Madoff Ripped Me Off, So Change My Divorce Property Division

On Behalf of | Jun 1, 2011 | Property Division

Courts don’t like to revisit issues in divorce property division. Just ask anyone who has asked a Pennsylvania court to change a property division decision after the divorce decree has become final. So it is not only Pittsburgh property division attorneys who are interested in the recent lawsuit by an ex-husband who wants the courts in his state to revise the property division in his divorce.

The reason the husband believes a change in the property division is justified is that he was a victim of Bernard Madoff’s massive Ponzi scheme.

At the time of the divorce in 2006, the spouses believed that they had five million dollars in investments with Bernie Madoff. The husband kept the Madoff investments, and the wife received a settlement in cash.

Now the husband has sued on the contract principle of “mutual mistake.” This is a standard doctrine in contract law, which says that where both parties were mistaken about a material element of the contract, the contract is rescinded. A common example is a sale of a valuable item that turns out to be fake. If both parties were innocently mistaken about the item’s value, the contract can be rescinded.

But many divorce attorneys in Pittsburgh and across the country note that courts have always expressed a strong interest in keeping final divorce decrees final. This competing interest has led to splits in the courts in NY where the husband brought his lawsuit.

Many observers worry that if the husband’s suit is successful, and he can change the property division based on the subsequently revealed fraud, it could open a huge contractual can of worms. Many deals are made based on the parties’ beliefs about the present and future value of the deal. If one party turns out to be mistaken about that value, can they get out of their part of the contract? That is what many people worry could happen.

It will be interesting to see how the courts ultimately decide between allowing an allegedly unfair settlement to be revised and interfering with the finality of divorce decrees.

Source: NYT Dealb%k “Madoff Victim Seeks Divorce Do-Over” 5/30/2011


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