Court Opinion

ID: 4430543
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:43:18.623481+00
Date Added: 2024-06-11T14:51:00.172390
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     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.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-5063-15T3

STEPHEN K. LEE,

        Plaintiff-Appellant,

v.

XIAOPING LI,

        Defendant-Respondent.

_______________________________

SHUANG QI SUN,

     Intervenor-Respondent.
_______________________________

              Submitted February 12, 2018 - Decided September 4, 2018

              Before Judges Messano, Accurso and Vernoia.

              On appeal from Superior Court of New Jersey,
              Chancery Division, Family Part, Somerset
              County, Docket No. FM-18-0659-13.

              Steven A. Caputo, attorney for appellant
              Stephen K. Lee.

              Respondent Xiaoping Li has not filed a
              brief.

              Wang, Gao & Associates, PC, attorneys for
              respondent Shuang Qi Sun (Heng Wang and
              Jeremy J. Jackson, on the brief).
PER CURIAM

     This divorce action became, in essence, a contest between

plaintiff Stephen Lee and an intervenor, Shuang Qi Sun, a

businessman from China, who obtained a default judgment of

approximately $1,040,0001 against Lee's wife, defendant Xiaoping

Li, but whose complaint against plaintiff was dismissed on

summary judgment.   After defendant defaulted in the divorce, the

trial court denied equitable distribution to both plaintiff and

defendant based on its finding that defendant acquired the

marital home and an apartment in Beijing through misuse of money

provided by intervenor for investment, and that the parties

transferred another property from plaintiff to defendant to

avoid its inclusion in plaintiff's bankruptcy.   The court

granted intervenor power of attorney to sell all three

properties to satisfy his default judgment against defendant and

allowed him to retain any surplus based on its finding that

neither defendant nor plaintiff was "entitled to equitable

distribution from those assets and these sums represent

1
   It is impossible to be more precise on this record. The
appendix does not contain a judgment entered on the Civil
Judgment and Order Docket, see R. 4:101, and the order dated
October 30, 2015 granting intervenor judgment by default,
included in the appendix, awards intervenor $900,000 and
¥919,091 (RMB). In its opinion from the bench, the court, using
an online calculator, noted that latter sum as the equivalent of
$139,703.

                                2                            A-5063-15T3
intervenor's lost profits on amounts given to the defendant, in

any event."

    Plaintiff appeals from those aspects of the final judgment

of divorce denying him equitable distribution, claiming, among

other things, that the court failed to accord him the benefit of

the summary judgment he obtained dismissing intervenor's

complaint and overlooked evidence in the record pointing to

intervenor's own unclean hands.       Defendant has not contested

plaintiff's appeal.   Intervenor opposes the relief, arguing

plaintiff is "trying to raise new issues on appeal" and "waived

his right to seek further discovery by moving for default

judgment against defendant."

    Because the unusual procedural posture of this case

deprived plaintiff of the benefit of his judgment dismissing

intervenor's complaint and did not afford him the opportunity to

challenge intervenor's allegedly "unclean hands," we vacate the

court's ruling on equitable distribution and remand for

reconsideration.

    Although our review has been somewhat hampered by the

parties' failure to include all parts of the record essential to

a proper consideration of the issues, see R. 2:6-1(a)(1), we

have been able to piece together what we believe to be the

essential facts and procedural history.      Plaintiff filed for

                                  3                           A-5063-15T3
divorce in January 2013.    Defendant filed a timely answer and

counterclaim, and her counsel apparently first raised the

specter of a potential claim by intervenor at the early

settlement panel.

     Intervenor thereafter obtained leave to participate in the

parties' divorce action.2   He filed a complaint against both

defendant and plaintiff alleging defendant enticed him to enter

"a business venture" in 2007 claiming "she had experience

operating a furniture and carpet business" and "with her United

States permanent resident status, that she was able to acquire

commercial property easily."    Intervenor claimed he and

defendant entered into an "oral agreement" in China to start a

new company in the United States of which they would be the only

two shareholders.   Intervenor was to own fifty-one percent and

defendant forty-nine percent and each was to contribute capital

in proportion to his or her ownership interest "towards the

purchase of commercial property for the purpose of operating the

new company."   Intervenor was to serve as chairman of the board

and defendant was to be in charge of business operations,

2
   There is no indication in the record on appeal as to whether
defendant opposed the application. Although plaintiff's counsel
claimed intervenor never served him with the motion to
intervene, he ultimately acquiesced in the filing after "the
judge . . . suggested there was no way this was going to get
resolved without it."

