Should Courts Allow the Re-Opening of Divorce Settlements? Where Fraud is Shown, the Answers Appears to be “Yes”

Even under the best of circumstances, divorce can be difficult. Whether a couple is splitting because they have simply lost interest in one another, had a change of heart or something worse, things get complicated. The divorce process is, in fact, adversarial and the laws that govern it are complex and confusing. There are assets to locate, valuations to make, custody agreements to arrange, and more. The parties are required to perform due diligence to locate assets and there are disclosure requirements as well.

Sometimes spouses work hard to compromise and share information. In other situations, they are completely adversarial and make things as hard as possible on each other. Once a divorce judgment is granted, and the issues are finally resolved, it can be a huge relief to both parties.

But what happens when, sometime later, there are new discoveries that make the final property settlement unfair to one side? Absent extenuating circumstances, a final judgment is usually a final judgment. But what if fraud is involved?

However, there are occasions when a court may reopen a judgment and reconsider the decision. Specifically, if there is evidence that one party to a divorce judgment committed fraud by hiding assets or purposefully misleading the court about the value of assets, the judgment may be set aside in favor of a more equitable outcome. The rules about this vary from state to state, as does the time limit in which to ask the court for help, so it is important to speak with a lawyer who is familiar with the specific rules of your state.

 

An English Court Rules in Favor of Fairness

Consider a case recently decided in the United Kingdom. Alison Sharland and Varsha Gohil are two women who asked the court to re-open their divorce settlements after proving that their ex-husbands misled the courts about how much money they were worth. The women asked the court to acknowledge that “non-disclosure in divorce settlements requires a case to be re-examined”. As reported by Theguardian.com, the UK court agreed unanimously that “dishonesty or fraud involving failure to disclose financial assets are grounds for renegotiating previously resolved disagreements”. This ruling opens the door for many aggrieved ex-spouses in England to pursue fairness in the face of dishonesty by their spouses.

If a party can show that his or her ex-spouse lied about the value or potential value of something that was material to the settlement agreement, it can potentially be grounds for the court to re-evaluate it.

 

Bad Valuation vs. Dishonesty and Fraud in Matrimonial Cases

Parties can argue that a valuation is “wrong” on virtually anything. This alone should not reopen a case. However, dishonesty and fraud are different.

The court in England made it very clear that dishonesty by a spouse is enough to cause the court to reopen a divorce settlement, but the dishonesty must be material to the case. This means that the lie or misrepresentation made must be important enough to affect the agreement reached or decision made. In other words, if not for the dishonesty, the settlement would have been different.

In the United States, the rules that govern re-opening judgments are very complicated. However, generally, the court may require proof of more than dishonesty. Some cases indicate that it must be shown that the party committed actual fraud.   Non-disclosure or misrepresentation may amount to fraud in some divorce cases but each case is different and has unique circumstances. In order to know whether the court will even consider re-opening a divorce case after judgment, we need the specific facts.

Some community members in England expressed fear following the decision, complaining that it will “open the floodgates” to all bitter ex-spouses who just want more money. Keep in mind that this decision was rendered to help people who are the victims of dishonesty and manipulation.   It is for the spouses who entered into agreements they thought were fair but were based on misinformation and deception.

After all, how can an agreement truly be fair and a “meeting of the minds” if the agreement is based on a lie?

Contact Leeds Brown’s New York Matrimonial Lawyers with Questions

If you think your estranged spouse committed fraud or withheld material information about assets during your divorce proceedings, speak to a lawyer about the rights you may have in our court system. Leeds Brown Law, PC can help you determine whether reopening your case is a viable option, or if there are other ways to enforce the rights you may have.

Sources:

http://www.theguardian.com/law/2015/oct/14/women-right-reopen-divorce-settlements-supreme-court

http://www.bbc.com/news/uk-34524641