NJ Supreme Court Grants Cert: Thieme v. Aucoin-Thieme

Thieme v. Aucoin-Thieme, 227 N.J. 269 (2016)

In 1999, plaintiff Michael J. Thieme was employed at a biometrics consulting firm.  In late 2000 or 2001, Michael met the defendant, Bernice F. Aucoin-Thieme.  By May 2002, they were living together, and their daughter was born in 2003.

Michael held no ownership interest in the firm.  However, the firm’s principals offered to compensate him for his contributions to the firm’s success, in the event they sold the firm.  Bernice was not employed, but rather cared for their daughter and performed all household tasks.

In an email exchange in 2010, Michael acknowledged that Bernice had given up her own career and educational aspirations so that Michael would pursue his, and noted “it is appropriate that I support you fully in recognition of this sacrifice.”  In 2010, the couple wed, but they filed for divorce 14 months later.  In the course of negotiations about the division of assets, Michael reiterated his view that Bernice would be entitled to a portion of any bonus he received upon the sale of the firm.

In 2012, Michael and Bernice executed their Property Settlement Agreement, and three months after the entry of their judgment of divorce, the firm was sold, and Michael was offered a one-time Closing Bonus of $2,250,000.  One of the firm’s owners testified in a deposition that the firm offered Michael the Closing Bonus based upon his contribution to the company over the 13 years.  Michael did not inform Bernice about the Closing Bonus.

Bernice first learned of the bonus when Michael deposited $200,000 into a bank account that remained a joint account despite the divorce.  With no notice to Michael, Bernice withdrew the deposited funds.  Michael filed a complaint

After a three-day bench trial, a Family Part judge determined that Michael earned the Closing Bonus over his entire employment with the firm, and Bernice was entitled to 30 percent of the post-tax portion of the bonus earned during their 14-month marriage.  The court awarded $30,288 to Bernice and ordered her to return the remaining amount she had withdrawn from the joint account to Michael.

Bernice appealed, asserting that she was entitled to a share of the Closing Bonus for the period during which she cohabitated with Michael prior to marriage under both the equitable distribution statute and equitable theories, including unjust enrichment and constructive trust.

In an unpublished opinion, the Appellate Division affirmed the trial court’s judgment.  The New Jersey Supreme Court granted Bernice’s petition for certification.

First, the Court held the trial court correctly allocated the distribution of Michael’s Closing Bonus to premarital and marital periods and properly deemed only the portion of the compensation that was earned during the parties’ marriage to be a marital asset subject to equitable distribution.  However, the Court noted that such a finding does not end the inquiry.

Relying on the equitable principles expressed in the case of Carr v. Carr, 120 N.J. 336 (1990), the Court found the circumstances warranted the imposition of a constructive trust as a remedy for Bernice’s claim of unjust enrichment.

The Court relied on Carr, where the Court held that “if warranted by the evidence, the equitable remedy of constructive trust should be invoked and imposed on the marital property under the control of the executor of [the deceased husband’s] estate.”  There, the husband died during their divorce proceedings and a judgment of divorce was not entered.  Thus, the wife was barred from a claim under the equitable distribution statute.  Similarly,  the wife was barred from receiving an elective share under the probate code by virtue of her separation from her husband and the pendency of the divorce proceedings prior to his death.  The New Jersey Supreme Court imposed a constructive trust awarding to the plaintiff a share of the marital assets controlled by the husband’s estate.

Here, the Court fashioned a similar remedy based on the principles expressed in Carr, which the Court deemed applicable with equal force to this matter.  Specifically, the Court noted the prospect that Michael would be generously compensated was a significant factor in the parties’ personal and financial planning from the early stages of their relationship.  Michael and Bernice each relied on the expectation of deferred compensation if the firm were sold.  The parties’ shared anticipation that Michael would be paid deferred compensation was supported by the Statement of Understanding, which acknowledged their intention to compensate their key employee and constituted a written commitment to Michael.  This confirmation occurred early in the relationship between the parties.

Moreover, Michael himself recognized Bernice’s contributions to their family should be rewarded, per his email sent to Bernice.   Michael assured Bernice that if he received an unexpected bonus, they would split that bonus after the deduction of taxes.  Michael expressed that view in 2003 when their child was born.

Although Michaels’ Closing Bonus materialized three months after the parties’ divorce was finalized, the Court found that a decision constraining Bernice to a nominal share of the Closing Bonus – authorized by the equitable distribution statute – would result in unjust enrichment.  Therefore, a percentage of the Closing Bonus that Michael earned during the period in which the parties cohabitated prior to their marriage should be deemed to be held by Michael in constructive trust for Bernice.

The Court remanded for the trial court to determine the precise time period for which the Closing Bonus should be shared by the parties, the percentage of the Closing Bonus that should be allocated to Bernice to avoid unjust enrichment, or the impact of taxes imposed on Michael by virtue of the Closing Bonus.