BETSY M. ARAUCO VS. SANTOS A. PEREZ (FD-16-1263-16, PASSAIC COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: July 25, 2018
• Docket: A-5261-16T4
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-5261-16T4

BETSY M. ARAUCO,

Plaintiff-Respondent,

v.

SANTOS A. PEREZ,

Defendant-Appellant. __________________________________________

Submitted July 9, 2018 – Decided July 25, 2018

Before Judges Yannotti and Haas.

On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Passaic County, Docket No. FD-16-1263-16.

Santos A. Perez, appellant pro se.

Respondent has not filed a brief.

PER CURIAM

Defendant appeals from an order entered by the Family Part

on April 27, 2016, which dismissed his claim for unjust enrichment

for lack of jurisdiction. We reverse and remand the matter for

further proceedings in the Family Part. I.

Plaintiff and defendant met in April 2001, and in October

2001, they began to live together. In 2003, the parties had a

child, A.P. Plaintiff also had another child from a prior

relationship. In April 2015, the parties apparently separated.

Thereafter, plaintiff commenced this action in the Family Part and

filed a pro se motion seeking joint legal custody, residential

custody, and child support for A.P. It appears that the Family

Part judge scheduled oral argument on plaintiff's motions for

April 27, 2016.

Two days before the scheduled hearing date, defendant filed

a verified answer and certain counterclaims. Defendant sought

joint legal custody of A.P., the release of the child's therapy

records, visitation, reunification therapy for the child, and

monetary damages for alleged parental alienation. In addition,

defendant asserted a claim against plaintiff for unjust

enrichment.

In his pleading, defendant alleged that he and plaintiff had

a fourteen-year cohabitating relationship with plaintiff, which

ended in April 2015. Defendant is an attorney. He alleged plaintiff

worked in a factory and earned a little more than the minimum

wage. Defendant claimed that during the period of cohabitation,

2 A-5261-16T4 he purchased two properties with his own funds. Both are two-

family homes, one in Paterson and one in Clifton.

Defendant claimed that because he had a poor credit rating,

plaintiff was the record owner of the properties. He alleged the

parties acquired the properties in furtherance of a joint venture.

It appears that until their cohabitation relationship ended, the

parties and the two children resided in one of the Clifton units.

Defendant further alleged that while he was living with

plaintiff, he incurred costs of $300,000 to renovate the two

properties. Defendant claimed he performed the construction work

himself, with minimal assistance. Defendant alleged the two

properties have an equity value of between $150,000 and $250,000,

or more.

Defendant also claimed that with minimal maintenance, the

properties would be profitable and income-producing for more than

thirty years. He claimed the rental income from the properties

would be sufficient to pay for the purchase of the properties.

According to defendant, after the outstanding mortgages are paid,

the properties will yield a net profit of more than a million

dollars.

Defendant claimed that if the "marital" unit in the Clifton

property is not rented, the current monthly income from the two

properties is nearly $4000. He asserted, however, that the current

3 A-5261-16T4 monthly income would exceed $6000 if the "marital" unit is rented.

He alleged that after the outstanding mortgages are paid, the

properties would yield a net income of $1500 per month, or more

than $18,000 per year.

Defendant also alleged that in approximately twenty years,

when the outstanding mortgages are paid, the equity or market

value of the properties will exceed $500,000, and may approach

$1,000,000. He claimed that during those twenty years, the owner

will receive at least $360,000 in rental income, for a total profit

of more than $1,000,000.

In addition, defendant asserted a claim for his services as

homemaker and full-time parent. He alleged that he paid more than

half of the household expenses. He claimed he paid for plaintiff's

relatively new vehicle, while he is driving a substantially older

car that requires service each month.

Defendant also alleged that throughout their relationship,

plaintiff claimed both children as dependents on her income tax

returns and received an average tax benefit of $8000 per month,

or nearly $100,000. Meanwhile, defendant claims he has incurred

an $80,000 tax debt because he has not been able to claim the

children as dependents on his returns. Defendant sought total

damages of $1,000,000. He also sought to partition the two

properties.

