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Postnuptial Agreements (Mid-Marriage Agreements)

Postnuptial Agreements (i.e., mid-marriage agreements) are problematic in New Jersey. This is primarily due to the decision in Pacelli v. Pacelli, 319 N.J. Super.185 (App. Div. 1999). The Appellate Division would not uphold a Mid-Marriage Agreement, notwithstanding the involvement of very seasoned attorneys, discovery and other factors.

The issue of whether the mid-marriage agreement was enforceable was one of first impression in 1999 because neither the laws pertaining to prenuptial or separation agreements applied. The court found that the nature of the agreement and the circumstances surrounding the execution of the agreement placed appellant (wife) in a difficult situation, one in which appellant had to base her decision on the fact that the marriage was still intact. The Pacellicourt held that mid-marriage agreements were similar in nature to reconciliation agreements and concluded that the terms of the mid-marriage agreement in that case were not fair and just. Therefore, the appellate court reversed the trial court’s decision enforcing the agreement when the appellate court found that the terms of the agreement were not fair or just.

The court further noted that “We are persuaded that the mid-marriage agreement in the present case differs from prenuptial agreements made before a marriage and property settlement agreements made at a marriage’s termination. The mid-marriage agreement was entered into before the marriage lost all of its vitality and when at least one of the parties, without reservation, wanted the marriage to survive. Plaintiff also wanted to continue the marriage, but only on his terms. In the Pacelli matter, unlike the pre-nuptial bride, Francesca Pacelli had already entered into the legal relationship of marriage when her husband presented her with his ultimatum. Moreover, the marriage had produced two children. Thus, defendant faced a more difficult choice than the bride who is presented with a demand for a prenuptial agreement. The cost to Francesca 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. The mid-marriage agreement in the Pacelli case also differs from a property settlement agreement made when the marriage has died. In that case, as Judge Lesemann perceptively observed in Marschall,each party, recognizing that the marriage is over, can look to his or her economic rights; the relationship is adversarial. The point being made by the Appellate Court in Pacelli was that the context in which plaintiff/husband made his demand was inherently coercive. Defendant/wife’s access to eminent counsel was deemed to be of little relevance because her decision was dictated not by a consideration of her legal rights, but by her desire to preserve the family.

The court further noted that, “On appeal, we observed that “[i]n some circumstances a reconciliation agreement will be enforced if it is fair and equitable.” Nicholson, supra, 199 N.J.Super. at 530, 489 A.2d 1247. 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.” Id. at 531, 489 A.2d 1247. Under such circumstances a “promise that induces a reconciliation will be enforced if it is fair and equitable.” Ibid.”In Nicholson, we required a showing that the marital relationship had genuinely deteriorated “to the brink of an indefinite separation or a suit for divorce.” Mr. Pacelli, however, stated that he had “new deals coming his way,” and he was concerned that his wife “not share beyond a certain point.” According to the Pacelli Appellate Court, “the evidence, therefore, supports an inference that the marital “crisis” was artificial, created by plaintiff to take advantage of his wife’s dedication to the marriage and her family.” The court further emphasized that the second relevant standard in Nicholson is that the agreement must be fair and equitable when made and when it is sought to be enforced.

In light thereof, the Pacelli Appellate Court was persuaded that placing a mid-marriage agreement in the same category as a pre-nuptial agreement is inappropriate. “As previously indicated, the dynamics and pressures involved in a mid-marriage context are qualitatively different. Similarly, there are significant differences between a mid-marriage agreement and a property settlement agreement made in the context of termination of the marriage. In the latter circumstances, knowing that the marriage is over, though one party may wish to continue it, each party can pursue his or her economic self interest.” The court then stated that, “Mid-marriage agreements closely resemble so-called reconciliation agreements. We must be aware, however, that such circumstances are pregnant with the opportunity for one party to use the threat of dissolution “to bargain themselves into positions of advantage.””Mathie, supra, 363 P.2d at 783.”

Although the Pacelli court concluded that it didn’t need to decide whether such agreements are so inherently and unduly coercive that they should not be enforced, they did conclude that, at the very least, they must be closely scrutinized and carefully evaluated. Further, the court concluded that the close scrutiny and careful evaluation of mid-marriage agreements also requires consideration of the agreement’s impact when enforced.In the Pacelli case, they concluded that the terms were not fair and just. Therefore, the mid-marriage agreement was not enforced.

 

Subsequent Cases

 

Pacelli v. Pacelli, 319 N.J. Super. 185 (App. Div. 1999), certif. denied, 161 N.J. 147 (1999) remains good law as of the Shepard’s report run on October 28, 2015. There are four unpublished decisions in New Jersey that cite Pacelli:

  1. Garofalo v. Kutch, 2013 J. Super.Unpub. LEXIS 2991 (App.Div. Dec. 20, 2013)
  2. Ward-Gallagher v. Gallagher, 2010 N.J. Super. Unpub. LEXIS 1968 (App.Div. Aug. 13, 2010)
  3. Milberg v. Milberg, 2006 J. Super.Unpub. LEXIS 2936 (App.Div. Sept. 5, 2006)
  4. Commerce Bank/North v. Yuresko, 2005 J. Super.Unpub. LEXIS 738 (App.Div. Oct. 13, 2005)

In Ward-Gallagher. In that case, the court reaffirms the principles of Pacelli:

Generally, mid-marriage agreements are unenforceable as they are “inherently coercive,” entered into “before [a] marriage los[es] all of its vitality and when at least one of the parties, without reservation, wanted the marriage to survive.” The public policy supporting enforcement of a pre-nuptial, as opposed to a post-nuptial, agreement is that one party remains free to walk away before the marriage takes place. So too, property settlement agreements prepared in contemplation of divorce are enforceable as they assume the parties stand in adversarial positions and negotiate in their own self-interest. .

In Ward-Gallagher v. Gallagher, 2010 N.J. Super.Unpub. LEXIS 1968 (App.Div. Aug. 13, 2010) (citing Pacelli, 319 N.J. Super. at 190-91, 195) the Appellate Division remanded to the trial court for a plenary hearing to determine whether the Final Judgment of Divorce should be vacated. The husband alleged that the Property Settlement Agreement was really akin to a mid-marriage agreement because he did not know that the wife intended to file for divorce and he entered into the agreement to save the marriage. There is no analysis of the agreement underPacelli’s standards.

In Commerce Bank/North v. Yuresko, 2005 N.J. Super.Unpub. LEXIS 738 (App.Div. Oct. 13, 2005), a mid-marriage agreement is only tangentially discussed as part of the procedural history. There is no analysis of the applicability of Pacelli to the particular agreement.

The other two cases do not discuss mid-marriage agreements and only cite to Pacelli for other purposes.

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