Jeffrey Matthew Brown v. Jennifer Lindsey (Williams) Brown - Dissenting

IN THE COURT OF APPEALS OF TENNESSEE

AT JACKSON

July 17, 2013 Session

JEFFREY MATTHEW BROWN v. JENNIFER LINDSEY (WILLIAMS)

BROWN

Direct Appeal from the General Sessions Court for Hardin County

No. 6888 Ron E. Harmon, Judge by Interchange

No. W2013-00263-COA-R3-CV - Filed September 12, 2013

J. STEVEN STAFFORD, J., DISSENTING:

For the reasons discussed below, I must respectfully dissent from the majority’s

opinion in this case.

According to the majority opinion, both Husband and Wife filed Motions for

Summary Judgment, essentially agreeing that the undisputed facts established that:

• Husband and Wife entered into an Antenuptial Agreement prior to their marriage that

provides that if the parties are married between four and five years, Wife will be

entitled to alimony in the amount of $80,000.00. However, the agreement provided

that Wife would not be entitled to alimony “if Wife has a sexual affair or commits

adultery during the marriage.”

• The parties separated in April 2008.

• Husband filed for divorce in May 2008.

• Wife engaged in an affair in or around December 2008.

• During the pendency of the divorce, the parties agreed to forego responding to

discovery requests. Accordingly, throughout the pendency of the divorce, Mother was

never required to respond to any queries regarding whether she had engaged in an

affair during the marriage. As such, Mother never made any assertions directly to

Husband, his attorney, or the trial court specifically as to whether she had engaged in

an affair.

• The parties entered into a Marital Dissolution Agreement (“MDA”) in February 2009.

The MDA provided that the parties acknowledged the terms of the Antenuptial

Agreement and “agree to be bound by the terms and provisions thereof.” The MDA

further stated that Wife was to be paid $80,000.00 in alimony “[i]n accordance with”

the terms of the Antenuptial Agreement.

From these events, the majority concludes that Wife “affirmatively represented” to

Husband that she was “contractually entitled” to the alimony provided in the Antenuptial

Agreement. Essentially, the majority holds that Wife’s simple act of signing the MDA, which

included the above language, was an affirmative assertion that Wife was both entitled to the

$80,000.00 alimony payment and that she had not engaged in an affair during the marriage.

Further, the majority concludes that this alleged “affirmative action” constitutes fraud

sufficient to justify setting aside the MDA. I respectfully disagree.

The term “affirmative” is defined as “that which declares positively.” Black’s Law

Dictionary 55 (5th ed. 1979). Accordingly, for Wife to have taken the affirmative action

found by the majority, she must have positively declared that the condition precedent to her

receiving the alimony payment, in this case, not having engaged in an affair during the

marriage, was met. The majority cites no authority for its position that Wife’s simple act of

signing the MDA was such a positive declaration that the condition precedent to the alimony

payment had been fulfilled. Respectfully, my own research has revealed no authority that

would support the majority’s conclusion. If the majority’s position is an accurate statement

of the law, any settlement in which the parties state that the settlement is pursuant to a prior

contract would be seen as an affirmative statement that the parties are not in breach of the

contract. It is axiomatic, however, that a party asserting a breach has the burden of proving

the other party’s breach by a preponderance of the evidence. See A.L. Belcher & Associates,

L.L.C. v. Harrison, No. M1998-00965-COA-R3-CV, 2000 WL 666365, at *3 (Tenn. Ct.

App. May 23, 2000) (citing Tedder v. Raskin, 728 S.W.2d 343, 351 (Tenn. Ct. App. 1987)).

To take a simple agreement to settle the case as an affirmative statement that there is no

breach, and then to allow one party to rescind the agreement when new evidence comes to

light that the other party did, in fact, breach the contract, relieves the party asserting the

breach from their burden to prove it.

In this case, Husband, as the party seeking Rule 60.02 relief, has the burden to prove,

by clear and convincing evidence, that Mother committed fraud or misconduct in order to be

entitled to relief from the MDA. In re Estate of Williams, No. M2000-02434-COA-R3-CV,

2003 WL 1961805, at *14 (Tenn. Ct. App. April 28, 2003) (perm. app. denied Oct. 6, 2003).

In addition, the fraud or misconduct must be of a kind that “prevented the other party from

fully and fairly presenting its case.” Id. at *13. According to this Court, relief is only

available when the “conduct affect[ed] the litigation or thwart[ed] the judicial process, with

the result that a litigant was prevented from fully and fairly presenting his or her case.” Id.

at *14. There is nothing in the record, however, to suggest that Wife’s failure to inform

Husband of her affair prevented him from fully litigating this case. Indeed, Father was well

within his rights to propound discovery to Wife asking whether Wife had engaged in an

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extramarital affair, and to insist that the discovery be answered. Husband failed to take this

action.

