Metropolitan News-Enterprise


Friday, April 19, 2013


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Family Law Statute on Forfeiture of Undisclosed Assets Held Inapplicable to Spouse’s Separate Property


By a MetNews Staff Writer


A Family Code provision that allows a judge to order forfeiture of a party’s interest in an asset to the other party as a sanction for failure to disclose the asset is limited to community property, the Fourth District Court of Appeal ruled yesterday.

Div. One reversed San Diego Superior Court Judge Christine Goldsmith’s order awarding Tracy Hoogenberg more than $245,000 under Family Code Sec. 1101(h) as sanctions for the failure of her ex-husband, Keith Simmons, to disclose ownership of funds that Hoogenberg discovered were held in a bank account as of August 2010.

The couple married in the summer of 2008 and separated a year later. Their child was born about two months before they separated.

Their divorce was “astoundingly lengthy, circuitous, and expensive,” Justice Judith Haller wrote, “particularly given that both parties had substantial financial assets and were married for a very brief time.” Hoogenberg had inherited wealth, the jurist explained, while Simmons was part-owner of a wetsuit business and a building in LaJolla in which his interest may have been worth $10 million.

The litigation was punctuated by numerous discovery sanctions against Simmons, who the judge found to have refused to comply with routine discovery requests, failed to disclose assets, failed to respond to questions at his deposition, and deliberately delayed proceedings. In addition to the Sec. 1101(h) sanction, the judge awarded $400,000 in discovery sanctions.

With respect to the bank account, Haller acknowledged, the statute does not facially limit its application to community property assets. But that is clearly what the Legislature intended, she said.

“We conclude the Legislature intended that section 1101(h) provides a remedy only when a spouse fails to disclose community property,” she wrote. “First, the section 1101(h) remedy is set forth in a portion of the Family Code that exclusively concerns matters associated with community property.  And, section 1101, subdivision (a) specifies that a spouse may raise a breach of fiduciary claim under this section when there is an impairment to the spouse’s community interest….Although section 1101(h)’s use of the term ‘any asset’ can on its face encompass both separate and community property, when read in conjunction with section 1101, subdivision (a)’s statement that a breach of fiduciary claim arises upon an impairment of a community interest, this strongly suggests that ‘any asset’ means any community asset.”

In an unpublished portion of the opinion, the justice rejected Simmons’ challenges to the discovery sanctions, but said the judge should reconsider the overall amount of sanctions on remand.

The case is In re Marriage of Simmons, 13 S.O.S. 1942.


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