Case Title: Mason v. Mason

Citation: 180 Vt. 98, 2006 VT 58, 904 A.2d 1164

Docket Number: 2004-434

State: vermont

Court: Vermont Supreme Court

Date: 2006-06-16T00:00:00Z

Document:
Mason v. Mason (2004-434); 180 Vt. 98; 904 A.2d 1164

2006 VT 58

[Filed 16-Jun-2006]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2006 VT 58

                                No. 2004-434


  Jeffrey Mason                                  Supreme Court

                                                 On Appeal from
       v.                                        Rutland Family Court


  Susan Mason                                    September Term, 2005


  Richard W. Norton, J.

  Stephen Alan Dardeck and Pamela Gatos of Tepper Dardeck & Levins, Rutland,
    for  Plaintiff-Appellee.

  Jon S. Readnour and Kurt A. Kuehl of Readnour & Barone, Rutland, for
    Defendant-Appellant.


  PRESENT:  Dooley, Johnson and Skoglund, JJ., and Burgess, D.J. and 
            Allen, C.J. (Ret.),  Specially Assigned

       ¶  1.  SKOGLUND, J.   Wife appeals an order of the family court
  enforcing the court's final divorce decree by requiring wife to transfer to
  husband 8,033 shares of stock.  We affirm.


       ¶  2.  The divorce decree in this case was based on and incorporated
  the parties' stipulation, which sought to divide a single item of marital
  property: 48,200 (FN1) shares of Union Bank stock held by wife. 
  Unbeknownst to husband, while the parties were negotiating the stipulation,
  wife received notice of an impending stock split, although the split did
  not actually take place until several days after the parties signed the
  stipulation and the divorce decree was entered.  The upshot of this timing
  was that husband received post-split shares of a drastically reduced value. 
  Thus, it appeared during negotiations that husband would receive shares
  equivalent to roughly one-third of the total stock value, but he ended up
  receiving shares that represented only one-fifth of the total stock value. 
  We conclude that, because the entitlement to the stock split vested before
  the parties signed the stipulation and before the divorce was final, the
  16,066 shares awarded to husband in the stipulation carried with them the
  entitlement to the stock split once it occurred. 

                                     I.

       ¶  3.  Wife and husband negotiated a divorce stipulation that
  purported to divide the marital property between them.  Among the
  provisions of the stipulation was a paragraph acknowledging that the
  parties would retain their own investments and property that was in their
  individual names, with the exception of a certain number of shares of stock
  in wife's name.  With respect to this asset, the stipulation provided that
  wife was to transfer 16,066 (FN2) shares of stock to husband "immediately." 
  Wife signed the stipulation on August 4, 2003, and husband signed on August
  6, 2003.  The family court entered its final decree of divorce, which
  incorporated the stipulation, on August 6, 2003.
                                                  
       ¶  4.  Although she did not raise the issue during the parties'
  negotiations, wife had known since July 31, 2003, that the stock was due to
  split sometime in the near future.  Wife learned of the split from her
  financial advisor, who received a notice advising of the split and
  explaining that the benefits of the stock split would go to all
  shareholders who were shareholders of record as of July 26, 2003.

       ¶  5.  Thus, wife was aware of the impending stock split during the
  parties' negotiations, when she signed the stipulation, and when the court
  entered its order incorporating the stipulation.  At no point did wife
  share this information with husband (or the court, for that matter);
  neither did husband discover this information on his own.  On August 11,
  2003, the stock split three-for-two.  Wife took steps to initiate the
  transfer of shares as early as August 6, 2003, but husband did not receive
  the 16,066 shares until August 14, 2003.  By that date, the value of each
  individual share of stock had dropped by approximately one-third from its
  pre-split value.  More importantly, rather than receiving one-third of the
  shares of stock to wife's two-thirds, husband now received only
  approximately one-fifth of the divided property, while wife retained
  four-fifths. (FN3)
   
       ¶  6.  Husband filed a motion for relief from judgment which asked the
  family court to modify the divorce decree to award him the additional
  shares, emphasizing that wife knew of the impending stock split when she
  signed the stipulation and alleging that she had fraudulently concealed
  that information.  Husband subsequently withdrew this motion, and instead
  filed  a motion for enforcement, arguing that because the stipulation
  required wife to transfer the stock to him "immediately," he was entitled
  to the shares as valued on August 6, 2003-the day the stipulation was
  signed and incorporated into the court's order.
   
                                     II.

       ¶  7.  The trial court styled its decision as a ruling on the motion
  for enforcement, although it considered both of husband's arguments as well
  as other frameworks for assessing wife's conduct in connection with the
  stock split.  Noting that the stock was the only marital asset the parties
  were dividing, and that the parties had intended a one-third to two-thirds
  division (although they memorialized it in the agreement as a specific
  number of shares-an approach recommended by wife's financial advisor with
  knowledge of the impending stock split), the family court concluded that
  the transfer of only 16,066 of the newly-devalued shares following the
  stock split "was not within the range of reasonable expectations" of the
  parties when they agreed to the stipulation.  The family court emphasized
  that the devaluation in shares did not affect both parties equally, as it
  would have had the stock price changed over time as the result of normal
  market fluctuations, but rather husband's loss was wife's gain.  The court
  considered it inequitable both that wife did not transfer the shares to
  husband "immediately," as required by the stipulation, and that wife
  permitted this delay despite the fact that she knew the stock split was
  taking place at the precise time between signing the stipulation and
  transferring the shares.
   
       ¶  8.  The court acknowledged the policy in favor of voluntary
  agreements between divorcing parties, but noted that even those agreements
  may be overcome where there is evidence of fraudulent concealment in the
  formation of the agreement.  The court found that all of the elements of
  fraudulent concealment were present in this case.  The court further noted
  that other states require divorcing parties to fully disclose all
  information known to them regarding marital property.  Accordingly, the
  family court rejected wife's contention that the situation was husband's
  own fault for failing to diligently investigate the stock asset, because
  candor is the expected mode in the dissolution of a marital relationship. 
  Finally, the court referred to the mandate of 15 V.S.A. § 751, requiring
  that marital property be distributed equitably.

                                    III.

       ¶  9.  We review the family court's factual findings for clear error
  and will uphold its conclusions if supported by the findings.  Thibodeau v.
  Thibodeau, 2005 VT 14, ¶ 7, 16 Vt. L. Wk. 45,