Janusz v. Gilliam

GREENE, Judge. This case involves the interpretation of a Voluntary Separation and Property Settlement Agreement (“the Agreement”) entered into between Margaret Virginia Janusz and Francis Peter Gilliam. In their Agreement, which was incorporated, but not merged, into the judgment of divorce, the parties agreed that Mr. Gilliam would maintain in effect his survivor’s annuity 1 with the federal Civil Service Retirement System, for the benefit of Ms. Janusz. Unfortunately, upon the grant of their divorce, Ms. Janusz became ineligible, pursuant to federal law, 5 C.F.R. § 838.802 (b) (2008), to receive the benefits of the survivor’s annuity. ⁵²⁹ Upon discovering that she was ineligible to receive the benefits from the survivor’s annuity, Ms. Janusz filed suit in the Circuit Court for Montgomery County, requesting that the court rescind the Agreement, or alternatively find that Mr. Gilliam had been unjustly enriched.

The trial court found no basis for either rescinding the contract, or finding that Mr. Gilliam had been unjustly enriched. Ms. Janusz appealed to the Court of Special Appeals and, before the intermediate appellate court decided the appeal, we granted certiorari. Janusz v. Gilliam, 402 Md. 352 , 936 A.2d 850 (2007). We are asked to decide whether a mutual mistake of law by the parties to a contract, the assumed future entitlement, post-divorce, of Ms. Janusz to Mr. Gilliam’s survivor’s annuity benefits, is grounds for rescinding their contract, or in the alternative, whether Mr. Gilliam has been unjustly enriched.

Although we hold that a mutual mistake of law is no basis for rescission or a claim of unjust enrichment, we shall neither affirm nor reverse the trial court’s judgment and remand the matter, pursuant to Md. Rule 8-604(d)(l) 2 , for the limited purpose of determining whether a Court Order Acceptable for Processing (“COAP”), executed by the parties’ attorneys, is a valid modification of the original Agreement. If so, the COAP explicitly states what actions the parties must take in the event that Ms. Janusz is ineligible to receive benefits under the survivor’s annuity. Finally, because the trial court, in its ruling, did not address Mr. Gilliam’s allegations that his attorney did not have the authority to bind him by signing the COAP, the court should address that allegation as well. If the ⁵³⁰ trial court determines that the COAP is not part of the parties’ Agreement, ultimately, the court must determine whether Mr. Gilliam has been unjustly enriched, because Ms. Janusz did not, as the trial court determined, waive her right to a claim for unjust enrichment.

FACTUAL AND PROCEDURAL BACKGROUND Margaret Virginia Janusz, appellant, 3 and Francis Peter Gilliam, appellee, were married on August 5, 1996. The parties entered into a Voluntary Separation and Property Settlement Agreement on February 14, 2000. On March 1, 2000, the court entered a Judgment of Absolute Divorce, and the Agreement was incorporated, but not merged, into the Judgment. The Agreement provided, in relevant part: 3.

Rehabilitative Alimony. The Plaintiff [appellee] agrees to pay the Defendant [appellant] rehabilitative alimony in the amount of $1,000.00 for thirty-six (36) months effective March 1, 2000. These payments shall be mailed to the Defendant [appellant] at an address or location to be provided by the Defendant [appellant] and this address or location shall not be changed more than once a year. Additionally, Plaintiff [appellee] agrees to continue funding and maintain in effect his survivor’s annuity through the [federal] Civil Service Retirement System at a cost to him of approximately $4,320.00 per year, with monthly benefits available to the Defendant [appellant] after his death, in the amount of $1,500.00 plus cost of living increases.

If the Plaintiff [appellee] should die before the end of the thirty-six (36) month period of rehabilitative alimony, such said alimony will cease and survivor’s annuity will be effective. This agreement as to alimony is non-modifíable.[ 4 ] ⁵³¹ 5. General Mutual Waiver of Claims. The parties hereby specifically agree that their intention is to conclude by this Agreement all claims and disputes between them; accordingly, apart from the agreements and promises specifically set forth in this Agreement, the parties hereby mutually and irrevocably waive and abandon all manner of claim against each other and their estates, regardless of the legal, factual, or equitable basis for any such possible claim; and the parties further specifically agree that this mutual waiver and abandonment of claims against each other and their estates shall be binding upon their heirs, assignees, and successors in interest of any sort whatsoever. 12.

