IRISH v. IRISH (2019)

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

Dawn E. Irish (wife) appeals from a judgment of the Probate and Family Court, entered on May 3, 2018, dismissing her complaint seeking to divide certain property. She contends that Craig S. Irish (husband) fraudulently concealed substantial marital assets when negotiating their separation agreement, resulting in a manifestly unjust property division. On appeal, she maintains that the Probate and Family Court judge erred by dismissing her complaint because (1) G. L. c. 208, § 34, permits the postdivorce division of undisclosed marital assets at any time; (2) the release of claims in the separation agreement is unenforceable due to alleged fraud; and (3) even if the claim were construed as an action to modify a divorce judgment, the claim should be allowed to proceed under Mass. R. Dom. Rel. P. 60 (b) (6). We affirm.

Background. The parties divorced on January 21, 2010, pursuant to a separation agreement that was incorporated into the judgment of divorce nisi but survived as an independent contract. The separation agreement divided the marital assets disclosed on the parties' respective financial statements, including the husband's disclosed six percent equity share in the common stock of his employer, Nuclear Logistics, Inc. (NLI), a closely held corporation. The parties agreed that the defendant would transfer and convey to an escrow agent twenty-four shares (one-fifth of the six percent) for the benefit of the wife, and that upon the sale of the business, the wife would receive her equity interest in her shares in the business. In June, 2012, NLI was sold for $ 80,000,000, plus $ 20,000,000 in potential earn-out compensation, from which the husband received a payment of $ 21,600,000, based on a twenty percent “phantom” or “ghost” equity share that the wife claims he negotiated in an undisclosed “side deal” in 2009.

The wife filed a diversity action alleging fraud and contract claims against the husband in the United States District Court for the District of Massachusetts on November 15, 2012, where the case remained until the entry of orders of closure and remand to the Probate and Family Court on February 19, 2014.² Rather than pursue the matter in the Probate and Family Court, on May 30, 2014, the wife filed a motion to reopen the case in Federal court. The case was reopened and, after a trial, judgment entered for the wife. On November 14, 2016, the United States Court of Appeals for the First Circuit vacated the resulting judgment for lack of subject matter jurisdiction. Irish v. Irish, 842 F.3d 736, 743-744 (1st Cir. 2016). On December 22, 2016, nearly three years after the judge of the United States District Court directed the wife to seek resolution of her claims in the Probate and Family Court, and nearly seven years after the parties' divorce, the wife filed a complaint in the Probate and Family Court for assignment of property pursuant to G. L. c. 208, § 34. After a hearing on the husband's motion to dismiss and consideration of the pleadings, a judge of the Probate and Family Court ordered dismissal of the case on December 4, 2017. Judgment entered on May 3, 2018, and this appeal ensued.

Discussion. 1. Section 34. On appeal, the wife contends that the husband's stock equity was previously concealed, and that an action under § 34 to divide fraudulently concealed assets is available “at any time” after a divorce. G. L. c. 208, § 34. The meaning of the phrase “any time” was considered in Carpenter v. Carpenter, 73 Mass. App. Ct. 732, 739 (2009), where we determined that principles of finality were applicable in § 34 proceedings. Id. at 739-740 (applying doctrine of claim preclusion in § 34 proceeding to asset previously considered). Moreover, in Sahin v. Sahin, 435 Mass. 396, 399-400, 406-407 (2001), the Supreme Judicial Court held that Mass. R. Civ. P. 60 (b), 365 Mass. 828 (1974), governed the effort to reopen a divorce judgment on the basis of fraud.³ ,⁴ We therefore turn to the requirements of rule 60 (b).

2. Rule 60 (b). The Probate and Family Court judge, viewing the pleadings in the light most favorable to the wife, concluded that there was no exception in rule 60 (b) that would permit the wife's claim for relief. “Rule 60 sets forth a comprehensive framework for obtaining relief from a final judgment or order, balancing the competing needs for finality and flexibility to be certain that justice is done in light of all of the facts.” Sahin, 435 Mass. at 399-400. “A motion for relief under rule 60(b) is directed to the sound discretion of the motion judge, and we review the judge's ruling for abuse of discretion.” Dilanian v. Dilanian, 94 Mass. App. Ct. 505, 515 (2018), quoting Ulin v. Polansky, 83 Mass. App. Ct. 303, 308 (2013). We discern no abuse of discretion here.

The wife filed her complaint in the Probate and Family Court long after the inelastic one-year period for filing motions under rule 60 (b) (1) - (3) had run. “For reasons (1), (2), and (3) [of rule 60 (b)], ․ the motion must be made within one year following the entry of judgment. This one-year time limit cannot be extended.” Chavoor v. Lewis, 383 Mass. 801, 803-804 (1981). Under the rule, therefore, the judge could not vacate the 2010 judgment in 2016 on the basis of evidence the wife discovered in 2012. See Rule 60 (b) (2).

