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Avoiding Equitable Distribution & Alimony Claims

by Wayne Stephenson |

Since joining Lawyers Mutual in late 1989, I have primarily monitored real estate related claims. Several years ago, it was determined the claims attorneys at LML should handle more than just their primary area as backup to claims staff during vacations, holidays, illness and even retirements long-range. For the last few years, I have backed up Mark Scruggs in handling domestic law related claims.

I am surprised the volume of my domestic claims nearly matches the number of my real estate claims. There is clearly an error that occurs more than others. That error is allowing your client’s potential claim for alimony or equitable distribution (ED) to lapse. Monetarily, a lost alimony/ED claim is as severe as a real estate attorney missing a deed of trust in a title search. Although that is the primary type of malpractice claim I see within the domestic practice, it is caused by several types of alleged errors. This article discusses a few of those errors.

North Carolina General Statute 50-16.2A (a) states: “In an action brought pursuant to Chapter 50 of the General Statutes, either party may move for postseparation support. The verified pleading, the verified motion or affidavit of the moving party shall set forth the factual basis for the relief requested.”

DON’T BE LAZY! Do not rely upon opposing counsel to do your work for you. If your client has a claim for alimony or equitable distribution, you need to specifically plead it on behalf of your client even if opposing counsel has already pled those causes of action. As you know, domestic matters often have several litigated issues proceeding forward on different schedules. If you are relying upon opposing counsel’s pleading of the alimony/ED causes of action, it is possible for the absolute divorce order to be entered prior to the alimony/ED causes of action being heard by the court. Once the order for absolute divorce is entered, opposing counsel can dismiss their alimony/ED causes of action and your client will have lost those causes of action unless the matter can be successfully repaired. Do not confuse the differing time tracks of the divorce action with the alimony/ED action.

DOUBLE CHECK YOUR SERVICE! You may have properly pled your client’s causes of action for alimony/ED, but if you have not properly served those actions on the opposing party and their counsel prior to the entry of the absolute divorce order, once again you may have lost your client’s causes of action unless there is a successful claims repair. Even if opposing counsel has told you verbally or by email that they are willing to accept service, you need to confirm that actual service has occurred prior to the entry of the absolute divorce order.

BEWARE THE RESERVED ALIMONY/ED CAUSES OF ACTION: Admittedly, while I haven’t had one of these particular claims cross my desk, Mark Scruggs has. Mark suggested I add this issue to the article due to the frequency he has seen over the years. Quite often when the parties enter into an absolute divorce order, the order will state that the alimony and ED claims are reserved. Under the caselaw, that is clearly inadequate. The alimony/ED claims must be specifically plead PRIOR to the entry of the absolute divorce order.

If you find yourself in a situation where you may have compromised their claims for alimony/ED, it may be possible to repair the error. However, from what I can tell from my files, a successful repair is far from a certainty and appears to be dependent upon the underlying facts of the error as well as the judge hearing the repair efforts. The primary tool to repair these claims is Rule 60(b)(1) which provides relief for mistake, inadvertence and excusable negligent.

Do not try these repairs solely on your own. Please contact Lawyers Mutual as soon as possible and we will put you in contact with one of the attorneys on our defense panel who are experienced in these repairs. They know how to “beef up” your motion to increase the chances of success. Also, since Rule 60 does mean you have to “fall on your sword”, those attorneys also can assist in drafting the motion in the best way possible so that your disclosures do the least amount of harm in case the repair effort is unsuccessful. Additionally, because of their experience in these repairs, they often see the possibility of additional motions that can be filed along with Rule 60 to try to repair these efforts.

Often, we set up the claim, at least initially, under the Additional Benefits coverage in your policy with Lawyers Mutual. This allows LML claims staff attorneys to engage these experienced repair attorneys to assist you without triggering your deductible. That coverage is limited to a $5000 cap for the claim and that cap applies to all Additional Benefit matters reported by your firm per policy year. However, even though this is the most numerous domestic claim I have seen over the last few years, I recall that cap being reached only once in one of my ED/Alimony repair matters.

Hopefully, this article raises a few “red flags” for domestic attorneys to look for when preserving their clients’ alimony/ED claims. As with all legal malpractice claims, do not stick your head in the sand and think it will resolve itself and do not delay in contacting LML for assistance. Generally, the earlier we can step in and assist, the better the chances are for a successful claims repair.

About the Author

Wayne Stephenson

Wayne Stephenson joined Lawyers Mutual in 1989. He has also worked with First Title and Investors Title as both an underwriting and claims attorney. He specializes in real estate matters. You can reach Wayne at 800.662.8843 or at wstephenson@lawyersmutualnc.com.

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