Modification of Agreement. The parties hereby agree that there shall be no modifications of this Agreement except in writing and executed with the same formality of this Agreement. No other oral representations or agree- ⁵³² merits, or oral or written agreements not specifically incorporated by reference in this Agreement, whether made before or after the execution of this Agreement, shall be of any force and effect. A COAP, 5 incident to the couple’s divorce, was executed on April 13, 2000, by both parties’ attorneys in the divorce proceeding, 6 and signed also by Domestic Relations Master Ann Sundt, and then Circuit Court Judge Patrick Woodward.

The COAP provided in relevant part: 4. The defendant [appellant] is entitled to a survivor annuity based on the plaintiffs [appellee’s] monthly retirement benefits. The amount of her survivor annuity has been elected by the plaintiff [appellee] and, at the time of divorce, has an approximate value of $1,500.00 per month. It is the intention of the parties to maintain the plaintiffs [appellee’s] election. 7.

If any provision of this Order designated for implementation by the Office of Personnel Management is found by that agency to be unacceptable for processing, the parties shall renegotiate their Agreement, if necessary, and draft a revised Order which will accord with both their intent and the agency’s requirements insofar as that is possible. The parties shall request the Court to enter a Modified Order acceptable for Processing, substituting their renegotiated provisions in the Order nunc pro tunc. 8. If it is not possible to draft a Court Order Acceptable for Processing which both accords with the parties’ original intent and meets the agency’s requirements, the parties shall adjust their Separation Agreement to assure that each ⁵³³ party benefits in a manner equivalent to the provisions originally negotiated. 9. The Court retains jurisdiction to enforce the above provisions with respect to such modifications of this Order as are necessary under the above paragraphs to assure that the Order is Acceptable for Processing in accordance with applicable law.

Several years after the divorce became final, the federal Office of Personnel Management (“OPM”) informed appellant that she was not eligible for appellee’s survivor benefits pursuant to federal law. 7 On January 25, 2006, appellant filed, in the Circuit Court for Montgomery County, a complaint which contained three claims: Count I—Rescission, Count II—Unjust Enrichment, and Count Ill-Attorney’s Fees. On November 1, 2006, appellee filed a Motion for Summary Judgment, arguing that he had complied with the contract, and that there was no basis, in law or equity, for appellant’s claim. On December 14, 2006, appellant filed an opposition to appellee’s Motion for Summary Judgment. The trial court denied appellee’s Motion for Summary Judgment on January 8, 2007.

After a trial, in April 2007, the Circuit Court determined that the mistake regarding appellant’s eligibility for the survivor’s annuity was a mistake of law, rather than a mistake of fact, as appellant had argued. In its ruling, the trial court noted that a mistake of law could not be the basis for rescinding the contract. Regarding the unjust enrichment, quasi-contract claim, the court determined that, although ap ⁵³⁴ pellee may have been unjustly enriched, appellant had waived her right to this equitable claim in paragraph five of the Agreement. That paragraph states, in relevant part: “the parties hereby mutually and irrevocably waive and abandon all manner of claim against each other and their estates, regardless of the legal, factual, or equitable basis for any such possible claim.” Finally, the trial court denied appellant’s request for attorney’s fees.

Appellant filed a notice of appeal to the Court of Special Appeals. 8 Before any proceedings in the intermediate appellate court, we granted certiorari. Janusz v. Gilliam, 402 Md. 352 , 936 A.2d 850 (2007). DISCUSSION This case requires us to interpret a property settlement agreement which was incorporated, but not merged, into a Judgment of Absolute Divorce. Such agreements are subject to the general rules of contract interpretation.