                                 4                          A-5063-15T3
providing intervenor with monthly reports on the company's

operations and finances.

     Intervenor also alleged in his complaint that the company

was incorporated in New Jersey in April 2007 and that he wired

$300,000 to defendant's account in a Chinese bank in July 2007

pursuant to the parties' agreement.3    The complaint further

alleged that intervenor "or his agents" purchased ¥918,991.19

(RMB) in carpet and furniture for the company in China in July

2007 at defendant's request, and that intervenor, using twelve

different individuals as surrogates, wired $600,000 to defendant

in sums of $50,000 each between August and October of 2007.         The

complaint alleged the company never got off the ground, and

defendant never "purchased any commercial property to facilitate

[its] operation[s]."     Intervenor pled counts alleging a

constructive trust, breach of contract and unjust enrichment

against both defendant and plaintiff as well as a fraud count

against defendant.

     Following intervenor's entry into the case in late

September 2013, the parties appeared for a case management

conference, at which defendant represented herself, having

dismissed her counsel.     On the record at that conference,

3
   A translation of the fund transfer document in the appendix,
however, lists the funds as a loan.

                                  5                            A-5063-15T3
defendant told the judge she was "just wondering if they said

the marriage residential, that's really belong to us, where does

the money come from?"     Defendant proceeded to explain to the

court that intervenor wired money to her to build a furniture

business but the economy in 2008 made that impossible.     She

explained "they" gave up on that and bought the house out of

foreclosure with the idea of flipping it.     She claimed when the

house did not sell, she and plaintiff moved there "to maintain

the house."   She further claimed intervenor agreed they would

sell it when the market improved.     She told the court that just

as she was readying the property to put it on the market,

plaintiff filed for divorce.

    Defendant does not appear to have meaningfully participated

in the case after that conference.    She never appeared for

deposition, and the court struck her pleadings, first on

intervenor's motion in November 2014 and then on plaintiff's

motion in January 2015.

    Plaintiff obtained summary judgment dismissing intervenor's

complaint against him in May 2015.    The court found intervenor

presented no proof that plaintiff knew where the funds to

purchase the marital residence had come from or had any

involvement in intervenor's dealings with defendant.     Although

plaintiff acknowledged meeting intervenor with defendant, the

                                  6                         A-5063-15T3
court noted that intervenor and defendant conducted their

business in Chinese, which plaintiff does not speak or

understand.   Another judge, the same one who entered the

judgment of divorce, subsequently granted intervenor's motion

for entry of default judgment against defendant on the papers.

    When plaintiff appeared for the default hearing on the

divorce, defendant's third lawyer on the case made a motion to

withdraw on the record after defendant advised the court that

she would not appear.   Although not objecting to counsel's

withdrawal, plaintiff's counsel vehemently objected to his

client being cross-examined by defendant's counsel in light of

her unwillingness to participate in discovery or be deposed.

    Plaintiff's counsel represented that defendant failed to

disclose her ownership of the apartment in Beijing and between

$50,000 to $60,000 of income on her CIS, and that plaintiff had

not been able to locate two other properties defendant acquired

in China during the parties' marriage.   He claimed permitting

defendant's counsel to do anything other than observe, simply

magnified the prejudice plaintiff had already suffered as a

result of defendant's contumacious conduct.   Although the court

advised defendant's counsel it would grant his motion to be

relieved, counsel determined ultimately to stay "and participate

on [defendant's] behalf" after his client sent him an email

                                7                           A-5063-15T3
"releas[ing] [him] from any liability for anything that happens

today."

    At the default hearing, plaintiff testified at length about

the parties' thirteen-year marriage, what little he knew of

their finances, his paying over the entirety of his social

security check every month to defendant, defendant's bullying

behavior toward him, her use of the letterhead of a defunct

business he formerly maintained to issue fraudulent invitations

to Chinese citizens, including intervenor, to allow them to

obtain travel visas to the United States, and his care of their

daughter then in sixth grade.   He was vigorously cross-examined

by counsel for intervenor and counsel for defendant, especially

over defendant's purchase of plaintiff's South Plainfield home

after the birth of their daughter in 2002 but approximately nine

months prior to their marriage in 2004.

