Marr. of Georgiou and Leslie
160 Cal. Rptr. 3d 254, 218 Cal. App. 4th 561 (2013)
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Rule of Law:
When a community asset has been disclosed, litigated, and divided in a final dissolution judgment, a party's exclusive postjudgment remedy for an alleged breach of fiduciary duty regarding the asset's valuation is an action to set aside the judgment under Family Code § 2122, which must be brought within that statute's strict time limits.
Facts:
- Byron Georgiou, an attorney, had an agreement with the law firm Milberg Weiss that entitled him to a referral fee from the Enron class action securities litigation.
- During their divorce proceedings, his wife, Maria Leslie, was aware of this prospective referral fee.
- Leslie's attorney deposed a Milberg Weiss partner, who testified that Georgiou's fee would be at least 3% and that the firm hoped for a total fee award far exceeding $330 million.
- Leslie acknowledged in a settlement brief that Georgiou's fee could be substantial, but Georgiou did not provide her with a copy of the specific fee agreement between Milberg Weiss and its client.
- In February 2007, Leslie and Georgiou entered into a Marital Settlement Agreement (MSA) that specifically divided the prospective referral fee.
- The MSA awarded Leslie 10% of the fee and Georgiou 90%, while Leslie received approximately $7 million in other certain assets, including the family home (which was Georgiou's separate property) and income-producing townhomes.
- In September 2008, after Milberg Weiss was awarded $688 million in fees, Georgiou paid Leslie her share. The payment revealed that Georgiou's total fee was substantially larger than the $33 million Leslie had previously estimated as the high end.
Procedural Posture:
- Byron Georgiou filed for dissolution of his marriage to Maria Leslie in 2003 in family court.
- A judgment of dissolution incorporating the parties' Marital Settlement Agreement (MSA) was entered by the family court on December 12, 2007.
- In November 2009, Leslie filed a motion under Family Code § 2122 to set aside the judgment, which she later dismissed in September 2010.
- On December 13, 2010, more than three years after the judgment, Leslie filed a new, separate action in family court under Family Code § 1101, alleging Georgiou breached his fiduciary duty.
- Georgiou moved for summary adjudication, arguing the action was untimely and legally improper.
- The family court granted Georgiou's motion, ruling that § 1101 does not authorize a postjudgment action in this context and that her claim was untimely.
- Leslie, as the appellant, appealed the family court's order to the Court of Appeal; Georgiou is the appellee.
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Issue:
Does Family Code § 1101 authorize a postjudgment action for breach of fiduciary duty concerning the value of a community asset that was disclosed and fully adjudicated in the final dissolution judgment?
Opinions:
Majority - McConnell, P. J.
No. A postjudgment action under Family Code § 1101 is not authorized when the asset in question was disclosed and adjudicated in the final judgment, as such an action would improperly circumvent the exclusive remedy and stricter time limits for setting aside a judgment under Family Code § 2122. The court reasoned that § 2120 et seq. were enacted to provide the exclusive grounds and time limits for setting aside a dissolution judgment, balancing the need for fair property division with the strong public policy favoring the finality of judgments. Because Georgiou's referral fee was not concealed but was a central, litigated issue in the MSA and the subsequent judgment, Leslie's claim is an attempt to 'undo' an adjudicated part of the judgment. Her sole recourse was an action to set aside the judgment under § 2122 for fraud or failure to disclose, which has a one-year statute of limitations that she failed to meet. The court distinguished cases like In re Marriage of Rossi, where a § 1101 action was permitted postjudgment because the asset (lottery winnings) was entirely concealed and thus unadjudicated, meaning its division would not disturb the existing judgment.
Analysis:
This decision clarifies the distinct postjudgment remedies available in family law and reinforces the principle of finality for dissolution judgments. It establishes a critical distinction between adjudicated and unadjudicated assets. For assets that were known and divided, a party cannot use the longer, three-year statute of limitations for a breach of fiduciary duty claim under § 1101 to bypass the strict one-year deadline for setting aside a judgment under § 2122. This holding prevents parties from relitigating valuation disputes years after a judgment is entered, thereby protecting the stability and finality of marital settlement agreements.
