Hess v. Hess

• Decision Date: 11 October 2019
• Docket Number: Case No. 2D18-3155
• Citation: 290 So.3d 512
• Parties: Sondra HESS, Appellant, v. Chad HESS, Appellee.
• Court: Florida District Court of Appeals

290 So.3d 512

Sondra HESS, Appellant,

v.Chad HESS, Appellee.

Case No. 2D18-3155

District Court of Appeal of Florida, Second District.

Opinion filed October 11, 2019

Theodore J. Rechel and Deborah M. Schmitt of Rechel & Associates, P.A., Tampa, for Appellant.

Mark A. Neumaier, Tampa, for Appellee.

SMITH, Judge.

Sondra Hess, the former wife, appeals a final judgment of dissolution of marriage and the denial of her motion to set aside a marital settlement agreement based upon the former husband's failure to disclose income in the form of disability benefits on his financial affidavit. The trial court erred in commenting, prior to receiving any evidence, that there was no fraud or misrepresentation and later relying upon these same comments as findings supporting its oral ruling denying the motion. Therefore, we reverse and remand for a new evidentiary hearing on the merits of the former wife's motion and otherwise affirm the final judgment of dissolution of marriage.

I

The parties married in September 1998 but by 2013 had begun living apart in different states. After years of separation, on April 27, 2017, the former husband filed a petition for dissolution of marriage. The facts following the filing of the petition and leading up to mediation were uncontentious and uneventful. The former wife filed her answer to the petition. Early mediation was scheduled soon after the trial court issued its standard order referring the parties to mediation. Both parties were represented by counsel throughout the dissolution proceedings.

In advance of the mediation, the parties exchanged mandatory financial disclosures under Florida Family Law Rule of Procedure 12.285, which included the filing of their respective financial affidavits in conformity with Florida Family Law Rules of Procedure Form 12.902(c). Neither party conducted any discovery prior to the mediation.¹ On September 29, 2017, the parties reached a resolution at the mediation and entered into a marital settlement agreement (MSA).

The MSA addressed the parties' financial disclosures and provided the following representation in paragraph twenty-five:

Each party acknowledges and agrees that he or she does not desire any additional discovery or valuation of the assets, liabilities, income and financial condition of the other party, and that each has made a full disclosure to the other of his or her known assets and liabilities, income and expenses, and current financial condition.²

The former husband's financial affidavit showed he was retired from the military, received a pension, and was then employed full-time as a contractor. As far as "contingent assets and liabilities," the former husband left this section blank on the Form.³ The former husband disclosed $0 of gross income in disability benefits.

Pursuant to the terms of the MSA, the parties agreed the former wife would receive monthly durational alimony. As far as equitable distribution, the parties agreed the former wife would receive, among other effects, monthly payments equal to 34.43% of the former husband's military pension, which was estimated to be approximately $1600 per month based upon a chart provided by the former husband's counsel at the mediation. The former husband's first payment under the MSA was due in early October 2017. A final uncontested dissolution hearing for the purpose of the court adopting the MSA was then scheduled for December 18, 2017.

Before the final hearing, the former husband made the first equitable distribution payment to the former wife on or about October 2, 2017, which was just days after the mediation. The amount deposited was approximately $400 less than what the former wife expected to receive. The former wife's counsel contacted the former husband's counsel and inquired about the discrepancy.⁴ It was during this exchange the former wife learned for the first time the former husband was determined to be seventy percent disabled and awarded disability benefits by the U.S. Veterans Administration Department (VA).

The former wife moved to set aside the MSA under rule 12.540(b) and sought a continuance of the final hearing based upon theories of "newly discovered evidence" and "fraud," arguing the former husband failed to disclose his disability status and VA disability benefits. The trial court granted the former wife's motion to continue the final hearing allowing a limited period to conduct discovery on the newly discovered VA disability benefits. At the evidentiary hearing on the motion to set aside the MSA, the former husband testified the former wife was aware he was filing an application for VA disability benefits⁵ but conceded the former wife could not have known of his seventy percent disabled status and the VA disability benefit award and payment because these facts were also new to him. He claimed he only learned of the award and payment after the former wife questioned the first MSA payment.

