Tuesday, February 21, 2006

Case Law Development: Interpreting Settlement Agreements Strictly

How should courts interpret marital settlement agreements: with the strict construction of standard contract law or with a more flexible approach drawn from equity?  Should we police marital settlement agreements with the same degree of judicial control as we do other fiduciary contracts?  With a thumb on the scales toward which side?  Should forfeitures in such contracts be disfavored more or less than in other contracts?

The Florida Court of Appeals recently split over these questions involving an agreement providing Wife an option to purchase the marital home.  The majority, in a very brief opinion, affirmed the trial court’s decision to strictly enforce Wife’s deadline for closing, reasoning that the contract provided a deadline which Wife had the opportunity to act within but chose not to because she had obtained an unfavorable interest rate. 

The dissent argued that the contract itself did not specify that time was of the essence and that courts interpreting settlement agreements should sit as courts of equity. The dissent’s viewed the former wife's request for additional time to close on the property as arising from the former husband's refusal to allow the former wife to purchase the property through the assistance of third parties so that she could procure a more favorable interest rate.  According to the dissent, “the sale proposed by the former wife would have accomplished the parties' intentions under the agreement. The trial court's and the majority's resolution of the matter frustrates those intentions and runs afoul of equitable principles.”

McCutcheon v. Tracy, 2006 Fla. App. LEXIS 1145 (February 1, 2006).

http://lawprofessors.typepad.com/family_law/2006/02/case_law_develo_25.html

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