Although the majority opinion is not specific, as I perceive it, the majority holds that

Wife made a fraudulent misrepresentation about her entitlement to alimony by signing the

MDA. However, the majority fails to specifically consider whether Husband has met his

burden to show that Wife’s alleged actions support a finding of fraudulent misrepresentation.

In order to establish a claim for fraudulent or intentional misrepresentation, a plaintiff must

show the following: (1) the defendant made a representation of an existing or past fact; (2)

the representation was false when made; (3) the representation was in regard to a material

fact; (4) the false representation was made either knowingly or without belief in its truth or

recklessly; (5) plaintiff reasonably relied on the misrepresented fact; and (6) plaintiff suffered

damage as a result of the misrepresentation. Walker v. Sunrise Pontiac-GMC Truck, Inc.,

249 S.W.3d 301, 311 (Tenn. 2008). The party alleging fraud bears the burden of proving

each element. Hiller v. Hailey, 915 S.W.2d 800, 803 (Tenn. Ct. App. 1995) (quoting

Williams v. Spinks, 7 Tenn. App. 488 (1928)).

First, I note that Wife’s agreement that she and Husband “agree to be bound by the

terms of the MDA,” is not a statement of existing or past fact, but an agreement to be bound

by the provisions of the MDA. This Court has specifically held that a fraudulent

misrepresentation claim cannot be based on “representations of future events.” Cummins

v. Opryland Productions, No. M1998-00934-COA-R3-CV, 2001 WL 219696, at *8 (Tenn.

Ct. App. Mar. 7, 2001). Consequently, this statement fails to meet the first requirement for

a finding of fraudulent misrepresentation: a misrepresentation of fact. Further, I fail to

comprehend how the statement in the MDA that the alimony will be paid “in accordance”

with the Antenuptial Agreement is a statement on Wife’s part that she has indeed fulfilled

the condition precedent to the payment of alimony. The MDA makes no mention of whether

Wife had actually complied with the Antenuptial Agreement with regard to the alimony

provision, but only states that the payment will be in accordance with the MDA, i.e., that the

amount will be paid as stated in the MDA. Accordingly, nothing in the record convinces me

that Wife took any other affirmative action to mislead Husband about the existence of her

extramarital affair.

Indeed, not even Husband asserts that this case involves an affirmative act by Wife.

Instead, Husband states that Wife’s breach in this case was her “silence” rather than any

affirmative statement. Multiple times in Father’s brief, he couches his interpretation of

Mother’s behavior as “silence,” “inaction,” “passive non-cooperation,” “non-disclosure,” and

“failure to disclose.” Husband even admits that Wife did not “lie to [] Husband or make [an]

overt misrepresentation about her sexual affair and adultery.” “It is not the role of the courts,

trial or appellate, to research or construct a litigant's case or arguments for him or her . . . .”

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Sneed v. Bd. of Prof'l Responsibility of Sup.Ct., 301 S.W.3d 603, 615 (Tenn. 2010).

Additionally, this Court’s review is appellate only. See Tenn. R. App. P. 13(b) (noting that

appellate review “generally will extend only to those issues presented for review”). We are

directed only to consider those issues that are properly raised, argued, and supported with

relevant authority. See Hawkins v. Hart, 86 S.W.3d 522, 531 (Tenn. Ct. App. 2001) (“In

order for an issue to be considered on appeal, a party must, in his brief, develop the theories

or contain authority to support the averred position . . . .”). Husband has neither raised,

argued, nor supported the majority’s unique interpretation of Wife’s behavior in this case.

Without any support for its interpretation, I must agree with the parties that this is not the

case of an affirmative misrepresentation, but simply involves Wife’s failure to disclose her

affair.

The resolution of this issue, however, does not end the inquiry because Wife may still

be guilty of fraud sufficient to set aside the MDA if she and Husband were engaged in a

confidential or fiduciary relationship at the time of the signing of the MDA, as discussed in

detail below. This issue, which was the issue that the parties focused on in their briefs and

at oral argument, is, in my view, the dispositive issue in this case.

Nondisclosure will give rise to a claim for fraud only when the defendant has a duty

to disclose and when the matters not disclosed are material. Dobbs v. Guenther, 846 S.W.2d

270, 274 (Tenn. Ct. App. 1992) (citing Gray v. Boyle Inv. Co., 803 S.W.2d 678, 683 (Tenn.

