BILL ANALYSIS                                                                                                                                                                                                    Ó





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                            2015 - 2016  Regular  Session


          SB 340 (Anderson)
          Version: February 23, 2015
          Hearing Date:  May 5, 2015
          Fiscal: No
          Urgency: No
          NR   
                    

                                        SUBJECT
                                           
                              Dissolution:  disclosure

                                      DESCRIPTION  

          Existing law requires each party in an action for dissolution of  
          marriage or legal separation to serve a preliminary declaration  
          of disclosure of assets, and a final declaration of disclosure  
          on the other party.  In the case of a default judgment, a  
          petitioner may waive the final disclosure requirements.

          This bill would state that a petitioner is not required to  
          provide a preliminary declaration of disclosure if the  
          petitioner served the summons and petition by publication or  
          posting pursuant to court order, and the respondent has not  
          responded. The bill would require, when a petitioner has served  
          the summons and petition by publication or posting and the  
          respondent files a response prior to default judgment being  
          entered, the petitioner must serve the respondent with a  
          preliminary declaration of disclosure within 30 days.

                                      BACKGROUND  

          The Elkins Family Law Task Force, appointed in 2008 for the  
          purpose of conducting a comprehensive review of family law  
          proceedings, produced a final report which contains 21 main  
          recommendations. (Elkins Family Law Task Force: Final Report and  
          Recommendations, (April 2010) Judicial Council  
           [as  
          of March 24, 2015].)  While many of the Task Force 's  
          recommendations have been implemented by the courts, whether  








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          through Rule of Court or informal policy change, others require  
          statutory changes. In 2010, AB 939 (Committee on Judiciary, Ch.  
          352, Stats. 2010) was enacted to implement most of the Elkins  
          Task Force's key legislative recommendations. Again in 2012, AB  
          1406 implemented another specific recommendation of the Task  
          Force by setting a deadline for service of preliminary financial  
          disclosures and requiring the parties to include tax returns  
          from the two previous years. (AB 1406, Committee on Judiciary,  
          Ch. 107, Stats. 2012.)  However, key recommendations from the  
          report have yet to be adopted.  For example, one recommendation  
          was to create more comprehensive, statewide rules.  The need for  
          this change was argued for by local family court staff who  
          noted, "for local rules it is kind of crazy, because you have  
          the same law being administered in different ways in 58  
          counties. I think more uniformity would be good." (Id. at 30.) 

          The lack of uniformity is evident in many places where the code  
          is silent and counties are left to fill in any necessary gaps.   
          The subject of this bill, financial disclosures between spouses  
          in an action for divorce where one spouse cannot be located and  
          defaults after being served notice by publication, lacks the  
          consistency the Task Force called for in its recommendations.   
          Specifically, when a person files for divorce, the law requires  
          the petitioning spouse to serve notice of the summons and the  
          petition for divorce on the other spouse.  Both parties are also  
          required to provide preliminary financial disclosures to the  
          other party.  In cases where the whereabouts of both spouses are  
          known, service is relatively straight forward and can be  
          accomplished in a number of ways, including in person or by  
          mail. (See Code Civ. Proc. Secs. 415.10; 1012.) 

          However, if the location of the responding spouse is unknown,  
          notice and service become more problematic.  In these cases, the  
          court may allow the petitioning spouse to give "notice by  
          publication" and publish the relevant information in a newspaper  
          "most likely to give notice to the party served." (Code Civ.  
          Proc. Sec. 415.50.)  The requirement of financial disclosure,  
          however, is not so easily solved when the other spouse's address  
          is unknown.  Because the Family Code does not specify how  
          financial disclosures must be completed, there are  
          inconsistencies in practice. Some counties have developed  
          systems through local rule of court, some rely on general  
          service provisions under the Code of Civil Procedure, and the  
          Judicial Council has created a form which requires that  
          disclosures are sent to a respondent's last known address.  







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          Accordingly, this bill seeks to better implement the Task Force  
          recommendation for more statewide uniformity in family law  
          procedures.  By creating a very narrow exception to the  
          mandatory financial disclosure rules in cases where the  
          petitioner served the petition by publication or posting and the  
          respondent has defaulted. 

                                CHANGES TO EXISTING LAW
           
           Existing law  provides that parties to a dissolution or legal  
          separation must serve on the other party a preliminary  
          declaration of disclosure of all assets and liabilities in which  
          one or both parties may have an interest. (Fam. Code Sec. 2103.)

           Existing law  provides that the preliminary declaration of  
          disclosure of assets must be served concurrently or within 60  
          days service of the petition for dissolution of marriage or  
          legal separation of the parties, and must be signed under  
          penalty of perjury. (Fam. Code Sec. 2104.)

           Existing law  prohibits the court from entering a judgment  
          regarding the parties' property rights in a dissolution  
          proceeding unless each party has submitted a final disclosure  
          declaration and a current income and expense declaration.  (Fam.  
          Code Sec. 2106.)

           Existing law  allows the petitioner, in the case of a default  
          judgment, to waive the final declaration of disclosure  
          requirements.  (Fam. Code Sec. 2110.)

           This bill  would provide that a preliminary declaration of  
          disclosure is not required by a petitioner if the petitioner  
          served the summons and petition by publication or posting  
          pursuant to a court order, and the respondent has defaulted. 

           This bill  would provide that when a petitioner serves the  
          summons and petition by publication or posting and the  
          respondent files a response prior to a default judgment being  
          entered, the petitioner must serve the respondent the  
          preliminary declaration of disclosure within 30 days of the  
          response being filed.
          
