GREENE v. MAAS-GREENE

 SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3196-20
ALLEN S. GREENE,
Plaintiff-Appellant/
Cross-Respondent,
v.
VERONIQUE MAAS-GREENE,
Defendant-Respondent/
Cross-Appellant.
___________________________
Argued April 19, 2023 – Decided August 4, 2023
Before Judges Vernoia and Firko.
On appeal from the Superior Court of New Jersey,
Chancery Division, Family Part, Union County, Docket
No. FM-20-1283-18.
Dale E. Console argued the cause for appellant/cross-
respondent.
Karin Duchin Haber argued the cause for
respondent/cross-appellant (Haber Silver Simpson &
Russoniello and Seiden Family Law, attorneys; Karin
Duchin Haber and Sheryl J. Seiden, of counsel and on
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
2 A-3196-20
the briefs; Donald Schumacher, Melissa E. Gluck, and
Lauren E. Sharp, on the briefs).

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
PER CURIAM
In September 1985, the parties signed an antenuptial agreement (the
agreement). Four days later, they married. Nearly thirty-three years later,
plaintiff Allen S. Greene filed a complaint for divorce and sought to summarily
validate the agreement. Defendant Veronique Maas-Greene filed an answer, a
counterclaim for divorce, and cross-moved to invalidate the agreement. After a
plenary hearing, the Family Part judge ultimately invalidated the agreement,
finding it unenforceable.
Plaintiff now appeals from the order invalidating the agreement, and both
parties appeal from the final judgment of divorce (FJOD). We affirm the judge's
order invalidating the agreement, and we affirm the judge's decision denying
plaintiff's request for a credit for pendente lite support he paid. We reverse and
vacate the FJOD and subsequent ruling to the extent the judge erred in awarding
100% of the investment experience on plaintiff's retirement accounts to plaintiff
after the complaint for divorce was filed and remand for further proceedings on
that issue. We also reverse and vacate the judge's decision reversing his counsel
fee award to defendant following the plenary hearing on the validity of the
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agreement and ordering the parties to be responsible for their own counsel fees
and costs and remand for further proceedings on that issue.
I.
A.
The Parties' Background
The parties met in Florida in 1983 while plaintiff was visiting his mother
with his two children from his prior marriage. Plaintiff was in the process of
getting divorced. Defendant was born and raised in France and moved to Florida
in 1983 at the age of twenty-six to live with her aunt. She worked in a French
restaurant and bakery where she primarily spoke French. Plaintiff was thirty-
seven years old at the time.
After they met and began dating, plaintiff would travel from his home in
New York City to Florida to see defendant every other weekend, and defendant
traveled to New York at plaintiff's expense to see him. When defendant faced
losing her employment, she planned to return to France. But plaintiff persuaded
defendant to live with him. She agreed and moved into his New York City
apartment. In 1984, defendant enrolled in college and took English language
courses. Defendant encountered difficulty keeping a job because her English
skills were limited. In 1998, she obtained a bachelor's degree in finance.
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In the summer of 1985, plaintiff proposed to defendant. Plaintiff made it
clear that he would not marry defendant without an agreement because he had
previously gone through a contentious divorce. Plaintiff did not provide
defendant with any financial documents prior to the execution of the agreement.
The agreement stated that both parties had independent counsel. Defendant
claimed she did not engage in negotiations regarding the agreement with
plaintiff and received no legal advice related to the agreement because the
attorney identified in the agreement had no experience in family law matters.
The agreement called for payments to defendant in lieu of alimony should the
parties divorce, dependent on the length of the marriage as follows:
Years 1 to 5: $10,000
Years 6 and beyond: $25,000
The marriage lasted thirty-three years, thus the agreement provided
defendant would receive a $25,000 payment in lieu of alimony. The agreement
also provided that each party was self-supporting or capable of being self-
supporting. The agreement stated that during the marriage each party could
accumulate property and assets in their own names, which would not be subject
to division, and any income generated during the marriage would remain
separate. The agreement made no mention of counsel fees. The agreement
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further provided the laws of the State of New York governed the execution and
interpretation of the agreement.
After the parties married, defendant was a stay-at-home mom who raised
the parties' one child, who is now emancipated. She also was the primary
caregiver for plaintiff's children from his prior marriage during his parenting
time. Defendant claimed she suffered significant medical issues that affected
her ability to work outside the home.
Plaintiff was a successful businessman before the marriage and
throughout the marriage with interests in real estate entities that own various
properties in New York City. He was the chairman and chief executive officer
of SmartPros, an educational consulting company, which was later acquired by
Kaplan. Plaintiff earned a significant income and orchestrated the sale of
SmartPros to Kaplan, resulting in a profit and deferred compensation. Prior to
his employment with SmartPros, plaintiff was the president and chief executive
officer of Veral, LLC, which was created as the entity providing his consulting
services. Plaintiff made defendant a 5% owner of Veral, LLC, which allegedly
is now defunct.
In December 2012, plaintiff established the Allen S. Greene Irrevocable
Trust for estate planning purposes. The trust named plaintiff as the grant or,
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settlor, and trustor, and an attorney as the co-trustee. The beneficiaries of the
trust were plaintiff's "spouse" and children, although defendant was the only
person who received distributions. The trust also provided that trust income
would only be paid to defendant if the parties were married. Plaintiff claims the
trust was funded with his interest in a premarital property and other real estate
entities he owned. During the parties' marriage, the income from the trust—
$120,000 to $160,000 annually—was deposited into a joint marital account to
pay expenses.
Plaintiff also owns partnership interests in other real estate assets valued
in excess of $2,100,000. After litigation ensued resulting from a falling out
between his business partners, a New York court awarded plaintiff interest in
properties valued at $1,115,000, which he transferred to the trust. On March 8,
2018, plaintiff filed a complaint for divorce.
On June 2, 2020, plaintiff and the attorney/trustee were notified that the
majority shareholder for each of the partnerships in the trust decided to terminate
the trust as the minority shareholder from the partnerships. To effectuate the
merger, plaintiff was terminated as an officer from each of the partnerships, and
consideration paid to the trust for its interests in each of the partnerships totaled
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$1,738,000. Plaintiff "gifted" bank accounts and assets to defendant during the
marriage and jewelry estimated to be worth $200,000.
