Ambiguous Property Settlement Agreement – It’s a “Mess”

New Jersey courts embrace the resolution of marital controversies through a Property Settlement Agreement (“PSA”), which are voluntarily entered into and promote post-divorce stability. Konzelman v. Konzelman, 158 N.J. 185, 193-94 (1999).  A PSA sets forth the terms of the negotiated settlement agreement between divorcing spouses.If the parties cannot come to a negotiated settlement in a divorce proceeding, the court (or arbitrator in some cases) will decide the issues for the parties at a trial.  Statistics show that the overwhelming majority of divorces resolve prior to a trial.  The PSA will address the issues that were the subject of the divorce proceeding – i.e. spousal support, alimony, equitable distribution, child support, custody and parenting time, counsel and expert fees, etc.  Since the PSA memorializes the agreement between the parties and will be referred to in the future as issues or disputes may arise, it is imperative that the terms of the agreement between the parties are clear and unambiguous.  But what happens when the terms of a PSA are not clear and unambiguous – according to the trial judge in the Appellate Division decision of Gilmore v. Salem it’s a “mess”.

In Gilmore v. Salem, the plaintiff appealed from a trial court order that interpreted the parties’ PSA as it related to which spouse would pay for their child’s college expenses.  The PSA stated in one section that their child’s college expenses would be proportionately paid by the parties based on their “income”, while another section of the PSA stated that their child’s college expenses would be proportionately paid by the parties based on their “income and assets.”  The trial judge declined to hold a plenary hearing on the issue, explaining she believed it would "be a mess." 

The trial judge in Gilmore rendered her decision based on the motion papers without the benefit of additional discovery or testimony.  Upon review, the Appellate Division reversed the trial judge’s order and remanded the case back to the trial judge to conduct a plenary hearing to determine whether, under the PSA, both income and assets in general should be considered, or just the parties' income.  The trial judge was also ordered to then determine the proper apportionment of college expenses given the financial data provided by the parties and the PSA, and if the trial judge concludes that circumstances warrant modification of the terms of the PSA, those findings should also be adequately set forth in the trial judge’s decision.

Unfortunately for the trial judge, the Appellate Division ordered her to conduct the plenary hearing that will certainly be a “mess” considering the ambiguous terms of the PSA.  After consideration of the time and expense of conducting such a hearing, in my opinion, neither party is likely to be satisfied with the outcome.  PSAs are meant to memorialize the negotiated settlement agreement between the parties in a divorce.  Careful review of the terms to ensure that the language is clear and unambiguous is imperative and can save both time and money later.