Family Law

Mississippi Supreme Court says husband committed fraud on court--Part 2

By Robert M. Kisselburgh, Esq.

Fraud on court for misrepresenting value of stock in financial disclosure

In the last post, I spoke about how Mr. Trim had told his wife during their divorce case that his business stock was only worth $100,000. Mrs. Trim agreed to the divorce based on that representation. She later found out her ex-husband seriously undervalued the stock. She got an attorney to file a lawsuit to set aside the divorce agreement so she could get more money given the stock was worth more. That is exactly what the Hinds County Chancery Court did and awarded her more than $150,000.

The husband appealed and the Mississippi Court of Appeals reversed the Chancellor. The Court of Appeals felt the issue of whether the husband misrepresented the value of stock was not not clear. It expressed doubt that Mr. Trim intentionally misrepresented the value of the stock. More importantly, the Court found that Ms. Trim's case fell under 60(b)(1) which required her to file the action within six months after the judgment was entered. Given she had file her case almost four years after the divorce judgment, she was barred from bringing the case. Mrs. Trim appealed to the Mississippi Supreme Court.

The Mississippi Supreme Court reversed the Court of Appeals and affirmed the Chancellor's decision. The Mississippi Supreme Court focused on whether the filing of the financial disclosure by Mr. Trim where he misstated the value of his stock was a "fraud on the court." The Court said it was. A unanimous Court stated:

"We hold that a party's intentional filing of a substantially false Rule 8.05 financial statements constitutes fraud on the court.... We hold that, by intentionally filing a substantially false Rule 8.05 financial disclosure statement, [Mr. Trim] committed a fraud upon the court. Therefore, no time limit constrained the chancellor's ability to modify the divorce judgment to remedy the fraud on the court."

A couple lessons can be learned from this case.

1. Hire an attorney to represent you in a divorce. Mrs. Trim was not represented by an attorney in her divorce and this leads to lesson #2.

2. Be very careful about relying on your soon to be ex-spouse about valuing their property. If Mrs. Trim had requested discovery of any financial statements Mr. Trim had filed in the previous three years, she would have had evidence showing Mr. Trim valued the property much different than the $100,00 he told her it was worth.

3. Understand the Mississippi Supreme Court takes a dim view of those who are not honest in their financial disclosures required by Rule 8.05. Don't misstate what property you have or the value of the property in your financial disclosure.

For a copy of the decision, click here

Information provided by Robert Kisselburgh, Mississippi Divorce Attorney

Full post as published by Mississippi Family Law Blog on May 04, 2010 (boomark / email).