During the marriage, plaintiff sold his apartment in Manhattan where the
parties initially resided. In 1995, the parties jointly purchased a home in Short
Hills for $1,225,000 and moved there. Plaintiff paid off the mortgage from his
exempt assets and paid $700,000 in renovations. In 2013, the parties sold their
Short Hills home and purchased two luxury apartments in Summit, and paid for
the units in cash. The parties resided in Unit 301, titled in plaintiff's name, and
Unit 303 was used as an investment property and was titled in defendant's name.
At trial, the parties stipulated the value of Unit 301 was $1,185,000, and the
value of Unit 303 was $1,255,000, as of the date of the complaint. The parties
agreed to keep their respective apartments and plaintiff paid defendant $50,000
to equalize the distribution.
B.
Motion Practice
Plaintiff moved for summary judgment seeking to enforce the agreement.
Defendant cross-moved for pendente lite support, to vacate the agreement, and
to establish a litigation fund. The judge denied plaintiff's summary judgment
motion and defendant's cross-motion insofar as it sought to vacate the
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agreement. The judge bifurcated the issue pertaining to the validity of the
agreement, ordered discovery on that issue, and scheduled a plenary hearing.
Regarding defendant's pendente lite support cross-motion, the judge ordered
plaintiff to pay the parties' Schedule A and B expenses, maintain medical and
life insurance, and pay defendant $8,000 a month in support. A consent order
was later entered, which provided that in the event defendant received income
from her 5% interest in Veral or trust distributions, those amounts would be
credited against the $8,000 amount plaintiff was ordered to pay her each month.
C.
Hearing on the Agreement
The hearing on the agreement took place over five nonconsecutive days.
Counsel for the parties were prepared to call experts to testify on New York law,
but the judge ruled that was unnecessary because he could interpret New York
law himself. Plaintiff testified that he retained George Bruckman, Esq. to draft
the agreement. According to plaintiff, defendant asked him to refer her to an
attorney for representation. To avoid any potential conflict of interest, plaintiff
suggested defendant ask her immigration attorney, Harry Polatsek, Esq., who
maintained offices in New York and Florida, to represent her or recommend
someone. Plaintiff testified he and defendant discussed the essential terms of
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the agreement would contain provisions to protect his present and future assets
and that he would not make payments to her going forward because he was
already making payments to his prior family.
Plaintiff admitted he did not provide any financial documents to defendant
prior to the execution of the agreement despite language in the agreement to the
contrary. He testified that the information set forth on his statement of financial
condition dated February 22, 1985, annexed to the agreement, accurately
reflected the assets and income he brought into the marriage. Plaintiff stated he
kept his assets separate, and the parties maintained separate accounts, except for
a joint checking and savings/money market account used to pay joint expenses,
where he deposited his paychecks. Plaintiff added that defendant could have
found information about his income by searching his apartment where it was
kept.
Plaintiff testified Bruckman communicated directly with Polatsek one
week after the parties' engagement. Plaintiff signed the agreement in his own
office, and his signature was notarized by one of his employees. The signed
agreement was hand-delivered to defendant's attorney so it could be signed by
defendant the same day. Leonard Sclafani, Esq. notarized defendant's signature.
The parties dispute whether Sclafani—Polatsek's law school friend—had a
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professional relationship with Polatsek. However, the parties stipulated that
Sclafani never performed any other legal services for defendant. Plaintiff
contended there was no pressure exerted on defendant to sign the agreement or
get married, and she did not pay for the wedding reception.
Defendant testified she had no recollection about the negotiation and
execution of the agreement. She claims plaintiff discussed the agreement with
her only once. Defendant authenticated her signature on the agreement.
Defendant testified plaintiff wanted an agreement. She stated she did not receive
any legal advice related to the agreement. Defendant testified she didn't know
what "assets" or "liabilities" meant. The parties' statements of financial
condition attached to the agreement indicated that defendant had a net worth of
$500 and plaintiff had a net worth of $904,500.
A few days before signing the agreement and getting married, defendant
testified she was seriously injured after falling from a walkway into the Hudson
River while disembarking from a river boat cruise. As a result of the fall,
defendant was transported to the hospital and diagnosed with a dislocated elbow.
She was prescribed pain medication, which she took on the day the agreement
was signed. Defendant did not postpone the wedding on account of her injuries
or taking pain medication. She claimed the pain medication may have affected
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her ability to comprehend the agreement when she signed it but did not proffer
any other evidence to support this contention.
Defendant testified she was not involved in plaintiff's business. She had
no income or assets when she married plaintiff. Defendant was "emphatic" that
Polatsek only represented her one time. After their child was born, defendant
stated the parties moved to a house they purchased in Short Hills. Defendant
has been treated for depression and has undergone seven surgeries.
Bruckman testified he was primarily a business and corporate law
attorney, but early in his career he practiced family law.1 His testimony was
based on his custom and practice, and he had no independent recollection of the
agreement executed thirty-three years earlier. Bruckman acknowledged he
formerly represented plaintiff. While it was Bruckman's practice to make sure
that the other party had independent counsel with experience in drafting
prenuptial agreements, he admitted if the other party had a prior relationship
with that attorney, he would not inquire about their qualifications. Bruckman
also testified he would not list the name of an attorney in an agreement who was
not actually involved in the transaction.
1 Bruckman's de bene esse deposition testimony was read into the record at trial.
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Polatsek testified he practiced immigration law exclusively in Florida
since 1982 and used to practice in New York City. Polatsek vaguely recalled
defendant. Polatsek testified he is not familiar with the New York Domestic
Relations Law (NYDRL), and never advised a client on family law.2 He also
had no knowledge of antenuptial law in the State of New York. Polatsek never
maintained an office on Park Avenue as indicated in the agreement. Following
the hearing, the judge requested written summations and certifications of
services and reserved his decision.
D.
