Following on from previous blog posts on "What is a Plenary Hearing?", "When to make a Motion for Reconsideration?", "When to Appeal?" and "When is a child emancipated In NJ?", I thought it might be interesting to write about what is a constructive trust and when this might be used in a family law matter ?

Justice Cardozo wrote many landmark opinions and was one of the leading jurists of the twentieth century.  In 1919, while a judge on the New York Court of Appeals (New York State's highest court), he wrote the following definition of a constructive trust that is still good today:

"A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain beneficial interest, equity converts him into a trustee."

Beatty v. Guggenheim Exploration Co., 225 N.Y. 38, 122 N.E. 378, 386 (1919)(Cardozo, J.).

The purpose of a constructive trust is to "prevent unjust enrichment and force a restitution to the plaintiff of something that in equity and good conscience [does] not belong to the defendant." Flanigan v. Munson, 175 N.J. 597, 608 (2003). "Constructive trusts are invoked to prevent unjust enrichment or fraud."  Carr v. Carr, 120 N.J. 336, 351 (1990). It is an equitable remedy that courts have the authority to impose when the facts justify such action.  Flanigan, supra, 175 N.J. at 608.

In Flanigan, grandparents made a claim on behalf of their deceased daughter's children that a constructive trust for the benefit of the children should be placed on the insurance proceeds paid to their daughter's second husband.  The New Jersey Supreme Court held that the decedant's failure to name her children as beneficiaries on the insurance policy was a wrongful act and that the second husband had been unjustly enriched by his receipt of the insurance money.  Flanigan v. Munson, 175 N.J. 597 (2003).

In order to consider whether a constructive trust is warranted, New Jersey courts have adopted a two-prong test, imposing a constructive trust:

1. Where a party has committed a wrongful act and
2. The wrongful act results in a transfer or diversion of property that unjustly enriches the recipie

Id. at 608 (citations omitted).  The "wrongful act" need not be fraudulent to result in a constructive act, a mere mistake is sufficient for these purposes.

At the time of Kay’s death the parties had already sold the marital residence, with the proceeds held in escrow pending equitable distribution upon finalization of their divorce. Additionally, while the divorce was pending, Kay was pursuing a claim that his wife had diverted marital assets.

On appeal, this decision was affirmed by the New Jersey Supreme Court earlier this year. The Court upheld the right of the executor of an estate to intervene and continue a divorce action in order to recover diverted assets from the surviving spouse, including the right to seek a constructive trust to prevent unjust enrichment.

“[D]epriving the estate of the opportunity to pursue its claim for relief would not serve the policy of promoting equity and fair dealing as between spouses.”

Kay v. Kay,  __NJ__ (2010). A constructive trust is, therefore, a powerful equitable remedy, and its use should be considered by family law attorneys in appropriate circumstances.

At the recent Family Law Symposium run by New Jersey Institute for Continuing Legal Education (NJ ICLE), Frank Louis suggested that a constructive trust could be used to avoid unjust enrichment where there is a palimony claim, but no agreement in writing to make the promise enforceable under current New Jersey law. Seeking the relief of a constructive trust could be a way to prevent the unjust enrichment that would otherwise occur.

Given that New Jersey family courts are courts of equity, it is an interesting argument.  However, it remains to be seen whether a family court would impose the equitable remedy of a constructive trust in such circumstances given that the New Jersey Legislature has enacted S-2091 with the specific purpose of preventing oral palimony claims. No doubt a case will reach the courts and a future appellate opinion will consider this innovative legal argument. 

A recent article on the BBC news web-site highlights the fact that marriage rates in the UK are at an all time low, in fact the lowest since records first started in 1862.  I don't know what the data is in New Jersey but indirectly what the UK data highlights is the number of people living in unmarried relationships, or cohabitation.

The legal problem with cohabitation is the lack of rights that are afforded in the case of a break-up or separation after a long period of time together. As previously discussed on this blog, unmarried couples who buy property together should consider signing a cohabitation agreement.

When it comes to support, verbal agreements as to future support are no longer enforceable. Governor Corzine before he left office signed into law, bill S2091 that now requires support agreements between unmarried couples to be in writing in order for a palimony claim to be enforceable.

Palimony is the right of an unmarried party to claim support from the other party where they have a marital-style relationship. A post last year on this blog, commented on whether such agreements should be in writing to be enforceable.

Given the increasing number of people living together outside of marriage/civil union, it is likely there will be more legal debate over cohabitation rights, and whether the badge of marriage/civil union is necessary to create enforceable rights. In the meantime, if you are living together, an agreement in writing should be considered if you own joint property or wish to have enforceable future financial support obligations in the event of separation.

The New Jersey Prevention of Domestic Violence defines a  "victim of domestic violence" as including, among others, "any person who has been subjected to domestic violence by a person with whom the victim has had a dating relationship." N.J.S.A. 2C:25-19d.

