Court Opinion

ID: 4652435
Source: CourtListenerOpinion
Date Created: 2021-01-20 15:07:57.223986+00
Date Added: 2024-06-11T08:01:47.744581
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NOT FOR PUBLICATION WITHOUT THE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-0881-19T3

VICTORIA GOETHALS,

          Plaintiff-Appellant,

v.

JEFFREY GOETHALS,

     Defendant-Respondent.
________________________

                   Submitted December 14, 2020 – Decided January 20, 2021

                   Before Judges Currier and Gooden Brown.

                   On appeal from the Superior Court of New Jersey,
                   Chancery Division, Family Part, Morris County,
                   Docket No. FM-14-0109-15.

                   Townsend, Tomaio & Newmark, LLC attorneys for appellant
                   (Paul H. Townsend, of counsel and on the briefs;
                   Jennifer M. Cornelius and Angela K. Halvorsen, on the
                   briefs).

                   Gomperts Penza McDermott & Von Ellen, attorneys for
                   respondent (Joseph M. Freda, III and Marisa Lepore
                   Hovanec, of counsel and on the brief).

PER CURIAM
      In this post-judgment matrimonial matter, plaintiff/ex-wife appeals from

the October 11, 2019 Family Part order denying reconsideration of an August

23, 2019 order. The August 23 order denied her request to correct a provision

of the marital settlement agreement (MSA) incorporated into the parties' three-

year-old final judgment of divorce (FJOD). The provision allowed for the

equitable distribution of stocks paid to defendant/ex-husband as part of his

compensation as an executive of Ross Stores, Inc. For the reasons that follow,

we reverse.

      The parties divorced in 2016 after a fifteen-year marriage that produced

two sons. Since the divorce, they have engaged in extensive post-judgment

motion practice, including appellate litigation that recently resulted in an

unpublished decision partially reversing and remanding for further proceedings

issues unrelated to this appeal. See Goethals v. Goethals, No. A-0513-18 (App.

Div. Jan. 7, 2020). This appeal pertains solely to the identification of the Ross

stocks subject to equitable distribution in the MSA entered on May 5, 2016 and

incorporated into the FJOD of the same date.

      Paragraph fifty-two of the MSA provides:

              The parties have a joint E-Trade (-1941) account. The
              parties acknowledge that said account is comprised of
              [defendant's] Employee Stock Purchase Plan shares and
              [defendant's] stock options which have vested. With

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            respect to the Employee Stock Purchase Plan shares,
            there were 3,306 marital shares of Ross Stock.
            [Defendant] shall transfer 1,653 of the Employee Stock
            Purchase Plan Stock to [plaintiff], in kind within thirty
            (30) days. With respect to the stock options that have
            vested, in 2010, [defendant] was granted 7,414 stock
            options. On March 17, 2014, 2,780 of those shares
            vested, resulting in sellable net shares of 1,724 shares,
            which were ultimately placed into the -1941 E-Trade
            account. [Plaintiff] shall receive [fifty percent] of these
            shares, or 862 shares, in kind, by way of equitable
            distribution within thirty (30) days. On March 17,
            2015, 4,634 shares of [defendant's] 2010 grant of stock
            options vested. This resulted in 2,921 net sellable
            shares which were placed in the -1941 E-Trade account.
            [Plaintiff] shall receive [forty percent] of those shares,
            or 1,168 shares, in kind, by way of equitable
            distribution within thirty (30) days. [Defendant] was
            granted 1,326 stock options on March 14, 2012 which
            vest[ed] on March 14, 2017. [Plaintiff] will receive
            [thirty percent] of the net sellable shares of the 2012
            grant, in kind, at the time they vest as additional
            equitable distribution. [Defendant] was granted 1,247
            stock options on March 20, 2013[,] which vest[ed] on
            March 20, 2018. [Plaintiff] will receive [twenty
            percent] of the net sellable shares of the 2013 grant, in
            kind, at the time they vest as additional equitable
            distribution.