The Judge's Decision On The Agreement
On May 7, 2019, the judge issued a letter decision finding the agreement
was invalid and unenforceable. The judge found Bruckman and Polatsek
"credible." The judge determined Polatsek exclusively practiced immigration
law in Florida and "would not have had the capacity to effectively represent
[d]efendant" in connection with the agreement, and found Polatsek "would not
have agreed to do so." Based on the testimony, the judge noted there was no
evidence that Bruckman had an initial conversation with Polatsek about the
2 Polatsek also gave de bene esse deposition testimony that was read into the
record at trial.
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agreement because "had he done so, [Bruckman] would have realized that . . .
Polatsek wasn't in New York and wasn't familiar with this area of law." The
judge found defendant was not represented by counsel when the agreement was
signed and emphasized if she had counsel, "the attorney would have
immediately realized that there were serious misrepresentations in that
document, starting with the recital that claimed [d]efendant was self-sufficient."
On its face, the judge found the agreement was "materially false." The
judge highlighted "patently false" statements in the agreement, such as: (1) the
parties had independent counsel and received advice; (2) each party represents
their attorney has advised them of the legal and financial means and resources
of the other party; (3) each party provided full financial disclosure; (4) each
party had explained to them the applicable section of the NYDRL; (5) plaintiff
fully informed defendant about his income, net worth, and financial resources
in a separate financial statement, which she received; (6) each party waives their
rights under the Estate, Powers and Trust Laws of New York; (7) both parties
are self-supporting; (8) defendant was represented by Polatsek; and (9) each
party was fully informed of their rights and obligations and apprised of recent
changes in the law. The judge concluded these material falsehoods rendered the
agreement "manifestly unfair and inequitable, and therefore unenforceable."
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The judge found defendant was a "temporary visitor to this country" with
only a "passable understanding and ability to speak English," which was
insufficient to enter the agreement without "competent counsel" to represent her.
The agreement was signed four days before the wedding with family and g uests
traveling from overseas. The judge did not find defendant was incapacitated in
any way from her elbow injury or taking pain medication because she
participated at the wedding and did not claim she was impaired when she got
married. The judge determined the agreement itself and the circumstances under
which it was executed "scream total inequality."
The burden shifted to plaintiff to prove there was no overreaching, and he
was unable to do so. In addition, the judge noted that no attorney required
payment for defendant's legal services. The judge concluded that defendant had
no permanent legal status and was "completely dependent" on plaintiff. The
judge concluded "[u]nder these overwhelming circumstances, even the 'cloak of
validity' New York affords [antenuptial] agreements cannot save this one."
The judge considered both parties' requests for counsel fees incurred in
connection with the hearing on the agreement. After analyzing Rule 4:42-
9(a)(1), N.J.S.A. 2A:34-23, and Rule 5:3-5(c), the judge awarded defendant
$327,000 in counsel fees, the amount she requested. The judge determined
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"there is no evidence that either party acted in bad faith," or was "unreasonable"
in their positions. The judge found defendant had already paid her attorneys
$200,000, thereby essentially depleting her liquid assets and noted plaintiff
controls the "purse strings."
Plaintiff moved to stay the May 7, 2019 order before the trial judge, which
was denied. Plaintiff then moved for leave to file an interlocutory appeal, which
we denied. He then paid the $327,000 counsel fee award to defendant. The
parties then engaged in discovery and retained experts for the dissolution trial.
E.
The Dissolution Trial
The parties retained forensic accounting experts. Plaintiff's expert, Mark
Bloomfield, evaluated the investment growth on the premarital portion of the
retirement accounts. Bloomfield opined that the passive gain from 1985 equaled
$1,679,768. Defendant's expert, Thomas Hoberman, evaluated plaintiff's
minority interests in his New York real estate entities. Both experts prepared
reports on the parties' assets, cash flow analyses, and traced marital and pre -
marital assets. The parties engaged in discovery before the trial.
The dissolution trial took place over the course of several days in August
2020. The parties stipulated to a net worth in excess of $11,000,000 as of the
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date of the complaint. The issues presented were what assets are subject to
equitable distribution, what assets plaintiff could prove were exempt from
equitable distribution, whether defendant was entitled to alimony, credits for
pendente lite support payments, and counsel fees. At the time of trial, the parties
stipulated that plaintiff's average pre-tax cash flow for the years 2017 to 2019
was $433,268 annually from all sources—real estate entities, dividends, interest,
and Social Security payments. In 2015, plaintiff retired at the age of sixty-nine.
He claimed to have some health issues. Plaintiff did not retain records of his
premarital accounts and retirement accounts because he claimed he relied on the
parties' agreement, and it wasn't necessary to do so.
Bloomfield testified on behalf of plaintiff and stated financial institutions
do not keep records, but he could rely on industry standards in rendering his
opinion. Based on a conservative approach, Bloomfield estimated plaintiff's
funds would be allocated 70% stocks, 24% bonds, and 6% cash. Bloomfield
applied the Standard and Poor return rate to the stock portion and industry
standards to the bond portion and concluded that the passive gain from 1985 was
$1,679,768.
Defendant's expert, Hoberman, opined on the value of plaintiff's minority
interests in the New York entities. Hoberman did not offer any opinion on the
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increased value of plaintiff's retirement accounts because there were no interim
statements to base such a calculation on, but he did not disagree with
Bloomfield's conservative approach.
Defendant testified about her claim for alimony but did not admit her
amended case information statement into evidence and did not testify as to her
need for alimony. Following the close of the evidence, the parties submitted
written summations.
F.
The Judge's Decision and FJOD
On May 27, 2021, the judge entered the FJOD accompanied by a letter
opinion. Aside from two of plaintiff's pre-marital entities, the judge determined
that the parties shall equally share all of the assets of the marriage as of the date
of the complaint.3 The judge ordered the parties to share equally any tax
consequences arising from the division of the subject assets. The judge did not
order an adjustment for market conditions after the date of the complaint, which
3 Ordinal 4 of the FJOD incorrectly refers to "'defendant's' request to find any
of the assets are exempt as pre-marital (with the exception of items of
personalty) are DENIED." This is a clerical error. The reference should be to
"plaintiff's" request.
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meant plaintiff retained 100% of the investment experience on the parties'
marital assets.