There is no definition of what a dating relationship is within the Act, instead it has been left to the courts to interpret this.

In the domestic violence case of J.S. v. J.F., the trial court judge entered a final restraining order (FRO) based on a finding that there was a dating relationship and that the defendant J.F. made terroristic threats and otherwise harassed J.S. 

On appeal, the defendant argued he was not in a dating relationship because their relationship was purely “professional” i.e. he paid for her services.

In the published opinion of December 10, 2009, the appellate division rejected this argument and affirmed the trial court’s decision and entry of an FRO. J.S. v. J.F., 410 N.J. Super. 611 (App. Div. 2009). The court held:

“we reject the contention that a relationship which includes a payment of consideration for the other's time precludes the finding of a dating relationship.”

The opinion by Judge Fisher went on to say that household members paid for non-personal services, such as an au pair or live-in housekeeper would also qualify as a person entitled to protection under the New Jersey Protection of Domestic Violence Act, N.J.S.A. 2C:25-19d.  The conclusion, being that payment of itself is not the defining factor as to whether a dating relationship exists or not.

Judge Pressler was known for her encyclopaedic knowledge of New Jersey Law and her annotation of the New Jersey Court rules published by Gann was the bible of most practicing attorneys. 

During the course of her career she participated in several landmark decisions such as the opening of Little League to girls in New Jersey. New Jersey became the first state to bar sex discrimination in the sport as a result of her opinion in which she wrote:

"The institution of Little League is as American as the hot dog and apple pie." "There is no reason why that part of Americana should be withheld from girls."

Another ground breaking case was her 1995 decision In re adoption by HNR where she allowed a lesbian co-parent to adopt, thereby granting her legal recognition as a parent. This extension of legal rights to same-sex couples put New Jersey at the forefront of gay and lesbian rights.

Judge Pressler will be remembered as one of the leading jurists of the State of New Jersey and her legacy will live on in the countless opinions she authored in the appellate division.

In a published appellate decision issued on February 3rd this year in Parish v. Parish, the appellate division issued an important opinion on the limits of the authority of family court judges. In this case, the motion judge issued an order that the parties must first conduct a four-way settlement conference before all future post-judgment motions could be filed.

The appellate division, with a dissent by Judge Ashrafi, held this to be an abuse of discretion absent a pattern of vexatious, frivolous or harassing litigation.  In dissent, Judge Ashrafi did not find the order unreasonable, overly burdensome, unfairly prejudicial nor a violation of due process since it did not fundamentally restrict access to the court, only placed a precondition on it.

A dissent by an appellate division judge is rare as it gives an automatic right of appeal to the New Jersey Supreme Court. Judges use their position to encourage settlements and dispute resolution, so this is an important case that discusses the limits of their authority.

Listen to my audio podcast discussing this decision:

Audio Podcast on Parish v Parish

One idea is to move away from linking the amount of child support that is paid to the amount of parenting time.  The New Jersey child support guidelines calculate child support based on amongst other things the income of the parties, number of children, age of the children and the number of overnights each parent has with the child.  The rational for this is that variable costs such as food etc are related to the time a child spends with a parent. However as Bettelheim in her opinion piece points out:

"As child support is often linked to the proportion of time the children spend with each parent, the days and hours of their future lives become tools for one parent to extract payment from the other. This is a recipe for warfare, with the children’s well-being both the disputed turf and the likely casualty."

It is hard not to agree with this observation.  The parent of primary residence (PPR) has a vested self-interest in maximising the amount of time the children spend with them in order to obtain the most child support. Post-judgment motions are often seen where the parties dispute the number of overnights each had for the purposes of child support calculations.

It is in a child's best interests to spend time with both parents. The reality is that a child may have two bedrooms, one with each parent.  Why not decouple the amount of child support from the amount of parenting time, and look purely at the needs of the child and the ability of the parties to pay ? This argument has merit and is certainly worthy of discussion, but I don't foresee the New Jersey child support guidelines changing anytime soon.

The Court held that "the preponderance [of the evidence] standard, as applied in domestic violence matters, conforms with the requirements of due process." The Act's requirement that a final hearing be held within ten days of the filing of a domestic violence complaint does not violate due process, nor is there any right to trial by jury. 

The challenge to the seizure of firearms upon a finding of domestic violence was also dismissed. Citing the 2008 Supreme Court case in District of Columbia v. Heller, the opinion noted that the second amendment right under the U.S. Constitution "to possess firearms may be subject to reasonable limitations". 

As a result of the in-depth review of the New Jersey Prevention of Domestic Violence Act in the Crespo case, any further legal challenges are unlikely to have merit.  For those who think the law is unjust or unfair, the only way to change it will be through the legislature.