Mason v. Mason

When Jeffrey Mason (plaintiff) and Susan Mason (defendant) divorced, the couple’s marital property included 48,200 shares of Union Bank stock in Susan’s name worth about $1.5 million. While the couple negotiated how to divide the stock, Susan’s financial advisor told her the stock was about to split three-for-two, meaning each shareholder would own three shares after the split for every two shares the shareholder owned beforehand. The stock-split mechanism specified that shareholders would receive one additional share for every two shares they held on the record date of July 26, 2003, meaning Susan’s shares would increase to 72,300 shares after the split. Susan’s financial advisor told her to negotiate a stipulation using a specific number of shares instead of a fractional amount. Without mentioning the stock split, Susan negotiated that Jeffrey would receive 16,066 shares, which was one-third of the shares they possessed before the split. The court incorporated that stipulation into a final divorce decree entered August 6, 2003, stating Jeffrey would receive 16,066 shares “immediately.” Susan began initiating the transfer of shares that same day, but Jeffrey did not receive his shares until August 14, 2003. Meanwhile, the stock-split dividend became effective, and the shares dropped significantly in value. More importantly, Jeffrey received one-fifth of the shares, while Susan retained four-fifths. Jeffrey filed a motion for relief from judgment, withdrew it, and instead filed a motion for enforcement. Jeffrey argued that because the stipulation required transfer “immediately,” he was entitled to value of 16,066 shares as of August 6, 2003. The court granted the motion and enforced the decree by requiring Susan to transfer 8,033 additional shares of stock to Jeffrey. Susan appealed, arguing Jeffrey agreed to accept 16,066 shares and should have diligently investigated the stock asset and discovered the impending split before agreeing to the stipulation.