Palimony and the Statute of Frauds to be Considered by the Supreme Court in Moynihan v. Lynch

By Charles F. Vuotto, Jr.

On May 21, 2021, the New Jersey Supreme Court granted certification to review the palimony case of Moynihan v. Lynch. The question presented is whether the written agreement between the parties is unenforceable due to the 2010 amendment to the Statute of Frauds, N.J.S.A. 25:1-5(h).1

Moynihan v. Lynch provides the Supreme Court with the opportunity to resolve several questions that it left open in the last palimony case it heard, to wit: Maeker v. Ross.2

By way of brief background, the Statute of Frauds requires that certain “agreements or promises … be in writing and signed by the party to be charged therewith.”3 On Jan. 18, 2010, the Statute of Frauds was amended to require that palimony4 agreements be in writing and entered with the advice of counsel.5 Specifically, the 2010 amendment provides that an agreement must be in writing where there is a:

promise by one party to a non-marital personal relationship to provide support or other consideration for the other party, either during the course of such relationship or after its termination. For the purposes of this subsection, no such written promise is binding unless it was made with the independent advice of counsel for both parties.6

In Maeker v. Ross, the 2010 amendment was challenged on several grounds, including: the constitutionality of applying the amendment retroactively; the viability of the equitable claims; partial performance as an exception; and the unconstitutionality of the requirement of independent advice of counsel. The Family Law Section of the New Jersey State Bar Association participated as amicus in Maeker v. Ross, and took the following three positions:

  1. The 2010 Amendment to the Statute of Frauds, N.J.S.A. 25:1-5(h), must be applied prospectively only, since applying it retroactively would violate Article IV, Section VII, Paragraph 3 of the New Jersey Constitution, which precludes the passing of aNY law that impairs the obligation of contracts, or deprives a party of any remedy for enforcing a contract which existed when the contract was made.
  2. NEW JERSEY COURTS SHOULD CONTINUE TO FOLLOW §139(1) OF THE RESTATEMENT (SECOND) OF CONTRACTS, WHICH RECOGNIZES THAT A COURT HAS THE EQUITABLE POWER TO UTILIZE PROMISSORY ESTOPPEL TO REMOVE A CASE FROM THE STATUTE OF FRAUDS WHEN NECESSARY TO AVOID AN INJUSTICE BUT SHOULD REQUIRE PROOF OF THE ELEMENTS BY THE HIGHER CLEAR AND CONVINCING EVIDENCE STANDARD TO BALANCE THE COMPETING PUBLIC POLICY INTERESTS AND ENSURE JUSTICE PREVAILS.
  3. NEW JERSEY COURTS SHOULD RETAIN THE ABILITY TO UTILIZE THE EQUITABLE DEFENSE OF PARTIAL PERFORMANCE TO TAKE AN ORAL AGREEMENT OUT OF THE STATUTE OF FRAUDS BUT SHOULD REQUIRE PROOF OF THE ELEMENTS BY THE HIGHER CLEAR AND CONVINCING EVIDENCE STANDARD TO BALANCE THE COMPETING PUBLIC POLICY INTERESTS AND ENSURE JUSTICE PREVAILS.

Because the New Jersey Supreme Court agreed the amendment could not be applied retroactively, the Court reversed on that basis and did not reach any of the other arguments presented.

In the current case, Moynihan v. Lynch, the parties were in a long-term dating relationship that began in 1997. In February 2014, the plaintiff (Kathleen M. Moynihan) and defendant (Edward J. Lynch) entered into an agreement, handwritten by the defendant, which was signed by both parties, and notarized. The agreement provided that “[i]n the event that [plaintiff] and [defendant] terminate their relationship [defendant] agree[s]” that:

  1. The home . . . in Bordentown[,] NJ will be paid off within five years after [defendant] vacates the property.
  2. After paying off the mortgage note [defendant] will sign the Deed over to [plaintiff] thereby giving her sole ownership of said property.
  3. Until the mortgage is satisfied [defendant] will pay the monthly mortgage payment.
  4. [Defendant] will pay the property tax at . . . [the] Bordentown[, NJ property] for two years after his departure.
  5. [Defendant] will pay [plaintiff] a sum of $100,000 dollars by the end of a five[-]year[] period starting when [defendant] vacate[s] the [Bordentown] property.

This agreement finalizes all obligations of [defendant] to [plaintiff].

Although the agreement was not dated, the trial court accepted the defendant’s testimony that it was executed in February of 2014.7 In her eleven-count amended complaint, the plaintiff sought relief based on the following causes of action: 1) palimony; 2) enforcement of a written contract; 3) enforcement of an oral contract; 4) partial performance as a bar to the Statute of Frauds, N.J.S.A. 25:1-5; 5) unjust enrichment; 6) quantum meruit; 7) quasi-contract; 8) equitable estoppel; 9) specific performance of an implied contract; 10) fraud or misrepresentation; and, 11) joint venture. The defendant filed an amended answer and a counterclaim for partition of the Bordentown property.

