Julie R. Waterfield v. Richard D. Waterfield
2016 Ind. App. LEXIS 335
| Ind. Ct. App. | 2016Background
- Julie and Richard Waterfield divorced in 1997 after a settlement incorporated into the divorce decree: Julie received $20 million (mostly cash) plus a cottage; a Disclosure Statement from Richard listed marital assets.
- Julie’s counsel repeatedly advised her, in writing, not to settle without conducting discovery and valuations; Julie acknowledged the advice but settled anyway.
- In 2003 Julie sued (six years later) to set aside the settlement and decree, alleging Richard fraudulently undervalued/omitted marital assets (seeking ~ $80M more).
- Richard counterclaimed for abuse of process and statutory attorney fees; after extended discovery fights the trial court granted summary judgment to Richard on valuation-based fraud claims and later entered default judgment against Julie as a discovery sanction in the counterclaim proceedings.
- The trial court found Julie had waived privilege by putting her reliance on Richard and lack of independent investigation at issue, rejected her right-to-rely on Richard due to her counsel’s written warnings, denied her summary judgment on abuse of process, imposed default as a justified sanction, and awarded Richard $842,021 in attorney fees.
Issues
| Issue | Plaintiff's Argument (Julie) | Defendant's Argument (Richard) | Held |
|---|---|---|---|
| 1. Whether Settlement Agreement may be set aside for fraud | Julie says Richard misrepresented marital assets/value and she relied on his disclosures, so the settlement was induced by fraud | Richard says Julie knew of risk, her counsel warned her repeatedly, she did not conduct discovery, so she cannot show a right to rely | Court: Denied—Julie cannot establish right to rely because she knowingly declined counsel’s advice and waived reliance |
| 2. Whether attorney-client privilege should bar disclosure of Julie’s divorce counsel file | Julie contends communications are privileged and not discoverable | Richard contends Julie put her counsel’s advice/knowledge at issue (to prove reliance), creating implied waiver | Court: Denied—trial court properly found implied waiver and compelled limited disclosure |
| 3. Whether summary judgment on abuse of process should be granted to Julie | Julie argued Richard’s counterclaim lacked merit and she was entitled to judgment as a matter of law | Richard argued facts (timing, motives, conduct, failure to prosecute) create genuine issues of ulterior motive and misuse of process | Court: Denied—genuine fact issues exist about Julie’s motive and use of process; summary judgment inappropriate |
| 4. Whether default discovery sanction and the attorney-fee award were proper | Julie argued discovery requests were irrelevant or she had conceded fee reasonableness; also contended lack of warning and counsel illness justify relief from default | Richard argued Julie repeatedly disobeyed orders, discovery of Julie’s fees was relevant to fee reasonableness, and she had notice and opportunity to comply | Court: Affirmed—discovery was relevant, trial court gave sufficient notice, default was not unduly harsh given pattern of noncompliance, and statutory fee award was justified |
Key Cases Cited
- Pohl v. Pohl, 15 N.E.3d 1006 (Ind. 2014) (policy favoring enforcement of marital settlement agreements)
- Voight v. Voight, 670 N.E.2d 1271 (Ind. 1996) (court should exercise restraint in rejecting settlements; review limited to fraud, duress, undue influence)
- Mountain States Tel. & Tel. Co. v. DiFede, 780 P.2d 533 (Colo. 1989) (articulates three-prong implied-waiver test when a party puts attorney communications at issue)
- Nat’l City Bank of Ind. v. Shortridge, 689 N.E.2d 1248 (Ind. 1997) (abuse-of-process requires use of process for an ulterior, illegitimate purpose)