Palimony Agreements. As our societal norms changed, it became more common place for couples to live together without the benefit of marriage. However, in most jurisdictions, New Jersey included, the laws and statutes favored marriage. Hence, when a relationship ended, the law only recognized the financial rights and obligations-i.e. spousal support or division of property-arising out of a marriage or other legally recognized relationship ( i.e. civil union, domestic partnership). These laws did not apply to “living together” relationships or their breakup, even if the couple had been together for many years. A financially dependent party could be jettisoned to fend for themselves without any recourse. Then came the case of the actor Lee Marvin and his longtime girlfriend. She sued him, claiming he had promised to support her for the rest of her life. The Court recognized that such promises could create an enforceable contract or agreement for which compensatory “damages” could be awarded. Since spousal support or alimony was only statutorily allowed upon divorce, the term “Palimony” was born to describe such damages. Following Kozlowski v. Kozlowski, N.J. 378 (1979), New Jersey recognized the enforceability of such
“ Palimony Agreements” arising out of such marital-type relationships. However, rarely were such “promises” reduced to writing. They were generally premised on statements orally made, or expressed or implied from the actions of the parties.
Perhaps concerned that the Courts had gone too far in enforcing such “Palimony Agreements”, the New Jersey Legislature in 2010 chose to amend the Statute of Frauds, N.J.S.A. 25:1-5(h), so as to require that any such contract must be in writing and signed by the person making the promise. However, the amendment went on to provide that “ no such written promise is binding unless it was made with the independent advice of counsel for both parties”.
Our Court’s has previously addressed the impact of this statutory amendment upon “Agreements” allegedly made prior to its enactment. However, it was the “ attorney review” requirement and party’s invoking of same as a defense to the enforceablity of a written “ Palimony Agreement” entered into subsequent to 2010 which led our Supreme Court to declare as unconstitutional that “ attorney review” requirement in the recent case of Moynihan v. Lynch, 250 N.J. 60 (2022)In this case, the Supreme Court considered the enforceability of a “palimony agreement” which had been entered into between the parties who had been involved in a long-term “marital-style relationship”, in light of the 2010 amendment to NJSA 25:1-5 which mandated that palimony agreements be in writing, signed, and subject to attorney review. In determining the parties’ written “palimony agreement” to be enforceable, the Supreme Court concluded that the imposition of an attorney-review requirement in regards to such palimony agreements was an arbitrary government restriction that contravened the Plaintiff’s substantive due process rights, and therefore struck down the attorney-review requirement of NJSA 25:1-5 (h), and reversed the ruling of the Appellate Division on this issue. However, the Supreme Court affirmed the determinations of the lower Courts which had rejected the Plaintiff’s claims that an oral palimony agreement, i.e. that the Defendant had made an explicit or implicit oral promise to support the Plaintiff for life, had been made prior to the 2010 enactment of NJSA 25:1-5 (h). In 2010, the New Jersey legislature had amended the Statute of Frauds to include palimony agreements. NJSA 25:1-5 (h) stated that the Statute of Frauds writing and signing requirements applied to “a promise by one party to a non-marital personal relationship to provide support or other consideration for the other party, either during the course of such relationship or after its termination. For purposes of this subsection, no such written promise is binding unless it is made with the independent advice of counsel for both parties.”
While the parties offered conflicting narratives as to the nature and scope of their relationship, the testimony essentially established the following. The Plaintiff, Kathleen Moynihan, and the Defendant, Edward Lynch, first met in 1997 when Moynihan served as a flight attendant and Lynch worked as a pilot for US Airways. The Plaintiff was in the midst of a divorce, and ultimately the parties developed a romantic relationship, with the defendant occasionally staying at the Plaintiff’s home. At the some point the home in which the Plaintiff was living went into foreclosure, and the Plaintiff and her children moved into a home which the Defendant primarily financed through a mortgage and which was deeded in his name. The defendant stayed with greater frequency at this home and became an active part of the lives of Plaintiff and her children. They entered into shared financial arrangements regarding the payment of bills and other expenses. In 2007, the Defendant placed title to the home into a revocable trust and named the Plaintiff as the trust’s beneficiary upon his death. The Defendant had also named the Plaintiff as beneficiary of certain life insurance and retirement accounts. In 2013, the Defendant converted his ownership of the home into a joint tenancy with rights of survivorship naming himself and the Plaintiff on the deed. Some time between 2012 and 2014, the parties entered into a prospective property agreement in the event their relationship dissolved. This handwritten agreement, drafted by the Defendant, provided that within five years of vacating their jointly owned home, the Defendant would pay off the mortgage, deed it over to the Plaintiff, pay her $100,000, and pay the real estate taxes on the property for two years after his departure. This agreement was signed by both parties and notarized, all without the involvement of attorneys. In 2015, the parties parted ways, and that other than continuing to pay the mortgage on the home, and until 2016 the real estate taxes, the Defendant otherwise refused to abide by their written settlement agreement.
