Olofson v. Olofson

• Decision Date: 22 July 2021
• Docket Number: No. SC 98043,SC 98043
• Citation: 625 S.W.3d 419
• Court: Missouri Supreme Court
• Parties: Jeanne H. OLOFSON, Appellant, v. Scott W. OLOFSON, in his Capacity as Personal Representative of the Estate of Tom W. Olofson, Respondent.

625 S.W.3d 419

Jeanne H. OLOFSON, Appellant,

v.Scott W. OLOFSON, in his Capacity as Personal Representative of the Estate of Tom W. Olofson, Respondent.

No. SC 98043

Supreme Court of Missouri, en banc.

Opinion issued July 22, 2021

Jeanne Olofson was represented by Jonathan Sternberg of Kansas City, (816) 292-7020.

Scott Olofson was represented by William C. Odle, R. Pete Smith, and Tiffany A. McFarland of McDowell, Rice, Smith & Buchanan, P.C. in Kansas City, (816) 753-5400.

Patricia Breckenridge, Judge

Jeanne Olofson (Wife) appeals from the judgment on the pleadings dismissing her Rule 74.06(b) motion to set aside, for fraud, the judgment of dissolution of her marriage to Tom Olofson (Husband) or, alternatively, the property division portion of the judgment. After Wife filed her Rule 74.06(b) motion, but before the circuit court ruled on the motion, Husband died, and the personal representative of his estate was substituted as the respondent. The personal representative filed a motion for judgment on the pleadings, which the circuit court sustained because it found Husband's death abated and rendered moot Wife's Rule 74.06(b) motion. The circuit court also held Wife's Rule 74.06(b) motion is moot because the relief sought in the motion cannot be granted in that the property alleged to be the subject of the fraud has been sold and there is no marital estate to reallocate.

The circuit court erred in finding Husband's death abated the proceedings on Wife's Rule 74.06(b) motion. Wife's Rule 74.06(b) motion seeks to vacate the dissolution judgment for fraud related to the property division, an issue not personal to Husband, so the doctrine of abatement is not applicable. The circuit court also erred in finding the motion was moot because meaningful relief is available under Rule 74.06(b). If fraud is proven, the relief that would be "upon such terms as are just" is the vacating of only the portion of the dissolution judgment dividing the marital property while leaving the dissolution of marriage intact. Neither Husband's death nor the sale of marital property after the dissolution judgment preclude the circuit court from readjudicating the division of the marital property pursuant to section 452.330.¹ The circuit court's judgment is vacated, and the cause is remanded.

Factual and Procedural Background²

Wife and Husband married in 1960 and had two children. In 2014, Wife filed for a dissolution of the marriage. The only contested issue in the dissolution proceedings was the property division. The single largest marital asset was the parties’ interest in Epiq Systems, Inc., a software company purchased during the marriage using marital assets and debt.³ Husband was Epiq's chairman of the board of directors, CEO, and an ex officio member of Epiq's strategic alternatives committee. The strategic alternatives committee was formed in September 2014 "to explore a full range of strategic and financial alternatives, including among other things, acquisitions, divestitures, or a going-private or recapitalization transaction, in order to determine a course of action that is in the best interest of all shareholders."

After months of discovery and negotiation, Husband and Wife agreed to value the Epiq stock at $13.50 per share and apportion 2,159,416 shares to Husband (the equivalent of approximately $29 million) and 1,076,639 shares to Wife (approximately $14.5 million).⁴ Husband was also to receive all Epiq stock options. Husband and Wife submitted a separation and property settlement agreement to the circuit court in February 2016. The circuit court entered a judgment that incorporated the separation agreement and dissolved the marriage in March 2016. Three months later, Epiq notified its shareholders, including Wife, that OMERS/DTI submitted an offer to buy Epiq at $16.50 per share. Epiq entered into an agreement to be acquired through DTI by OMERS, and the sale closed in September 2016. As part of the sale, Husband received over $16 million in golden-parachute benefits and payouts for his outstanding stock options and restricted stock awards. Pursuant to the sale, Epiq became a private company combined with DTI, and both Husband's and Wife's shares were paid out in cash.

