CORTIÑAS, Judge.Page 2
The Appellant, Osvaldo Romero ("Former Husband"), appeals from a trial court order granting his former wife, Aurora Romero ("Former Wife"), an interest in stock he purchased by exercising options he received from his employer and imposing a constructive trust on one-half of the options deemed to be marital assets, as well as an equitable lien on the Former Husband's homestead property to satisfy the Former Wife's interest.
The parties were married in 1990, and separated in 1998. A petition for dissolution of marriage was filed on July 20, 1999. Months prior, the parties began negotiating how to divide their property and drafted a Marital Settlement Agreement ("MSA") in January 1999. In fact, the MSA ultimately signed by the parties contained substantially the same property division as the January draft. On July 6, 1999, the Former Wife signed the MSA. On July 20, 1999, the Former Husband signed the MSA and completed a financial affidavit. The Former Wife completed her financial affidavit on September 23, 1999, and the judgment of dissolution of marriage, which incorporated the MSA, was entered on September 27, 1999.
Almost three years after the entry of the final judgment of dissolution, the Former Husband petitioned to modify his child support obligations. As a result of his petition, the Former Wife became aware that the Former Husband had exercised certain stock options, which caused substantial increases in the income he declared on his 2000 federal income tax returns. The Former Wife then filed a counter-petition seeking to increase child support. Subsequently, the Former Wife amended her counter-petition to include a count seeking the imposition of a constructive trust, contending that the stock options and resulting stock were marital assets that the Former Husband failed to disclose on his financial affidavit and that she was entitled to a constructive trust on one-half of the options. Subsequently, both parties dismissed their actions seeking modification of child support and a hearing was held solely on the Former Wife's petition to impose a constructive trust.
The stock options and resulting stock at issue were offered to the Former Husband when he obtained employment with Qtera in March 1999. Specifically, the Former Husband received stock options to purchase 22,000 common shares of Qtera stock at ten (10) cents per share. These options were non-transferable and were contingent upon the Former Husband working at Qtera for one year. After one year of employment, twenty-five percent (25%) of the stock options would vest. The remaining stock options would vest 1/48th per month for the following forty-eight (48) months. Thus, at the time the final judgment of dissolution was entered, the Former Husband's stock options were non-vested and he owned no stock.
Further complicating matters, in December 1999, months before the Former Husband's stock options vested, Qtera was acquired by Nortel, and Qtera stock was exchanged for Nortel stock at a rate of one share of Qtera stock for 1.335 shares of Nortel stock. Thus, in March 2000, when the Former Husband's option to purchase the first twenty-five percent of the stock vested and was exercised, he received Nortel stock valued at $126 per share. The Former Husband continued to exercise his options to purchase stock, which vested monthly, through December 2000. Based on advice from stock market experts, the Former Husband did not sell any of the stock he received. Ultimately, the price of Nortel stock drastically decreased and the Former Husband was left with worthless stock and tax liabilities.
The Former Husband could have continued to exercise options beyond this date but did not.
At the hearing on her petition to impose a constructive trust, the Former Wife testified that she did not know the Former Husband had stock options in Qtera when she signed the MSA. She testified that if she knew about the stock options, she "would have wanted half." She further testified that if awarded half the stock options, she would have exercised all the options and then immediately sold the stock, using the proceeds of the sale to reduce the mortgage on her home. The Former Wife also offered expert testimony as to the value of the stock resulting from the options, although her own expert opined that in July of 1999, the non-vested stock options could not be valued.
The trial court ultimately concluded that the options were marital assets because they were awarded to the Former Husband because of his past qualifications and experience. As such, the trial court declared that the marital assets were subject to equitable distribution and adopted the valuations of the Former Wife's expert witness. Specifically, the trial court concluded that "the most equitable division in this case would be based on a pro-rata basis, based on the percentage of the amount of time the Former Husband worked during the marriage at QTERA over the total time at QTERA needed to exercise each stock option."
