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Monday, November 19 , 2018, 6:53 am | Fair 48º

 
 
 
 

Brian Burke: About Your Divorce (Letter 8)

'Demand for the Production of Documents' a springboard to all-out war

Dear Ones,

You have “let slip the dogs of war,” and you will, I fear, “inherit the wind.”

In response to Nick’s sackcloth and ashes routine, Nora (predictably) engaged the services of her own lawyer who is just as mean as or meaner than Nick’s. After filing the single page “Response,” Nora’s lawyer sent Nick’s lawyer a 25-page “Demand for the Production of Documents.” Nick brought that document to me after he received it from his attorney.

Nora, since you will undoubtedly get one of these, too, I’ll take the time to explain how this document will serve as the springboard to future misery for both of you.

Start with the general proposition that, in California, each spouse is entitled to any information about the marital estate he or she wants, and the other spouse has a duty to make an active and good faith effort to help procure it. In most marriages, one partner becomes the “managing spouse of the community estate.” In your case, Nick has managed the community estate for the entire marriage. This means the primary obligation to produce information in the form of documents will be his.

The demand describes 50 types of documents. I’ll classify them into four categories, and the first three are: (1) legitimate requests such as current bank and brokerage account statements; (2) requests, inapplicable to this case, for passbooks to foreign bank accounts of which Nora knows there are none; she also knows there are no documents related to “sports wagers and games of chance”; and (3) documents Nora can get as easily as Nick. One clever request is for “all tax returns filed during the marriage dated and bearing the signature of both parties.”

Nick says the tax returns should be in the house, but it’s a big house and Nora decided where the returns should be stored. You have had the same accountants during the marriage, and they keep copies of what they file on your behalf. But none of these returns is likely to have a signature because most people make the copy of the return before they sign it — and there’s no reason to sign the copy you are going to keep for yourself. Nick can sign his own name, but does he add the date he signed the original return or the current date? The best way to get a dated and signed copy of a return is to request it from the IRS, which Nora could do just as easily as Nick.

The fourth category consists of demands for documents that will be a bur under Nick’s saddle for the rest of the case. In this category there are at least two good examples. During the course of the marriage, Nick estimates that he made 2,000 to 3,000 stock trades. He lost money on some and made money on others. Over the years, he made much more money than he lost. In the Request for Production of Documents, Nora’s lawyer wants to see all of the research material relied upon when making the decision to buy and then to sell each of Nick’s 20 biggest losses.

This is a legitimate request, and Nick has an obligation to do what he can to satisfy it. If there are such documents, he’ll have a hard time finding them and will be annoyed — possibly outraged — that he’s being asked only for his losers and getting no recognition for the winners that outnumber the losers in every way. (This has the potential for becoming a great example of why it is not a good idea for a divorcing husband to seek approval from his wife’s divorce lawyer.)

The reason supporting the request will be: “Nick has a fiduciary duty to his wife about management of their property.” If he is buying and selling by the seat of his pants (which is certainly true for a lot of his trades) and loses money, his management of the estate is irresponsible and reckless, and he must, therefore, make the loss up to Nora.

There is not a lot of law on this point. Imagine an estate worth $10 million. The couple started with nothing. The accumulation of wealth was due to the husband’s effort, making it all community property. Each spouse gets half. But in this hypothetical case, the husband’s trading involved $2 million in losses, and neither the purchase nor the sale of that stock was researched in any way. Arguably, it’s reckless handling of community assets, and the claim will be for the husband to reimburse his wife for her half of the money he lost. Under this version of law, she would get her half plus half of the reckless loss from the original $10 million; she would get $6 million and he would get $4 million, even though he earned it all.

Another reasonable rule of law could say that the wife has to take the good with the bad and is entitled to no more than half (and should be grateful she’s getting it). An equally reasonable rule of law could say that when a spouse makes reckless investments, he does so at his own risk — which means he must split the proceeds of good bets with his wife and hold her harmless from the losses.

One thing is certain: This is the type of issue — and yours is the type of estate — divorce lawyers thrive on.

Going back to Document Production, the other example of a request that falls within the fourth category is the request for all documents having to do with Nick’s relationship with our local Ponzi schemer. Understandably, this is an area of great embarrassment to Nick, who always says, “How could I be so stupid?” whenever the subject comes up.

Nora’s lawyer will be asking the same type of questions (plural). Those questions will be much more polite, much more penetrating and much more humiliating than, “How could I (you) be so stupid?” It will be an excruciating experience for Nick to explain in detail how he got involved with his broker in the first place.

Finally, the lawyers’ big hope for the Document Demand is that Nick will get angry and will refuse to produce or to look for one or more documents. This will give Nora’s lawyer an opportunity to make a motion in court saying, in effect, “This guy has had control of the community estate for more than 30 years. What’s he hiding? What’s he afraid of? Force him to cough up what he’s not showing us.”

This sets the stage for an expensive lawyerly fight over the production of documents, which has nothing to do with the division of two that’s at the heart of your case.

Divide by two.

I predict with confidence that when I next write, Nick’s lawyer will have sent a similar Document Demand to Nora’s lawyer. I also predict that one of these lawyers is going to use the “get to court first” tactic. This tactic involves filing a notice of motion requesting the judge to order someone not to do something he should not do and has no intention or reason to do. The idea is to drag the other party into a courtroom to attend a hearing he will lose (even though the loss involves a matter so trivial that it will have no effect on the losing party).

You two are “off to the races,” and your lawyers are “cooking with gas.”

Still your best 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).

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