SONDRA HESS v. CHAD HESS

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
SONDRA HESS, )
)
Appellant, )
)
v. ) Case No. 2D18-3155
)
CHAD HESS, )
)
Appellee. )
)
Opinion filed October 11, 2019.
Appeal from the Circuit Court for
Hillsborough County; Chet A. Tharpe,
Judge.
Theodore J. Rechel and Deborah M.
Schmitt of Rechel & Associates, P.A.,
Tampa, for Appellant.
Mark A. Neumaier, Tampa, for Appellee.
SMITH, Judge.
Sondra Hess, the former wife, appeals a final judgment of dissolution of
marriage and the denial of her motion to set aside a marital settlement agreement
based upon the former husband's failure to disclose income in the form of disability
benefits on his financial affidavit. The trial court erred in commenting, prior to receiving
any evidence, that there was no fraud or misrepresentation and later relying upon these
same comments as findings supporting its oral ruling denying the motion. Therefore,
we reverse and remand for a new evidentiary hearing on the merits of the former wife's
motion and otherwise affirm the final judgment of dissolution of marriage.
I
The parties married in September 1998 but by 2013 had begun living
apart in different states. After years of separation, on April 27, 2017, the former
husband filed a petition for dissolution of marriage. The facts following the filing of the
petition and leading up to mediation were uncontentious and uneventful. The former
wife filed her answer to the petition. Early mediation was scheduled soon after the trial
court issued its standard order referring the parties to mediation. Both parties were
represented by counsel throughout the dissolution proceedings.
In advance of the mediation, the parties exchanged mandatory financial
disclosures under Florida Family Law Rule of Procedure 12.285, which included the
filing of their respective financial affidavits in conformity with Florida Family Law Rules
of Procedure Form 12.902(c). Neither party conducted any discovery prior to the
mediation.1 On September 29, 2017, the parties reached a resolution at the mediation
and entered into a marital settlement agreement (MSA).
The MSA addressed the parties' financial disclosures and provided the
following representation in paragraph twenty-five:
1The record is silent as to whether the parties entered into a stipulation to
stay discovery before the mediation.
-2-
Each party acknowledges and agrees that he or she does
not desire any additional discovery or valuation of the
assets, liabilities, income and financial condition of the other
party, and that each has made a full disclosure to the other
of his or her known assets and liabilities, income and
expenses, and current financial condition.2
The former husband's financial affidavit showed he was retired from the military,
received a pension, and was then employed full-time as a contractor. As far as
"contingent assets and liabilities," the former husband left this section blank on the
Form.3 The former husband disclosed $0 of gross income in disability benefits.
Pursuant to the terms of the MSA, the parties agreed the former wife
would receive monthly durational alimony. As far as equitable distribution, the parties
agreed the former wife would receive, among other effects, monthly payments equal to
34.43% of the former husband's military pension, which was estimated to be
approximately $1600 per month based upon a chart provided by the former husband's
counsel at the mediation. The former husband's first payment under the MSA was due
in early October 2017. A final uncontested dissolution hearing for the purpose of the
court adopting the MSA was then scheduled for December 18, 2017.
2The court finds no merit in the former husband's argument that paragraph
twenty-five waived the former wife's right to challenge the MSA because the former
husband failed to fully disclose his financial condition. See, e.g., Marjon v. Lane, 995
So. 2d 1086, 1087-88 (Fla. 2d DCA 2008) (holding party was entitled to evidentiary
hearing on the merits of motion to set aside marital settlement agreement based upon
fraud notwithstanding provision in agreement stating "no duress, undue influence, fraud
or overreaching has been utilized by any party").
3Section
III.D. of Form 12.902(c) provides: "If you have any POSSIBLE
assets (income potential, accrued vacation or sick leave, bonus, inheritance, etc.) or
POSSIBLE liabilities (possible lawsuits, future unpaid taxes, contingent tax liabilities,
debts assumed by another), you must list them here." Fla. Fam. L. R. P. Form
12.902(c).
-3-
Before the final hearing, the former husband made the first equitable
distribution payment to the former wife on or about October 2, 2017, which was just
days after the mediation. The amount deposited was approximately $400 less than
what the former wife expected to receive. The former wife's counsel contacted the
former husband's counsel and inquired about the discrepancy.4 It was during this
exchange the former wife learned for the first time the former husband was determined
to be seventy percent disabled and awarded disability benefits by the U.S. Veterans
Administration Department (VA).
