In re Patricia A. Hurd, petitioner, Appellant, vs. Thomas L. Hurd, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-259

 

In re Patricia A. Hurd, petitioner,
Appellant,
 
vs.
 
Thomas L. Hurd,
Respondent.

 

Filed September 28, 2004

Affirmed

Willis, Judge

 

Pipestone County District Court

File No. F9-01-358

 

 

Gerald O. Williams, Jr., McCullough, Smith, Kempe, Williams & Cyr, P.A., 905 Parkway Drive, St. Paul, MN 55106 (for appellant)

 

Daniel A. Gislason, Sara N. Wilson, Gislason & Hunter, LLP, 2700 South Broadway, P.O. Box 458, New Ulm, MN 56073 (for respondent)

 

            Considered and decided by Randall, Presiding Judge; Willis, Judge; and Halbrooks, Judge.  

U N P U B L I S H E D  O P I N I O N

WILLIS, Judge

            Appellant challenges the district court's orders denying her motion to repudiate or reform her marital-termination agreement and awarding attorney fees to respondent.  Because we find no error or abuse of discretion by the district court, we affirm.

FACTS

Appellant Patricia Hurd (wife) and respondent Thomas Hurd (husband) were married in 1974.  In July 2000, wife petitioned for dissolution of the marriage, and, at about the same time, she moved from the couple's house in Pipestone to a house in Stillwater.  The parties participated in mediation in December 2000 in an effort to reach an agreement regarding the terms of the dissolution but were unsuccessful in resolving their disputes.  During the mediation, the parties discussed the issue of setting a valuation date for marital property, particularly H & W Contracting (H & W), a subchapter S construction business owned by husband.  Letters exchanged between counsel for the parties shortly after the mediation show that they agreed to December 31, 2000, as the valuation date.  Each party hired an accountant to determine the value of H & W, and letters exchanged among the parties and accountants over the next several months show that the parties were operating with an understanding that December 31, 2000, was the agreed-on marital-property valuation date.

            Over the ensuing months, wife made various requests to husband for information needed by the accountant wife had hired to value H & W.  Husband provided all of the requested information.  During a conference call on January 10, 2002, the parties and their accountants agreed that the value of the business as of December 31, 2000, was $2.8 million.

            In February 2003, wife obtained new counsel.  That same month, because wife had recently expressed objection to the marital-property valuation date, husband moved the district court to set December 31, 2000, as the valuation date.  Husband argued that date was appropriate because the parties had agreed to it in mediation.  Wife argued that she had not agreed to the valuation date and that the district court needed to hear testimony before it could decide what was a fair valuation date.  On March 26, the district court set December 21, 2000,[1] as the marital-property valuation date.   

            On June 18, 2003, the parties again participated in mediation, this time reaching a marital-termination agreement (MTA).  Paragraph 12 of the MTA provides that

[t]o effect an equitable distribution of the property of the parties, [husband] will pay to [wife] the sum of $461,000, which includes $5,000 for reimbursement of taxes paid by [wife] in 2000.  This payment shall be made by an equal division of . . . joint investment accounts [in which each party's share of the assets was $169,821.00] into two, separate accounts in the individual names of the parties, without sale of any of the equities . . . [Husband] shall pay the difference of $291,179.00 to [wife] within 60 days of the entry of the judgment and decree herein.

 

Husband notified the district court that the MTA had been reached, and, with wife's consent, the court issued partial findings of fact, partial conclusions of law, and a partial order and decree, granting the dissolution but reserving all other issues.

            After the MTA had been reached, but before the district court's partial order was issued, wife again obtained new counsel, who continues to represent wife in this matter.  On July 10, wife moved the district court to allow her to repudiate the MTA before the court entered final judgment.  During a telephone hearing on August 4, wife argued that husband used fraud and duress to coerce her to agree to the MTA, and she requested a continuance.  On August 18, the district court granted wife a 30-day continuance but ordered that if wife was unable to prove fraud or duress, she would be ordered to pay husband's attorney fees from August 18 forward.

