## Facts

- Kim Denise Varner (wife) and Stephen Varner (husband) married in 1977 and had five children; wife was largely a homemaker and husband controlled multiple businesses and real property interests.
- During dissolution proceedings, wife identified extensive community assets, including multiple parcels of real property, businesses, partnerships, accounts, and other interests.
- Shortly before the July 13, 1993 dissolution hearing, wife’s attorney withdrew; wife appeared without counsel and requested a continuance to obtain new counsel, which the court denied.
- At the hearing, husband (represented by counsel) testified his business interests were essentially valueless; husband’s counsel proposed wife keep the residence and husband keep the “valueless” businesses, with husband waiving a large equalization payment.
- The trial court stated that, if the stated valuations were accurate, the proposed division appeared to be in wife’s best interest.
- On July 20, 1993, the parties executed a written marital settlement agreement that the court entered as a stipulated judgment dividing property.
- After judgment, wife retained new counsel and obtained appraisals indicating the assets husband had described as valueless had an aggregate value exceeding $3 million.
- Wife also produced evidence of limited intellectual functioning (IQ of 75) and evidence that husband restricted access to financial information needed to value assets.
- Wife moved to set aside the stipulated judgment under Family Code sections 2120–2122 based on nondisclosure and misrepresentation; the trial court denied the motion, and wife appealed.

## Issues

1. Whether the trial court erred by denying relief from a stipulated dissolution judgment when the supporting record showed material nondisclosure and misrepresentation of community asset values.
2. Whether a spouse’s reliance on grossly inaccurate asset valuations, caused by the other spouse’s breach of disclosure duties, constitutes “mistake” under Family Code section 2122 sufficient to set aside the property division.

## Decision

- The Court of Appeal reversed the order denying the motion to set aside.
- The court held the property division in the stipulated judgment had to be set aside and remanded for further proceedings to permit a properly informed division of community property.
- The court concluded that husband’s nondisclosure and misvaluation of substantial community assets, together with wife’s lack of counsel and limited ability to evaluate the finances, established statutory “mistake” warranting relief.

## Legal Principles

- Spouses in dissolution proceedings owe fiduciary duties of the highest good faith and fair dealing, including a continuing duty of full and accurate disclosure of assets and their valuation.
- Family Code sections 2120–2122 authorize setting aside dissolution judgments when equity requires, including when nondisclosure or misrepresentation results in an unjust property division.
- “Mistake” under Family Code section 2122 includes a party’s reliance on materially inaccurate or incomplete valuation information about community property, particularly when the other spouse failed to provide required disclosures and controlled access to valuation data.
- Finality of judgments yields where the statutory scheme targets inequitable outcomes produced by concealment, restricted access to information, or material misstatements affecting the property division.

## Conclusion

The appellate court required reopening the stipulated property division because the wife entered the agreement based on materially false and incomplete valuation information in breach of marital disclosure duties, and that reliance constituted statutory “mistake” justifying set-aside and a renewed, informed division of community assets.


In re Marriage of Varner, 63 Cal. Rptr. 2d 894 (Cal. Ct. App. 1997)