The judge ruled he had no jurisdiction over the trust, which did not
intervene in the action, and therefore, the trust was not subject to equitable
distribution. The judge found creation of the trust and withdrawals therefrom
did not constitute a dissipation of marital assets by plaintiff, and the judge noted
that trust dispersions went to defendant.
Defendant's request for alimony was denied.4 The judge cited N.J.S.A.
2A:34-23(j)(1), which provides a "rebuttable presumption that alimony shall
terminate upon the obligor spouse or partner attaining full retirement age."
Since plaintiff was seventy-four years old when the FJOD was entered, the judge
found it would be inappropriate to order him to pay alimony, especially in light
of the parties' substantial marital estate and plaintiff's age and health issues.
The judge denied plaintiff's request for a credit for pendente lite support
he paid to defendant under Mallamo v. Mallamo, 280 N.J. Super. 8, 12 (App.
Div. 1995). Plaintiff did not present evidence to support a Mallamo credit. He
testified that in 2018, $36,500 of pendente lite support was paid by the trust to
defendant; in 2019, the trust paid defendant $112,023 and Veral paid $2,760, for
4 Defendant does not challenge the denial of alimony ruling on appeal.
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a total of $151,283 in support payments. Plaintiff instructed the trust to make
distributions to defendant to pay her Schedule A and B expenses without her
initial consent.
The judge denied plaintiff's request for a Mallamo credit for the following
reasons: (1) a significant portion of the pendente lite support was paid from the
trust distributions instead of plaintiff's income or marital assets; (2) plaintiff
controlled the martial assets and had the benefit of the investment experience to
pay his expenses and the balance of his pendente lite obligation; (3) plaintiff had
the benefit of income tax refunds, which he used to pay expenses. Defendant
had no access to these marital resources.
On the issue of counsel fees, the judge ordered each party to be responsible
for their respective counsel fees and costs, and plaintiff was awarded a 100%
credit for any fees he was previously ordered to contribute to defendant's fees
and costs. Plaintiff incurred counsel fees and costs totaling $632,726.83, and
defendant's counsel fees and costs, exclusive of the $327,000 amount she
incurred to address the enforceability of the antenuptial agreement, totaled
$531,757.48.
The judge analyzed the Rule 4:42-9(a)(1), N.J.S.A. 2A:34-23, and Rule
5:3-5(c) factors, the financial needs of the parties as required by our Supr eme
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Court in Mani v. Mani, 183 N.J. 70, 94 (2005), and the reasonableness of the
fees in light of the extent of the services rendered under Williams v. Williams,
59 N.J. 229, 233 (1971). The judge emphasized "the parties are entitled to
counsel of their choice" and was unpersuaded by plaintiff's argument that
defendant was represented by counsel from two different law firms.
In addition, the judge requested and received sealed envelopes containing
the parties' respective settlement correspondence, which he reviewed prior to
deciding the counsel fee issue. Counsels' letters included proposals made before
the judge conducted the hearing on the enforceability of the antenuptial
agreement. The judge reiterated his prior finding on the counsel fee issue
following the hearing on the agreement that neither party acted in "bad faith,"
and there was no evidence to support defendant's argument that plaintiff
"willfully held back discovery" of thirty-five years of documents that might
substantiate his position a portion of his assets were not subject to equitable
distribution. The judge highlighted that plaintiff ultimately failed in carrying
his burden of proof on this issue.
The judge emphasized that in the beginning stages of the divorce case,
plaintiff "held virtually all of the assets of the marriage" but "[t]hat is no longer
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the case." The judge determined each party should be responsible for their own
counsel fees and costs.
After the entry of the FJOD, the parties disagreed as to whether defendant
was entitled to receive the investment experience on her portion of the
retirement assets from the date the complaint was filed—March 8, 2018—until
the FJOD was issued—May 27, 2021—because the FJOD and accompanying
decision did not address this issue. The parties' counsel sent letters to the judge
advocating for their clients' respective positions: plaintiff sought to have the
retirement accounts distributed as of the date of the complaint with no
adjustment for market experience; defendant requested the retirement accounts
be divided as of the date of the filing of the complaint and that she receives 50%
of the investment experience for those accounts.
On July 8, 2021, plaintiff's counsel sent a letter to the judge requesting a
decision on this issue. But, before the judge issued a corrective decision, under
Rule 1:13-1,5 plaintiff filed a notice of appeal. We dismissed plaintiff's appeal
5 Rule 1:13-1 provides:
Clerical mistakes in judgment, orders, or other parts of
the record and errors therein arising from oversight and
omission may at any time be corrected by the court on
its own initiative or on the motion of any party, and on
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without prejudice because the order appealed from was not a final order. On
September 1, 2021, the judge issued his decision and determined he made no
oversights or omissions when the FJOD and accompanying letter opinion were
entered. Therefore, all of the investment experience was awarded to plaintiff.
Based on the judge's final decision, we reinstated plaintiff's appeal and denied
defendant's motion for an award of counsel fees and costs for appellate legal
services.
II.
Appellate "review of a trial court's fact-finding function is limited."
Cesare v. Cesare, 154 N.J. 394, 411 (1998). "The general rule is that findings
by the trial court are binding on appeal when supported by adequate, substantial,
credible evidence." Id. at 411-12 (citing Rova Farms Resort, Inc. v. Invs. Ins.
Co. of Am., 65 N.J. 474, 484 (1974)). This is particularly true in matters
emanating from the Family Part, because of its special expertise. Ibid.
Consequently, the factual findings and legal conclusions reached by the
Family Part trial judge will not be set aside unless the court is "'convinced that
they are so manifestly unsupported by or inconsistent with the competent,
such notice and terms as the court directs,
notwithstanding the pendency of an appeal.
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relevant and reasonably credible evidence as to offend the interests of justice' or
. . . we determine the court has palpably abused its discretion." Parish v. Parish,
412 N.J. Super. 39, 47 (App. Div. 2010) (quoting Cesare, 154 N.J. at 412).
However, no special deference is owed to the trial court's conclusions of law.
Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)
(citations omitted).
III.
