The California Fourth District Court of Appeals in San Diego ruled earlier this month that a parent or spouse's obligation under the Family Code to disclose changes in financial status to the other party does not extend past the date a court enters a final judgment. The court reversed the trial court's order imposing sanctions against an obligor ex-husband and father, which were based in part on a failure to disclose certain financial changes after a divorce decree was granted.
This case could have a significant impact on how California parents handle child support issues after entry of a decree, and it will be important for parents who have child support orders, both as obligor and obligee. An obligee, who receives payments from the other parent, has an interest in knowing if that parent is not paying the full amount of which they are capable.
The parties in this case have three children. All of the children were minors when the mother filed for divorce from the father in Wyoming in 2003. A Wyoming court granted the divorce in 2003. The wife and children relocated to San Diego, and a California court confirmed the decree in 2005. At the time of the divorce, the father declared an annual income of $800,000 and agreed to pay $8,500 per month in child support. The child support amount would reduce to $4,000 per month when only one child remained a minor. The father also agreed to pay monthly spousal maintenance of $12,000 for a ten-year period.
The mother brought an action in San Diego in 2007 to modify and enforce support. She requested an increase in the child support amount, enforcement of arrears on spousal maintenance, and court costs. Her financial declaration to the court indicated that she had a net worth at the time of $14 million and monthly expenses of over $40,000. The father's financial declaration showed significant changes from the time of the divorce. He had sold his business, his monthly income was less than $11,000, and he claimed to have $60,000 per month in expenses. He had earned $3 million from his business in 2006, which he had not disclosed to the mother. He had also brought in over $100 million in 2007 from the sale of the business, but later ventures had not been successful.
The mother asked for sanctions against the father for failing to disclose these sources of income. The trial court agreed, finding that he had "unnecessarily prolonged litigation" and breached his fiduciary duty. It increased his child support to $18,000 per month and ordered him to pay attorney fees and sanctions. The father appealed some of the trial court's holdings.