Dear Pinky and Dear Spike:
The original reason for this digression into Ralph’s divorce was to demonstrate how two lawyers can reach, in good faith, completely opposite opinions on an issue and what effect that has on their clients.
During his marriage to Rebecca, Ralph made substantial support payments to his first wife and their children. Before she married Ralph, Rebecca knew of the court order requiring him to make the payments. Even after he made his support payments, Ralph’s salary was several times greater than Rebecca’s — and he contributed it all to their joint account (which Rebecca managed).
On Rebecca’s behalf, her attorney, Eunice Heep, claimed: (1) What Ralph earned during marriage was community property; Ralph agrees. (2) Each party has an undivided one-half interest in their earnings and their partner’s earnings. (3) Ralph, therefore, used money that was half Rebecca’s to make support payments to his first wife and their children; Rebecca wants her half back.
I’ll get to Ralph’s reply to the claim in the next letter. But first I need to tell you what happened after Ms. Heep hauled Ralph and his attorney, Jennifer Gaunt, before the court for the third time. Ms. Heep was still making the same complaint, which was that Ralph had not provided adequate answers to the “Interrogatories” propounded to him by her.
The judge was tired of and bored by the case and found that Ralph had done his best to reply to Ms. Heep’s questions — and his effort had been good enough. Jennifer asked the judge if she could make a motion, right there and then, to sever the reimbursement issue from all the others and to set it for an early trial. The judge was willing to consider it if Ms. Heep consented to an immediate hearing. Ms. Heep withheld consent, and the judge told Jennifer to make a separate motion.
I’ve been asked what could be so oppressive about a set of questions asking Ralph how he invested joint funds during this relatively short marriage. My answer is: Seeing is believing. Here are seven of the 30 Special Interrogatories propounded to Ralph in Set One.
. . .
The following Special Interrogatories are propounded in connection with the investigation conducted on behalf of Petitioner-Wife into whether, during the years of the marriage, you lived up to your Fiduciary Duty to manage the assets and income of the Community in the “Highest Good Faith and Fair Dealing” as described in California Family Code Section 721.
Special Interrogatory 1 [Set One]
From date of marriage and the date of separation (as indicated on the Petition for Dissolution), list by year each and every purchase of corporate stock.
Special Interrogatory 2 [Set One]
For each of the securities listed in response to Special Interrogatory 1 [Set One] please indicate:
»1. The name of the corporation in which you acquired an interest.
»2. The date of the acquisition.
»3. The number of shares purchased.
»4. The purchase price of each share.
»5. The brokerage through which you made the purchase.
»6. The name of the broker and his current place of business and phone number.
»7. The fundamentals you considered when making the purchase.
»8. The then values of the fundamentals listed in response to Special Interrogatory 2 [Set One) 7.
»9. Any other factors you considered when making the purchase.
»10. The name, current business address and phone number of any person with whom you discussed this transaction prior to the purchase of the stock.
Special Interrogatory 3 [Set One]
With respect to each acquisition listed in response to Interrogatory 1 [Set One] please identify each and any document or writing of any kind whatsoever that you read or reviewed with respect to each specific acquisition.
Identification must contain sufficient specificity to support a Demand for Production of Documents.
Special Interrogatory 4 [Set One]
A summary of the content of each and every document listed in Special Interrogatory 3 [Set One].
Special Interrogatory 5 [Set One]
Please describe every fact you considered before making each acquisition described in your response to Special Interrogatory 1 [Set One].
Special Interrogatory 6 [Set One]
Please state your reason(s) for making each of the acquisitions described in the response to Interrogatory 1 [One].
Special Interrogatory 7 [Set One]
With respect to each of the reasons listed in response to Interrogatory 6 [Set One] describe:
»1. The name of every person who can testify to its truth or falsity together with those witnesses’ current business or residence address and current phone number.
»2. Any writing evidencing the truth or falsity of each of the reasons listed in Interrogatory 6 [Set One], with a description of its content and current location with sufficient specificity to support a Demand for Production of Documents.
. . .
An answer to these first seven questions, for a single purchase of stock, requires some sort of a response to 17 separate requests for information. Multiply the number of purchases by 17, and you get a sense of the size of the task Ralph is being required to complete.
These questions are only the beginning. Every one of them will be repeated to ask Ralph about the purchase of bonds, options and for “any other form of security not previously described herein.”
Ms. Heep can easily justify the inquiry as part of her job. She must find out if Ralph managed community finances by living up to his “fiduciary duty,” which sounds comprehensive and burdensome. It’s not. The duty has three components: (1) Financial documents must be made available to the spouse upon request; (2) A spouse cannot enter into a transaction that benefits him more than it benefits his partner; and (3) Transactions involving marital property can’t be reckless.
So, essentially, the “investigation” is looking for reckless or one-sided transactions. The managing spouse will know if he or she is guilty of either; however, even if not guilty, the pervasiveness of the inquiry has the effect of making all of its targets question the history of their own behavior.
Note, too, that the Interrogatories are generic in the sense that they can be printed from a template without inserting information specific to Ralph’s case. This means Ralph will spend hundreds of hours answering questions it took Ms. Heep no more than a few minutes to ask.
. . .
Back to you Spike, and especially you, Pinky. Ralph’s story isn’t a digression when it comes to you. Pinky’s attitude and management of the community estate has been reckless. During his entire adult life Pinky “invested” your money by trusting his “intuition,” which he has so often described as “too complex to explain to anyone who hasn’t been blessed with the same gift.”
Fortunately, he first used his intuition to buy a share in a partnership that drilled an oil well that’s still pumping oil and money. After that, Pinky’s intuition got you into ten, maybe 15, complete losers — big losers. Then he paid almost nothing for lots of the most grim and ugly land on the planet. It was such a nasty place that the federal government acquired it for the site of a high-security prison. You guys made more on the prison than on the oil well. And so it went. A bunch of spectacular losers always followed by an even more spectacular winner.
To date there is no California law on whether the Fiduciary Duty owed by one spouse to the other in the management of marital property can be satisfied by a good overall outcome in spite of some reckless behavior. Right now it’s not clear if the court can even consider evidence of the excellence of the overall performance. This didn’t bother your judge. She sidestepped Ralph’s mess by announcing from the bench that she was very interested in evidence of overall success — and that she wanted to hear it before she would entertain requests to order Pinky to comply with demands for information about specific transactions.
Both lawyers got the message. For this judge the proof of the pudding was net financial success, and she didn’t want to hear about what went into it. This saved you both a lot of grief.
. . .
Jennifer Gaunt is trying to achieve a similar result, but her task is more difficult. First she has to get the judge to sever the issue of Rebecca’s reimbursement claim from the rest — then she must get the judge to hold an early trial on that issue alone. At trial Jennifer will still have to convince the judge that there is an inadequate legal basis to sustain the claim that Eunice Heep is advancing on behalf of her client.
I can report here that the judge granted Jennifer’s motion to sever the reimbursement issue, and she set a trial early enough for me to report its outcome in my next letter to you.
Your friend,
Bucky
— Brian H. Burke is a certified family law specialist practicing family law and mediation in Santa Barbara. A researcher and educator in the field of divorce and family conflicts, he is also the creator of the Legal Road Map™. Click here for more information, call 805.965.2888 or e-mail .(JavaScript must be enabled to view this email address). Click here to read previous columns. The opinions expressed are his own.
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