At the conclusion of trial, the court issued a May 29, 2019, order dismissing all the remaining counts in the plaintiff’s amended complaint except for count two, enforcement of the agreement. It ordered the defendant to “completely satisfy” the mortgage at the Bordentown property, issue a general warranty deed to the plaintiff upon satisfaction, pay the plaintiff $100,000, and pay all property taxes on the property between May 1, 2015, and April 30, 2017. The court denied the plaintiff’s requests for “an equitable legal share of the assets accumulated by the [d]efendant during the relationship,” and “that the [d]efendant provide proper support for her.” Further, it continued the previously entered restraint on the defendant’s bank account and ordered the parties to pay their own attorneys’ fees and costs. Finally, the court dismissed the defendant’s counterclaim.

The Appellate Division reversed the trial court’s decision enforcing the written agreement, finding:

The trial judge incorrectly concluded that because the Agreement lacked an essential element of a palimony agreement, a promise of support for life, it fell outside of the Statute of Frauds. The Amendment, however, requires only that such an agreement contain a “promise by one party to a non-marital personal relationship to provide support or other consideration for the other party, either during the course of such relationship or after its termination.” N.J.S.A. 25:1-5(h). The Amendment does not limit the attorney review requirement to promises of support for the promisee’s life or any other duration of time. As such, the trial court erred when it concluded that because the Agreement lacked a promise of support for life, it stood outside the clear requirements of the Amendment.8

The Appellate Division in Moynihan addressed the plaintiff’s constitutional arguments regarding the obligation to have an attorney review the agreement by laying out the law applicable to the unconstitutional governmental impairment of contracts.9 A three-part inquiry is required to determine if legislation unconstitutionally impairs a contract: does it (1) substantially impair a contractual relationship; (2) lack a significant and legitimate public purpose; and, (3) is it based upon unreasonable conditions and … unrelated to appropriate governmental objectives. Addressing the first prong, the appellate court found no improper contractual impairment. Although stating that the “Legislature routinely imposes additional costs on parties who seek to enter contractual relationships,” it gave only one example (i.e. requiring independent legal counsel if a lottery winner seeks to assign their winnings pursuant to N.J.S.A. 5:9-13(d)(15)).10

The Appellate Division then addressed the next prong (i.e. whether the restriction is reasonable and necessary to serve an important public purpose). In doing so, it concluded that “the Amendment’s conditions reasonably relate to a significant and legitimate public purpose. The Statute of Frauds exists because the Legislature has found agreements within its scope susceptible to fraudulent and unreliable methods of proof.”11  It continued by noting:

With regard to the Amendment specifically, we noted that the Legislature was concerned with the burden of proof difficulties in establishing valid palimony agreements. While independent attorney review is not required in other provisions of the Statute of Frauds or other family law agreements, the Legislature has required so for palimony agreements with the very purpose of protecting the rights of contracting parties. The Amendment is one legitimate way of addressing this significant issue and is reasonably related to appropriate legislative objectives.12 After considering the aforementioned three-part inquiry, the Appellate Court concluded plaintiff had failed to establish that the Amendment violates the Contract Clauses of the State or Federal Constitutions.13

On appeal to the New Jersey Supreme Court, the plaintiff is making the following three arguments:

  1. The provision in the amendment to the Statute of Frauds requiring palimony agreements to be reviewed by independent legal counsel in order to be enforceable is unconstitutional;
  2. Promissory estoppel and partial performance should be recognized as valid defenses that can remove a case from the Statute of Frauds when necessary to avoid a manifest injustice; and
  3. In addition to the written agreement, there was also ample evidence of an earlier implied oral agreement that pre-dated the amendment to the statute that could not be rendered unenforceable through the retroactive application of the State of Frauds amendment under Maeker v. Ross, and the trial court erred by not recognizing the existence of that earlier agreement.

The Family Law Section’s amicus subcommittee has sought and obtained the New Jersey State Bar Association’s permission to participate as amicus in this case, so it can raise the following three arguments:

  1. New Jersey courts should continue to follow §139(1) of the Restatement (Second) of Contracts, which recognizes that a court has the equitable power to utilize promissory estoppel to remove a case from the Statute of Frauds when necessary to avoid an injustice. To balance the competing public policy objectives, the court should continue to require proof of the elements by clear and convincing evidence. 
  2. New Jersey courts should retain the ability to use the equitable defense of partial performance to take an oral agreement out of the Statute of Frauds. To balance the competing public policy objectives, the court should continue to require proof of the elements by clear and convincing evidence.
  3. The Statute of Frauds amendment mandating both parties in a non-marital relationship have independent advice of counsel for promises of support or other consideration to be binding is unconstitutional.

