Financial Affidavits in Dissolution of Marriage Actions: Are They Really Mandatory?
Of all the ostensibly sacrosanct principles of Florida family law procedure, the concept that financial affidavits are required in all dissolution of marriage actions and cannot be waived is the polestar. While it is in fact true that the literal language of the Family Law Rules of Procedure mandate that all parties in all dissolution proceedings file financial affidavits, an analysis of the pertinent case law reveals that the courts have in significant measure eviscerated the rule. Indeed, while the rules provide that financial affidavits are mandatory in all dissolution proceedings, the case law supports the proposition that financial affidavits are mandatory only in original proceedings as opposed to simplified dissolutions, and even then only when a specific request for financial relief has been made in the pleadings. Moreover, the answers to several compelling questions are uncertain in the case law. Are marital settlement agreements and final judgments void in the absence of financial affidavits? Can the court proceed with entry of a final judgment in the absence of financial affidavits? If settlement agreements and judgments are not void, can it reasonably be argued that financial affidavits are in fact mandatory?
This article will explore and attempt to answer these questions and, ultimately, pose the theory that it cannot be presumed that marital settlement agreements entered in the absence of financial affidavits may be abrogated, or that final judgments of dissolution entered without a financial affidavit are automatically void, except in a very narrow category of dissolution actions. Ultimately, then, it can well be argued that the proposition that financial affidavits are truly mandatory in all dissolution cases is at least somewhat embellished.
The requirement that financial affidavits are mandatory in dissolution actions is well entrenched in Florida law.1 Prior to enactment of the Florida Family Law Rules of Procedure in 1996, Fla. R. Civ. P. 1.611 provided that each party seeking child support, alimony, or modification thereof, an equitable distribution of assets or debts; or attorneys’ fees, suit money, or court costs, was required to serve on all parties a financial affidavit in substantial conformity with Rule 1.611(a).2 Rule 6.11 was deleted and relocated to the Florida Family Rules of Procedure November 22, 1995, effective January 1, 1996.3 The requirements regarding the need for financial affidavits are now found in two separate sections of the rules. Rule 12.105 states that in simplified dissolution procedures: “The parties must each file a financial affidavit (Family Law Form 12.901(d) or 12.901(e)) and a marital settlement agreement (Family Law Form 12.901(h)(3)).4 In all other dissolution actions, Rule 12.285, subsection(d), sets forth the mandatory disclosure requirements for initial or supplemental proceedings and provides that the filing of a financial affidavit is a “requirement” that “cannot be waived by the parties.”5 S imilarly, subsection (c)(1) of Rule 12.285 provides that the financial affidavit requirement “cannot be waived by the parties” in proceedings for temporary financial relief.6 Rule 12.285 specifically excludes simplified dissolution proceedings and uncontested dissolutions from its requirements.
Construction of the rules as to the issue of whether financial affidavit can be waived has led to different standards for simplified dissolutions as opposed to original proceedings. As to simplified dissolutions, although Rule 12.105 in fact states the financial affidavits cannot be waived, the case law construing the rule indicates otherwise. Varrieur v. Varrieur, 775 So.2d 361 (Fla. 3d DCA 2000), is instructive. In Verrieur, the husband filed a simplified dissolution petition. The parties later mutually divided all of the real property and marital assets and signed a partnership agreement effectuating their agreement. The partnership agreement provided that the parties’ rental properties would be jointly owned and operated, and that the rentals would be distributed equally. The trial court then entered a final judgment of dissolution, after the wife testified under oath that she was not coerced, and that the marital property had been divided.