            Wife and the two attorneys who had previously represented her each waived the attorney-client privilege, and both attorneys were deposed.  Wife then submitted a supplemental memorandum in support of her motion, arguing that husband had defrauded her in the valuation of H & W and in the property-settlement provision described in paragraph 12 of the MTA.  Therefore, wife argued, she should be allowed to repudiate the MTA, or, alternatively, the district court should reform paragraph 12 to correct the alleged inequities that resulted from husband's fraudulent actions.  Wife also argued that she should not be required to pay any of husband's attorney fees.  The district court denied wife's motion, concluding that she had not shown that husband had acted fraudulently.  On October 9, the district court issued a final judgment and decree that incorporated the MTA in its entirety and that provided that the attorney-fee award mentioned in the August 18 order would be addressed in a separate order upon husband's application.  Husband made such an application, and the district court awarded him $11,309.50 for attorney fees that he incurred in opposing wife's motion.  Wife appeals.

D E C I S I O N

I.

Wife contends that the district court abused its discretion by denying her motion to repudiate the MTA.  Stipulated agreements are a judicially favored means of simplifying and expediting dissolution litigation and are "accorded the sanctity of binding contracts."  Shirk v. Shirk,561 N.W.2d 519, 521 (Minn. 1997).  Even if the district court has not yet adopted the parties' stipulation or incorporated it into a dissolution judgment, a party cannot repudiate or withdraw from the stipulation without the other party's consent or the court's permission.  Toughill v. Toughill, 609 N.W.2d 634, 638 (Minn. App. 2000).  We review a district court's determination on whether to vacate a dissolution stipulation under an abuse-of-discretion standard.  Id. at 639.  Wife claims that she established three grounds for allowing her to repudiate the MTA:  (1) The December 2000 valuation date of H & W was improper; (2) husband committed fraud through his "absence of disclosure [of financial information] regarding [H & W] from the time period after December 2000"; and (3) paragraph 12 of the MTA resulted in an unfair distribution of marital property.

A.         Valuation date of H & W

Wife first argues that the December 2000 valuation date for H & W that was set by the district court and incorporated into the MTA was "not in accordance with the law."  A district court has broad discretion in setting a valuation date for marital property.  Grigsby v. Grigsby, 648 N.W.2d 716, 720 (Minn. App. 2002).  The district court must "value marital assets for purposes of division between the parties as of the day of the initially scheduled prehearing settlement conference, unless a different date is agreed upon by the parties, or unless the court makes specific findings that another date of valuation is fair and equitable."  Minn. Stat. § 518.58, subd. 1 (2002).

Here, there was no prehearing settlement conference.  Wife argues that the district court abused its discretion by setting the marital-property valuation date of December 31, 2000, because the order setting the date does not include findings showing that the court chose that date because it was "fair and equitable" and because the parties never agreed to the December 2000 valuation date.  Husband argues that the record shows that the parties did agree to the date. 

The record supports a conclusion that the parties agreed to value the marital property as of December 31, 2000.  With his motion to set a valuation date, husband submitted an affidavit in which he stated that he had wanted an earlier date but that "through negotiations [he] settled on the December date.  We also discussed the valuation date with [wife and wife's then-attorney]."  Husband's counsel submitted an affidavit attesting to the authenticity of two attached letters between the parties' counsel that showed that the parties agreed to December 31, 2000, as the marital-property valuation date.  Additionally, the record shows that, in early 2001, each party hired accountants with the understanding that the accountants would determine the value of H & W as of December 31, 2000.  Because the record supports a conclusion that the parties agreed to the date, the district court did not abuse its discretion by setting December 31, 2000, as the marital-property valuation date, and the court did not abuse its discretion by refusing to allow wife to repudiate the MTA based on her allegation that the valuation date for marital property was improper. 

