Opinion
No. 3-161 / 02-1022.
Filed June 25, 2003.
Appeal from the Iowa District Court for Dubuque County, Jon Fister, Judge.
Gary Lenz appeals the district court decision granting Janice Lenz's petition to vacate the parties' dissolution decree based on fraud and duress. AFFIRMED.
James Affeldt and Edward Blando of Elderkin Pirnie Law Firm, Cedar Rapids, for appellant.
Jennifer Clemens-Conlon of Reynolds Kenline, L.L.P., Dubuque, and Robert Day of Day Hellmer, P.C., Dubuque, for appellee.
Heard by Sackett, C.J., and Huitink and Vogel, JJ.
I. Background Facts and Proceedings
Janice and Gary Lenz were married in December 1971. Although they divorced in 1975, Gary and Janice continued to live together. On May 27, 1998, Gary transferred all of his real property to the Gary L. Lenz Trust, naming himself as trustee. Gary reserved the right to amend or revoke the trust. The trust also included the following provision:
The trustee shall pay to [Gary], [Janice] and any other person who is a financial dependent of mine, such portions of income and principle [sic] as the independent trustee deems necessary or advisable to provide for the care, education, comfort, and maintenance of myself, my spouse and any financial dependent of mine.
Janice filed for divorce in December 1999 requesting dissolution of her common-law marriage to Gary. On January 28, 2000, the trial court granted Janice's request for temporary allowances awarding her $2000 per month in temporary alimony and $5000 for attorney fees. We affirmed the trial court's temporary order on Gary's appeal. See In re Marriage of Lenz, No. 1-085/00-0302 (Iowa Ct.App. Aug. 29, 2001).
In May 2000 Janice discharged her lawyer. In a June 8, 2000, letter to her lawyer Janice stated that she no longer needed his assistance and had decided to dismiss her dissolution action. On June 27, 2000, Janice signed a satisfaction of spousal support and temporary attorney fees that was filed with the clerk of court on June 30, 2000.
Contrary to her stated intentions, Janice did not dismiss the dissolution action and on June 27, 2000, met with Gary and Gary's business lawyers to discuss settlement of disputed financial issues and finalization of their divorce. As a result of this meeting, Gary and Janice reached an agreement resolving all disputed financial issues and signed a stipulation prepared by Gary's lawyers. The stipulation provided:
1. Gary L. Lenz Trust. Gary and Janice acknowledge that all of their real property has been transferred to the Gary L. Lenz Trust by a Trust Agreement dated May 27, 1998. The parties acknowledge that this is a revocable living trust. The parties acknowledge that they accept the rights and benefits provided to each of them by the Gary L. Lenz Trust and hereby confirm this trust agreement.
The stipulation also provided that Janice would not receive any alimony from Gary, that they would each pay their own attorney's fees, and that "no additional property exists which needs to be divided."
A dissolution decree incorporating the terms of the parties' stipulation was filed on June 30, 2000. After the decree was entered, Janice did not receive any predetermined allowances for her subsistence. She lived with family or friends and was required to forward her bills to Gary for payment.
These proceedings commenced with Janice's May 2001 petition to vacate the June 30, 2000, decree. Her petition alleged:
The dismissal of Petitioner's attorney, the execution of the Stipulation and the entry of the Decree of Dissolution of Marriage were obtained due to the irregularity or fraud practiced by the Respondent in obtaining such action. . . .
Further, as a result of years of domestic abuse, both physical and verbal, and the corresponding manipulation by Respondent, the Petitioner was of unsound mind at the time of the execution of the relevant documents and was unable to make them binding.
Gary denied Janice's allegations and also claimed that Janice's petition to vacate the decree was not timely filed.
Janice's evidence supporting her claims of fraud and irregularity included her testimony that Gary and his lawyers told her that the terms of the trust could not be changed and she did not know the trust was revocable. She also testified that Gary told her that her lawyer was out to ruin him financially, that their children would lose their inheritance if she persisted in her claims, he was going to file bankruptcy, and the stress caused by the divorce was ruining his health.
Janice also presented testimony that Gary was physically abusive and controlling during the marriage. The record includes expert testimony concerning the implications of her abusive relationship with Gary and that she suffered from posttraumatic stress disorder and battered woman's syndrome.
