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.