B.         Failure to disclose information

Wife next claims that the district court abused its discretion by refusing to allow her to repudiate the MTA because husband failed to disclose financial information regarding H & W after the December 2000 valuation date.  She argues that husband had an ongoing, affirmative duty to provide such information and that his failure to do so amounted to fraud.  Citing the fraud standard described in Kornberg v. Kornberg, 542 N.W.2d 379, 387 (Minn. 1996), the district court denied wife's motion, concluding that she had failed to prove fraud and instead had only "demonstrated dissatisfaction with the MTA" that she had signed "following extensive mediated negotiation during which she was represented by competent counsel." 

"When a district court is considering whether to allow a party to repudiate or withdraw from a dissolution stipulation which has not yet been incorporated into a dissolution judgment, the district court is to consider whether the stipulation was improvidently made and in equity and good conscience ought not to stand."  Toughill, 609 N.W.2d at 639 (citations and quotations omitted).  Stipulations based on fraud and that prejudice the defrauded party are improvidently made and should not stand.  Id.  On appeal, wife argues that the district court should not have applied the Kornberg fraud standard, but instead should have applied the standard in Doering v. Doering, 629 N.W.2d 124, 128-30 (Minn. App. 2001), review denied (Minn. Sept. 11, 2001).  Husband disagrees.  Because neither standard is met here, we need not determine the parties' dispute regarding the applicable standard. 

Under Kornberg, "[t]he elements of fraud in the context of marital dissolution" include "an intentional course of material misrepresentation or nondisclosure[.]"  Kornberg, 542 N.W.2d at 387 (citing Maranda v. Maranda, 449 N.W.2d 158, 165 (Minn. 1989)).  Under Doering, a party's failure to make "full and complete disclosure constitutes sufficient reason to reopen the dissolution judgment for fraud[.]"  Doering, 629 N.W.2d at 129 (citing Ronnkvist v. Ronnkvist, 331 N.W.2d 764, 766 (Minn. 1983)).  Here, the district court found that wife failed to show fraud by husband.  A district court's findings of fact regarding whether a dissolution stipulation was prompted by fraud or mistake will not be set aside unless clearly erroneous.  Hestekin v. Hestekin, 587 N.W.2d 308, 310 (Minn. App. 1998).

The record supports a finding that wife failed to show fraud under either the Kornberg or the Doering standard.  In an affidavit filed with his memorandum opposing wife's repudiation motion, husband states that he made available all of his individual tax returns and all post-December 2000 H & W financial information that had been requested.  And wife identifies no specific financial information that she was deprived of or that would have affected the fairness of the settlement.  Thus, nothing in the record shows that husband misrepresented or failed to disclose, intentionally or otherwise, any financial information relevant to determining the value of H & W, and this case involves neither the intentional material misrepresentation required for fraud under Kornberg nor the failure to make full and complete disclosure required for fraud under Doering.  The district court did not abuse its discretion by refusing to allow wife to repudiate the MTA on the basis of fraud by husband in failing to provide financial information. 

Moreover, the financial information that wife alleges that she did not receive is for periods after December 2000.  How that information is or can be relevant to determining the value of H & W on its December 31, 2000 valuation date is neither clear nor explained.  See Minn. R. Evid. 401 (defining "relevant evidence" as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence").  And evidence that is not relevant is not admissible.  Minn. R. Evid. 402.  We decline to reverse the district court's denial of wife's motion to repudiate the MTA on the ground of fraud when the basis for that motion is her claim that husband failed to produce evidence that is irrelevant and inadmissible. 

C.        Payment of funds

Wife argued to the district court that husband and his attorney drafted the MTA and that, by identifying the $169,821 conveyance to wife of her share of funds in jointly held accounts provided for in paragraph 12 as a "payment," husband committed fraud that should allow wife to repudiate the MTA.  She claimed that the result was that she was "shortchanged" and that the property settlement was not "equal."  The district court concluded that wife had failed to demonstrate fraudulent conduct by husband.  On appeal, wife argues only that paragraph 12 resulted in an unfair property settlement and that the district court, therefore, abused its discretion by refusing to allow her to repudiate the MTA. 

