Esposito v. Esposito

Justice GOLDBERG,

dissenting.

Because I disagree with the 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, 883 A.2d 732, 737 (R.I.2005) (quoting Christian v. Christian, 42 N.Y.2d 63, 396 N.Y.S.2d 817, 365 N.E.2d 849, 855 (1977)). In Gorman, the Court adopted this principle as the standard governing “the dealings of spouses who invoke the Family Court’s powers for the purpose of obtaining a divorce.” Id. We recognized that spousal contracts fundamentally are different from ordinary contracts and that the Family Court must monitor such agreements “with special attention and with a concern for the equities of the situation.” Id. The special nature of marital property settlement agreements makes judicial approval of the fairness of those contracts “a sine qua non ” of our Family Court jurisprudence. Id. at 737-38 n. 7.

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, 883 A.2d at 741, the majority concludes that an equitable evaluation of the fairness of the contract is unavailable to this spouse based on the contract itself.

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, 883 A.2d at 738 (emphases added), the majority sua sponte concludes that such a review is unwarranted.

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, 883 A.2d at 739. Because we are not confronted with an ordinary contractual dispute, but with an agreement “drafted in the context of a divorce proceeding,” id. at 739-40, our law mandates that “the validity and enforceability of such a contractual agreement between divorcing spouses must be analyzed differently from the way in which those aspects of an ordinary bilateral contract would be analyzed.” Id. at 740 (emphasis added). Because that did not happen in this case, I dissent.