## Facts

- Elena Feldman filed for dissolution of a 34-year marriage to Aaron Feldman.
- During the marriage, Aaron developed and controlled numerous privately held businesses (the “Sunroad” entities) involved in real estate investment/development and auto dealerships, and asserted his assets exceeded $50 million.
- The characterization and valuation of the Sunroad entities (community vs. separate property) were central disputes in the dissolution.
- Elena pursued financial discovery through interrogatories, document requests, and depositions of Aaron and business employees.
- Elena sought sanctions and attorney’s fees, alleging Aaron repeatedly failed to make complete and timely financial disclosures required by spousal fiduciary duties in dissolution proceedings.
- Alleged nondisclosures included transactions and assets such as a personal residence purchased through a company, a $1 million government bond purchased with loan proceeds, a 401(k) account, and the existence of certain business entities.
- The trial court ordered Aaron to pay $250,000 in monetary sanctions and $140,000 in attorney’s fees, entered before final dissolution judgment.
- Aaron appealed the interlocutory sanctions/fees order.

## Issues

1. Whether the trial court had authority under the Family Code to impose substantial monetary sanctions and attorney’s fees for a spouse’s failure to satisfy statutory fiduciary disclosure duties during dissolution proceedings.
2. Whether sanctions for disclosure violations require proof of the other spouse’s actual economic harm.
3. Whether the moving spouse must first pursue discovery enforcement (e.g., motions to compel) before obtaining sanctions for fiduciary nondisclosure.
4. Whether the disclosure duty reaches assets, transactions, and newly formed entities even when funded by loan proceeds or later partially disclosed.
5. Whether sanctions and fee awards may be imposed before final judgment and whether a statement of decision is required for such an order.

## Decision

- The Court of Appeal affirmed the sanctions and attorney’s fee order in full.
- The trial court acted within its discretion in finding a course of incomplete and untimely disclosure warranting substantial sanctions.
- No showing of actual economic harm to Elena was required to support sanctions for the disclosure violations.
- Elena was not required to exhaust general discovery remedies before seeking sanctions based on statutory fiduciary disclosure duties.
- The disclosure duty covered the bond purchase, the residence transaction, retirement assets, and additional entities; later partial disclosures did not cure earlier nondisclosure.
- The trial court could issue the sanctions order before final dissolution judgment and was not required to provide a statement of decision on the motion.

## Legal Principles

- Spouses in dissolution proceedings owe each other fiduciary duties of the highest good faith and fair dealing, including an affirmative, ongoing duty to disclose material information about assets and liabilities.
- Family Code provisions governing disclosure and fiduciary breaches authorize monetary sanctions and fee awards to enforce disclosure obligations and deter noncooperation.
- Sanctions tied to disclosure violations may be imposed without proof of the nonmoving spouse’s quantifiable economic loss, where nondisclosure impairs transparency and frustrates settlement and cost-reduction policies.
- Family-law sanctions for fiduciary nondisclosure are available in addition to ordinary civil discovery remedies; a party need not first seek motions to compel before requesting statutory sanctions.
- Sanctions and attorney’s fee awards may be ordered during the pendency of dissolution proceedings, and a statement of decision is not required for a motion ruling of this type.
- Appellate review of such sanctions is deferential; the order stands absent an abuse of discretion.

## Conclusion

The court upheld significant sanctions and attorney’s fees against a spouse who failed to meet continuous statutory disclosure duties in a dissolution, holding that the trial court could act before final judgment, that actual economic harm need not be shown, and that sanctions are not conditioned on first pursuing ordinary discovery enforcement.


In re Marriage of Feldman, 153 Cal. App. 4th 1470, 64 Cal. Rptr. 3d 29 (Cal. Ct. App. 2007)