            First, the record supports the district court's determination that wife did not show fraudulent conduct by husband.  The attorney who represented wife in the second mediation testified in deposition (1) that the $461,000 conveyance described in paragraph 12 was agreed on through negotiation, (2) that before wife signed the MTA, the attorney went over it line by line with wife and that wife understood all of the MTA's terms, and (3) that wife signed the MTA voluntarily and with full knowledge of its contents.  Additionally, the MTA includes an acknowledgment by the parties that they have read and understand the MTA and intend it to be a full, final, and complete settlement of all property rights and claims.  Paragraph 12 of the MTA is unambiguous in providing for the $461,000 payment and how the money would be paid.  Thus, nothing in the record suggests that husband attempted to mislead the district court or opposing counsel as to what paragraph 12 provided for.  And nothing in the record suggests that the district court or opposing counsel were, in fact, misled as to the provisions of the paragraph.  Wife's alleged failure to understand the plain language of paragraph 12 does not establish fraud by husband. 

            Next, the record does not show that the provisions of paragraph 12 resulted in an unfair distribution of the marital property.  A marital-property division must be equitable, but it need not be equal.  Thomas v. Thomas, 383 N.W.2d 727, 728 (Minn. App. 1986).  While paragraph 12 provided for a "payment" to wife of $169,812 in funds that were already rightfully hers as her share of jointly held property, the record also shows that, wholly apart from the MTA, husband voluntarily paid wife $190,000 to help her purchase and maintain her house in Stillwater and paid dissolution-related attorney and accountant fees for wife totaling $30,939.  And an affidavit submitted by husband states that these amounts were taken into consideration in negotiating the MTA.  Considering the record as a whole, we conclude that wife did not establish that the provisions of paragraph 12 resulted in an unfair distribution of marital property. 

            The record supports the district court's conclusion that wife failed to prove that the payment agreement in paragraph 12 was the result of husband's fraud, and wife has failed to show that the paragraph resulted in an unfair distribution of marital property.  Therefore, wife has not shown that the payment agreement was improvidently made, and the district court did not abuse its discretion by denying wife's motion to repudiate the MTA based on the provisions of paragraph 12.

II.

            Wife argues, alternatively, that the district court abused its discretion by declining to reform paragraph 12 of the MTA.  A court may reform a written instrument if the moving party proves by "clear and consistent, unequivocal and convincing" evidence that "(1) there was a valid agreement between the parties expressing their real intentions, (2) the written instrument failed to express the real intentions of the parties, and (3) this failure was due to a mutual mistake of the parties, or a unilateral mistake accompanied by fraud or inequitable conduct by the other party."  Manderfeld v. Krovitz, 539 N.W.2d 802, 805 (Minn. App. 1995) (quoting Nichols v. Shelard Nat'l Bank, 294 N.W.2d 730, 734 (Minn. 1980)), review denied (Minn. Jan. 25, 1996).  The decision of whether to reform a contract is discretionary with the district court.  See In re Estate of Savich, 671 N.W.2d 746, 751 (Minn. App. 2003) (applying abuse-of-discretion standard in resolving question of whether reformation of deed was appropriate).  A district court's decision of whether to reform a written instrument "will not be disturbed on appeal unless it is manifestly contrary to the evidence."  Metro Office Parks Co. v. Control Data Corp., 295 Minn. 348, 353, 205 N.W.2d 121, 124 (1973) (quotation omitted). Wife argues that she established all three elements necessary for reformation and that, therefore, the district court abused its discretion by not reforming paragraph 12.  The district court denied the motion, finding that husband had not acknowledged any mutual mistake and concluding that wife had failed to establish that "the document as written represents anything other than the intentions of the parties" and that wife had not shown any fraud or inequitable conduct on the part of husband. 

