Moynihan v. Lynch, 250 N.J. 60 (March 8, 2022)
This New Jersey Supreme Court decision addresses the validity of a palimony agreement.
Beginning in 1997, plaintiff Kathleen Moynihan (“Kathleen”) and defendant Edward Lynch (“Edward”) were involved in a long-term romantic relationship. In 2000, Kathleen and her children moved into to a home in Bordentown, New Jersey. Edward had purchased the home with a mortgage and had title to the home. Kathleen had contributed the down payment. They shared the financial responsibilities of the home, and over time, Edward moved into the home and became more active in family life. While the parties discussed marriage they never wed.
In 2007, Edward transferred title to the home into a trust and named Kathleen as the beneficiary upon his death. In 2013, he converted his ownership of the home into a joint tenancy with the right of survivorship naming himself and Kathleen on the deed.
Sometime between 2012 and 2014, the parties entered into a handwritten agreement drafted by Edward, which provided the following in the event their relationship ended: (1) Edward would pay off the property within five years of vacating; (2) after paying off the mortgage, Edward would sign the deed over to Kathleen; (3) until the mortgage is satisfied, Edward would pay the monthly mortgage payments; (4) Edward would pay the property taxes for two years after his departure; and (5) Edward would pay $100,000 to Kathleen five years after vacating the property. The parties signed the agreement, had it notarized, but they did not consult with counsel.
In or around 2015, the parties split, and Edward refused to abide by the agreement.
Kathleen filed a complaint seeking enforcement of the agreement either as a written palimony agreement or an alleged oral palimony agreement that she claimed the parties had entered into before the 2010 amendment to N.J.S.A. § 25:1-5 to include subparagraph (h). Subparagraph (h) mandated that palimony agreements be reduced to writing and “made with the independent advice of counsel.” Kathleen challenged N.J.S.A. § 25:1-5(h) on constitutional grounds. Alternatively, she sought enforcement of the agreement on equitable grounds. Edward denied the existence of an oral palimony agreement and asserted that the written agreement was not enforceable because the parties had not received the independent advice of counsel before entering into it.
At the trial court level, Kathleen testified that their relationship was like a marriage and that Edward told her there was no reason to consult an attorney to make it legal. Edward diminished the relationship and gave conflicting testimony about whether he intended to be bound by the agreement. Ultimately, the trial court found that N.J.S.A. § 25:1-5(h)’s attorney review requirement did not contravene Kathleen’s constitutional rights. The trial court determined that the written agreement was not a palimony agreement, but more akin to a landlord/tenant agreement. Finally, the trial court found that the couple did not enter into an enforceable oral palimony agreement.
The Appellate Division reversed, but it upheld the finding that the parties did not reach an oral palimony agreement. The New Jersey Supreme Court granted certification. 246 N.J. 324 (2021).
The New Jersey Supreme Court reversed in part and affirmed in part and remanded to the trial court. Ultimately, the Court found that the palimony agreement, as written and signed without the attorney review requirement, was enforceable. N.J.S.A. § 25:1-5(h) – in imposing an attorney review requirement to enforce a palimony agreement — contravenes Article I, Paragraph 1 of the New Jersey Constitution. The Court further found that the parties did not enter into an oral palimony agreement.
The Statute of Frauds generally requires that certain agreements be signed by the party against whom enforcement is sought. In 2010, the Legislature amended the statute to include palimony agreements. Prior to the amendment, New Jersey’s common law recognized that an unwed couple could enter into an oral palimony agreement involving marital-type relationships. The feature that distinguishes N.J.S.A. § 25:1-5(h) from all other provisions in the Statute of Frauds is the requirement that each party to the palimony agreement secure independent advice of counsel. No other law in the state conditions enforceability of an agreement between private parties on attorney review. Furthermore, none of the jurisdictions that enforce palimony agreements mandate that the parties consult with attorneys before entering into such agreements.
The Court did agree with Kathleen’s argument that N.J.S.A. § 25:1-5(h)’s attorney review requirement violated the contract clause of the United States and New Jersey Constitutions. The essential aim of the contract clause is to restrain a state legislature from passing laws that retroactively impair preexisting contracts. This concern – that the legislation reaches back to alter an already-existing contract and causes fundamental unfairness – was not present in this case, since Kathleen and Edward signed the agreement well after the effective date of N.J.S.A. § 25:1-5(h). .
Next, the Court considered whether under the substantive due process guarantee of Article I, Paragraph 1 of the State Constitution, the state generally can impose on an individual the burden of retaining counsel to review a private contract. The right to “personal liberty” guaranteed in Article I, Paragraph 1 protects against the government arbitrarily interfering with the right to individual autonomy. The original Statute of Frauds did not require a person to consult with an attorney before entering into a contract, but the amendment mandates attorney review only for palimony agreements.
To determine whether parties have a particular liberty interest to enter into a written palimony agreement, the Court applied a balancing test weighing three factors:
(1) The nature of the right at stake;
(2) The extent to which the challenge statutory scheme restricts that right; and
(3) The public need for statutory restriction.
Id. at 88.
The Court opined that the right of personal autonomy is infringed upon by the requirement that an attorney participate in the process of entering into a palimony agreement. An attorney’s services may impose a cost that the parties do not want to bear or cannot afford. Attorney review almost certainly will result in fewer palimony agreements. Further, the imposition of an attorney review requirement is an arbitrary government restriction that contravenes Kathleen’s substantive due process rights.
In conclusion, the Court found there was sufficient credible evidence in the record to support the trial court’s determination that the parties did not have an oral palimony agreement before 2010, but the palimony agreement, as written and signed, without the requirement of attorney review, was enforceable. “That portion of N.J.S.A. 25:1-5(h), which imposes an attorney-review requirement to enforce a palimony agreement, contravenes Article I, Paragraph 1 of the New Jersey Constitution.” Id. at 91.
Thus, the Court struck down the attorney review requirement of N.J.S.A. 25:1-5(h). Palimony writings 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 Statue of Frauds.
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