Pascale v. Pascale

Most family law practitioners have heard the speech many times from judges, usually at an initial Case Management Conference. You know the one: settle, settle, settle. If you don’t settle, some person in a black robe will have to decide important issues about your life and you will probably be unhappy with the result.

The seminal case of Pascale v. Pascale, 274. N.J. Super. 429 (1994) offers some important insights into Equitable Distribution and what can happen if you don’t settle your case. The case featured two working parents who had been married for 17 years and had three young children together. The trial last for 6 days with the trial court ruling on child support, counsel fees and several issues of Equitable Distribution including the marital home and stock options. Both parties filed appeals because they were unhappy with the results.

Regarding the marital home, Plaintiff wife contended that the trial court denied her claim of a $35,000 credit in error. The credit she sought was for the sale of her premarital stocks, the proceeds of which she and the husband used for a down payment. The appellate court upheld the trial’s court’s denial of the credit. The stocks were unquestionably premarital, and even though the benefit of the $35,000 could still be “traced” to the house, the court found that it was the parties’ intent to share this asset, as they had done all previous assets and liabilities until the breakdown of the marriage. The court found relevant that the decision to sell the stock and use it for a down payment on the home they titled in both their names was a joint decision. It was viewed and used as if it were a joint asset, not a premarital one, and not as an interspousal gift.

Defendant Husband appealed the trial court’s decision to allow the Wife to stay in the home for five years before he could realize the benefit of his interest in the home. The appellate court upheld this decision of the trial court as well, finding the Wife’s request reasonable given the ages of the children, the lack of affordable housing in the area and that Defendant would receive the benefit of a fair return for the delayed realization as he received 8% interest a year.

Stock Options and Filing date: Wife had received stock options at several points during the marriage form her employer. The trial court had excluded from equitable distribution only the most recent stocks, even though an two earlier sets had been awarded on the same day, 10 days after the filing of the Complaint for divorce. Although the Appellate Division acknowledged that the filing of a Complaint is an important line of demarcation, the court is allowed to consider other facts. Here, it upheld the trial’s court’s determination as to one set of stocks issued on that day but not the other. The court made it’s determination not based on the timing of the stock options but for the purpose of which they were awarded.

The court founds that the smaller set of options given 10 days after the Complaint were in recognition of prior employment performance. Since that service occurred during the marriage, the court found them subject to equitable distribution. A letter accompanying the distribution from Wife’s employer demonstrated that the stocks were in recognition of contributions that had already been made. However, the larger set of options given on the same day were deemed as an incentive to promote continued effective service and were therefore not subject to equitable distribution.

As for child support, the Appellate Division remanded because the lower court did not offer any explanation for its reward.

Pascale offers some great insight into how a court can determine what, when and how property is subject to equitable distribution. But it also demonstrates a court’s favor lesson of all: settle your case.

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