Tuesday, February 4, 2014
Sara, Craig (University of California Hastings College of the Law) recently published an article entitled, Transmutations and the Presumption of Undue Influence: A Quagmire in Divorce Court, Hasting's Women's Law Journal (October 2013). Provided below is the introduction to the article:
In the past thirty years, California’s community property system has undergone a transformation driven by statutory changes, including the enactment of a statute of frauds for transactions between partners1 and the imposition of heightened fiduciary duties between partners,2 as well as judicial interpretation of these statutory changes.3 As a result of these changes, divorcing partners now have greater opportunity to influence the outcome of the court’s division of the community property by appearing as sympathetic as possible on the witness stand. In this note, I will discuss briefly the history of California’s community property laws, and more particularly, the presumption of undue influence as applied to transmutations.4 Section I provides background and context for the discussion, including principles of community property as they are applied in California statutes and jurisprudence. Section II describes the application of the presumption of undue influence to transmutations in the context of recent cases; explains how judicial interpretation of what constitutes an unfair advantage to one partner over the other has led to tension between the fiduciary obligations imposed by section 721(b) and the writing requirement codified at section 852(a) of the Family Code; and shows how lack of precedents from the appellate courts and instructions from the Legislature creates a danger that some lower courts will apply outmoded social stereotypes and undervalue work performed in the home. Finally, Section III proposes that California’s Legislature and judiciary should change the way that parties in dissolution proceedings are allowed to raise and rebut the presumption of undue influence, first by redefining “any unfair advantage” from section 721(b)5 as an advantage to one partner that disadvantages or damages the community estate, which will bring the statute in line with the purpose of a community property system, and second by clarifying whether the writing requirement under section 852(a)6 operates as a statute of frauds with traditional contracts law exceptions. Section III also gives some recommendations for attorneys and partners contemplating transmutation, which will be helpful in the absence of legislative or judicial action.