4 A-5261-16T4 The judge considered the parties' applications on April 27,

2016, and placed his decisions on the record. The judge stated

that both parties were seeking joint legal custody of A.P. and

granted that application. The judge observed that the parties had

agreed that plaintiff would continue to have residential custody

of A.P., at least for the present time.

The judge did not establish a visitation schedule for

defendant because A.P. had indicated she did not want to see him,

and the parties could not identify a person who could supervise

defendant's visits. The judge ordered the parties to meet with a

reunification therapist, with the cost to be shared equally. The

judge also required plaintiff to provide defendant with A.P.'s

therapy records.

The judge refused to entertain defendant's claim for damages

resulting from the alleged intentional infliction of emotional

distress due to parental alienation. The judge found that defendant

had not alleged sufficient facts to meet the criteria for such a

claim under Segal v. Lynch, 413 N.J. Super. 171 (App. Div. 2010).

The judge also decided that defendant's unjust enrichment

claim should be dismissed without prejudice because the Family

Part did not have jurisdiction to consider the claim. The judge

stated that the claim should be brought in the Law Division or the

General Equity Part of the Chancery Division.

5 A-5261-16T4 In addition, the judge decided that defendant's temporary

child support obligation would be determined based on the

information he provided regarding his income. The judge also denied

defendant's motion to transfer the case to Morris County.

The judge memorialized his decisions in an order dated April

27, 2016. Among other things, the order prohibits defendant from

having parenting time until the reunification therapist issues his

reports, at which time the matter will be scheduled for further

review. The order also states that defendant's child support

obligation is $118 per week, which defendant must pay through the

probation department. The order does not expressly state that

defendant's unjust enrichment claim was dismissed.

Defendant filed a motion for leave to appeal the trial court's

April 27, 2016 order and for a stay pending appeal. We denied the

motions. Thereafter, the Supreme Court denied defendant's motion

for leave to appeal.

On June 20, 2017, another Family Part judge entered a consent

order, which states that the parties would share joint legal

custody of A.P., and plaintiff would have residential custody of

the child. The order establishes a visitation schedule for

defendant, and states that the parties must meet with the

rehabilitation therapist for three additional sessions. The order

provides that the parties agreed to contact the therapist if

6 A-5261-16T4 further problems develop, with the understanding that they could

reopen the custody issue at any time. Defendant's appeal followed.

II.

On appeal, defendant argues that the trial court erred by

dismissing his claim for unjust enrichment on jurisdictional

grounds. We agree.

In Tevis v. Tevis, 79 N.J. 422, 424 (1979), the plaintiff

brought a claim against her husband for injuries sustained in a

physical beating that her husband administered. The Court

determined that the claim should have been asserted in the prior

divorce action between the parties. Id. at 433-34. The Court held

the plaintiff's cause of action accrued when the plaintiff was

battered because she knew at that time she had been injured and

her husband caused the injuries. Id. at 432. Plaintiff did not

assert her claim within the time required by the statute of

limitations. Id. at 424-25.

The Court held the statute of limitations should not be tolled

on equitable grounds. Id. at 433-34. The Court noted that the

plaintiff previously had initiated a divorce action against the

defendant, and in that action, the plaintiff did not assert any

damages claims for the injuries she had suffered. Id. at 433.

The Court stated that, "A wife's civil claims for monetary

compensation against her husband, and his contingent liability

7 A-5261-16T4 therefor, would seem a relevant circumstance affecting the

parties' financial status in the context of a matrimonial

controversy." Id. at 433-34 (citations omitted). The Court

explained:

Since the circumstances of the marital tort and its potential for money damages were relevant in the matrimonial proceedings, the claim should not have been held in abeyance; it should, under the "single controversy" doctrine, have been presented in conjunction with that action as part of the overall dispute between the parties in order to lay at rest all their legal differences in one proceeding and avoid the prolongation and fractionalization of litigation.

[Id. at 434 (citations omitted).]

In Oliver v. Ambrose, 152 N.J. 383 (1998), the Court again

addressed the application of the entire controversy doctrine to a

matrimonial action. In Oliver, the Court noted that Beverly Oliver

and Louis Ambrose had a "tumultuous" eight-year relationship,

during which time Beverly became pregnant five times. Id. at 386-

88. Beverly claimed Ambrose forced her to have two abortions and

caused her to suffer two miscarriages. Id. at 389.