    Plaintiff testified the house was in foreclosure and there

was an outstanding tax sale certificate.   Although the testimony

was far from clear about how much plaintiff owed on the mortgage

when he sold the property, he eventually testified he owed

$110,000 on the mortgage, that defendant purchased the property

for $115,000, although the property was worth $300,000, and he

did not declare an expected interest in the property when he

filed for bankruptcy in August 2005, despite an oral agreement

                                8                         A-5063-15T3
with defendant that she would put his name on the deed after he

completed his bankruptcy, which she reneged on.

     Plaintiff sought fifty percent of the marital home, valued

by his expert between $750,000 and $780,000 and fifty percent of

the South Plainfield property, which his expert testified he

would list at $310,000, expecting a sale price between $298,000

and $300,000.   As to the property in Beijing, an apartment

valued at $1,953,000, plaintiff offered to have his share of the

property placed in trust for their daughter's education.4     The

two New Jersey properties are titled solely in defendant's name,

as apparently is the apartment in Beijing.

     Defendant's counsel argued in summation that the South

Plainfield property was a pre-marital asset not subject to

equitable distribution.   Counsel conceded plaintiff was entitled

to a share of the marital home but argued giving him "fifty

percent of everything with the million dollar judgment"

4
   Although an appraisal, of sorts, of this property translated
from the Chinese and listing defendant as the owner was admitted
in evidence, no one produced a deed, and there was no testimony
as to when defendant purchased the property, purportedly built
in 2005, or for how much. The appraisal does not list a
mortgage encumbering the property. Plaintiff testified to
sending a $400,000 wire transfer at defendant's direction to an
account in China in her name in January 2010, but had no
knowledge of where the money came from or what it was to be used
for. There was no evidence linking that transfer to this
property.

                                9                           A-5063-15T3
intervenor had against her would result in "a situation where

the net to . . . [defendant] is going to work out to be zero or

around there."

    Intervenor's counsel argued that "plaintiff should be

jointly liable for the repayment of all monies paid on that

house."   Acknowledging plaintiff succeeded in having

intervenor's complaint against him dismissed in its entirety,

counsel argued "the court still can hold him liable under the

theory of marital liabilities."     He claimed plaintiff "kept

himself willfully ignorant of his wife's dealings" with

intervenor and suggested based on their "past collu[sion] to

hide assets from a trustee in a bankruptcy proceeding" that the

two were working together "in an attempt to try to do the same

thing here."   Intervenor asked that the court transfer title to

the marital home to him or alternatively that all the properties

be liquidated, the proceeds placed in counsel's or the court's

trust account to permit satisfaction of the judgment and

distribution of the remaining funds as the court would order.

    Counsel for plaintiff reminded the court that another judge

had already ruled that plaintiff "had no liability whatsoever"

for the sums owed intervenor, and that the court could not

accept intervenor's argument and "procedurally or equitably

. . . reinstate[s] those claims and hold [plaintiff] liable for

                               10                           A-5063-15T3
this after [plaintiff] already won the motion for summary

judgment."   Although taking no "position as to what [plaintiff

and defendant] were trying to do" with regard to the South

Plainfield property in plaintiff's bankruptcy, counsel argued

defendant received a windfall in the conveyance, a portion of

which should equitably be awarded to plaintiff.    Finally,

plaintiff's counsel argued that defendant should not be rewarded

for her successful efforts in preventing plaintiff from

discovering her assets in defiance of multiple court orders.

    Following summations, the court questioned the lawyers for

intervenor on the ability to execute on the property in Beijing

should the court "address liquidation of that property to

satisfy a judgment."   Counsel responded that they had been in

contact with intervenor's counsel in China, and "[a]ccording to

her, it's extremely difficult to get it liquidated unless

[defendant] is physically there to sell that property.    Things

in China work very differently."    Counsel expressed the view,

again based on his discussions with his counterpart in China,

that "to the extent that that property can be turned into money,

I think it's not going to happen right away[,] and I doubt if it

will ever happen at all. . . . [I]t's generally very difficult

to enforce a U.S. judgment in China."

