FIDUCIARY DUTIES BETWEEN SPOUSES AND WHEN THAT DUTY IS BREACHED
FAMILY LAW BREACH OF FIDUCIARY DUTY WHEN THAT OCCURS AND REMEDIES
In divorce cases honesty is the best policy. You can loose everything if you try to hide assets or you do not disclose all assets you acquire during marriage.
In re: Marriage of Margulis our California Courts explain their position in the issues of dishonesty and breach of fiduciary duty between spouses:
"The fiduciary obligations of spouses to each other are set forth in section 721, and are made specifically applicable during dissolution proceedings by section 1100, subdivision (e). "Each spouse shall act with respect to the other spouse in the management and control of the community assets and liabilities in accordance with the general rules governing fiduciary relationships which control the actions of persons having relationships of personal confidence as specified in Section 721, until such time as the assets and liabilities have been divided by the parties or by a court. This duty includes the obligation to make full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest and debts for which the community is or may be liable, and to provide equal access to all information, records, and books that pertain to the value and character of those assets and debts, upon request." (? 1100, subd. (e).)
Family law Fiduciary Duty Preliminary Disclosures and Remedies for the dishonest Spouse
Consistent with these fiduciary obligations, section 2100, subdivision (c) provides that "a full and accurate disclosure of all assets and liabilities in which one or both parties have or may have an interest must be made in the early stages of a proceeding for dissolution of marriage or legal separation of the parties, regardless of the characterization as community or separate, together with a disclosure of all income and expenses of the parties." This disclosure duty is ongoing, as section 2100 provides that "each party has a continuing duty to immediately, fully, and accurately update and augment that disclosure to the extent there have been any material changes so that at the time the parties enter into an agreement for the resolution of any of these issues, or at the time of trial on these issues, each party will have a full and complete knowledge of the relevant underlying facts." (? 2100, subd. (c), italics added.)5
[64 Cal.Rptr.3d 34]
To implement the disclosure obligation, the Family Code requires the service of a preliminary and final declaration of disclosure "[i]n order to provide, full and accurate disclosure of all assets and liabilities in which one or both parties may have an interest...." (?2103.) Specifically, "the preliminary declaration of disclosure shall set forth with sufficient particularity," to the extent that "a person of reasonable and ordinary intelligence can ascertain [them]," "[t]he identity of all assets in which the declarant has or may have an interest and all liabilities for which the declarant is or may be liable, regardless of the characterization of the asset or liability as community, quasi-community, or separate." (? 2104, subd. (c)(1).) It also shall include "[t]he declarant's percentage of ownership in each asset and percentage of obligation for each liability where property is not solely owned by one or both of the parties." (? 2104, subd. (c)(2).)
Section 2107, subdivision (c) requires the trial court to impose monetary sanctions and award reasonable attorney fees if a party fails to comply with any portion of the chapter of the Family Code that deals with spouse's fiduciary duty of disclosure during dissolution proceedings, i.e., sections 2100 to 2113. The statute provides, "If a party fails to comply with any provision of this chapter, the court shall, in addition to any other remedy provided by law, impose money sanctions against the noncomplying party. Sanctions shall be in an amount sufficient to deter repetition of the conduct or comparable conduct, and shall include reasonable attorney's fees, costs incurred, or both, unless the court finds that the noncomplying party acted with substantial justification or that other circumstances make the imposition of the sanction unjust." (? 2107, subd. (c).)
Similarly, section 271, subdivision (a) provides the trial court with authority to order the opposing party to pay attorney fees and costs in the nature of a sanction when "the conduct of each party or attorney ... frustrates the policy of the law to promote settlement of litigation." Specifically the statute provides: "Notwithstanding any other provision of this code, the court may base an award of attorney's fees and costs on the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys. An award of attorney's fees and costs pursuant to this section is in the nature of a sanction. In making an award pursuant to this section, the court shall take into consideration all evidence concerning the parties' incomes, assets, and liabilities. The court shall not impose a sanction pursuant to this section that imposes an unreasonable financial burden on the party against whom the sanction is imposed. In order to obtain an award under this section, the party requesting an award of attorney's fees and costs is not required to demonstrate any financial need for the award." (? 271, subd. (a).) Section 271 "advances the policy of the law `to promote settlement and to encourage cooperation which will reduce the cost of litigation.'" (In re Marriage of Petropoulos (2001) 91 Cal.App.4th 161, 177, 110 Cal.Rptr.2d 111 (Petropoulos).)
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