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When spouses divorce, financial disclosures must be made in order to resolve the property division aspect of the dissolution. Such disclosures may also be part of a private settlement agreement which resolves property division without direct court involvement. When parties create and execute a private settlement agreement, and give disclosures, there can be consequences if one party or both parties fails to be honest. If, for instance, one spouse later discovers that the other spouse “hid” certain assets by failing to disclose them, then the spouse who made the discovery may have an actionable case. Depending on the exact facts of the matter, the party who discovered the hidden assets may pursue a claim based on breach of the settlement agreement.
In the case of De Koomen v. De Koomen (2019), a wife pursued a claim against her former husband after discovering that the husband committed fraud when the settlement agreement was executed. Let’s look at this case more closely to see how these claims may be resolved in Maryland.
Factual Outline of the Case
The husband in this case was the CEO of a candy equipment supply company. The divorce was finalized in 2006. The couple executed a private settlement agreement which was incorporated into the final divorce decree. The settlement agreement contained a “full disclosure” clause which specifically referenced the necessity of both parties making accurate disclosures of assets. Nearly 12 years after the divorce was finalized, the wife became aware of the fact that the husband had actually committed fraud by hiding certain assets (business assets, bank accounts, etc.). The wife then initiated an action which included multiple claims; one claim asserted that the husband had breached the settlement agreement, and another claim attempted to reopen the finalized divorce. The trial court dismissed the claim which attempted to reopen the finalized divorce on the ground that the wife didn’t have evidence of extrinsic fraud (which is a necessary element to reopen a finalized divorce). The trial court also dismissed the claim for breach of the settlement contract. The case went before the appellate division.
Ruling & Discussion
The appellate court upheld the dismissal of the claim which attempted to reopen the divorce decree. Although the wife had evidence of intrinsic fraud, that type of evidence is simply insufficient to reopen a finalized divorce. But, the wife’s evidence of intrinsic fraud was sufficient to assert a claim of breach of contract. The husband had breached the settlement contract, and even though this discovery was made a dozen years after the contract was executed, the claim was still viable. The wife was allowed to pursue her claim of breach of contract and recover whatever damages could be substantiated.
Contact the Murphy Law Firm for More Information
If you want more information on property division, financial disclosures in divorce, or another related topic, reach out to one of the family law attorneys at the Murphy Law Firm today by calling 240-219-5243.
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