Divorces are frequently resolved by agreement, rather than litigation. Courts have long favored settlement of disputes without litigation. Hentschel v. Smith, 153 N.W.2d 199, 204 (Minn. 1967). In family court, [divorce] stipulations are treated as binding contracts. Tomscak v. Tomscak, 352 N.W.2d 464, 466 (Minn. Ct. App. 1984). But can an act of fraud enable a party to be relieved of the obligations imposed by that binding contract?
Sometimes, yes. The Minnesota Court of Appeals recently considered whether a divorce agreement may be vacated if one of the parties fails to disclose an important fact in reaching their agreement. What if, for example, at the time of the agreement, one of the parties has applied for a new job, but doesn’t bring this up in settlement discussions? Is that an act of fraud which invalidates the agreement? The answer is…..it depends.
Minnesota law allows a party to be relieved from a stipulated divorce decree when there’s fraud, misconduct, or misrepresentation committed by a party. Minn. Stat. §518.145 subd. 2(3). To claim ‘fraud’ a party has to show:
- a false representation by a party of a past or existing material fact susceptible of knowledge;
- that representation must be made with knowledge of the falsity of the representation or made without knowing whether it was true or false;
- the representation must be made with the intention to induce another to act in reliance thereon;
- the representation caused the other party to act in reliance thereon; and
- that the party suffered damage as a result of the reliance.
The Court of Appeals looked at these factors as they are outlined in its decision, Driscoll v Standard Hardware, Inc. 785 N.W.2 801, 811 (Minn. Ct. App. 2010) (citing Hoyt Props., Inc. v. Prod. Res. Group, L.L.C., 736 N.W.2d 313, 318 (Minn. 2007)), in finding that a party’s duty to disclose information in settlement is limited to what is relevant, current, and material.
For example, knowing what a party’s future earnings might be is not, presumptively, material to a parenting time schedule; and so failing to disclose at settlement, that a parent has applied for a new job is not material to the parenting time schedule, and therefore failing to mention the job application at settlement is not fraud.
Not only that, in the instant case, the parent who applied for the job, provided current pay information in reaching settlement, making no misrepresentation about his current pay.
In reaching its conclusion that there was no evidence of fraud, the Court of Appeals was persuaded by the factors in Driscoll that there was no false material, relevant information relied upon in entering into the enforceable agreement.
For questions about the enforceability of a divorce agreement, it important to seek competent legal advice. At Beyer & Simonson, we are happy to help answer these, and many other questions about a Minnesota divorce!
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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.