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Property set asides and partition actions

SET ASIDES AND PARTITION ACTIONS

This blog was written solely for my own educational benefit. If you would like a more authoritative source on the subject, with a greater depth and understanding, then please direct your attention to Marshall Willick's website at www.willicklawgroup.com. That being said this blog provides a brief description as to when a property distribution or settlement Decree may be set aside. The blog then goes on to describe when a partition action, division of omitted assets, may be successful under Nevada law.

NRCP 60(b) allows for judgments or orders to be set aside under certain conditions. NRCP 60(b)(1) provides for a set aside for mistake, inadvertence, surprise, or excusable neglect. NRCP 60(b)(2) provides for such orders to be set aside upon a finding of fraud, misrepresentation or misconduct of an adverse party which would have theretofore justified a court in sustaining a collateral attach upon the judgment. NRCP 60(b)(3) and (4) will not be discussed here.

Keep in mind that these set asides are only available for a period of six months following the entry of judgment. There is case law which provides that when the fraud is "committed upon the court" then this six month limitation will not apply. This fraud upon the court consists of fraud which prevents a real trial upon the issues involved. For instance if the fraudulent party acts so as to prevent the defrauded party from appearing at trial based on false promises or compromise this may suffice. However this "fraud upon the court" appears to be a rather high standard. The case law doesn't appear to allow for an exception to the six month ruled based solely on misrepresentations made to the aggrieved party as to the presence or value of marital property.

Where the aggrieved party acts within the six month limitation the court grants more leniency or a lower burden of "fraud". The common circumstance which may give rise to this motion to set aside is the circumstance where one of the parties realizes post Decree that she or he received a substantially smaller portion of the community estate than she or he believed. If the aggrieved party acts within the six month window the reviewing court should consider the fairness of the property distribution in determining whether a set aside is proper.

Where the aggrieved party received an unequal distribution of community property due to the intentional misrepresentations the aggrieved party may have redress under NRCP 60(b)(2). Of course there will be other occasions where both of the marital parties are mistaken as to the value of a marital asset. This commonly occurs where one of the parties has a pension, which is often times more difficult to value then a defined contribution plan such as a 401k or perhaps an IRA. When the parties are both mistaken as to the value of some property the aggrieved party may find recourse under NRCP 69(b)(1).

There will be times when a Decree of divorce does not list a community asset of the parties. This is called an "omitted asset". The Nevada case law is not uniform in its dealings of omitted assets. It is difficult to distinguish the Supreme Court's rulings in this regard. However, the tendency as it stands today is for the court to distribute any omitted assets equally post-divorce. The rationale might be that property held in part by two previously married parties is held as tenants in common post-divorce. What that means is that each of the parties has an individual right to that property and to alienate their respective interest in such property as that party sees fit. Thus omitted property, which is not considered in the Decree, is considered to be held by the parties as tenants in common post-divorce.

Following the Doan v. Wilkerson 327 P.3d 498 (2014) case the pertinent question seems to be whether the omitted asset was in fact "litigated". In the Seminole case of Amie v. Amie 106 Nev. 541, 796 P.2d 233 (1990) it was sufficient that there was no mention of an omitted asset in the Divorce Decree. Following the Doan case the question is more refined. Now it seems we must determine whether there was any mention of the omitted asset prior to Divorce. Thus if there is evidence that there was disclosure by one of the parties of the asset which was subsequently omitted from the Decree then the court may well find that Res Judicata applies and no partition will be had. Thus before filing a partition action review the record to see if there were any disclosures, whether it be in 16.2 disclosures, a financial disclosure form, pleadings, or testimony in court regarding the asset which was omitted from the Decree. If there was disclosure then the court may be inclined to deny the partition action for reasons of Res Judicata given the fact that the moving party already had a shot to litigate the asset in prior litigation.

If one of the parties realizes post-divorce that an asset was omitted then it becomes incumbent upon that party to file a partition action. This partition action must either be filed by motion or by separate action. The seminole cases on point here are Bank v. Wolff, 66 Nev. 51, 202 P.2d 878 (1949) or more recently Amie v. Amie 106 Nev. 541, 796 P.2d 233 (1990). These cases provide for post-divorce partition of omitted assets. Be advised that it seems to make no difference as to whether the property was omitted due to fraud or mistake. Also keep in mind that the six month set aside rules on NRCP 60(b) don't seem to apply. Thus the partition action can take place far into the future after the divorce.

There are other cases which stand for the direct opposite proposition. These cases essentially don't allow for a partition of omitted assets post-0divorce. However the current trend in Nevada seems to be to allow for such partition at least where the asset was omitted from the Decree. That being said, given the uncertainty, drafting counsel should consider including an "Aimie provision", which essentially gives the court continuing jurisdiction to adjudicate potential omitted assets discovered post-divorce.

Categories: Family Law