Ct. App. 1990); Piccadilly Square v. Intercontinental Constr. Co., 782 S.W.2d 178, 184

(Tenn. Ct. App.1989)). The parties disagree as to whether Wife had a duty to disclose in this

case. Husband cites the Tennessee Supreme Court’s decision in Bratton v. Bratton, 136

S.W.3d 595 (Tenn. 2004). The Bratton Court held that parties to a postnuptial agreement

have a confidential relationship which gives rise to a duty to disclose:

Because of the confidential relationship which exists

between husband and wife, postnuptial agreements are likewise

subjected to close scrutiny by the courts to ensure that they are

fair and equitable. See, e.g., Peirce v. Peirce, 994 P.2d 193

(Utah 2000); In re Estate of Gab, 364 N.W.2d 924 (S.D. 1985);

In re Estate of Harber, 104 Ariz. 79, 449 P.2d 7 (1969); see

also 41 C.J.S. Husband & Wife § 87 (1991) (“Since a husband

and wife do not deal at arm’s length, a fiduciary duty of the

highest degree is imposed in transactions between them.”). As

explained by the court in Estate of Gab,

While it is lawful and not against public policy for

husband and wife to enter into such contracts, yet

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they are not dealing with each other as strangers

at arm's length. The relationship of husband and

wife is one of special confidence and trust,

requiring the utmost good faith and frankness in

their dealings with each other.... Transactions of

this character are scrutinized by the courts with

great care, to the end that no unjust advantage

may be obtained by one over the other by means

of any oppression, deception, or fraud. Courts of

equity will relieve against any unjust advantage

procured by any such means, and less evidence is

required in such cases to establish the fraud,

oppression, or deception than if the parties had

been dealing at arm’s length as strangers . . . .

364 N.W.2d at 926 (quoting Keith v. Keith, 37 S.D. 132, 156

N.W. 910, 911 (1916)).

Bratton, 136 S.W.3d at 601.

Wife argues, however, that the Bratton case is distinguishable because it involved a

failure to disclose while the parties were still engaged in the marital relationship and were

not contemplating a divorce. Indeed, the agreement at issue in Bratton was signed by the

parties in 1983 and no divorce was filed by the parties until 2000, approximately seventeen

years later. This Court has previously declined to extend the confidential relationship to

married parties who were engaged in divorce proceedings at the time of the alleged non-

disclosure. See Southers v. Southers, No. 03A01-9802-CV-00001, 1999 WL 333315, at

*3–5 (Tenn. Ct. App.1999). In Southers, the trial court found that a duty to disclose existed

between the parties because they were married at the time of the alleged non-disclosure. Id.

The trial court relied, at least in part on the decision of this Court in the case of Howell v.

Davis, 306 S.W.2d 9 (Tenn. Ct. App. 1957), which states that:

“The relation of husband and wife has been regarded as one of

special confidence and trust, and in contracting with each other

they must exercise the utmost good faith. The court will closely

scrutinize all transactions between them to the end that injustice

and oppression may not result.”

Id. at 12. The trial court further cited the opinion in Lightman v. Magid, 54 Tenn.App. 701,

394 S.W.2d 151 (Tenn. Ct. App.1965), which stands for the principle:

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[t]hat a confidential relationship exists between a prospective

husband and wife who execute an antenuptial agreement while

they are engaged to be married which requires the utmost good

faith and full disclosure of all circumstances materially bearing

on the contemplated contract.

Id. at 156. According to the Court of Appeals, “[t]he trial court . . . rationalized that if parties

negotiating a prenuptial agreement stand in a confidential relationship with one another, then

such a relationship must exist between these parties who were married.” Southers,, 1999 WL

333315, at *3. The Court of Appeals disagreed, distinguishing the above cases based on the

deteriorated relationship between the parties at the time of the alleged non-disclosure. Id.

The Court noted:

In the instant case, the parties had been separated for over

17 months before the divorce was granted; each had sued the

other for divorce; and each was represented by counsel. There

is nothing in the record to indicate that they had personally

negotiated any aspect of the settlement of the economic issues

in this case. On the contrary, all negotiations appear to have

been undertaken through counsel and the parties apparently did

not even talk to one another after their separation. There is

nothing about the relationship between these separated,

divorcing, represented-by-counsel parties to suggest that their

relationship-contentious as it then obviously was-falls within

one of the “three distinct classes” giving rise to a duty to

disclose. See Justice v. Anderson County, 955 S.W.2d 613,

616-17 (Tenn. App. 1997). This case is not like Howell. In that

case, the court was dealing with a transaction between spouses

during an intact marriage. Here, the parties were married in

name only, and they were clearly dealing at arms’ length,

through counsel, with absolutely no trust or confidence reposed

by one in the other.

