In Re Marriage of Varner
55 Cal. App. 2d 128, 55 Cal. App. 4th 128 (1997)
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Rule of Law:
Under California Family Code § 2122(e), a spouse's failure to provide a full and accurate disclosure of the existence or value of community assets constitutes 'mistake,' which is a valid ground for setting aside a stipulated judgment of dissolution if the motion is brought within one year of the judgment.
Facts:
- Kim Varner (wife) and Stephen Varner (husband) began living together when she was 15 and he was 24, marrying in 1977.
- During their marriage, they had five children and accumulated substantial community property, including multiple real estate parcels and several businesses, notably Varner Construction, Inc.
- The parties separated in 1989, initiating dissolution proceedings.
- At the dissolution hearing on July 13, 1993, Kim Varner was not represented by counsel, and her request for a continuance to obtain a lawyer was denied.
- Stephen Varner, who was represented by counsel, testified that the net value of his primary business, Varner Construction, Inc., was 'about zero' and that his other business interests also had little to no value.
- Based on Stephen Varner's testimony regarding asset values, the parties signed a stipulated settlement agreement which was entered as a judgment by the court.
- Subsequent appraisals obtained by Kim Varner indicated that Varner Construction, Inc. was worth between $2 million and $2.75 million, and other assets were also worth substantially more than Stephen Varner had testified.
Procedural Posture:
- Kim Varner (wife) and Stephen Varner (husband) entered into a stipulated judgment of dissolution in the trial court on July 20, 1993.
- On January 13, 1994, within six months, Kim Varner filed a motion in the trial court to set aside the judgment, alleging fraud and mistake.
- After briefing and a hearing, the trial court denied Kim Varner's motion to set aside the judgment on June 22, 1994.
- Kim Varner (appellant) timely appealed the trial court's order denying her motion. Stephen Varner is the appellee.
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Issue:
Does a spouse's failure to accurately and completely disclose the value of community assets during dissolution proceedings constitute 'mistake' under California Family Code § 2122, thereby providing grounds to set aside a stipulated judgment?
Opinions:
Majority - Ramirez, P. J.
Yes, a spouse's failure to accurately disclose community asset values constitutes a 'mistake' under Family Code § 2122, providing grounds to set aside the stipulated judgment. The court reasoned that recent legislative changes, particularly Family Code §§ 2100 et seq., impose a fiduciary duty of the 'highest good faith and fair dealing' on spouses regarding their assets, which continues from the date of separation until the property is divided. Stephen Varner breached this duty by failing to provide an 'accurate and complete disclosure of all assets and liabilities.' This nondisclosure induced Kim Varner to stipulate to the judgment based on incomplete and inaccurate information. Such an inducement constitutes a mistake of fact sufficient to set aside the judgment under § 2122(e), which was specifically enacted to provide relief in such situations without requiring the stricter showing of extrinsic fraud previously needed.
Analysis:
This case is significant as one of the first to interpret the grounds for setting aside a dissolution judgment under the newly enacted California Family Code §§ 2120-2127. The court's decision broadens the concept of 'mistake' to include breaches of the fiduciary duty of disclosure between spouses. This lowers the historical bar for relief, moving away from the difficult-to-prove standard of extrinsic fraud. The ruling reinforces the legislature's intent to prioritize fair and equitable property division based on full disclosure over the finality of judgments, particularly where one party is unrepresented and relies on the other's misrepresentations.