The former wife moved to set aside the MSA under rule 12.540(b) and
sought a continuance of the final hearing based upon theories of "newly discovered
evidence" and "fraud," arguing the former husband failed to disclose his disability status
4Former husband's counsel wrote in an email to former wife's counsel:
I have, however, now conferred with my client and he reports
that he has fully complied with the MSA and did, in fact, send
your client 34.43% of his net pension payment which
amounts to the $1,199.94 he sent. . . . Once your client
begins getting her check directly from DFAS, they will not
withhold taxes from her share, as I understand it, and she
will get her full 34.43% of his non-disability pension
thereafter, though even that won't be what she expects
inasmuch as my client has been determined to be
approximately 70% disabled now (since our mediation) so
your client cannot get any share of the disability portion and
will get her 34.43% share from the remaining 30% of his
pension which is not disability pay. . . .
(Emphasis added.) After the filing of the motion, the former wife sought discovery of the
VA disability benefits records from the former husband, who objected. The former wife
later obtained these records from the VA, which revealed two determination letters from
the VA concerning his disability status and benefit award, as well as payment of his first
disability benefit also dated days before the mediation.
-4-
and VA disability benefits. The trial court granted the former wife's motion to continue
the final hearing allowing a limited period to conduct discovery on the newly discovered
VA disability benefits. At the evidentiary hearing on the motion to set aside the MSA,
the former husband testified the former wife was aware he was filing an application for
VA disability benefits5 but conceded the former wife could not have known of his
seventy percent disabled status and the VA disability benefit award and payment
because these facts were also new to him. He claimed he only learned of the award
and payment after the former wife questioned the first MSA payment.
At the evidentiary hearing, during opening statements and before any
evidence was introduced, the trial court commented that he was not finding any fraud or
misrepresentation by the former husband. Similar comments were made by the trial
court during the hearing. After the close of the evidence, the trial court made an oral
ruling concluding there was no fraud or misrepresentation by the former husband.
Instead of pronouncing findings in support, the trial court stated it was relying upon its
earlier findings of no fraud or misrepresentation—the comments made by the trial court
during the opening statements.
II
The former wife argues the former husband failed to disclose his "income
potential" by omitting the VA disability benefit income from his financial affidavit. The
5The former wife denied knowing the former husband was filing an
application for VA disability benefits. We do not reach the issue whether the former wife
knew the former husband was filing an application for VA disability benefits, as this
issue will need to be addressed by the trial court upon remand following an evidentiary
hearing on the merits of the former wife's motion.
-5-
facts here establish that the former husband applied for VA disability benefits, listing his
former wife as a dependent, following the filing of his petition for dissolution. His
financial affidavit was filed nine days later and did not include any mention of his
application for VA disability benefits. The former husband did not amend his financial
affidavit after he learned of the VA disability benefit award.
In response, the former husband argues the VA disability benefits are
irrelevant to the only issue the parties had pending at the trial level, namely, equitable
distribution. He contends because disability payments are exempt from inclusion as
marital property, the discovery of his disability award should not matter, even if he
intentionally failed to disclose same to former wife. This argument is disingenuous.
Pursuant to rule 12.285(f) (Duty to Supplement Disclosure; Amended
Financial Affidavit):
(1) Parties have a continuing duty to supplement
documents described in this rule, including financial
affidavits, whenever a material change in their financial
status occurs.
(2) If an amended financial affidavit or an amendment to a
financial affidavit is filed, the amending party must also serve
any subsequently discovered or acquired documents
supporting the amendments to the financial affidavit.
(Emphasis added.) Under this rule, the former husband had a continuing duty to
supplement his financial affidavit to include the VA disability benefit income, as such
constitutes a material change in his financial status.
The filing of a financial affidavit pursuant to rule 12.285 in dissolution
proceedings is mandatory, and the rule so states in its title—"Mandatory Disclosure."
See Fla. Fam. L. R. P. 12.285(d)(1). The importance of a financial affidavit in
-6-
dissolution proceedings was best discussed in Daniel v. Daniel, 922 So. 2d 1041, 1045
(Fla. 4th DCA 2006). In Daniel, the husband refused to file a financial affidavit in a non-
simplified dissolution proceeding asserting his right to privacy under article I, section 23
of the Florida Constitution. In holding the husband's right of privacy was not implicated,
the court reasoned:
A financial affidavit is central to the job of a court trying to do
justice in a divorce case. The property divisions made and
obligations imposed by a final decree turn on the financial
condition of the parties. A court cannot do the right thing
without sufficient information about the parties' finances.
