Pacelli v. Pacelli
Pacelli v. Pacelli, 725 A.2d 56 (N.J. Super. Ct. App. Div. 1999).
NATURE OF THE CASE: This family law case involved the enforceability and validity of a contract entered into by a couple during marriage.
FACTS: Mr. Pacelli married Ms. Pacelli in June 1975 when he was 44 years old and she was 20. The Pacellis had two children. W was born in Italy and immigrated to the United States when she was fourteen. H was a builder and real estate developer who owned a restaurant at the time of the marriage.
H testified that he had a net worth of three million dollars at the time they were married but presented no evidence to support that statement. The family enjoyed a high standard of living with a gross income of $540,000 in 1984 and $476,000 in 1985. W contributed no income to the family.
In 1985 H informed W that he would divorce her unless she agreed to certain terms regarding their economic relationship and moved out of the marital bedroom into an apartment above the garage. H had consulted a divorce attorney and was aware of his economic exposure for equitable distribution and alimony. H admitted to a net worth of $ 4.7 million in 1985, $1.7 million more than he had when he married W. H was informed that any agreement between them had to be fair and made only after full disclosure of relevant information regarding the parties’ assets. H was also aware that W should be represented by counsel.
W did not want a divorce. She consulted with counsel and was aware of her rights. She informed her lawyer that H sought an agreement whereby he would pay her $500,000 in the event of a future divorce in full satisfaction of plaintiff’s equitable distribution and alimony obligations. W’s lawyer advised her not to agree to the deal. W signed the agreement against her attorney’s advice and told him that she would sign anything in an effort to preserve the marriage. The Pacellis remained married until 1994 when H filed a complaint for divorce. H had a net worth of $11,241,500 at the time.
The trial court found that the agreement was not the result of coercion or duress that it was fair as measured in 1985, and that defendant’s contention that the parties had nullified the agreement in 1989 was not credible. This appeal resulted.
ISSUE: Under what circumstances will a mid-marriage agreement for divorce be deemed valid? In determining fairness, should the agreement be measured for fairness as of the date it was executed or as of the date of enforcement?
RULE OF LAW: A mid-marriage agreement for divorce is valid if it is fair and equitable at the time of its enforcement.
HOLDING AND DECISION: A prenuptial agreement is reached when the parties are not adversaries, when the relationship is at its closest, and when the parties are least likely to be cautious in dealing with each other. W faced a more difficult choice than the bride who is presented with a demand for a pre-nuptial agreement. The cost to W would have been the destruction of a family and the stigma of a failed marriage. She testified on several occasions that she signed the agreement to preserve the family and to make sure that her sons were raised in an intact family.
A mid-marriage agreement in this case also differs from a property settlement agreement made when the marriage has died. W’s access to eminent counsel is of little relevance because her decision was dictated not by a consideration of her legal rights, but by her desire to preserve the family.
There is no case in point on this type of agreement but courts have addressed reconciliation agreements. We have ruled that in some circumstances a reconciliation agreement will be enforced if it is fair and equitable. A prerequisite to enforcement is a requirement that the marital relationship has deteriorated at least to the brink of an indefinite separation or a suit for divorce. Under such circumstances a promise that induces a reconciliation will be enforced if it is fair and equitable.
Before a reconciliation agreement will be enforced, the court must determine that the promise to resume marital relations was made when the marital rift was substantial. The terms of the agreement must have been conscionable when the agreement was made. The party seeking enforcement must have acted in good faith. Changed circumstances must not have rendered literal enforcement inequitable.
H and his lawyer establish that H’s primary interest was financial. The evidence supports an inference that the marital crisis was artificial, created by H to take advantage of his wife’s dedication to the marriage and her family. In most other jurisdictions a contract between a husband and wife, made when the spouses are separated for legal cause, and providing for the payment of a consideration for their reunion, is, by weight of authority, enforceable by either spouse. In most jurisdictions, an agreement of that character is held not only to be unobjectionable in this respect, but to promote the stability of the relation, as it purports to do. On the other hand, several courts have considered such an agreement as mischievous, because it offers an inducement for domestic discord to persons who are willing to occupy this vantage ground for the purpose of obtaining pecuniary or other concessions.
Placing a mid-marriage agreement in the same category as a pre-nuptial agreement is inappropriate. Mid-marriage agreements closely resemble so-called reconciliation agreements with an opportunity for one party to use the threat of dissolution to bargain themselves into positions of advantage. In the present case, we conclude that the terms were not fair and just.
We conclude that in 1985 the marital estate was $3,000,000, not $1,700,000. Thus, the $540,000 provided in the agreement was 18% of the marital estate. The $500,000 also purchased defendant’s waiver of alimony. An alimony award in 1985 would have been substantial, perhaps approaching six figures. H’s annual income in 1984 and 1985 averaged $500,000. The parties lived well. They lived in an expensive home, drove luxury automobiles and vacationed at some of the most desirable destinations. W spent $20,000 to $30,000 per year on clothing from stores such as Bergdorf Goodman. Their son, Tony, went to Deerfield Academy, and Franco went to Choate. Defendant argues that the agreement should be measured for fairness in 1994, when plaintiff sought to enforce it.
In evaluating a reconciliation agreement changed circumstances must not have rendered literal enforcement inequitable. The close scrutiny and careful evaluation of mid-marriage agreements also requires consideration of the agreement’s impact when enforced. A marriage may prosper or decline and for those reasons we adopt this rule. It is apparent that the agreement is also unfair when measured in 1994.
DISPOSITION: Reversed.