BETSY M. ARAUCO VS. SANTOS A. PEREZ (FD-16-1263-16, PASSAIC COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE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,
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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
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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.
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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.
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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
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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
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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
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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'
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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
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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
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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
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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
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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
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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.
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