In Wolf v. Mahar, No. 310479
, the Court of Appeals held that a mutual mistake of fact about the State of Michigan’s pension recoupment policy was sufficient to order reformation of a divorce judgment, despite the policy being easily available online.
In this case, Wolf and Mahar divorced in 2009. The parties entered into a consent judgment of divorce, which included a provision that awarded each party a fifty percent portion of the other party’s retirement pension. The judgment also allowed one party to elect receiving the other party’s benefits at the person’s earliest retirement age. Per the judgment, Mahar applied for early benefits under Wolf’s pension. Wolf subsequently realized that her policy was subject to the State of Michigan’s recoupment policy, which reduces her own pension payments to account for Mahar’s early receipt of funds. As a consequence, Wolf would receive significantly less than Mahar under her pension. The parties stipulated that they did not know about the state’s recoupment policy until after Mahar began receiving funds from Wolf’s pension.
Wolf argued that the recoupment policy was contrary to the consent judgment’s purpose, which was intended to split both pension funds equally. The trial court denied Wolf’s request for relief and reasoned that the state’s policy is easily available on its websites and therefore the parties should have known about the program.
The Court of Appeals held that the trial court erred when it refused to accept the parties’ stipulation that they did not know about the recoupment policy. The Court also reviewed the parties’ divorce judgment and concluded that they clearly intended to split each pension equally. The Court opined that the parties were under a mistake of fact about the recoupment process since they were not informed of it and did not understand the inequitable effect the policy may have on Wolf’s pension. Therefore, the Court reversed the trial court’s order and remanded the case back to reform the consent judgment in consideration of the recoupment policy’s effect on Wolf’s pension.