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Gayagoy v. Matela

A-3704-07T1 (N.J. Super. App. Div. 2009) (Unpublished)

CO-TENANTS; AGREEMENTS —Where there is an agreement between co-tenants in the form of a consent order that provides for disputed funds to be held in escrow, but not how they are to be further distributed, a court may resolve the dispute and not leave the parties with claims against each other, but without a means to resolve those claims.

Two women purchased a residence as joint tenants with rights of survivorship. One of the women vacated the property and demanded that the other either purchase her share or sell the home. The other woman continued to reside in the home, refused to abide by either request, and then transferred her interest in the property to her sister. The woman who vacated the premises sued her co-owner and the co-owner’s sister seeking sale of the property and a determination of their respective interests in the sale proceeds. Before the matter was heard, the parties signed a consent order. The consent order provided that if the parties could not agree as to the amount that would be due to each party, an amount necessary to cover such claims would be held in escrow. The parties sold the home, but could not resolve claims for reimbursement that each of them had against the other. Money was put in escrow pending resolution of the claims.

The woman who originally vacated the residence brought a motion for credits against the other woman’s share of the escrowed funds. The other woman filed a counterclaim and made similar demands for credits against the vacating woman’s share of the funds. The lower court held that the matter was closed because it had been resolved by consent order. The woman who originally vacated the apartment appealed, arguing that a plenary hearing should have been scheduled to determine the parties’ respective claims to the escrow fund.

The Appellate Division reversed, noting that the lower court acknowledged that there was a factual dispute over who was entitled to the escrowed funds but chose to defer to the terms of the consent order. It found that the consent order failed to set forth a method to determine the parties’ interest in the sale proceeds. The Court believed that it would be absurd to find that the consent order allowed the parties to assert claims, but not present them to a court for resolution. That would leave the parties without a remedy. The Court concluded that the consent agreement was not intended to act as the final answer with regard to determining the amount of the parties’ entitlements and that further proceedings were required to resolve the dispute. The Court also mentioned that the use of alternative dispute resolution programs could be used by the lower court, at its discretion.

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