We first address the issues raised by plaintiff in his appeal. Plaintiff
argues the judge erred by failing to apply New York law in interpreting the
agreement and erred in finding the agreement was unenforceable. Plaintiff also
contends the judge erred in failing to give him a credit for the pendente lite
support paid because the assets were distributed equally as of the filing date of
the complaint.
A.
The Agreement
Under New York law, antenuptial agreements are enforceable assuming
full disclosure and comprehension, and absent unconscionability. See Christian
v. Christian, 365 N.E.2d 849, 855 (N.Y. 1977). NYDRL § 236(B)(3)
(McKinney 2021) authorizes spouses or prospective spouses to provide for
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matters such as inheritance, distribution or division of property, spousal support,
and child custody and care in the event the marriage ends. An agreement made
before or during the marriage must satisfy three requirements to be "valid and
enforceable in a matrimonial action." Ibid. First, the agreement must be in
writing. Ibid. Second, it must be subscribed by the parties. Ibid. Third, it must
be "acknowledged or proven in the manner required to entitle a deed to be
recorded." Ibid.
Reviewing courts "will view the agreement in its entirety and under the
totality of the circumstances." Mizrahi v. Mizrahi, 171 A.D.3d 1161, 1164 (N.Y.
App. Div. 2019) (citations and internal quotations omitted); see Kabir v. Kabir,
85 A.D.3d 1127, 1128 (N.Y. App. Div. 2011) ("[W]ithout a hearing to determine
the totality of the circumstances, including the extent of the parties' assets, and
the circumstances surrounding the execution of the agreement, it cannot b e
determined on this record whether or not equity should intervene to invalidate
the parties' agreement.").
An antenuptial agreement is unconscionable if "no person in his or her
senses and not under delusion would make on the one hand, and no honest and
fair person would accept on the other, the inequality being so strong and
manifest as to shock the conscience . . . of any person of common sense."
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Schultz v. Schultz, 58 A.D.3d 616, 616 (N.Y. App. Div. 2009) (citations and
internal quotations omitted). Moreover, "[a]n agreement that might not have
been unconscionable when entered into may become unconscionable at the time
a final judgment would be entered." Taha v. Elzemity, 157 A.D.3d 744, 745-46
(N.Y. App. Div. 2018) (citations omitted).
To demonstrate overreaching, no actual fraud need be shown, but "the
challenging party must show overreaching in the execution, such as the
concealment of facts, misrepresentation, cunning, cheating, sharp practice, or
some other form of deception." Gottlieb v. Gottlieb, 138 A.D.3d 30, 37 (N.Y.
App. Div. 2016) (citations omitted). Further, "the challenging party must show
that the overreaching resulted in terms so manifestly unfair as to warrant equity's
intervention." Ibid.
In Smith v. Smith, a prenuptial agreement was held to be invalid where
the wife had established "her prima facie entitlement to judgment as a matter of
law by demonstrating that the terms of the prenuptial agreement were manifestly
unfair given the nature and magnitude of the rights she waived and in light of
the vast disparity in the parties' net worth." 129 A.D.3d 934, 935 (N.Y. App.
Div. 2015). The court reasoned that "[t]he circumstances surrounding the
signing of the agreement support[ed] a finding that the unfairness of the
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agreement was the product of the [husband's] overreaching, including that the
agreement was presented to the [wife] two days before the wedding as 'take-it
or leave-it.'" Ibid.
Similarly, in Davis v. Davis, both the terms of the post-nuptial agreement
and the circumstances surrounding the execution, including the wife's limited
education and lack of independent legal counsel, raised an issue of fact as to
whether the agreement was the product of the husband's overreaching. 149
A.D.3d 483, 484 (N.Y. App. Div. 2017). The court ordered financial discovery
and a hearing to determine the validity of the agreement. Ibid.
In Taha, the New York Supreme Court, Appellate Division, overruled the
trial court's determination that the parties' prenuptial agreement was
enforceable. 157 A.D.3d at 744. The husband earned $300,000 per year and the
wife did not work outside of the home during the marriage. Ibid. The court
noted that "'[a]n agreement between spouses or prospective spouses . . . may be
set aside upon a showing that it is unconscionable, or the result of fraud, or
where it is shown to be so manifestly unfair to one spouse because of
overreaching on the part of the other spouse.'" Ibid. (citations omitted).
Plaintiff contends under New York law, when there is a "deliberately
prepared" and executed written agreement, there is a strong presumption of
27 A-3196-20
validity under NYDRL, especially if the agreement is notarized and sets forth
the name and address of counsel. Plaintiff also asserts pursuant to NYDRL §
236(B)(5)(a), a properly executed agreement must be enforced unless it is
"unconscionable" or can be shown is the result of fraud or overreaching. He
claims that defendant's signature and that of her notary was stipulated to and
establish an irrebuttable presumption. Plaintiff maintains the application of
New York law to the matter under review supports his argument that the
agreement is valid and enforceable, and the trial court erred by concluding
otherwise. Plaintiff further contends there is no requirement under New York
law that the parties be represented by counsel, and instead, the judge erred by
not focusing on whether undue influence was exerted upon defendant by
plaintiff, and there is no evidence of undue influence in the record. We disagree.
Defendant demonstrated that the terms of the agreement were manifestly
unfair given the substantial rights she was waiving to alimony and equitable
distribution in light of the vast disparity in the parties' net worth. See Petracca
v. Petracca, 101 A.D.3d 695, 699 (N.Y. App. Div. 2012). Here, defendant only
had a few days to review the agreement, did not understand essential terms such
as "assets" and "liabilities," and was not represented by counsel. The agreement
28 A-3196-20
lacked a schedule of the parties' assets and did not identify plaintiff's business
interests at the time it was entered.
Notwithstanding defendant's execution of the agreement in the presence
of a notary, the judge properly concluded the agreement was not negotiated at
arm's length, and defendant was not represented by counsel. Consequently, the
attorney who notarized defendant's signature merely performed a ministerial act.
There were no draft agreements exchanged, and defendant testified she did not
recall having any discussions with an attorney about the agreement. Defendant
also testified she was not fluent in speaking or writing the English language
when she signed the agreement, which was written in English. Plaintiff did not
present any contrary proof on this issue. Moreover, plaintiff could not
specifically identify any communications between his attorney and Polatsek
about the negotiation and execution of the agreement.
