Mediated Settlement Agreements In Texas Divorce Cases: Fraudulent Nondisclosure As Ground To Set Aside MSA

The legal landscape surrounding divorce is complex, and even more so when assets and children are involved. This article will explore a particular Texas case, "In re Marriage of Moncur, 640 S.W.3d 309, 316 (Tex.App.--Houston [14th Dist.] 2022, no pet." and discuss its implications on mediated settlement agreements (MSAs) under Texas Family Code Section 6.602. This case serves as a critical example of the complexities that can arise in divorce proceedings and the limitations of MSAs.

Case Overview
Leticia G. Moncur and Ross S. Moncur, who were married in 2002 and have a daughter, entered into a mediated settlement agreement (MSA) as part of their divorce proceedings. Leticia later claimed that Ross had fraudulently induced her to sign the MSA by not disclosing certain community property assets either before or during the mediation. The trial court, however, affirmed the MSA.

What is Texas Family Code Section 6.602?
Before we delve into the specifics of the case, it's essential to understand the framework of Texas Family Code Section 6.602. This section lays out the requirements for an MSA to be binding, which includes a prominently displayed statement that the agreement is not subject to revocation, signatures from each party, and signatures from the parties' attorneys if present during the signing.

How Does the Moncur Case Relate to Section 6.602?
The Moncur case brings up a challenging issue: Can an MSA be set aside if one party claims it was procured through fraud? Leticia alleges that Ross had a duty to disclose all financial accounts, asserting that he deliberately failed to do so. However, according to Section 6.602, the MSA met all the statutory requirements to be binding, and Leticia even conceded this point during the appeal.

The Argument for Fiduciary Duty and Fraud by Non-disclosure
Leticia argued that Ross had a fiduciary duty to disclose all material facts because they were married. While it's true that marriage creates a fiduciary relationship, this fiduciary duty dissolves when each spouse is independently represented by counsel in contested divorce proceedings, according to Texas case law.

Additionally, she claimed that Ross had committed fraud by non-disclosure, a subcategory of fraud that occurs when a party deliberately fails to disclose material facts. To establish fraud by non-disclosure, several conditions must be met, including a pre-existing duty to disclose these facts. However, the court found that Ross did not have such a duty at the time of the MSA.

The Importance of Context in Partial Disclosure
One of the significant points raised in the case was the concept of partial disclosure. The court emphasized that without proper context, it's impossible to know whether partial disclosure created a false impression that necessitated full disclosure.

Conclusion
The Houston appeals court refused to set aside the MSA on the ground of fraudulent disclosure and represent a sting of similar cases where the Courts have refused to overturn mediated settlement agreements.   The Moncur case emphasizes the importance of understanding that MSAs are tantamount to court rulings and will be overturned only in the most extreme of attacks on their validity.   Parties should be exceedingly careful when entering into such agreements and be fully aware of the information being disclosed—or not disclosed—as an MSA, once entered is for most situations irrevocable.