Divorce • Property Settlement Agreement • Disclosure Recital

Bennett v. Bennett, PICS Case No. 17-1287 (Pa. Super. Aug. 4, 2017) Bowes, J. (19 pages).

The trial court erred in holding that wife could negate a recital affirming her knowledge of the parties' marital estate based on her subsequent assertion that she did not know the full extent of the martial assets when she executed a property settlement agreement. The court reversed a trial court order imposing a constructive trust.

The parties were married in 1972 and divorced 23 years later. In anticipation of the divorce, the parties executed a property settlement agreement. This agreement covered the distribution of marital assets and, inter alia, husband's assent to paying marital liabilities, alimony, child support and college expenses. The agreement was incorporated, but not merged, into a divorce decree of July 12, 1995. In late 2014, wife petitioned to impose a constructive trust pursuant to 23 Pa. C. S. § 3505(d). She alleged that husband had failed to disclose a pension benefit earned during the marriage and entered pay status in October 2012. The trial court granted wife's petition for a constructive trust. Husband filed this appeal, arguing that the trial court erred in granting the constructive trust without establishing that he failed to disclose an asset. In Pennsylvania, the law of contracts governs a property agreement if the agreement is not merged into a divorce decree, the appellate court observed. Absent fraud, misrepresentation or duress, spouses should be bound by the terms of their agreements. Pursuant to state precedent, an agreement is valid even if it does not contain financial disclosure itself and can be upheld if it merely recites that such disclosure has been made, the court explained. The trial court found that wife should not be bound by the disclosure recital in the parties' agreement because she was not actually familiar with all the marital assets that she certified knowing about. This rationale conflicted with the holding in Lugg v. Lugg, 64 A. 3d 1109 (Pa. Super. 2013), that a party can waive economic disclosure even if they do not know the full extent of that waiver. The court reasoned that wife could not negate her recital affirming her knowledge of the marital estate based on a subsequent assertion that she did not know the full extent of the assets when she executed the certification. The court thus found that the disclosure recital in the parties' settlement agreement applied. Given this, wife could not overcome the presumption of full disclosure absent clear and convicting evidence of fraud, duress or misrepresentation. The record did not support the trial court's finding that husband engaged in fraud or misrepresentation. In fact, the record indicated that the parties did not discuss the pension before executing the property settlement agreement, and wife did not assert that husband mislead her. As such, the trial court erred in finding that wife was not bound by the disclosure recital and was, therefore, entitled to a constructive trust.

Divorce • Property Settlement Agreement • Disclosure Recital

Bennett v. Bennett, PICS Case No. 17-1287 (Pa. Super. Aug. 4, 2017) Bowes, J. (19 pages).