California Court Weighs Mediation Confidentiality Versus Disclosure Requirements in Divorce

finance-growth-concept-1446012-3-m.jpgWhen a couple chooses to end a marriage, they must sort through a variety of important financial and emotional issues, such as the division of marital property and spousal support. If there are children involved, they must also address matters of custody, visitation, and child support. One way families can attempt to resolve these issues is through a process known as mediation. In mediation, an impartial third party — the mediator – assists the spouses in reaching an agreement they can both accept. However, considering the nature of divorce, mediation may only be beneficial under certain circumstances. If you are considering divorce or legal separation, it is important to contact an experienced San Diego family law attorney who can guide you through the process with confidence and ease.

In a recent California divorce case, the parties had been married for 16 years and had two children. During the marriage, the wife was a “stay-at-home” mom, and the husband was a doctor and “successful businessman.” After the wife filed for divorce, the couple agreed to resolve their support and property issues through mediation, without the assistance of counsel. The mediation resulted in a signed marital settlement agreement (“MSA”) that provided in part that the husband would pay the wife $10 million to fully satisfy her community interest in the shares of the business, escreen, Inc. The parties signed declarations that both preliminary and final disclosures had been served on the other party in accordance with Family Code provisions.

In August 2011, the court entered a stipulated judgment that included the MSA. Barely five months later, the wife discovered that her ex-husband was in the middle of selling eScreen as well as the equity shares in the company that he acquired through the MSA. He received an estimated $75 million for the shares. The wife filed a motion to set aside the judgment, alleging grounds of perjury, fraud, mistake, and duress. As part of this motion, the wife requested the production of documents, including the disclosure declaration that the husband served upon her before the divorce judgment was entered. He objected and refused to produce the document, arguing that it was protected by mediation confidentiality provisions.

The wife moved to compel production of the declaration. The trial court ruled in favor of the husband, concluding that the California Supreme Court typically has rejected judicially crafted exceptions to mediation confidentiality, and the parties had stipulated in their MSA that the Evidence Code confidentiality principles applied to declarations of disclosure. The wife challenged the ruling, arguing that the mediation confidentiality provisions cannot be applied in a divorce proceeding to prevent the discovery and admissibility of financial items that are mandated by the state Family Code.

The court of appeals agreed and reversed the decision, first pointing out the principles behind the statute’s disclosure requirements: to ensure fairness in awarding child and spousal support, as well as the proper division of community assets and debts. The court concluded that the mediation confidentiality provisions found in the Evidence Code do not apply to statutorily mandated disclosures, which are items that must be made regardless of whether the parties engaged in mediation. To put it another way, the court held that, since the Family Code requires such disclosures, they couldn’t be deemed to be prepared for use in the mediation proceeding, as required by the Evidence Code.

This case clearly exemplifies the complicated interplay of the California Family Code and the state’s Evidence Code. For this reason alone, it is important to consult with an experienced family lawyer with respect to any divorce-related matter. Roy M. Doppelt has been representing parties in family law matters for more than 20 years. Doppelt & Forney serves clients throughout Southern California, including San Diego, Encinitas, La Jolla, and Chula Vista. For a free consultation, contact Doppelt & Forney through our website, or give us a call toll-free at (800) ROY IS IT (769-4748).

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