More Extended Three Years Limitations Period Does Not Apply Unless Asset Was Unadjudicated or Omitted from Marital Division Judgment.
Here is an interesting one in the family law area, involving claims that ex-husband contingency attorney concealed his true interest in a contingency split for multi-millions in fees to securities attorneys handling the Enron litigation.
What occurred in Marriage of Georgiou and Leslie, Case No. D061200 (4th Dist., Div. 1 July 31, 2013) (published) is that an attorney standing to get a big contingency split in the Enron litigation did reveal the arrangement to ex-wife, but just not the particulars which did appear to be somewhat in flux and subject to court approval of any settlement/fee fixing. However, in exchange for wife getting 10% of the eventual fee, she obtain an unequal division of assets by getting the most certain, liquidated items, but with ex-husband attorney getting 90% of the contingency cut. This was all wrapped up in a marital settlement agreement reduced to judgment. However, wife was peeved after learning that the actual cut was higher than she expected. She moved for set-aside relief under Family Code section 2122(d), but dismissed that maneuver and sought relief under Family Code section 1101, which has an extended three year statute of limitations for breach of fiduciary duty for a spouse not being candid in disclosing assets/liabilities from the date of separation to the date of distribution of the community/quasi-community asset/liability in question.
The trial court denied relief under section 1101, based primarily on the theory that it was not available postjudgment for an adjudicated asset situation–something done in the parties’ divorce proceeding.
Wife did not prevail on her appeal, which pitted the interaction between sections 2122 and 1101. A section 2122(f) set-aside action must be brought within one year after the date on which wife discovered or should have discovered the failure to comply, which wife admitted occurred before she filed her subsequent action. Section 1101 (3-year, general breach of fiduciary action) was “trumped” by section 2120 et seq., because the dispute involved an adjudicated asset rather than an unadjudicated or omitted aset from the judgment. Because the contingency split was adjudicated (even though neither side had perfect knowledge), wife could not take the benefits of the judgment on “certain” assets yet attempt to overturn the “uncertain” component given that she made a risk allocation to take certainty as opposed to uncertainty.