Aarvig v. Aarvig

• Decision Date: 31 January 1991
• Citation: 590 A.2d 704,248 N.J.Super. 181
• Parties: Irene L. AARVIG, Plaintiff, v. Edward AARVIG, Defendant.
• Court: New Jersey Superior Court

Page 181

248 N.J.Super. 181

590 A.2d 704

Irene L. AARVIG, Plaintiff, v. Edward AARVIG, Defendant.

Superior Court of New Jersey, Chancery Division,

Atlantic County.

Decided Jan. 31, 1991.

Anthony J. Ruggiero, New York City, for defendant.

Carole M. Mattessich, for plaintiff (Gaver & Gaver, attorneys), Cape May.

SELTZER, P.J.F.P.

This postjudgment motion requires consideration of the circumstances under which the executory terms of a property settlement agreement may be modified. It is typical of many claims for relief resulting from the impact of a declining real estate market upon property settlement provisions requiring the sale of the marital asset at a fixed price.

The motion papers reveal that plaintiff and defendant were divorced on February 17, 1989. The final judgment incorporated a property settlement agreement which disposed of all issues of child support, alimony and equitable distribution. In particular, the property settlement agreement distributed to plaintiff certain assets and permitted defendant to reside in property located on Broadway in West Cape May pending its sale. The agreement further provided a detailed scheme for the sale of the Broadway property, setting an initial listing price, allowing for reductions in the event the property was not sold and providing "the lowest amount this property shall be listed for is $230,000." At the time of the property settlement agreement, an appraisal had been performed which indicated that the fair market value of the property--between $215,000 and $225,000--was comparable to the lowest listing price permitted--$230,000. The agreement also provided that, upon the sale of the real estate, the parties would divide the net proceeds, subject to some minor adjustments not relevant here, on an equal basis.

Pursuant to the agreement, plaintiff took title to the assets distributed to her and defendant commenced to reside in the property which is the subject of this motion. Despite the prompt listing of the property, and the subsequent reductions of the listing price in accordance with the property settlement agreement, no offer was received on the property from the date of the final judgment to the present. Plaintiff has produced a current appraisal, not disputed by defendant, which suggests that the fair market value of the property has declined by almost 30% to $180,000. It is evident, therefore, that, absent some modification of the property settlement agreement, the property will not sell in the forseeable future, defendant will continue to remain in the premises and plaintiff will be deprived of her equity interest in the real estate.

Plaintiff alleges that this is a condition which the parties never contemplated and which requires a "modification" of the property settlement agreement. Defendant, however, responds that the provisions of the property settlement agreement were voluntarily negotiated, that the parties had specifically contemplated this situation and explicitly provided for it by the plain language of the agreement. Moreover, defendant asserts, had he known that at some future time he might have been required to receive less than one-half of $230,000 for his interest in the property, he would never have acceded to the other provisions of the property settlement agreement.

The resolution of this dispute requires an understanding of the nature of a property settlement agreement and the manner in which courts have treated claims for enforcement or modification. The essentially contractual nature of property settlement agreements has always been recognized by our courts and they are to be construed in accordance with contract law. Dworkin v. Dworkin, 217 N.J.Super. 518, 524, 526 A.2d 278 (App.Div.1987). There are three distinct circumstances under which courts have considered attempts to modify contracts: (1) when the contract speaks directly to the issue in controversy; (2) when the agreement speaks to the issue but inaccurately reflects the parties agreement and (3) when the agreement is silent as to the matter in dispute.

Generally, once the parties have reached an agreement, no court may create a "new or better" contract for them. Communication Workers of America, Local 1087 v. Monmouth Cty. Bd., 96 N.J. 442, 452, 476 A.2d 777 (1984). That general rule applies as well to agreements made in a dissolution context. Our decisions hold universally that contracts, insofar as they deal with equitable distribution, are not subject to modification by virtue of changed circumstances. Rosen v. Rosen, 225 N.J.Super. 33, 541 A.2d 716 (App.Div.1988), certif. den. 111 N.J. 649, 546 A.2d 558 (1988); Ganther v. Ganther, 153 N.J.Super. 226, 231, 379 A.2d 473 (App.Div.1977); Mahoney v. Mahoney, 91 N.J. 488, 498, 453 A.2d 527 (1982). But see, Skoloff & Cutler, II N.J. Family Law Practice (6th Ed.1990), § 614 at p. 983, 988 (contending that modification should be allowed upon a showing of unconscionability).

Similarly, just as any contract is subject to reformation when it fails to accurately express the agreement of the parties, a contract between parties to a dissolution action may be reformed. A reformation of a contract, however, is not a modification. It is merely a recognition that the scrivener has failed to express accurately what the parties themselves intended and a correction of that failure. Capanear v. Salzano, 222 N.J.Super. 403, 407-408, 537 A.2d 306 (App.Div.1988).

Finally, if the agreement is silent as to a circumstance which thereafter arises, the parties may not be left without an agreement. So long as the parties intended to be bound by their agreement and a court is able to fill any gaps necessary to achieve a fair and just result, the contract may be modified by the addition of reasonable terms. Paley v. Barton Savings and Loan Assn., 82 N.J.Super. 75, 83, 196 A.2d 682 (App.Div.1964). It is when the missing provisions go to the essence of the agreement that a court may not insert the probable or reasonable resolution of the...