Berg v. Berg

151 N.E.3d 321

Russell G. BERG, Appellant-Respondent,

v.Stacey L. BERG, Appellee-Petitioner.

Court of Appeals Case No. 19A-DC-3038

Court of Appeals of Indiana.

FILED July 15, 2020

Rehearing Denied September 15, 2020

Case Summary

[1] Amid proceedings to dissolve their marriage, Russell G. Berg ("Husband") and Stacey L. Berg ("Wife") entered a mediated settlement agreement (the "Settlement Agreement") concerning the disposition of marital property, inter alia . The trial court adopted the Settlement Agreement in its dissolution decree. Wife later filed a Trial Rule 60(B) motion, alleging that an account was omitted from a balance sheet used at mediation. Wife raised alternative grounds for relief. On the one hand, Wife sought to avoid the Settlement Agreement by alleging fraud, constructive fraud, misrepresentation, mutual mistake, or other misconduct. On the other hand, Wife sought to enforce the Settlement Agreement by alleging that Husband breached a warranty contained therein. Upon a motion to correct error, the trial court entered sua sponte findings and awarded Wife half of the value of the account. Husband appeals, arguing that the judgment depends on inadmissible evidence of what occurred at mediation.

[2] We agree that the judgment granting Wife relief under Trial Rule 60(B) relies on mediation evidence. As to admissibility, we conclude that the mediation evidence is admissible only to enforce the Settlement Agreement—an issue collateral to the mediated dispute. Moreover, although the mediation evidence is admissible for this purpose, we ultimately discern no proper basis to uphold the judgment. We therefore reverse.¹

Facts and Procedural History

[3] Husband and Wife participated in mediation and negotiated the Settlement Agreement. Under the Settlement Agreement, each party retained all stock accounts held in his or her own name and Husband retained all stock accounts the parties jointly held. The Settlement Agreement disposed of other property and obligated Husband to make a property-equalization payment to Wife. At one point, the parties made mutual representations and warranties: "Each of the parties ... represent and warrant one to the other that all assets and debts owned or owed by the parties, either individually or jointly, have been correctly and truly revealed to the other and reflected within this [Settlement A]greement." Appellant's App. Vol. 2 at 22. The Settlement Agreement also stated that, "[i]n consideration of the promises, mutual covenants and agreements herein contained, the payments herein made and the property herein to be transferred," the parties "each declare[d that] there has been a full disclosure of all their assets and liabilities and that this [Settlement A]greement is a final and complete settlement of all of their property rights[.]" Id. at 18-19.

[4] On April 16, 2018, the trial court approved the Settlement Agreement and incorporated its terms into a dissolution decree. On April 15, 2019, Wife filed a verified Trial Rule 60(B) motion focused on a stock account Husband held, which was valued at about $122,000. Wife alleged that the Settlement Agreement "did not reference and therefore omitted" the stock account. Appellee's App. Vol. 2 at 2. Wife noted that Husband's counsel had disclosed the account to her lawyer. Wife alleged that her lawyer inadvertently omitted the account from a marital balance sheet and that the parties used that balance sheet at mediation. Wife attached several exhibits, including two purported marital balance sheets that her lawyer had prepared. Wife also attached an affidavit in which she averred that "[a]t no time before or during the mediation ... did [she] learn of the existence of the [account]" and that, had she been aware of the account, she "would not have agreed to the property disposition" set forth in the Settlement Agreement. Id. at 72.

[5] Husband filed a motion to strike, challenging the admissibility of the evidence attached to Wife's motion.² At a hearing on Wife's motion, Husband objected to "everything that is going to go into the record as all of this was information that was discussed and done during mediation." Tr. at 5. He argued that any evidence concerning "what went on during mediation, what became part of the mediated agreement" is inadmissible. Id. at 6. The trial court overruled Husband's objection. The trial court eventually entered an order summarily (1) denying Husband's motion to strike and (2) declining to grant Wife relief.

[6] Wife filed a motion to correct error. Although neither party had requested special findings, Wife later submitted proposed findings that the court adopted verbatim. In its written order, the court found that Wife's balance sheet "was utilized during mediation" and did not contain Husband's account. Appellant's App. Vol. 2 at 46. The court found that (1) fraud, constructive fraud, mutual mistake, or misrepresentation had occurred and (2) Husband had breached a warranty. The court ultimately awarded Wife half of the value of the account.