      On June 6, 2019, plaintiff moved pursuant to Rule 4:50-1 to correct

paragraph fifty-two of the MSA "to accurately reflect [her] equitable share of

[d]efendant's Employee Stock Purchase Plan, Options vested and unvested"

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subject to equitable distribution. 1   In her supporting certification, plaintiff

asserted that "the date to be used for valuation of [the parties'] marital property

for purposes of equitable distribution" was "July 21, 2014," the date she filed

the divorce complaint.     To that end, based on defendant's production of

documents, "[p]aragraph [fifty-two] of [their] MSA identifie[d] 13,293 shares

as marital property" in the following manner:

            a. [3306] marital shares in Employee Stock Purchase
            Plan, of which [plaintiff] was to receive [1653];

            b. 2780 stock options granted in 2010 which vested, of
            which [plaintiff] was to receive 862 shares;

            c. 4634 stock options granted in 2010 which vested, of
            which [plaintiff] was to receive 1168 shares; and

            d. two tranches of unvested stock options which was
            [set] to vest in March 2017 and March 2018, at which
            time [plaintiff's] share of the net sellable shares would
            need to be calculated.

      However, as a result of a June 8, 2018 meeting convened by Susan Miano,

a forensic accountant appointed by the court in 2017 to address financial issues

related to other post-judgment litigation, both parties were advised that based

on "a 2-for-1 stock split" of Ross stocks that occurred on June 11, 2015, "while

1
  In her moving papers, plaintiff requested oral argument pursuant to Rule 1:6-
2(d) if the application was opposed.
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                                        4
[the] divorce was pending," the numbers reflected in paragraph fifty-two of the

MSA were incorrect. According to plaintiff, based on Miano's discovery, the

stock split resulted in doubling "the marital shares . . . so that instead of 13,293

shares to be distributed, there were actually 26,586 shares subject to equitable

distribution." (Emphasis omitted).

      Plaintiff explained:

            This means that [her] equitable share[s] as of May
            2016, the date the MSA was signed, [were] as follows:

                   a. [3306] shares from Employee Stock
                   Purchase Plan,

                   b. [1724] shares of the first 2010 tranche of
                   vested options,

                   c. [2336] shares of the second 2010 tranche
                   of vested options,

                   d. [thirty percent] of the net sellable shares
                   attributable to the [2652] shares arising
                   from the 2012 grant; and

                   e. [twenty percent] of the net sellable
                   shares attributable to the [2494] shares
                   arising from the 2013 grant.

      According to plaintiff, "[u]sing the current market value of Ross stocks,

just the balance of Employee Stock Purchase Plan and the options granted in

2010" would entitle her to "another $350,695.26 ($95.22 x [3683] shares)," not

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                                         5
including the final two tranches of options from the 2012 and 2013 grants.

However, plaintiff was not seeking "to re-open the amount" she had already

"received for . . . 12,046 shares[] but only the shares [she had] not received to

date," including "the other 12,046 shares created by the stock split and [her]

equitable interest ([twenty percent] of net sellable share) in the 2494 options

which vested in March 2018."

      Plaintiff averred that since the discovery, efforts to resolve the issue

without court involvement have been futile, notwithstanding defendant's initial

acknowledgement during the meeting with Miano that "it must have been a

mistake." While plaintiff "believe[d defendant] either knew or at least should

have known that his company issued a stock split during the pendency of [their]

divorce," and despite other instances during which defendant "ha[d] been less

than honest and forthcoming about the value of [their] marital assets," plaintiff

was "will[ing to] give him the benefit of the doubt and assume that it was

inadvertent and not intentional fraud on his part." Plaintiff asserted "[i]f that

means . . . we call this simply a 'mutual mistake' which resulted in an

unintentional error in [their] MSA, so be it."

      Defendant opposed the motion, asserting that plaintiff's application was

"procedurally deficient as same was submitted without a brief contrary to Court

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                                        6
Rule, was submitted almost two . . . years after the deadline [contrary to] Court

Rule, was a relitigating of an issue previously adjudicated by the [c]ourt, and

[was] contrary to the express language of [their] MSA." Defendant stated that

"[d]espite [p]laintiff's claims to the contrary, th[e] E-Trade account was a [joint]

account," and "[p]laintiff had full and complete access to [the] account for the

duration of [their] marriage, and for almost one (1) year following [their]

divorce." Moreover, according to defendant, plaintiff previously acknowledged

in a November 2016 "post-divorce certification . . . that she was familiar with

the account details and spoke with E-Trade representatives herself regarding the

details of this account."

