Mason v. Mason

Mason v. Mason (2004-434); 180 Vt. 98; 904 A.2d 1164

2006 VT 58

[Filed 16-Jun-2006]


       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.


                                 2006 VT 58

                                No. 2004-434


  Jeffrey Mason                                  Supreme Court

                                                 On Appeal from
       v.                                        Rutland Family Court


  Susan Mason                                    September Term, 2005


  Richard W. Norton, J.

  Stephen Alan Dardeck and Pamela Gatos of Tepper Dardeck & Levins, Rutland,
    for  Plaintiff-Appellee.

  Jon S. Readnour and Kurt A. Kuehl of Readnour & Barone, Rutland, for
    Defendant-Appellant.


  PRESENT:  Dooley, Johnson and Skoglund, JJ., and Burgess, D.J. and 
            Allen, C.J. (Ret.),  Specially Assigned

       ¶  1.  SKOGLUND, J.   Wife appeals an order of the family court
  enforcing the court's final divorce decree by requiring wife to transfer to
  husband 8,033 shares of stock.  We affirm.


       ¶  2.  The divorce decree in this case was based on and incorporated
  the parties' stipulation, which sought to divide a single item of marital
  property: 48,200 (FN1) shares of Union Bank stock held by wife. 
  Unbeknownst to husband, while the parties were negotiating the stipulation,
  wife received notice of an impending stock split, although the split did
  not actually take place until several days after the parties signed the
  stipulation and the divorce decree was entered.  The upshot of this timing
  was that husband received post-split shares of a drastically reduced value. 
  Thus, it appeared during negotiations that husband would receive shares
  equivalent to roughly one-third of the total stock value, but he ended up
  receiving shares that represented only one-fifth of the total stock value. 
  We conclude that, because the entitlement to the stock split vested before
  the parties signed the stipulation and before the divorce was final, the
  16,066 shares awarded to husband in the stipulation carried with them the
  entitlement to the stock split once it occurred. 

                                     I.

       ¶  3.  Wife and husband negotiated a divorce stipulation that
  purported to divide the marital property between them.  Among the
  provisions of the stipulation was a paragraph acknowledging that the
  parties would retain their own investments and property that was in their
  individual names, with the exception of a certain number of shares of stock
  in wife's name.  With respect to this asset, the stipulation provided that
  wife was to transfer 16,066 (FN2) shares of stock to husband "immediately." 
  Wife signed the stipulation on August 4, 2003, and husband signed on August
  6, 2003.  The family court entered its final decree of divorce, which
  incorporated the stipulation, on August 6, 2003.
                                                  
       ¶  4.  Although she did not raise the issue during the parties'
  negotiations, wife had known since July 31, 2003, that the stock was due to
  split sometime in the near future.  Wife learned of the split from her
  financial advisor, who received a notice advising of the split and
  explaining that the benefits of the stock split would go to all
  shareholders who were shareholders of record as of July 26, 2003.

       ¶  5.  Thus, wife was aware of the impending stock split during the
  parties' negotiations, when she signed the stipulation, and when the court
  entered its order incorporating the stipulation.  At no point did wife
  share this information with husband (or the court, for that matter);
  neither did husband discover this information on his own.  On August 11,
  2003, the stock split three-for-two.  Wife took steps to initiate the
  transfer of shares as early as August 6, 2003, but husband did not receive
  the 16,066 shares until August 14, 2003.  By that date, the value of each
  individual share of stock had dropped by approximately one-third from its
  pre-split value.  More importantly, rather than receiving one-third of the
  shares of stock to wife's two-thirds, husband now received only
  approximately one-fifth of the divided property, while wife retained
  four-fifths. (FN3)
   
       ¶  6.  Husband filed a motion for relief from judgment which asked the
  family court to modify the divorce decree to award him the additional
  shares, emphasizing that wife knew of the impending stock split when she
  signed the stipulation and alleging that she had fraudulently concealed
  that information.  Husband subsequently withdrew this motion, and instead
  filed  a motion for enforcement, arguing that because the stipulation
  required wife to transfer the stock to him "immediately," he was entitled
  to the shares as valued on August 6, 2003-the day the stipulation was
  signed and incorporated into the court's order.
   
