Law Lessons from DiLauri v. DiLauri, App. Div. (A-0437-07T1; Decided December 2, 2008):

Picture by Micah Maziar

The PSA is generally the controlling authority for disposition of disputes between divorced parties. For example, in Conforti v. Guliadis, the respondent’s former wife moved for reformation of a lease that had been incorporated into their divorced decree. 128 N.J. 318, 320 (1992). The Court was asked to determine whether the issue should be resolved by principles of matrimonial law applicable to judgments of divorce, or, contract law applicable to lease agreements. Ibid. The Court held that matrimonial law applied, stating:
although plaintiff seeks modification of what appears to be a standard lease for retail space, the lease was but one component of a much broader agreement encompassing a host of domestic issues that arose when [the parties] ended their marriage. Consequently the lease [...] cannot be viewed merely as a conventional property transaction.
[Id. at 323-24.]

In other words, the PSA, as the overarching judgment that governed the parties’ post-divorce obligations, was the focal point for resolving their dispute.

Generally, the rule of merger holds that the acceptance of a deed for lands is considered “prima facie full execution of an executory contract to convey, unless the contract contains a covenant collateral to the deed.” Caparrelli v. Rolling Greens, Inc., 39 N.J. 585, 590 (1963). The merger rule extinguishes all previous covenants that relate to the “title, possession, quantity or emblements of the land.” Id. at 591. Covenants in an antecedent contract that the parties do not intend to incorporate into the deed or are not necessarily satisfied by execution and delivery of the deed are collateral agreements and are preserved from merger. Id. at 592.

However, in this case, as in Conforti, the parties have a broad PSA. Their agreement addresses alimony, child support, distribution of personal property and, of course, the disposition of the marital home. It is clear from the agreement that the parties intended it to govern any dispute that might arise between them regarding the marital property. See Konzelman v. Konzelman, 158 N.J. 185, 199 (1999) (holding that parties’ freedom to mold contract obligations in property settlement agreements “should be assured”). Therefore, any claims between the parties must be addressed under the lens of the PSA, and not the law of real property.

Basic contract law holds that a party waived nothing by performing his end of the bargain despite defendant’s breach. The court have stated that “[w]hile a substantial defect in the proposed performance of the defaulting party may discharge the innocent party from his duty to perform, or entitle him to rescind, he may also choose to proceed with the contract and recover in damages for the injuries caused by the breach.” Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 145 (App. Div. 1960), certif. denied, 34 N.J. 66 (1961). Simply because the non-breaching party has knowledge that the defaulting party will not perform one of his obligations under the contract, the injured party, by choosing to proceed nonetheless, “obviously does not manifest agreement that the performance received is in full satisfaction of all contractual obligations.” Ibid. Therefore, “prior notice [is] [...] not required to give rise to defendant’s liability for a breach.” Caparrelli, supra, 39 N.J. at 594.