SUSANN BASILE SUSANN SHANLEY v. BRIAN SHANLEY (2013)

Plaintiff Susann Basile appeals from a post-final judgment of divorce (FJD) order entitling her to a credit only for those principal mortgage payments made after entry of the FJD and then only to the extent payable out of the net proceeds of the sale of the marital home.   We affirm.

Plaintiff and defendant Brian K. Shanley were married on November 1, 1987 and divorced by FJD of July 19, 2011.   They have two children, one emancipated and a seventeen-year old who resides with plaintiff and is in her sole custody.   The parties owned a heavily mortgaged (fifteen-year) marital home, which defendant vacated at time of separation in October 2010, and a rental property.

The FJD included a property settlement agreement (PSA) containing the following provisions relevant to this appeal:

1.  Aug + Sept [2011] payment for the marital home to be paid out of the credit line tied to the rental property.

2. Commencing on October 15, 2011, the defendant shall pay $1,500 for unallocated support until the marital house is sold.

․

4. Upon the sale of the marital home the parties defendant [sic] shall pay child support for [Daughter] in the amount of $910 per month, the 15th of each month.

5. The plaintiff and the defendant shall immediately re-list both properties for sale.

6. Once the rental property located [at] 16 Mayaguana St., Toms River is sold then the proceeds shall be equally split.   The parties will cooperate to sell the properties.

7. Upon the sale of the marital home, the plaintiff shall receive a credit for all principle [sic] payments incurred.   These payments shall not include the interest component of any monthly payment.

8. The balance of any remaining marital house proceeds or deficits shall be equally split.

․

[ (Emphasis added).]

Pursuant to the PSA, both the marital home and rental property were listed for sale on the open market.   The asking price for the marital residence was $499,000 and was later reduced to $465,000.   The property sold on March 10, 2012 for $453,000.

Within one year of the FJD, plaintiff filed three separate applications involving these two properties.   In the first, filed in October 2011, plaintiff sought to compel defendant to execute and deliver to her a quitclaim deed to the marital home because the mortgage debt exceeded the parties' equity in the property or, in the alternative, declare that pursuant to paragraph (7) of the PSA, she was entitled to a credit for all principal reduction payments she made since the date of their separation in October 2010, which at the time amounted to $17,862.98, reducing the mortgage balance to $459,460.49.¹  Moreover, in the likely event her proper share could not be satisfied from the net proceeds of the marital home sale, plaintiff requested an order directing all proceeds from the sale of the rental property, if it sold first, to be held in escrow pending sale of the marital home.

In opposition, defendant denied that he and plaintiff ever agreed that in the event the net proceeds derived from the sale of the marital home were insufficient to allow plaintiff to receive 100% of the principal reduction credits, that such credits would be paid out of the rental property sale proceeds.   Defendant also maintained that after the August and September 2011 mortgage payments were made out of the credit line tied to the rental property, it was the intent of the PSA that plaintiff alone would make the monthly mortgage payments and receive a principal reduction payment credit at the closing of the marital home for only those payments plaintiff made after entry of the FJD. In support of his position, defendant claimed that prior to the FJD, plaintiff used joint marital assets or support contributions from defendant to make the monthly mortgage payments.

The Family Part judge denied plaintiff's motion in its entirety.   Plaintiff moved for reconsideration of her proposal that, if the sale of the rental property preceded the sale of the marital home, those proceeds be held in escrow to satisfy the credit due plaintiff for her mortgage principal reduction payments.   Plaintiff's motion for reconsideration was denied.

Lastly, on April 5, 2012, following execution of a contract for the sale of the marital home, plaintiff once again filed a motion seeking to compel defendant to satisfy, at the closing of the marital home, the total amount of plaintiff's credit for principal payments made toward the mortgage on the home, and to satisfy this credit from the proceeds of the sale of the rental property.   Plaintiff estimated that by the time of closing of the sale, she would have made principal payments in the amount of $32,383.21.   Defendant, in turn, cross-moved to enforce litigant's rights and for other relief.

Because the motions could not be heard until after the closing on the sale of the marital home, scheduled for May 15, 2012, the parties agreed to proceed to the closing as scheduled with each being responsible for satisfying half of any deficiency, without prejudicing plaintiff's right to pursue reimbursement of the principal payments.   Closing took place on May 16, 2012, and resulted in a deficiency owed by the parties, as seller, in the amount of $11,218.74.   Each party contributed half, or $5,609.37.

