Lappe v. Superior Court of L.A. Cnty.
| Decision Date | 19 December 2014 |
| Docket Number | B255704 |
| Citation | 232 Cal.App.4th 774,181 Cal.Rptr.3d 510 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Gilda LAPPE, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent; Murray Lappe, Real Party in Interest. |
Barbakow & Ribet, Daniel Barbakow, Claudia Ribet, Beverly Hills, and Elizabeth Skorcz Anthony for Petitioner.
No Appearance for Respondent.
Law Offices of James M. Donovan, James M. Donovan, Michael J. Glenn, Los Angeles; Walzer & Melcher LLP, Christopher Melcher, Woodland Hills, and Anthony D. Storm for Real Party in Interest.
This writ proceeding arises from a marital dissolution action brought by petitioner Gilda Lappe against her former husband and real party in interest Murray Lappe.1 The parties agreed to resolve their property and support issues through mediation, during which they purportedly exchanged certain financial disclosure declarations that are mandated by the Family Code. They also executed a marital settlement agreement, which was incorporated into a stipulated judgment. Shortly after entry of judgment, Gilda learned that Murray recently sold a company he founded during the marriage. In the settlement agreement, Gilda had relinquished her community share of the company for $10 million. Murray received approximately $75 million from the sale.
Following this revelation, Gilda filed an application to set aside the judgment on grounds of fraud and duress. In connection with the application, Gilda served discovery on Murray requesting, among other things, the financial disclosure declarations that were exchanged prior to entry of judgment. Murray refused to produce the declarations, asserting they were covered by the mediation confidentiality statutes, insofar as they constituted writings that were “prepared for the purpose of, in the course of, or pursuant to, a mediation.” (Evid.Code, § 1119, subd. (b).) Gilda moved to compel production. The trial court denied the motion on mediation confidentiality grounds.
In her petition for writ of mandate challenging the trial court's order, Gilda contends the mediation confidentiality statutes do not apply because the subject financial disclosure declarations were necessarily prepared pursuant to and for the purpose of complying with the Family Code's statutory mandate, not because the parties participated in mediation. We agree, and grant Gilda's petition.
Gilda and Murray were married for 16 years and have two children together. Gilda was a stay-at-home mother during their marriage. Murray is trained as a medical doctor and is a successful businessman.
On February 10, 2011, Gilda filed a petition for dissolution of the marriage. The parties agreed to settle their property and support issues through mediation without representation by counsel. During the mediation, Gilda and Murray signed declarations stating that service of the preliminary and final declarations of disclosure had been made on the other party as required by the Family Code. Notwithstanding these declarations, Gilda maintains that she did not serve Murray with a preliminary or final declaration of disclosure, nor did she receive a preliminary or final declaration from Murray. She avers the declaration regarding service was one of several documents that Murray “coerced” her to sign while they were alone in the mediator's office. Murray denies the allegation.2
During the mediation, the parties also executed a marital settlement agreement. As pertinent to the instant proceeding, the agreement provides that Murray shall pay Gilda a total of $10 million in full satisfaction of her entire community interest in shares of eScreen, Inc. With respect to the declarations of disclosure, the agreement also states: “The parties' Preliminary/Final Declarations of Disclosure shall be inadmissible in a court of law, and otherwise protected from disclosure, pursuant to the provisions of Section 1119(b) of the California Evidence Code .” Evidence Code section 1119, subdivision (b) bars discovery or admissibility of writings “prepared for the purpose of, in the course of, or pursuant to, a mediation.” On August 2, 2011, the trial court entered a stipulated judgment, which incorporated the marital settlement agreement.
On April 24, 2012, Gilda filed an application to set aside the judgment on grounds of fraud, perjury, duress, and mistake. In her supporting declaration, Gilda asserted that in January 2012, less than five months after the judgment was entered, she learned Murray was in the process of selling eScreen and all equity shares he acquired in the company through the marital settlement agreement. As a result of the sale, Murray received approximately $75 million pretax for the eScreen shares. Gilda averred that Murray never disclosed he was shopping eScreen for sale, and had she known as much, she would not have agreed to surrender her community interest in the company for only $10 million.
