Consequences of Failing to Comply with Disclosure Requirements during Divorce
There is a natural tendency between parties undergoing a divorce not to be forthcoming with one another in disclosing all their assets, debts, income and expenses. In an effort to get a bigger share of the pie, a party to a divorce proceedings sometimes will have to urge not to disclose that secret bank account or that secret property that was purchased without the other spouse’s knowledge. As a result, parties sometimes refuse to comply with the requirement to exchange preliminary and final declarations of disclosures. There is a statutory duty in family law to exchange prescribed “preliminary” and “final” declarations, along with a current income and expense statement, in all dissolution, legal separation and nullity actions. Family Code Section 2103 provides that "In order to provide full and accurate disclosure of all assets and liabilities in which one or both parties may have an interest, each party to a proceeding for dissolution of the marriage or legal separation of the parties shall serve on the other party a preliminary declaration of disclosure under Section 2104 and a final declaration of disclosure under Section 2105, unless service of the final declaration of is waived.”
The declarations of disclosure are not a mere formality. The parties are bound to provide full and accurate disclosures, consistent with their continuing fiduciary obligations as to all activities affecting each other's property and support rights. The deadline for service of each party's final declaration is either (1) “before or at the time the parties enter into an agreement for the resolution of property or support issues” (other than pendente lite support), or (2) if the case goes to trial, “no later than 45 days before the first assigned trial date.” Missing this deadline will not prevent the case from going to trial but will prevent entry of judgment.
What happens when one party fully complies with the disclosure requirement while the other does not? Family Code Section 2107 lays out the remedies a complying party may have. The complying party may either 1) file a motion to compel further response and/ or 2) file a motion for an order preventing the noncomplying party from presenting evidence on issues that should have been covered in the declaration of disclosure at trial. 3) The complying party may also seek monetary sanctions against the non complying party. Such monetary sanctions award against a party who fails to comply with any provision of Fam.C. § 2100 et seq. The sanctions must be assessed in an amount “sufficient to deter repetition of the conduct or comparable conduct,” and must include reasonable attorney fees, costs incurred or both ... unless the court finds that the noncomplying party “acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” 4) If a court enters a judgment when the parties have failed to comply with all disclosure requirements, the court shall set aside the judgment. The failure to comply with the disclosure requirements does not constitute harmless error. 4) Upon the motion to set aside judgment, the court may order the parties to provide the preliminary and final declarations of disclosure that were exchanged between them.
What happens if both parties complied with the disclosure requirements but left out material items in the disclosure? A party who finds out after a divorce judgment has been entered may file a motion to adjudicate omitted asset or debt under family code section 2556. In those cases, generally the Court would distribute the omitted item among the parties as if it was added to the prior judgment rather than setting aside the original judgment.
Please note that this article is not legal advice and is not intended as legal advice. The article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article does not create any attorney-client relationship between you and the Law Offices of Kenneth U. Reyes, P.C. This article is not a solicitation.
Attorney Kenneth Ursua Reyes was President of the Philippine American Bar Association for 2005. He is a member of both the Family law section and Immigration law section of the Los Angeles County Bar Association. Mr. Reyes is a Certified Family Law Specialist. He is a graduate of Southwestern University Law School in Los Angeles and California State University, San Bernardino School of Business Administration. He has extensive former CPA experience prior to law practice. LAW OFFICES OF KENNETH REYES, P.C. is located at 3699 Wilshire Blvd., Suite 700, Los Angeles, CA, 90010. Tel. (213) 388-1611 or e-mail kureyeslaw@gmail.com; visit at www.kenreyeslaw.com