Appointing Wife’s Children as Her Guardian in Divorce Proceeding Did Not Render Subsequent Settlement Unconscionable

D.M.C. v. K.H.G., ___ N.J. Super. ___ (App. Div. 2022). This Family Part appeal involved the dissolution of a marriage that had lasted 31 years. As Judge Mawla described in his opinion, the wife “has been diagnosed with bipolar disorder, manic type with psychotic features, schizophrenia, paranoid type, and schizoaffective disorder, bipolar type. After her initial diagnosis, defendant experienced fifteen psychiatric inpatient hospitalizations, including a breakdown following the filing of the divorce complaint.” As a result, a guardian ad litem (“GAL”) was appointed for the wife.

The GAL asked the Probate Part to enter a judgment of guardianship appointing the parties’ two adult children, ages 28 and 26 years old, as co-guardians. Finding the wife incapacitated and “incapable of governing herself and managing her affairs and unable to consent to medical treatment,” the Probate Part appointed the children as co-guardians and ordered them to participate in the divorce on the wife’s behalf.

Prior to that, the wife had retained a forensic accountant to value the husband’s business interests and otherwise to evaluate financial issues. That accountant ran up bills that the Family Part stated “appear[ed] excessive.” The Family Part also found that the accountant’s certification was ” close to a net opinion in that he provides little factual support necessary for his conclusions.”

The co-guardians terminated that expert and retained new counsel. The case then was resolved in January 2018 at a settlement conference attended by counsel for both parties, the husband, the co-guardians, and the GAL. The settlement included a property settlement agreement (“PSA”) under which the wife received various benefits (though assets were not divided equally), which Judge Mawla recited in great detail.

In 2019, the wife obtained several medical opinions stating that she had returned to mental competency and was no longer a candidate for guardianship. The Probate Part terminated the guardianship and declared her competent.

The wife then filed a motion under Rule 4:50-1(f) to attack the PSA. She claimed that numerous aspects of the PSA were unconscionable, and that the children “were not neutral parties” and were under plaintiff’s
“financial influence and control.” Moreover, she argued, the children did not protect her interest because they were negotiating a settlement that included assets they stood to inherit and because the husband was paying their expenses. The wife also submitted an undated text message to her, purportedly from one of the children, that was very harsh toward the wife.

The Family Part found no basis to overturn the PSA. On appeal, the Appellate Division agreed, applying the abuse of discretion standard of review that applies to motions for relief from judgment under Rule 4:50.

Judge Mawla said that “Defendant produced no objective evidence to support her claim the children, who were emancipated at the time of their appointment, were under plaintiff’s financial control or acted against her interests. Defendant failed to provide context for the text message from the daughter. Although we cannot ignore the words used in the text, as the motion judge observed, defendant failed to show they led to an unjust outcome in settling the divorce. Instead, the objective evidence in the record shows the children protected defendant by taking prudent measures to control the costs of the litigation and settling the case in concert with a GAL who was a competent attorney and with the assistance of
a matrimonial attorney.”

Moreover, the panel was not “convinced the settlement was unconscionable because the assets were not divided equally. This is not unusual where, as here, one party operates a business subject to equitable distribution or retains the risk associated with an asset; i.e., plaintiff’s retention of the loans receivable and the risk associated with collecting them while paying defendant her share of the asset. Regardless, defendant received one-half the total value of marital assets. Moreover, the payout of equitable distribution into a trust was appropriate considering the context of the settlement, namely, defendant’s ongoing incapacity at the time of settlement.”

Nor was the wife’s changed circumstances– her recovery– grounds to undo the PSA. Lepis v. Lepis, 83 N.J. 139 (1980), allows for modification of matrimonial agreements for changed circumstances. But Lepis is inapplicable to equitable distribution, and an “anti-Lepis” clause as to alimony was enforceable “given the totality of the circumstances, including their ages, needs, and the equitable distribution terms. Moreover, defendant did not establish her ability to support herself was ‘substantially impaired,’ to warrant vacating the anti-Lepis clause.” And, overall, “changed circumstances” arguments “turn on the discretionary determinations of Family Part judges, based upon their experience as applied to all the relevant circumstances presented.” The Appellate Division found no basis to question that exercise of discretion here.