The Preliminary Declaration of Disclosure - How to Do it Right, Best Practices, and What Happens When it Goes Wrong

• Citation: Vol. 36 No. 3
• Publication year: 2014
• Author: Lynn Yates Carter and Tracy Duell-Cazes

The Preliminary Declaration Of Disclosure - How To Do It Right, Best Practices, And What Happens When It Goes Wrong

Lynn Yates Carter and Tracy Duell-Cazes

Lynne Yates-Carter is a certified specialist in family law who has been practicing family law for thirty-six years and has been a certified specialist in family law for twenty-nine years. She is a fellow of the American Academy of Matrimonial Lawyers and the past-president of the Northern California Chapter, as well as a former chair of both the California State Bar Association Family Law Section Executive Committee and Santa Clara County Bar Association Family Law Section.

Tracy Duell-Cazes is a certified specialist in family law and has been in practice since December 1989 and has been a specialist since December 2002. She is a member of the Association of Certified Family Law Specialists and the Santa Clara County Bar Association. She is a member of the San Jose Regional Standing Committee of the California State Bar Association Family Law Section. Since 2009, she has been selected as a Northern California Super Lawyer by Super Lawyer Magazine.

Introduction

In virtually every case, parties are required to file a "Preliminary Declaration of Disclosure" or "PDD." The importance of preparing an accurate and complete PDD is sometimes underestimated or ignored. Failing to do so may lead to the imposition of substantial monetary or other sanctions.

In this article, we will explain how to correctly prepare the Preliminary Declaration of Disclosure (PDD) and how to avoid the problems that can result from the failure to follow required procedures or to include all the required information. We will also discuss best practices for preparation of the PDD; review common errors in preparing PDDs and how to avoid them. Finally, we will discuss case law that explains the potential consequences, financial or otherwise, clients and attorneys face when the PDD is not properly completed or served.

A properly and completely prepared PDD can be an invaluable aid in more efficiently resolving financial issues early in the case by clarifying disputed issues and assisting counsel in determining which areas may require additional or different discovery.

Statutory Requirements

I. Family Code provisions regarding disclosures:

Cal. Fam. Code § 2100 sets out both the legislative intent and the duty to make full disclosure. Most importantly, Cal. Fam. Code § 2100(b) provides, "Sound public policy further favors the reduction of the adversarial nature of marital dissolution and the attendant costs by fostering full disclosure and cooperative discovery."

Cal. Fam. Code § 2101 covers definitions of the following: asset, default judgment, earnings and accumulations, expenses, income from all sources, the income and expense declaration (the required form), liabilities which includes any debt or obligation whether currently existing or contingent.¹

Cal. Fam. Code § 2102 effectively cautions the parties that they are subject to the requirements of Cal. Fam. Code § 721 from the date of separation until the date of a valid, enforceable and binding resolution of all issues is achieved relating to child or spousal support and professional fee issues, including the immediate, full and accurate disclosure of all material facts and information regarding the income or expenses of the parties.

Cal. Fam. Code § 2103 covers service of the PDD; it must be served by both parties. Service of the PDD cannot be waived.

Cal. Fam. Code § 2104 covers the preparation and service of the PDD. The PDD is not filed with the court. The Petitioner must serve the PDD within 60 days of filing the petition and the Respondent must serve the PDD within 60 days of filing the response. These deadlines may be extended by written agreement of the parties or by a court order.

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The PDD shall include: (1) all tax returns filed by the declarant within the two years prior to the date the PDD is served. This is not the last two years of returns, but all returns of any kind (personal, corporate, estate, property, for any taxing authority) filed within the prior two years; (2) completed Income and Expense Declaration, unless it has already been provided and remains current (no more than three months old [Cal. Rules of Court, Rule 5.260(a)(3) defines current]); and (3) set forth with sufficient particularity, that a person of reasonable and ordinary intelligence can ascertain, all of the following: (a) the identity of all assets where there is or may be an interest and all liabilities which have or may have liability, whether community, quasi-community or separate and (b) percentage of ownership in each asset and percentage of obligation for each liability, if not solely owned by one or both parties.

The character of the asset or liability may also be included. The PDD may be amended at any time and proof of service of each amendment must be filed with the court. Commission of perjury on the PDD is ground for setting aside the judgment, or any parts of the judgment, in addition to any other remedies, civil or criminal, that is otherwise available under the law for the commission of perjury.

Cal. Fam. Code § 2105 provides, the Final Declaration of Disclosure (FDD) may be waived in writing by both parties. If the FDD it is not waived, it must be served no later than 45 days before the first assigned trial date or before or at the time the parties enter into an agreement for the resolution of property or support issues, except for pendente lite support. The FDD must include all material facts and information regarding the characterization of all assets and liabilities. All material facts regarding the valuation of all assets that are contended to be community or in which the community has an interest must be stated. All material facts and information regarding the amounts of any obligations that are contended to be community obligations or for which it is contended the community has some obligation must be described. All material facts regarding earnings, accumulations and expenses of each party, per the income and expense declaration, must also be stated. If there is perjury in the FDD, the judgment can be set aside. The court can limit a set aside order to only those provisions affected by the non-disclosure or perjury.

Cal. Fam. Code § 2106 also requires that the FDD and current income and expense declaration must be served, unless properly waived, prior to entry of judgment on property rights. Each party must serve a declaration regarding service of the FDD or that it has been waived.

Cal. Fam. Code § 2107 provides for setting aside a judgment and for waiver of the FDD for good cause. The court must set aside the judgment if the FDD is not done unless there is a proper...