Gary's evidence included testimony indicating Janice dismissed her lawyer and voluntarily signed the relevant settlement documents after being fully informed of her entitlements and opportunity to seek independent legal advice. Gary claimed Janice decided to settle on the terms of the stipulation based on her desire to protect the children rather than any misrepresentation or intimidation by him or his attorneys.
At the conclusion of the evidence, the court granted Janice's request to amend her petition by adding an equitable claim that the June 27, 2000 satisfaction of spousal support and temporary attorney fees and the June 30, 2000, decree were void because they were obtained by duress and in violation of due process of law. The court made the following findings of fact:
In any event, the Court does not see any benefit in cataloging the individual incidents and history of abuse that characterized this relationship. The simple truth is that however long Petitioner was subjected to the abuse, and however remote in time particular incidents of abuse may have been, they were sufficient in severity and frequency that she still suffered from them in June 2001, approximately 12 months after the dissolution. In that regard, her petition to vacate this decree because of duress cannot be untimely because the duress under which she labored was still operating at and after the time it was filed and it will continue until she gains insight into the reasons for her past behavior and learns ways to avoid it in the future through counseling, deprogramming, and reconditioning.
As ultimate facts, the Court finds by clear and convincing evidence that [Gary's] statements to [Janice] that his revocable trust would take care of her and could not be changed, that her lawyer intended to ruin him financially, that he was facing bankruptcy if the litigation continued, and that the litigation was jeopardizing his health and the children's inheritance were all material misrepresentations, that — he knew they were misrepresentations and that he intended to deceive and did deceive [Janice] who justifiably relied on his misrepresentations to her injury and damage. These misrepresentations also lulled her into a false sense of security and prevented her from making a defense which prevented a fair submission of the controversy.
Moreover, as additional ultimate facts, the Court also finds by clear and convincing evidence that, under the particular circumstances of this case, Petitioner signed off on the decree and executed the stipulation and satisfaction of judgment under duress on account of multiple unlawful acts of domestic abuse assault committed on her and out of a need to survive the threat of future physical, psychological, emotional, and economic abuse. Stated otherwise, she was under such compulsion at the time of the execution of these documents that she did not execute them freely or voluntarily . . . .
In addition to vacating the satisfaction of temporary spousal support and the June 30, 2000, decree, the court determined the temporary support order entered June 28, 2000, remained in full force and effect. Gary's post trial motions were denied, resulting in this appeal.
On appeal Gary claims the trial court erred by not dismissing Janice's petition to vacate the decree because it was not timely filed. Gary also contends the trial court erred by granting Janice's motion to amend her petition by adding an equitable claim that the satisfaction of spousal support and attorney fees as well as the June 30 decree were obtained by duress. Gary further contends that the record does not support the trial court's findings of fraud, duress, and resulting denial of due process. Lastly, Gary argues the trial court erred by reinstating Gary's temporary alimony obligation.
II. Standard of Review
Our review of a petition to vacate a judgment under Iowa Rule of Civil Procedure 1.1012 is for the correction of errors at law, not de novo. In re Marriage of Cutler, 588 N.W.2d 425, 429 (Iowa 1999). The district court's factual findings are binding upon us if supported by substantial evidence. Id. at 430. The district court enjoys wide discretion in deciding whether to vacate an order under rule 1.1012. In re Adoption of B.J.H., 564 N.W.2d 387, 391 (Iowa 1997). We are more reluctant to find an abuse of discretion where the judgment has been vacated than when relief has been denied. Id. III. Timeliness
A petition to vacate must be brought within one year after the entry of a judgment. Iowa R.Civ.P. 1.1013(1). A petition must show the grounds for relief "were not and could not have been discovered in time to proceed under rule 1.977 or 1.1004." Id. The time limit for bringing a motion to set aside under rule 1.977 is sixty days, while a motion for new trial under rule 1.1004 must be brought within ten days. Gary claims Janice could have discovered the reasons she seeks relief in this case within ten days, which makes the petition untimely.