Relevant here, the Family Part judge, by order of May 25, 2012, directed defendant to satisfy principal payments plaintiff made towards the marital home only from October 2011 through May 2012, which totaled $16,421.69.   Furthermore, these credits were to be taken from the net proceeds from the sale of the marital home.   As to the former, the motion judge reasoned:

From the context of the entire agreement, the principal payments referred to in Paragraph 7 must be those incurred by [p]laintiff after the August and September 2011 payments were made out of the credit line tied to the rental property, in accordance with Paragraph 1 of the PSA. It is an illogical interpretation to assert that principal payments made prior to August 2011 are to be a credit to [p]laintiff at the closing of title of the marital home.   The amount of any principal payments that [p]laintiff claims to have made prior to the execution of the PSA was a quantifiable number at the time of the execution of the PSA. If [p]laintiff wanted credit for amounts paid prior to the date of the PSA, she could have included that number in the agreement.   The amount of the principal payments made after the execution of the PSA was not quantifiable, hence leading credence to the interpretation that this was referring to prospective principal payments.

As for directing that the credits for plaintiff's principal payments be taken from the net proceeds of the sale of the marital home, the court concluded:

that the credit for the principal payments made by [p]laintiff would be taken from the net proceeds of the martial [sic] home sale, as this was the logical context of the provision in Paragraph 7. The [c]ourt did not remake the agreement to make a better deal than the one to which she entered

․  It is clear in reading said Paragraph in conjunction with Paragraph 8, that a deficit was contemplated as a possibility upon the sale of the house.   No logical interpretation of the provisions in question yielded a result by which the credit for principal payments on the marital home was a global credit against other assets equitably distributed or that if the marital home did not yield sufficient equity for the [p]laintiff to receive the whole credit of the principal payments made, that she was able to attach the portion of the credit not realized on the marital sale, against the 16 Mayaguana Street [rental] property.

On appeal, plaintiff raises the following issues:

I.  THE TRIAL COURT ERRED IN HOLDING THAT PLAINTIFF IS ENTITLED TO A CREDIT FOR PRINCIPAL PAYMENTS TOWARD THE MARITAL PROPERTY ONLY TO [THE] EXTENT THAT THE SALE OF THE PROPERTY YIELDED NET PROCEEDS.

II. THE TRIAL COURT ERRED IN DETERMINING THAT PLAINTIFF'S CREDIT FOR PRINCIPAL PAYMENTS TOWARD THE MARITAL PROPERTY IS LIMITED TO THE POST–JUDGMENT PERIOD.

Our scope of review in a non-jury civil action is limited.   We will not disturb the conclusions of law or factual findings of the trial court “unless we are ‘convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice.’ ”  Walles v. Walles, 295 N.J.Super. 498, 513 (App.Div.1996) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483–84 (1974)).   We recognize that “[b]ecause of the family courts' special jurisdiction and expertise in family matters, appellate courts should accord deference to family court factfinding.”  Cesare v. Cesare, 154 N.J. 394, 413 (1998).   That said, we owe no special deference to a trial court's construction of a PSA, which we review de novo.  Kieffer v. Best Buy, 205 N.J. 213, 222–23 (2011).

Property settlement agreements and other matrimonial agreements are contractual in nature and are enforceable in equity as long as they are fair and just.  Carlsen v. Carlsen, 72 N.J. 363, 370–71 (1977);  Massar v. Massar, 279 N.J.Super. 89, 93 (App.Div.1995).  “Applying principles of fairness and justice, a judge sitting in a court of equity has a broad range of discretion to fashion the appropriate remedy in order to vindicate a wrong consistent with principles of fairness, justice, and the law.”  Graziano v. Grant, 326 N.J.Super. 328, 342 (App.Div.1999).  “In each case the court must determine what, in the light of all the facts presented to it, is equitable and fair, giving due weight to the strong public policy favoring stability of arrangements.”  Smith v. Smith, 72 N.J. 350, 360 (1977).   Accord Conforti v. Guliadis, 128 N.J. 318, 323 (1992).

At the same time, matrimonial agreements “are essentially consensual and voluntary in character and therefore entitled to considerable weight with respect to their validity and enforceability notwithstanding the fact that such an agreement has been incorporated in a judgment of divorce.”  Petersen v. Petersen, 85 N.J. 638, 642 (1981).   Generally, absent fraud, accident or mistake, “[e]quitable relief cannot be claimed because a contract is oppressive, improvident, or unprofitable, or because it produces hardship.”   Dunkin' Donuts of Am., Inc. v. Middletown Donut Corp., 100 N.J. 166, 183–84 (1985).

