It is common knowledge among divorce
litigants that purposely hiding assets is unethical and can lead to very
serious consequences. Yet, the question remains as to what occurs if the
litigants omit assets, unintendedly, from the divorce settlement. The most
common example of this scenario is an unaccounted-for retirement plan that
accrued value during the marriage.
Because a final decree has been entered by the judge, is
there nothing to be done? What if the good-faith omission results in a gross miscarriage
in justice?
In most instances, once the judge has issued his/her final
edict, the case is resolved, and the parties go on their ways in abidance with
the judicial order. However, there are limited scenarios that a case might need
to be reopened—for example if after the final judgment, it is discovered by one
of the spouses that the order was imparted while the court presumed a material
mistake in fact.
Per Nevada Rule of Civil Procedure 60(b), upon the discovery
of “mistake,” “inadvertence,” or “excusable neglect” by a party to a legal
proceeding, said party has up to six months from the date of the order to
motion the court. In the (hopefully) hypothetical scenario we are discussing, a
non-purposeful omission of a material asset from a divorce should be classified
as a “mistake,” “inadvertence,” or “excusable neglect.”
Luckily, the rule also contains the provision that “this
rule does not limit the power of a court to entertain an independent action to
relieve a party from a judgment, order, or proceeding.” The Nevada Supreme
Court interprets this sentence to best effectuate justice for Nevada citizens:
“The salutary purpose of Rule 60(b) is to redress any
injustices that may have resulted because of excusable neglect or the wrongs of
an opposing party…Rule 60 should be liberally construed to effectuate that
purpose.” Nevada Industrial Dev. v. Benedetti, 103 Nev. 360, 363
(Nev. 1987). An omitted asset that is worth (at least) five-figures to a person
without an alternative source of income is such an injustice that a court should
and will remedy.
So if a court will reopen a divorce decree because of an
omitted asset, how long does a divorce litigant have to file?
The Nevada case law regarding an omitted asset is what I will
euphemistically call less-than-consistent, and given the glaring
inconsistencies, I just don’t see the benefit in walking you through the
changes in the law over the years.
The confusion crested in Doan
v. Wilkerson, 327 P.3d 498, 501 (Nev. 2014), when the Nevada
Supreme Court dismissed its previous common law precedent and declared that “[i]f
the legislature had intended to vest the courts with continuing jurisdiction
over property rights, it would have done so expressly…policy in favor of
finality and certainty underlying NRCP 60(b) applies equally, and some might
say especially, to a divorce proceeding. Therefore…we hold that NRCP 60(b)'s
time limitation applies to a motion for relief from or modification of a
divorce decree.”
Without action from the Nevada Assembly, such a decision
would have incentivized the hiding of assets, because once the 60(b) time limit
lapsed, there would be no further recourse available for the injured spouse. Fortunately,
our noble Nevada legislature was up to the task and responded—just like our founding
fathers wrote it up—with an amendment to NRS 125.150.
The revised law now says that a divorce judgement “as the result
of fraud or mistake” may be reopened “within 3 years after the aggrieved party
discovers the facts constituting the fraud or mistake.” Why three years? Mostly
likely, the assembly chose to adopt a similar three-year statute of limitations
for other mistakes in fact that is found in the Period of Limitations law, NRS
11.190(3)(d).
The Nevada Assembly
clarifies in the legislative
notes that the intent of the bill is to empower judges to rectify
unjust results when necessary. “This bill further provides that the court has
continuing jurisdiction to hear such a motion and must make an equal
disposition of the omitted community property or liability unless the court
finds that certain exceptions apply.”
There is a reasonable argument to made that the statute of
limitations is unreasonable at three years because the omitted asset is most
often a pension plan—and such a discovery often does not occur until the
litigants near retirement. Such a statute of limitations will only protect
older divorce litigants; yet, the law should provide justice to everyone
equally.
On the other hand, there is a strong public policy incentive
for the finality of judgements. Folks would not make long-term investments if
there was the potential that any resolved judgment could be reopened at any
time in the future. Courts need to account for this as well.
About the Author:
Stacy Rocheleau has practiced
divorce law for 18 years, helping clients with uncontested divorces, legal
separations, and contested divorces. Among her accolades, Ms. Rocheleau was
elected the best divorce attorney in her home State of Nevada for 2017 &
2018. You may contact Ms. Rocheleau from her website.
Need a lawyer? Start here.