May v. May

• Decision Date: 24 July 2019
• Docket Number: Opinion No. 5667,Appellate Case No. 2017-000030
• Citation: 833 S.E.2d 78,428 S.C. 131
• Parties: Keith Alan MAY, Respondent, v. Denise Marie MAY, Appellant.
• Court: South Carolina Court of Appeals

428 S.C. 131

833 S.E.2d 78

Keith Alan MAY, Respondent,

v.Denise Marie MAY, Appellant.

Appellate Case No. 2017-000030

Opinion No. 5667

Court of Appeals of South Carolina.

Heard April 17, 2019

Filed July 24, 2019

Harold Alan Oberman, of Oberman & Oberman, of Charleston, for Appellant.

Donald Bruce Clark, of Donald B. Clark, LLC, and Mary Kathryn Schmutz, of Schmutz & Schmutz, both of Charleston, for Respondent.

KONDUROS, J.:

Denise Marie May (Wife) appeals the family court's grant of Keith Alan May's (Husband's) motion to set aside judgment in the parties' divorce action based on mutual mistake pursuant to Rule 60, SCRCP. We affirm.

FACTS/PROCEDURAL BACKGROUND

Husband and Wife were married twice. This action involves the divorce ending their second marriage. As part of the divorce action, Husband and Wife were subject to mandatory mediation. Wife appeared pro se at the mediation, although she had previously been represented by counsel. Husband was represented at the mediation. The parties reached a consensus on all relevant issues at the conclusion of the mediation, and the mediator drafted a settlement agreement (the Agreement) intended to reflect the agreed-upon terms. The relevant part of the Agreement provided:

The Wife shall refinance or assume the debt on the home to remove the Husband's name from the indebtedness to Benchmark Mortgage. The Wife shall refinance or assume the debt on the home to remove the Husband's name from the indebtedness on or before June 7, 2016. The Husband hereby waives and relinquishes any and all interest in the property and the equity therein. The Wife shall be responsible for any and all debts and liabilities associated with this property and shall hold the Husband harmless therefrom.

Should the Wife not refinance or otherwise remove the Husband's name from the Benchmark Mortgage on or before June 7, 2016, the house shall be placed on the market for sale by June 13, 2016.... All net sales proceeds shall be split by the parties on a 50/50 basis.

Husband and Wife initialed each page of the Agreement and signed the final page. Husband and Wife then appeared before the family court, again with counsel and pro se respectively, and affirmed they had read and understood the Agreement and consented to it. Wife refinanced the mortgage on the marital home and removed Husband's name therefrom in the allotted time. However, according to Husband, Husband's attorney, and the mediator, the parties agreed that if Wife was able to refinance the marital home, she would pay Husband $60,000 as his part of the equity in the home. As exposed in the above-quoted portion of the Agreement, the document did not include this provision.

Husband filed a Rule 60(a) and (b), SCRCP motion, arguing the Agreement should be reformed to correct his and Wife's mutual mistake in signing something other than what they agreed to at mediation. Husband's attorney, Husband, and the mediator presented affidavits to that effect. Wife attested in her affidavit "there is no error, clerical or otherwise, in the agreement or the [family court]'s Order. This is the agreement that was drafted [and] signed [,] and it is precisely to what I agreed." Wife also argued evidence regarding anything that occurred during mediation was protected by privilege under Rule 8, SCADR. The family court concluded the Agreement reflected a mistake and should be reformed. The family court indicated it did not rely on the mediator's affidavit in reaching its conclusion. Rather, the family court relied on the parties' affidavits and the internal inconsistency in the Agreement which under Wife's interpretation, would give Husband no equity in the marital home if Wife refinanced but would give him half the equity if the home was sold. Additionally, the court declared each party should pay his or her own attorney's fees. The family court denied Wife's motion for reconsideration, and this appeal followed.

STANDARD OF REVIEW

"Whether to grant or deny a motion under Rule 60(b) [, SCRCP,] lies within the sound discretion of the judge. Our standard of review, therefore, is limited to determining whether there was an abuse of discretion." Raby Constr., L.L.P. v. Orr , 358 S.C. 10, 17-18, 594 S.E.2d 478, 482 (2004) (citation omitted). "An abuse of discretion occurs when the ruling is based on an error of law or a factual conclusion without evidentiary support." Historic Charleston Holdings, LLC v. Mallon , 381 S.C. 417, 434, 673 S.E.2d 448, 457 (2009).

