Cyr v. Cyr

Brian G. Paul, a partner in the firm’s matrimonial department, recently reversed a Trial Court judge’s denial of a former husband’s motion to reopen his Final Judgment of Divorce so that $330,000 of net proceeds stemming from the sale of marital stock options that he claimed were not disclosed at the time of the divorce could be equitably distributed. In Cyr v. Cyr, the husband and wife negotiated a Property Settlement Agreement between themselves without the assistance of counsel. In the agreement, both parties expressly stated that the they had fully disclosed and listed all of their assets on the attached Appendix A. During the marriage, the Wife served as Chief Financial Officer for a publicly traded bank. Three (3) years after the divorce, while surfing the internet in an effort to determine his former wife’s income for purposes of calculating child support, the husband shockingly discovered in SEC filings that the Wife had received $330,000 of after-tax proceeds when liquidating stock options the prior year. The SEC filing further indicated that the wife had been granted 30,500 of stock options during the parties’ marriage, and that all of the options had become fully vested by the time they were negotiating their agreement. Nevertheless, the stock options were not mentioned anywhere in the parties’ agreement.

Upon the husband’s discovering the stock options, the firm immediately proceeded to file a motion pursuant to R. 4:50-1, alleging that the wife’s failure to disclose the stock options at the time of the divorce had led to an unfair and inequitable result necessitating the reopening of the Final Judgment of Divorce, so that the husband could receive his fair share of what turned out to be the most valuable asset of the marital estate. In opposition, the wife asserted that the husband new about the stock options at the time of the divorce, but that he had orally waived his interest in them. The wife further claimed that husband’s motion was time barred on the basis that a motion to reopen for non-disclosure or fraud must be evaluated under the terms of R. 4:50-1 (c), and that claims under subsection (c) must be brought within one year of the entry of the judgment. In reply, the husband strenuously maintained that he did not learn about the stock options until three years after the divorce, and pointed out that the options were not mentioned anywhere in the parties’ Property Settlement Agreement, or anywhere on the Wife’s Case Information Statement, despite the fact that she certified in both documents that she had made a full disclosure of all her assets. Brian further argued on the husband’s behalf that for public policy reasons a motion to reopen a judgment to equitably distribute assets for non-disclosure must always be analyzed under the “catch all” provision of R. 4:50-1(f), which permits the reopening of a judgment for exceptional and compelling circumstances provided it is brought within a reasonable time, otherwise it would encourage spouse’s to conceal marital assets in hope that the non-disclosure would not be discovered until more than 1 year after the divorce. Without conducting a trial to resolve the conflicting claims, the Trial Court judge denied the husband’s motion, finding that it stemmed in fraud and was time barred on the basis it was brought three (3) years after the entry of judgment.

Brian G. Paul then filed an appeal on the husband’s behalf. The Appellate Division agreed with Brian that an alleged failure to disclose marital assets should be analyzed under R. 4:50-1(f), not (c), and that the husband’s motion had been brought within a reasonable time. The Appellate Division then went on to reverse the Trial Court’s decision, and ordered the matter remanded for a trial in order to resolve the conflicting certifications on the issue of whether the stock options had been disclosed at the time of the divorce.

Click here to view the decision in Adobe Acrobat format (PDF).