It is not unusual for a settled family case to reappear
before the court on the claim that the settlement was
procured by fraud. The special treatment reserved for post-
dissolution fraud claims demonstrates the importance of the
financial affidavit to the family law process. . . . While
evidence of a person's financial condition may be drawn
from a multitude of documents, a financial affidavit is a
party's formal, sworn position that reduces finances to a
manageable chunk of information. The affidavit becomes
"ground zero" for any request for post-judgment relief that
comes before the court.
A financial affidavit is filed for the benefit of the court
and the opposing party in the dissolution. Decisions on
whether and how to settle a case depend on full, honest
financial disclosure. The financial affidavit is at the center of
the system established by the Family Law Rules to resolve
the issues that arise in family cases.
Id. at 1045.
The former husband correctly argues his VA disability benefits are not a
marital asset subject to equitable distribution. However, while a spouse would not be
entitled to a share of the VA disability benefits, these benefits are nonetheless a source
of income appropriate for consideration in a dissolution proceeding. See Naples v.
Naples, 967 So. 2d 944, 943, 947 (Fla. 2d DCA 2007) (determining the Uniformed
-7-
Services Former Spouses' Protection Act did not preclude husband from paying alimony
merely because he received military disability benefits which were exempt from
equitable distribution); see also Smith v. Smith, 737 So. 2d 641, 642 (Fla. 1st DCA
1999) ("In a dissolution of marriage proceeding, each party's sources of income and
ability to pay are factors to be considered in determining whether alimony, child support,
or attorney's fees are appropriate, and if so, in what amounts."); Day v. Day, 574 So. 2d
324, 324 (Fla. 4th DCA 1991) (holding court may consider disability benefits when
considering husband's ability to comply with purge provision of contempt order).
III
We next address the former wife's contention she was deprived of an
evidentiary hearing on the merits of her fraud claims when the trial court announced
during opening statements, prior to presentation of any testimony or other evidence, it
would not be making a finding of fraud or misrepresentation. We agree.
Preliminarily, the former wife filed an amended motion prior to the
evidentiary hearing. The former husband argues the amended motion did not allege the
fraud theory and, thus, the former wife should be precluded from challenging the MSA
based upon fraud. While we agree the fraud theory was absent from the amended
motion, the case tried before the trial court at the evidentiary hearing included theories
of both newly discovered evidence and fraud. There being no objection or no
complained error by the trial court to this evidence, the fraud theory was therefore tried
by implied consent. See Fla. R. Civ. P. 1.190(b); Hemraj v. Hemraj, 620 So. 2d 1300,
1301 (Fla. 4th DCA 1993) (holding unpleaded alimony issue was tried by implied
-8-
consent where wife included issue in pretrial statement and argued same in opening
and closing arguments without any objection by the husband); Smith v. Landy, 402 So.
2d 441, 441 (Fla. 3d DCA 1981) (holding estoppel case tried with implicit consent of the
parties where issue was supported by the evidence and formed the basis of the
judgment, notwithstanding mortgagor’s failure to plead estoppel). As further support of
consent here, the trial court at the conclusion of the hearing made findings on the
presented fraud theory.
Florida law permits a party to challenge a marital settlement agreement
based upon certain limited circumstances. See Casto v. Casto, 508 So. 2d 330, 333
(Fla. 1987) (discussing grounds upon which a party may set aside or modify a
postnuptial agreement based upon fraud, where the challenging spouse establishes that
the agreement "makes an unfair or unreasonable provision for that spouse, given the
circumstances of the parties"); accord Macar v. Macar, 803 So. 2d 707, 712-13 (Fla.
2001) (holding the Casto line of cases have no application where the parties are
involved in a contested divorce and have had the opportunity to full discovery); Crupi v.
Crupi, 784 So. 2d 611, 614 (Fla. 5th DCA 2001) (holding mediated settlement
agreement could not be set aside based upon fraud where wife was aware of the
inaccuracies in the husband's affidavit). A party seeking relief from a marital settlement
agreement based upon fraud is entitled to be heard on the merits of his or her motion.
Marjon v. Lane, 995 So. 2d 1086, 1087-88 (remanding case for an evidentiary hearing);
see also Hinson v. Hinson, 985 So. 2d 1120, 1121 (Fla. 3d DCA 2008) ("Where a
motion for relief from judgment alleges 'colorable entitlement to relief,' it should not be
summarily dismissed without an evidentiary hearing."). The former wife's motion
-9-
addresses these issues. Because we are remanding this case for a new evidentiary
hearing on the merits of the former wife's motion, we make no comment as to the merits
of the arguments raised.