            The parties do not contest that they had a valid agreement expressing their real intentions, which were that the marital property other than that addressed in paragraph 12 would be distributed according to the other provisions of the MTA, and paragraph 12 would provide for an equalizing payment to wife of $461,000.  But wife argues that paragraph 12 does not express the real intentions of the parties because its net result is a payment by husband to her of $291,179 rather than the agreed-on $461,000.  Wife claims in an affidavit submitted with her motion that when she signed the MTA, it was not her understanding that the $461,000 payment included conveyance to her of $169,821 of funds in jointly held accounts.  But wife produced no evidence showing that the parties intended for the $461,000 payment to wife to be accomplished in any manner other than that clearly provided for in paragraph 12.  The party seeking reformation must "submit clear proof of the actual agreement between the parties."  Savich, 671 N.W.2d at 751 (citing Theros v. Phillips, 256 N.W.2d 852, 858 (Minn. 1977)).  Because wife has not produced clear evidence of an agreed-on conveyance different from that described in paragraph 12, the record supports the district court's conclusion that she has not shown that the MTA failed to express the real intentions of the parties. 

            Wife argued in the district court that she was fraudulently misled to believe that paragraph 12 provided for a payment to her of $461,000 from husband's own funds.  On appeal, wife argues that the district court abused its discretion by requiring either husband's "express acknowledgement of [mutual] mistake or, in the alternative, [wife's] express proof of fraud" in order to establish the third element when the record "strongly suggested" either mutual mistake or unilateral mistake coupled with fraud or inequitable conduct.  But the burden of proving each necessary element is on the party seeking reformation.  Metro Office Parks, 295 Minn. at 353, 205 N.W.2d at 124.  The record supports the district court's determination that wife has failed to show fraud or inequitable conduct by husband, and the record does not show a mutual mistake by the parties.  Absent ambiguity, fraud, or misrepresentation, a unilateral mistake is not a ground for reformation.  Nichols, 294 N.W.2d at 734.   

            Because wife did not establish that paragraph 12 does not represent the real intentions of the parties or that husband committed fraud or inequitable conduct, the district court's determination that reformation was not appropriate was not manifestly contrary to the evidence, and the district court did not abuse its discretion by refusing to reform paragraph 12 of the MTA.

III.

            Wife argues that the district court abused its discretion by awarding husband attorney fees.    Minn. Stat. § 518.14, subd. 1, provides two bases for awarding attorney fees to parties in a dissolution action:  first, the district court "shall" award attorney fees based on a party's need if the court finds that (1) the fees are necessary for the good-faith assertion of the party's rights; (2) the party from whom fees, costs, and disbursements are sought has the means to pay them; and (3) the party to whom fees, costs, and disbursements are awarded does not have the means to pay them.  Minn. Stat. § 518.14, subd. 1 (2002).  The district court may also award "additional fees, costs, and disbursements against a party who unreasonably contributes to the length or expense of the proceeding."  Id.  Here, because the record shows that both parties had the means to pay their own attorney fees, it is apparent that the district court based its award on a determination that wife had unreasonably contributed to the length or costs of the proceeding.

            An award of attorney fees under Minn. Stat. § 518.14, subd. 1, "rests almost entirely within the discretion of the [district] court and will not be disturbed absent a clear abuse of discretion."  Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. App. 1998) (quotation omitted), review denied (Minn. Feb. 18, 1999).  The district court's discretion in awarding attorney fees is broad; a reviewing court will rarely reverse the district court's award.  Reinke v. Reinke, 464 N.W.2d 513, 516 (Minn. App. 1990).  Here, the parties had negotiated a complete settlement that would have ended the proceedings but for wife's unsuccessful motion to repudiate or reform the MTA because of alleged fraudulent conduct by husband.  The district court did not abuse its discretion by awarding husband the attorney fees that he incurred in opposing wife's motion.  

            Affirmed.

[1] It appears that "December 21" is a typographical error and that the court intended "December 31."