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Ulanski v. Coppola

A-722-03T5 (N.J. Super. App. Div. 2004) (Unpublished)

CONTRACTS; SETTLEMENTS—A court, believing that all settlement negotiations are stressful, upholds a settlement reached in a co-ownership dispute despite one party’s claim that she was distraught and upset during the negotiations and therefore couldn’t have grasped the terms of the settlement.

The woman and her boyfriend arranged to buy a house and live in it. The contract between them provided that if either wished to terminate the relationship, that party would notify the other, and the boyfriend would have thirty days to move out. Following any such termination, the woman would have five months to obtain financing to buy her boyfriend’s one-half share. If she couldn’t get financing, the house would be listed for sale at its then market value, and the net proceeds would be split.

After six years, the boyfriend left and gave notice to the woman, triggering the buy-sell provision. The woman failed to respond. Five months later, the boyfriend filed a complaint seeking to enforce the agreement. The two parties settled, and their settlement agreement essentially mirrored the original agreement. The woman was given two more months to complete the buyout, and if she failed, the house would be sold. During the proceedings, the woman clearly stated that she understood and accepted the terms of the settlement.

Two days before the buy-out deadline, the woman filed a motion to vacate the settlement, requesting an evidentiary hearing to determine her capacity to contract. Specifically, she claimed that she was distraught and upset during the settlement negotiations and therefore did not grasp the terms of the agreement.

The lower court denied her motion, holding that public policy favors the finality of settlements and that the woman had failed to provide clear and convincing proof of her incapacity so as to justify vacating the settlement. It pointed out that all negotiations are stressful. Therefore, they do not automatically constitute duress. Furthermore, it took note that when the original court asked the woman whether she understood the terms of the agreement, her affirmative responses were “very normal” and she did not “show[] any great emotion.” Finally, the settlement and its negotiations were not one-sided. In fact, after the negotiations had ended, she made a successful demand that her boyfriend pay a utility bill.

On appeal, the Appellate Division held that the woman failed to demonstrate fraud or any other compelling circumstance that would justify reversing the lower court’s decision. It gave high deference to the lower court’s personal observations of the owner during the course of the settlement negotiations. To succeed in her claim, she needed to demonstrate that enforcing the settlement would be unjust, oppressive, or inequitable. Here, the woman failed to do so. For that reason, the Appellate Division affirmed the lower court’s decision, holding that the woman had not met the minimum threshold to warrant an evidentiary hearing.

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