The court of appeals’ recent decision in Cooper (unpublished) gives us some instruction on how to reach a valid, binding agreement pursuant to Rule 69 that will presumably stand up to a later attack on the basis that the agreement was either (a) not fair; or (b) obtained by duress.
Most attorneys and mediators have run into the situation where a mediation session is held; both parties appear, either with counsel or representing themselves; and an agreement is reached at the end of what was perhaps a long, extended negotiation. The written agreement generally includes (and should include) recitals that the agreement is fair and that each party acted with knowledge of the community assets and debts or that the party waives any further disclosure and knowledge of things in order to resolve the case.
Then, days or longer after the mediation agreement is signed, one party gets cold feet and tries to claim the agreement is not valid and binding.
Under Rule 69, an agreement is binding if:
(1) the agreement is in writing and signed by the parties personally or by counsel on a party’s behalf;
(2) the agreement’s terms are stated on the record before a judge, commissioner, judge pro tempore, or court reporter; or
(3) the agreement’s terms are stated in an audio recording made before a mediator or a settlement conference officer appointed by the court.
Assuming the basic requirements of a writing are met, the means of attacking a signed agreement then become claims that the property division is not fair, or that a party signed only after duress or being coerced to do so.
The claim of duress is the more difficult claim. Cooper tells us that a claim of duress must be based on a wrongful act, and that act must preclude the party from exercising free will and judgment (citing Dunbar, 1967). The party claiming duress has the burden to prove the alleged duress. The claims that Wife was told she could “go to jail” or that she “could get less if she went to court” were not claims amounting to duress, as the first claim was not true (and could have been easily disproven with legal advice) and the second claim was not wrongful. The claim that Wife was not permitted to consult a friend about the proposed settlement also was not a wrongful act rising to duress
Written agreements that say they are binding pursuant to Rule 69 are presumed valid until someone proves otherwise.
Rule 69(c) Challenge to Validity. An agreement under section (a) is presumed valid, and a party who challenges the validity of an agreement has the burden to prove any defect in the agreement. Under A.R.S. § 25-324, the court may award a party the costs and expenses of maintaining or defending a challenge to the validity of an agreement that was made in accordance with this rule.
The claim that a property division is not fair is the more difficult review. Under Sharp, the court is required to make findings of fairness. Cooper tells us that with few exceptions, a hearing on that issue is required once the challenge to the Rule 69 agreement is raised on the issue of fairness. “In deciding whether an agreement is fair, the court must “necessarily” consider evidence of the agreement itself, “together with all other evidence concerning the relation of the parties at the time of trial, their ages, financial conditions, opportunities, and the contributions of each to the joint estate.” Further, the superior court must “determine what assets comprise the community estate and whether the party challenging the agreement had full knowledge of the property involved.” (citing Sharp)
What evidence should be shown to the trial court to allow it to make findings of fairness? The Cooper decision makes specific reference to “tax returns, bank statements, pay stubs, appraisals, valuations, or any other documents that would provide evidence as to the extent of the community assets.” Anyone trying to promote evidence of the fairness of a Rule 69 agreement will be wise to document that these items were not only provided in disclosure in the case but also made a part of the court record as soon as the claim of unfairness is raised.
While Cooper is not a reported decision, its basic instruction on what does not constitute duress, and on what the court record must show as evidence of the fairness of a Rule 69 agreement is valuable.