See PaineWebber, Inc. v. East, 363 Md. 408, 413-14 , 768 A.2d 1029, 1032 (2001). Without deciding the question, we have previously noted that “other courts have characterized the [survivor’s benefits plan] as a separate and distinct [marital] property interest.” Matthews v. Matthews, 336 Md. 241, 253 , 647 A.2d 812, 818 (1994) (citing cases from Illinois, Washington, and California). The Court of Special Appeals has said that “the right to a survivor annuity is incident to the marital relationship, and that such a right, analogous to the right to the pension benefits themselves, falls within the definition of marital property.” Potts v. Potts, 142 Md.App. 448, 463 , 790 ⁵³⁵ A.2d 703, 712 (2002) (quoting Pleasant v. Pleasant, 97 Md. App. 711, 725 , 632 A.2d 202, 209 (1993)). We agree that the survivor’s annuity in this case was marital property and subject to division under the Agreement entered into between appellant and appellee.

In her complaint, appellant presented two separate bases for relief: rescission of the contract, and unjust enrichment, a quasi-contract theory. Although appellant did not specifically ask the court, in her complaint, to enforce the COAP, because she prayed for “such other relief as the Court deems equitable and fair” and because she argued the point at trial and raised it in her answer to appellee’s motion for summary judgment, we address the point here. We will also address the trial court’s finding that appellant waived her claim to a cause of action for unjust enrichment. I. Rescission We begin our discussion of rescission by noting that “[n]o party has a right to rescind or modify a contract merely because he [or she] finds, in the light of changed conditions, that he [or she] has made a bad deal.” Harford County v. Town of Bel Air, 348 Md. 363, 384 , 704 A.2d 421, 431 (1998) (quoting McKeever v. Washington Heights Realty Corp., 183 Md. 216, 220 , 37 A.2d 305, 308 (1944)).

Furthermore, “it is not within the power of either party to rescind [a valid contract] without an option to do so or without the consent of the other party, in the absence of fraud, duress or undue influence, or unless the equities are such that he [or she] should not be permitted to enforce it.” McKeever, 183 Md. at 219-20 , 37 A.2d at 308 . Because the trial court did not find that there was any fraud, duress or undue influence, the court determined that rescission of the contract was inappropriate, as a matter of law. Notwithstanding that, we shall remand this case to the trial court to determine whether the COAP effectively modified the Agreement. Appellant argues that the Agreement should be rescinded because the parties made a mutual mistake.

Equity ⁵³⁶ will reform a contract where there has been a mutual mistake of fact in the formation of the contract. Maryland Port Admin, v. John W. Brawner Contracting Co., Inc., 303 Md. 44, 58 , 492 A.2d 281, 288 (1985). In this case, however, the mutual mistake was one of law. “A mistake of law is where a person knows the facts of a case but is ignorant of the legal consequences.” State v. American Bldg. & Loan Ass’n, 177 Tenn. 385 , 150 S.W.2d 1048, 1065 (1941). Both parties, in the case at bar, mistakenly believed 9 that appellant could receive survivor benefits under the federal Civil Service Retirement System, even after their divorce.

Without reaching the question, this Court has opined that it is not clear that a mutual mistake of law “would be grounds for relief in Maryland.” Ferrero Constr. Co. v. Dennis Rourke Corp., 311 Md. 560 , 578 n. 8, 536 A.2d 1137 , 1145 n. 8 (1988); see also Hoffman v. Chapman, 182 Md. 208, 213 , 34 A.2d 438, 441 (1943) (noting that “[t]he general rule is accepted in Maryland that a mistake of law in the making of an agreement is not a ground for reformation”). The rule that a mistake of law is not grounds for rescission is founded on the principle that ignorance of the law is no excuse. American Bldg. & Loan Ass’n, 150 S.W.2d at 1065 .

See also Burggraff v. Baum, 720 A.2d 1167, 1169 (Me.1998) (holding that a mistake of law is not a basis to rescind a contract). In Burggraff , the Supreme Judicial Court of Maine noted that “[t]he rationale behind this rule is that the parties are presumed to know the law, or at least [are] capable of verifying it, whereas they cannot be expected to be acquainted with all factual matters, regardless of their diligence.” Burggraff, 720 A.2d at 1169 . We agree with this rationale. In addition, since both parties were represented