Neither party objected to the proposed financial settlement, and neither party filed a financial affidavit.7 The Third District ruled that financial affidavits can in fact be waived for simplified procedures under Rule 12.105.8 The court pointed out that though Rule 12.285 contains specific language which states that the financial affidavit requirement “cannot be waived by the parties,” there is no such language in Rule 12.105 for simplified dissolution proceedings.9 M oreover, the court further noted that Rule 12.285 specifically excludes simplified dissolution proceedings and uncontested dissolutions from its requirements.10 C iting Leisure Resorts, Inc. v. Frank J. Rooney, Inc., 654 So.2d 911 (Fla.1995), the court reasoned that if the Supreme Court had intended to prohibit a waiver of the obligation of filing financial affidavits in Rule 12.105, it would have included an explicit statement to that effect, just as it did in Rule 12.285.11
The court concluded that the deliberate exclusion of this language evidences a different meaning was intended with regard to financial disclosure in simplified dissolution proceedings, citing Ocasio v. Bureau of Crimes Compensation Division of Workers’ Compensation, 408 So.2d 751 (Fla. 3d DCA 1982). The court concluded that a party may waive the filing of a financial affidavit in a simplified proceeding under Rule 12.105 by failing to object at trial, and that such a waiver will be upheld when there is no showing of prejudice and the record demonstrates competent substantial evidence that supports the final award.12
Even in nonsimplified cases, the rule mandating financial affidavits has been significantly constrained. In Salczman v. Joquiel, 776 So.2d 986 (Fla. 3d DCA 2001), the wife filed a verified petition for the dissolution of marriage, wherein she averred that the terms of an antenuptial agreement should be fully enforced.13 She sought no financial support or relief from the former husband. The former husband filed his answer, admitting all of the allegations contained in the petition, and requested that the only two jointly titled assets of the parties be divided equally between the parties pursuant to the antenuptial agreement. Thereafter, the parties amicably disposed of the two jointly titled assets pursuant to the terms of the antenuptial agreement.
On appeal, the parties argue that the order requiring them to submit financial affidavits in their dissolution action pursuant to Rule 12.285, where there were no financial issues presented to the trial court for its consideration, violated their constitutional right to privacy.14 Finding that it was not necessary to reach the privacy claim, the court read the plain language of Rule 12.285 as that financial affidavits are required (and nonwaivable by the parties) when there has been an initial or supplemental request for permanent financial relief, that is, where a party seeks to have the court make an award of permanent financial relief such as child support, alimony, equitable distribution of assets, or debts, etc. Contrarily, if a court in a dissolution proceeding under that rule is not being called upon to award any permanent financial relief to a party, financial affidavits are not required and are indeed wholly irrelevant to the proceeding.15 As the court was presented with absolutely no issue as to permanent financial relief for either party, the court concluded that the rule does not mandate that financial affidavits be filed.16
If financial affidavits are not required in simplified dissolution actions or in cases where financial relief has not been requested, the question remains as to whether there is a class of cases in which financial affidavits are in fact mandatory. An analysis of the recent Fifth District case of Dyke v. Dyke, 837 So.2d 584 (Fla. 5th DCA 2003), is enlightening as to this issue.
In Dyke, the parties began dissolution proceedings when the former wife filed a petition for dissolution of marriage.17 A lthough the husband was hospitalized in a psychiatric facility at the time he was served with the dissolution papers, he retained counsel and filed an answer and counterclaim for dissolution, alimony, equitable distribution, and a partition of the parties’ real and personal property.18 At the time of the final hearing, he was again hospitalized in a psychiatric facility in England, and as a result, did not attend the final hearing and was not represented as his counsel had previously withdrawn. A final judgment of dissolution was therefore entered, which awarded the former wife what the former husband later contended was substantially all of the parties’ property. More than three years after the final judgment was entered, the former husband filed a motion to set the judgment aside, alleging fraud. He further alleged that the former wife’s failure to file the financial affidavit required by Florida Family Law Rule of Procedure 12.285(d)(1), rendered the final judgment void. His argument was premised on the notion that the failure to file a financial affidavit is akin to filing a fraudulent affidavit.
Citing Cerniglia v. Cerniglia, 679 So.2d 1160 (Fla.1996), the court stated that accepting the former husband’s position would “negatively impact the finality of judgments, and that [S]uch an expansion. . . is contrary to the public policy favoring the termination of litigation after trial and appeal of the court’s judgment.”19 Further citing Vaccaro v. Vaccaro, 677 So.2d 918 (Fla. 5th DCA 1996), the court indicated that though it may have been error for the court to proceed without a financial affidavit from the former wife, that the lack of such an affidavit does not deprive the trial court of jurisdiction and that any error was waived by the failure of the husband to object at the time of the final hearing. (emphasis added).