Because the trial court then divided the assets based on the amount of time the options vested during the marriage, this determination was not dispositive. In fact, the trial court further stated in its order:
Thus, even if the stock options were given for future performance, the Former Husband worked at QTERA for over four months during the marriage, which time was directly attributable to each stock option that vested during his employment (and is the prorata [sic] basis for the Court's equitable distribution in this judgment).
The trial court then found that the options vested for 126 days during the marriage and that accordingly "the marital value of the option to purchase 25% of the stock was 126/360 of the fair market value of the stock as of March 8, 2000, the day that option vested." The trial court also considered the remaining stock options to have a marital component, as they too vested for 126 days during the marriage. The trial court then calculated that "the total marital value of such options was $577,528.38 and that the Former Wife would be entitled, under the facts of this case, to one half (1/2) of that amount, or $288,764.19." The trial court reduced that sum by half the total cost of exercising the options and by the federal income taxes that the Former Wife would have paid at her tax rate on her share of the stock. Ultimately, the trial court concluded that the Former Husband was holding $197,856.92 in a constructive trust for the benefit of the Former Wife, and that an equitable lien should be imposed on the Former Husband's homestead property because he used the Former Wife's funds to reduce the mortgage on that property. The Former Husband appeals from that order. Even assuming that the Former Wife's petition was procedurally proper, we must reverse the trial court's order because the Former Wife failed to establish the elements of fraud and impermissibly stacked inference upon inference, with the full benefit of hindsight, culminating in a final judgment based solely on speculation. The trial court correctly recognized that the stock options contained a marital component. Non-vested rights, such as non-vested stock options, that accrue during the marriage are marital assets pursuant to section 61.075(5)(a)4, Florida Statutes (2005). As such, they are subject to equitable distribution. Id. Had the Former Wife claimed a right to the stock at the time of dissolution, the non-vested stock options could have been assigned a future value at that time and Former Wife could have received that value either outright or in kind. § 61.075(9), Fla. Stat.
Section 61.075(6), Florida Statutes, requires a trial court to determine which assets are marital assets as of the earliest date that the parties either enter into a valid separation agreement or file a petition for dissolution of marriage. Although the trial court was correct to determine the number of days from when the options were granted until the petition for dissolution was filed, the trial court order incorrectly states that the petition for dissolution was filed on July 13, 1999. A review of the record indicates the petition was signed by the Former Wife on July 13, 1999, but was actually filed with the clerk of court on July 20, 1999. The MSA was signed by the Former Wife on July 6, 1999 and the Former Husband on July 20, 1999. Thus, the relevant period of time, from March 8, 1999 until July 20, 1999, actually spanned 134 days, not 126 days. Given our disposition of this appeal, however, this calculation error is moot and we will use the trial court's calculation throughout this opinion.
In this situation, the trial court was not compelled to value the stock options as of July 20, 1999, see § 61.075(6), Fla. Stat. andHeslop v. Moore, 716 So. 2d 276 (Fla. 3d DCA 1998), however, we will defer to the trial court's decision to do so as it is a fact-specific determination within the trial court's discretion. § 61.075(6), Fla. Stat.
The trial court accepted the Former Wife's testimony that she had no knowledge of the stock options at that time. We have no reason to doubt that credibility determination. However, we cannot overlook the fact that the Former Wife did not attempt to determine the full value of the Former Husband's assets. By all accounts, the MSA was agreed upon and entered into based solely on the parties' representations as to their assets, with neither party declining to negotiate the property division until a petition for dissolution was filed and discovery could be requested. Further, there is absolutely no evidence in the record to indicate that the Former Husband knew the potential future value of the stock options and intentionally failed to disclose those options.
Instead, the record clearly indicates that both parties only disclosed their assets of value and, in fact, the Former Wife testified that she failed to disclose her pension plan, the marital home furnishings, and her jewelry both by oversight and because the jewelry was of little value. It is evident neither party completed a thorough examination of their assets when drafting the MSA. Given those circumstances, we cannot find, nor did the trial court find, that the Former Husband committed fraud.
