Archive for February 2012

Hildy Fentin, Esq. on Fox San Diego talking about Collaborative Divorce and Divorce Mediation

Watch my friend and colleague, Hildy Fentin, Esq. on Fox News San Diego talking about Collaborative Divorce and Divorce Mediation. http://www.fox5sandiego.com/videogallery/68438067/News/Ask-the-Shrinks:-Divorce

 

California’s Prop 8 Overturned by 9th Circuit U.S. Court of Appeals.

Here is the text of the landmark decision by the three judge panel at the 9th Circuit U.S. Court of Appeals.  http://www.emptywheel.net/wp-content/uploads/2012/02/Prop8-9thCircuitDecision.pdf

 In essence,  the Judges upheld the notion of equal protection status for same-sex couples deserving of constitutional protection.  I quote from the opinion:

We consider whether that amendment (Prop 8) violates the Fourteenth Amendment to the United States Constitution.  We conclude that it does.

The Judges go on:

Although the Constitution permits communities to enact most laws they believe to be desirable, it requires that there be at least a legitimate reason for the passage of a law that treats different classes of people differently.  The was no such reason that Proposition 8 could have been enacted.  Because under California statutory law, same-sex couples had all the rights of opposite-sex couples, regardless of their marital status, all parties agree that Proposition 8 had one effect only.  It stripped same-sex couples of the ability they previously possessed to obtain from the State, or any other authorized party, an important right- the right to obtain and use the designation of ‘marriage’ to describe their relationships.  Nothing more, nothing less….

All that Proposition 8 serves no prupose, and has no effect, other than to lessen the status of himan dignity of gays and lesbians in California, and to officially reclassify their relationships and families as inferior to those of opposite-sex couples.  The Constitution simply does not allow for ‘laws of this sort.’  Romer v. Evans, 517 U.S. 620, 633 (1996).

So, the question now is, “What happens next?”  Honestly, we are not sure.  It seems that marriages will still be banned pending either an appeal to the full appelate panel at the 9th Circuit or an appeal directly to the U.S. Supreme Court.  Some believe that because the issue is so narrowly crafted to address Prop 8 only and not some of the broader issues that is less likely that the U.S. Supreme Court will grant review.  It would seem from the opinion that the authors intended a narrow ruling  only applied to California.  Perhaps this was to discourage the Supreme Court’s involvment.  They write:

We need not and do not answer the broader question in this case, however, because California had already extended to same-sex couples both the incidents of marriage and the official designation of ‘marriage,’ and Proposition 8’s only effect was to take away that important and legally significant designation, while leaving in place all of its incidents.  This unique and strictly limited effect of Proposition 8 allows us to address the amendment’s constutitionality on narrow grounds.

However, I think it very plausible that the more conservative Supreme Court may very well take it up to address specifically the equal protection question.  Namely, the broader question of whether same-sex couples are in a suspect class granting them equal protection under the Fourthteenth Amendment. 

No matter how you slice it though, supporters of same-sex marriage got a significant victory where a U.S. Appelate court held that a ban of same-sex marriage violates the Fourteenth Amendment to the U.S. Constituion– even if it was a narrow holding.  That really is a big deal.

Failure to follow California’s strict disclosure rules can be very expensive in divorce cases.

California Duty of Disclosure

In California, it is essential in every dissolution, divorce, nullity or legal separation case to make a full and complete disclosure.

Young black man filling out income and expense declaration fl-150 and schedule of assets and debts fl-142

California Family Code § 721 requires full disclosure in divorce cases.

California Family Code § 721

The duties of disclosure are largely controlled by California Family Code § 721, which describes the fiduciary duties between spouses. It provides, in part:

[A] husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.

California Family Code § 721 (b).

The statute goes further to subscribe to marriages the same sort of fiduciary duties that exist between business partners. It indicates that, as with business partners, the confidential relationship between spouses is

(b)…a fiduciary relationship subject to the same rights and duties of nonmarital business partners, as provided in Sections 16403, 16404, and 16503 of the Corporations Code, including, but not limited to, the following:

(1)Providing each spouse access at all times to any books kept regarding a transaction for the purposes of inspection and copying.

(2)Rendering upon request, true and full information of all things affecting any transaction which concerns the community property. Nothing in this section is intended to impose a duty for either spouse to keep detailed books and records of community property transactions.

(3)Accounting to the spouse, and holding as a trustee, any benefit or profit derived from any transaction by one spouse without the consent of the other spouse which concerns the community property.

Id.