The district court found Janice's petition was not untimely because the fraud and duress which caused Janice to sign the stipulation continued even after she signed, so that she did not question what had happened. We find the district court did not abuse its discretion in making its assessment. See In re Marriage of Marconi, 584 N.W.2d 331, 333 (Iowa 1998) (finding grounds for relief could not have been discovered in time to proceed under rule 1.977 where a victim of domestic violence left the area for safety).
IV. Fraud
A judgment may be vacated due to "[i]rregularity or fraud practiced in obtaining it." Iowa R.Civ.P. 1.1012(2). A judgment may be vacated based upon extrinsic fraud, rather than intrinsic fraud. Phipps v. Winneshiek County, 593 N.W.2d 143, 146 (Iowa 1999). Extrinsic fraud is some act or conduct of the prevailing party which has prevented a fair submission of the controversy. B.J.H., 564 N.W.2d at 391. It includes lulling a party into a false sense of security or preventing the party from making a defense. In re Marriage of Short, 263 N.W.2d 720, 723 (Iowa 1978).
The elements of fraud are (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) resulting injury or damage. Cutler, 588 N.W.2d at 430. "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." In re Marriage of Heneman, 396 N.W.2d 797, 800 (Iowa Ct.App. 1986).
The district court made the following findings:
As ultimate facts, the Court finds by clear and convincing evidence that [Gary's] statements to [Janice] that his revocable trust would take care of her and could not be changed, that her lawyer intended to ruin him financially, that he was facing bankruptcy if the litigation continued, and that the litigation was jeopardizing his health and the children's inheritance were all material misrepresentations, that he knew they were misrepresentations and that he intended to deceive and did deceive [Janice] who justifiable relied on his misrepresentations to her injury and damage. These misrepresentations also lulled her into a false sense of security and prevented her from making a defense which prevented a fair submission of the controversy.
We determine the district court's findings are supported by ample evidence in the record and should be affirmed on appeal. See Cutler, 588 N.W.2d at 430 (noting district court's factual findings on a petition to vacate are binding on appeal if supported by substantial evidence). Due to this extrinsic fraud, the dissolution decree and supporting documents should be vacated. See In re Marriage of Kinnard, 512 N.W.2d 821, 823-24 (Iowa Ct.App. 1993) (discussing evidence sufficient to vacate a dissolution decree based on extrinsic fraud).
V. Duress Due Process
Gary claims Janice should not have been permitted her amend her petition to allege duress, she failed to prove duress, and she failed to show she was denied due process. Because we have determined the dissolution decree, and accompanying documents, should be vacated due to fraud, we do not need to address these issues on appeal.
VI. Temporary Alimony
Gary asserts the district court erred by reinstating the temporary alimony obligation. He claims the court did not have subject matter jurisdiction to reinstate the temporary alimony obligation, because the claim was not raised in Janice's petition to vacate. Gary points out that the relief to be afforded in a case is limited by the prayer of a petition. See In re Guardianship of Cerven, 334 N.W.2d 337, 340 (Iowa Ct.App. 1983).
Gary's claims are based on his belief that the reinstatement of his temporary alimony obligation was a separate issue which needed to be pled and proven by Janice. Janice asserts the reinstatement of the temporary alimony obligation was the natural result of the vacation of the dissolution decree. The decree terminated the temporary alimony obligation. Janice contends that by vacating the decree, the temporary alimony obligation was no longer terminated, and thus, remained in full force and effect.
In the case, In re Marriage of Kinnard, 512 N.W.2d 821 (Iowa Ct.App. 1993), the parties were divorced in 1988, and were remarried later that year. The parties divorced again in 1990. We concluded the 1990 dissolution decree should be vacated based on extrinsic fraud. Kinnard, 512 N.W.2d at 824. We stated, "The 1990 dissolution decree is vacated, and the 1988 dissolution decree is reinstated." Id.
We conclude that by vacating the dissolution decree, the parties are placed in the positions they held prior to the entry of the decree. Prior to the dissolution decree, Gary was required to pay temporary alimony. Although the dissolution decree terminated his temporary alimony obligation, that decree has now been vacated. Therefore, Gary's temporary alimony obligation has never been terminated by any valid legal proceedings. We determine the temporary alimony obligation remains in full force and effect.
We affirm the decision of the district court vacating the decree and reinstating the dissolution proceedings. Costs of this appeal are assessed to Gary.