Sunday, August 10, 2014

Separation Anxiety

Tschaikowski v. Tschaikowski, 2014 VT 83

By Andrew Delaney

Sometimes you just have to rip off the band-aid. My professional experience with separation agreements is that they’re legal minefields. I don't think they're helpful.  If you want a divorce, just get a divorce.  If you change your mind later, well, at least you'll know what you're doing during the wedding ceremony.  But I digress.

Husband and wife are in the middle of a divorce. They entered into a separation agreement in 2007, which was formally incorporated into a final order. When they went to make their divorce “official,” husband was all like, “Oh, hey trial court—we’ve got that agreement, that’s the deal on the property settlement.” The trial court disagreed, and denied husband’s motion for summary judgment.

When the parties entered their comprehensive—meaning that it covered all the bases like parental rights and responsibilities and property division as well as including a “subsequent divorce” provision—they were both represented by counsel, waived a final hearing, and asked the court to enter a final order. The court obliged.

Then husband moved to England for a few years. When he re-crossed the pond, wife filed for all-donesies divorce. She attached a copy of the separation agreement to her complaint. There were some skirmishes over parental rights and responsibilities and child support that eventually resolved. Husband then moved for summary judgment on division of the marital property.

The trial court denied the motion. It reasoned that final-divorce issues are determined at the time of the final divorce. Husband appeals.

The majority agrees with husband “on grounds that the terms of the parties’ separation agreement were incorporated into a final order by the family court in 2007 and the distribution of property under those terms cannot be modified except on grounds sufficient to overturn a judgment.”

This concept, in our little blogosphere, is known as the “what’s-done-is-done doctrine.” Essentially, it means that final property settlements are final. It’s fairly described as a hard-and-fast rule, but as with most hard-and-fast rules, there is the occasional exception. As you, dear reader, already know, this case is not an exception, at least for the majority.

The SCOV gives summary-judgment decisions a complete review. If there are no material factual disputes and the law is on a party’s side, then that party wins. It’s a game-over-no-trial-for-you proposition.

Husband argues that he’s entitled to judgment as a matter of law on the property settlement. Wife disagrees on fairness and equity grounds.

The majority notes: “Legal separation has rarely been before this Court.” There is a statute, but it’s a bit of a head-scratcher. As Mr. Mackie might say, “And there’s a statute, mmm-kay?” It does, however, seem to give authority for a trial court to enter a final order based on an agreement, which is what played out here.

“Once an agreement is incorporated into a final judgment, it too is final.” The only way to change it is through a relief-from-judgment motion, and those grounds are limited. Thus, the majority opines: “Summary judgment was therefore appropriate, as the terms of the separation agreement regarding the marital property in 2007 were enforceable as a matter of law.”

The majority notes that its “holding is in line with public policy and an interest in encouraging stipulations within the family court context that has been consistently reiterated in our previous decisions.” It’s the idea that when you agree, you know what you’re buying (so to speak). It’s a contract and it’s treated as such—expectations are upheld, and that’s good.

The majority further reasons that any other approach would be to rob the legal separation statute of any legal effect. Separation can be temporary or it can be permanent. Here, the parties agreed it would be permanent, so the majority isn’t going to mess with that—especially when the parties expected their separation agreement to be incorporated into their eventual divorce. “For this Court to hold that the terms of the agreement are now subject to modification nearly seven years later because the parties have chosen to take a step they directly addressed in the separation agreement would undermine our preference for stipulations, finality in final judgments, and general principles of contract law.”

The majority dismisses wife’s argument that this forecloses her opportunity to have the trial court examine the agreement for fairness and equity. The trial court already did that, the majority reasons, when it reviewed the separation agreement before incorporating it into a final order. The majority explores a couple what-if scenarios, but reasons that in those situations—say a party inherited a million dollars or became disabled between separation and divorce—there would be the kind of real, substantial, and unanticipated change in circumstances that’d allow revisiting the order.

So the majority reverses the trial court’s denial of summary judgment and holds “that husband is entitled to enforcement of the property settlement terms incorporated into the final separation order.”

Chief Justice Reiber, joined by Justice Dooley, dissents. The dissent reasons that the majority overlooks the trial court’s statutory “duty to evaluate the fairness and equity of the property distribution and spousal maintenance at the time of divorce.”

The dissent notes that the trial court is required “to evaluate the surrounding circumstances at the time of divorce in awarding spousal maintenance.” To the dissent, it’s “clear that the Legislature intended to give discretion to the family courts to divide property in an equitable and just manner based on the circumstances at the time of divorce.” “Simply put, had the Legislature intended for a prior separation agreement to be binding on the court at divorce, it could have said so.” The dissent notes that the property-distribution statute puts all marital property within the trial court’s jurisdiction.

The dissent reasons that “the majority’s decision is certain to put trial courts in a bind in situations where the separation agreement is at odds with statutory mandates.” The dissent also reasons that the SCOV has to read the whole statutory scheme together, not—as the dissent sees the majority doing—give effect to one statute and ignore the rest.

For the dissent, equity is first and foremost in divorce proceedings. Things change, and courts should have flexibility to address those changes. While the separation agreement should be given due weight, the dissent “cannot agree with the majority that a legal separation agreement is binding in a divorce as a matter of law.”

So there you have it.  Two versus three very smart and well-versed justices disagree on the effect a separation agreement should have on a divorce.  I don't know about you, but that makes me feel a-okay about my skittishness toward separation agreements in general.  

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