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Appellate Court Explains Difference Between Divorce Settlement Agreement And All Other Contracts

June 2, 2016

In an April 2016 non-precedential Superior Court Appellate decision, Doyle v. Doyle, the court found that a husband and wife had entered into a valid divorce settlement agreement despite the wife’s argument that the agreement was invalid. The wife argued that she was not provided full and fair disclosure of the husband’s financial status prior to signing the agreement.  The court found that the wife’s argument was not persuasive because disclosure had been provided.

The issues between the husband and the wife began in 1998 when the wife filed her first of four divorce complaints. In 2006, the wife retained an attorney who wrote a letter to the husband providing that the attorney was going to send the husband a divorce settlement agreement.

The husband and wife met with another attorney who was a business acquaintance of wife. The parties reached a consensus regarding the division of marital property. A third attorney was retained to draft the divorce settlement agreement.

The wife acknowledged that she could have received more assets in the divorce, but simply wanted to get out of the marriage. Prior to signing the agreement, on June 3, 2009, the parties entered into a marital settlement agreement.

On June 9, 2010, the wife filed an amended complaint for declaratory judgment asserting that the marital settlement agreement was invalid due to lack of full and fair disclosure, fraud and misrepresentation.

The court acknowledged that the seminal Pennsylvania Appellate decision, Simeone v. Simeone, provided that “full disclosure of the parties’ financial resources is mandatory” to the enforceability of a marital agreement. A rationale supporting this extra requirement is that spouses or prospective spouses are not always dealing at arm’s length. The disclosure requirement is to abate a spouse from using a position of trust in a relationship to hide assets. A court, however, will not review whether a marital agreement is “fair,” as long as there was full and fair disclosure.

Regarding “full disclosure,” the court acknowledged that there is a presumption that “full disclosure” was provided if the terms of the agreement specifically indicate that “full disclosure” had been made.

In this matter, the agreement signed by the husband and wife contained a term indicating that full disclosure had been made. Thus, the wife was required to rebut the presumption by proving fraud or misrepresentation.  The wife was unable to rebut the presumption. The court found that the wife had essentially initiated and controlled the nearly all negotiations.  The wife had understood that husband’s assets had greater value than her assets and could not later argue that she was defrauded.

While divorce settlement agreements have an extra requirement that “full and fair disclosure” be provided, the court’s decision shows how difficult it can be to void a divorce settlement agreement, if the agreement provides that “full and fair disclosure” had been provided.