrator determined, by the parties' own admissions, the marriage ended by February 11, 2010 and set the termination of the marriage to that date for equitable distribution purposes. The arbitrator also awarded the Defendant with 25% interest in the value of HIS as of February 11, 2010 or $18,750. The Defendant appealed. The Appellate Division affirmed the lower court's decision to uphold the arbitrator's decision. According to the court, an arbitrator may "conduct an arbitration in such a manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding." N.J.S.A. 2A:23B-15(a). The arbitrator's authority includes the power of "determine the admissibility, relevance, materiality, and weight of any evidence." N.J.S.A. 2A:23B-15(a). The court concluded that it found no basis to disturb the arbitrator's award as it was consistent with the arbitrator's broad authority to conduct the proceeding and the record sufficiently supported the final award. The equitable distribution of assets is of the most emotional and complex aspects of a divorce. If you are involved in a battle over the pre- or post-judgment division of marital property, assets, or debts it is extremely important that you seek out the advice of an experienced attorney before moving forward. For more information about divorce where a party owns a business, high net-worth divorce, equitable distribution, post-judgment modification, contested divorce, alimony, or other family law matters in New Jersey visit DarlingFirm.com. This blog is for informational purposes and in no way intended to replace the advice of an attorney.