Here, the agreement bears the hallmarks of an unenforceable agreement .
Plaintiff is a sophisticated businessman, who is well-educated and was
represented by counsel when the agreement was prepared. On the other hand,
defendant was not financially savvy, spoke English as a second language, and
was not self-supporting when the agreement was executed or at any time
thereafter during the marriage self-supporting. And, plaintiff overlooks a salient
29 A-3196-20
fact—the maintenance waiver in the agreement is unenforceable under New
York law, thereby invalidating the agreement even in the face of proper
authentication.
In Maddaloni v. Maddaloni, the parties entered into a postnuptial
agreement, which provided that, in the event the parties divorced after the first
five years of marriage, the wife agreed to accept the sum of $50,000, payable in
five equal annual installments of $10,000 "in full satisfaction of any and all
claims of whatsoever kind and nature she may have at that time for past or future
support or for distribution of assets." 142 A.D.3d 646, 647 (N.Y. App. Div.
2016).
Thereafter, the parties remained married for more than twenty-five years
before filing for divorce. Ibid. The trial court determined that the provision
providing for a payment of $50,000 in full satisfaction of all support claims, was
unenforceable as unconscionable. Ibid. During more than twenty-five years of
marriage, the husband's jewelry business underwent "tremendous growth," and
the parties lived a "lavish lifestyle." Id. at 650. The Appellate Division agreed
that the trial court properly determined that the maintenance provision in the
postnuptial agreement was unconscionable and, thus, unenforceable. Ibid.
30 A-3196-20
Similarly, in Siclari v. Siclari, a maintenance provision of a prenuptial
agreement was held unconscionable. 142 A.D.2d 392, 392 (N.Y. App. Div.
2002). The court reasoned that the agreement was "not negotiated at arms'
length" and was "facially unfair," as the prenuptial agreement was drafted by the
husband's lawyer the night before the wedding, and was forced upon the wife,
who was not represented by counsel. Id. at 393. Based on such factors, the
court set aside the wife's waiver of maintenance. Ibid.
Whether "a contract is entire or severable generally is a question of
intention, to be determined from the language employed by the parties, viewed
in the light of the circumstances surrounding them at the time they contracted."
Christian, 365 N.E.2d at 856. Where there is a severability clause, by contract
terms, courts are "free to adjudge the validity of . . . the separation agreement
without consequential effect on the remainder of the writing." Ibid. Where the
provisions of a contract are intertwined with the consideration to be paid, the
agreement is considered in its entirety and indivisible. Navilia v. Windsor Wolf
Rd. Props. Co., 249 A.D.2d 658, 661 (N.Y. App. Div. 1998).
Here, because there is no severability clause contained in the agreement,
no provision of the agreement can remain intact. The maintenance waiver, and
waivers of equitable distribution and counsel fees are inextricably intertwined
31 A-3196-20
with the payment of the unconscionable consideration of just $25,000 for a
thirty-three-year marriage. Accordingly, plaintiff's argument that the agreement
is valid under New York law because it was signed by defendant and notarized
on her behalf is devoid of merit. The judge correctly determined the agreement
is invalid and unenforceable.
B.
Mallamo Adjustment
Plaintiff contends that the judge abused his discretion when he denied
plaintiff's request for a Mallamo adjustment for overpayment of pendente lite
support. In particular, plaintiff asserts that because the judge ultimately divided
the assets equally as of the date the complaint was filed, plaintiff is entitled to a
Mallamo credit. Plaintiff contends he was ordered to pay pendente lite support
because the assets that supported the marital lifestyle were titled in his name.
When the complaint was filed, plaintiff claims he was "largely retired," but had
some sporadic consulting income, which was insufficient to pay the marital
expenses.
"[P]endente lite support orders are subject to modification prior to entry
to final judgment . . . , and at the time of entry of final judgment. . . ." Mallamo,
280 N.J. Super. at 12 (citations omitted). "In many instances the motion judge"
32 A-3196-20
hearing a pendente lite application "is presented reams of conflicting and, at
times, incomplete information concerning the income, assets and lifestyles of
the litigants." Id. at 16. Often "a judge will not receive a reasonably complete
picture of the financial status of the parties until a full trial is conduct ed." Ibid.
In analyzing a request for a Mallamo adjustment, the court must consider
whether the amount of pendente lite support paid "was consistent with the
marital lifestyle." Slutsky v. Slutsky, 451 N.J. Super. 332, 369 (App. Div.
2017). "Any changes in the initial orders rest with the trial judge's discretion"
and are therefore reviewed under an abuse of discretion standard. Id. at 368.
Here, the judge denied plaintiff's request for a Mallamo adjustment. The
judge reasoned a large portion of the pendente lite support was paid from trust
distributions; plaintiff controlled the marital assets; plaintiff had the benefit of
investment income to pay his expenses plus the balance of his pendente lite
obligation; plaintiff had the benefit of tax refunds that he used to pay expenses;
and plaintiff took his girlfriend on expensive vacations. The record shows
plaintiff spent $81,000 of marital funds in five months while the divorce was
pending on trips and luxuries. In addition, the judge found defendant's lifestyle
has been "static," but in contrast, plaintiff's lifestyle has not been static, "neither
in earnings nor expenditures."
33 A-3196-20
Moreover, defendant was not awarded alimony and was ordered to pay for
her own counsel fees and expenses, which the judge accounted for in the
Mallamo analysis. And, plaintiff's income was $433,000 at the time these
proceedings were pending; while in contrast, defendant had no income. The
judge declined to retroactively modify plaintiff's pendente lite support amount
after presiding over two trials, and considering factual and expert testimony.
The judge considered the equitable distribution award to the parties , and in
particular, his ruling that the assets would be divided equally as of the date of
complaint. Based upon our careful review of the record. we are satisfied the
judge did not abuse his discretion in denying a Mallamo credit to plaintiff. The
judge reasonably reached the result from the evidence presented, and we do not
discern any error.
IV.
We next address the issues raised by defendant in her cross-appeal.
