Tudhope v. Riehle

Tudhope v. Riehle  (96-229); 167 Vt. 174; 704 A.2d 765

[Filed 10-Oct-1997]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                No. 96-229


Mary Tudhope                                      Supreme Court

                                                  On Appeal from
    v.                                            Chittenden Superior Court

Theodore Riehle                                   November Term, 1996


Alden T. Bryan, J.

  Peter F. Langrock and Frank H. Langrock of Langrock Sperry & Wool,
  Middlebury, for plaintiff-appellant

  Michael S. Brow and Alan F. Sylvester of Sylvester & Maley, Inc.,
  Burlington, for defendant-appellee


PRESENT:  Gibson, Dooley, Morse and Johnson, JJ., and Suntag, D.J., 
          Specially Assigned



       GIBSON, J.   Plaintiff Mary Tudhope appeals the superior court's order
  dismissing her complaint alleging that her ex-husband, defendant Theodore
  Riehle, had fraudulently induced her to accept a separation agreement later
  incorporated into the parties' final divorce order. Tudhope and Riehle
  dispute whether their agreement may be collaterally attacked on grounds of
  fraud, duress, and unconscionability in a tort action in superior court. 
  We conclude that, under the circumstances presented here, the superior
  court correctly dismissed the suit as a belated collateral attack on the
  parties' divorce judgment.

       Tudhope and Riehle married in 1979 and separated in 1990.  One month
  before filing for divorce, they executed a separation agreement "to make
  arrangements in connection [with their upcoming divorce], including the
  settlement of all questions relating to their property rights."  Under the
  stipulation, Riehle retained ownership of all assets in his name, but
  agreed to pay Tudhope $430,000, unless the parties settled on a larger sum
  before the divorce was finalized.  In May 1990, at a hearing unattended by
  Tudhope, the family court granted the

 

  parties a divorce and incorporated most of the agreement's terms into its
  judgment order.

       In January 1996, shortly before the limitations period was to expire,
  Tudhope filed suit in superior court, alleging that the separation
  agreement was unconscionable and obtained through fraud, deceit, and
  duress.  She complained that (1) Riehle had virtual control over her
  decision-making ability during their relationship and continued to exert
  substantial control while they were negotiating the settlement agreement;
  (2) he fraudulently told her that the amount of property she would receive
  under the agreement was more than she would receive through a court
  distribution; and (3) he warned her that it was in her best interest to
  sign the agreement because she would ultimately get less money from him if
  she did not do so.  Riehle moved to dismiss the action on the ground that
  the superior court lacked subject matter jurisdiction.  See V.R.C.P
  12(b)(1).  The court granted Riehle's motion, ruling that the claims should
  have been litigated before the family court in the original divorce action. 
  On appeal, Tudhope argues that the superior court has exclusive
  jurisdiction over her claims of fraud and unconscionability, which sound in
  tort; therefore, according to Tudhope, the divorce decree is not res
  judicata with respect to those claims, notwithstanding that the settlement
  agreement was incorporated into the decree.

       When the family court was created, the Legislature amended the statute
  delimiting the superior court's jurisdiction so as to deny it jurisdiction
  over actions cognizable in the family court.  4 V.S.A. § 113 (superior
  court has original and exclusive jurisdiction over all original civil
  actions except "those made cognizable by . . . the family court").  The
  family court has exclusive jurisdiction over divorce proceedings, which
  includes the distribution of marital property.  4 V.S.A. § 454(4); 15
  V.S.A. § 751(a).  Within such proceedings, Vermont law allows -- in fact,
  favors -- agreements between divorcing parties to settle the distribution
  of marital property.  Bendekgey v. Bendekgey, 154 Vt. 193, 197, 576 A.2d 433, 435 (1990); see Kanaan v. Kanaan, 163 Vt. 402, 413, 659 A.2d 128, 135
  (1995) (record must demonstrate compelling reason for court not to accept
  parties' pretrial agreement).  Such agreements are

 

  presumed to be fair, and will be set aside only upon a showing of fraud,
  unconscionable advantage, impossibility of performance, hampering
  circumstances beyond the parties' expectations, collusion, or duress. 
  Bendekgey, 154 Vt. at 197-98, 576 A.2d  at 435-36.

       Once the family court adopts a settlement agreement and incorporates
  it into the divorce order, the agreement becomes part of the judgment of
  the court and is assailable only through a motion to set aside the
  judgment.  See Viskup v. Viskup, 149 Vt. 89, 90-91, 539 A.2d 554, 556
  (1987) (divorce decree's property distribution is final and not subject to
  modification, absent circumstances recited in V.R.C.P. 60(b)); Flynn v.
  Flynn, 265 P.2d 865, 866 (Cal. 1954) (even if merger is not intended,
  incorporation of settlement agreement renders its validity res judicata in
  any later action attacking it); Johnston v. Johnston, 465 A.2d 436, 439
  (Md. 1983) (accord); cf. Manosh v. Manosh, 160 Vt. 634, 634, 648 A.2d 833,
  835 (1993) (mem.) (where settlement agreement was acknowledged but not
  incorporated into divorce order, family court had jurisdiction to consider
  wife's motion to reopen divorce on grounds that agreement was
  unconscionable); Elmore v. Elmore, 159 Vt. 278, 280, 617 A.2d 159, 161
  (1992) (family court adopted parties' post-judgment agreement as its own
  determination by incorporating it into prior divorce order).  Collateral
  attacks on the validity of the judgment are thereafter barred under
  principles of res judicata.  Hamilos v. Hamilos, 465 A.2d 445, 448-449 (Md.
  1983); e.g., Lerman v. Lerman, 148 Vt. 629, 629, 528 A.2d 1121, 1122 (1987)
  (mem.) (res judicata precluded father, who had opportunity to litigate
  paternity in divorce action, from relitigating paternity in later
  child-support proceeding).  The doctrine of res judicata protects both
  courts and parties from the burden of repetitive litigation, encourages
  reliance on judicial decisions, prevents vexatious litigation, and
  decreases the chances of inconsistent adjudication.  See Berlin
  Convalescent Ctr., Inc. v. Stoneman, 159 Vt. 53, 56, 615 A.2d 141, 143-44
  (1992).

