Massachusetts divorce lawyer Nicole K. Levy reviews a recent Massachusetts case in which a Probate and Family Court held that spouses were bound by a “memorandum of understanding” that outlined the terms of a future divorce agreement.
As litigious as divorce matters can be, the vast majority divorce cases end with a negotiated Separation Agreement. In fact, settlement can even occur mid-trial if the parties can agree to resolve the issues being litigated. Whether the parties reach an agreement at a four-way meeting, a Pre-Trial Conference, or out in the hallway midway through trial, the first step in settlement is often an “agreement in principle”. An agreement in principle simply represents the middle stage between the time the parties decide they have resolved the major issues in litigation and the final drafting of the formal Separation Agreement.
Here is an example: the attorneys for two spouses reach tentative agreement at 3:45 pm, midway through the second day of a five-day divorce trial. Given that Massachusetts courts close at 4:30 pm, there is no time for the attorneys to draft a comprehensive Separation Agreement before the court’s doors close in 45 minutes. Under these facts, the attorneys will typically report to the judge that the parties have reached an “agreement for principle”, then ask for additional time to draft a final agreement. Inherent in any any agreement in principle is the acknowledgment that certain details must still be resolved by the parties.
Table of Contents for this Blog
- Agreements in Principle: What Do they Mean?
- Memoranda of Understanding
- Are Parties Bound by a Signed Memorandum of Understanding?
- The “Fair and Reasonable” Colloquy
- The Dominick Standard
- When is a Signed Divorce Agreement Enforceable?
Agreements in Principle: What Do they Mean?
In most situations, the “agreement in principle” is more of a placeholder than a tangible thing. The agreement in principle often consists of little more than an oral agreement between the parties and counsel that they intend to resolve a major issue in certain way. The agreement is not necessarily memorialized in writing nor the details fleshed out. In certain cases, however, the parties will memorialize an agreement in principle in a written “memorandum of understanding”, which briefly summarizes the major points the parties agree on, and further provides that the parties intend to an enter a full-blown, formal agreement that will reflect the summarized points of understanding.
Memoranda of Understanding
This practice of drafting a “memorandum of understanding” is especially common when parties reach agreement while physically present at a court hearing. At court, attorneys are far away from their computers and support staff, and they frequently face time and space constraints that prevent the preparation of a complete agreement. However, the practice of executing a memorandum of understanding can lead to problems if one party decides down the road that he or she no longer agrees with the terms of the memorandum.
Reaching agreement is not always easy in a contentious divorce case.
Negotiation is an incredibly important, but stressful, time in the divorce process. Each side is expected to make concessions, and human nature dictates that each side of a negotiation frequently feels he or she is making more concessions than the other. Moreover, agreement on major issues is not always a guarantee of success. The devil is in the details, they say, and it is not uncommon for an agreement in principle to be derailed by a small-but-important detail that escaped the attention of the parties or attorneys when they initially reached agreement. A memorandum of understanding is a great to preserve the momentum of a negotiation, but before signing, parties must consider if they are willing to be permanently bound by the memorandum’s terms.
Are Parties Bound by a Signed Memorandum of Understanding?
In a recent 2015 decision, Kimberk v. Wysocka (Rule 1:28), the Appeals Court reviewed a Probate and Family Court judge’s finding that a husband was bound by a signed memorandum of understanding, despite the husband’s subsequent withdrawal of consent and refusal to execute a final Separation Agreement reflecting the terms of the memorandum. The parties were in the middle of their divorce trial when they reached agreement on the division of assets, which they memorialized in a memorandum of understanding. The memorandum was executed by both parties and presented to the judge. Notably, the judge ruled that the terms of the memorandum were fair and reasonable after each party testified under oath about the memorandum.
In Kimberk, the Probate and Family Court judge specifically requested that the parties and counsel report the terms of there agreement in principle to the judge, on the record, and further requested that the parties memorialize the agreement in a memorandum of understanding. In its review of the case, the Appeals Court noted that the memorandum provided detailed terms regarding the division of property (the major issues at trial), but left out minor details and provisions that would likely be included in a formal Separation Agreement. Of note, the signed memorandum explicitly spelled out that if a final Separation Agreement was not entered within two weeks, the memorandum itself would enter as a Judgment of the court.
Both parties testified at the hearing that they understood the terms of the memorandum. Based on this, the judge moved forward with a colloquy with the parties, reviewing each parties’ execution of the memorandum. Each party testified that he or she had executed the memorandum voluntarily and believed its terms to be fair and reasonable. The judge then found, on the record, that the agreement was “fair, reasonable, and binding on the parties”.
Following the hearing, the husband withdrew his consent and declined to execute a formal Separation Agreement. The husband argued that he signed the memorandum of understanding under duress, and upon consideration, no longer agreed to its terms. Despite his claims, the judge declared the memorandum binding and enforceable and incorporated its terms in the Judgment of Divorce, making it forever binding on the parties.
