Summary
The North Dakota Supreme Court held that a former spouse may pursue an independent action in equity, or other authorized postjudgment procedures, to obtain relief from a divorce judgment based on fraudulent concealment of marital property. The court concluded that punitive damages are not available in such proceedings, but equitable relief may include redistribution of property using the Ruff-Fischer guidelines and consideration of economic fault or misconduct. The judgment was reversed and remanded because the district court's decision did not show whether it considered those factors.
Topics
Practice areas
Questions Presented
- Whether punitive damages may be awarded in an independent action in equity seeking relief from a prior divorce judgment based on fraudulent concealment of marital property.
- Whether the district court abused its discretion by denying Catherine Walstad's motion to amend her complaint to add a punitive-damages claim.
- Whether a court exercising equitable authority to grant relief from a prior divorce judgment may apply the Ruff-Fischer property-distribution guidelines and consider economic fault or misconduct.
- Whether remand was required because the district court's decision did not show whether it considered economic fault or misconduct in redistributing the concealed property.
Holdings
- An independent action in equity remains available to seek an injunction against enforcement of, or other equitable relief from, a prior divorce judgment when relief is unavailable under the time limitations governing motions under N.D.R.Civ.P. 60.
- Punitive damages are not authorized in an independent action in equity seeking to enjoin enforcement of or otherwise obtain relief from a blatantly unjust divorce judgment.
- A court exercising equitable authority in an independent action to grant relief from a prior divorce judgment may apply the Ruff-Fischer property-distribution guidelines, including consideration of economic fault or misconduct.
Key quotations
“This Court defined an independent action in equity as “a general recognition of the equitable powers of a court to entertain an independent action to enjoin the enforcement of, or otherwise procure relief from, a judgment on whatever basis chancery would afford relief.”” (821 N.W.2d at 773)
“We conclude punitive damages are not authorized in such an action.” (821 N.W.2d at 775)
“We conclude that authority includes using the established Ruff-Fischer guidelines for property distribution, including consideration of economic fault and misconduct in distributing marital property.” (821 N.W.2d at 776)
Factual background
Catherine and Richard Walstad divorced in 1994 after executing a stipulated property settlement agreement representing that both had fully disclosed their assets and liabilities. Before the divorce judgment, Richard paid two business employees more than $100,000 in bonuses with an understanding that the money would be returned to him after the divorce, allegedly reducing the value of the business included in the marital estate. Catherine later learned of the payments and sued for relief from the divorce judgment, while also seeking to amend her complaint to request punitive damages.
Procedural history
The parties entered a stipulated property settlement agreement in 1994 that was incorporated into their divorce judgment. In 2009, Catherine brought an independent action in equity alleging Richard had concealed marital assets before entry of the judgment. The district court denied her motion to amend to add punitive damages, conducted a bench trial, awarded her actual damages, prejudgment interest, and costs, and entered judgment. The North Dakota Supreme Court reversed and remanded because the district court's decision did not establish whether it considered economic fault or misconduct in redistributing the concealed property.
Remand instructions
The district court must reconsider the redistribution of the concealed property under the correct law governing an independent action in equity, including the Ruff-Fischer guidelines and consideration of economic fault or misconduct.