In many instances, individuals getting divorced will enter into settlement agreements to divide what is deemed “marital property.” Settlement agreements are contractual in nature. Therefore, when individuals enter into settlement agreements dividing marital property, the settlement agreements become binding on the parties. The trial court only retains jurisdiction to interpret the terms of the property settlement agreement and to enforce them. But what happens if the settlement agreement was improper or was based on something like fraud? Is there ever any instance in which a court can modify an agreement? The Court of Appeals recently addressed such questions in their decisions of Berg v. Berg.1
Before discussing the Court of Appeals’ holding in Berg, it is important to note the general rule of settlement agreements in dissolution matters. That is, when individuals enter into settlement agreements as to the division of property, those agreements are not subject to modification unless “the agreement allows for modification, the parties agree to modification, or a court finds the agreement was procured using fraud, duress, or undue influence.”2 Thus, the general rule is, unless the parties agree to a modification in their settlement agreement or same was induced by fraud, duress, or undue influence, the settlement agreement may not be modified. With the general rule in mind, we can now turn to the Court of Appeals’ holding in Berg v. Berg.
In Berg, the Wife was appealing the parties’ Settlement Agreement, arguing, in part, that the Settlement Agreement should be set aside because it was induced by fraud, misrepresentation, mutual mistake or other misconduct. Specifically, the Wife in Berg argued that the Settlement Agreement should be set aside because Husband failed to include $122,000 worth of stock during mediation, thereby resulting in a Settlement Agreement that was not based upon the total value of the parties’ marital property. The trial court agreed with Wife and subsequently awarded Wife half of the value of the omitted stock.
On appeal, however, Husband argued that the trial court erred because the court relied on inadmissible evidence from confidential communications had at mediation. The Court of Appeals agreed with Husband, finding that the trial court erred in modifying the Settlement Agreement. Specifically, the Court of Appeals found that “although the mediation evidence is admissible for [the purpose of enforcing the settlement agreement], we ultimately discern no proper basis to uphold the judgment.” As such, the Court of Appeals reversed.
This area of law is extremely technical, while also having the potential to completely change the course of your life. Further, knowing the status of developments in the law is the key to protecting your rights, as well as being an engaged citizen in our participatory system of government. This blog post on a key new case was written by attorneys at Dixon & Moseley, P.C. who deal with all aspects of divorce proceedings throughout the state. Having counsel current on the latest developments in family law provides you with the best defense. This blog is written for educational purposes only. It is not intended as legal advice or a solicitation for services. It is an advertisement.