In connection with her application to set aside the judgment, Gilda served a request for production of documents on Murray, which included a request for the declaration of disclosure that Murray served upon Gilda prior to entry of judgment. Murray objected to the request and refused to produce the declaration on the ground that it was protected from disclosure by the mediation confidentiality statutes. Gilda brought a motion to compel production.
The trial court appointed a referee to make recommendations regarding the discovery dispute. The referee concluded the declaration of disclosure was not subject to mediation confidentiality because the document had “independent legal significance” and the “public policy” declared by the Family Code favoring disclosure to ensure fair and equal property divisions “overrides” mediation confidentiality. Gilda applied for an order confirming the referee's recommendation and findings. Murray objected to the recommendation.
In his objections, Murray principally argued that the referee erred by relying on a nonstatutory exception for documents having “independent legal significance” in violation of the Supreme Court's repeated instruction that courts may not craft judicial exceptions to mediation confidentiality. Murray also argued the recommendation ignored the parties' express agreement that the declarations of disclosure were to be deemed inadmissible and shielded from discovery under the mediation confidentiality provisions of the Evidence Code.
The trial court agreed with Murray. In view of the Supreme Court authorities consistently rejecting judicially crafted exceptions to mediation confidentiality, and the parties' stipulation in their marital settlement agreement that Evidence Code section 1119 applied to the declarations of disclosure, the court ruled the mediation confidentiality statutes barred compelled production of the disclosure declarations.
We review the order denying Gilda's motion to compel for an abuse of discretion. (People ex rel. Lockyer v. Superior Court (2004) 122 Cal.App.4th 1060, 1071, 19 Cal.Rptr.3d 324 (Lockyer ).) Under this standard, a trial court's ruling on a discovery motion will be overturned upon a prerogative writ if there is “no substantial basis” for the manner in which the court exercised its discretion or if the court applied a “patently improper standard” for its decision. (Coriell v. Superior Court (1974) 39 Cal.App.3d 487, 491, fn. 1, 114 Cal.Rptr. 310.) Where the propriety of a discovery order turns on statutory interpretation, we review the issue de novo, as a question of law. (Lockyer, at p. 1071, 19 Cal.Rptr.3d 324.)
Gilda contends the Evidence Code's mediation confidentiality provisions cannot be applied in a marital dissolution proceeding to bar the discovery and admissibility of financial disclosures mandated by the Family Code. To put the issue in context, we begin with a review of each statutory scheme.
As codified in Family Code section 2100 et seq., California law recognizes the vital importance of “full and accurate disclosure of all assets and liabilities” at the “early stages” of a marital dissolution proceeding to ensure fair and sufficient child and spousal support awards and to achieve a proper division of community and quasi-community assets and liabilities. (Fam.Code, § 2100, subd. (c) ; see id., subd.(a); Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2014) ¶ 11:40, p. 11-8 (rev. # 1, 2014.).) This includes a “continuing duty” on the part of each spouse to “immediately, fully, and accurately update and augment that disclosure” so both will have “full and complete knowledge of the relevant underlying facts.” (Fam.Code, § 2100, subd. (c).)
To implement this policy, the Family Code mandates that each spouse “shall serve on the other party” a “preliminary” and “final” declaration of disclosure. (Fam.Code, § 2103.) The preliminary declaration of disclosure provides a general inventory of the parties' respective assets at the outset of dissolution proceedings.3
The final declaration requires far more extensive disclosures.
The Family Code mandates that the final declaration of disclosure “shall include” “[a]ll material facts and information” regarding (1) the characterization of all assets and liabilities; (2) the valuation of all assets that are contended to be community property, (3) the amounts of all obligations that are contended to be community obligations, and (4) the earnings, accumulations, and expenses of each party. (Fam.Code, § 2105, subd. (b) ; see Hogoboom & King, Cal. Practice Guide: Family Law, supra, ¶¶ 11:68, 11:87.) The final declaration must also contain “accurate and complete written disclosure of any investment opportunity, business opportunity, or other income-producing opportunity that presents itself after the date of separation, but that results from any investment, significant business activity outside the ordinary course of...
To continue reading
Request your trial