Florida courts have consistently found error where a trial court prejudges a
case. See Van Hoven v. Burk, 71 So. 2d 158, 158 (Fla. 1954) (holding trial court erred
by directing a verdict for one party or another or ruling on a claim after an opening
statement but before presentation of the evidence or testimony); Kates v. Seidenman,
881 So. 2d 56, 58 (Fla. 4th DCA 2004) ("While a trial judge may form mental
impressions and opinions during the course of hearing evidence in a case, the judge is
not permitted to pre-judge the case."); Perez v. State, 771 So. 2d 1285, 1285 (Fla. 3d
DCA 2000) (finding statements made by trial court judge provided a "well founded fear"
the defendant would not receive an unbiased hearing); Gonzalez v. Goldstein, 633 So.
2d 1183, 1184 (Fla. 4th DCA 1994) (determining trial judge's announced intention
before a scheduled hearing to make a specific ruling, regardless of any evidence or
argument to the contrary, is indicative of judicial bias and prejudice); Wilfork v.
Associated Grocers of Fla., Inc., 343 So. 2d 84, 85-86 (Fla. 3d DCA 1977) (finding trial
court erred in directing verdict against plaintiff after her opening statement without
allowing presentation of case); see also Trans Health Mgmt. Inc. v. Nunziata, 159 So.
3d 850, 862 (Fla. 2d DCA 2014) ("Trial judges must be fair, impartial, and disinterested
participants in the proceedings."); Lee v. State, 264 So. 3d 225, 226 (Fla. 1st DCA
2018) (noting judges should not only be impartial, but should also leave the impression
of impartiality upon all those who appear in court). In this case, the trial court's
premature findings before receiving any evidence were tantamount to a judgment on the
- 10 -
pleadings and summary denial of the former wife's claims. The former wife was
deprived her entitled evidentiary hearing and, most importantly, due process and her
day in court.
IV
The former wife also argues the trial court erred in finding the VA disability
benefits were not "newly discovered evidence" under rule 12.540(b). Rule 12.540(b)
allows a trial court to relieve a party from a final judgment on grounds of newly
discovered evidence, which by due diligence could not have been discovered in time to
move for a new trial or rehearing. The rule is derived from Florida Rule of Civil
Procedure 1.540 and the same standards apply in family law proceedings, except there
is no time limit in rule 12.540 for motions based on fraudulent financial affidavits in
marital or paternity cases. See Anderson v. Anderson, 845 So. 2d 870, 870-71 n.1 (Fla.
2003). The rule contemplates the motion being filed after a final judgment giving a party
relief from judgment where a party was denied the benefit of certain evidence despite
the party's due diligence. See Fla. Dep't of Revenue v. Edden, 761 So. 2d 436, 437-38
(Fla. 3d DCA 2000) (involving father who sought to set aside paternity judgment based
upon newly discovered evidence the child's mother had sexual relations with another
person during the same period he had sexual relations with the mother); Wiley v. Wiley,
546 So. 2d 1149, 1150 (Fla. 4th DCA 1989) (discussing former husband who filed timely
motion for relief from judgment of contempt for failure to pay child support based on
alleged newly discovered evidence in the hands of the former husband's attorney).
Consequently, the rule has no application here where the trial court afforded the former
- 11 -
wife a continuance of the final hearing so that she could conduct additional discovery on
the newly discovered VA disability benefit evidence prior to the final hearing and in
support of her motion to set aside the MSA.
Notwithstanding, because we find the facts tried before the trial court
based upon the newly discovered evidence grounds are inextricably intertwined with the
fraud and misrepresentation claims, we reverse the trial court's decision on the newly
discovered evidence for the same reasoning above that the former wife was deprived a
hearing on the merits of her motion. Accordingly, we affirm the final judgment insofar as
it dissolves the parties' marriage. We reverse the remainder of the final judgment and
remand this case for a new evidentiary hearing on the issues of fraud and
misrepresentation. On remand the trial court may grant the former wife leave to amend
the motion to set aside the MSA in order to limit the claims to fraud and
misrepresentation.
Reversed in part, affirmed in part, and remanded with instructions.
CASANUEVA and VILLANTI, JJ., Concur.
- 12 -