Family Code § 2102

With this in mind, the California Family Code has specific disclosure rules. Per Family Code § 2102, parties are subject to the § 721 fiduciary standards.  This goes from the time of separation until the distribution of the community assets. Section 2102 requires the following:

(1)The accurate and complete disclosure of all assets and liabilities in which the party has or may have an interest or obligation and all current earnings, accumulations, and expenses, including an immediate, full, and accurate update or augmentation to the extent there have been any material changes.

(2)The accurate and complete written disclosure of any investment opportunity, business opportunity, or other income-producing opportunity that presents itself after the date of separation, but that results from any investment, significant business activity outside the ordinary course of business, or other income-producing opportunity of either spouse from the date of marriage to the date of separation, inclusive. The written disclosure shall be made in sufficient time for the other spouse to make an informed decision as to whether he or she desires to participate in the investment opportunity, business, or other potential income-producing opportunity, and for the court to resolve any dispute regarding the right of the other spouse to participate in the opportunity. In the event of nondisclosure of an investment opportunity, the division of any gain resulting from that opportunity is governed by the standard provided in Section 2556.

(3)The operation or management of a business or an interest in a business in which the community may have an interest.

Family Code § 2102(a).

Duty to Update and Augment Disclosures

It is important to note that the code not only requires a complete disclosure, but it also requires “immediate, full, and accurate update or augmentation to that extent that there have been material changes.” Id [emphasis added]. This means that after you provide your first disclosure, you must update the other party when there are changes.

Preliminary and Final Declarations of Disclosure

Before the court will grant a judgment for divorce, the parties must exchange preliminary and final declarations of disclosure. Parties can waive the final declaration of disclosure by written stipulation of the parties.  But, they can’t waive the preliminary disclosures.  See Family Code §§ 2104 and 2105. The statute requires that the parties use specified forms for the disclosures. They are:

Declaration of Disclosure (Judicial Counsel Form FL-140)

Complete this form and sign under penalty of perjury to indicate that you have made a complete and accurate disclosure.  Don’t file this form.  Rather, just serve it on the other party.

Income and Expense Declaration (Judicial Counsel Form FL-150)

On form Fl-150 you provide all of your income and expense data.  You show everything you earn and everything you spend.  It’s kind of a “budgety” type form.  This aids the court and the spouses in determining the best choices for child support and alimony.  You only need to file the form FL-150 if support is at issue at a court hearing.  Otherwise, just serve it with your Declaration of Disclosure form.

Schedule of Assets and Debts (Judicial Counsel Form FL-142)

On form FL-142 you list all of your assets and debts.  In essence, it shows everything you own and everything you owe.  Be sure to list EVERYTHING.  There can be consequences if you leave something off.  So, when in doubt, disclose.  You don’t file form FL-142 at court.  Instead, just serve it on the other party with your Declaration of Disclosure.

Declaration Regarding Service of Declaration of Disclosure (Judicial Counsel Form FL-141)

This form indicates to the court that you completed your declaration of disclosure and served it on the other spouse.  File this one at court.

Importantly, you only need to file the Declaration Regarding Service of Declaration of Disclosure form at court. Rather than filing, you simply serve the other documents on the other party. However, despite not filing them at court, it is essential to take these forms seriously and to be complete and truthful. The court can be very harsh with people who are inaccurate or incomplete in their disclosures.  So, get this one right too.

Sanctions for Failure to Comply with Disclosure Requirements

Family Code § 2107(c) requires monetary sanctions and reasonable attorney fees if a party fails to comply with the spouse’s California Family Code § 721 fiduciary duty of disclosure during dissolution proceedings. Family Code §271(a) provides authority to order attorney fees and costs in the nature of a sanction if conduct “frustrates the policy of the law to promote settlement of litigation.”

In summary, the disclosure required by California Family Code § 721 is not a topic to mess around with. The court must impose Draconian penalties and sanctions on parties who do not comply with the disclosure statutes. Hence, the best advice is to err on the side of caution. Disclose everything and anything to the other side even if you think it is unimportant. Do it early and thoroughly.  What’s more, Augment and update routinely.  I have seen even the smallest technicality lead a court to set aside a judgment or order stiff sanctions. So, it is simply best to play it safe and disclose it all. Withholding information, whether it is inadvertent or an attempt to be sneaky or cute, can lead to devastating results. If you are not sure if you have disclosed everything necessary, then talk to an attorney and get it right.

For more information, read:

How California Child Support Works

Early intervention: Why mediation early in a family law case can save a fortune in fees and stress.

Pre-Mediation Information Packet