It is important to recognize what this case does not

involve. There are no allegations or proof in the record that

[h]usband made an affirmative misrepresentation. He apparently

was not asked in discovery regarding whether his health

condition-about which [w]ife had some, but incomplete,

information-had prompted him to consider early disability

retirement. This is also not a case where a party hides the

existence of a marital asset or otherwise makes an affirmative

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misrepresentation regarding a marital asset-one that amounts to

an act of fraud. Obviously, an act of fraud can be the basis for

setting aside a negotiated marital dissolution agreement. See

Rule 60.02(2), Tenn.R.Civ.P.

Southers, 1999 WL 333315, at *3–4. Thus, the Court held that, based on the particular facts

of the case, there was no confidential relationship from which a duty to disclose could arise:

We know of no Tennessee appellate case authority

deciding whether, and to what extent, a confidential relationship

giving rise to a duty to disclose-as distinguished from a duty not

to engage in an affirmative misrepresentation or a duty not to

hide marital assets-exists as between divorcing parties. Other

states have recognized such a duty under some circumstances.

See Avriett v. Avriett, 88 N.C.App. 506, 363 S.E.2d 875, 877

(N.C. App.1988) (holding that the “confidential relationship that

usually exists between husband and wife” terminated when they

“become adversaries” in the course of negotiating a divorce

settlement); Eltzroth and Eltzroth, 67 Or.App. 520, 679 P.2d

1369, 1372 (Or. App. 1984) (“Because the fiduciary duty is

imposed as a result of the confidential relationship between the

parties, it continues while the parties contemplate divorce, as

long as the confidential relationship remains intact and the

parties are not dealing at arms’ length through separate agents

or attorneys.”); Gabbert v. Johnson, 632 P.2d 443, 446 (Okla.

App. 1981) (“Both parties were represented by able counsel.

Once she filed her action, the woman no longer enjoyed a

confidential relationship with her husband. He did not have to

voluntarily disclose anything.”); Jeffries v. Jeffries, 434 N.W.2d

585, 587-88 (S.D. 1989) (“While it is generally true that a

husband and wife do enjoy a confidential relationship, . . . we do

not believe that such a relationship existed here. When the

parties to a marriage are negotiating a property settlement,

recognizing that their interests are adverse to one another and

that they are dealing at arms [sic] length, neither spouse owes to

the other the duty of disclosure which he or she would normally

owe if their relationship remained, in fact, a confidential one.”).

Cf. McDonald v. Barlow, 109 Idaho 101, 705 P.2d 1056, 1060

(Idaho App. 1985) (“Throughout the property settlement

negotiations, the relationship between McDonald and Barlow

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was that of husband and wife. The fiduciary duty arising from

that relationship was not affected by the parties’ separation.”).

In the instant case, we do not find it necessary to define, by way

of a bright-line rule, when the confidential relationship

recognized in Howell terminates in the context of a divorce.

Suffice it to say that it had clearly terminated in this case.

Southers,, 1999 WL 333315, at *4; see also Macar v. Macar, 803 So.2d 707, 711–13 (Fla.

2001) (denying relief from final MDA based on alleged fraudulent non-disclosure, when

MDA was agreed to after contentious litigation between the parties had commenced and both

parties were given ample opportunity to conduct discovery).

Likewise in this case, the only evidence contained in the record shows that Wife had

an affair in or around December 2008. At this time, the parties had been separated for

approximately nine months and the divorce complaint had been pending for seven months.

Nothing in the record suggests that the parties were not fully and effectively represented by

counsel throughout the proceedings. In addition, nothing suggests that Husband was

prevented from engaging in full discovery with Wife. Based on the opinion in Southers, this

situation tends to support a conclusion that the confidential relationship between the parties

was extinguished by the time the parties signed the MDA. Further, there is no evidence in

the record that Wife engaged in an affair prior to the parties’ separation, when the parties

would undisputedly be considered to be in a confidential relationship.

The majority bases its decision on the erroneous premise that Wife engaged in

affirmative action to misrepresent her fidelity in this case; accordingly, the majority fails to

consider the dispositive issue in this case. Because I conclude that Husband failed to meet

his burden to prove that Wife committed an affirmative act sufficient to constitute a

fraudulent misrepresentation, I would go on to consider whether Wife’s failure to disclose

her affair was nevertheless a basis for Rule 60.02 relief. Neither the trial court nor the

majority opinion consider whether Wife breached a duty to disclose in this case; however,

in my view, resolution of this issue is necessary to decide the substantive issue presented in

this appeal. Thus, I must respectfully dissent from the majority opinion.

_________________________________

J. STEVEN STAFFORD, JUDGE

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