Lead Opinion
OPINION
for the Court.
Thе parties to this appeal are former spouses, and the issue before us involves the property settlement agreement (the Agreement) that was entered into in connection with their divorce. This dispute centers around a single asset; a minority interest in Prime Time Manufacturing, Inc. The Agreement specified that the
I
Facts and Travel
Sharon Esposito and Joseph Esposito were married on July 8, 1987. One child was born of the marriage. On February 21, 2005, Joseph initiated a divorce action against Sharon, declaring that irreconcilable differences between the parties had led to the irremediable breakdown of the marriage.
On March 22, 2007, their negotiations completеd, Joseph and Sharon entered into the Agreement for the purpose of equitably dividing their marital estate. The Agreement provided for the division of the marital assets, with 55 percent assigned to Sharon and 45 percent to Joseph. As part of Joseph’s 45 percent share, he was assigned all his stock in Prime Time.
On June 4, 2008, after learning about the increase in Joseph’s interest in the company,
II
Standard of Review
This Court reviews a trial justice’s decision in a divorce proceeding with deference, and “[w]e do not disturb the trial justice’s findings of fact unless it can be shown that he or she has overlooked or misconceived relevant and material evidence or was otherwise clearly wrong.” Curry v. Curry,
III
Discussion
Sharon asserts that the trial justice committed a number of errors when he denied her Rule 60(b) motion. First, she argues that the trial justice erred when he found that there was no mutual mistake between the parties about the value of Joseph’s share in Prime Time when the parties executed the Agreement. Second, Sharon contends that the trial justice erred because the proper date for valuation of the marital assets was on October 31, 2007, the
A. Mutual Mistake
It is well settled that a property settlement agreement that has been “incorporated by reference, but not merged into the final divorce decree, retain[s] the characteristics of a contract.” Zaino v. Zaino,
Sharon asserts that both she and Joseph relied upon the representation of the value of Joseph’s share in Prime Time, аs set forth in the Piccerelli appraisal, and that the report failed to properly account for the marketability of his minority share. Sharon argues that the parties’ reliance was misplaced because the actual value of Joseph’s interest in Prime Time was substantially higher than the amount that had been determined by the appraisal.
The court appointed the Piccerelli firm as a neutral appraiser to value Joseph’s 24.59 percent minority ownership interest in Prime Time. Based on all the available information, the appraiser opined that, as of February 2, 2006, the fair value of Prime Time was approximately $15.2 million, and the fair value of Joseph’s stock in Prime Time was $4.1 million. After discounting that number to reflect the lack of marketability of a minority ownership,
It is significant that at that time, negotiations for the sale of Prime Time to Rich-line had not commenced. When he ruled on Sharon’s motion, the trial justice found that there was “no evidence whatsoever that there were any discussions concerning the sale of the company” prior to the execution of the Agreement. Therefore, hе reasoned, the appraiser’s opinion was not undermined because it did not take into account the later purchase of Prime Time by a subsidiary of Berkshire Hathaway. Before they used the appraisal as a basis for equitably dividing the marital estate, each of the parties was provided the opportunity to obtain a second, separate appraisal, and Sharon availed herself of that opportunity. However, after her own appraisal resulted in a valuation that was less than the court-ordered appraisal, both she and Joseph accepted the original valuation
. Because there was no mutual mistake of fact regarding the value of Joseph’s interest in Prime Time when the Agreement was entered into, and because Joseph did not consent to reformation of the Agreement, the Family Court lacked the power to reform or amеnd it. See Paul v. Paul,
B. The Proper Date for Valuation of Assets
This Court has held that “parties to a divorce action remain as husband and wife until the entry of the final decree of divorce.” Janson v. Janson,
Here, both parties were represented by competent and experienсed counsel. They negotiated over a protracted period, engaging in a series of proposals and coun-terproposals. When the Agreement finally was consummated, it contained an “express agreement” that set the terminal date for equitable distribution as March 22, 2007, when the Agreement formally was approved by the Family Court. See Ruffel,
“Except as otherwise more specifically provided in this Agreement, all of the property of each of the parties hereto, both real and personal, now owned by him or her, or to which he or she may hereafter become entitled, shall be and remain his or her sole and separate property, free from all rights of the other spouse and party hereto, with power in the party owning such property to deal with or otherwisе dispose of the same as if he or she were single. * * * 0f fhe parties hereto releases and quit-claims unto the other * * * all other rights, statutory or otherwise, in and to any real estate of which such other spouse and party hereto is, or may become seized and possessed, or to which he or she may otherwise be or become entitled. It is the intention of this clause to permit and empower each of the parties hereto to deal with his or her own separate property now owned or hereafter acquired without any let, hindrance, claim, demand or assertion of right of or by the other party and in all respects as if each party hereto were single.”