      Further, defendant averred "[t]here was absolutely no mistake nor fraud"

as the "MSA was negotiated at length between counsel, [the parties], the

economic mediator, and the multiple forensic accountants." Defendant pointed

out that the absence of mistake or fraud was "confirmed" in "paragraph fifty-

eight . . . of [the] MSA," where they "acknowledged that . . . [e]ach party [was]

fully satisfied with the full disclosure of each of the accounts as provided herein

and both have reviewed all account statements and other documentation

necessary relative to the balances distributed and amounts not subject to

equitable distribution." According to defendant, because "[e]verything was

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                                         7
intertwined," if the court "entertain[ed] the amendment of the E-Trade provision,

all issues within the MSA would need to be addressed."

      Additionally, defendant stated they "previously addressed the stock issues

at length in connection with post-judgment litigation and resolved same in full"

in 2017 when he paid plaintiff "the total sum of $244,687.59 as her share of the

sale of [Ross s]tock."    Defendant stated "if th[e c]ourt were to entertain

[p]laintiff's application, . . . . a plenary hearing would be required along with

substantial discovery" to resolve the "material issue of fact" created by their

conflicting positions.

      In a reply certification, plaintiff averred that her application was neither

procedurally nor substantively deficient because she "filed [it] within [one] year

(to the day) of discovering what happened" and included the requisite supporting

brief. See R. 4:50-1 (requiring briefs with the filing of the motion). Plaintiff

also pointed out that defendant neither denied the occurrence of the stock split

"during the pendency of [their] divorce, due to completely passive market

forces," nor claimed "not to have known about it." Thus, according to plaintiff,

without correction, "[t]he existing language [in the MSA] amount[ed] to unjust

enrichment, providing a baseless windfall to . . . defendant."

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                                        8
       Based only on the written submissions of the parties, the motion judge

entered an order on August 23, 2019, denying plaintiff's application. In the

accompanying statement of reasons, after citing Rule 4:50-1 in its entirety, the

judge explained:

              Plaintiff has brought this application to reform the
              MSA based on mistake, though she hints it may be the
              result of fraud. Notwithstanding the specific basis
              [p]laintiff seeks to reform the agreement under, her
              application is time-barred. [Rule 4:50-1(a)] does not
              state, as [p]laintiff suggests, that the application must
              be brought within one year of the discovery of the
              mistake. Instead [Rule] 4:50-2 specifically states the
              application must be brought within one year of the entry
              of the judgment or order.

       Plaintiff moved for reconsideration of the August 23 order over

defendant's objection.2 Relying on Farrell v. TCI of Northern N.J., 378 N.J.

Super. 341 (App. Div. 2005) and subsection (f) of Rule 4:50-1, plaintiff argued

that her application was not, in fact, time barred. Plaintiff asserted the court's

equitable powers allowed for an extension of the timeline, and the applicable

timeline began to run when plaintiff had actual notice of the claimed mistake,

new evidence, or fraud.

2
    Plaintiff again requested oral argument if her motion was opposed.
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                                         9
      In an October 11, 2019 order, the judge again denied the motion on the

written submissions only. In the accompanying statement of reasons, the judge

determined plaintiff failed to satisfy either ground for reconsideration. See

Fusco v. Bd. of Educ. of City of Newark, 349 N.J. Super. 455, 462 (App. Div.

2002) (explaining reconsideration is only available when "either (l) the [c]ourt

has expressed its decision based upon a palpably incorrect or irrational basis, or

(2) it is obvious that the [c]ourt either did not consider, or failed to appreciate

the significance of probative, competent evidence." (quoting D'Atria v. D'Atria,

242 N.J. Super. 392, 401 (Ch. Div. 1990))).

      The judge distinguished Farrell, where we determined "that implicit in the

time proscriptions of Rule 4:50-2 is that the order from which relief is sought

pursuant to Rule 4:50-1 must first have been served upon the attorney of the

party against whom the order was entered as required by Rule 1:5-1" or that "the

attorney must have actual knowledge of the order." 378 N.J. Super. at 348. The

judge concluded that "[h]ere, unlike Farrell, it is undisputed that plaintiff and

her counsel received the [MSA] at or near the time it was entered into on May

5, 2016. Thus, the one-year deadline under [Rule] 4:50-2 began to run on that

date." This appeal followed.