Defendant argues the judge committed reversible error by failing to distribute
the parties' retirement accounts subject to passive increases in the form of market
gains and losses6 and failed to make specific findings regarding equitable
6 In her merits brief, defendant represents she waived the investment experience
on the distributions plaintiff withdrew from his retirement assets while this
matter was pending.
34 A-3196-20
distribution of the parties' marital retirement assets. Defendant also contends
the judge erred by reversing his prior counsel fee award to her and refunding
$327,000 of counsel fees previously paid to her in accordance with the May 7,
2019 order because the judge made a "final decision" that the agreement is
unenforceable, and the award of counsel fees was not granted without prejudice.
A.
Market Gains and Losses
"Appellate review pertaining to the division of marital assets is narrow."
Valentino v. Valentino, 309 N.J. Super. 334, 339 (App. Div. 1998) (citing
Wadlow v. Wadlow, 200 N.J. Super. 372, 377 (App. Div. 1985)). "We decide
whether the trial [court] mistakenly exercised its broad authority to divide the
parties' property and whether the result was 'reached by the trial judge on the
evidence, or whether it is clearly unfair or unjustly distorted by a misconception
of law or findings of fact that are contrary to the
evidence.'" Ibid. (quoting Wadlow, 200 N.J. Super. at 382).
Generally, assets are valued at the time of the filing of the complaint.
Bednar v. Bednar, 193 N.J. Super. 330, 332 (App. Div. 1984) (citation omitted).
However, "[p]assive assets, the value of which fluctuate after the filing of the
complaint by virtue of market forces, should be valued as of the date of trial or
35 A-3196-20
distribution, not the date of the filing of the divorce complaint." Platt v. Platt,
384 N.J. Super. 418, 427 (App. Div. 2006) (citing Scavone v. Scavone, 243 N.J.
Super. 134, 137 (App. Div. 1990)). If the increase in the asset's value is due to
the actions of one party, then the increase is not subject to distribution. Addesa
v. Addesa, 392 N.J. Super. 58, 77 (App. Div. 2007).
In Addesa, we held where there are fluctuations in the value of a marital
asset between the date the divorce complaint was filed and the date of
distribution, an analysis must be made as to the "driving force" behind the
fluctuations. 392 N.J. Super. at 76-77. We concluded where the enhanced value
of an asset is attributable to market factors or inflation, the increase will
generally be divided between both parties. Id. at 77.
Likewise, in Scavone v. Scavone, the trial court defined different types of
assets and opined as to the method of distribution related to same. 230 N.J.
Super. 482, 486 (Ch. Div. 1988). Passive assets were "defined as those assets
whose value fluctuations are based exclusively on market conditions," ibid., and
"passive joint asset[s] acquired during marriage," are subject to equitable
distribution, id. at 490. As to the distribution of such passive joint assets, the
trial court reasoned:
If the asset increases in value between the time
controlling for purposes of inclusion and evaluation,
36 A-3196-20
i.e. ordinarily the date of filing the complaint, and the
time of actual distribution ordered by the [c]ourt, (and)
[i]f the increase in value is simply due to market factors
or inflation, each party should share equitably in the
increment.
[Ibid. (quoting Bednar, 193 N.J. Super. at 333)].
Here, the judge initially ordered all the parties' assets to be divided as of
the date of the filing of the complaint for divorce, pursuant to the FJOD but did
not apply the principles established in Addesa, Scavone, or Bednar and did not
explain how changes in the parties' accounts following the date of the complaint
should be distributed. The judge also did not address or find whether the
accounts increased in value due to market factors or inflation or the effort s of
one or both parties. In a subsequent decision, however, the judge ruled that the
investment experience on the non-retirement and retirement assets that
accumulated between the date of the filing of the complaint for divorce until the
actual distribution date would inure to plaintiff only.
Defendant argues the judge's decision deprives her of the passive
increases7 on the parties' retirement accounts from the date the complaint was
7 In her merits brief defendant asserts the passive increases are estimated at
$800,000 to $900,000. At oral argument, her attorney argued the passive
increases are $1,600,000 to $1,800,000. The exact amount is not germane to
our decision except that we note it is a large sum.
37 A-3196-20
filed and the entry of the FJOD in derogation of the controlling case law, and
the judge's decision on this issue is inequitable. Defendant claims the growth is
"passive" as defined in Scavone and later case law. Defendant maintains that
plaintiff did not present any evidence at trial to prove the increase in his
retirement accounts from the date of the filing of the complaint to the date of
distribution was active appreciation and not passive appreciation.
We are constrained to vacate, reverse, and remand and direct the trial
judge to reconsider the issue, the evidence, and the parties' arguments and make
specific findings of fact and conclusions of law in accordance with Rule 1:7-
4(a). The judge did not specify his reasons for refusing to account for passive
investment increases in plaintiff's retirement accounts in his equitable
distribution award. We remand for the judge to reconsider the issue and make
the appropriate findings supporting his determination. We decline to exercise
original jurisdiction under Rule 2:10-5 on this issue because the judge may
require further factfinding on the passive investment increases issue.
B.
Equitable Distribution Findings
We are unpersuaded by defendant's argument the judge committed
reversible error by failing to make specific findings regarding equitable
38 A-3196-20
distribution of the parties' marital retirement assets under N.J.S.A. 2A:34-23.1.
Defendant asserts the judge did not analyze the claims made by either party and
did not conduct a categorization of the assets pursuant to Scavone.
We review a decision about equitably distributing marital assets for an
abuse of discretion. La Sala v. La Sala, 335 N.J. Super. 1, 6 (App. Div. 2000).
We will affirm the Family Part's decision as long as the court "could reasonably
have reached the result from the evidence presented, and the award is not
distorted by legal or factual mistake." Ibid. (citing Perkins v. Perkins, 159 N.J.
Super. 243, 247-48 (App. Div. 1978)).