In essence, paragraph 17 specifically empowered each party to move on with his or her individual financial life, free of
“Each party waives any interest he or she may have in and to any assets acquired by the other party subsequent hereto and prior to the entry of any Final Judgment of Divorce.”
Contrary to Sharon’s argument that the parties “never expressly agreed to a terminal date,” the Agreement convinсes us that the parties concurred that during the interlocutory period, property rights may have continued in the estate of the other unless they otherwise provided, and they did so provide. See Ruffel,
C. Should the Family Court have withdrawn its approval?
Sharon also contends that even if no mutual mistake of fact existed when the Agreement was entered into, the Family Court nonetheless erred because it declined to withdraw its prior approval of the Agreement. See Gorman,
There is no doubt that until the entry of final judgment in a divorce action, spouses have a continuing duty to disclose changes in their financial circumstances. See Giha,
In so holding, we are in no way signaling a retreat from the good-faith rule set out in Gorman. See Gorman,
IV
Conclusion
For the reasons stated in this opinion, we affirm the order of the Family Court and remand the record to that court.
Notes
. In this opinion, we refer to the parties as Joseph and Sharon. This is for the purpose of clarity only, and we intend no disrespect by using their first names.
. This initial divorce proceeding was dismissed and later refilled by Joseph on March 31, 2006.
. Paragraph 13 of the Agreement, entitled "Prime Time Manufacturing,” specified:
“[Joseph] has an ownership interest in a business known as Prime Time Manufacturing, along with certain other minor related business entities. His ownership interest has an agreed-upon value of approximately $2,900,000.00. [Joseph] is awarded all right, title and interest in and to these businesses, free and clear of any claim by [Sharon].”
. Sharon learned about the sale of Prime Time after reading a press release.
. Rule 60(b) of the Family Court Rules of Procedure for Domestic Relations allows for a relief from judgment or order based on:
"(1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud * * * misrepresentation, or other misconduct of an adverse party; * * * (6) any other reason justifying relief from the operation of the judgment.”
. The appraisal explained that a "marketability discount’’ was applied because a minority interest in a closely held company tends to be more difficult to sell.
Dissenting Opinion
dissenting.
Because I disagree with thе result in this case and particularly the manner in which the majority reaches that result, I respectfully dissent. This Court has consistently recognized the fiduciary obligations that exist during the marital relationship. “Agreements between spouses, unlike ordinary business contracts, involve a fiduciary relationship requiring the utmost of good faith.” Gorman v. Goman,
In my opinion, the fairness of a marital settlement agreement between divorcing spouses should not be controlled or diluted by reference to other terms in the contract; unfortunately, that is what the majority’s approach in this case accomplishes. In a single sentence, the majority dispenses with the fiduciary considerations attendant to this marital property agreement and concludes that “even despite Joseph’s breach of his duty to disclose, any property rights Sharon had in Joseph’s share of Prime Time were foreclosed on March 22, 2007, when the Agreement was executed and approved by the Family Court.” I am not convinced, as the majority holds, that “disclosure by Joseph to Sharon would have changed nothing.”
Under the most generous time-line available to Joseph, three months before the entry of the final judgment, he learned that his shares in Prime Time were worth a whopping $2.5 million more (almost double) than the $2.9 million figure in the Agreement. He deliberately withheld this from Sharon. The record discloses that a binding agreement for the sale of Prime Time was executed before the entry of final judgment of divorce and the shares were sold less than two weeks after the entry of final judgment of divorce. The majority acknowledges that Joseph had a duty to disclose this fact during the marriage and that he failed to honor that obligation. However, rather than remand this case to the Family Court “to review the Property Settlement Agreement and to withdraw its approval of the Agreement [if] it determine[s] that the Agreement [is] inequitable,” Gorman,
The result in this case represents a departure from our venerable principles concerning the mutual fiduciary duties owed by divorcing spouses because the equities of this situation have not been addressed; neither by the Family Court, nor by this Court. Contrary to our holding in Gor-man, in which we declared unequivocally that the property settlement agreement, “even if reflected in a completed and integrated and signed document, * * * is subject to review and approval by the Family Court,” Gorman,
In this case, Sharon’s contention that the Family Court should have withdrawn its approval of the Agreement based on an inequitable distribution of the marital assets as a result of the unexpected (and undisclosed) increase in the value of Prime Time, has been rejected because the majority determined — based on other terms in the contract itself — that review would be fruitless. This circuitous result appears to limit or disregard “the special oversight duties of the Family Court with respect to property settlement agreements,” oversight duties that are not confined “to the terms to which [the parties] agreed in a formal written document.” Gorman,