Spouse Discovers After Divorce Where The Ex Was Hiding Assets
Obviously, a marriage is based upon trust. However, if your spouse is being secretive about finances, it is only inevitable that you may ask yourself, “What else is he (or she) hiding?” I cannot begin to tell you how many folks have come to visit my law firm over the years because of secrecy and lies. Often, the spouse then discovers other secrets, typically a paramour. I recently had a case where my client’s brother-in-law explained to her that he knew his brother was about to move “a lot” of money to Cairo, Egypt. She then broke into his email and found out that he was about to wire approximately $400,000. Once she hired me as her lawyer, we immediately filed a Complaint for Divorce as well as an Order to Show Cause. Within 24 hours I was successful in obtaining a Court Order freezing all assets pending the finalization of the divorce. In this divorce case I was one fortunate lawyer in that my client discovered the evidence before the divorce was over. This is because, as a divorce attorney for decades now, I understand that to reopen a divorce if the assets are found after the divorce is over can be quite difficult.
Discovering the existence of an asset, which has been concealed in a divorce proceeding, is always a difficult task. This is especially true if one party has been hiding assets out of the state of New Jersey and into another country. As a divorce attorney, I advise my client’s to do everything in their power to try to locate these assets. Simply put, if the hidden assets are discovered before the final judgment of divorce is granted, then they are taken into consideration when it comes to equitable distribution. However, what if the assets are not discovered before the final judgment is issued, but rather after? Can the party who discovers the hidden assets request the court to set aside the final judgment of divorce? That was the issue addressed in the case of Zuba v. Zuba, decided April 14, 2015. Following is a lawyer’s analysis.
In the case the parties married in July 1980 and divorced in January 2011. Upon the divorce, the parties entered into a property settlement agreement. Pursuant to the agreement, the parties affirmed that they had “candidly and fully disclosed to the other all of their income, assets, and liabilities as the execution of the agreement.”
After the divorce, the husband started living in the home of Ms. Grinfelds. While living with her, the husband allegedly disclosed to her and other members of her family that he owned property in Costa Rica. Additionally, he told her that he had a bank account in Belize. Once he told the Grinfelds about the property and bank account, he further revealed that he did not disclose the assets on his Case Information Statement that he filed during the divorce proceeding.
Although Grinfelds did not have proof that the husband actually hid these assets from his wife, she contacted the wife in December 2012 and told her that her ex-husband had hid money and property from her during their marriage. Over a year later in September 2013, the wife filed a motion to set aside the property settlement agreement. She claimed that it was not until December 2012 that she learned for the first time that her ex-husband bought property in Costa Rica and wired money to his bank account in Belize. As a result, the wife requested discovery into the matter.
Furthermore, the wife got Grinfelds to submit an affidavit to the court. In particular, Grinfelds affirmed the following key points:
- (1) While the husband lived in her home, he told many members of her family on multiple occasions that he bought property in Costa Rica while married to his ex-wife. Specifically, he told her that he paid $65,000 for the Costa Rican property and that he concealed this from his ex-wife.
- (2) Furthermore, the husband told her that he had a savings account in Belize with a lot of money invested in it. This too he concealed from his ex-wife during his marriage.
- (3) Moreover, the husband was worried that his wife was very suspicious of his behavior. As a result he believed that she would hire an investigator to look into what her husband had been up to. Consequently, the husband sold the Costa Rican property in 2012 for over $100,000 and realized $87,000 in net profit. He also transferred the money from Belize back to the US.
- (4) Finally, although she didn’t have proof initially, the husband showed her paperwork demonstrating the proof of the assets existence.
Of course, the husband opposed his ex-wife’s motion. He certified that all of the allegations made against him were not true and stressed that Grinfelds lacked credibility. Ultimately, the trial court denied the wife’s motion. The court held that she failed to establish a prima facie case of fraud. In particular, the trial judge stated that the evidence presented was speculative and that Grinfelds did not identify the specific documents that she supposedly saw. As a result, the wife appealed. On appeal, the wife argued that the trial court erred in not granting her motion to set aside the final judgment of divorce under Rule 4:50-1. She claimed that she was entitled to an opportunity for post-judgment discovery at the very least.
The NJ Appellate Division first looked to Rule 4:50-1 to begin its analysis. Pursuant to the rule, a court may relieve a party from a final judgment for any of the following reasons:
- a) Mistake, inadvertence, surprise, or excusable neglect
- b) Newly found evidence which would probably alter the judgment and which could not have been discovered in time to move for a new trial
- c) Fraud, misrepresentation, or other misconduct of an adversary
- d) It is void
- e) It is no longer justifying relief from the operation of the judgment
The court stated that “where there is a showing of fraud or misconduct by a spouse in failing to disclose the true worth of his of her assets, relief may be granted under rule 4:50-1 (f). if the motion is made within a reasonable time. Accordingly, the court believed that the wife should have been granted some form of relief because she did file a timely motion that fell within subsection (f) of the Rule.
Keeping Rule 4:50-1 in mind, the court went on to examine the issue of whether or not the wife should be granted discovery. The court first noted that if Grinfelds’s allegations tuned out reliable, they would provide great support for the wife’s claim that her husband hid assets from her throughout the marriage and divorce proceeding. Additionally, the court stated although the husband argued that the wife failed to present sufficient evidence, the Appellate Division believed that it would be unreasonable to place the burden of proof on the wife to show that the assets existed. The court noted that it would be extremely difficult for the wife to independently verify the assets existence and gather documentation related to them since they were out of the country.
After considering all the factual disputes and the wife’s lack of opportunity to fully develop her claim that her husband purposely hid assets from her, the New Jersey Appellate Division vacated the order of the trial court and remanded the case for discovery and investigation. I believe that the parties ultimately settled out of court.
To discuss this new, red-hot issue further please contact my office today.