       Here, notwithstanding her protestations to the contrary, Tudhope's
  complaint is nothing more than a collateral attack on the divorce judgment,
  which should have been directed to the family court.  The thrust of the
  complaint is that the family court's order incorporating the

 

  parties' settlement agreement is unconscionable because Riehle fraudulently
  convinced her to accept the agreement rather than let the family court
  decide how to divide their property. Putting aside her request for punitive
  damages, Tudhope concedes that the compensatory damages she seeks would be
  measured by the amount she should have received from the property
  distribution.  Thus, Tudhope is attacking the validity of the family
  court's judgment, and more specifically, its adoption of the parties'
  division of property.

       Tudhope contends that it would be fundamentally unfair to preclude her
  from collaterally attacking the divorce order because Riehle's fraud
  induced her to accept the agreement and thus prevented the family court
  from looking into the facts.  The simple answer to this argument, of
  course, is that the proper avenue of relief is through a motion to set
  aside the judgment under V.R.C.P. 60(b), which balances the needs for both
  fairness and finality, and serves as a safety valve to the doctrine of res
  judicata.  See Cliche v. Cliche, 143 Vt. 301, 306, 466 A.2d 314, 316 (1983)
  (Rule 60(b) is to be liberally applied to prevent injustice and hardship;
  for these reasons, doctrine of res judicata does not preclude litigant from
  making direct attack upon judgment under Rule 60(b) before court that
  rendered judgment).

       Tudhope states that at the time she filed the instant complaint in
  superior court, the one-year period for filing a Rule 60(b) motion based
  on fraud had passed.  This may be so, but the need for finality of
  judgments requires some time constraints on the filing of such motions, and
  we fail to see why Tudhope's allegations could not have been raised within
  a year of the divorce order.  In any case, Tudhope could have sought relief
  under Rule 60(b)(6), which does not have a time limitation.  Indeed, in
  Cliche, 143 Vt. at 306, 466 A.2d  at 316, we upheld the trial court's
  decision to vacate a divorce judgment under Rule 60(b)(6) on grounds that
  the settlement agreement, which had been incorporated into the final
  divorce order, was unconscionable.

       We reject Tudhope's argument that she was entitled to file a
  collateral tort action in superior court under the principles established
  in Slansky v. Slansky, 150 Vt. 438, 553 A.2d 152 (1988), and Ward v. Ward,
  155 Vt. 242, 583 A.2d 577 (1990).  In Slansky, we held that an ex-

 

  husband was not barred from bringing a claim for conversion and breach of
  trust based on his former wife removing his and their children's names from
  an insurance policy not mentioned in the parties' property settlement
  agreement, even though he could have raised the issue during the prior
  divorce proceedings.  150 Vt. at 440-41, 442, 553 A.2d  at 153, 154.  In
  allowing the husband to bring his claims in a collateral action in superior
  court, we stated: "[P]laintiff is not attempting to relitigate the property
  distribution agreement adopted by the trial court in the final divorce
  decree; rather, he is asserting a unique claim sounding in tort that is
  separate and distinct from the divorce decree."  Id. at 442, 553 A.2d  at
  154; see Delahunty v. Massachusetts Mut. Life Ins. Co., 674 A.2d 1290, 1295
  (Conn. 1996) (refusing to apply res judicata to preclude wife from bringing
  independent tort claim alleging that former husband had fraudulently
  converted and concealed life insurance policy; res judicata is flexible
  doctrine that must give way when its application would frustrate public
  policies more important than assuring finality in legal controversies).

       In Slansky, we relied on Aubert v. Aubert, 529 A.2d 909, 912 (N.H.
  1987), which held that an ex-husband was not precluded from bringing a
  personal injury action against his former wife based on a shooting incident
  during their marriage.  150 Vt. at 441, 553 A.2d  at 154.  The Aubert
  holding was based on the court's conclusion "that a civil action in tort is
  fundamentally different from a divorce proceeding, and that the respective
  issues involved are entirely distinct." Aubert, 529 A.2d  at 911.  This
  conclusion, in turn, stemmed from the court's belief that the type of
  relief available in a tort action is not available in a divorce action. 
  Id. at 912.  Citing both Slansky and Aubert, we held in Ward, 155 Vt. at
  246-48, 583 A.2d  at 580-81, that the divorcing parties' independent tort
  claims and counterclaims sounding in assault and battery were improperly
  joined in their divorce case.

       Here, in contrast, although Tudhope labels her complaint a tort
  action, in fact she is attempting to relitigate the property distribution
  agreement that the family court adopted rather than asserting a unique
  claim separate and distinct from the divorce decree.  Cf. Kinney v.

 

  Goodyear Tire & Rubber Co., 134 Vt. 571, 575-76, 367 A.2d 677, 680 (1976)
  (in determining relevant limitations period, courts look to substance of
  complaint -- nature of alleged harm -- rather than precise terminology of
  complaint).  As the trial court concluded, Tudhope's claim is that she is
  entitled to more money than she received in the final divorce order, and
  thus this dispute is about the process of dividing marital property
  incident to a divorce.  Accordingly, it belongs in the family court, not
  the superior court.

       Affirmed.

                                 FOR THE COURT:



                                 _______________________________________
                                 Associate Justice