BILL ANALYSIS Ó
SB 340
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Date of Hearing: June 16, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
SB
340 (Anderson) - As Introduced February 23, 2015
Proposed Consent
SENATE VOTE: 34-0
SUBJECT: Dissolution: disclosure
KEY ISSUE: TO BETTER PROTECT CONFIDENTIAL FINANCIAL
INFORMATION, SHOULD A PETITIONER IN A DISSOLUTION PROCEEDING NO
LONGER BE REQUIRED TO SERVE HIS OR HER ASSET DISCLOSURE
DECLARATION ON A BAD ADDRESS FOR A RESPONDENT WHO HAS BEEN
SERVED BY PUBLICATION OR POSTING BUT DEFAULTED IN THE ACTION?
SYNOPSIS
As part of a dissolution or legal separation, spouses must
disclosure to each other detailed information about any of their
assets in which the community may have an interest and all debts
for which the community may be liable. To accomplish this, the
parties are required to serve each other with preliminary and
final disclosure declarations listing the parties' assets and
liabilities. The final declarations can be waived in certain
situations and if the respondent defaults, his or her disclosure
declarations can be waived, but the petitioner's preliminary
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disclosure declaration is currently required in all cases. This
non-controversial bill, sponsored by the Family Law Section of
the State Bar, seeks to protect the parties' privacy by creating
a very narrow exception to the mandatory financial disclosure
rules in cases where the petitioner is unable to personally
serve the respondent and the court permits service by
publication (in a newspaper), or posting (in a location
reasonably thought to notify the respondent), and the respondent
defaults in the action. In this limited instance, this bill
would allow the petitioner to not prepare and serve a
preliminary disclosure declaration on a respondent who cannot be
located. If the respondent appears in the action, however, the
petitioner would be required to serve the disclosure declaration
within 30 days. There is no reported opposition to this
measure.
SUMMARY: Relieves a petitioner in a dissolution or legal
separation proceeding of the requirement to serve a preliminary
disclosure declaration on a respondent who was served by
publication or by posting and who has defaulted in the action.
Specifically, this bill:
1)Provides that a preliminary declaration of disclosure is not
required by a petitioner in a dissolution or legal separation
proceeding if: a) the petitioner served the summons and
petition by publication or posting pursuant to a court order,
and b) the respondent has defaulted.
2)Provides 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.
EXISTING LAW:
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1)In order to provide full and accurate disclosure of all assets
and liabilities in which one or both parties may have an
interest, requires each party to a dissolution or legal
separation proceeding to serve the other party with a
preliminary declaration of disclosure and a final declaration
of disclosure, as provided. (Family Code Section 2103.
Unless stated otherwise, all further statutory references are
to that code.)
2)In a dissolution proceeding, requires the petitioner to serve
the other party with the preliminary declaration of disclosure
either concurrently with the petition for dissolution, or
within 60 days of filing the petition. Requires the
respondent to serve the other party with the preliminary
declaration of disclosure either concurrently with the
response to the petition, or within 60 days of filing the
response. Allows the time periods to be extended by written
agreement of the parties or by court order. Also requires
that the parties provide each other with a completed income
and expense declaration. (Section 2104.)
3)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. (Section 2106.)
4)Allows the petitioner, in the case of a default judgment, to
waive the final declaration of disclosure requirements.
(Section 2110.)
5)Allows the court to permit service by publication if the court
determines that the party cannot, with reasonable diligence,
otherwise be served. (Code of Civil Procedure Section
415.50.)
6)Where service cannot otherwise be accomplished, allows the
court to permit service in a manner which is reasonably
calculated to give actual notice to the party being served.
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Provides that the service by posting is only permitted if the
petitioner is eligible for a waiver of court fees. (Code of
Civil Procedure Section 413.30; California Rules of Court,
Rule 5.72.)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: Divorcing spouses are required to serve each other
with preliminary and final disclosure declarations listing their
assets and liabilities. This non-controversial bill, sponsored
by the Family Law Section of the State Bar, seeks to protect the
parties' privacy by creating a very narrow exception to the
mandatory financial disclosure rules in cases where the
petitioner has served the petition by publication or posting and
the respondent has defaulted in the action. In these limited
instances, the petitioner would not be required to serve a
preliminary disclosure declaration. Writes the author:
The court can approve service by publication or posting in
cases where 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, it can reasonably be assumed that
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. Additionally, the mandatory disclosures
have to be served to respondent's last known address, which
means that petitioner's sensitive and private financial
information will most likely fall into the hands of unknown
persons who may abuse it. This proposal would change the
law to allow a very narrow exception to the financial
disclosure rules in cases where service of Summons and
Petition was by publication or posting and the respondent
defaults. If respondent answers prior to entry of default,
this bill would require petitioner to serve the mandatory
disclosures within 30 days of when response was filed.
