Recent Developments in Family Law

COURT FINDS THAT ONCE A FINAL SUPPORT ORDER HAS BEEN ENTERED, DIVORCED PARTIES DO NOT HAVE A CONTINUING FIDUCIARY DUTY TO DISCLOSE TO EACH OTHER ALL MATERIAL FACTS REGARDING THEIR INCOME. In re Marriage of Sorge, (2012) 202 Cal.App.4th 626.

FACTS

Husband (H) and wife (W) agreed that H would pay W child support in the amount of $8,500 per month for their three minor children (and not less than $4,000 per month for one child) based on H’s gross income of more than $800,000 per year. The agreement was established as part of a judgment. Post- judgment W filed an order to show cause (OSC) seeking, among other relief, a modification of child support. Finding an increase in H’s income, the trial court increased H’s child support obligation from $4,000 per month to approximately $18,000 per month.

The trial court also determined that H breached his fiduciary duties to W by failing to disclose material changes to his income after the entry of judgment and continuing throughout the litigation. The court awarded W sanctions in the amount of $75,000 pursuant to Family Code Sections 271 and 2107, which authorize the court to impose sanctions in Family Law proceedings. H appealed, arguing that he no longer owed W any fiduciary duties since the two were no longer married and there was a final judgment in their marital dissolution case.

APPELLATE COURT DECISION

The District Court of Appeal that serves San Diego County (Fourth District, First Division) reversed the trial court’s sanction order. The sanctions were based in part on the court’s determination that H had breached his fiduciary duty to W by not disclosing information related to his income. The appellate court held that once a final order of child support has been entered in a dissolution case, the parties are no longer subject to the requirement of immediate, full and accurate disclosure of all material facts and information regarding their income or expenses. The court noted that after the entry of a judgment of dissolution, a custodial parent is entitled, upon written request, to an annual declaration of income and expenses from the parent paying child support, regardless of whether a notice of motion or order to show cause has been filed. Thus, the parties have a means to resolve support issues without judicial intervention, permitting them to reassess on a periodic basis whether a modification is warranted, discouraging the filing of meritless claims for a change in support, and encouraging the use of voluntary agreements to modify support payments.

COMMENTS

In re Marriage of Sorge stands for many propositions, however we find most notable the court’s findings that after the entry of judgment the parties are no longer required to disclose to each other all material facts and information regarding their income and expenses. Litigants should be aware of the fact that the fiduciary duty to disclose material facts and information regarding their income or their former spouse’s income terminates upon the entry of a final support order. Parties with final support orders should also be aware of the mechanisms available to them for ascertaining changes in the opposing party’s income which could affect support and should be diligent in utilizing those tools available to keep themselves informed regarding changes in their former spouse’s income.

Recent Developments in Family Law

COURT FINDS THAT FORMER WIFE WAS REQUIRED TO SHOW A CHANGE OF CIRCUMSTANCES TO SEEK AN EXTENSION OF A SPOUSAL SUPPORT ORDER WHICH TERMINATED BY ITS OWN TERMS ABSENT A SHOWING BY WIFE OF GOOD CAUSE AS TO WHY THE COURT SHOULD ORDER SPOUSAL SUPPORT TO BE CONTINUED.
In re Marriage of Khera and Sameer (2012) 206 Cal.App.4th 1464.

FACTS

Husband (H) and wife (W) reached a settlement agreement in their divorce which was incorporated into a final Judgment. H was ordered to pay W spousal support of $2,650 per month, commencing June 1, 2007. There was an annual step-down in H’s support obligation through June 1, 2010. The Judgment provided that on June 1, 2010, “Spousal support will be reduced to zero, unless, before that date, [W] files a motion to have spousal support continued and shows good cause as to why the Court should order spousal support to be continued.” With regard to child care expenses, the Judgment provided that commencing June 1, 2007, “The parties shall each pay one-half of all: (a) Reasonable child care expenses incurred to permit a Party to work; (b) Only through October 30, 2007, reasonable child care expenses incurred to permit [W] to obtain her MSW degree . . .”

On March 24, 2010, W filed an Order to Show Cause seeking a modification of the Judgment’s spousal support provisions. She requested that the court determine the marital standard of living and order an upward modification of support, including a Smith/Ostler obligation. In her declaration, W indicated she was earning $9 per hour as an associate social worker. She was in a clinical psychology doctoral program and only able to work 24 hours per week. She argued no showing of changed circumstances was required due to the fact that the language contained in the Judgment specifically allowed for W to seek modification of the order before June 1, 2010. Alternatively, she argued even if a change of circumstances is required, a modification may be grounded on a showing of unrealized expectations, namely that W was not self-supporting by the termination date of the support. The trial court denied W’s request finding there was insufficient evidence to modify the spousal support prospectively.

APPELLATE COURT DECISION

The District Court of Appeal that serves Santa Clara County (Sixth District) affirmed the trial court’s order. The court explained that a modification of spousal support, even if the prior amount is established by agreement, requires a material change of circumstances since the last order. A material change of circumstances may be in the form of unrealized expectations, however a family law court may not find a change of circumstances in the reconsideration of a circumstance which has not changed since the previous order.

The parties’ Judgment contained an order commonly referred to as a “Richmond order” which is named after the decision of In re Marriage of Richmond (1980) 105 Cal.App.3d 352. These orders provide for contingent termination of spousal support on a specific date unless, before that time, the supported spouse brings a motion to modify for good cause. A Richmond order is normally issued with the expectation that if the supported spouse exercises reasonable diligence, he or she will have become self-supporting by the date set for support payments to end. The effect of a Richmond order is to tell each spouse that the supported spouse has a specified period of time to become self-supporting, after which the obligation of the supporting spouse will cease. A Richmond order psychologically prepares the supported spouse for the time when he or she must be self-supporting. It also places the burden of showing good cause for a change in the order upon the one who is most able to exercise the control necessary to meet the expectations the trial Judge had in making the order.

The Court of Appeal explained the question of reasonable expectations is material, and a failure to realize them may constitute a change of circumstances justifying modification of the order. The clear implication of the Judgment was that, absent unforseen circumstances, W was expected to complete her MSW degree and be able to be fully self-supporting by June 1, 2010. The court noted W’s supporting declaration did not show that she diligently acted to achieve financial self-sufficiency and, despite her reasonable efforts, she had been unable to complete her MSW degree, she had been unable to obtain full time work as a social worker, or she had been unable to find full-time employment at a salary that made her self-supporting. An unrealized expectation of self-support requires a showing that, despite the supported spouse’s reasonable efforts, he or she was unable to support himself or herself. The burden was on W to show reasonable efforts to achieve this objective. W did not present evidence of the marital standard of living or her needs based on that standard. The court noted, in its view, a voluntary decision to pursue a doctoral degree rather than entering the working world full-time does not constitute a material change of circumstances in the context of this case.

COMMENTS

As discussed in the appellate court decision, requiring a material change of circumstances since the last order for a modification of that order helps to ensure the policy of the law supporting finality in dissolution cases. Absent such a requirement, dissolution cases could be endless allowing unhappy former spouses to bring repeated actions for modifications of orders with no burden of showing a justification to change the order. In deciding whether to file a request for a modification of an order, the moving party should consider the circumstances at the time the order was made and should review the order for any findings or indication of those circumstances. Absent the ability to prove those circumstances and a material change in those circumstances, a request for a modification of a prior order is likely to be a fruitless effort.