Opinion ID: 1612464
Heading Depth: 1
Heading Rank: 6

Heading: modification of property settlement

Text: It is undisputed that the division of Gruber's pension set forth in the decree was the result of a property settlement agreement entered into by the parties. Where parties to a divorce action voluntarily execute a property settlement agreement which is approved by the dissolution court and incorporated into a divorce decree from which no appeal is taken, provisions dealing with division of pension benefits will not thereafter be vacated or modified in the absence of fraud or gross inequity. Reinsch v. Reinsch, supra . See, Hoshor v. Hoshor, 254 Neb. 743, 580 N.W.2d 516 (1998); Pascale v. Pascale, 229 Neb. 49, 424 N.W.2d 890 (1988). The issue presented is therefore whether either fraud or gross inequity is present in the instant case so as to justify modification of the decree. Because there is no allegation of fraud, we limit our review to whether the district court abused its discretion in determining that failure to modify the decree would result in gross inequity. Gruber argues there is no gross inequity present for two reasons. First, he contends that it was well within the power of [Witters] to create the necessary language in the consent decree of 1995. Brief for appellant at 15. The record reveals, and the district court found, that the language drafted by the city of Omaha to assist attorneys in dividing pensions in divorce decrees did not exist in 1995. Nevertheless, Gruber argues that Witters could have contacted the city for assistance in drafting the agreement. In support of this argument, Gruber cites Pascale v. Pascale, supra , and Robbins v. Robbins, 3 Neb.App. 953, 536 N.W.2d 77 (1995). In Pascale, a dissolution decree divided the property of the parties pursuant to the terms of a settlement agreement. The relevant portion of the agreement provided that although the parties would file joint tax returns for the year 1985, the husband alone would be entitled to any tax refund for that year or obligated for any tax liability. When the wife sold shares of stock awarded to her in the decree, resulting in an increase of approximately $26,000 in tax liability, the husband filed an application to modify, contending her action in selling the stock justified the modification. We determined that it was obvious from the record that the husband knew the tax consequences relating to all of the financial dealings of the parties at the time of the decree. We noted that the husband regularly prepared the parties' tax returns and that the husband furnished the figures upon which the settlement agreement was based. We therefore held that it cannot be said that the respondent should not have reasonably contemplated a sale of the stock by the petitioner and the resulting tax consequences. Id. at 50, 424 N.W.2d at 891. We then found that because the parties voluntarily entered into the agreement, it could be vacated or modified only in circumstances of fraud or gross inequity. Finding that there was no evidence of either in the record, we reversed the district court's modification order. In Robbins v. Robbins, supra , the parties voluntarily entered into a property settlement agreement awarding the wife $20,000 in lieu of her interest in the husband's pizza business. When the husband subsequently sold the business and incurred a substantial tax liability, he sought modification of the decree, contending that the wife obtained an unconscionable advantage due to his ignorance concerning the tax consequences of the sale of the business. Id. at 963, 536 N.W.2d at 85. Although the husband asserted that the tax consequences of the sale were not within the reasonable contemplation of the parties at the time of the agreement, the Court of Appeals, relying on Pascale v. Pascale, 229 Neb. 49, 424 N.W.2d 890 (1988), reasoned that the husband had intimate knowledge of the business and regular contact with an accountant. The court thus concluded that the tax consequences were reasonably contemplated at the time of the agreement and that the agreement was not subject to modification. Gruber argues that Pascale and Robbins control the instant case and bar modification of the decree because it was within the reasonable contemplation of Witters at the time the settlement agreement was made to properly draft the language incorporated in the decree. He contends that because she failed to do so at the time, there is no justification for now modifying the decree in order to correct the error. Both Pascale v. Pascale, supra , and Robbins v. Robbins, 3 Neb.App. 953, 536 N.W.2d 77 (1995), however, are distinguishable from the instant case. In both cases, the issue was whether modification of the agreement of the parties was justified based on a contention that the agreement as made was inequitable. In contrast, the instant case presents the issue of whether modification of a decree which fails to properly preserve the undisputed agreement of the parties is justified because such result is grossly inequitable. Because it is undisputed that neither party reasonably contemplated that the agreement would result in Witters' taking less than one-half of Gruber's pension, Pascale and Robbins are inapposite. Gruber also argues that the district court erred in modifying the decree because denying Witters her approximately $29,000 interest in the pension does not result in an inequitable distribution of property between the parties. He contends that [t]he issue that this Court must determine is whether or not $29,069.01 is gross [sic] inequitable if not awarded to [Witters]. Brief for appellant at 16. In support of this argument, he again relies on Pascale and Robbins and further cites Hoshor v. Hoshor, 254 Neb. 743, 580 N.W.2d 516 (1998). We disagree with both his statement of the issue and his citation of authority. In Pascale, we held that the $26,672 incurred by the husband in tax liability as a result of the agreement he voluntarily entered into did not result in a division of property that was grossly inequitable. In Robbins, we similarly held that a $37,000 tax liability incurred by the husband as a result of a voluntary property settlement agreement was not grossly inequitable. In Hoshor, we addressed the division of a husband's pension benefits set forth in a property settlement agreement reached by the parties and incorporated into the decree. The provision of the consent decree at issue provided that `[the husband] is the beneficiary of a pension and retirement plan.... [The wife] should receive one-fourth of any payments received from the pension and retirement plan by [the husband] at the time such payments are received.'  Id. at 745, 580 N.W.2d at 519. The husband argued that gross inequity would result unless the consent decree was modified to limit the wife to one-fourth of the pension benefits existing as of the date of the termination of the parties' marriage, rather than to give the wife one-fourth of the pension benefits when ultimately obtained by the husband. Id. at 753, 580 N.W.2d at 522. Noting that we could not ascertain from the record to what extent the wife's share would be greater under the decree than if it were modified, we declined to find the existence of gross inequity. We further noted that because the parties were represented by counsel at the time the settlement was entered into and that they both understood the terms of the agreement, the wife is entitled to the benefit of her bargain. Id. at 753, 580 N.W.2d at 523. Gruber contends that Pascale v. Pascale, 229 Neb. 49, 424 N.W.2d 890 (1988), and Robbins v. Robbins, 3 Neb. App. 953, 536 N.W.2d 77 (1995), establish that the failure to award the $29,000 amount to Witters in and of itself is not gross inequity. Brief for appellant at 18. He further argues that because Witters bargained to receive her one-half interest in the pension by way of a QDRO, she is entitled to only the benefit of her bargain, as in Hoshor v. Hoshor, supra . The issue in this case, however, is not simply whether the failure of the decree to award Witters $29,000 as her one-half interest in the pension results in a property division that is inequitable, but, rather, whether the failure of the original decree to fully preserve the undisputed agreement of the parties would result in gross inequity. It is clear that the benefit of the bargain in this case was a one-half share of the pension plan, not the legal device by which it was originally sought to be realized. The unforeseen refusal of the city to recognize a QDRO would unfairly deprive Witters of this benefit and allow Gruber to retain it, thereby requiring modification of the decree to prevent a gross inequity. Pascale, Robbins, and Hoshor are therefore not applicable to this case. Based on the record before us, particularly the undisputed evidence that both parties intended to divide the pension equally as of July 20, 1995, we conclude that the district court did not abuse its discretion in finding that gross inequity would result in the absence of modification of the decree. The judgment of the district court is therefore affirmed. AFFIRMED.