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                                       10
      On appeal, plaintiff argues that because her "application was made under

multiple grounds – mistake, fraud, and equitable grounds," while "the one-year

time-frame cited by the [t]rial [c]ourt may have served to preclude consideration

of her motion purely on the grounds of mistake or newly discovered evidence,"

the fact that she filed the motion "within one . . . year of discovering a fraud or

other misconduct should be sufficient to meet the more flexible 'reasonable time'

standard permitted under other subsections of the Rule." Plaintiff asserts further

that "[e]ven if the [c]ourt believed that the timeframe for Rule 4:50 precluded

[p]laintiff's motion, relief should have been granted under the court's equitable

jurisdiction in the interests of justice to make right what is wrong." Instead,

plaintiff argues, the court's analyses in its August 23 and October 11, 2019

decisions "completely ignore the relevant law and misapply the [c]ourt [r]ules

to summarily deny [p]laintiff's application."

      Our review of orders entered by the Family Part is generally deferential.

Landers v. Landers, 444 N.J. Super. 315, 319 (App. Div. 2016) (citing Gnall v.

Gnall, 222 N.J. 414, 428 (2015)).           Nevertheless, "when reviewing legal

conclusions, our obligation is different; '[t]o the extent that the trial court's

decision constitutes a legal determination, we review it de novo.'" Id. at 319

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                                       11
(alteration in original) (quoting D'Agostino v. Maldonado, 216 N.J. 168, 182

(2013)).

      We also review a trial court's decision on a motion for reconsideration

under an abuse of discretion standard. Cummings v. Bahr, 295 N.J. Super. 374,

389 (App. Div. 1996). Accordingly, "a trial court's reconsideration decision will

be left undisturbed unless it represents a clear abuse of discretion." Pitney

Bowes Bank, Inc. v. ABC Caging Fulfillment, 440 N.J. Super. 378, 382 (App.

Div. 2015). A court abuses its discretion "when a decision is 'made without a

rational explanation, inexplicably departed from established policies, or rested

on an impermissible basis.'" Ibid. (quoting Flagg v. Essex Cty. Prosecutor, 171

N.J. 561, 571 (2002)).

      Here, plaintiff's application for relief was brought under Rule 4:50-1,

which "is designed to reconcile the strong interests in finality of judgments and

judicial efficiency with the equitable notion that courts should have authority to

avoid an unjust result in any given case." Manning Eng'g, Inc. v. Hudson Cty.

Park Comm'n, 74 N.J. 113, 120 (1977) (citing Hodgson v. Applegate, 31 N.J.

29, 43 (1959)). Therefore,

            [a] motion under Rule 4:50-1 is addressed to the sound
            discretion of the trial court, which should be guided by
            equitable principles in determining whether relief
            should be granted or denied. The decision granting or

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                                       12
            denying an application to open a judgment will be left
            undisturbed unless it represents a clear abuse of
            discretion.

            [Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283
            (1994) (internal citations omitted).]

      "Rule 4:50-1 provides for relief from a judgment in six enumerated

circumstances," In re Estate of Schifftner, 385 N.J. Super. 37, 41 (App. Div.

2006), and "does not distinguish between consent judgments and those issued

after trial." DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 261 (2009). Pertinent

to this appeal, Rule 4:50-1 provides for relief from a final judgment for "(a)

mistake, inadvertence, surprise, or excusable neglect; . . . (c) fraud (whether

heretofore denominated intrinsic or extrinsic), misrepresentation, or other

misconduct of an adverse party; . . . or (f) any other reason justifying relief from

the operation of the judgment or order."

      A motion brought under Rule 4:50-1 must be made "within a reasonable

time" but if based on subsection (a) or (c), "not more than one year after the

judgment . . . was entered." R. 4:50-2. See Edgerton v. Edgerton, 203 N.J.

Super. 160, 173 (App. Div. 1985) ("There are no set rules for situations arising

under subsection (f), but in such exceptional cases the phrase 'reasonable time'

is 'as expansive as the need to achieve equity and justice.'" (quoting Court Inv.

Co. v. Perillo, 48 N.J. 334, 341 (1966))).

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                                        13
      Generally, "[t]he application of . . . subsection [(f)] requires the

demonstration of 'exceptional circumstances.'" Schifftner, 385 N.J. Super. at 41

(quoting Perillo, 48 N.J. at 341). Thus, to obtain relief under subsection (f), a

movant must show that the enforcement of the order "would be unjust,

oppressive or inequitable."    Greenberg v. Owens, 31 N.J. 402, 411 (1960)

(Jacobs, J., dissenting) (citation omitted). Although relief under Rule 4:50-1 "is

granted sparingly," F.B. v. A.L.G., 176 N.J. 201, 207 (2003) (citing Pressler &

Verniero, Current N.J. Court Rules, cmt. 1.1 on R. 4:50-1 (2003)), the

boundaries under subsection (f) "are as expansive as the need to achieve equity

and justice." Little, 135 N.J. at 290 (quoting Palko v. Palko, 73 N.J. 395, 398

(1977)).

