Pointers and Pitfalls in Family Law Set Asides

• Jurisdiction: California,United States
• Author: Andrew Botros
• Publication year: 2018
• Citation: Vol. 40 No. 1

Pointers and Pitfalls in Family Law Set Asides

Andrew Botros

Andrew J. Botros is a Certified Family Law Specialist with the Law Office of Nancy J. Bickford, APC in San Diego. His practice is focused on complex family law litigation, as well as family law appeals and writs. He currently serves as a Board Member of the San Diego Family Law Bar Association.

At first blush, setting aside judgments under Family Code section 2122 does not appear to be an overwhelmingly complex topic. Case law, however, indicates otherwise. This article will address some common mistakes and misconceptions about set-asides under section 2122.

"Should Have Discovered" Has a Different Meaning in Family Law Cases

Family Code section 2122 includes six different subsections allowing for six different grounds for set-aside. These grounds include actual fraud, perjury, duress, mental incapacity, mistake, and failure to disclose. Each subsection includes a statute of limitations. The statute of limitations for actual fraud, perjury, and failure to disclose include a delayed discovery provision. That is to say, actions based on actual fraud, perjury, and failure to disclose must be brought "within one year after the date on which the complaining party either did discovery, or should have discovered," the fraud, perjury, or failure to disclose. ¹

It is important to understand that "should have discovered" has a different meaning in the context of a fiduciary relationship than it does in other cases such as, say, fraud cases between consumers and businesses. In a civil case between non-fiduciaries, the statute of limitations will begin to run when a plaintiff "suspects or should suspect that her injury was caused by wrongdoing, that someone has done something wrong to her." Further, "[t]he limitations period begins once the plaintiff 'has notice or information of circumstances to put a reasonable person on inquiry....'"²

Where a fiduciary relationship exists, a party "is entitled to rely on the statements and advice provided by the fiduciary."³ Based upon such reliance, "facts which ordinarily require investigation may not incite suspicion and do not give rise to a duty of inquiry."⁴ Further "[w] here there is a fiduciary relationship, the usual duty of diligence to discover facts does not exist."⁵

Accordingly, "[w]here the plaintiff is not under such duty to inquire, the limitations period does not begin to run until plaintiff actually discovers the facts constituting the cause of action, even though the means for obtaining the information are available."⁶ In other words, even though Family Code section 2122 uses the term "should have discovered," the fiduciary duty that exists between parties in a family law case means that there is no duty of inquiry.

Rubenstein v. Rubenstein⁷ first applied these principles to a family law case. In Rubenstein, Husband Alan filed for divorce in 1986. In his declaration of disclosure, he did not claim any interest in various music-related enterprises.⁸ Wife Arteena first alleged in 1986 that Alan possessed ownership rights to the music of Jimi Hendrix and George Clinton and that the community had an interest in those ownership rights.⁹ She filed trial briefs accusing Alan of perjury based on hidden assets. The trial was held on February 6, 1992. Alan again denied any ownership interests in these musical enterprises.¹⁰ On March 5, 1992, Arteena filed motions to vacate the judgment and for a new trial on the grounds that Alan gave false testimony at trial and that she had newly discovered evidence regarding community property. In October of 1992, the trial court denied her request and found that there were no community assets.¹¹ Arteena appealed and that ruling was affirmed.

In May of 1997, Arteena filed another action to set aside the judgment, again alleging that Alan procured the judgment through perjury and fraud.¹² In this motion, she cited pleadings that Alan had filed in another action in which he admitted that he had ownership interests in the same enterprises to which he previously denied having any interest.¹³ Alan challenged her action in a summary judgment motion on the grounds that it was time-barred under section 2122.¹⁴ Specifically, Alan argued that Arteenae had made allegations of fraud and perjury from 1986-1992 and her action to set aside was filed in 1997. Alan's summary judgment motion was granted.

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Alan had made several unequivocal misrepresentations to the court by way of his property declaration.¹⁵ On Arteena's appeal, the Second District held that as a direct result, Alan "succeeded in obtaining a judgment" in his favor.¹⁶ It held that in resisting Arteena's motion to set aside, Alan "in effect asserted that Arteena had no right to rely on his sworn testimony [and property disclosures] in the underlying proceeding."¹⁷ The panel held that just because Arteena "suspected Alan...misstated community assets does not compel the conclusion that Arteena at that juncture either discovered, or should have discovered, the necessary facts constituting the fraud or perjury."¹⁸

The appellate court held that "in view of the fiduciary relationship between spouses, Arteena was entitled to rely on Alan's testimony [and property disclosure] in the dissolution proceeding."¹⁹ It held that for Alan to argue that Arteena knew or should have known about the facts constituting the fraud or perjury where Husband misrepresented critical facts concerning community property was to "have it both ways," and flew "in the face of the fiduciary relationship that exists between spouses."²⁰ Specifically, it said that the fiduciary relationship compelled Alan to make "full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest."²¹ Therefore, Arteena was entitled to "rely on Alan's [property disclosures] in the dissolution trial." and her set-aside action was not time-barred.²²

In Rubenstein, the court held that, as a result of the fiduciary relationship, the statute of limitations did not begin to run until Arteena actually "came across new information" that was "diametrically opposed" to Husband's previous testimony and financial disclosures. Clearly, "should have discovered" has a much more restricted meaning in family law cases.

Don't Rely Solely...