                                        COMMENT
           







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           1.Stated need for the bill
           
          According to the author: 

            The court can approve service by publication or posting in  
            cases where the respondent cannot be served with reasonable  
            diligence in another manner authorized by statute (Code of  
            Civil Procedure Section 415.50). In these cases, if the  
            respondent defaults, and most do, it can reasonably be assumed  
            the respondent will not get actual notice of the disclosures,  
            making petitioner's efforts in completing, filing and serving  
            the required forms an unnecessary expenditure of time and  
            resources.   These disclosures, which often contain personal  
            financial information, like bank account and credit card  
            account numbers and balances, must be mailed to the last known  
            address, so there is the possibility a third party may come  
            into possession of the Petitioner's sensitive financial  
            information.  These disclosures are not filed with the court,  
            so eliminating the requirement to serve a defaulting spouse  
            with these forms, when service is by publication or posting,  
            will not deprive the court of needed information.  

           2.Does not create exception for respondent to serve preliminary  
            disclosures

           This bill would exempt a person who is seeking a divorce and  
          cannot locate her spouse, from the obligation of serving  
          preliminary financial disclosures on the missing spouse if  
          notice by publication has been approved by the court. 

          This bill does not exempt the missing spouse, who has been  
          served notice by publication, from the obligation to provide  
          preliminary financial disclosures.  If the respondent does, in  
          fact, respond to the notice by publication, the petitioner is  
          required to serve preliminary declarations upon the respondent  
          within 30 days of that response, and the respondent must make  
          those same disclosures within 60 days.  Accordingly, the only  
          difference between the requirements under existing law and those  
          set forth under this bill are that a petitioner would not be  
          required, in the rare situation that she gave notice by  
          publication, to send financial information to an address where  
          the respondent no longer lives. 

          Staff notes that it is in a respondent's best interest to  
          respond, and not default, to a petition for dissolution to  







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          ensure that both parties are able to present information to the  
          court prior to the division of assets.  When a respondent  
          defaults, the court only reviews information that the petitioner  
          has provided.  Judicial Council has created a number of forms to  
          assist a petitioner who is asking the court to divide property.   
          For example, the "Request to Enter Default" form (FL-165) should  
          be accompanied by a "Property Declaration" form (FL-160) and a  
          "Proposed Judgment" form (FL-180) to help the court make the  
          division of property.  Further, under existing law (and this  
          bill) if a petitioner lies about not knowing where the  
          respondent is in order to get permission to serve by posting or  
          publication, the entire judgment could subsequently be set aside  
          due to fraud. 

           3.Privacy 
           
          Existing law requires that preliminary financial disclosures be  
          served on a spouse concurrently or within 60 days service of the  
          petition for dissolution of marriage.  This bill would eliminate  
          this requirement for an individual who is unable to locate his  
          or her spouse and has, with the court's approval, served the  
          petition by publication.  In the event that a spouse does  
          respond to the publication, this bill would require the  
          petitioner to serve the respondent with the preliminary  
          financial disclosures within 30 days. 

          The Executive Committee of the Family Law Section of the State  
          Bar (FLEXCOM), the sponsor of this bill, explains that, "in the  
          vast majority of cases where service was accomplished by  
          publication or posting, respondents default in the case, meaning  
          they never appear or participate in the case."  Thus, preparing  
          the financial disclosures is arguably unnecessary expenditure of  
          time and resources because a defaulting respondent will never  
          see the disclosures and the court does not evaluate them to  
          determine the disposition of the case.  

          In addition, because existing law is silent regarding how or  
          where the disclosures must be served, counties have developed  
          different practices to address this issue.  For example, Santa  
          Clara County employs a local rule which allows a petitioner, in  
          the case of publication, to file his or her preliminary  
          financial disclosures with the Superior Court. (Super. Ct. Santa  
          Clara County, Local Family Rules, Rule. 1(J)(3).) However, the  
          instructions on the Judicial Council form created for serving  
          the petition by publication or posting indicate that any  







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          documents posted must be mailed to the last known address. (See  
          Code Civ. Proc. Sec 415.50; Judicial Council Form FL-982 found  
          at < http://www.courts.ca.gov/documents/fl982.pdf.> [as of April  
          29, 2015].) Because these disclosures contain personal financial  
          information (e.g., tax returns, and bank/credit card account  
          numbers and balances) mailing to a respondent's last known  
          address creates the possibility a third party may come into  
          possession of the petitioner's sensitive information.

          As noted above, this bill would address that issue by instead  
          providing that preliminary disclosures in cases where the  
          petitioner provided service by publication or posting need not  
          be completed unless the respondent actually responds to the  
          petition.  Accordingly, this bill seeks to save these  
          petitioners the time and expense of preparing preliminary  
          disclosures and protect against the possibility that sensitive  
          financial information will fall into the hands of third parties.  



           Support  :  None Known

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Executive Committee of the Family Law Section of the  
          State Bar (FLEXCOM)

           Related Pending Legislation  :  None Known 

           Prior Legislation  :  

          AB 1406 (Committee on Judiciary, Chapter 107, Statutes of 2012)  
          set a 60 day time limit for the preliminary declaration of  
          disclosure, as specified, and required the preliminary  
          declaration of disclosure of assets to include all tax returns  
          filed by the declarant within the two years prior to the date  
          that the party served the declaration.

          AB 939 (Committee on Judiciary, Chapter 352, Statutes of 2010)  
          made various changes to family law proceedings thereby  
          implementing a number of the legislative recommendations issued  
          by the Elkins Family Law Task Force.








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