“To Pay or Not to Pay” (New v. New)

At the heart of many family law related disputes lie arguably the most difficult decisions regarding the children and their futures.  At times it may seem unlikely that individuals in the midst of a divorce will ever agree on anything; fortunately, ensuring that any children involved receive a quality education is usually a top priority for everyone.  Setting aside differences for what is in the children’s best interest saves not only time but may also preserve important financial resources that may be reallocated to ensuring the children’s futures are preserved. “Agreements” as they are so appropriately called, may avoid costly litigation procedures, and provide the parents with the opportunity to freely discuss, negotiate, and formulate what they mutually believe to be a plan that will best serve the interests of their children.

The freedom to contract is an important legal principle and when utilized correctly, can be both an effective and efficient means of resolving issues. A recent North Carolina Court of Appeals case, New v. New, discusses the implications and consequences where parents utilize this right to resolve how to care for their child as they confront arguably the biggest step of any child’s life: attending college. In New, the parties agreed to pay off their children’s “ordinary and necessary” college expenses. When it came time to pay up, “ordinary and necessary” became a point of contention.  Language in any agreement is crucial, and given the general stance that parties are free to negotiate how they see fit, it is imperative that any ambiguities are either understood and accepted or limited and clarified during formation.  Here, the parties initially worked together, saving time and money in coming to an agreement, only to end up right back in a courtroom, litigating a language based issue that could have been potentially resolved at negotiations.

Ultimately, the Court in New defined the expenses incurred by the child’s education to be “ordinary and necessary” and moved on to the next step regarding the appropriate remedy for the plaintiff.  There are two types of remedies when it comes to contract disputes, a remedy at law (typically money damages), and a remedy in equity (known as “specific performance”).  In determining the correct remedy, the Court will look to the facts surrounding a particular case. In this case, since the obligation of the defendant to pay his share of the ordinary and necessary expenses associated with the child’s education will continue in the future, the Court decided that an award of damages to the plaintiff would be ineffective as it would require coming back to litigate the same issue time and time again if the Defendant failed to perform under the agreement. Therefore, the Court determined that specific performance would be the appropriate remedy as it would require the defendant to comply with the terms of the agreement moving forward.

In ordering specific performance, it must be determined that the party being instructed to perform must have the ability to do so.  In another instance of judicial inefficiency, the parties failed to establish at the trial level if the defendant had the ability to perform under the agreement.  As such, the Court of Appeals remanded the case back to the trial level in order to determine whether or not the defendant had the ability to perform, resulting in more litigation and costs. This case is an example of how inefficiencies caused primarily by an initial failure to identify and resolve potential pitfalls at the negotiation table properly can result in headache and frustration down the line. Always ask questions, be deliberate, and make sure when coming to an understanding or agreement, that all parties have truly had a “meeting of the minds.”