M.G. v. S.M.

199 A.3d 318, 457 N.J. Super. 286
CourtNew Jersey Superior Court Appellate Division
DecidedDecember 26, 2018
DocketDOCKET NO. A-1290-17T1
StatusPublished
Cited by23 cases

This text of 199 A.3d 318 (M.G. v. S.M.) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M.G. v. S.M., 199 A.3d 318, 457 N.J. Super. 286 (N.J. Ct. App. 2018).

Opinion

MAWLA, J.A.D.

*289Plaintiff M.G.1 appeals from a provision of a June 16, 2017 amended final judgment *321of divorce and an October 10, 2017 order *290denying relief from part of that judgment. The issue is whether the portion of restricted stock transferred to plaintiff by his employer, which vests after the date of the complaint, is subject to equitable distribution if the vesting is contingent upon plaintiff's post-complaint employment efforts. The trial judge concluded defendant S.M. was entitled to fifty percent of all stock awards made before or near the date of complaint. However, because the judge's decision is contrary to the evidence and his credibility findings, and mistaken as a matter of law, we reverse and remand for further proceedings consistent with this opinion.

The following facts are taken from the record. The parties were married in May 1998. In 2001, plaintiff became employed as a principal consultant for a large multi-national corporation. Beginning in August 2003, and every August thereafter until 2010, plaintiff received a stock award from his employer. According to plaintiff's testimony and a corresponding summary, the stock awarded would vest in yearly tranches. For example, plaintiff received 490 shares in 2003. Those shares began to vest at a rate of 174 shares per year commencing in 2011. A similar vesting schedule was applied to the subsequent stock transfers, such that the stock awards and the vesting occurred on a rolling basis.

Plaintiff filed a complaint for divorce on July 28, 2014. By then, he had been granted eight stock awards. However, only three had fully vested and the remainder were due to vest post-complaint, beginning on August 31, 2014, and every August thereafter.

At trial, plaintiff also produced an informational document from his employer entitled "Overview of Stock Awards," which plaintiff, on questioning by the trial judge, confirmed contained the employer's policy. In pertinent part, the document stated as follows:

Stock-based compensation is a key component of our reward program ... because it provides an ownership stake in the company's success for employees who contribute over the long term. To preserve this core element of our culture, in July 2003, [we] decided to grant employees stock awards, which represent the future right to receive shares of ... stock when a vesting requirement is satisfied.
....
*291At [our company] we believe that employees who become shareholders maintain a long-term, vested interest in sustained individual excellence and the overall success of the company.
....
Each eligible employee's annual stock award grant is based on his or her impact, level, and country.

Furthermore, plaintiff testified the stock plan was

the way [the employer] retain[s] their employees and they want to make sure that you consistently perform better so if the year that it vests, if you don't perform well, it gives them reason to let you go and you don't get those [stocks], so you have to be consistently performing at a better level to be able to take advantage of the stocks that they give you.

Following the judge's questioning, plaintiff's attorney asked plaintiff: "Now with regard to equitable distribution ... do you acknowledge that some of those stocks should be distributed to [defendant]?" Plaintiff agreed he would share the stocks "already vested" with defendant as equitable distribution. Defendant did not refute any of plaintiff's testimony regarding the stock plan, the awards he received, the *322conditions for vesting, or the basis on which the employer made the awards.

Following the conclusion of the trial, the judge rendered a thirty-nine page written decision addressing custody and parenting time, equitable distribution, alimony, child support, and counsel fees. In the section of his opinion addressing credibility the judge opined:

The [c]ourt finds [p]laintiff to be credible. After observing him during his testimony, the [c]ourt determined that he was honest and sincere. His description of events was logical and supported by the facts.
On the other hand, the [c]ourt does not find [d]efendant credible. Many of her claims were unsupported by facts or reason.

Regarding plaintiff's restricted stock units, the judge continued:

The restricted stock units ("RSUs") awarded to [p]laintiff as part of his compensation package vest over a five-year vesting schedule. As the stocks vest, they are reflected in [p]laintiff's W-2 for that year. Plaintiff concedes that [d]efendant is entitled to share in the [RSUs] that were vested as of the date of filing.
Plaintiff takes the position that the RSUs awarded on August 31, 2014 are exempt from equitable distribution based upon the post-[complaint] status of their receipt. This is incorrect. The 2014 award, not the vesting of that award, created a marital asset which will vest in five years and whose value is as of yet uncertain.
*292The 2014 award was made in recognition of [p]laintiff's past job performance. Said past performance was during the marriage, making the units subject to equitable distribution. In Pascale v. Pascale, [140 N.J. 583, 660 A.2d 485 (1995),] the Court found that stock options awarded after the marriage has terminated, but obtained as a result of efforts expended during the marriage should be subject to equitable distribution. ( [See also ] Reinbold v. Reinbold, 311 N.J. Super. 460 [710 A.2d 556] (App. Div. 1998) noting that portions of a retirement incentive package offered after the divorce were based upon pre-complaint efforts and subject to equitable distribution.)
In the within matter, the [c]ourt finds that the RSUs awarded to [p]laintiff up to and including the August 2014 award are the result of pre-filing, marital efforts, and are thus subject to equitable distribution.

Accordingly, the judge imposed a constructive trust to facilitate distribution of the unvested stock to defendant.

After entry of the divorce, plaintiff filed a motion seeking various forms of relief, including modification of the judgment pursuant to Rule 4:50-1, as it pertained to the restricted stock. In the certification accompanying the motion, plaintiff stated:

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Bluebook (online)
199 A.3d 318, 457 N.J. Super. 286, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mg-v-sm-njsuperctappdiv-2018.