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In many cases, developing a private settlement agreement to resolve property division issues is a desirable course of action. When these issues are left purely to the court, things can quickly become exceedingly expensive. The reason is because litigation is almost always a very pricey phenomenon, and property division issues often require a lengthy litigation process. However, although private settlement agreements can be desirable, they need to be clear and unambiguous in order to confer the maximal benefits to the parties. If parties sign agreements which aren’t fully clear, this can leave the door open to unwanted interpretations and, consequently, suboptimal outcomes. For example, if an agreement is not sufficiently clear, one party may end up trying to take a larger share of the marital estate than was expected by the other party.
This is precisely what occurred in the recent case of Bohling v. Segree (2022). In this case, the husband’s corporate stock was a part of the settlement agreement, but he believed that the “vesting date” was actually earlier than the date which was found in the agreement. Let’s look at this case a bit more closely to get a sense of the importance of having sufficiently clear agreements.
Case Facts
As mentioned, the couple in this case developed a private settlement agreement which included the husband’s corporate stock. The husband’s employer had compensated in stock units consistently during his tenure with his company, and so his total stock holdings were substantial. The settlement agreement stated that the wife would received “42% of the after tax value of the marital portion” of his stock holdings at the time the units “vested.”
Approximately 4 months after the couple signed the settlement agreement, an entity purchased the company which employed the husband, and this purchase suddenly caused the husband’s stock units to vest on an “accelerated” basis. The husband’s stock units were cashed out and the husband received a payout of $1.44 million in total. The wife claimed that her share of this payout, according to the terms of the settlement agreement, was$403,000. However, when the husband wrote a check to settle his obligation to the wife, he wrote a check for $249,000.
The wife filed a motion for contempt to compel the husband to settle this balance of $154,000. The husband argued that the correct calculation of the wife’s share was actually $249,000 based on the vesting time included in the settlement agreement. The husband lost at the trial court level, and the case went to the appellate division.
Ruling & Discussion
The husband argued that the settlement agreement was inherently ambiguous regarding the vesting time which should have been used to calculate the wife’s share. He further argued that “parol evidence” should be used to clarify this ambiguity, and that the available parol evidence would support his claim regarding an earlier vesting time. Maryland courts, however, only use parol evidence in cases in which the terms of an agreement are too ambiguous to decipher from the language of the agreement itself. In this case, the appellate division held that the terms of the original agreement were sufficiently clear that the vesting time should have been the time when the stock units were cashed out, not an earlier time as argued by the husband. Hence, because there was no ambiguity according to the appellate division, the trial court ruling stood and the husband needed to write a check for an additional $154,000.
Contact the Murphy Law Firm for More Information
If readers want to learn more about developing clear and unequivocal settlement agreements, or any other related family law topic, contact one of the top family law attorneys at the Murphy Law Firm today by calling 240-219-5243.
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