Equitable Distribution

Husband’s Transfer of Marital Assets to His Brother as “Divorce Planning” Could Impose a Constructive Trust on the Concealed Assets Years After the Divorce Planning

In the equitable distribution, family law appellate case of Kozel V. Kozel, PICS Case No. 14-1221, (Pa. Super: July 29, 2014), the husband appealed from a court order denying his motion for summary judgment, which allowed former wife to proceed with her petition for special relief seeking imposition of a constructive trust on assets allegedly concealed during the divorce.

The parties were married in 1994, separated in 1998 and divorced in 2002. A master issued findings of fact regarding equitable distribution, alimony and counsel fees in 2005 which were appealed and confirmed by the court in 2007. In 2012, wife filed a petition asserting that husband failed to disclose his legal or equitable ownership in certain assets and asking for the imposition of a constructive trust on the assets. Husband filed a motion for summary judgment arguing that wife’s motion was barred by the statute of limitations in 3332 of the Divorce Code, which required that any action claiming intrinsic fraud be filed within 30 days of the divorce decree and any action claiming extrinsic fraud be filed within five years of the final decree. The trial court denied husband’s motion and husband appealed.

Husband relied on Hassick and argued that 3322 controlled the relief wife was seeking. Wife countered that Major supported her position that husband’s failure to disclose his ownership of certain property brought her petition within 3505, which provided for the filing of a petition “at a time.” The court disagreed with husband and found that Hassick was not a 3505(d) case and could not serve as a basis for denying wife the opportunity to seek relief under 3505(d).

The court also declined to accept husband’s argument that 3505 and 3323 should be read in pari materia because the language of 3505 was unambiguous and in pari materia did not apply.

The trial court did not abuse its discretion in dismissing husband’s summary judgment motion because there were genuine issues of material fact that required discovery. For example, wife alleged that husband had transferred assets to his brother as “divorce planning” with the understanding that the brother would reconvey the assets to husband when the divorce litigation was concluded. Wife also alleged that husband may have owned more gas wells and related interests than disclosed in his inventory, marital asset summary and pretrial statement. She based her claim on averments in a lawsuit for specific performance filed against husband’s brother and sister-in-law by unrelated plaintiffs, which indicated that husband and brother agreed to sell approximately 592 natural gas wells in 2004. Thus, there was a genuine issue of material fact as to when husband acquired an interest in those assets.

In light of the specificity of wife’s allegations and the master’s findings that husband engaged in divorce planning, the trial court properly denied husband’s summary judgment motion, allowing the parties to engage in discovery.

Reference: Digest of Recent Opinions; Pennsylvania Law Weekly, 37 PLW 763 (August, 12, 2014)

Filed Under: Divorce Law: Family Law: Equitable Distribution: Constrictive Trust on Concealed Marital Assets

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