Wagster v. Wagster

2013 Ark. App. 616

• Court: Court of Appeals of Arkansas
• Decided: October 30, 2013
• Docket: CV-13-181
• Status: Published

Opinion

Cite as 2013 Ark. App. 616

ARKANSAS COURT OF APPEALS DIVISION I No. CV-13-181

KEIKO WAGSTER Opinion Delivered October 30, 2013 APPELLANT APPEAL FROM THE V. INDEPENDENCE COUNTY CIRCUIT COURT [NO. 2006-350-2] JEFFREY D. WAGSTER APPELLEE HONORABLE ADAM HARKEY, JUDGE

AFFIRMED

RITA W. GRUBER, Judge

Keiko Wagster, ex-wife of appellee Jeffrey Wagster, appeals from the circuit court’s

denial of her request to set aside the parties’ 2006 divorce decree five years after it was

entered. Keiko filed a motion to set aside the decree on October 11, 2011, alleging that, at

the time of the divorce, Jeffrey fraudulently represented to her that she was not entitled to

any of his military retirement and, in reliance on this misrepresentation, she entered into a

property-settlement agreement that made no distribution of this asset. The question

presented is whether the circuit court abused its discretion in refusing to set aside the decree.

We find no abuse and affirm the circuit court’s order.

Keiko was born in Japan. The parties were married there in 1982 while Jeffrey was

stationed on active duty with the United States Marine Corps. While married, the parties

lived abroad on United States military bases, where English was the primary language, until Cite as 2013 Ark. App. 616

they moved to the United States, where they lived for approximately seventeen years before

the divorce. Testimony of both parties indicated that Keiko spoke English well and had

worked in various English-speaking jobs while on the bases and in the United States, often

as a translator.

Jeffrey testified that, after his retirement in 1998, Keiko regularly expressed her desire

to get a divorce. He said that he finally hired a lawyer and filed a complaint for divorce on

August 2, 2006. He testified that he and Keiko discussed property division at length and

made a list of the division of assets that ended up in the final property-settlement agreement.

He said that he told Keiko that she could hire an attorney if she was not happy with the

agreement. Jeffrey testified that they discussed his military retirement and that he did not try

to trick her or misrepresent any facts. He told his attorney that he was giving Keiko the

house and would continue to make mortgage payments until it was paid off in exchange for

keeping all of his retirement benefits. He testified that he did not tell Keiko that she was not

entitled to his retirement but asked her to agree not to “get into it.” He also testified that,

including the home mortgage of approximately $67,000 that he agreed to pay, he agreed to

pay additional marital debt that, with the mortgage, totaled “well over $100,000.”

At the time the parties divorced, Keiko signed an entry of appearance and waiver of

service in addition to the property-settlement agreement. The court entered the decree on

September 16, 2006, in which it incorporated the property-settlement agreement by

reference. A year later, at Keiko’s insistence, the parties signed a separate, informal agreement

in which Jeffrey agreed to give Keiko several of the items that had been awarded to him in

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the divorce. Jeffrey testified that she asked about his retirement at that time and he told her

that she could “get a lawyer and we’ll fight about it,” but he had given her 100% of the

marital home on which he continued to pay the mortgage and he did not intend to give her

any of his retirement. He reminded her that they worked it out that way so that she would

not have to pay the mortgage or rent.

Keiko testified that she filed this action in response to Jeffrey’s filing a petition for an

order of protection against her. She testified that her lawyer mentioned that she might be

entitled to some of Jeffrey’s retirement benefits because the benefits were not mentioned in

the property-settlement agreement. She said she was so upset at the time of the divorce that

she “didn’t think right,” that she did not read the agreement, and that she just “signed over

everything.” She testified that Jeffrey told her that she was not entitled to his retirement or

disability. She said that she believed him and relied on his statement. Although she said that

she had known that she could hire her own lawyer, she had chosen not to because Jeffrey

had told her it would be too expensive and they would “be broke” and “homeless” if she

did. She testified that she first realized that she might be entitled to some of Jeffrey’s

retirement several days after she signed the property-settlement agreement and that she talked

with an attorney a few months later. She claimed that the attorney told her it was too late.

The parties’ daughter, Angela, testified that her mom “was an extremely intelligent

person” and knew that she could hire a lawyer but chose not to do so. She said that,

unbeknownst to her father, she overheard him give her mom the papers to sign for the

divorce. She testified that Jeffrey told her mother to sign them and said that she could read

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them later. Angela said that, in response to her mom’s statement that she wanted to read the

papers and perhaps talk to a lawyer, her father told her mom not to do that because it would

be a waste of money.

On October 28, 2012, the circuit court filed a letter explaining its decision to deny

Keiko’s motion to set aside the divorce decree. On December 13, 2012, the court entered

an order denying Keiko’s motion, finding specifically that she failed to present sufficient

evidence of fraud to meet her burden of proof to set the decree aside and that her reliance

on Jeffrey’s legal opinion regarding his military retirement was neither reasonable nor

justifiable.