                                     II.

       ¶  7.  The trial court styled its decision as a ruling on the motion
  for enforcement, although it considered both of husband's arguments as well
  as other frameworks for assessing wife's conduct in connection with the
  stock split.  Noting that the stock was the only marital asset the parties
  were dividing, and that the parties had intended a one-third to two-thirds
  division (although they memorialized it in the agreement as a specific
  number of shares-an approach recommended by wife's financial advisor with
  knowledge of the impending stock split), the family court concluded that
  the transfer of only 16,066 of the newly-devalued shares following the
  stock split "was not within the range of reasonable expectations" of the
  parties when they agreed to the stipulation.  The family court emphasized
  that the devaluation in shares did not affect both parties equally, as it
  would have had the stock price changed over time as the result of normal
  market fluctuations, but rather husband's loss was wife's gain.  The court
  considered it inequitable both that wife did not transfer the shares to
  husband "immediately," as required by the stipulation, and that wife
  permitted this delay despite the fact that she knew the stock split was
  taking place at the precise time between signing the stipulation and
  transferring the shares.
   
       ¶  8.  The court acknowledged the policy in favor of voluntary
  agreements between divorcing parties, but noted that even those agreements
  may be overcome where there is evidence of fraudulent concealment in the
  formation of the agreement.  The court found that all of the elements of
  fraudulent concealment were present in this case.  The court further noted
  that other states require divorcing parties to fully disclose all
  information known to them regarding marital property.  Accordingly, the
  family court rejected wife's contention that the situation was husband's
  own fault for failing to diligently investigate the stock asset, because
  candor is the expected mode in the dissolution of a marital relationship. 
  Finally, the court referred to the mandate of 15 V.S.A. § 751, requiring
  that marital property be distributed equitably.

                                    III.

       ¶  9.  We review the family court's factual findings for clear error
  and will uphold its conclusions if supported by the findings.  Thibodeau v.
  Thibodeau, 2005 VT 14, ¶ 7, 16 Vt. L. Wk. 45, 869 A.2d 142.  Further, we
  may affirm the decision of the family court under any legal theory that is
  supported by the record.  Larkin v. City of Burlington, 172 Vt. 566, 568,
  772 A.2d 553, 556 (2001) (mem.) ("[W]e will not reverse the trial court's
  underlying decision if the record before us reveals any legal grounds that
  would justify the result.") (citations omitted).   We need not pass on all
  of the issues raised by the family court in its decision because we
  conclude there is a more direct route to affirming the result.

       ¶  10.  There can be no disagreement that the situation engineered by
  wife and her financial advisor was inequitable and achieved through
  something less than full candor.  The question, however, is whether an
  equitable result is possible in light of the parties' voluntary agreement,
  and if so, by what method?  While we adopt a different approach from that
  of the family court, we conclude that result is correct and that there is
  ample support for that result in the record.

       ¶  11.  The goal of the stipulation was to divide 48,200 shares of
  stock between the parties.  This number represented the shares wife held in
  the stock as of December of 2002, shortly before wife sold a number of
  shares to purchase property, and thus a moment in time when the marital
  property was still intact.  The parties accomplished the desired division
  by stipulating that wife would transfer 16,066 shares to husband
  "immediately"-presumably upon finalizing the stipulation, although the text
  of the stipulation does not clarify this point.
   
       ¶  12.  The right to the benefit of the stock split vested in
  shareholders of record on July 26, 2003.  While husband was not a
  shareholder of record (and did not receive notice of the split for this
  reason), the stock was still marital property as of this date, and husband
  gained an entitlement to the split as part of the marital property.  This
  conclusion is further supported by the mechanism of the stock split, which
  was for shareholders to "receive one additional share of common stock for
  every two shares they hold of record on July 26, 2003."  Thus, the right to
  the benefits of the split attached to each individual share (or every two
  shares) referenced in the stipulation, even though the split had yet to
  take place.

