ATTORNEY FEES AS SANCTIONS VALID WHEN FIDUCIARY DUTY VIOLATED

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So you’re thinking of leaving the spouse, and you think it might be a good idea to take a cash advance from the joint family credit card, just in case.  And you want to put the money in your own bank account, sacking the community with the debt, and not telling him about it.  And you think this is a good idea.  And, well…

Maybe you should think again.  That’s because California’s appellate courts have ruled that a trial court erred by not awarding attorney fees as sanctions under Family Code §1101(g) despite the fact it found during a dissolution trial that Wife had violated her statutory fiduciary duty by taking a $24,000 cash advance on a credit card before separation and transferring the funds to her personal bank account without informing her Husband.

The facts of Marriage of Fossum (2011) 192 CA4th 336, 121 CR3d 195 were that Wife, before separating from Husband, took a $24,000 cash advance using a credit card and transferred the funds into her personal bank account without informing Husband.  After the trial for the couple’s marital dissolution, the trial court ordered Wife to reimburse Husband for half the amount charged, but found that Husband was not entitled to an award of attorney fees even though she had violated her fiduciary duty under Family Code §721.

The appellate court reversed the judgment.  Regarding attorney fees, the court of appeal held that Husband was entitled to an award of attorney fees under section 1101(g) as a result of Wife’s breach of fiduciary duty.  Family Code §1101(g) states that its remedies “shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs.”

FAILURE TO DISCLOSE NEW LOAN COULD BREACH FIDUCIARY DUTY

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When involved in a divorce in California, it is important to understand that by taking out a loan on your separate property you have a fiduciary duty to disclose this to your soon-to-be-ex spouse.  Family law courts have held that by not being totally forthright with such disclosures, a party is in breach of their fiduciary duty.

This is covered through Family Code § 1101 (a) and (g), and the case of In re Marriage of Quay (1993) 19 Cal.App.4th 961, 972-973, whereby the trial court was granted permission to unequally divide marital properties if it finds that one spouse breached his or her fiduciary duty to the other.

In Quay, the court awarded the property and its encumbrance to the Wife and ordered her to pay Husband the share of the equity of the property at the time of conveyance.  This amounted to a $59,000 breach, which probably really wasn’t worth it to the Wife in the long run.

INCURRING DEBT MANDATORY WITH BREACH OF FIDUCIARY DUTY

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An important California family law decision was handed down earlier this year dealing with breach of fiduciary duty in a dissolution.  In the case, a California appellate court has ruled that the trial court erred by refusing to award attorney’s fees to husband under Family Code §1101(g) for wife’s violation of her fiduciary duty, because such an award is mandatory under that statute.

In re Marriage of Fossum, 192 Cal.App.4th 336 (2011) the facts indicate wife had incurred a $24,000 credit card debt prior to separation without the knowledge or consent of husband.  This was a no-no because the law clearly states that in California dissolution actions, debts incurred without the consent of the other spouse may be assigned to the party incurring the debt.

DURATION OF DUTY OF CHILD SUPPORT IN CALIFORNIA

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Another issue that troubles many parents when they get caught up in a child support battle is how long their duty to support lasts.  California Family Code § 3901covers the duration of duty for support.

Section 3901 (a) states:  “The duty of support imposed by Section 3900 continues as to an unmarried child who has attained the age of 18 years, is a full-time high school student, and who is not self-supporting, until the time the child completes the 12th grade or attains the age of 19 years, whichever occurs first.”  In In re Marriage of Hubner, 94 Cal.App.4th 175, 114 Cal.Rptr.2d 646 (2001), the court determined that a child is not required to graduate high school as soon as possible or required to take only those courses necessary to graduate from high school in order to maintain eligibility for child support.

ALL SPOUSES SUBJECT TO FIDUCIARY DUTIES

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When dealing with property division in California family law cases, it is important to remember that all transactions between spouses are subject to the general rules that govern fiduciary relationships.  As cited in Irmo Haines (1995) 33 Cal.App.4th 277, a “duty of the highest good faith and fair dealings” applies to each party to the transaction and neither shall take any unfair advantage of the other. FC § 721(b).

Thus, when an interspousal transaction unfairly advantages one spouse, a presumption arises that the transaction was the result of undue influence.  Undue influence exists in “the use of confidence or authority to obtain an unfair advantage.”