In reviewing the triumvirate of Dyke, Varrieur, and Salczman, several conclusions can be drawn. First, it is apparent that though the rules provide that financial affidavits are mandatory in simplified dissolutions, the case law supports that in fact they can be waived.20 Second, even in original proceedings, if a party’s pleadings do not include a request for financial relief, the requirement that the parties file financial affidavits is not triggered. Third, even in original proceedings, the requirement that the parties file financial affidavits will effectively be negated if the parties proceed to final hearing without objecting to the lack of affidavits, and by the holding in Dyke that final judgments in the absence of financial affidavits are not void.
Notwithstanding that we may reach these conclusions, our critical questions are still unanswered. In the absence of financial affidavits, are final judgments of dissolution and marital settlement agreements ever void? Under what circumstances? If they are never void, can we agree that the language in the rule that financial affidavits are mandatory is in essence mere window dressing?
To answer these questions, we must first analyze the court’s statement in Dyke that it may have been error for the court to proceed to entry of a final judgment without a financial affidavit. In reaching that conclusion, the court in Dyke cited Vaccaro v. Vaccaro, 677 So.2d 918 (Fla. 5th DCA 1996). Citing Rule 1.611(a), Florida Rules of Civil Procedure, the court in Vaccaro held that a final judgment granting monetary relief may be vacated on appeal if the party awarded relief failed to file a required financial affidavit, but only if the appellant objected at trial to the other party’s failure to file an affidavit. Further citing Seinfeld v. Seinfeld, 363 So.2d 19 (Fla. 3d DCA 1978), and Nour v. Nour, 373 So.2d 379 (Fla. 1st DCA 1979), the Vaccaro court also noted that the appellant need demonstrate that he was prejudiced by the other party’s failure to file the affidavit and that the award is not supported by competent substantial evidence. To establish prejudice, the appellant need demonstrate that the court would not have awarded the monetary relief had it possessed the information required by the financial affidavit. Seinfeld, 363 So.2d 19 (Fla. 3d DCA 1978).
Ultimately then, Dyke instructs us that final judgments effected in the absence of financial affidavits are not automatically void, and that only upon a showing that a party objected to the final hearing on the grounds there was no financial affidavits filed and that the lack of affidavit was prejudicial would the final judgment probably be subject to successful attack. The underpinning of all the cases cited in Dyke regarding the question of whether final judgments are void if effected in the absence of financial affidavits is Fla. R. Civ. P. 6.11(a), which was abrogated by the Florida Family Law Rules of Procedure in 1996. Though not yet answered in the case law, the present rule regarding the need for financial affidavits as found in Fla. Fam. L. R. P. 12.285 would likely be construed as the courts construed the prior Rule 1.611, that is, that only upon a showing that the court would have ruled differently at the final hearing had financial affidavits been exchanged would a final judgment be abrogated.
Dyke dealt with the question of a dissolution action proceeding to final hearing without the parties having reached a settlement
agreement prior to the final hearing. The question remains as to whether marital settlement agreements and final judgments effected in the absence of financial affidavits are ever subject to being vacated or abrogated. To answer that question, we must examine the Florida Supreme Court decision of Macar v. Macar, 803 So.2d 707 (Fla. 2001).
In Macar, the Supreme Court held that in divorce cases where marital settlement agreements are reached after litigation is initiated and the parties are afforded an opportunity to engage in the discovery process, parties challenging settlement agreements and final judgments should not be permitted to claim lack of knowledge, because through due diligence they could have unearthed all relevant facts. The Supreme Court limited its prior rule set forth in Casto v. Casto, 508 So.2d 709 (Fla. 1987), holding that Casto provides the framework for challenging settlement agreements entered into prior to litigation and discovery, but that after a legal proceeding has been initiated, where parties may employ counsel to engage in the discovery process to disclose all assets and relevant factors, an ex-spouse should not be permitted to challenge settlement agreement and final judgments on the basis of lack of disclosure.21 The court further ruled that the more narrow provisions of Fla. R.Civ. P. 1.540 apply to challenging agreements entered into after litigation.