Beverly eventually had a child with Ambrose and later married

another man. Id. at 388. Ambrose filed an action in the Family

Part seeking joint custody of the child, visitation, and a support

determination. Ibid. In those proceedings, Beverly filed a

certification in which she set forth facts concerning Ambrose's

8 A-5261-16T4 abusive and violent behavior. Id. at 389. Her husband also filed

a complaint to adopt the child. Ibid.

The parties settled the custody and adoption matters, and the

court dismissed the harassment complaint. Id. at 390. Several

months later, Beverly and her husband filed an action against

Ambrose based on Ambrose's physical abuse. Ibid. In response,

Ambrose argued that the action was barred by the entire controversy

doctrine. Ibid.

The Court noted that the entire controversy doctrine applies

in family matters. Id. at 394 (citing Brennan v. Orban, 145 N.J.

282, 290-91 (1996); Tevis, 79 N.J. at 434). The Court stated that

the doctrine requires that "[c]laims stemming from the same core

of facts should be raised in one action." Id. at 397. The Court

held that the plaintiffs' tort action "involves the same core set

of facts that undergirded the custody, adoption, and harassment

actions." Ibid.

The Court explained that the allegations of abuse were

relevant to the custody dispute because they pertained to the

issues of parental fitness and the safety of the child. Id. at 398

(citing N.J.S.A. 9:2-4). Moreover, resolution of the tort claims

would affect the amount of child support that should be awarded.

Ibid. The Court noted that in establishing child support, the

trial court must consider, among other factors, the parents'

9 A-5261-16T4 sources of income and assets, and their respective debts and

liabilities. Id. at 398 (citing N.J.S.A. 2A:34-23(a)). The Court

stated that the judgment on the tort claim would obviously "have

been a relevant circumstance affecting Beverly's and Ambrose's

financial status." Id. at 399.

The Court also considered the fairness of applying the entire

controversy doctrine. Id. at 399-402. The Court emphasized that

the doctrine requires the parties to assert all claims they have

against each other in one proceeding. Ibid. It is the trial court's

role to determine if the claim is relevant to the custody decision.

Ibid. The Court held that it was not unfair to apply the doctrine

to the plaintiffs, noting that Ambrose had settled his disputes

with them in the apparent belief he had conclusively resolved

those matters. Id. at 402.

III.

We are convinced that, in light of Tevis and Oliver, the

entire controversy doctrine applies in this case and required

defendant to assert his unjust enrichment claim in the Family Part

action. Defendant's claim arises from the same core set of facts

as the dispute between the parties over custody and child support.

Resolution of defendant's claim will have a significant bearing

on the financial status of the parties, which is a key

consideration in the determination of child support. The record

10 A-5261-16T4 does not indicate it would be unfair to require defendant to

litigate his unjust enrichment claim in the Family Part.

We note that there is support in our case law for defendant's

claim. In Bayne v. Johnson, 403 N.J. Super. 125, 138 (App. Div.

2008), the plaintiff had a relationship with a married man and

brought suit against him seeking palimony, based on his alleged

promise to support her for life. The plaintiff also sought an

interest in a condominium held in the names of the defendant and

his wife. Ibid.

In Bayne, we reversed the award of damages on the palimony

claim because the plaintiff failed to establish a promise of

lifetime support, but affirmed the award of an interest in the

condominium to the plaintiff because she had contributed funds for

its purchase. Id. at 144. We observed that it would be a "clear

injustice to deprive" the plaintiff of her interest in the

condominium, and it would "constitute an unjust enrichment" to the

defendant and his spouse. Ibid.

Furthermore, in Connell v. Diehl, 397 N.J. Super. 477, 487

(App. Div. 2008), the plaintiff asserted a palimony claim against

the defendant. The plaintiff also sought to partition the home in

which the parties had resided, as well as the personal property

in the home. Id. at 500. We noted that the "mere promise to provide

11 A-5261-16T4 lifetime support does not extend to a claim against assets owned

solely by the [promisor]." Ibid. (citation omitted).

