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Spousal Opportunity: Does It Exist?
Shortly after the entry of a divorce judgment, matrimonial litigants walk away with their respective pieces of the marital estate (sometimes with support or distributive payments to follow) and begin separate lives with separate interests. However, without adequate protections under the law, the value of the marital estate before that pivotal moment (and the value of each litigant's post-termination estate) could have been diminished by the actions of the other spouse. For this reason, some concept of a fiduciary obligation between spouses exists in the majority of the states. Whether in equitable distribution jurisdictions or community property jurisdictions “spouses must manage marital property with care shortly before the termination of the marriage to ensure that the full value of the marital estate gets divided justly according to the prevailing system of distribution. For example, in California, each spouse has a fiduciary obligation to act in good faith with respect to the management and control of community property. Cal. Fam. Code (Section sign) 721; see Duffy v. Duffy, 111 Cal. Rptr. 2d 160, 164-65, 91 Cal. App. 4th 923, 930 (Cal. Ct. App. 2001); Rossi v. Rossi, 108 Cal. Rptr. 2d 270, 275, 90 Cal. App. 4th 34, 40 (Cal. Ct. App. 2001). Even in the equitable distribution state of Massachusetts, where there is no articulated concept of a fiduciary obligation, conduct that has harmed the marital estate may be considered a factor tending to decrease that spouse's equitable share of marital property upon divorce. Kittredge v. Kittredge, 441 Mass. 28, 803 N.E.2d 306 (Mass. 2004) (holding that a portion of the husband's gambling losses were chargeable to the husband in the ultimate division of marital property).
Today's Complexities
Today, marital dissipation is more complicated than ever. No longer is an attorney confronted with the simple case of a spouse purchasing lavish gifts for a paramour using marital funds. Rather, what has evolved over the course of the last several years is ever increasing, overly complex schemes to defer lucrative business transactions until after termination of the marriage. Are the courts prepared to deal with this scenario? Is an extension of the doctrine of corporate opportunity the answer? It seems that California legislators clearly contemplated the need to infuse matrimonial law with corporate principles of fair dealing. Duffy v. Duffy. (The duties specified in Family Code section 721, subdivision (b), are derived from the Corporations Code sections upon which subdivision (b) relies.). Indeed, California legislators have gone far in identifying the responsibilities of spouses with regard to business assets acquired after separation but before dissolution. California Family Code A ' 2102 requires the accurate and complete written disclosure of any investment opportunity, business opportunity, or other income-producing opportunity that presents itself after the date of separation, but that results from any investment, significant business activity outside the ordinary course of business, or other income-producing opportunity of either spouse from the date of marraige to the date of separation, inclusive. Cal. Fam. Code A ' 2102(a)(2); see also Varner v. Varner, 63 Cal. Rptr. 2d 894, 903, 55 Cal. App. 4th 128, 142 (Cal. Ct. App. 1997), superceded by statute, Rubenstein v. Rubenstein, 81 Cal. App. 4th 1131 (2000).
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