Opinion
No. 2-952 / 01-1853.
Filed March 12, 2003.
Appeal from the Iowa District Court for Chickasaw County, JON C. FISTER, Judge.
Richard Brummond appeals from the district court's ruling that his property settlement with his former wife was obtained by fraud. AFFIRMED.
Kristy Arzberger of Arzberger Law Office, Mason City, for appellant.
Richard Stochl of Elwood, O'Donohoe, Stochl, Braun Churbuck, New Hampton, for appellee.
Considered by HUITINK, P.J., and MAHAN and VAITHESWARAN, JJ.
We must decide whether the district court was correct in modifying a property stipulation in a dissolution decree on the ground that it was procured by fraud. Finding no error, we affirm.
I. Background Facts and Proceedings
Richard and Vicki Brummond were married for nineteen years. During the marriage, they owned and operated a construction and concrete business.
At the time of their divorce, a competitor, Croell Redi Mix, offered to buy the Brummonds' business for $800,000, but insisted that Richard execute a covenant not to compete. Richard stated he was unwilling to do so and negotiations ended.
During the dissolution trial, the parties stipulated that Richard could keep the business assets. Vicki received an $80,000 equalizing payment. The district court approved the stipulation and filed a decree.
On the date the decree was filed, Richard's attorney notified Croell that Richard was ready to sell the business. The attorney further stated Richard was "willing to consider an Offer that includes a covenant not to compete, if the offer were for an increased amount." Richard eventually agreed to sell a portion of the business assets to Croell. He also agreed to sign a partial covenant not to compete.
Vicki applied to modify the decree, contending the property settlement was fraudulently procured. Following a hearing, the district court sided with Vicki. The court modified the decree to require an additional payment of $76,800 to Vicki. This appeal followed.
II. Scope of Review
As a preliminary matter, the parties disagree on our scope of review, with Richard claiming it is at law, and Vicki asserting it is de novo. While modification applications are generally reviewed de novo, we believe Richard is correct that our scope of review in this case is at law.
Vicki's application to modify the property portion of the dissolution decree was grounded on a claim of fraud. The district court, therefore, treated the application as a petition to vacate the judgment for fraud or irregularity pursuant to Iowa Rule of Civil Procedure 1.1012. This was appropriate, as our courts have declined to consider petitions to modify the property provisions of a decree except on a showing of one or more of the factors outlined in that rule. See In re Marriage of Waggoner, 438 N.W.2d 850, 851 (Iowa Ct.App. 1989) (affirming district court's treatment of petition to modify decree as a petition to vacate judgment). See also In re Marriage of Knott, 331 N.W.2d 135, 136-37 (Iowa 1983) (same); Sorenson v. Sorenson, 254 Iowa 817, 824, 119 N.W.2d 129, 133 (1963) (same); cf. Kleinsmith v. Northwest Bank Trust Co., 477 N.W.2d 388, 390 (Iowa 1991) (noting substantial change of circumstances requirement for modification does not apply to property divisions, but authority to modify such settlements is not limited to grounds specified in rule 1.1012). Because the petition was treated as a petition to vacate judgment, our review is at law and the district court's fact findings are binding on us if supported by substantial evidence. See In re Marriage of Butterfield, 500 N.W.2d 95, 97-99 (Iowa Ct.App. 1993).
Formerly Iowa R.Civ.P. 252.
III. Merits
"Fraud" as used in rule 1.1012 includes "any act, omission, or concealment which involves a breach of legal or equitable duty, trust or confidence, and is injurious to another, and by which an undue or unconscientious advantage is taken of another." Copic v. Copic, 325 N.W.2d 766, 769 (Iowa Ct.App. 1982) (quoting Reimers v. McElree, 238 Iowa 791, 797, 28 N.W.2d 569, 572 (1947)).
A plaintiff alleging fraud in obtaining a judgment must prove the following elements by clear and convincing evidence: 1) misrepresentation or failure to disclose when under a legal duty to do so, 2) materiality, 3) scienter, 4) intent to deceive, 5) justifiable reliance and 6) injury or damage. In re Marriage of Cutler, 588 N.W.2d 425, 430 (Iowa 1999).
The district court made extensive findings to support its determination that fraud was committed, the most pertinent of which are as follows:
Throughout this period and up until the stipulation and decree were filed, Respondent represented that he would not sell the business with a noncompete agreement. However, within hours after the stipulation and decree were filed, Respondent directed his lawyer to contact Croell Redi Mix and advise that, now that his wife was out of the picture, he would consider an offer to purchase the business which included a covenant not to compete. When Croell Redi Mix did not respond immediately, he repeated his invitation to them in December. When he testified at trial, Respondent provided two equally incredible, unbelievable, and inconsistent explanations for these letters.
Based on these preliminary findings, the court made the following findings of ultimate fact:
Respondent's representation that he would not sell the ready mix plant and concrete construction company with a covenant not to compete was a material misrepresentation with respect to the ready mix plant, he knew it was a misrepresentation, and he intended to deceive and did deceive Petitioner who justifiably relied on his misrepresentation to her injury.
The record contains substantial evidentiary support for these findings. Accordingly, we affirm.