Buyer’s Remorse After the Marital Dissolution Agreement is Signed: Reformation or Rescission
- At October 27, 2020
- By Miles Mason
- In After Divorce, Divorce Process
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Thank you, Joe for this great blog post. Reformation or rescission is always a challenging legal topic. Most judges hate to reopen closed litigation files.
The complexity with this issue is one which requires a nuanced approach. 
Having second thoughts about that recent Amazon.com purchase? Amazon.com and most of its sellers offer returns for items within thirty (30) days of receipt of shipment.[i] However, in divorce cases, it is different. A spouse can enforce a signed Marital Dissolution Agreement,[ii] (“MDA”) and hold the other spouse to the agreement even when the other spouse wakes up the next morning and wants to change it.
So, if the spouses cannot agree to resolve issues arising from the MDA, what can they do?
MDA’s are contracts. Thus, there are contractual issues arising from an MDA that could impact a spouse’s ability to obtain what he bargained for during the divorce.
For instance, due to mistake or fraud, a spouse may want to alter or cancel the MDA. Or a spouse might want to alter the MDA if unforeseen circumstances have made it impossible for him to perform under the agreement.
Reformation is a legal remedy recognized by Tennessee law to resolve contractual issues.[iii] If a spouse can prove that he entered into the MDA through mutual mistake or fraud;[iv] or that his performance under the MDA is impossible,[v] a judge can “reform” the agreement to make it “conform to the real intentions of the parties.”[vi]
But reformation has its limits.[vii] Judges are not permitted to make a new contract for spouses under the guise of reforming it or impose obligations on a spouse to which he never agreed.[viii] Earlier this year, the Tennessee Court of Appeals reversed a trial judge for reforming a MDA even though the trial court’s order effectuated the parties’ intent.[ix]
In Moore v. Moore, the parties executed the MDA with the intention of each spouse retaining their respective retirement benefits, but the MDA was silent as to how that was to be accomplished.[x] After the divorce was finalized the husband sought to alter the MDA, because he realized that he could not remove the wife as his retirement beneficiary.[xi] Consequently, the husband’s daughter could not receive his retirement benefits if he predeceased her.[xii]
To effectuate the parties’ intent, notwithstanding the husband’s “mistake” as to his own retirement benefits, the trial judge chose to place additional burdens on the wife by making her pay to the daughter the retirement proceeds net after tax.[xiii]However, the Court of Appeals determined that the trial judge’s action was not an appropriate form of reformation, because new obligations were placed on the wife to which she did not consent.[xiv] So, the judge’s decision was reversed.[xv]
An alternative to reformation is rescission, which is the canceling of a contract. However recission, like reformation, is not favored in Tennessee and is only permitted upon a showing of fraud or mutual mistake.[xvi] In the context of a divorce, rescission is effectuated when the judge sets aside the divorce judgment incorporating the parties’ MDA and holds a divorce hearing anew.[xvii] Had the husband sought rescission instead of reformation, the judge could have issued an order to ensure that the daughter receives his retirement benefits.
So, it goes without saying that spouses should be vigilant in avoiding mistakes when negotiating their MDA. However, if you find yourself contemplating whether reformation or rescission is appropriate, then ask yourself the following questions:
- Are you making a new MDA or imposing new obligations to the current one?
- Are you bringing the MDA into conformance with an intent arising after its formation?
- Are you creating a more reasonable bargain?
If the answer to any of those questions is, “Yes,” then reformation is not appropriate, and you should consider rescission. If the answer to all of them is, “No,” then reformation may be the appropriate remedy.
Endnotes:
[i] About Our Returns Policies. (2011). Retrieved October 26, 2020, https://www.amazon.com/gp/help/customer/display.html?nodeId=GKM69DUUYKQWKWX7
[ii] A Marital Dissolution Agreement is a contract between two spouses that terminates the marriage and settles all or some of the property, custody, and support issues between the parties.
[iii] Sikora v. Vanderploeg, 212 S.W. 3d 277, 287 (Tenn. Ct. App. 2006).
[iv] City of Memphis for Use & Benefit of State v. Moore, 818 S.W. 2d 13, 16 (Tenn. Ct. App. 1991) (holding that mutual mistake or fraud is required to form a basis for reformation).
[v] Turner v. Turner, No. 2015-01165-COA-R3-CV (Aug. 11, 2016) (holding that a property settlement agreement may be reformed on the basis of impossibility).
[vi] Sikora, at 287.(quoting Lebo v. Green, 426 S.W. 2d 489, 494 (1968)).
[vii] 21 Tenn. Prac. Contract Law and Practice §6:64.
[viii] Ament v. Wynne, No. M2005-01876-COA-R3-cv (Tenn. Ct. App. Aug. 20, 2007) (citing Rogers v. First Tenn. National Bank Association, 738 S.W. 2d 635 (Tenn. Ct. App. 1987).
[ix] Moore v. Moore, No. E2019-00503-COA-R3-CV (May. 15, 2020).
[x] Id. at 6.
[xi] Id.
[xii] Id.
[xiii] Id. at 3. The trial court ordered that if Wife received her share of Husband’s retirement, she would pay the net amount after her taxes for that income to Husband’s daughter. Id
[xiv] Id. at 13.
[xv] Id.
[xvi] Pugh’s Lawn Landscape Co. v. Jaycon Dev. Corp., 320 S.W. 2d 252, 261 (Tenn. 2010); But see, Heaton v. Heaton, No. E2013-01985-COA-R3-CV (Aug. 29, 2014) (citing Hearne v. Marine Ins. Co., 87 U.S. 488, 491 (1874) (holding that “a mistake on one side may be a ground for rescinding, but not for reforming, a contract”)).
[xvii] Moore, at 8.
To learn more about divorce procedure, see The Tennessee Divorce Process: How Divorces Work Start to Finish.