                               11                             A-5063-15T3
     Two weeks after the hearing, the judge put his opinion on

the record.   The judge found plaintiff a credible witness,

ignorant of his wife's misdeeds.    Based on plaintiff's

testimony, the court found the marital standard of living for

the family was $6358 per month, and that plaintiff was without

property or savings other than the $1000 per month he received

in social security, $300 of which he received on behalf of the

parties' daughter.   In light of the considerable difference in

the parties' incomes and ages, plaintiff was sixty-eight when

the court entered judgment and defendant fifty-four, the court

awarded plaintiff term alimony and required no child support

beyond the $300 derivative payment from social security.

     Determining, however, that the marital property and the

property in Beijing5 were "illegally acquired and the court can

only distribute assets that were legally acquired," relying on

5
   Although defendant admitted in her CIS filed with the court
that she used a portion of the funds supplied by intervenor to
purchase the marital property, prompting the court's finding in
the default judgment entered in favor of intervenor that
defendant used $636,000 of the $900,000 wired to her by
intervenor for that purpose, there is nothing in the record
linking the funds used to purchase the Beijing apartment to the
$264,000 of intervenor's funds remaining after defendant's
purchase of the marital residence in 2008. The trial judge
found he could not determine where the funds came from for that
purchase. The court found only that there was no evidence that
defendant "had the means" to acquire either the marital
residence "or the China property, except by way of ill-gotten
gains, namely, by using the money given to her by intervenor."

                               12                          A-5063-15T3
Sheridan v. Sheridan, 247 N.J. Super. 552, 562 (Ch. Div. 1990),

the court declined to make any equitable distribution of those

assets to the parties and instead ruled "intervenor will be

permitted to satisfy his judgment from these assets."

    The court ruled the South Plainfield property "stands on

similar but slightly different footing."   Finding "the parties

operated to hide [the] asset from the bankruptcy trustee," the

court determined "to notify the United States bankruptcy trustee

of plaintiff's admission to the fraud on the record."   The court

further ordered:

              Until the bankruptcy trustee notifies
         this Court of his or her intent to act or
         not, vis a vis this asset, the asset shall
         not be equitably distributed or liquidated.
         If the trustee declines to act, the
         intervenor shall be permitted to liquidate
         the asset to the extent his judgment has not
         been satisfied from the other assets.

              The intervenor is granted power of
         attorney, therefore, to liquidate the
         [marital residence] to satisfy his judgment.
         Next, the intervenor is granted power of
         attorney to liquidate the China property to
         satisfy his judgment. Third, and in this
         order, if the bankruptcy trustee declines to
         act, the intervenor will then be permitted
         to liquidate the [South Plainfield]
         property, to the extent that the
         intervenor's judgment is not satisfied from
         the [marital residence] and the China
         property.

              The intervenor shall satisfy the
         [attorney fee] debt owed by defendant from

                              13                          A-5063-15T3
          the [South Plainfield] property, as well as
          any counsel fees owed to [plaintiff's
          counsel] from that asset. If after the
          liquidation of the China property and the
          [marital residence], there are funds left,
          the intervenor shall keep them, because the
          plaintiff and the defendant are not entitled
          to equitable distribution from these assets
          and these sums represent intervenor's lost
          profits on amounts given to the defendant,
          in any event.

    Plaintiff appeals, arguing, among other things, that the

court erred in ignoring evidence of intervenor's unclean hands,

in awarding intervenor approximately $3,000,000 in assets to

satisfy a judgment against defendant for approximately

$1,100,000, in making intervenor defendant's attorney in fact to

liquidate those assets and in reporting the parties to the

bankruptcy trustee.

    Intervenor counters that plaintiff is "trying to raise new

issues on appeal," and that we should disregard plaintiff's

allegations of money laundering and decline to apply the defense

of "in pari delicto" as neither was ever raised in the trial

court.   Intervenor contends the judgment was fair and equitable

because plaintiff was unjustly enriched by defendant's

fraudulent conduct.   Intervenor contends the court's dismissal

of all his claims against plaintiff, including those for unjust

enrichment, is "not dispositive of a finding of unclean hands"

                               14                         A-5063-15T3
because "[t]he doctrine of unclean hands is a legal principle,

not a cause of action."