Instead, the trial court found that the Former Wife was entitled to relief based on the Former Husband's failure to disclose the existence of his stock options in Qtera stock on his financial affidavit. However, proof of non-disclosure alone is, as a matter of law, insufficient to establish a basis for relief. See Robinson v. Kalmanson, 882 So. 2d 1086, 1087-88 (Fla. 5th DCA 2004). Florida Family Law Rule of Procedure 12.540 provides that a petition to set aside a final judgment based on a fraudulent financial affidavit in a marital case may be brought at any time. However, to be entitled to relief, the movant still must establish a ground for setting aside the final judgment under Florida Rule of Civil Procedure 1.540. Specifically, Rule 1.540(b)(3) authorizes a court to set aside a final judgment for "fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party." However, to establish a basis for relief under this subsection, a movant must show not just that the financial affidavit contained a false statement of material fact, but also that it was fraudulent, i.e., that the person making the false statement knew that it was false, that the false statement was made with the intent that the other party would rely on the false statement, and that the other party actually relied on the false statement and was thereby prejudiced. Ward v. Atl. Sec. Bank, 777 So. 2d 1144, 1146 (Fla. 3d DCA 2001).
The Former Wife did not establish any of these elements. As mentioned above, there was no evidence that the Former Husband knowingly failed to disclose the stock options with the intent to defraud the Former Wife as the Former Husband testified that he did not consider the stock options assets. Moreover, the Former Wife completely failed to establish her reliance on the "fraudulent" financial affidavit as that affidavit was not in existence at the time she signed the MSA. The Former Wife cannot claim that she was defrauded by the Former Husband's representations outside of the financial affidavit, as those claims of fraud would be time-barred by the one-year statute of limitations contained in Rule 1.540(b).
Even if the Former Wife did establish a valid claim for fraud, her request for relief impermissibly stacked inference upon inference.See Johnson Constr. Mgmt., Inc. v. Lopez, 902 So. 2d 206, 210 n. 8 (Fla. 3d DCA 2005) (citations omitted). "[I]f a party to a civil action depends upon the inferences to be drawn . . . as proof of one fact, it cannot construct a further inference upon the initial inference in order to establish a further fact unless it can be found that the original, basic inference was established to the exclusion of all other reasonable inferences."Nielsen v. City of Sarasota, 117 So. 2d 731, 733 (Fla. 1960). We can only speculate as to whether the Former Wife would have insisted on her share of the stock in 1999, much less whether she would have opted to receive its value in kind. The Former Wife's expert testified that, in his opinion, non-vested stock options "probably have no value" and could not be valued in July 1999. Further, the parties omitted from the MSA similar stock holdings from other companies because of their worthlessness and the Former Wife has expressed no interest in receiving her share of those assets. Additionally, the testimony at trial established that the expert valued the stock as if all of the options were exercised, when in fact they were not, and assumed the immediate sale of the stock after each option was exercised, even though the Former Husband testified that stock market experts advised against an immediate sale and all stockholders followed this advice.
As the Former Husband explains, the Former Wife's argument assumes the following: if I knew about the stock, I would have recognized the potential value and I would have wanted half in kind; if I received half of the stock options, I would have exercised all the options immediately upon vesting; if I exercised all the options, I would have been taxed at my income level and I would have sold the stock I received immediately. As there is no evidence to support that any of these suppositions would have in fact occurred, they cannot be the basis of the trial court's award.
We further note that the proper course of action for a trial court to follow in adjudicating a petition to set aside a final judgment based on a fraudulent financial affidavit is to vacate the final judgment and redistribute the marital assets. See Bane v. Bane, 775 So. 2d 938, 941 (Fla. 2000). A trial court cannot modify the property division in a final judgment. See Braswell v. Braswell, 881 So. 2d 1193, 1199 (Fla. 3d DCA 2004); Langer v. Langer, 463 So. 2d 429, 429 (Fla. 3d DCA 1985).
Because the Former Wife failed to establish the elements of fraud to justify the imposition of a constructive trust, and because the evidence did not support the inferences upon which her argument was based, we reverse the trial court order in her favor and direct the trial court to reinstate the original property distribution.
Reversed and remanded with instructions.
Not final until disposition of timely filed motion for rehearing.