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Case Notes: Fraud and divorce - opening the divorce after the fact.

In the Allegheny County case of Kozel v. Kozel, 161 Pa Super 2014, the parties divorce was finalized in 2005. Later, Wife found out that Husband failed to disclose certain assets at the time of the divorce. So, in 2012, she brought suit to get assets re-distributed under a "constructive trust". Husband sought to dismiss Wife's claim based upon the statute of limitations and other reasons.

The Allegheny County Court of Common Pleas ruled that Wife could seek to establish a "constructive trust" under 3505 (d) of the divorce code. The Superior Court agreed.

Husband sought to bar wife's case by citing 23 Pa. CS 3332 which limits the re-opening of a decree in divorce to 30 days (for intrinsic fraud) and 5 years (for extrinsic fraud). In answer, the Court noted that Wife sought relief under 23 Pa CS 3505 (d), not 3332.

Under 3505(d), if "a party fails to disclose information required by general rule of the Supreme Court and in consequence thereof an asset or assets with a fair market value of $1,000 or more is omitted from the final distribution of property,...the Court shall grant the petition [for imposition of a constructive trust] upon a finding of a failure to disclose assets as required by general rule of the Supreme Court".

In this case, Wife claimed that Husband failed to disclose his ownership in Falcon Partners, gas interests and wells and other partnerships. Apparently, Husband did things like transferring his interest in Falcon Partners to his brothers for no money prior to equitable distribution and then, after the divorce, received his interest back from his brothers. He and his brothers engaged in impermissible "divorce planing". So, the Court imposed a "constructive trust" which permits the court to "re-do" the divorce distribution without re-opening the divorce decree or being subject to the time limits of 3332.

Moral of the case #!: Be honest with the court and your attorney. The parties here were married in 1994 and separated in 1998. Meaning, that there were only 4 years of marital property in the case. Yet, the case was re-opened in 2014 and Husband will now face a court that likely considers him a "schnook". Had Husband merely been honest from the start, he would have put this Case behind him many years ago with minimal exposure. Instead, he tried to pull a fast one and is paying the price.

Moral of the case #2: If the Court thinks that you are trying to rip-off your spouse, they will likely find a way to make you pay. The law can be interpreted in many ways and the court does not want to see somebody getting away with defrauding their ex.

Moral of the case #3: It is important to properly list your assets and debts in any settlement and/or to use proper language to prevent your ex from claiming omission of assets, even if you did not mean to do so. An experienced family law attorney can do this.

We sometimes get asked to take "short-cuts" on cases. This case is an example of why that is a bad idea.