The “Fair and Reasonable” Colloquy
A key component in Kimberk was the colloquy the judge conducted, which specifically addressed whether the parties signed it freely and voluntarily. Similarly, the judge sought testimony from the parties confirming that they understood the memorandum; this confirmed for the judge that there was no confusion about the details of the document. Lastly, the judge asked the parties to confirm that they each believed the terms of the memorandum were fair and reasonable. Based on this testimony, as well the judge’s own review of the memorandum and knowledge of the case, the judge entered a finding that the memorandum was fair and reasonable.
The court’s finding that the agreement was “fair and reasonable” was important because “fair and reasonable” the legal standard that judges apply to the approval of Separation Agreements in every divorce case. What’s more, not every memorandum of understanding executed in a divorce is subject to a colloquy; indeed, many such agreements are entered without a judge’s review, much less a separate finding declaring the memorandum “fair and reasonable” at the time it was entered. Had the parties entered the memorandum outside of court, without a judge present to immediately declare its terms fair and reasonable, it is quite possible that Kimberk would have turned out differently.
The Dominick Standard
In the seminal case of Dominick v. Dominick (1984), the Appeals Court held that parties could be bound by an oral agreement that was read into the record at trial – despite the immediate absence of a signed writing – when both parties testified under oath regarding their understanding of the agreement, which they each entered voluntarily. The Appeals Court summarized the events as follows:
[C]ounsel reported a settlement to the judge, and counsel for the husband asked that both counsel be allowed to participate in reading into the record “the bare bones” of an agreement which “we would like to incorporate in a formal agreement at a later stage but, nevertheless, to read the basic understandings into the record.” There followed a detailed recitation of the parties’ agreement, made with the assistance of a draft, which dealt with the transfer and retention of all of the marital assets, alimony, child support (including costs of education through college), custody, visitation and miscellaneous matters. The parties were present when the agreement was read into the record, and thereafter the judge conducted the colloquy …
In Dominick, the judge’s colloquy with the parties did not specifically include the judge asking parties if they believed the agreement was “fair and reasonable”, nor did the judge enter a specific finding that the terms were fair and reasonable at the time of the hearing. Nevertheless, the Appeals Court held that the oral agreement was binding on the parties – despite the husband’s subsequent attempts to withdraw his consent – where the Appeals Court found that the judge was “entitled to rely on the representations of experienced domestic relations counsel, the fact that each party had been advised by experts in the valuation of marital assets, the answers of the parties to the questions put by the judge, and the comprehensiveness of the agreement…”
When is a Signed Divorce Agreement Enforceable?
In general, Probate and Family Court judges have fairly broad discretion to determine whether a signed agreement should be binding on the parties. There is no guarantee that a judge will find signed agreement enforceable, however, absent the many layers of confirmation obtained by the judge in Kimberk. For example, in Britton v. Britton (2007), the Appeals Court upheld a lower court’s decision declining to enforce a signed stipulation that the parties had entered months before trial, where the original stipulation had not been presented to the court at the time of execution, and the parties no longer agreed on its terms at the time of trial. In Rubin v. Rubin (1991), the Court upheld a decision declining to enforce an agreement where trial judge found “the ‘agreement does not make adequate provisions for child support or alimony,’ that the assignment of property was not based upon the factors set out in c. 208, § 34, and was ‘inadequate and incomplete,’ and that the agreement was the ‘product of duress and coercion’ …”
(Notably, the Britton court did not find that the agreement was necessarily unfair; rather, the decision was based on the parties’ failure to formalize agreement soon after its entry. By the time the husband presented the agreement to the court, months had passed and circumstances had changes. In contrast, the judge in Rubin attacked the terms of the contents of the agreement itself, finding that it was unfair, unreasonable and incomplete. Each case reflects a different way that a judge may decline to enforce a signed agreement in a divorce case.)
It is fair to say that Probate and Family Court judges encounter cases like Kimberk relatively infrequently, and most will consider the specific facts and circumstances surrounding the execution of an agreement, along with the terms of the agreement itself, when determining whether the agreement is enforceable. Like so many family law issues, there is no “one size fits all” answer in such cases. What we know is that not all cases benefit from the type of comprehensive hearing and colloquy present in Kimberk, where the agreement was not only memorialized in writing, but recited and agreed to by the parties on the record, under oath and in detail. The take away is that parties and counsel should be mindful that in settlement negotiations, tensions are often high, and terms and issues can slip through the cracks in the pressure of the moment. In the moment, signing a memorandum of understanding will likely come as relief to all involved, but everyone involved should know that even a short memorandum could transform into a final agreement if settlement negotiations later break down.
About the Author: Nicole K. Levy is a Massachusetts divorce lawyer and family law attorney for Lynch & Owens, located in Hingham, Massachusetts.