Posted by Nydia Streets of Streets Law in Florida Divorce
Can someone named as a creditor in a Florida marital settlement agreement sue as a third-party beneficiary to the agreement? For example, if an agreement states one spouse will pay a debt owed to a family member, can the family member sue the spouse for non-payment of the debt? This was an issue in the case Helmick v. Taylor, 2D22-3658 (Fla. 2d DCA April 3, 2024).
During their marriage, the former wife’s mother and grandmother loaned money to the former husband. The former husband and wife entered a marital settlement agreement in their divorce which specified that the former husband was to repay these debts, and specifically named the former wife’s mother and grandmother. Another part of the agreement specified that the intent of the marital settlement agreement was to settle what was owed between the spouses and to resolve any issues arising from their marriage. Several months after the entry of the settlement agreement, the former wife’s mother sued the former husband alleging she was a third-party beneficiary to the agreement and that the former husband breached it by not paying her. The former husband moved for summary judgment which was granted by the trial court, and the former wife’s mother appealed.
The appellate court affirmed the trial court’s ruling, holding “When read in its entirety, the MSA did precisely what [the former husband and former wife] stated that it would: it settled what they ‘owed to each other’ and ‘expected from each other’ after their marriage dissolved. In line with this purpose, the third paragraph of the MSA established how the contracting parties agreed to satisfy their marital debts. They divvied those debts up and identified which creditors each party would pay to satisfy the debts. The MSA listed [the former mother-in-law and grandmother] by name; it also listed all but one of the parties' other creditors by name. In short, the debts owed to [the former mother-in-law and grandmother] were treated in the same manner as were the debts owed to credit card companies, student loan providers, and other commercial creditors. And the intent behind these undisputedly unambiguous provisions of the MSA was to memorialize who would pay which creditor, not to primarily and directly benefit any creditor as a third-party beneficiary.”
The appellate court noted in conclusion “Permitting creditors who are specifically named in marital settlement agreements to enforce such agreements—without the contracting parties having clearly intended this result—seemingly would cut against these interests and could discourage parties from settling at the risk of exposing themselves to additional litigation and further liability. Relatedly, such a rule could revive stale or nonviable claims that creditors might not have been able to pursue or prove but for the parties divorcing and dividing up their debts by agreement. Our holding avoids these contingencies, while remaining true to the principle that a third party ‘is an intended beneficiary only if the parties to the contract clearly express, or the contract itself expresses, an intent to primarily and directly benefit the third party.’”
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