The Statute of Limitations Barrs the Enforcement of Equitable Distribution Agreement
In the appellate family law, equitable distribution case of K.A.R. v. T.G.L., PICS Case No. 14-2113, (Pa. Super. Dec. 23, 2014), the Honorable Paula Francisco Ott, writing on behalf of the Pennsylvania, Superior Court, ruled that the explicit terms of the parties’ equitable distribution agreement established a finite date and specific amount that husband was to pay to wife and was not a continuing contract. The order of the trial court affirmed.
Wife appealed from the order of the trial court dismissing her exceptions to the report and recommendation of the master, and granting the exceptions filed by husband, in the form of statute of limitations and laches defenses, to wife’s action to enforce the parties’ equitable distribution agreement. The parties’ equitable distribution agreement provided that husband would pay wife a certain percentage of the net after taxes proceeds of the sale of the stock of his business venture, which the court referred to as Business-1.
Wife contended that the trial court erred in ruling that the statute of limitations barred her present action to enforce the parties’ agreement, arguing that the equitable distribution agreement was a “continuing contract”.
However, the court ruled that because the equitable distribution agreement expressly provided for a specific date that husband was to pay wife (upon the sale of the Business-1 stock) and a specific amount in the form of a percentage of the net after taxes proceeds of the sole of the stock, the parties’ agreement was not a continuing contract, and therefore subject to the four-year statute of limitations.
Alternatively, wife argued that the statute of limitations was tolled by: (1) a writ of summons filed by wife; (2) the discovery rule; (3) husband’s concealment and settlement negotiations; and/or (4) husband’s acknowledgement of his obligation to wife.
Although the court believed that wife’s writ of summons was intended to preserve a fraud claim, wife contended that she filed the writ to preserve all her claims against husband. However, the court found that wife cited no authority supporting the application of a writ in a civil action to an enforcement proceeding under the Divorce Code; accordingly, the court held that wife’s action could not be preserved by her writ of summons.
The court further held that the statute of limitation was not tolled by the discovery rule, noting that wife was provided with documentation relating to the proceeds of the Business-1 sale, which wife acknowledged. Furthermore, the court noted that wife communicated her belief to husband that he owed her further funds in January 2005, which the court held was the latest date for the application of the discovery rule.
The court further found no concealment of the monies received by husband, noting that the letter from husband’s counsel that wife relied on for her concealment argument made no misrepresentation of the amount husband received from the Business-1 sale. The court additionally noted the well-settled principle that settlement negotiations do not toll the statute of limitations in rejecting wife’s argument that husband’s attempt to settle with wife evidenced that he owed her additional funds.
Finally, the court agreed with the trial court’s finding of the applicability of the defense of laches, on the basis that wife did not exercise due diligence in pursuing her claim until 5 years after the relevant events took place, and because husband was prejudiced by wife’s actions when he made a payment of $150,000 in the belief that it would resolve the parties’ equitable distribution issues, only for wife to continue pursue funds.
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, 38 PLW 38 (January 13, 2015)
Filed Under: Family Law: Equitable Distribution