Tuesday, December 23, 2014
Court of Appeal Says Mediation Confidentiality Does Not Apply to Family Law Financial Disclosures
By KENNETH OFGANG, Staff Writer
The mediation confidentiality statutes do not apply to mandatory family law financial disclosures, even if the required documents are exchanged during mediation, the Court of Appeal for this district has ruled.
Div. Three Thursday granted a writ of mandate to Gina Lappe, the ex-wife of Beverly Hills physician and medical services entrepreneur Murray Lappe. The writ requires Murray Lappe to produce the financial disclosure declaration that he prepared for the couple’s 2011 divorce proceedings, as discovery material in connection with Gina Lappe’s motion to set aside the judgment on grounds of fraud, duress, perjury, and mistake.
Gina Lappe contends that her ex-husband hid the true value of eScreen, a company that he started during the marriage. She says he convinced her to accept $10 million for her community property share of the company, then turned around and sold his share, netting $75 million before taxes, and that she would not have accepted the amount she did if she knew that eScreen was being shopped.
The couple exchanged financial disclosure declarations during the divorce, as required by Family Code §2100 and subsequent sections. In the post-judgment proceedings, the ex-husband claimed that those documents were exchanged during mediation, which Gina Lappe disputed.
In opposing the ex-wife’s motion to compel production of the declaration, the doctor’s attorneys cited a clause in the marital settlement agreement purporting to make the parties’ financial declarations “inadmissible…and otherwise protected from disclosure,” citing Evidence Code §1119(b). The statute preserves the confidentiality of documents “prepared for the purpose of, in the course of, or pursuant to, a mediation”
Los Angeles Superior Court Judge Thomas Trent Lewis ruled that §1119(b) barred the ex-wife from obtaining her ex-husband’s declaration.
Justice Patti Kitching, however, writing for the Court of Appeal, said that Gina Lappe was entitled to discovery, whether the declarations were exchanged during mediation or not.
“[C]ourts must eschew judicially crafted exceptions to mediation confidentiality, unless due process is implicated or a literal construction would produce absurd results,” she wrote. “…However, manifest as this rule is, it does not answer the threshold question presented by this case—that is, do the mediation confidentiality statutes apply in the first instance to statutorily mandated disclosures that must be made regardless of whether the parties participate in mediation? We conclude the answer to this question is ‘no.’”
Financial disclosure declarations, she explained, are not “prepared for the purpose of mediation,” within the meaning of the statute, rather they are prepared in order to comply with the Family Code disclosure requirements. Nor are they exchanged “in the course of” mediation, even if they are exchanged during it, the justice said.
Kitching cited Evidence Code §1120, which provides that a document otherwise admissible or discoverable does not “become inadmissible or protected from disclosure solely by reason of its introduction or use in a mediation or a mediation consultation.” The section “limits the scope of Evidence Code section 1119 and thus prevents parties from using mediation as a pretext to shield materials from disclosure,” Kitching wrote.
The justice went on to say that public policy does not permit enforcement of the parties’ agreement to bar admission of the declarations in subsequent proceedings. “In view of the Family Code’s stated public policy to promote ‘full and accurate disclosure of all assets and liabilities’ in dissolution proceedings…such a stipulation is not permitted,” the justice wrote.
Attorneys on appeal were Daniel Barbakow, Claudia Ribet and Elizabeth Skorcz Anthony of Barbakow & Ribet for the ex-wife and James M. Donovan and Michael J. Glenn of the Law Offices of James M. Donovan, along with Christopher Melcher and Anthony D. Storm of Walzer & Melcher LLP, for the ex-husband.
The case is Lappe v. Superior Court (Lappe), 14 S.O.S. 5843.
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