Posted by Nydia Streets of Streets Law in Florida Divorce

A marital settlement agreement in Florida will be enforced as written - a court is not free to rewrite the terms of a contract. This is why the wording used in contracts is important. This was an issue in the case Hurley v. Veon, 5D2021-2409 (Fla. 5th DCA June 28, 2024).

During the parties’ marriage, the former husband developed software for car dealership accounting. He formed a corporate entity of which he was the sole shareholder to sell this software. Other entities related to this software were formed but the former husband was not an owner of these entities. The former husband eventually transferred all of his stock in his corporate entity to his son.

The parties entered a marital settlement agreement approximately 10 months after the former husband transferred the last of his stock to his son. The agreement (as noted in the appellate opinion) contained the following pertinent clauses:

Paragraph 3 indicates the parties’ agreement to waive any right to seek compensation from, or any interest in, the salary, income, or awards of the other in the future unless otherwise provided in the MSA.

Paragraph 20 provides an exception to Paragraph 3. It recites that, as of the date of the MSA’s execution, Former Husband holds no legal or equitable ownership interest in the AutoSoft Companies, any of their subsidiaries, or any related or affiliated entity. The paragraph then grants Former Wife half of all sums Former Husband “receives or becomes entitled to receive” as “distribution[s], dividend[s], or any sums of money which could be characterized as distributions or dividends paid incident to” any legal or equitable ownership interest that Former Husband once held in the AutoSoft Companies, “any subsidiary[,] or any

related or affiliated entity.”

Paragraph 47 provides for prevailing party attorney’s fees in the event of future enforcement actions.

The former wife filed a motion to set aside the settlement agreement or enforce paragraph 20, alleging the former husband fraudulently transferred his ownership to the son during the parties’ separation. Evidence was presented at the hearing that the former husband sued the company after he transferred his ownership interest in a dispute over the software he created. The suit settled and the former husband was paid a lump sum. The parties’ son stated as his deposition that “Former Husband had no control over the day-to-day operations of AutoSoft, Inc. or Orion Dealer Systems, Inc., and he did not recall Former Husband having any power to give instructions about the handling of distributions and profits. In fact, [the son] directly testified that Former Husband did not have control and was not happy with the direction in which [the son] was taking the companies.” The trial court eventually ruled the former husband had a legal and equitable interest in the companies and ordered him to pay a percentage of the money he received from the lawsuit. A prevailing attorney’s fee award was also granted to the former wife. The former husband appealed.

As to the former wife’s argument that former husband had legal ownership of the company, the appellate court held “Former Husband completely divested his legal title to AutoSoft, Inc. when he transferred the last of his shares to [the parties’ son] in January 2010. Former Husband correctly points out that Former Wife conflates legal ownership of the Software with legal ownership of the Companies. Under the plain terms of the MSA, however, it is Former Husband’s ownership of the Companies, any of their subsidiaries, or ‘any related or affiliated entity’—not his ownership of an asset—that counts. The Software is an asset, not a company, subsidiary, or other business entity, so Former Husband’s ownership of the Software does not implicate Paragraph 20 of the MSA.”

Turning to the question of whether the former husband had an equitable interest in the company, the court held “One key fact, however, definitively establishes that Former Husband lacked the kind of control necessary to indicate equitable ownership: the 2014 litigation itself. It is undisputed that Former Husband brought a lawsuit against the Companies to attempt to recover monies that he alleged were rightfully owed to him, and that the suit settled for substantially less than his claims. Had Former Husband wielded any appreciable degree of control over the Companies, he would not have needed to file or settle his suit. Even putting aside the federal litigation, none of the record evidence demonstrates the type or level of control that courts have found to signal equitable ownership. [. . .] On this record, there is no competent, substantial evidence that Former Husband retained sufficient control to indicate equitable ownership of the AutoSoft Companies.”

The award to the former wife of one-half of the amounts received from AutoSoft was reversed. The court also reversed attorney’s fees awarded on this issue, holding “Former Wife asserts that Former Husband waived any argument against the attorney’s fees award by failing to attack the award in his initial brief. It is true that failure to address an issue in the initial brief generally waives it. [internal citation omitted] However, this general rule does not apply to prevailing party fees and costs where the appellant establishes that he or she is the prevailing party.”

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