Regarding proposed third point, palimony agreements typically benefit the partner in a relationship that has become financially dependent upon the other by affording them certain protections or benefits in the event the relationship ends. Requiring these individuals to obtain independent advice of counsel for their agreement to be enforceable does not benefit them (provided there is adequate evidence that it was voluntarily executed without any coercion), it simply makes it harder for them to enter into a binding agreement, thereby depriving them of equal access to justice.

When signing the amendment into law, then-Gov. Jon Corzine expressly recognized the potential for the independent legal counsel requirement to adversely impact less financially fortunate individual’s equal access to justice. Specifically, in his Statement on Signing Senate Bill No. 2091, dated Jan. 18, 2010, Corzine stated:

I approve Senate Bill No. 2091 … in light of the representation by legislative leadership and the bill sponsors that this law will be improved to recognize agreements or promises in a non-marital relationship as binding when they are mutual, in writing, and notarized as opposed to mandating the involvement or services of an attorney. Legislative leadership and the sponsors share my goal of providing greater clarity in the enforcement of palimony agreements but ensuring that this law does not have an adverse impact on parties who may not be able to afford the services of an attorney. I take this action in light of the time constraints that result at the end of a legislative session, which do not afford time for a [c]onditional [v]eto to recommend removal of this provision.14

Moreover, two individuals in a non-dating relationship, such as two business partners, friends or a brother and sister, could sign this same exact written agreement as the plaintiff and defendant signed in this case without the benefit of legal counsel and it would be enforceable. There is no rational basis to treat non-married individuals wishing to enter into these same types of agreements differently than other similarly situated individuals, thus making the amendment unconstitutional on equal protection grounds.15

Another troubling aspect of requiring independent counsel is that one party (usually the empowered party) outwardly intending to enter into a palimony agreement could refuse counsel and accomplish the goal of invalidating the agreement based on a hidden intent not to be bound. In other words, the empowered party can refuse to seek independent legal advice, thereby nullifying any agreement, regardless of whether the dependent partner seeks legal advice, which is extremely troubling if the empowered partner induces the dependent partner to continue performing through false assurances that they have a valid contract. (“A contracting party is bound by the apparent intention he or she outwardly manifests to the other party. It is immaterial that he or she has a different, secret intention from that outwardly manifested.”)16

It should also be noted that the history of this amendment to the Statute of Frauds and impact on palimony agreements was vigorously addressed by the Family Law Section when it was first proposed. Articles were written about its impact at the time.17 Further, when the undersigned was Chair of the Section, we drafted a proposed palimony statute that was submitted to the New Jersey State Bar Association in the latter part of 2009. It was intended to cure several issues that had arisen by recent case law18 and address the concerns of the legislature. Before it could be fully considered, the amendment to the Statute of Frauds became law on Jan. 18, 2010. Just recently, an article appeared in this publication about the impact of mandatory counsel.19 Therefore, the Section and its membership have a history of efforts on this front.

Finally, it was not lost on the Family Law Section, its amicus committee, or this author that opposing the requirement that palimony agreements be reviewed by independent legal counsel may be contrary to the pecuniary interests of attorneys. However, ensuring fairness, equal application of the law and access to justice for financially disadvantaged litigants must be (and I’m sure is) the primary concern of all attorneys.

This article was originally published within the New Jersey Family Lawyer (40 NJFL 3 (Oct. 2021)) and is being republished herein with permission of the New Jersey State Bar Association.

The author wishes to acknowledge the invaluable contributions to this column by Brian G. Paul, partner at Szaferman Laking Blumstein & Blader, PC.

1 Amended 1991, c. 86, § 1; 1995, c. 360, § 8; 2009, c. 311, § 1, eff. Jan. 18, 2010.

2 Maeker v. Ross, 219 N.J. 565 (2014)

3 N.J.S.A. 25:1-5.

4 Palimony is “a claim for support between unmarried persons.” Devaney v. L’Esperance, 195 N.J. 247, 253(2008). “A valid cause of action for palimony requires an agreement to pay future support made during a marital-type relationship between unmarried persons.” Bayne v. Johnson, 403 N.J. Super. 125, 139 (App. Div. 2008). The common law elements of a palimony cause of action are that: 1) the parties cohabited; 2) in a marriage-type relationship; 3) during which defendant promised plaintiff support for life; and 4) there was valid consideration for the promise. Levine v. Konvitz, 383 N.J. Super. 1, 3 (App. Div. 2006).