LAW/ANALYSIS

I. Mediation¹

Wife argues the family court could not consider any information related to the mediation other than that contained in the original Agreement presented to the family court because Rule 8, SCADR, prohibits such disclosure. She contends this would have the effect of negating the affidavits of Husband, Husband's attorney, and the mediator in consideration of whether a mutual mistake occurred. We disagree.

In 2018, Rule 8 was revised to specifically address the issue in this case. It now provides for a limited exception to confidentiality.

(c) Limited Exceptions to Confidentiality. There is no confidentiality attached to information that is disclosed during a mediation:

...

(4) offered for the limited purpose in judicial proceedings of establishing, refuting, approving, voiding, or reforming a settlement agreement reached during a mediation; ...^{[2 ]}

Prior to the revision of Rule 8, this court considered the language of the prior version and what type of information it protected from disclosure in later proceedings.³ In Huck v. Oakland Wings, LLC , 422 S.C. 430, 435-36, 813 S.E.2d 288, 290-91 (Ct. App. 2018), cert. denied , S.C. Sup. Ct. Order dated Aug. 3, 2018, the court found:

Avtex argues the trial court erred in concluding the South Carolina rules governing alternative dispute resolution prevented it from compelling disclosure of the terms of [a settlement agreement with other parties]. The Hucks argue the settlement agreement is protected because it was a part of the mediation process.

We find the trial court erred in denying Avtex's motion to disclose settlement. The documents referred to in Rule 8 are designed to protect any documents prepared for use by the mediator and the parties to the mediation itself. Once the parties reach a settlement, documents prepared in conjunction with the settlement and release are not for the purpose of, or in the course of, mediation. Rather, they are documents prepared in connection with the litigation and to bring the litigation to a close. Rule 8 is designed to protect the communications made during the mediation itself and to protect the process. The parties' mediation agreement reinforces the rule and simply incorporates the same language. The request for production of the settlement documents does not disclose confidential information from the mediation (i.e., it does not disclose or discuss information the parties utilized to reach the settlement).

In the instant case, neither Husband's, nor Husband's attorney's, nor the mediator's affidavits disclosed the substance of the negotiations. Rather, they stated what the parties agreed to as a result of the mediation and that the Agreement as prepared did not contain the agreed-upon terms. The statement of what the parties agreed to at the conclusion of the mediation process, even if it was incorrectly memorialized in the written agreement, is not "information they utilized to reach the settlement," nor does it reveal documents or material relied upon during or in the course of the mediation. Therefore, Rule 8 as it existed at the time of Husband's motion did not protect the relevant affidavits. Furthermore, the legislature's revision to Rule 8 last year makes clear it intended to permit the correction of mediated settlement agreements. Accordingly, the admission of the disputed affidavits was not erroneous.

II. Mutual Mistake

Wife contends the family court erred in reforming the settlement agreement on the basis of mutual mistake. Specifically, she maintains Husband did not establish a mistake at all and if he did, the mistake was a unilateral mistake on Husband's part in failing to read the Agreement. We disagree.

"A contract may be reformed on the ground of mistake when the mistake is mutual and consists in the omission or insertion of some material element affecting the subject matter or the terms and stipulations of the contract, inconsistent with those of the parol agreement which necessarily preceded it." George v. Empire Fire & Marine Ins. Co. , 344 S.C. 582, 590, 545 S.E.2d 500, 504 (2001). "A mistake is mutual whe[n] both parties intended a certain thing and by mistake in the drafting did not obtain what was intended. Before equity will reform a contract, the existence of a mutual mistake must be shown by clear and convincing evidence." Id . (citation omitted).

Wife correctly argues Husband was required to establish a mistake by clear and convincing evidence. The family court indicated it based its finding of mistake on the internal inconsistency in the Agreement—the parties agreed to split the marital home's equity if sold, but Husband would receive no equity if Wife refinanced the mortgage. This incongruity suggests a mistake. However, in the absence of the affidavits regarding the $60,000 provision, that inconsistency may not rise to the level of clear and convincing evidence.⁴ Nevertheless, considering all the information presented to the family court, it is clear the parties agreed to the $60,000 equity payment and it was inadvertently omitted from the Agreement. Wife contends she did not admit to any mistake and therefore a finding of mutual mistake is in error. However, Wife's affidavit is equivocal and does not deny she consented to the $60,000 equity provision at the time of the drafting of the Agreement. Regardless, as noted by one court, "the issue of mutual mistake arises only when alleged by one party and denied by the other. Agreement on the matter would eliminate it as an issue to be tried."...