Washington Opens The Floodgates

By Attorney Gregg Herman
August 1, 2000

Perhaps it is due to the complexity of “unweaving the web” of family finances. Perhaps it is due to the desire of clients to minimize costs. Perhaps it is due to Wisconsin law which values property as of the date of divorce, which leads to much last-minute scrambling.

Perhaps it is a combination of all of these factors, and more, that ambiguities and sometimes errors are commonplace in property division issues. Many times, lawyers define the ambiguities or correct the errors by oral amendments at the time of trial or even stipulations amending judgment later. Other times, the parties work out the issues by themselves.

As a result of June 7 Supreme Court of Wisconsin case, Washington v. Washington, 2000 WI 47, trial courts now have the power to grant relief, even years after the judgment.

In Washington, the court of appeals affirmed the circuit court’s refusal to grant relief to the wife to have the divorce judgement amended to allow her to receive interest and appreciation on a lump-sum share of her former husband’s federal pension. The court of appeals held that the circuit court could not modify or revise a final division of property.

In reversing, the supreme court held at ¶ 4:

We conclude that a circuit court may construe the final division of property in a divorce judgment and allocate appreciation and interest on a pension when the divorce judgment is silent about the allocation of appreciation and interest on a lump-sum share awarded to a spouse but not payable immediately. The silence about appreciation and interest makes the judgment ambiguous. A circuit court’s construction of the ambiguous final division of the pension in this divorce judgment does not violate Wis. Stat.§ 767.32(1)(a).
The import of this case lies in the finality of divorce judgments. On this issue, the court held, in relevant part at ¶¶ 13-14, as follows:

A significant aspect of justice is finality of decisions, and the court takes this legislative goal of finality seriously. Furthermore, when a marriage ends, the law envisions the parties as having an opportunity to be independent of each other and go their separate ways in regards to their property.
Nevertheless, the legislature and the courts recognize that a final division of property in a divorce judgment does not always resolve all matters between the parties and that remedial action by the circuit court may be needed to effectuate the objectives of the final division without disrupting the finality of the judgment. While the final division of property in a divorce judgment is indeed final, the jurisdiction of the court “continue[s] until the property [is] disposed of pursuant to the provisions of the division contained in the judgment of divorce.”

The Washington case further blurs a once distinct line. Issues of custody/placement, maintenance and child support are open for modification based upon a substantial change in circumstances following the divorce. Property division, however, is final, unless it falls within the very limited parameters of Wis. Stat. § 806.07, which applies only in certain circumstances and is time-limited to a “reasonable time after judgment” or one year after judgment in the event of fraud. See Wis. Stat. § 806.07(2).

The first crack in the door of finality arose when the supreme court created an exception to these time limitations in State ex. rel. M.L.B. v. D.G.H., 122 Wis. 2d 536, 363 N.W.2d 419 (1985). In that case, the court allowed a judgment to be reopened several years after judgment based upon a finding of “extraordinary circumstances.”

In Washington, the circumstances, while unfortunate for Ms. Washington, were not even remotely close to the extraordinary circumstances contemplated by the supreme court in M.L.B. Clearly, Ms. Washington should have been entitled to any appreciation or income on her share of the retirement plan. Had the retirement plan been a bank account, for example, she would have received her share instantly, and all appreciation or income would accrue to her share. She should not be penalized because the type of retirement plan involved could not be immediately divided.

It is not clear why the divorce judgment failed to provide Ms. Washington the appreciation and income on her share, but the options are apparent. The court could fail to grant relief and let the husband take advantage of this lapse. This might have lead to a malpractice action by the wife against her lawyer, but given the complexity of a such an action and minimal damages, it is questionable whether many plaintiff’s lawyers would take on such a case. The alternative is to amend the judgement, which prevents the husband from receiving a windfall due to this lapse by the wife and her attorney.

The court found it highly significant that Ms. Washington’s motion was to clarify the divorce judgment, not to modify it, which would be prohibited under Wis. Stat. § 767.32(1)(a). Yet, one person’s “clarification” is another person’s “modification.” In Washington, for example, the judgment, by being silent on the issue of appreciation and income, had the effect of awarding all of it to the husband. While it is certainly not equitable that the husband would receive the income and appreciation on the wife’s share, the “clarification” of the judgment has the effect of modifying it.

Perhaps in that particular case, it righted a wrong. But as the law now allows judgments to be “clarified” at any time in the future, the floodgates may be wide open for creative practitioners and parties.

This article originally appeared in Term in Review, 1999-2000 Decisions and Analyses published by Wisconsin Opinions.

Attorney Gregg Herman is a founding partner of Loeb & Herman S.C. in Milwaukee, WI. He practices family law exclusively, and can be reached via e-mail or by calling (414) 272-5632.