VICTORIA GOETHALS VS. JEFFREY GOETHALS (FM-14-0109-15, MORRIS COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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unpublished decision partially reversing and remanding for further proceedings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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[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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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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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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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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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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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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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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(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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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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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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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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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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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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