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Disclosure Declarations Designed to Provide Both Spouses With
Knowledge of Their Community's Assets and Liabilities. As part
of a dissolution or legal separation, spouses must, until assets
and liabilities have been divided, make full disclosure to each
other of all information about all assets in which the community
may have an interest and all debts for which the community may
be liable, and to provide access to all information, records,
and books that pertain to the value and character of those
assets and debts. To accomplish this, the parties are required
to serve each other with preliminary disclosure declarations,
listing the parties' assets and liabilities and stating the
percentage of ownership in each item not solely owned by one or
the other party. The disclosure declarations are designed to
ensure that both parties understand their assets and their debts
when determining how to divide the community estate.
Additionally, unless the judgment is by default, no final
judgment as to property rights may be entered unless the parties
have served the required declarations, or have stipulated to a
mutual waiver of a final disclosure declaration, having
previously exchanged preliminary disclosure declarations. In
case of a default judgment, only the petitioner's declaration of
service of the preliminary disclosure is required.
Serving the Summons and Petition and Disclosure Declarations are
Difficult When One Party Cannot be Located or Otherwise Provided
with Notice and Required Legal Documents. 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. Each party is also, as discussed above, required to
provide preliminary financial disclosures to the other party.
In cases where the whereabouts of both spouses are known,
service of both the summons and petition and the disclosure
declaration is relatively straightforward and can be
accomplished in a number of ways, including by in person
service, or service by mail. (See Code Civil Procedure Sections
415.10 et seq.)
However, if the location of the responding spouse is unknown,
notice and service become more problematic. In these cases, the
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court may, if it determines that the respondent cannot, with
reasonable diligence, be served, allow the petitioning spouse to
provide notice through alternative means, including notice by
publication. Notice by publication requires the petitioner to
publish, for a specified period of time, the summons in a
newspaper "most likely to give notice to the party served."
(Code Civil Procedure Section 415.50.) Where no statutory
prescribed method will work to provide notice, the court may
allow a party to serve in another method, as directed by the
court, "which is reasonably calculated to give actual notice to
the party to be served." (Code of Civil Procedure Section
413.30.) One of the options under this service alternative of
last resort is service by posting. Service by posting is
accomplished by posting the documents in a location where the
respondent is most likely to receive actual notice of the
pending litigation. By court rule, service by posting is only
permitted when the petitioner is eligible for a waiver of court
fees, likely because the cost of service by publication can be
prohibitive to parties receiving fee waivers. (Rule of Court
5.72.)
The requirement of financial disclosure, however, is not so
easily solved when the other spouse cannot be located and
served. Because the Family Code does not specify how financial
disclosures must be completed, there are inconsistencies in
practice. For example, Santa Clara County has a local rule
which allows a petitioner, in the case of publication, to send
his or her preliminary financial disclosures to the respondent
in care of the court clerk. (Superior Court Santa Clara County,
Local Family Rules, Rule 1(J)(3).) Alternatively, the
instructions on the Judicial Council form created for serving
the petition by publication or posting indicate that any
documents posted must be mailed to the last known address, which
could mean that the disclosure declaration must also be posted
and mailed. (Judicial Council Form FL-982.) However, none of
these solutions is particularly satisfactory because the
disclosures contain personal financial information (e.g., tax
returns, as well as bank and credit card account numbers and
balances) and mailing to a respondent's last known address makes
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it possible that a third party could obtain the petitioner's
sensitive information.
The Family Law Section of the State Bar explains that in "the
vast majority of cases where service was accomplished by
publication or posting, [r]espondents default in the case,
meaning they never appear or participate in the case. Preparing
the financial disclosures is quite time consuming, and they
often contain personal financial information, like bank account
and credit card account numbers and balances. Requiring a
spouse to complete these forms when the other side will never
see them is an unnecessary expenditure of time and resources."
Moreover, since the court does not receive or independently
evaluate the disclosure declaration to determine the disposition
of the case, their preparation and service may be of no value to
anyone, and could potentially cause harm if the confidential
financial information falls into the wrong hands.
This Bill Creates a Limited Exception to Disclosure When the
Respondent Cannot be Located and Fails to Participate in the
Proceeding. This bill exempts a person seeking a divorce, who
cannot locate his or her spouse for purpose of service of
process, from the obligation of serving preliminary financial
disclosures on the missing spouse if the court has approved
notice by publication or posting. However, this bill does not
provide a blanket exemption to providing disclosure declarations
if service by publication or posting is used. If the respondent
does, in fact, respond to the notice by publication or posting,
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 he
or she gave notice by publication or posting, to send financial
information to an address where the respondent no longer lives.
And, as a result, this bill will save petitioners the time and
expense of preparing preliminary disclosures and protect against
the possibility that sensitive financial information will fall
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into the hands of third parties.
Pending Related Legislation: AB 1519 (Judiciary), among other
things, requires that the timeframe for exchange of the
preliminary disclosure declaration in dissolution cases also
applies to legal separation cases - within 60 days of the filing
of the petition or the response. AB 1519 passed the Assembly
and is concurrently awaiting hearing in the Senate Judiciary
Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Family Law Section of the State Bar (sponsor)
Opposition
None on file
Analysis Prepared by:Leora Gershenzon / JUD. / (916)
319-2334
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