As with other contracts, the language in a matrimonial agreement should be given its “ordinary” meaning.  Flanigan v. Munson, 175 N.J. 597, 606 (2003).   Whether a term in a contract is clear or ambiguous is a question of law, and “[a] ‘court should not torture the language of [a contract] to create ambiguity.’ ”  Nester v. O'Donnell, 301 N.J.Super. 198, 210 (App.Div.1997) (quoting Stiefel v. Bayly, Martin & Fay, Inc., 242 N.J.Super. 643, 651 (1990)).  “In interpreting a contract, [i]t is not the real intent but the intent expressed or apparent in the writing that controls.”  Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 135 (2001) (internal citations and quotation marks omitted) (alteration in original).   It “is not the function of the court to make a better contract for the parties, or to supply terms that have not been agreed upon.”  Graziano, supra, 326 N.J.Super. at 342 (citing Schenck v. HJI Assocs., 295 N.J.Super. 445, 450 (App.Div.), certif. denied, 149 N.J. 35 (1996)).   Nevertheless, “a contract must be interpreted considering the surrounding circumstances and the relationships of the parties at the time it was entered into, in order to understand their intent and to give effect to the nature of the agreement as expressed by them.”  Ibid. In so doing, a court should not “give[ ] the literal sense of particular terms, isolated from the context, ascendancy over the reason and spirit of the whole of the contract.”  Krosnowski v. Krosnowski, 22 N.J. 376, 385 (1956).   But “[w]here a dispute arises as to the application of a property settlement agreement, the court may apply basic principles of fairness and equity to resolve ambiguities.”  Guglielmo v. Guglielmo, 253 N.J.Super. 531, 541 (App.Div.1992).

Guided by these governing principles, we are satisfied

that the motion court reasonably interpreted paragraph (7) of the PSA in the context of the entire document.   While it is true that, on its face and viewed in isolation, paragraph (7) does not address the source of the credit for plaintiff's mortgage principal reduction payments, nothing in the PSA suggests that the credit due plaintiff was intended to be a “global credit” against other marital assets.   To the contrary, the language of the following paragraph clearly indicates that the credit was intended to be applied exclusively to the net proceeds from the sale of the marital home:  “The balance of any remaining marital house proceeds or deficits shall be equally split.”   The word “remaining” obviously indicates that what is left of the marital home sale proceeds shall be split between the parties after application of plaintiff's credit.

Indeed, by providing, in the alternative, that in the event of a deficit, the deficiency as well would be shared equally, the parties expressly contemplated the possibility that the marital home would sell at a loss.   This event was not only foreseeable but actually foreseen by the parties, who specifically provided for this contingency.   Notwithstanding the foreseeability of this event, no provision was made that any other marital asset was to be utilized to satisfy plaintiff's mortgage principal reduction credit.   Instead, as the PSA makes clear, the rental property sale proceeds were treated separate and independent of the marital home proceeds.

Equally clear is that plaintiff's credit was limited in the PSA to those mortgage principal payments on the marital home made after entry of the FJD. If, as plaintiff argues contrarily, the intent was to credit her for all mortgage payments she made from the time of the parties' separation in October 2010, the parties, both represented by counsel, could readily have quantified the amount due at the time they executed the PSA and could have easily included that figure therein.   Instead, paragraph (1) of the PSA directs that the August and September 2011 mortgage payments be paid out of the credit line tied to the rental property, before plaintiff commences making the payments herself.   Therefore, it is entirely reasonable to conclude, as did the Family Part judge, that the later reference to plaintiff receiving a credit specifically referred to those payments made after the August and September 2011 payments.

Having failed to persuade that the language of the PSA requires she be credited for payments made before entry of the FJD and that such credit be paid out of the proceeds from the sale of the parties' rental property, plaintiff argues she is entitled to such relief by virtue of equitable principles.   We reject this argument as unpersuasive and unfounded.

Affirmed.

FOOTNOTES

FN1. According to plaintiff, she had been pre-qualified for a traditional thirty-year mortgage of $460,000 that would substantially reduce her monthly payment obligations and make the home affordable for her.   She claimed that transferring the marital home to her would accomplish several objectives, among them removing the home from a volatile and declining real estate market, eliminating the need for the parties to satisfy any deficiencies at closing, and preserving plaintiff's credit for the principal payments she had made..  FN1. According to plaintiff, she had been pre-qualified for a traditional thirty-year mortgage of $460,000 that would substantially reduce her monthly payment obligations and make the home affordable for her.   She claimed that transferring the marital home to her would accomplish several objectives, among them removing the home from a volatile and declining real estate market, eliminating the need for the parties to satisfy any deficiencies at closing, and preserving plaintiff's credit for the principal payments she had made.

PER CURIAM