Turning to defendant's contentions, we conclude the judge properly
exercised his discretion in awarding each party fifty percent of the assets with
the exception of two properties plaintiff proved were his pre-marital assets: 54
Satellite Company and 12 W. 9th Street Company. Based on the testimony and
expert opinions of two seasoned forensic accountants, the judge found there was
"no paperwork showing the value of any retirement assets [plaintiff] owned prior
to the marriage." The only documentary proof of retirement statements was
dated 2013. In his decision, the judge noted there is "little question" that
plaintiff had some retirement assets going into the marriage. Other than "overall
value," the judge found plaintiff failed to meet his burden to claim his pre-
39 A-3196-20
marital retirement assets were immune from equitable distribution. The judge
therefore properly discerned the pre-marital retirement assets were part of the
marital estate and divided them equally between the parties.
Based on the limited proofs available and the benefit of forensic
accounting expert testimony, the judge provided his reasoning with regard to the
division of marital assets based on the evidence presented. We discern no abuse
of discretion in light of the fact defendant received fifty percent of the assets,
save for two that plaintiff proved were exempt from equitable distribution.
C.
Counsel Fees
Defendant contends the judge initially ordered plaintiff to pay $327,000
in counsel fees to her because the judge found defendant was not represented by
counsel when the agreement was entered, and the agreement was materially false
for the many reasons expressed in his opinion on this issue. Defendant also
claims she made a good faith effort to resolve the dispute without the need for
litigation by attending several mediation sessions before the divorce complaint
was filed. She also asserts plaintiff chose to "ignore" the "obvious flaws" of the
agreement, which made it "blatantly unenforceable." Plaintiff argues defendant
should be responsible for all of her counsel fees and costs because she received
40 A-3196-20
approximately $6,000,000 in equitable distribution. The judge reversed his
original $327,000 counsel fee award without adequate explanation. Based upon
our careful review of the record, we vacate that portion of the court's order
requiring defendant pay for the $327,000 counsel fee the court previously
ordered plaintiff pay, reconsider the issue anew, and make appropriate findings
of fact and conclusions of law supporting whatever determination it makes on
the issue following remand.
The decision to award "attorney's fees rests within the sound discretion of
the trial court." Maudsley v. State, 357 N.J. Super. 560, 590 (App. Div. 2003).
"'[F]ee determinations by trial courts will be disturbed only on the rarest of
occasions, and then only because of a clear abuse of discretion.'" Packard-
Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 444 (2001) (quoting Rendine v.
Pantzer, 141 N.J. 292, 317 (1995)); accord Berkowitz v. Berkowitz, 55 N.J. 564,
570 (1970).
"Although New Jersey generally disfavors the shifting of attorney'[s]
fees," a prevailing party may recover attorney's fees if expressly provided by
statute, court rule, or contract. Bamberger, 167 N.J. at 440 (first citing N.
Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158 N.J. 561, 569 (1999); and
then citing Dep't of Env't Prot. v. Ventron Corp., 94 N.J. 473, 504 (1983)). A
41 A-3196-20
Family Part judge may award counsel fees at their discretion subject to the
provision of Rule 4:42-9. In determining the award, the judge should consider:
(1) the financial circumstances of the parties;
(2) the ability of the parties to pay their own fees or to
contribute to the fees of the other party;
(3) the reasonableness and good faith of the positions
advanced by the parties both during and prior to trial;
(4) the extent of the fees incurred by both parties;
(5) any fees previously awarded;
(6) the amount of fees previously paid to counsel by
each party;
(7) the results obtained;
(8) the degree to which fees were incurred to enforce
existing orders or to compel discovery; and
(9) any other factor bearing on the fairness of an award.
[R. 5:3-5(c).]
A judge "shall consider the factors set forth in [Rule 5:3-5(c)], the
financial circumstances of the parties, and the good or bad faith of either party."
N.J.S.A. 2A:34-23. In calculating the amount of reasonable attorney's fees, "an
affidavit of services addressing the factors enumerated by RPC 1.5(a)" is
42 A-3196-20
required. R. 4:42- 9(b); Twp. of W. Orange v. 769 Assocs., LLC, 198 N.J. 529,
542 (2009). RPC 1.5(a) sets forth the factors to be considered:
(a) A lawyer's fee shall be reasonable. The factors to be
considered in determining the reasonableness of a fee
include the following:
(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill
requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that
the acceptance of the particular employment will
preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for
similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or
by the circumstances;
(6) the nature and length of the professional
relationship with the client;
(7) the experience, reputation, and ability of the
lawyer or lawyers performing the services; [and]
(8) whether the fee is fixed or contingent.
The judge noted the appropriate factors in his decision, but did not fully
analyze each except to find there was no significant financial disparity between
the parties because following the dissolution trial, the judge awarded each party
43 A-3196-20
fifty percent of the assets as of the date of the complaint. The judge concluded
each party had the same ability to pay their respective counsel fees and litigation
expenses, and found both parties acted in good faith in advancing their
arguments pendente lite and at the dissolution trial. However, the judge never
explained why he reversed his original $327,000 attorney's fee award to
defendant. Therefore, as noted, we vacate the court's order directly defendant
pay the $327,000 in her counsel fees it previously directed plaintiff pay, remand
for the court to reconsider that issue anew, and direct the court make appropriate
findings of fact and conclusions of law. R. 1:7-4, supporting its determination
of the issue on remand.
To the extent we have not specifically addressed any of the parties'
remaining claims, we conclude they lack sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).
In sum, we:
(1) affirm the order invalidating the agreement;
(2) affirm the decision denying a Mallamo credit to
plaintiff;
(3) vacate the court's order directing defendant pay the
$327,000 in her counsel fees it previously directed
plaintiff pay, remand for the court to reconsider the
issue anew, and direct that the court make appropriate
44 A-3196-20
findings of fact and conclusions of law, R. 1:7-4
supporting its determination of the issue on remand;
(4) affirm the award of equitable distribution; and
(5) vacate and remand as to the FJOD and subsequent
ruling and direct the judge to reconsider anew his
decision awarding all of the investment experience on
the parties' retirement accounts to plaintiff.
We express no opinion as to the outcome of the judge's decisions on the
investment experience and counsel fee issues. The court shall conduct such
proceedings it deems appropriate on remand to address the issues and the parties'
arguments.
Affirmed in part, vacated, and remanded in part. We do not retain
jurisdiction.