Prior to Macar, the district courts had spearheaded attacks on mediation agreements and settlement agreements, limiting abrogation of those agreements to the first prong of the Casto analysis. Petracca v. Petracca, 706 So. 2d 904 (Fla. 4th DCA 1998); Crupi v. Crupi, 784 So. 2d 611 (Fla. 5th DCA 2001). Petracca involved a stipulated settlement agreement made in the course of what the court termed “overheated” and “fierce” divorce litigation, and an attack on the agreement prior to entry of the final judgment. The Fourth District in Petracca held that the spouse challenging a litigation settlement agreement is limited to showing fraud, misrepresentation, or coercion, and that inquiry into the “unreasonableness” or “unfairness” of the settlement agreement to either party is not permitted. In Crupi, one of the parties attacked a mediation agreement on the ground of lack of disclosure. There, the Fifth District ruled that the same rule should apply regardless of whether the agreement is a stipulated settlement agreement, as in Petracca, or a mediated settlement agreement, as in Crupi.
Though yet unanswered in the case law, the Supreme Court’s rule in Macar would likely extend to marital settlement agreements and judgments executed and rendered in the absence of financial affidavits because of the logical underpinnings of the rule. Macar, Petracca, and Crupi teach us that a party in litigation can choose to utilize discovery tools. They can also choose not to. If they do not, and then reach marital settlement agreements and mediation agreements and allow final judgments to be entered, they are at great peril, in that they cannot come back after execution of the agreement or entry of the judgment and question the adequacy of knowledge, because to do so would be to manipulate the privileges of litigation. The court in Macar specifically stated that if the Casto analysis were applied to final judgments entered after litigation initiated, such settlements would be entered into “with the knowledge, indeed, the expectation, that they could be rescinded.”22 It is likely, then, that a court faced with the question of the abrogation of a marital settlement agreement or mediation agreement executed in the absence of a financial affidavit and after litigation commences would reach the same decision as the court in Macar, Petracca, and Crupi.
The rationale that prompted the court in Macar to state that the incentive of parties in litigation to challenge the judgment after final judgments would “permit parties to manipulate the privileges of litigation, waste judicial resources, and compromise finality in these judgments” is as equally applicable to discovery in the form of financial affidavits as with any of the other tools of discovery. Why should financial affidavits be treated differently than depositions, interrogatories, requests for production, Rule 12.285 discovery, requests for admission, or subpoenas for documents from nonparties? If a party does not file a financial affidavit in litigation, the other party can bring a motion to compel, motion for contempt, and ultimately, any of the other sanctions as set forth in Fl. R. Civ. P. 1.380(b)(2), including striking of pleadings, as with any other discovery. Most importantly, the party can choose not to execute a settlement agreement prior to financial affidavits being filed. Therefore, and given the tools available to compel discovery, including the filing of financial affidavits, it logically follows that an attack on a marital settlement agreement after litigation commences on the grounds of a lack of a financial affidavit is the same manipulation of the privileges of litigation and waste of judicial resources as is an attack on such an agreement on the grounds of lack of any other discovery.
The foregoing analysis of Dyke and Macar supports the following conclusions:
• In dissolution actions where the parties do not reach a settlement prior to the final hearing and have not filed financial affidavits, final judgments of dissolution are not void even in the absence of affidavits, unless a party objects prior to entry of the judgment, and even then only if court would not have awarded the monetary relief had it possessed the information required by the financial affidavit. Seinfeld v. Seinfeld, 363 So. 2d 19 (Fla. 3d DCA 1978).
