On October 25, 2011, the Appellate Division of the New Jersey Superior Court decided that the case of B. v. B. (names redacted for privacy) and recognized the significant decrease in real estate values in implementing the parties’ divorce settlement.
The current economic downturn had not been contemplated in the parties’ Marital Settlement Agreement which was entered into in 2007. When one party sought to enforce the Agreement based upon 2007 values, the trial court agreed. The Appellate Division, however, reversed that ruling and concluded that a reasonable construction of the Agreement, coupled with principles of fairness and equity, required a different result. The Court stated that although the parties’ Agreement contained no reference of the possibility of reduced fair market values for their three parcels of real estate, the Court has the inherent authority to insert such a provision even though either party had anticipated it or it had been overlooked.
This is an important development since the Court specifically acknowledged that principles of fairness compelling an examination of the current real estate market, as opposed to that which existed in 2007. In these troubling economic times it is heartening that the Court recognized that matrimonial settlements, unlike commercial contracts, are a special breed and subject to interpretation and on occasion, reconstruction, based on principles of fairness and equity.