    We ordinarily accord deference to the Family Part based on

its special jurisdiction and expertise.    Cesare v. Cesare, 154

N.J. 394, 411-13 (1998).   We defer to the court's factual

findings if "supported by adequate, substantial, and credible

evidence in the record."   D.A. v. R.C., 438 N.J. Super. 431, 451

(App. Div. 2014).   We owe no deference, however, to rulings not

based on witness testimony or credibility findings.   Yueh v.

Yueh, 329 N.J. Super. 447, 461 (App. Div. 2000).    Our review of

questions of law is, of course, de novo.   Nicholas v. Mynster,

213 N.J. 463, 478 (2013); Manalapan Realty, L.P. v. Twp. Comm.

of Manalapan, 140 N.J. 366, 378 (1995).

    The law is well settled that "[a] court of equity can never

allow itself to become an instrument of injustice."   Rolnick v.

Rolnick, 262 N.J. Super. 343, 362 (App. Div. 1993) (quoting

Sheridan, 247 N.J. Super. at 556).   "Thus, where the bad faith,

fraud or unconscionable acts of a petitioner form the basis of

his lawsuit, equity will deny him its remedies."    Ibid. (quoting

Sheridan, 247 N.J. Super. at 556).   Courts of equity applying

the maxim of unclean hands must, of course, "use just discretion

in determining under what circumstances, to what extent and what

policy reasons will constitute cause to banish a litigant or to

                               15                            A-5063-15T3
bar her relief."    Sheridan, 247 N.J. Super. at 569.    The Supreme

Court has long acknowledged "[i]t is the effect of the

inequitable conduct on the total transaction which is

determinative whether the maxim shall or shall not be applied.

Facades of the problem should not be examined piecemeal."

Untermann v. Untermann, 19 N.J. 507, 518 (1955).

    We begin our analysis by making clear we have no quarrel

with the court's referral of plaintiff's failure to have

disclosed his expected interest in the South Plainfield property

in his 2005 bankruptcy to the bankruptcy trustee.       We reject

plaintiff's arguments that the language barrier to clear

testimony and the uncertainty as to whether plaintiff had an

obligation to report his expectation as to that property, which

was ultimately not fulfilled in any event, should have stayed

the judge's hand.

    "When a court becomes aware that the parties appearing

before it are, or may be, involved in illegal conduct, it has an

ethical obligation to act."    State v. V.D., 401 N.J. Super. 527,

537 (App. Div. 2008).    Although we have not hesitated to act

ourselves when we believe a judge has overstepped his bounds in

that regard, see id. at 538 (reversing special condition of

probation requiring defendant contact immigration officials to

notify them of her conviction), we have no cause to do so here.

                                16                            A-5063-15T3
It is up to the bankruptcy trustee to determine whether

plaintiff had an obligation to disclose whatever interest he had

in the South Plainfield property and, if so, whether the

interest would have or should be abandoned.   See id. at 537.

     We are not so sanguine, however, about the court's

disposition of that asset in the event the trustee determined to

abandon it,6 or the court's conclusion that plaintiff should

forfeit any interest in that property or the other two

properties owned by defendant without any inquiry as to whether

intervenor was entitled to equitable relief vis-á-vis plaintiff.

In other words, it does not appear the judge assessed

intervenor's conduct with the same gimlet eye with which it

appraised plaintiff's.

     Plaintiff testified that defendant used old letterhead of

his to make up phony invitations to Chinese citizens, including

intervenor, permitting them to obtain visas to travel to New

Jersey to conduct business, and to his belief that intervenor

violated Chinese law in transferring $900,000 out of China to

defendant.   Intervenor apparently admitted in a deposition, not

6
   Indeed, even under the trial court's expansive view of
Sheridan, we can discern no reason why the South Plainfield
property, to the extent the court determined it a marital asset,
would not be subject to equitable distribution should the
bankruptcy trustee determine to abandon it.

                               17                          A-5063-15T3
included in the appendix, that he transferred $600,000 of that

amount in sums of $50,000 through twelve proxies to avoid

detection and that doing so was a violation of Chinese rules,

or, as plaintiff claims, currency regulations.

    There are other facts apparent on the record that raise

further questions as to intervenor's good faith in this matter.

