Florida - Invalidating Marital Settlement Agreements by Dana E. Quigley, Esq.

Dana Elaine Quigley

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Divorce / Separation Lawyer

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In Florida, marital settlement agreements are interpreted as other contracts. Bacardi v. Bacardi, 386 So.2d 1201, 1203 (Fla. 3rd DCA 1980). It is a fundamental tenet in contract law that a meeting of the minds of the parties on all essential elements is a prerequisite to the formation and existence of an enforceable contract. Greater New York Corp. v. Cenvill Miami Beach Corp., 620 So.2d 1068, 1070 (Fla.3d 1993).

Generally, the acceptance of an offer which results in a contract must be absolute and unconditional, identical with the terms of the offer, and in the mode, at the place, and within the time expressly or impliedly stated within the offer. Thus, `[an] acceptance must contain an assent to the same matters contained in the offer.'" Cheverie v. Geisser, 783 So.2d 1115, 1119 (Fla. 4th DCA 2001)(internal citation omitted)). See, also, Ribich v. Evergreen Sales & Serv. Inc., 784 So.2d 1201, 1202 (Fla. 2d DCA 2001)(citing Sullivan v. Economic Research Props., 455 So.2d 630, 631 (Fla. 5th DCA 1984)). [1]

Firmly rooted in contract law is the legal premise that a counteroffer operates as a rejection of a preceding offer. See, Padron v, Plantada, 632 So.2d 113 (Fla. 3d 1994); Cheverie v. Geisser, 783 So.2d 1115, 1119 (Fla. 4th DCA 2001). Where it appears that the parties are continuing to negotiate as to essential terms of an agreement, there can be no meeting of the minds. Drost v. Hill, 639 So.2d 105, 106 (Fla. 3d DCA 1994). With no meeting of the minds, there is no contract formation.

If a party withdraws his or her counteroffer and further negotiations are terminated, no binding or enforceable contract is formed. Moreover, as the Florida Courts have long held, “where parties intend that their verbal negotiations shall be reduced to writing as the evidence of the terms of their agreement, there is nothing binding on them until the writing is executed." See, Rork v. Las Olas Co., 156 Fla. 510, 23 So.2d 839 (Fla. 1945)(quoting Ocala Cooperage Co. v. Florida Cooperage Co., 59 Fla. 390, 394, 52 So.13 (Fla. 1910)), and its progeny.

A mere offer not assented (agreed) to does not constitute a contract for there must be not only a proposal but an acceptance of the offer. So long as a proposal is not agreed to or accepted, it is not binding on either party and may be retracted. If a party has retracted his or her offer and/or rejected the counteroffer no contract comes into existence and no legal obligations attach or exist. Gibson v. Courtois, 539 So.2d 459, 460 (Fla. 1989).

With respect to Marital and Property Settlement Agreements, if a Court finds that a “valid contract" was formed between the parties it may be invalidated and unenforceable on other grounds; for instance, if the agreement was based upon fraud, deceit, duress, coercion, misrepresentation, overreaching, without the benefit of discovery, without a full and frank financial disclosure by the one spouse and without the benefit of an attorney, it may be invalidated.

There are two Florida Supreme Court landmark decisions regarding the validity and enforceability of marital settlement agreements: Casto and Macar.

Within the Casto case, the Florida Supreme Court was confronted with an agreement entered into before the initiation of litigation and the entry of the final judgment. In Casto, the Court’s opinion notes that Husband did not advise the Wife of the value of his assets and issued her an ultimatum that if she did not sign the agreement she would lose her house and furniture and the Wife was deeply depressed the week before signing the agreement. Casto v. Casto, 508 So.2d 330, at 332 (Fla. 1987). The Court set aside the agreement upon a finding that the Wife was coerced into the agreement, that it was made without adequate knowledge of his assets, and without the assistance of competent counsel, and that it was unfair and inequitable to the Wife. Id. In setting aside the agreement, the Court in Casto held that that (1) a spouse may set aside or modify an agreement by establishing that it was reached under fraud, duress, deceit, coercion, misrepresentations, or overreaching; (2) that a challenging spouse may set aside or vacate an agreement if the agreement makes an unfair or unreasonable provision for that spouse, given the circumstances. If the Court deems that the agreement is unreasonable, a rebuttable presumption arises that there was either concealment by the defending spouse or a presumed lack of knowledge by the challenging spouse as to the defending spouse’s finances at the time the agreement was reached. [2]

Conversely, within the Macar case, the Florida Supreme Court was confronted with an agreement entered into after the initiation of litigation and after the entry of the final judgment. In Macar, the Florida Supreme Court distinguished the facts in its case from that of Casto as the parties in Macar did not reach an agreement until after the parties had commenced litigation and had engaged in extensive discovery before reaching their agreement. In supporting its opinion, the Florida Supreme Court in Macar cites to Petracca v. Petracca, 706 So.2d 904 (Fla. 4th DCA 1998) [3] wherein it states that Casto really turns on the adequacy of the knowledge of the challenging spouse as a predicate for an unreasonableness challenge. The Court went on to state that Casto is not applicable in cases where the agreement is reached after the initiation of litigation and the completion of discovery. The Macar Court held that Rule 1.540 and not Casto provides the framework for challenging settlement agreements entered into after the commencement of litigation and utilization of discovery procedures.

Accordingly, depending upon the circumstances, even fully signed Marital Settlement Agreement may be invalidated and unenforceable if there is evidence to show that the agreement was reached under fraudulent, deceitful, and/or coercive circumstances without the benefit of a full disclosure of your spouse’s financial disclosure. However, this body of case law does not permit a spouse to set aside or invalidate what the courts consider to be a “bad bargain" or a poor economic decision simply for the sake of he or she got a better deal. These arguments are limited to circumstances where a spouse was mislead or pressured into reaching an agreement.

[1] To determine whether a valid contract has been formed, Florida employs the “mirror image rule." Under this rule, in order for a contract to be formed, an acceptance of an offer must be absolute, unconditional, and identical with the terms of the offer. Sullivan v. Econ. Research Properties, 455 So.2d 630 (Fla. 5th DCA 1984); see also, Holloway v. Gutman, 707 So.2d 356 (Fla. 5th DCA 1998)(holding that acceptance must be of the identical terms of the offer).

[2] Casto v. Casto, 508 So.2d 330 (Fla. 1987)(addressing marital agreements entered into prior to litigation and entry of the final judgment and seeking relief under Florida Rule of Civil Procedure 1.540)). Cf. Macar v. Macar, 803 So.2d 707 (Fla. 2001).

[3] In Petracca, the parties entered into a post-litigation agreement after the parties had engaged in extensive discovery and both parties were continuously represented by counsel.

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