At the evidentiary hearing, during opening statements and before any evidence was introduced, the trial court commented that he was not finding any fraud or misrepresentation by the former husband. Similar comments were made by the trial court during the hearing. After the close of the evidence, the trial court made an oral ruling concluding there was no fraud or misrepresentation by the former husband. Instead of pronouncing findings in support, the trial court stated it was relying upon its earlier findings of no fraud or misrepresentation—the comments made by the trial court during the opening statements.

II

The former wife argues the former husband failed to disclose his "income potential" by omitting the VA disability benefit income from his financial affidavit. The facts here establish that the former husband applied for VA disability benefits, listing his former wife as a dependent, following the filing of his petition for dissolution. His financial affidavit was filed nine days later and did not include any mention of his application for VA disability benefits. The former husband did not amend his financial affidavit after he learned of the VA disability benefit award.

In response, the former husband argues the VA disability benefits are irrelevant to the only issue the parties had pending at the trial level, namely, equitable distribution. He contends because disability payments are exempt from inclusion as marital property, the discovery of his disability award should not matter, even if he intentionally failed to disclose same to former wife. This argument is disingenuous.

Pursuant to rule 12.285(f) (Duty to Supplement Disclosure; Amended Financial Affidavit):

(1) Parties have a continuing duty to supplement documents described in this rule, including financial affidavits, whenever a material change in their financial status occurs.

(2) If an amended financial affidavit or an amendment to a financial affidavit is filed, the amending party must also serve any subsequently discovered or acquired documents supporting the amendments to the financial affidavit.

(Emphasis added.) Under this rule, the former husband had a continuing duty to supplement his financial affidavit to include the VA disability benefit income, as such constitutes a material change in his financial status.

The filing of a financial affidavit pursuant to rule 12.285 in dissolution proceedings is mandatory, and the rule so states in its title—"Mandatory Disclosure." See Fla. Fam. L. R. P. 12.285(d)(1). The importance of a financial affidavit in dissolution proceedings was best discussed in Daniel v. Daniel, 922 So. 2d 1041, 1045 (Fla. 4th DCA 2006). In Daniel, the husband refused to file a financial affidavit in a non-simplified dissolution proceeding asserting his right to privacy under article I, section 23 of the Florida Constitution. In holding the husband's right of privacy was not implicated, the court reasoned:

A financial affidavit is central to the job of a court trying to do justice in a divorce case. The property divisions made and obligations imposed by a final decree turn on the financial condition of the parties. A court cannot do the right thing without sufficient information about the parties' finances.

It is not unusual for a settled family case to reappear before the court on the claim that the settlement was procured by fraud. The special treatment reserved for post-dissolution fraud claims demonstrates the importance of the financial affidavit to the family law process.... While evidence of a person's financial condition may be drawn from a multitude of documents, a financial affidavit is a party's formal, sworn position that reduces finances to a manageable chunk of information. The affidavit becomes "ground zero" for any request for post-judgment relief that comes before the court.

A financial affidavit is filed for the benefit of the court and the opposing party in the dissolution. Decisions on whether and how to settle a case depend on full, honest financial disclosure. The financial affidavit is at the center of the system established by the Family Law Rules to resolve the issues that arise in family cases.

Id. at 1045.

The former husband correctly argues his VA disability benefits are not a marital asset subject to equitable distribution. However, while a spouse would not be entitled to a share of the VA disability benefits, these benefits are nonetheless a source of income appropriate for consideration in a dissolution proceeding. See Naples v. Naples, 967 So. 2d 944, 947 (Fla. 2d DCA 2007) (determining the Uniformed Services Former Spouses' Protection Act did not preclude husband from paying alimony merely because he received military disability benefits which were exempt from equitable distribution); see also Smith v. Smith, 737 So. 2d 641, 642 (Fla. 1st DCA 1999) ("In a dissolution of marriage proceeding, each party's sources of income and ability to pay are factors to be considered in determining whether alimony, child support, or attorney's fees are appropriate, and if so, in what...