Pretrial Stipulation and Continuance Examined in Memphis, Tennessee Divorce: Watts v. Watts

Facts: Husband and Wife divorced after 20 years of marriage. Husband owned three small businesses.

In May 2015, husband and Wife filed with the trial court a written stipulation that they would hire Mr. Orndorff to value two of the businesses. They agreed to stipulate that whatever values Mr. Orndorff placed on the businesses would be accepted by them without objection. The stipulation also provided that Mr. Orndorff would be “allowed to retain the services of other experts if he finds it necessary to do so.”

A few weeks later, Mr. Orndorff sent an engagement letter to the parties that stated, “If it becomes necessary to engage other professionals (such as a forensic accountant), [I] will engage qualified professionals of [my] choice to provide such services.” Wife signed the engagement letter, but Husband did not.

Upon the request of Husband’s counsel, Mr. Orndorff prepared a second engagement letter that said Mr. Orndorff would only hire a forensic accountant if the parties agreed that it was necessary to do so. Husband signed the revised engagement letter, but Wife did not.

In early September 2015, the trial court resolved the dispute by ordering Wife to sign Mr. Orndorff’s revised engagement letter, i.e., the one that said he can only hire a forensic accountant if the parties agreed.

The order reflecting this ruling was entered on October 14, 2015, and Wife signed the revised engagement letter that day. Mr. Orndorff did not complete valuations of the businesses, however, before trial began five days later.

When the trial began, Wife requested a continuance to allow Mr. Orndorff more time to complete his valuations. The trial court denied Wife’s request, and the trial began.

In the pretrial filings required by the local rules, Husband listed the value of the two businesses while Wife did not.

After a trial, Husband was awarded the two businesses.

Wife appealed.

On Appeal: The Court of Appeals reversed the trial court.

Stipulation. A stipulation is an agreement between attorneys regarding an issue before the court that is entered into mutually and voluntarily by the parties. A valid stipulation is binding on the parties and will be rigidly enforced by the courts like any other agreement. In determining whether a stipulation is valid, courts should consider

  • whether the parties had competent representation of counsel,
  • whether extensive and detailed negotiations occurred,
  • whether the parties agreed to the stipulation in open court, and
  • whether the parties acknowledge their understanding of the terms and that the terms are fair and equitable when questioned by the judge.

The Court of Appeals ruled the trial court erred by modifying the parties’ stipulation:

Here, the foregoing factors weigh in favor of the stipulation agreement’s enforcement as written. Both parties were represented by counsel when they entered into the agreement. The parties entered into the agreement at mediation. The terms of the agreement are detailed and carefully constructed. The agreement was reduced to writing and signed by the attorneys for both parties. Finally, the agreement was filed with the trial court and appears in the record in the case. While the record on appeal does not reflect that the trial judge posed questions to the litigants about the terms of the agreement, neither party has argued that they did not understand its terms or that its terms are unfair. As such, we conclude that the stipulation agreement was valid and enforceable, and the trial court erred in modifying it.

Continuance. Trial courts have broad discretion over whether to grant or deny a request for a continuance. The party seeking the continuance has the burden of demonstrating that the circumstances justify it. To meet that burden, the moving party must supply some strong excuse for postponing the trial date. Factors relevant to the trial court’s decision include

  • the length of time the case has been pending,
  • the reason for the continuance,
  • the diligence of the party seeking the continuance, and
  • the prejudice to the requesting party at the continuance is not granted.

The Court found that all of these factors weighed in favor of a continuance such that the trial court’s decision was unreasonable and caused an injustice to Wife. The Court concluded the trial court abused its discretion when it denied Wife’s request for a continuance.

Thus, the trial court’s rulings as to property division and valuation were vacated and the case remanded for further proceedings.

Watts v. Watts (Tennessee Court of Appeals, Western Section, July 11, 2017).

Information provided by K.O. Herston: Knoxville, Tennessee Divorce and Family-Law Attorney.

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K.O. Herston is a family-law attorney in Knoxville, Tennessee whose practice is devoted exclusively to family law, including divorce, child custody, child support, alimony, prenuptial agreements, and other aspects of family law.

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