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Court of Appeals upholds denial of request to set aside 1997 divorce decree

September 9, 2016

The denial of a woman’s request to set aside her divorce decree nearly 20 years after the end of her marriage because of fraud on the part of her ex-husband has been upheld by the Indiana Court of Appeals.

In the case of Julie R. Waterfield v. Richard D. Waterfield, 92A03-1511-PL-1968, Julie Waterfield petitioned the Whitley Superior Court to re-open her divorce settlement agreement – which was entered into in 1997 – after coming to the conclusion that he ex-husband committed fraud and forced her into an agreement that was more than $80 million less than what she was entitled to.

In May 1997, Julie Waterfield filed for divorce and agreed to a settlement of $20 million, including almost $19.5 million in cash and a lake cottage on Clear Lake near Fremont in December of the same year.

While negotiating the settlement, Richard Waterfield produced a disclosure statement listing the property that was part of their marital estate. Julie Waterfield’s attorneys advised her against settling until they conducted a detailed discovery into the estate her ex-husband had presented.

Julie Waterfield ignored that advice and chose to settle without the discovery, but one month later told her attorneys that she regretted that decision.
In July 2003, nearly six years after entering into the settlement agreement, Julie Waterfield filed a complaint against her ex-husband and accused him of intentionally undervaluing or excluding assets in his list of the marital estate and committing fraud valued at $80 million. Richard Waterfield filed a counterclaim, citing abuse of process and requesting statutory attorney fees.

The trial court entered into partial summary judgment against Julie Waterfield’s claims of undervaluing in 2006 and full summary judgment against all of her claims in 2009.

Julie Waterfield then moved for summary judgment against both of her ex-husband’s claims in 2012, but that motion was denied in 2013.

The following year, she requested access to documents related to Richard Waterfield’s attorney fees claims, which prompted him to serve her with a discovery request to access her divorce attorney’s files. Richard Waterfield said those files contained information that could be used to refute her fraud allegation by showing how much knowledge she had of the marital estate and the process of discovery and settlement. Julie Waterfield fought her ex-husband’s discovery request, saying it violated attorney-client privileges.

Julie Waterfield failed to comply with the discovery request in 2014, saying in 2015 that her attorney had been too sick to gather the documents. As a result of her lack of cooperation, the trial court awarded default judgment as a discovery sanction to Richard Waterfield.

The Whitley Superior Court also awarded Richard Waterfield $842,021 in attorney fees in October 2015.

In its response to her appeal, the Indiana Court of Appeals wrote that although Julie Waterfield contended that she relied solely on Richard Waterfield’s representations when making the decision to enter into the settlement, and that she had no reason to ask for an independent evaluation of the value of the marital estate, she could not hide behind attorney-client privilege to keep her ex-husband from accessing documents that would contradict her testimony.

Further, when the communications between Julie Waterfield and her attorney were disclosed, they showed that she was advised at least three different times not to enter into the settlement without doing a detailed discovery. Julie Waterfield signed three different letters acknowledging her attorney’s advice, but still chose to enter the settlement.

By signing these documents, the appellate court wrote that Julie Waterfield surrendered her right to claim she relied on misinformation from her ex-husband when entering into the settlement to support her fraud allegation.

Julie Waterfield also appealed the court’s decision to deny her motion for summary judgment against her ex-husband’s claims of abuse of process. However, the Court of Appeals wrote that the timing of her decision to file suit against her ex-husband – in 2003, shortly after he remarried in 2002 – indicates that she entered into the legal process for a purpose other than what it is intended for.

 Further, the appellate court wrote that Julie Waterfield’s new counsel failed to review the communications between his client and her previous counsel. Had he done so, he would have learned of her previous attorney’s advice not to enter into the settlement without a discovery, which could have prevented her lawsuit against her ex-husband.

“Accordingly, we cannot say that Julie used the legal process to accomplish an outcome which the process was designed to accomplish,” the Court of Appeals wrote in its Friday opinion.

Julie Waterfield also appealed the default judgment as a sanction against her. While the appellate court wrote that it sympathized her with attorney’s illness, it also wrote that the illness did not strike until more than a month after the discovery request.

Finally, Julie Waterfield appealed the decision to award her ex-husband attorney fees. But because her new attorney prolonged the litigation process by failing to research her communications with her previous attorney and ignoring the court’s discovery orders, the Court of Appeals said Richard Waterfield was entitled to an attorney fee award.


 

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