Divorce Settlement Agreements - Georgia Case Law Update
On January 29, 2009, the Georgia Court of Appeals reversed the decision of the trial court, which held that the Husband’s claim for indemnification under the divorce settlement agreement was barred by res judicata. In Stone v. Stone, (A08A2020), the parties separated on August 28, 2005 and the Husband filed for divorce shortly thereafter. During the pending divorce, the Wife obtained five cash advances from an equity line of credit on the marital home and used the money for her own personal expenses. The Wife disclosed this action prior to finalizing the divorce and the parties’ settlement agreement reflected that the Husband would retain the marital home, but that the Wife would be responsible for, indemnify and hold Husband harmless from any liability arising out of this debt.
After the trial court entered a final decree incorporating the terms of the settlement agreement, the Husband sued the Wife for indemnification on the equity line of credit. The trial court dismissed the action after the Wife argued that Husband’s claim was barred by the prior divorce action because it could have been resolved at that time. The Court of Appeals disagreed, stating that “the breach allegation was not – and could not have been – adjudicated in the divorce proceeding, which concluded when the parties settled the case…” The Court of Appeals did not reach the merits of the Husband’s claim, but reversed the trial court’s dismissal.