They include:   the absence of any written agreement between

intervenor and defendant, two individuals, seemingly not well-

acquainted; intervenor's having visited defendant at the marital

residence in 2008; intervenor's almost six-year delay in

instituting suit to recover the money he claimed defendant

misappropriated; and his having done so only after plaintiff

filed his complaint for divorce.    Indeed, there is nothing in

the record on appeal indicating how intervenor learned of the

parties' divorce action.

    None of those facts, either singly or in combination,

proves, of course, plaintiff's allegations that defendant and

intervenor were engaged in a money laundering scheme or that

they colluded to deprive plaintiff of his interest in the

marital property.   But we reject intervenor's assertion that we

should disregard plaintiff's claims of intervenor's inequitable

conduct because they were not raised in the trial court — for

the simple reason that intervenor does not explain when

                               18                           A-5063-15T3
plaintiff should have asserted such claims, or, indeed, had the

opportunity to do so.   See State v. Witt, 223 N.J. 409, 419

(2015) (quoting State v. Robinson, 200 N.J. 1, 20 (2009))

("[O]ur appellate courts will decline to consider questions or

issues not properly presented to the trial court when an

opportunity for such a presentation is available.") (emphasis

added).

    The record makes very apparent, as two judges found, that

plaintiff knew absolutely nothing about defendant's dealings

with intervenor.   Plaintiff secured summary judgment dismissing

intervenor's complaint against him for a constructive trust,

breach of contract and unjust enrichment based on intervenor's

inability to marshal any evidence of plaintiff's knowledge of

defendant's business affairs.   Plaintiff had no need, or likely

ability, to establish anything beyond the absence of any

evidence against him in intervenor's suit.   Further, the trial

judge granted intervenor's motion for default judgment against

defendant in that suit on the papers.   Although intervenor's

counsel participated in the default hearing, we see no reason

for plaintiff to have been prepared to mount a defense to

intervenor's claims against him at that time in light of the

summary judgment he had already secured.

                                19                          A-5063-15T3
    Intervenor's argument that plaintiff chose to enter default

against defendant instead of pursuing discovery ignores the

multitude of discovery and case management orders defendant

defied in the divorce action, which was over three years old at

the time of the entry of the judgment.   Intervenor's claim that

the court was correct to ignore another judge's order finding

that plaintiff was not unjustly enriched at intervenor's

expense, an order intervenor did not appeal, because the

equitable doctrine of unclean hands "is a legal principle, not a

cause of action," is without basis in the facts or the law.

    A review of the record makes clear the court weighed the

equities of intervenor's claims against plaintiff's right to

equitable distribution without critical assessment of

intervenor's good faith, without acknowledging that intervenor's

claims against plaintiff had been dismissed, including the claim

for unjust enrichment, and without ever hearing intervenor's

testimony.   The court never required intervenor to appear before

it to testify to his claims under oath and thus never had the

opportunity to assess his credibility before deciding that

intervenor's claims rose higher than plaintiff's right to

equitable distribution.

    That circumstance makes the court's decision to award

intervenor assets of over $3,000,000 on a claim of less than

                               20                           A-5063-15T3
$1,100,000, expressly permitting him to retain any sums he

collects in excess of his judgment, while awarding plaintiff

zero in equitable distribution, especially troubling.   It is

highly unlikely that intervenor could have obtained such relief

in the Law Division, see Bell Atl. Network Servs., Inc. v. P.M.

Video Corp., 322 N.J. Super. 74, 97-101 (App. Div. 1999) (noting

New Jersey courts do not generally award lost profit damages for

new businesses because of the inability to prove such profits

with reasonable certainty), especially the right to liquidate

the South Plainfield and Beijing properties, which intervenor

produced no proof were purchased with his funds, see Flanigan v.

Munson, 175 N.J. 597, 608 (2003) (explaining the test for

imposition of a constructive trust requires a wrongful act which

"must result in a transfer or diversion of property that

unjustly enriches the recipient"); he should not receive greater

relief simply because he intervened in the parties' divorce.