[7] Husband now appeals.³

Discussion and Decision

Standard of Review

[8] In general, we review a ruling on a motion to correct error for an abuse of discretion. State v. Reinhart , 112 N.E.3d 705, 709-10 (Ind. 2018). However, to the extent the ruling turns on a question of law, our review is de novo. See id. Here, the motion to correct error involved a motion for relief under Trial Rule 60(B). The party moving for Trial Rule 60(B) relief bears the "burden ... to demonstrate affirmatively that relief is necessary and just." Fairrow v. Fairrow , 559 N.E.2d 597, 599 (Ind. 1990) ; see also Gipson v. Gipson , 644 N.E.2d 876, 877 (Ind. 1994). Ordinarily, "the propriety of relief under ... Trial Rule 60(B) is a matter entrusted to the trial court's equitable discretion." Citimortgage, Inc. v. Barabas , 975 N.E.2d 805, 812 (Ind. 2012). However, where—as here—a Trial Rule 60(B) motion is directed toward a marital settlement agreement, the court must approach the matter "as a contract dispute, subject to the rules of contract law." Ryan v. Ryan , 972 N.E.2d 359, 370-71 (Ind. 2012) (noting that "a court's exercise of power under Trial Rule 60(B) is subject to the limitations of the substantive law" and that provisions of the Indiana Code limit a court's power to modify a marital settlement agreement); cf. Snow v. England , 862 N.E.2d 664, 668 (Ind. 2007) ("As with other contracts, a division of property may only be modified according to the terms of the agreement, if the parties[ ] consent, or if fraud or duress occurs." (citing Ind. Code §§ 31-15-2-17(c) & 31-15-7-9.1 )).⁴

[9] Further, where, as here, a court enters findings without a timely written request, the findings control only the issues they cover, Ind. Trial Rule 52(D), and we will disturb the judgment only if clearly erroneous, T.R. 52(A). A judgment is clearly erroneous if the evidence does not support the findings and the findings do not support the judgment. See S.H. v. D.W. , 139 N.E.3d 214, 220 (Ind. 2020). To the extent an issue is not covered by the findings, we apply a general-judgment standard under which we "affirm based on any legal theory supported by the evidence." Steele-Giri v. Steele , 51 N.E.3d 119, 123-24 (Ind. 2016).

[10] As to the findings, Husband points out that the court adopted Wife's proposed findings verbatim. We note that a trial court is not prohibited from adopting a party's proposed findings, however, the practice " ‘weakens our confidence’ that those findings were ‘the result of considered judgment.’ " River Ridge Dev. Auth. v. Outfront Media, LLC , 146 N.E.3d 906, 916 (Ind. 2020) (quoting Cook v. Whitsell-Sherman , 796 N.E.2d 271, 273 n.1 (Ind. 2003) ).

Mediation

[11] Husband argues that the court "relied on inadmissible evidence in granting" Wife relief under Trial Rule 60(B). Br. of Appellant at 13. Specifically, Husband asserts that mediation evidence—i.e. , evidence of what transpired at mediation—"is subject to the [Indiana Rules for] Alternative Dispute [Resolution] and is deemed confidential, and not admissible[.]" Id. at 16.⁵

[12] Mediation is a "confidential process" during which a neutral person—a mediator—"assists the litigants in reaching a mutually acceptable agreement." Ind. Alternative Dispute Resolution Rule 2.1. "Evidence discoverable outside of mediation shall not be excluded merely because it was discussed or presented in the course of mediation." A.D.R. 2.11(B)(2). However, mediation itself "shall be regarded as settlement negotiations governed by Indiana Evidence Rule 408." A.D.R. 2.11(B)(1). As to Evidence Rule 408, the rule provides that

[e]vidence of the following is not admissible ... to prove or disprove the validity or amount of a disputed claim ...:

(1) furnishing, promising, or offering, or accepting, promising to accept, or offering to accept a valuable consideration in order to compromise the claim; and (2) conduct or a statement made during compromise negotiations about the claim.

[13] Notably, Indiana Evidence Rule 408 has an exception that allows such evidence to be admitted "for another purpose, such as proving a witness's bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution." Ind. Evidence Rule 408(b). The Indiana Supreme Court has explained that this exception allows mediation evidence to be used "in collateral matters unrelated to the dispute that is the subject of the mediation." Horner v. Carter , 981 N.E.2d 1210, 1212 (Ind. 2013). For example, in Gast v. Hall , this Court applied the exception in Rule 408 where the mediation evidence—i.e. , a person's unusual statements at mediation—was offered to prove that the person later lacked testamentary capacity. 858 N.E.2d 154, 161-62 (Ind. Ct. App. 2006), trans. denied . The exception applied in Gast because the issue of testamentary capacity was collateral to the mediated dispute. See id. In contrast, in Horner , our ...