Cases

Over the course of a 30-year marriage, the wife worked as an independent contractor for a business owned by her husband (GMSR’s client).  During divorce proceedings, the wife claimed the husband had breached his spousal fiduciary duty by taking excessive withholdings from her separate property earnings.  Instead of applying the general 4-year breach of fiduciary duty statute of limitations, the trial court applied Family Code section 1101(d)(2).  That statute permits spouses to maintain stale fiduciary-duty claims during divorce proceedings—regardless of when the claims accrue.

The Court of Appeal reversed.  Agreeing with GMSR’s statutory interpretation, the court’s published opinion held that section 1101(d)(2)’s exemption from the statute of limitations applies only to claims where the breached duty impacts community property—not separate property.  A holistic evaluation of the statute’s structure, its placement within the Family Code and its legislative history all required this narrow interpretation.  In short, the Legislature intended to provide harsher remedies for misappropriation of community property.

In the unpublished portion of the opinion, the Court of Appeal agreed with GMSR on the most significant remaining issues, including (1) whether the premarital agreement required the husband to provide additional support for the wife’s retirement, and (2) the substantial reduction to the wife’s needs-based attorney fees.

To read the Court of Appeal opinion, click HERE.