5 L. 2009, c. 311, § 1, eff. Jan. 18, 2020.

6 N.J.S.A. 25:1-5(h) (emphasis added).

7 Moynihan v. Lynch, No. A-4883-18T3, 2020 N.J. Super. Unpub. LEXIS 2165, at *7-8 (App. Div. Nov. 12, 2020)

8 Id. at 22 (emphasis added).

9 The Contract Clause of the United States Constitution states: “No State shall … pass any … Law impairing the Obligation of Contracts.” U.S. Const. art. 1, § 10, cl. 1. Similarly, New Jersey’s Constitution guarantees: “The Legislature shall not pass any … law impairing the obligation of contracts, or depriving a party of any remedy for enforcing a contract which existed when the contract was made.” N.J. Const. art. IV, § 7, para. 3; see, e.g., Berg v. Christie, 225 N.J. 245, 258-59 (2016); Burgos v. State, 222 N.J. 175, 193 (2015).

The appellate court summarized the applicable law as follows: “Contract impairment claims brought under either constitutional provision entail an analysis that first examines whether a change in state law results in the substantial impairment of a contractual relationship and, if so, then reviews whether the impairment nevertheless is ‘reasonable and necessary to serve an important public purpose.'” Berg, 225 N.J. at 259 (quoting U.S. Tr. Co. of N.Y. v. New Jersey, 431 U.S. 1, 25 (1977)), 97 S. Ct. 1505, 52 L. Ed. 2d 92. Our Supreme Court has advised this analysis requires “three inquiries.” Ibid. “Legislation unconstitutionally impairs a contract when it (1) ‘substantially impair[s] a contractual relationship,’ (2) ‘lack[s] a significant and legitimate public purpose,’ and (3) is ‘based upon unreasonable conditions and . . . unrelated to appropriate governmental objectives.'” Burgos, 222 N.J. at 193-94 (quoting Farmers Mut. Fire Ins. Co. of Salem v. N.J. Prop.-Liab. Ins. Guar. Ass’n, 215 N.J. 522, 546-47 (2013) (alterations in original)).” Moynihan v. Lynch, No. A-4883-18T3, 2020 N.J. Super. Unpub. LEXIS 2165, at *35-36 (App. Div. Nov. 12, 2020)

10 Moynihan v. Lynch, No. A-4883-18T3, 2020 N.J. Super. Unpub. LEXIS 2165, at *36 (App. Div. Nov. 12, 2020)

11 Id. citing Lahue v. Pio Costa, 263 N.J. Super. 575, 599 (App. Div. 1993).

12 Id.

13 Id.

14 Senate Judiciary Committee, Statement to S.2091(Feb. 9, 2009) (emphasis added).

15 See ADA Financial Service Corp. v. State, 174 N.J. Super. 337, 347 (App. Div. 1979) (“The essence of the Equal Protection Clause under the Fourteenth Amendment of the Federal Constitution, as well as the sometimes even more demanding equal protection guarantees implied in our State Constitution, is that persons situated alike should be treated alike. Both the state and federal guarantees seek to ensure equality of right by forbidding arbitrary discrimination between persons similarly situated.”); Washington National Ins. Co. v. Board of Review, 1 N.J. 545, 553 (1949) (“The equal protection of the laws means that no person or class of persons shall be denied the protection of the laws enjoyed by other persons or classes of persons under similar conditions and circumstances, in their lives, liberty, and property, and in the pursuit of happiness, both as respects privileges conferred and burdens imposed.”); and 399 Lincoln Associates v. City of Orange Tp., 244 N.J. Super. 238, 242 (App. Div. 1990) (“Persons situated alike shall be treated alike.”)

16 Cf. Hagrish v. Olson, 254 N.J. Super. 133, 138 (App. Div. 1992).

17 See Chair’s Column: Will Palimony Go The Way of the Siberian Tiger? by Charles F. Vuotto, Jr. (30 NJFL 3 (Dec. 2009)).

18 See, e.g., Devaney v. L’Esperance, 195 N.J. 247 (2008), overruling Levine v. Konvitz,383 N.J. Super. 1 (App. Div. 2006), where the Appellate Division held that cohabitation was an indispensable element of a cause of action of palimony, but a marital type relationship is required. The legislative history of the Statute of Frauds amendment makes clear that the legislature “intended to overturn recent ‘palimony’ decisions by New Jersey courts,” specifically referencing Devaney, 195 N.J. at 248 (See Senate Judiciary Committee, Statement to S.2091)

19 See Compulsory Counsel: The Palimony Statue’s Unique Requirement by Alix Claps(39 NJFL 4 (March 2020)).