Opinion ID: 2096401
Heading Depth: 1
Heading Rank: 1

Heading: Duty of Spontaneous Disclosure

Text: Nicole contends that the trial court erred in finding no constructive fraud from Donald's failure to disclose the value of the profit sharing plan with his employer. It is undisputed that she knew that he had pension rights, that he did not provide information regarding the nature or valuation of the rights, that she never requested disclosure of such information, and that the property settlement agreement contained no provision imposing a duty to disclose. Nicole asserts that a duty of spontaneous full disclosure of assets is implicit under the Indiana marriage dissolution statutes. In support of this claim she cites Ind. Code § 31-1-11.5-11(b), which directs the court to divide the property of the parties in a just and reasonable manner, and Ind. Code § 31-1-11.5-11(c), which provides in part: The Court shall presume an equal division of the marital property between the parties is just and reasonable. Without full disclosure of the nature and value of marital assets, she argues, a court cannot fulfill its statutory obligation to make the required just and reasonable property division. Donald contends that, absent a request for information from Nicole, or a disclosure obligation imposed by the settlement agreement, he had no duty to provide the valuation information. In Atkins v. Atkins (1989), Ind. App., 534 N.E.2d 760, the Court of Appeals set aside a property settlement agreement finding that the husband's failure to disclose information affecting the value of stock perpetrated a constructive fraud. Both Nicole and Donald claim that Atkins is favorable to their position. Nicole points to the following passage: The cases make clear, however, that a trial court has discretion to determine whether or not to accept an agreement in the first instance... . [T]he court should nevertheless do so unless it determines that the agreement was the product of some unfairness, unreasonableness or manifest inequity in its terms or that it was procured through fraud, misrepresentation, coercion, duress or lack of full disclosure. Atkins, 534 N.E.2d at 762. As noted by Donald, however, the court went on to base its decision upon the breach of the duty to disclose imposed by the settlement agreement itself, not upon any implied duty of spontaneous disclosure. The agreement required that each party make full and complete disclosure of all pertinent financial and other information... . Such provisions ... require the disclosure by one party to the other of all matters which in good conscience ought to be disclosed. Moreover, the failure to disclose when such a duty exists constitutes constructive fraud. .. . Id. at 763. While a duty to disclose asset value information may arise from unique factual circumstances including the express terms of a property settlement agreement, or from a request for discovery under the Indiana Trial Rules, such a duty of spontaneous disclosure is not imposed as a matter of law by Ind. Code §§ 31-1-11.5-11(b) and -11(c) of the Indiana Dissolution of Marriage Act. Clearly there is no express statutory duty of mandatory disclosure. Nor can such a duty reasonably be inferred from the Act. We observe that even with respect to antenuptial agreements, presumably entered into when the parties' relationship is likely to be one of trust and reliance, in contrast to the potential and actual adversity which accompanies marriage dissolutions, there is no absolute and mandatory duty imposed upon the parties to disclose information regarding possessions. Matter of Estate of Palamara (1987), Ind. App., 513 N.E.2d 1223 (no duty to disclose value); Johnston v. Johnston (1962), 134 Ind. App. 351, 184 N.E.2d 651 (no duty to disclose nature, extent, and value). [1] Donald was under no duty to disclose the value of the plan. The trial court did not abuse its discretion in denying Nicole's petition to set aside the parties' settlement agreement.