Nor could the judgment be vacated on the basis of alleged fraud or misrepresentation by the husband. See Rule 60 (b) (3). “It is settled that a decree is not open to attack simply because of false testimony or an inadequate presentation of the case at the hearing.” Coughlin v. Coughlin, 312 Mass. 452, 454 (1942). The possibility that a party perjures himself is a “common hazard of the adversary process with which litigants are equipped to deal through discovery and cross-examination.” Sahin, 435 Mass. at 402, quoting Geo. P. Reintjes Co. v. Riley Stoker Corp., 71 F.3d 44, 49 (1st Cir. 1995).

Nor has the wife shown the “compelling or extraordinary circumstances” that would allow relief from judgment under the “extremely meagre scope” of subdivision (b) (6). DeMarco v. DeMarco, 89 Mass. App. Ct. 618, 621 (2016), quoting Winthrop Corp. v. Lowenthal, 29 Mass. App. Ct. 180, 188 (1990). See Sahin, 435 Mass. at 406. Additionally, “[a] party's nondisclosure to an adverse party ․ or to the court ․ of facts pertinent to a controversy before the court, without more, does not amount to ‘fraud on the court’ for purposes of vacating a judgment under rule 60 (b).” Paternity of Cheryl, 434 Mass. 23, 36 (2001).

The record before us provides no support for the wife's claim of “compelling or extraordinary circumstances.” The wife has failed to demonstrate that she could not have discovered the alleged fraud through reasonable diligence in the divorce proceeding. There is no record of having deposed the husband or his employer or of subpoenaing records from him, his advisors, his accountant, or his employer. See Mass. R. Dom. Rel. P. 26; Mass. R. Dom. Rel. P. 30; Sahin, 435 Mass. at 402.⁵ There is simply no support for a conclusion of extraordinary circumstances.

Delay born of litigation decisions also factors into the analysis. The wife bypassed the Probate and Family Court, initiated proceedings in Federal court, and spent years litigating there. When directed by the United States District Court judge to pursue a remand order, the wife filed no pleading in the Probate and Family Court. Instead, she reported to the Federal judge that the clerk declined to accept the remand order and informed her of the need to “file a new action and start over.” Irish, 842 F.3d at 739. The substantial delay in bringing the rule 60 (b) (6) motion is itself grounds for denying the rule 60 (b) (6) motion. See Owens v. Mukendi, 448 Mass. 66, 76 (2006).⁶

Judgment affirmed.

FOOTNOTES

2.   The wife's Federal complaint also named NLI's principal and its successor company as defendants, but both were dismissed from the case before the closure and remand orders.

3.   In Carpenter, we held that the cases had typically allowed “postdivorce complaints for division of an omitted marital asset generally involving circumstances where either there was no division of the marital estate or a particular asset was omitted from the original division.” 73 Mass. App. Ct. at 739. Here the asset was included and the equity was divided; the wife's claim is that she was not fully informed of the extent or value of the husband's equity.

4.   As noted in Sahin, 435 Mass. at 398 n.4, the language of Mass. R. Civ. P. 60 (b) is identical to that of Mass. R. Dom. Rel. P. 60 (b). We will refer simply to rule 60 (b) hereafter.

5.   The judge also dismissed the claim for lack of subject matter jurisdiction on the mistaken belief that she lacked jurisdiction to hear a claim based on the separation agreement, which contained mutual releases. The subject matter of the complaint was properly before the Probate and Family Court. “[T]he proper administration of justice calls for the disposition in the Probate Court of all claims relative to the consequence of a separation agreement ․” Tompkins v. Tompkins, 65 Mass. App. Ct. 487, 491 n.7 (2006). See G. L. c. 215, § 6 (“The probate and family court department shall have original and concurrent jurisdiction with ․ the superior court department of all cases and matters of equity cognizable under the general principles of equity jurisprudence. ․ They shall, after the divorce judgment has become absolute, also have concurrent jurisdiction to grant equitable relief in controversies over property between persons who have been divorced”). The possibility that relief cannot be afforded under applicable statutes, rules, or case law does not deprive the court of jurisdiction to hear the matter.

6.   The wife also contends that the husband cashed over $ 50,000 in “stockpiled” reimbursed expense checks from his employer after the divorce was finalized, and that these checks constituted an undisclosed asset. She offers no authority, however, to support the assertion that these checks constituted an asset, rather than a dollar for dollar reimbursement of expenses. To the extent that the checks could be treated as having an impact on the family's net income, neither the pleadings nor the wife's cursory argument on appeal suggest a prior history of expense reimbursement when the family was an intact unit from which to derive any conclusion whether the reimbursement of expenses acted to reduce personal living expenses. See Casey v. Casey, 79 Mass. App. Ct. 623, 634 (2011). Similarly there is nothing to suggest that the expenses were paid out of joint accounts. In short, we are lacking both a factual basis and a sustained legal argument on the issue sufficient to permit meaningful appellate review. See Selmark Assocs., Inc. v. Ehrlich, 467 Mass. 525, 540 (2014). The wife has not shown error in the dismissal of this aspect of her complaint.