As first made known to this blog by Judge Steve Halsey on his blog, Minnesota Family Law Issues, a prominent New York lawyer and divorcee will be unable to re-open a divorce settlement in his attempt to recoup losses stemming from investment in Bernie Madoff’s ponzie scheme.
The New York Court of Appeals rules that “Mutual mistake” in divorce settlement is not applicable. As reported by the New York Law Journal:
In his claim for reformation, husband requests that the court “determine the couple’s true assets with respect to the Madoff account” and alter the settlement terms to reflect an equal division of the actual value of the Madoff account. The second cause of action seeks restitution from wife “in an amount to be determined at trial” based on her unjust enrichment arising from husband’s payment of what the parties mistakenly believed to be wife’s share of the Madoff account. Wife moved to dismiss the amended complaint on several grounds, including a defense founded on documentary evidence . . . and for failure to state a cause of action . . .
The New York appeals court ultimately agreed with the wife. The court rejected the husband’s “mutual mistake” argument in its entirety.
Reading the opinion, I could not help but feel just a little bit bad for the former husband. I also liked his attempt to create what appears to be new law in the field of family law based on the novel argument of “mutual mistake”. However, at least in Minnesota, the law on property settlement modification – as it relates solely to “property” – is pretty clear. Property settlement agreements, once negotiated, are largely none modifiable. It would appear that the same general law holds true in New York.
In Minnesota, the case of Ernst v. Ernst, 408 N.W.2d 679 (Minn. App., 1987), provides guidance on the issue. In Ernst, the Minnesota Court of Appeals held that:
The principles of res judicata bar relitigation of issues finally disposed of in a prior, appealable order and apply to dissolution cases, subject to the limitation that either party may petition for a modification of support or maintenance based on substantially increased or decreased needs or resources. Rydell v. Rydell, . . . see Kiesow v. Kiesow . . . In addition to res judicata, property divisions are subject to the further conclusiveness of Minn.Stat. Secs. 518.64, which defines the division as final and not subject tomodification merely because of a subsequent change in the financial circumstances of the parties. Kaiser v. Kaiser, . . .
In essence, parties cannot modify marital termination agreements as they relate to property. The standard for spousal maintenance and/or child support are different legal issues and have different legal standards of potential modification.
See NY court: Man stuck with Madoff loss in divorce, Twin Cities Pioneer Press, April 3, 2012.
-This post was written by Joseph M. Flanders, a Apple Valley MN family law lawyer.
