Summary
The North Dakota Supreme Court reversed and remanded an order granting Kathleen Varty relief under North Dakota Rule of Civil Procedure 60(b)(6) and awarding her one-half of proceeds from phantom stock acquired during the marriage. The court held that the district court failed to explain how the marital settlement agreement and resulting judgment were unconscionable and did not make required findings regarding procedural and substantive unconscionability.
Topics
Practice areas
Questions Presented
- Whether the district court abused its discretion under North Dakota Rule of Civil Procedure 60(b)(6) by finding it unconscionable for Thomas to retain the benefits of phantom-stock rights accrued during the marriage without analyzing the marital settlement agreement and judgment as a whole.
- Whether the district court was required to make findings regarding both procedural and substantive unconscionability before granting relief from the divorce judgment.
- Whether the district court abused its discretion by considering an untimely reply brief and granting an untimely request for oral argument.
Holdings
- The district court abused its discretion by granting Rule 60(b)(6) relief based only on its conclusion that it would be unconscionable for Thomas to retain the stock benefits, without determining whether the marital settlement agreement and resulting judgment as a whole were so one-sided and created such hardship that relief was required.
- Before finding a marital settlement agreement or resulting judgment unconscionable, the district court must make findings addressing both procedural and substantive unconscionability and must evaluate the relevant circumstances in totality.
- North Dakota law provides separate remedies under N.D.C.C. § 14-05-24(3) and Rule 60 for a former spouse's failure to disclose marital assets or debts during a divorce.
Key quotations
“Rule 60(b) attempts to strike a proper balance between the conflicting principles that litigation must be brought to an end and that justice should be done, and, accordingly, the rule should be invoked only when extraordinary circumstances are present.” (¶ 9)
“To determine a settlement agreement is unconscionable there must be some showing of both procedural and substantive unconscionability and courts must balance the various factors, viewed in totality, to make its determination.” (¶ 12)
“The district court did not explain the terms of the marital termination agreement and how not receiving 50% of the stock made the stipulation and resulting judgment as a whole so one-sided and created such hardship that it is unconscionable.” (¶ 14)
Factual background
Kathleen and Thomas Varty divorced in 2011. During the marriage, Thomas obtained rights in a phantom-stock plan from a former employer, and he received $72,400 in sale proceeds in February 2016. Kathleen claimed she was entitled to one-half of the proceeds because the stock rights accrued during the marriage, while Thomas argued the stock had no value at the time of divorce and did not vest until after the divorce.
Procedural history
The parties divorced in 2011. After Thomas moved to terminate spousal support in 2017, Kathleen moved under Rule 60(b) in 2018, asserting that Thomas had failed to disclose phantom-stock rights accrued during the marriage. The district court granted relief and awarded Kathleen $23,714.62. The North Dakota Supreme Court reversed and remanded because the district court failed to analyze whether the marital settlement agreement and resulting judgment were unconscionable as a whole and failed to make findings on procedural and substantive unconscionability.
Remand instructions
The district court must conduct further proceedings consistent with the opinion, including analyzing the marital termination agreement and resulting judgment as a whole and making findings regarding procedural and substantive unconscionability.