During the course of the marriage, and continuing through the dissolution
proceedings and until the assets have been distributed, spouses have fiduciary
duties to one another, which will be explained in the following paragraphs.
Inextricably intertwined with and part of spouses' fiduciary duties
is the duty to truthfully and fully disclose assets and liabilities.
California Family Code section 721 sets forth the fiduciary duties spouses have toward one another
with respect to any transactions concerning community property. Specifically,
Section 721 states that:
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. This confidential relationship
is a fiduciary relationship subject to the same rights and duties of nonmarital
If the Court finds that either spouse has breached his or her fiduciary
duty, it can fashion a remedy pursuant to
Family Code section 1101, including ordering an accounting, ordering a spouse's
name added to community property, or even ordering half or all (in cases
of willfulness or fraud) of the community property at issue to be awarded
to one spouse.
It is extremely important to be completely truthful and accurate when you
respond to any discovery request (such as in responding to Interrogatories,
Request for Admission or answering questions at your Deposition) or when
you complete a Preliminary or Final Declaration of Disclosure. The Court
has broad power to fashion any variety of scathing remedies against any
party that intentionally withholds the truth, especially with respect
to financial information. Full financial disclosure is the name of the
game, and is the only way to protect yourself from being the subject of
monetary or other sanctions.
Cases Involving Fiduciary Duty, Disclosure & Sanctions
In three recent cases, the Courts have not held back in issuing huge sanctions
against spouses who intentionally withheld financial information. You
should always be mindful of these cases in remembering the importance
of full disclosure of financial information.
Marriage of Rossi (2001) 90 Cal.App.4th 34, the trial court awarded the entirety of the
wife's $1.3 million lottery winnings to the husband because the trial
court found that the wife committed fraud in intentionally concealing
her lottery winnings from her husband. The wife was part of a lottery
pool, and her pool won the lottery in December 1996, just before she filed
for divorce in January 1997. She received her first check after separation.
The wife failed to include her lottery winnings in her Final Declaration
of Disclosure, Income and Expense Declaration, the Judgment of Dissolution,
and the Marital Settlement Agreement. She also communicated with the California
Lottery Commission as to how she could keep her husband from finding out
about her winnings, and to that end, she used her mother's mailing
address for correspondence with the California Lottery.
The trial court found that the wife's conduct constituted fraud, and
as such, the trial court applied the penalty provision of
Family Code 1101(h), which provides that if a spouse breaches his or her fiduciary
duty to the other spouse, and if that breach constitutes fraud, the remedy
for such a breach
but not be limited to, an award to the other spouse of 100 percent"
of the undisclosed asset. [Emphasis added.]
The trial court was not persuaded by the wife's claims that she believed
that her lottery winnings were her separate property (nonetheless, even
if a spouse believes certain property is his or her separate property,
that property must still be included in his or her Preliminary and Final
Declarations of Disclosure). The trial court was further unpersuaded by
the wife's argument that she did not disclose her winnings to her
husband because she was a battered spouse and was fearful that her husband
would take all of the money. As the Court of Appeal plainly stated:
"The statute is unambiguous and
[Emphasis added.] The Court of Appeal affirmed the trial court's ruling.
Contact a Santa Clarita Family Law Attorney
Our law office is located in Santa Clarita, serving communities in Saugus,
Canyon Country, Valencia, Newhall, and more. If you have any questions regarding
child support, questions about modifying a child support order, or if you need assistance
defining and outlining the extent of your fiduciary duties pending a divorce,
child custody dispute, or child support request, please call family law attorney Eric
Martinelli with the
Martinelli Law Group for a free consultation.