    We think it plain from this discussion that the "equitable"

award to intervenor the trial court fashioned cannot stand and

must be remanded for reconsideration.   We do not contend the

court erred in seeking to apply the doctrine of unclean hands to

this matrimonial action.   As the Court many years ago observed

in responding to criticisms of the doctrine's applicability to a

divorce, "in many instances involving a rule of law or equity it

                               21                           A-5063-15T3
is not the rule but the application of the rule which raises the

various problems."   Untermann, 19 N.J. at 517.     As the Court

explained, "the principles upon which the maxim rests are

equitable and, if properly administered with consideration of

the total situation, are instrumental in the preservation of

justice and the integrity of the courts."   Ibid.     The problem

here is that the court looked only to defendant's conduct and

plaintiff's but not intervenor's in weighing the equities; that

error must be corrected on remand.

    We offer the following for guidance on remand.      Intervenor

has a default judgment for approximately $1,100,000 against

defendant only, plaintiff having obtained a final judgment

dismissing intervenor's claims, which intervenor did not appeal.

As far as we can tell, intervenor presented no proof that

defendant used intervenor's funds to purchase either the South

Plainfield property or the Beijing apartment.     The default

judgment against defendant limits its findings regarding any

constructive trust to the marital residence.      Thus there was no

basis for the court to order conveyance of either the South

Plainfield property or the Beijing apartment to intervenor.         See

Flanigan, 175 N.J. at 611 ("caution[ing] courts generally that a

constructive trust is a powerful tool to be used only when the

equities of a given case clearly warrant it").      The question for

                               22                            A-5063-15T3
the court on remand is to determine, viewing all the equities,

whether plaintiff has a right to equitable distribution of some

or all of the marital residence vis-á-vis both defendant and

intervenor, whose default judgment against defendant impressing

a constructive trust on that property to the extent of at least

$636,000 was made expressly subject to plaintiff's right to

equitable distribution.

    The court must also determine plaintiff's right to

equitable distribution of the South Plainfield property, in the

event the bankruptcy trustee determined to abandon it, as well

as the Beijing apartment.   In that regard, we make two points

about Sheridan.   The first is that the parties to the divorce in

that case were, for purposes of equitable distribution, in pari

delicto, 247 N.J. Super. at 562, which, with the exception of

the South Plainfield property, is not the case here.   And second

is the Sheridan court's belief that the sums over which it

imposed a constructive trust would likely be consumed to satisfy

the Sheridans' federal and state tax liabilities; meaning that

the court leaving them "where the court found them" would not

reward either one.   Id. at 562, 566-67.   Of course, when the

parties to a divorce are not in pari delicto, the court could

face a more difficult task in ensuring it does not "become an

instrument of injustice," Rolnick, 262 N.J. Super. at 362

                               23                           A-5063-15T3
(quotation omitted), in attempting to equitably distribute the

parties' assets.   Care must be taken in applying the doctrine of

unclean hands to "not worsen a thoroughly bad situation and give

an economic advantage" to a party not deserving it.   Untermann,

19 N.J. at 519.

    Finally, should the court determine that liquidation of

some or all of the properties is appropriate, the court must

consider whether the remedy it chooses is a realistic one and

take steps to assure the proceeds of any liquidation are

properly accounted for.   Judging from the responses of

intervenor's counsel to the court's questions about enforcing a

New Jersey judgment in China, the judgment the court fashioned

could well have the perverse effect of leaving the largest asset

in defendant's possession, a decidedly inequitable result.     The

court has other tools, notably the power in aid of litigant's

rights, to compel compliance with its orders.   See R. 1:10-3; R.

4:59-2(a); In re N.J.A.C. 5:96 & 5:97, 221 N.J. 1, 17-19 (2015)

(discussing alternatives available to the trial court for

enforcing a party's rights); see also Roselin v. Roselin, 208

N.J. Super. 612, 616 (App. Div. 1986) (same).   It should further

consider whether investing the power to liquidate assets

belonging to the parties in an individual beyond the reach of

the court's process and without requiring payment of the

                               24                           A-5063-15T3
proceeds into the Superior Court's or an attorney's trust

account for final disbursement in accordance with the judgment

is appropriate.

    We reverse the equitable distribution award to plaintiff

and those provisions of the divorce judgment granting intervenor

exclusive power to sell or liquidate the three properties

identified in the judgment and remand to the Family Part for

reconsideration and further review.   To the extent that the

court's reconsideration of the equitable distribution award

affects other financial aspects of the judgment, such as

alimony, child support or counsel fees, it may reconsider such

aspects of the judgment as well.

    Reversed in part and remanded.

                              25                            A-5063-15T3