Be careful when thinking of defying a mediated settlement agreement in Family Court. Courts will use their inherent authority to impose sanctions as needed to protect their vital functions of:
- bringing cases to disposition;
- delivering remedies and justice for those who’ve been wronged;
- promptly, without delay; and
- in conformance with the law
Patton v. Newmar Corp. 538 N.W.2d 116 (Minn. 1995); and Chambers v. NASCO, Inc. 501 U.S. 32 (1991).
Patton and Chambers are decisions that identify the functions of the Courts, and recognize their broad authority to carry out those functions; including by assessing fees against parties who act in bad faith.
A recent demonstration of this broad authority was realized in Minnesota, by a divorced Husband, who, after reaching a binding settlement agreement with his ex-Wife, later refused to cooperate with that agreement, and learned the hard way, that such behavior does not go unpunished.
In their agreement, Husband and Wife agreed that Husband would transfer a college savings account to their daughter on her 21st birthday. But when daughter turned 21 and Husband failed to act, Wife had to incur more than $10,000.00 in attorney’s fees to get Husband to sign the papers to transfer the account as agreed. Husband presented a number of ‘reasons’ for his refusal to follow the agreement, including:
- He didn’t have the daughter’s contact information (which he didn’t need; he had Wife’s contact information, and her attorney’s);
- Social unrest in Minneapolis kept him from getting his mail (Wife and daughter’s financial planner had attempted unsuccessfully to contact Husband to arrange the transfer);
- after hearing from Wife’s lawyer, Husband didn’t believe that Wife’s lawyer, had authority to speak with him;
- Husband believed that half of the college savings account belonged to him;
- Husband felt he should be ‘compensated’ (for doing what he had already agreed to);
- Husband’s health kept him from signing the paperwork (though it didn’t keep him from traveling to Florida).
In addition to refusing to cooperate, Husband, in his communications, repeatedly disparaged Wife, her attorney, and the daughter. Finally, after Wife’s attorney requested the Court’s assistance, Husband signed the transfer so that daughter received the college savings account; more than 18 months after the transfer was supposed to be made.
Because of the extraordinary lengths Husband made Wife go to in order to follow their agreement, Wife filed a request with the Court to have Husband pay her legal fees. Unsurprisingly, the Court found Husband’s behavior to be “uncooperative”, “unreasonable”, “bizarre”, and a “flagrant disregard for the parties’ binding agreement”.
The Court agreed that Wife should be awarded her attorney’s fees, but, it could not rely on statute or rule for the authority to sanction Husband. That’s because Minnesota’s attorney’s fees statute, Minn. Stat. § 518.14, requires that a party’s unreasonable conduct occur during the litigation process, before a Court can impose sanctions. Under this statute, delaying a trial by making unreasonable arguments (Redmond v. Redmond 594 NW2nd 272 (Minn. Ct. App. 1999) or, refusing to participate in a mediation (Madden v. Madden 923 N.W.2d 688 (Minn. Ct. App. 2019) will allow a Court to impose sanctions, because the conduct affects parties in litigation.
But in Husband’s case, there was no trial, the divorce was already completed, and it was the parties’ settlement agreement, not a court order, which Husband was defying. With no trial, and no litigation, the court had no authority to cite § 518.14 as a reason to assess attorney’s fees against Husband. So the Court looked further…
It recognized that it had “inherent power” to deliver remedies and justice, as recognized by the Minnesota and United States Supreme Court in the Patton and Chambers decisions, referenced above.
The Court exercised some of this inherent power and recognized that although the rules and statutes don’t fully allow a remedy for Husband’s poor conduct, the Court can still use its broad power to award Wife her attorney’s fees caused by Husband’s bad faith conduct; a powerful demonstration of what a Court can do in fulfilling its vital function.
It’s also is a clear warning that operating in bad faith in a marriage dissolution proceeding, at any stage, can result in significant punishment. Acting on the advice of an attorney, qualified to understand and implement the terms of a mediated settlement agreement, is always the best practice to avoid the risk sanctions that a Court can impose.
Contact Beyer & Simonson
If you are facing divorce and any of the divorce-related issues such as spousal maintenance, child support, child custody, property division, or domestic abuse matters, you need our experienced Minneapolis divorce attorneys to help you. Contact Beyer & Simonson in Edina, Minnesota today at (952) 303-6007.