• In dissolution actions where the parties reach a marital settlement agreement or mediation agreement after the initiation of litigation, marital settlement agreements, mediation agreements, and final judgments will most likely be deemed valid and will not be abrogated, even when financial affidavits are not filed prior to execution of the agreement and rendition of the judgment.
It is in fact true that the Florida Family Law Rules of Procedure mandate financial affidavits in all dissolution cases. The case law provides otherwise. Dissolution proceedings in simplified cases, cases when financial relief is not requested, and cases involving mediation agreements, marital settlement agreements, and final judgments after litigation commences, are likely completely unaffected by the failure of the parties to file financial affidavits. While it is conceded that there exists a class of cases in which a result of failing to file a financial affidavit is of true significance and will result in a final judgment being invalidated and voided, that line is quite constrained, and includes only those actions in which a party objects prior to entry of the judgment, and even then only upon a showing that the court would not have granted the monetary relief had it possessed the information required by the financial affidavit.
Are financial affidavits truly mandatory? As Jake Barnes bluntly put it, “Isn’t it pretty to think so?”23
1 Fla. Fam. L. R. P. 12.105; 12.285(d).
2 Fla. R. Civ. P. 1.611.
3 Fla. R. Civ. P. 1.611 was deleted Nov. 22, 1995, effective Jan. 1, 1996 (663 So. 2d 1047).
4 Fla. Fam. L. R. P. 12.105(c).
5 Fla. Fam. L. R. P. 12.285(d)(1).
6 Fla. Fam. L. R. P. 12.285(c)(1).
7 Verrieur, 775 So.2d 361.
9 Rule 12.285(a)(1) states: “This rule shall apply to all proceedings within the scope of these rules except proceedings involving. . . simplified dissolution.”
13 Salczman, 776 So. 2d 986.
14 The parties contended that the rule violated their constitutional right to privacy as guaranteed by Fla. Const. art. I, §23.
15 Alligood v. Florida Real Estate Commission, 156 So. 2d 705 (Fla. 2d D.C.A. 1963) and State v. Egan, 287 So. 2d 1 (Fla. 1973).
17 Dyke v. Dyke, 837 So. 2d 584 (Fla. 5th D.C.A. 2003).
19 Cerniglia v. Cerniglia, 655 So. 2d 172 (Fla. 3d D.C.A. 1995).
20 Varrieur v. Varrieur, 775 So. 2d 361 (Fla. 3d D.C.A. 2000).
21 In Casto, the Supreme Court considered the elements upon which a trial court could set aside a postnuptial agreement, ruling that a spouse may set aside or modify an agreement by establishing that it was reached under fraud, deceit, duress, coercion, misrepresentation, or overreaching. Alternatively, agreements may be revoked if the challenging spouse establishes that the agreement makes an unfair or unreasonable provision for that spouse, given the circumstances of the parties…. Once the claiming spouse establishes that the agreement is unreasonable, a presumption arises that there was either concealment by the defending spouse or a presumed lack of knowledge by the challenging spouse of the defending spouse’s finances at the time the agreement was reached. The burden then shifts to the defending spouse, who may rebut these presumptions by showing that there was either (a) a full, frank disclosure to the challenging spouse by the defending spouse before the signing of the agreement relative to the value of all the marital property and the income of the parties, or (b) a general and approximate knowledge by the challenging spouse of the character and extent of the marital property sufficient to obtain a value by reasonable means, as well as a general knowledge of the income of the parties. Casto, 508 So. 2d at 333.
22 Macar, 803 So. 2d at 710.
23 Ernest Hemingway, The Sun Also Rises (1926).
David L. Manz practices with the law firm of Greenmanz and Manz, PA., in the firm’s Marathon and Key West offices. His practice is limited to complex matrimonial matters. Mr. Manz is board certified in marital and family law and is a fellow in the American Academy of Matrimonial Lawyers. He is a member of the executive council of the Family Law Section, has served as editor of their various publications, and also is immediate past chair of the Family Law Board Certification Committee.
This column is written on behalf of the Family Law Section, Evan R. Marks, chair, and Kristen Adamson-Landau, editor.