Breach of Fiduciary Duty

When two people marry, absent an agreement to the contrary, they enter into a financial relationship in which each spouse owes a fiduciary duty to the other to protect and preserve the assets of the marriage and not to dispose of them without the consent of the other. In the event of a divorce, it is not uncommon for the spouse who has the greater control of marital assets to take act in a manner where he/she can retain more assets than he or she is entitled to under community property laws. Under the California Family Code, when this occurs, the injured spouse has a claim against the other for breach of fiduciary duty if it results in impairment of that spouse’s fifty percent interest in the community property of the marriage.

Remedies for breach of fiduciary duty

There are various remedies for different types of breaches of fiduciary duties. Among others, the breach may consist of failing to disclose all assets, actively concealing assets, misappropriating assets, and/or encumbering assets. Below is a list of potential remedies depending on the manner of the breach.

Failure to Make a Proper Disclosure

When a party fails to make a proper preliminary declaration of disclosure and/or final declaration of disclosure the Court may:

  1. Grant a motion to compel further response from the noncomplying party.
  2. Grant evidentiary sanctions against he noncomplying party, preventing him/her from presenting evidence that would have been in the declaration of disclosure.
  3. Order monetary sanctions against the noncomplying party.

Additionally, failure to provide a full and accurate disclosure is grounds for a set-aside of a judgment.

Impairment of Other Spouse’s Undivided One-Half Interest in Community Property

Where are spouse impairs the other spouse’s undivided one-half interest in community property, serious remedies may be imposed.

First, the Court may order an account of the parties’ property to determine ownership rights. After the characterization of property has been determined, the Court can order the name of spouse to be added to any and all community property that is not otherwise held in his/her name.

Additionally, if an asset is undisclosed or misappropriated, the Court shall award an amount equal to 50% of the assets plus attorney’s fees and costs to the non-breaching spouse. It should be noted that the value of asset is determined on its highest value at the either the date of the breach, the sale or disposition of the asset, or the date awarded.
In the event that a spouse can prove the breaching spouse acted with “fraud, malice, or oppression”, the Court shall award the non-breaching spouse 100% of the asset (or an amount equal thereto) and may also award the spouse with attorney’s fees and costs.

California’s Strong Public Policy of Ensuring Finality of Judgment vs. Proper Division of Marital Property

The California legislature has promoted a strong public policy towards assuring the finality of judgments. This is often favorable to parties that have entered into stipulated judgments or marital settlement agreements. However, the Courts will balance this public policy interest with the goal of ensuring that the division of marital property is proper. Accordingly, the Family Code provides mechanisms for judgments to be set-aside. If you believe your judgment was unfair, the family attorneys at Aeschleman Law can assess the facts in your case to determine if a set-aside of your judgment is appropriate and likely to be successful. Some grounds for a set-aside include actual fraud, perjury, duress, mistake of law or fact, and/or failure to make full and accurate disclosures.

Identify the Breach of Fiduciary with the Help of an Experienced Family Law Attorney

Having an experienced family law attorney may be critical to you identifying a breach of fiduciary duty and the assets and amounts involved in that breach.

The family law attorneys at Aeschleman Law bring the necessary financial background and legal experience to assist you in a breach of fiduciary duty action. Additionally, when required, Aeschleman Law has access to top forensic accounting experts who can do an in-depth analysis of complex financial situations in high asset divorces where improper treatment of marital assets is suspected.

Aeschleman Law will represent you in your request for a fair and proper division of marital property.

Aeschleman Law is located in San Jose and serves Santa Clara, Alameda, and San Mateo Counties. Call us today for a initial consultation at (408) 724-8930. You may also contact us by filling out the form on the bottom of this site.