In number of recent cases, several state appellate courts have been asked to determine whether there existed grounds for fraud or duress sufficient to void a property judgment based on a settlement agreement. Unless brought soon after the judgment, courts generally treat these actions as equitable actions to void a contract, rather than actions to reopen a judgment. The cases demonstrate just how difficult it is to provide sufficient proof of fraud or duress to avoid a settlement agreement.
The California Court of Appeals found a sufficient basis for avoiding a marital settlement agrement (MSA) that had been incorporated into a default judgment of divorce. In this case, Husband used a document preparation service to prepare their property agreement. Wife relied on Husband’s representations that she could get no spousal support from him and signed the MSA. Wife later learned of her rights and sued to set aside the MSA and the default divorce judgment incorporating its terms. The court of appeals held that the trial court did not err in setting aside the MSA. Husband had failed to comply with mandatory disclosure obligations regarding value of community property, to wife’s detriment, and had affirmatively misled her regarding her legal rights to support. The court found that “The mistake as to spousal support prejudiced wife. Husband's gross monthly income was $ 10,000, more than seven times wife's gross monthly income of $ 1,400. Because of wife's mistake, she waived her right to receive spousal support.” Click here to read to opinion from the Court of Appeals.
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