We stated, however, that unmarried cohabiting partners are

entitled to seek a partition when they have engaged in a joint

venture to purchase property in which they have resided. Ibid.

(citing Mitchell v. Oksienik, 380 N.J. Super. 119, 127 (App. Div.

2005)). We observed that a party to a joint venture may seek to

partition the property when the joint enterprise ends. Ibid.

(citing Mitchell, 380 N.J. Super. at 127).

Moreover, in Maeker v. Ross, 430 N.J. Super. 79 (App. Div.

2013), rev'd on other grounds, 219 N.J. 565 (2014), the plaintiff

filed an action against the defendant, an individual with whom she

lived for more than a decade. Id. at 83. The plaintiff asserted

claims against the defendant based on palimony, partnership/joint

venture, resulting trust, fraud, and unjust enrichment. Ibid.

Among other things, the plaintiff alleged that the defendant had

promised throughout their relationship to take care of her and

provide lifetime support. Ibid.

We held the plaintiff's palimony claim was barred by a recent

amendment to the statute of frauds and should have been dismissed.

Id. at 86-89 (citing N.J.S.A. 25:1-5(h)). We also determined that

the plaintiff's unjust enrichment claim should have been dismissed

12 A-5261-16T4 because it was "merely [a] different version[] of [the plaintiff's]

underlying palimony claim that is barred." Id. at 97.

We noted, however, that even in the absence of a claim for

palimony, courts have recognized that an unmarried party could be

unjustly enriched by certain contributions from the other party

to the relationship. Id. at 96 (citing Bayne, 403 N.J. Super. at

144; Connell, 397 N.J. Super. at 500). We also observed that the

Restatement Third of Restitution and Unjust Enrichment § 28 (2011)

(the Restatement) provides that

If two persons have formerly lived together in a relationship resembling marriage, and if one of them owns a specific asset to which the other has made substantial, uncompensated contributions in the form of property or services, the person making the contributions has a claim in restitution against the owner as necessary to prevent unjust enrichment upon the dissolution of the relationship.

[Ibid.]

As we have explained, in this case, defendant alleges the

parties lived together for several years in a relationship

resembling marriage. He claims he acquired the properties in

Paterson and Clifton in furtherance of a joint venture with

plaintiff. Defendant alleges that he purchased the properties with

his own funds, but due to his poor credit history, plaintiff is

the record owner of the properties. He further alleges that over

the years, he has made substantial contributions in the form of

13 A-5261-16T4 property and services to renovate the properties, and plaintiff

has been unjustly enriched by her ownership interest in the

properties and the income from the properties.

Defendant's claim regarding the properties is similar to the

claims asserted in Bayne and Connell. Moreover, plaintiff argues

his claim has been recognized in the Restatement, which we

discussed in Maeker. We note that the Family Part considered the

claims of unjust enrichment in Maeker, Bayne, and Connell. It

appears that in those cases, no one argued that the Family Part

did not have jurisdiction to consider the claims.

We therefore conclude that the entire controversy doctrine

required defendant to assert his claim of unjust enrichment against

plaintiff in the pending Family Part proceedings. We also conclude

that the Family Part judge erred by determining defendant must

bring his claim in either the Law Division or the General Equity

Part of the Chancery Division. We remand the matter to the Family

Part for further proceedings on defendant's claim.

We note that on appeal defendant has not argued that the

court erred by dismissing his claim of unjust enrichment based on

the parenting and homemaking services he allegedly provided to

plaintiff during the cohabitation. In Maeker, we observed that a

claim for homemaking services had been rejected in Carney v.

Hansell, 363 N.J. Super. 111, 127 (Ch. Div. 2003), but courts have

14 A-5261-16T4 recognized claims of unjust enrichment involving cohabitating

parties that are independent of homemaking services. Maeker, 430

N.J. Super. at 96.

In any event, it appears that defendant is not pursuing a

claim of unjust enrichment for homemaking and parenting services.

However, if defendant is pursuing such a claim, on remand, the

court should address that claim as well.

Reversed and remanded to the Family Part for further

proceedings in conformity with this opinion. We do not retain

jurisdiction.

15 A-5261-16T4