Friday, January 6, 2012
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C.A. Limits Duration of Duty to Disclose in Child Support Cases
By KENNETH OFGANG, Staff Writer
A person’s duty to disclose changes in his or her financial status that may affect child support terminates once a final order is entered, the Fourth District Court of Appeal ruled yesterday.
Reversing an order by a San Diego Superior Court judge, Div. One ruled that Joseph A. Sorge was under no duty of continuing disclosure after he and wife Maryanne Sorge divorced nearly a decade ago.
Sorge, a physician and founder of a biotechnology company, married Maryanne Sorge in 1983; the couple had three children. Maryanne Sorge sued for divorce in Wyoming in 2000, when all of the children were minors.
Support Agreement
Joseph Sorge, who was earning more than $800,000 a year at the time, agreed to pay $8,500 per month in child support, commencing when the wife and children moved to San Diego and reducing to $4,000 once there was only one remaining minor child. He also agreed to pay $12,000 per month in spousal support for 10 years.
A Wyoming judgment based on the agreement was entered in 2003, and a California judgment in 2005. Maryanne Sorge brought an action for modification and enforcement in 2007, seeking an increase in child support, attorney fees, and collection of spousal support arrears.
Maryanne Sorge filed a financial declaration showing a net worth of more than $14 million. She later indicated expenses of more than $40,000 per month. Joseph Sorge’s declaration indicated that he had sold his company and was earning less than $11,000 in monthly salary, was losing money on investments, and had more than $60,000 in monthly expenses.
An evaluator noted that he had received in excess of $100 million, before taxes, when he sold the company in 2007, but had investment in thus-far-unprofitable startup companies after that.
Sanctions Sought
Maryanne Sorge subsequently sought sanctions for her ex-husband’s failure to disclose more than $3 million in 2006 income, as well as the money he received from the sale of his former company.
The judge found that Joseph Sorge had engaged in conduct that unnecessarily prolonged litigation, and breached fiduciary duties, and ordered an increase in child support to $18,000 a month, and awarded $200,000 in attorney fees plus $75,000 in sanctions. The court later awarded $60,000 in attorney fees pending appeal.
The Court of Appeal affirmed the child support award, but reversed with respect to sanctions and sent the case back to the trial court.
Justice Cynthia Aaron said the duty of continuing disclosure in Family Code Sec. 2012(c) does not apply post-dissolution:
No Continuing Duty
“We disagree with the trial court’s interpretation of section 2012, subdivision (c), and conclude that this subdivision does not impose on divorced parties a continuing fiduciary duty to disclose all material facts regarding a party’s income after a final custody and support order has been entered,” the justice wrote.
Aaron noted, however, that sanctions were also awarded for unnecessary prolonging litigation, pursuant to Sec. 271, and that the former husband did not challenge the application of that section. The sanctions may thus be re-imposed on remand if the trial judge concludes that they are justified under Sec. 271 along, the justice concluded.
The case is In re Marriage of Sorge, D057677.
Copyright 2012, Metropolitan News Company