       ¶  13.  Stated another way, as of July 26, 2003, every two shares
  allocated by the stipulation now represented not only those two shares but
  also the right to the additional share that would be generated at some
  point in the future by the split.  Therefore, in awarding the additional
  8,033 shares to husband, the family court did not modify the parties'
  allocation of the marital property, but simply enforced it.  See, e.g.,
  Schwartz v. Haas, 169 Vt. 612, 614, 739 A.2d 1188, 1190 (1999) (mem.)
  (holding that "the family court was not modifying its property division or
  maintenance award but, rather, was seeking to enforce the terms of the
  decree as originally entered in the face of intransigence by one of the
  parties").  Wife is not entitled to arbitrarily and unilaterally decide
  that the shares allocated by the stipulation and divorce decree represented
  the post-split shares of August 14, 2003, rather than the pre-split shares
  of August 6, 2003-the date the parties signed the agreement and the family
  court entered its order.
   
       ¶  14.  In awarding husband the additional 8,033 shares he was
  entitled to as a result of the stock split, the family court reasoned as
  follows: "Had the stock been held under both parties' names, Mr. Mason
  would have been a shareholder of record on July 2[6], 2003[,] and would
  have been entitled to the additional shares as a matter of law, had the
  shares been transferred on the date of the hearing."  But what the family
  court overlooked is the fact that, while husband was not a shareholder of
  record on that date, this does not mean he is not entitled to the benefit
  of the stock split.  Rather, as those benefits vested in wife who was the
  shareholder of record and holder of the marital property, they vested
  equally and simultaneously in husband.

       ¶  15.  We decline to address a number of wife's other arguments in
  light of our reasoning above, other than to note them here.  Wife argues
  that husband should have taken into account the possibility of a stock
  split in negotiating the stipulation because stocks are subject to constant
  fluctuation on the market.  In short, she in essence faults husband for
  failing to exercise due diligence during their negotiations.  This argument
  is moot in light of our resolution above.  Wife also argues that the family
  court could not rule on the allegation of fraud because husband had
  withdrawn that motion.  This point is moot because our ruling is not based
  on a finding of fraud.  Because the court's ruling is properly considered
  an order to enforce rather than modify the divorce order, and we affirm it
  as such, we do not address wife's argument that she was entitled to a
  broader evidentiary hearing before the trial court could modify the order. 
  Because our decision is not premised on the notion that wife failed to
  transfer the stock "immediately," we do not address wife's arguments
  related to this finding by the trial court.  Finally, our decision does not
  require us to conclude that the parties intended for the transfer of stock
  to husband to have a particular, set value.  The only relevant factor
  supporting enforcement is that the entitlement to the split vested in the
  shares as of July 26, 2006, when the stock was marital property and the
  subject of the parties' stipulation.
   
       ¶  16.   By enforcing husband's entitlement to his designated portion
  of the marital property, our result in this case serves equity and our
  policy in favor of voluntary agreements to divide marital property by
  supporting the notion that parties should be candid and forthright with one
  another in negotiating those agreements.  Bendekgey v. Bendekgey, 154 Vt.
  193, 197, 576 A.2d 433, 435 (1990) (noting policy favoring voluntary
  agreements).  

       Affirmed.


                                       FOR THE COURT:



                                       _______________________________________
                                       Associate Justice



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                                  Footnotes


FN1.  The parties based their division on the 48,200 shares wife held as of
  December 2002-a  date prior to wife's sale of a substantial portion of the
  shares to fund the purchase of property.

FN2.  16,066 shares represents one-third of the 48,200 shares wife held as
  of December 2002.  The fact that the parties were basing the division of
  property on a number of shares held at a specific time in the past may
  explain why husband's award was described in terms of a specific number of
  shares rather than a specific value in or percentage of currently held
  shares.

FN3.  Again, these ratios are based on the 48,200 shares the parties had
  agreed to divide, not wife's actual, current holdings in the stock, which
  at the time of these events had been significantly reduced by wife's
  decision to sell a portion of her shares.