Fair or unfair, just or unjust, once a final judgment and decree of divorce has been entered, and the limited time for seeking a new trial or appealing that judgment has passed, both parties ordinarily remain bound by the terms of that judgment. But what happens if one former spouse later discovers that the other hid substantial assets from discovery during the divorce action? Undisclosed assets – including financial accounts, real estate, and valuable corporate or partnership interests – which properly should have figured into the analysis of alimony and child support, consequently are omitted from analysis. If acquired by the other spouse during the marriage, concealed assets which should have constituted marital property subject to equitable division between the spouses instead become the sole property of the duplicitous spouse. In such cases, do the victimized spouses have a remedy?
The answer is, maybe. Georgia law permits a court, on the motion of a party, to set aside or modify a final judgment for “[f]raud, accident, or mistake or the acts of the adverse party unmixed with the negligence or fault of the movant…”(1) That motion, however, must be “brought within three years from entry of the judgment complained of.”(2) Upon expiration of that three-year period, a cheated spouse loses the ability to challenge the judgment on grounds of fraud, even if he/she did not discover the existence of hidden assets until more than three years after entry of the final decree.(3)
If a cheated former spouse files a timely motion to set aside, some legal support exists to grant relief on the basis that the other party concealed assets during the divorce. The Georgia Supreme Court has affirmed the ruling of a lower court setting aside alimony and equitable division portions of a divorce decree on grounds that a spouse had fraudulently hidden assets to prevent their equitable division in the divorce.(4) In another appeal of a decision setting aside a divorce judgment on grounds of fraud (where an spouse had failed to disclose his interest in real properties during the divorce), the Georgia Supreme Court ruled that the filing of a motion to set aside the judgment more than three years after its entry precluded relief under the subject statute. The Court made no mention of error, however, in the lower court’s determination that a final decree could be set aside due to a party’s concealment of assets during the divorce.(5)
Neither of those two Supreme Court opinions specifically confirmed that the concealment/non-disclosure of assets during divorce constitutes the type of fraud for which a court may set aside a judgment under Georgia law. Problematically, that omission leaves unclear whether a claim of hidden assets comports with a distinction for setting aside judgments established under a long line of Georgia cases. Those authorities enforce a principle that a party seeking to set aside a judgment for fraud must demonstrate that the fraud was extrinsic or collateral to the merits of the original case.(6) In other words, the fraud must be “one the effect of which prevents a party from having a trial, or from presenting all of his case to the court, or which operates, not upon matters pertaining to the judgment itself, but to the manner in which it is procured.”(7) Where fraud is intrinsic – i.e., when the fraud pertains to an issue raised or which could have been raised in the original action, or the fraud was or could have been discovered and raised in the court below – a party cannot set aside a judgment allegedly procured by such fraud.(8) Unless and until a binding appellate decision expressly states whether a claim of hidden assets in divorce constitutes extrinsic or intrinsic fraud, trial judges remain free to rule either way; and the established definitions of those terms seemingly enable a finding that concealed marital assets constitute intrinsic fraud which will not support the setting aside of a judgment under Georgia law.
(1) O.C.G.A. § 9-11-60(d)(2). (2) O.C.G.A. § 9-11-60(f). (3) Myles v. Myles, 300 Ga. 261, 262, 794 S.E.2d 56 (2016). (4) White v. White, 275 Ga. 884, 561 S.E.2d 801 (2002). (5) Myles, supra, 300 Ga. at 262-263. (6) McCarthy v. Ashment, 790 S.E.2d 651, 654(2) (Ga. Ct. App. 2016). See also Jackson v. Jackson, 254 Ga. 280, 282, 328 S.E.2d 733 (1985); and Young v. Young, 2 S.E.2d 622, 626(3) (Ga. 1939). (7) Jackson, supra, 254 Ga. at 282. (8) McCarthy, supra, 790 S.E.2d at 654-655.