Bodine v. Bodine

754 P.2d 1200, 114 Idaho 163, 1988 Ida. App. LEXIS 51
CourtIdaho Court of Appeals
DecidedMay 3, 1988
Docket16785
StatusPublished
Cited by8 cases

This text of 754 P.2d 1200 (Bodine v. Bodine) is published on Counsel Stack Legal Research, covering Idaho Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bodine v. Bodine, 754 P.2d 1200, 114 Idaho 163, 1988 Ida. App. LEXIS 51 (Idaho Ct. App. 1988).

Opinions

SWANSTROM, Judge.

This is the second appeal, and the third appellate opinion in this case. The dispute centers on a property settlement agreement executed at the time of the parties’ divorce in 1976. Three years later Dorothy Bodine brought an independent action to set aside the agreement. She contended that her husband, Loren Bodine, had misrepresented the value of the community property. The district court (Hon. J. Ray Durtschi) granted summary judgment in favor of Loren. On appeal this Court, in Bodine v. Bodine, 103 Idaho 185, 646 P.2d 427 (Ct.App.1982), reversed and remanded for reconsideration of the summary judgment motion. Loren Bodine’s petition for review was granted and the Idaho Supreme Court later decided that the case should be remanded for trial on the merits because material issues of fact existed. Bodine v. Bodine, 105 Idaho 477, 670 P.2d 884 (1983).

On remand the district court (Hon. Robert G. Newhouse) addressed the issue of misrepresentation. Judge Newhouse found that the value of assets exceeded the value represented by Loren during the settlement agreement negotiations, and that Loren knew he had understated the value of the assets. However, the court also found that Dorothy knew these values were false or dubious and that Dorothy had not completely relied on the truth of Loren’s statements in signing the agreement. Judgment was entered in favor of Loren, upholding the settlement agreement. Neither party was granted attorney fees, but costs were awarded to Loren.

Dorothy Bodine appeals the district court’s decision. She argues that the district court erred: (1) in failing to hold that Loren’s representations of value of items of community property were a warranty upon which Dorothy was entitled to rely; (2) in finding that Dorothy was suspicious of the values stated by Loren, that she knew many of the represented values were false and that she did not rely on them completely; (3) in concluding that Dorothy failed to prove fraud in a degree sufficient to overturn the property settlement provisions that were incorporated into the judgment of divorce; and (4) in awarding discretionary costs to Loren. We affirm for reasons which follow.

We turn first to the question of whether Loren’s representations of value, later expressed in the property settlement agreement, constituted a warranty upon which Dorothy was entitled to rely. A warranty is commonly defined as:

an assurance by one party to a contract of the existence of a fact upon which the other party may rely. It is intended to relieve the promisee of any duty to ascertain the fact for himself, and amounts to a promise to indemnify the promisee for any loss if the fact warranted proves untrue.

17A C.J.S. Contracts § 342 at 325 (1963). The district court did not expressly say that the values ascribed to the various items of community property were warranties. The court did hold, however, that the values were material statements of fact.

The general rule is that representations of value are expressions of opinion and do not constitute a basis for fraud. Reese v. Cradit, 12 Ariz.App. 233, 469 P.2d 467 (1970); Dolson Co. v. Imperial Cattle Co., 624 P.2d 993 (Mont.1981). However, the general rule has been reshaped by the special circumstances prevailing between a married couple attempting to divide community assets incident to a divorce or legal separation.

A fiduciary relationship exists between the spouses throughout the marriage. In Idaho the relationship continues even after the spouses have separated or one has filed a complaint for divorce. Only when the marriage is dissolved does the fiduciary relationship cease. Compton v. [165]*165Compton, 101 Idaho 328, 612 P.2d 1175 (1980); McDonald v. Barlow, 109 Idaho 101, 705 P.2d 1056 (Ct.App.1985). In Compton our Supreme Court said:

This fiduciary duty extends to the parties’ negotiations leading to the formation of the property settlement agreement during marriage, and requires, at least, a disclosure by both parties of all information within their knowledge regarding the existence of community property and of pertinent facts necessary to arrive at a reasonable valuation of the property. Like a business partner, each spouse is free to adopt a position favorable to himself or herself regarding the property’s valuation, its inclusion in the community, or other such issues. They are not free, however, to resolve such issues unilaterally by concealing the very existence of particular items or amounts of property.

101 Idaho at 336, 612 P.2d at 1183. After Compton two things are clear. A spouse may, consistent with his or her fiduciary duty, take a position as to the value of the various items of community property. This idea comports with the right of any property owner to form and express an opinion as to the property’s value when value is at issue. The idea that a spouse is free to assert the value of an asset is not consistent with the idea that an expression of value can be relied upon as if it were a statement of a material fact. Thus, where value is concerned there is little room for a warranty theory.

However, Compton makes another important point. The fiduciary duty requires at least that both spouses disclose “all information within their knowledge regarding the existence of community property and of pertinent facts necessary to arrive at a reasonable valuation of the property.” Id. The failure of a spouse to make such disclosures may be grounds for setting aside a judgment that divides the community property inequitably. See, e.g., Golder v. Golder, 110 Idaho 57, 714 P.2d 26 (1986).

Here, Dorothy is not claiming that Loren failed to disclose the existence of some item of community property. Rather, her contention is that she had no independent knowledge of the value of various business assets managed and controlled by Loren; that she trusted Loren to state the actual fair market value of the assets; that, in fact, he deliberately understated some of the values. The district court found that Loren knowingly understated the values. This finding has not been challenged on appeal. The court made no findings as to the actual value of the assets at the time of the divorce. The court merely found that the value of marital assets exceeded $446,000, the total value stated by Loren. “However,” the court said, “considering the problem of the marketability of these assets, the values were not [understated to the extent contended by [Dorothy].”

The district court avoided having to determine the value of the assets because the court found that Dorothy had not completely relied upon the truth of Loren’s statements. As we have noted, Dorothy has challenged that finding. Consequently, we shall first consider whether Dorothy had any right to rely on Loren’s statements of value. In view of the statement in Compton

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Bodine v. Bodine
754 P.2d 1200 (Idaho Court of Appeals, 1988)

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Bluebook (online)
754 P.2d 1200, 114 Idaho 163, 1988 Ida. App. LEXIS 51, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bodine-v-bodine-idahoctapp-1988.