      "[C]ourts have allowed modification of property settlement agreements

under the catch-all paragraph (f) of R[ule] 4:50-1, . . . where there is a showing

of inequity and unfairness." Rosen v. Rosen, 225 N.J. Super. 33, 36 (App. Div.

1988). "Further, where there is a showing of fraud or misconduct by a spouse

in failing to disclose the true worth of his or her assets, relief may be granted

under R[ule] 4:50-1(f) if the motion is made within a reasonable time." Id. at

37 (citing Palko, 73 N.J. at 397-398). See also Edgerton, 203 N.J. Super. at 173

(allowing modification of divorce judgment under Rule 4:50-1(f) "some two

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                                       14
years and eight months after it was entered" where parties mistakenly treated

inherited property as marital asset subject to equitable distribution in the MSA).

Cf. Capanear v. Salzano, 222 N.J. Super. 403, 409 (App. Div. 1988) (noting that

even if the movant's application was considered under Rule 4:50-1(f), a

reopening of a divorce judgment "some ten years after its entry to reform the

incorporated agreement" was not "within a reasonable time nor does it appear

that enforcement of the judgment as entered would be unjust or inequitable").

      Here, plaintiff meets the standard for relief from the final judgment under

Rule 4:50-1(f). There is no dispute that as a result of an undisclosed stock split

doubling the number of Ross stocks, that post-dated the filing of the divorce

complaint but pre-dated the execution of the MSA, the MSA incorrectly

identified the number of stocks subject to equitable distribution under paragraph

fifty-two. The ensuing undervaluing of plaintiff's interest renders the result

"unjust, oppressive, or inequitable," Quagliato v. Bodner, 115 N.J. Super. 133,

138 (App. Div. 1971), and justifies a modification of the MSA. "The issue is

not the rightness or wrongness of the original determination at the time it was

made but what has since transpired or been learned to render its enforcement

inequitable." In re Guardianship of J.N.H., 172 N.J. 440, 476 (2002).

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                                       15
      Because we are satisfied that subsection (f) of Rule 4:50-1 provides a basis

to modify the agreement, whether the error was a result of mutual mistake of the

parties or intentional fraud by defendant is immaterial. "What is involved is the

court's unexercised power to determine the fairness of this particular agreement

under the law regarding equitable distribution." Edgerton, 203 N.J. Super. at

174. See Pascale v. Pascale, 140 N.J. 583, 610 (1995) (explaining that while

"[t]he brightline rule . . . is that the date on which a divorce complaint was filed

fixes the marital termination date for equitable distribution purposes," " stock

options awarded after the marriage has terminated but obtained as a result of

efforts expended during the marriage should be subject to equitable

distribution.").

      We also conclude plaintiff's motion was filed within a reasonable time

under the circumstances, and the judge mistakenly exercised his discretion in

his cabined view of the applicable subsection and failure to allow modification

of the judgment under subsection (f) of the Rule. We therefore reverse and

remand with instructions to the judge to correct the number of Ross stocks

included in paragraph fifty-two of the MSA that is subject to equitable

distribution. The judge should allow discovery and conduct a plenary hearing,

if necessary, to determine the number and value of shares owed to plaintiff and

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                                        16
direct defendant to pay the outstanding amount that has not been paid or

distributed to plaintiff to date. "Of course, any future agreement of the parties

may obviate the need for such hearing." Edgerton, 203 N.J. Super. at 175.

      Because we are remanding the matter, it is not necessary for us to address

plaintiff's additional contention that the judge erred in denying her request for

oral argument. We note, however, that the better practice is for trial courts to

afford parties oral argument when such a request is made. See R. 5:5-4(a)

(providing that a court should ordinarily grant requests for oral argument on

"substantive" motions); Palombi v. Palombi, 414 N.J. Super. 274, 285 (App.

Div. 2010) ("The denial of oral argument when a motion has properly presented

a substantive issue to the court for decision 'deprives litigants of an opportunity

to present their case fully to a court.'" (quoting Mackowski v. Mackowski, 317

N.J. Super. 8, 14 (App. Div. 1998))).

      Reversed and remanded for further proceedings in accordance with this

opinion. We do not retain jurisdiction.

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