The Plaintiff filed a Complaint seeking enforcement of the written palimony agreement as well as an alleged palimony agreement she claimed the parties had entered into prior to the 2010 amendment to NJSA 25:1-5. The Plaintiff also argued that the palimony agreement should be enforced on a number of equitable grounds, or alternatively, as a typical contract rather than a palimony agreement. In response, the Defendant denied the existence of any oral palimony agreement and contended that the written agreement was unenforceable because the parties did not receive the independent advice of counsel before entering into it as required by NJSA 25:1-5 (h). Defendant also counterclaimed for partition of the home and to equally split the proceeds of sale. In response, the Plaintiff claimed, among other things, that the provisions compelling the parties to secure the assistance of counsel to enter into a written palimony agreement violated the Constitutional prohibition on impairing contracts.
Although finding the Plaintiffs testimony to be much more credible than the Defendants in all respects, the trial court dismissed the Plaintiff’s claim that she had an enforceable written palimony agreement because of the parties’ failure to comply with the attorney-review requirement of NJSA 25:1-5 (h) and thereby rejecting the Plaintiff’s argument that this requirement had contravened her constitutional rights. The trial court also determined that the Plaintiff did not have a viable oral palimony agreement because she had failed to prove that between 1997 and 2010, the Defendant had made any “express or implied promises to support her for life”. However, the trial court found that the Plaintiff had an enforceable written contract despite her palimony claims, which was more akin to an “orderly removal” in a landlord/tenant matter and enforced the agreement according to its terms. The Appellate Division reversed, concluding that the agreement was clearly a palimony agreement pursuant to NJSA 25:1-5 (h), and was therefore deemed unenforceable because the parties did not receive the “independent advice from counsel” before signing it. The Appellate Division further determined that NJSA 25:1-5 (h)’s attorney-review requirement did not violate the Federal and State Constitutional provision prohibiting the impairment of contracts. It upheld the trial courts’ finding that the parties did not reach an oral palimony agreement.
First, the Supreme Court agreed with the Appellate Division that the parties had signed a written palimony agreement. The Supreme Court also found that NJSA 25:1-5 (h) did not retrospectively alter a preexisting contract and therefore did not constitute legislation impairing a contract in violation in the Contract Clauses of the Federal and State Constitutions, the essential aim of which is to restrain a State legislature from passing laws that retrospectively impaired existing contracts, and noting that this statute went into effect in January 2010 several years prior to the parties entering into their written agreement. However, the Supreme Court held that NJSA 25:1-5 (h)’s attorney-review requirement contravened the substantive due process guarantee of Article 1 Paragraph 1 of New Jersey Constitution which limits the power of the state to control individual decision making in certain fundamental areas concerning a person’s life and livelihood. The Court noted that NJSA 25:1-5 (h) compelled individuals to retain attorneys before they can enter a palimony agreement – a contract no more complicated than other family law or commercial contracts that do not require attorney review. The Court found that this attorney-review requirement interfered with an individual’s right of autonomy, singled out written palimony agreements from among all other agreements for differential treatment, and that this had no parallel in the legislative history of this State.
The Court noted that the State generally cannot compel a person to accept counsel in a criminal or civil case. Because individuals generally have a Constitutional right to represent themselves in criminal and civil courts, it must follow that generally they can enter into a contract no more complex than others without an attorney. The Court was of the view that such an attorney- review requirement would also unduly burden those who cannot afford counsel, denying them the opportunity to enter contracts available to their more affluent counterparts. The Court found that there was no sound reason given for the public need to compel attorney-review of palimony agreements to the exclusion of all other agreements and therefore concluded that the statutes’ provision compelling parties to seek the advice of counsel – and therefore retain counsel – before signing a palimony agreement violated the substantive due process guarantee of the State Constitution. While the Supreme Court was constrained to strike down the attorney-review requirement in NJSA 25:1-5 (h), it held that such palimony agreements must still be in writing and signed, if not by both parties, at least by the party against whom the agreement is to be enforced – just like all agreements enumerated in the Statute of Frauds. Therefore, the Supreme Court enforced the written palimony agreement as signed and entered into between the parties in this matter; however, the Supreme Court affirmed the determinations of the lower courts that the parties did not have an oral palimony agreement before 2010.
While the Supreme Court set aside the “ attorney review “ requirement when it comes to such “Palimony Agreements”, the Court nevertheless recognized the benefit and guidance that an attorney would provide in reviewing or crafting such Agreements, particularly given the substantial and significant rights and obligations involved therein. And while the Supreme Court recognized the right of personal autonomy to make decisions on one’s own without the compelled participation of an attorney ”whether enlightened or foolish”, given what may be at stake, we submit that it is better to be “enlightened”, than “foolish”. If you are in such a relationship, let the experienced attorneys at Yudes Family Law guide and navigate you through this process.