In February 2017, Wife filed a Rule 74.06(b) motion to set aside the dissolution judgment for fraud. Wife alleges Husband "deliberately misrepresented and failed to disclose facts regarding Epiq's strategic review process during the dissolution," Husband intended for her to rely on these misrepresentations, and she, in fact, relied on his statements during settlement negotiations. Specifically, Wife alleges that during a deposition in December 2015, Husband said there had been "no compelling offers" to purchase Epiq and he planned to continue with the company. He represented at the parties’ settlement conference on January 7, 2016, that he had no new information to share regarding the sale of Epiq, and later executed the parties’ separation agreement wherein he represented he had "made a full disclosure concerning the nature and extent of the property, assets, liabilities and financial conditions" and warranted that he had disclosed to Wife his "respective properties and income."

Assuming the truth of Wife's well-pleaded allegations pursuant to the standard of review, Husband's statements were false. He was personally pursuing potential buyers in November 2015, potential buyers were performing due diligence in December 2015, and OMERS/DTI, who became the ultimate buyer, made a non-binding preliminary bid of $15.00 per share in January 2016, the time frame in which Husband and Wife were negotiating the final terms of their settlement agreement. Nine days before Husband and Wife submitted their separation agreement to the circuit court that valued the stock at $13.50 per share, Epiq rejected the $15 per share offer because it undervalued Epiq. Then, within 21 days of the entry of the court's dissolution judgment, Epiq received non-binding indications of interest for the purchase of Epiq from three potential buyers, including the ultimate buyer, with two of the non-binding indications of interest received within 14 days of entry of the judgment.

Wife did not learn this information during the dissolution proceeding because Husband failed to disclose it, despite Wife's discovery requests for non-public information about Epiq that would have revealed sale negotiations were progressing, and failed to update his answers to pattern interrogatories as required by 16th Judicial Circuit Local Rule 68.4.1.5.⁵ Wife contends Husband's dishonesty during his deposition, failure to disclose information regarding OMERS/DTI despite Wife's discovery requests, and failure to update his interrogatory answers amounted to fraud. As a result of that alleged fraud, Wife claims Husband received "a significantly greater portion of the marital estate worth millions of dollars, culminating in a materially inequitable division."

On April 6, 2017, Husband filed suggestions in opposition to Wife's motion, denying her fraud allegations and asserting Wife's motion had been filed unreasonably late. Two days later, Husband died. Scott Olofson, Husband and Wife's son and the personal representative of Husband's estate, was substituted as respondent, pursuant to Rule 52.13(a)(1).

The personal representative moved for judgment on the pleadings, asserting Wife's Rule 74.06(b) motion was abated and mooted by Husband's death and barred by res judicata and collateral estoppel. The circuit court entered judgment on the pleadings, overruling Wife's motion to set aside part or all of the dissolution judgment, and dismissed the action with prejudice. Wife appealed, and this Court granted transfer after opinion by the court of appeals. Mo. Const. art. V, sec. 10.

The personal representative raises several procedural objections to review on the merits. First, he asserts Wife's claim that the circuit court may set aside only the property division portion of the judgment while leaving the dissolution of marriage intact is a new argument advanced on appeal and, therefore, is unpreserved. Second, he claims Wife's action is barred by res judicata and collateral estoppel because Wife had an opportunity to litigate her claim of fraud in the dissolution proceeding. Finally, the personal representative avers Wife's Rule 74.06(b) motion should be dismissed as untimely. These procedural claims are addressed first.

I.

A. Wife's Claim for Vacating Property Division Preserved

The personal representative first contends that Wife, in her Rule 74.06(b) motion, did not properly preserve a claim for the relief of vacating only the property division of the dissolution judgment because such claim for relief was neither presented to nor decided by the circuit court. He contends Wife sought monetary damages in the circuit court, so on appeal she cannot seek the alternative remedy of setting aside only the property division.

This argument is clearly refuted by the record. In her Rule 74.06(b) motion, Wife asked the circuit court to "set aside the Judgment of Dissolution of Marriage, or, in the alternative, set aside portions of the Judgment, so as to effectuate an equitable division of the marital estate to include the value of the Epiq stock at $16.50 per share and the value of Tom's Golden Parachute Benefits." She, again, articulated she was requesting this relief in her suggestions in opposition to the personal representative's motion for judgment on the pleadings. Because Wife properly raised her claim that, upon proof of fraud, the court may set aside only the division of the parties’ property and not affect the dissolution of their marriage, she has preserved her claim of error for review.

B. Res Judicata and Collateral Estoppel Not Applicable

The personal representative next claims Wife's Rule 74.06(b) motion is barred by the doctrines of res judicata and collateral estoppel because she had "a full and fair opportunity to litigate...