On appeal, Keiko contends that the circuit court erred in determining that the divorce

decree and incorporated property settlement were not tainted with fraud as contemplated by

Rule 60 of the Arkansas Rules of Civil Procedure. A circuit court may set aside a judgment

or order more than ninety days after the filing of the judgment or order for misrepresentation

or fraud. Ark. R. Civ. P. 60(c)(4) (2013). We review a circuit court’s decision under Rule

60 for an abuse of discretion. Downum v. Downum, 101 Ark. App. 243, 247, 274 S.W.3d 349,

352 (2008). A circuit court abuses its discretion when it makes an error of law. Id. We

evaluate the circuit court’s factual findings about the elements of fraud for clear error. Id.

Disputed facts and determinations of credibility of witnesses are within the province of the

fact-finder. Carroll v. Carroll, 2013 Ark. App. 401, at 5.

To establish fraud in Arkansas, a plaintiff must prove that the defendant intentionally

misrepresented a material fact and that the plaintiff was damaged by justifiably relying on that

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misrepresentation. Downum, 101 Ark. App. at 247–48, 274 S.W.3d at 352. The party seeking

to set aside a judgment on the basis of fraud has the burden of proving fraud by clear, cogent,

and convincing evidence or, as our courts have sometimes said, clear, strong, and satisfactory

proof. Carroll, 2013 Ark. App. 401, at 5.

Keiko contends that Jeffrey told her that she had no marital interest in his military

retirement, that she relied on this statement, and that she was damaged as a result. She argues

that the circuit court erred as a matter of law in concluding that Jeffrey’s statement of law

cannot be classified as fraud and argues also that the circuit court’s findings are clearly

erroneous.

First, the trial court did not find that Jeffrey’s “statement of law” cannot be fraud.

Rather, the court found that, during their divorce negotiations, Jeffrey told Keiko that she

was not entitled to his military retirement. The court found that this was a statement of

opinion, not a statement of fact. Moreover, and critical to the court’s decision, the court

found that Keiko’s reliance on this opinion was neither reasonable nor justifiable.

Keiko claims that her case is factually and legally similar to Dickson v. Fletcher, 361 Ark.

244, 206 S.W.3d 229 (2005), because Jeffrey induced her to settle their property rights by

telling her something that was not true just as Mr. Dickson induced his wife to settle without

having all the relevant facts. Keiko’s reliance on Dickson is misplaced. In Dickson, the supreme

court affirmed the circuit court’s finding of constructive fraud where Mr. Dickson

misrepresented his net worth during the divorce by failing to disclose over $100,000 in

Exxon stock in spite of Ms. Dickson’s request for the information in discovery. The circuit

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court found, and the supreme court in Dickson affirmed its finding, that Mr. Dickson owed

a legal duty pursuant to Ark. R. Civ. P. 33(b) to answer discovery requests truthfully and

completely. Here is the court’s reasoning.

This court has held that constructive fraud or the breach of a legal or equitable duty to another warrants setting aside or modifying a judgment. See RLI Ins. Co. v. Coe, 306 Ark. 337, 347, 813 S.W.2d 783, 788 (1991); see also Davis v. Davis, 291 Ark. 473, 725 S.W.2d 845 (1987). A party to a legal proceeding owes a duty to answer discovery requests under oath, Ark. R. Civ. P. 33(b), and is under a further duty to reasonably amend a prior response to discovery when he knows that the response, though correct when made, is no longer true, and the circumstances are such that a failure to amend the response is in substance a knowing concealment. Phillips v. McAuley, 297 Ark. 563, 764 S.W.2d 424 (1989) (citing Ark. R. Civ. P. 26(e)(2)).

In the instant case, Dickie never denied that his responses to Martha’s discovery requests omitted his Exxon stock and that he failed to supplement his discovery responses. In addition, Dickie neither denied that his statement of net worth at the time of the parties’ divorce omitted the disputed stock, nor did he deny that he presented false testimony by stating his statement of worth was complete. Thus, the trial court did not err in ruling that Dickie had committed fraud.

Dickson, 316 Ark. At 250–51, 206 S.W.3d at 233.

In the case at bar, Jeffrey did not fail to provide Keiko with information about his

military retirement during discovery or otherwise. Indeed, Keiko admitted she knew about

Jeffrey’s military retirement at the time she signed the property-settlement agreement. In

other words, this is not a case in which one party attempted to conceal a relevant fact from

another party. Keiko’s allegation is that Jeffrey told her about the military retirement but

opined that she was not entitled to any of it. Keiko claims that she relied on Jeffrey’s opinion

and did not obtain a lawyer to determine her rights. She admits that she had the opportunity

to hire a lawyer, but she chose not to. That she chose not to because Jeffrey told her it would

be too expensive and they would “be broke” and “homeless” if she did does not elevate

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these facts to the standard set forth in Dickson for constructive fraud.

There was testimony at the hearing that Keiko was an intelligent woman who was

told by others, and who admitted that she knew and understood, that she could hire a

lawyer. She testified that she signed the agreement without reading it because she was

“upset.” The circuit court’s finding that Jeffrey’s statement was one of opinion, not fact, is

not clearly erroneous. In addition, its finding that Keiko’s reliance on Jeffrey’s legal opinion

regarding his military retirement was neither reasonable nor justifiable is also not clearly

erroneous. Accordingly, we affirm the court’s order denying her motion.

Affirmed.

HARRISON and WHITEAKER, JJ., agree.

Murphy, Thompson, Arnold, Skinner & Castleberry, by: J.T. Skinner, for appellant.

Gregg, Farris & Bumpers, Attorneys at Law, by: Fuller Bumpers, for appellee.