The recent case out of New Jersey between Michael J. Thieme and Bernice Aucoin-Thieme explores the rules of equitable distribution and principles of equity in a love affair turned marriage, turned sour. The two parties met, briefly dated, and shortly after, Bernice discovered she was pregnant. Bernice had been working at a part-time retail job while Michael worked a high-power job for a bio metrics company, often working upwards of 90 hours a week with extensive travel. Michael’s relationship with the founders of the company was close, and they appreciated the work he had put into the success of the company. Therefore, they created a Statement of Understanding, essentially confirming that Michael would get a good share of the company should it ever be sold, in appreciation for all of his hard work and contributions to the company. In light of Michael’s demanding schedule and his significant compensation, the couple decided that, upon the birth of their child, Michael would continue to work but Bernice would stay home, raise the child and care for their shared residence. They talked frequently of marriage, but decided to use their time and money for other things that took priority. In 2003, their child was born.
Over a period of 8 years, the parties lived together, with Michael working long hours, Bernice conducting minor repairs on the property, taking care of their rental portfolio, and raising their child full-time. The relationship was fraught with disagreements and arguments, but eventually, in 2010, the parties finally married. Their honeymoon period was short-lived, and the relationship deterioriated quickly, with angry words and some nasty emails exchanged. In one email, Michael acknowledged the sacrifice that Bernice had made in order for him to pursue his career, and wrote that she should be fairly compensated and taken care of for such an act. Eighteen months after they said ‘I Do,’ Michael filed for divorce. The parties reached a settlement agreement, and it did not include any potential bonus from the company (IBG), particularly because Michael stated that there was no guarantee, and certainly no amount of money that was specifically discussed. While Bernice was aware of this statement of understanding, she was under the impression that Michael would allow her to share in any bonus he might receive, given his words and behaviors over the entire course of their relationship.
As luck would have it, just three month’s after the final judgment of divorce between the parties, IBG was sold and Thieme received a whopping $2.25 million as a Closing Bonus from the company. Not surprisingly, Bernice filed suit for her share of said bonus. In both the trial and appellate courts, the equitable distribution statute was examined fully. The court held that the equitable distribution statute concerned only the time of marriage, with no recognition of any partnership prior to ‘I Do.’ Therefore, the concept of palimony in New Jersey in this case would not apply. Palimony would be any payment to a person who cohabited with another as consideration for various sacrifices or agreements between the parties during their relationship. But, because the parties did get married, palimony in New Jersey was unavailable to Bernice. Therefore, she was ultimately being awarded around $30,000.00 of the bonus – or less than 2 percent. But, at the Supreme Court, the inquiry did not end there. Bernice argued that, under principles of equity, their long period of cohabitation should entitle her to a better share of the bonus in exchange for the sacrifice she had made to Michael to raise their child, maintain their home, and allow him to pursue his career. While the Supreme Court agreed that the equitable distribution statute was correctly interpreted and that it does not govern property between parties who have cohabited but never married, the court agreed that principles of equity demanded an examination into Bernice’s argument of unjust enrichment. Under this theory, Bernice would need to show that Michael received a benefit, and it would be unjust for him to retain the benefit without some compensation to her. If this is shown, then the court can impose a constructive trust on property to ensure compensation to the plaintiff. The court relied heavily on the case Carr v. Carr, 120 N.J. 336 (1990) in delivering its rationale. There, the wife claimed that she should receive an equitable distribution of assets because the husband ended up dying during their lengthy divorce proceedings, and a judgment was never actually entered. The court agreed, imposing a constructive trust because the estate should not contain the share which would benefit Mrs. Carr because it would be unjust enrichment. Continue Reading →