Most Cases Settle Without A Trial Or Significant Litigation
Most cases settle without a trial or other significant litigation, which means they are resolved through one or more agreements. These agreements may be accomplished through mediation, through meetings between the parties and their attorneys (4-way meetings), through written offers and counter offers, or through court programs where a court employee or a volunteer attorney meets with the parties and their attorneys if they have one to discuss the issues. The judge in the case will often try to resolve the issues without a hearing, although there is always a concern that what you say during settlement negotiations may be different that what you would say during trial and the judge will remember what you said on the issue in negotiations. Care is therefore required before agreeing to a judge acting in a settlement capacity.
Settlement agreements are agreements to resolve some or all of the issues during litigation and in divorce proceedings are commonly referred to as marital settlement agreements. A marital settlement agreement can address some or all the issues in the case, which include not only division of property, but child custody and visitation, child and spousal support, reimbursement claims, attorney fees, procedural matters and termination of the marriage. These issues can also be addressed by stipulation, which is an agreement between the parties that is specifically intended to be made an order of the court. A marital settlement agreement can be enforced as an agreement or as a court order, depending on whether it is incorporated into the marital settlement judgment. The manner in which the terms of a marital settlement agreement are incorporated into the judgment and become court orders can vary widely among lawyers and the local court systems.
Spouses have the right to modify most California laws concerning community and separate property by written agreement. Future spouses have the most freedom to make their own financial arrangements before marriage using a premarital agreement [link to page]. Once parties are married and until financial issues are resolved, each spouse has fiduciary duties to the other on financial matters. This means that they have a duty of highest good faith and fair dealing with the other spouse. It further means that on request a spouse must provide true and full information on any transaction which concerns community property and must allow the other spouse to access to all records regarding a transaction. The parties can also reach agreements on the other issues in the marital dissolution proceeding, such as child custody and visitation, child and spousal support, attorney fees, California considers the welfare and support of children to be of such importance that the law provides that a court need not honor the parents’ agreements on custody and child support in making orders on those issues.
Thus, if the spouses make an agreement after marriage, it may be set aside if one spouse shows it was obtained by undue influence by the other spouse. This is an area of law that is rapidly developing, but the best practice if you want to make an enforceable agreement is to disclose all of the facts on which the transaction is based along with an explanation of what the spouse may give up if he or she goes forward with the agreement. However, at least in some circumstances where full disclosure would violate other laws, the courts have excused making disclosures that violate those laws.
After the spouses become adversaries in the divorce process, much of the fiduciary duties remain. A very important part of the divorce process is the mandatory statutory requirement that the parties exchange Preliminary Disclosure Documents (PDDs) shortly after the start of the case. The PDDs consist of a Schedule of Assets and Debts, an Income and Expense Declaration, the last two years of tax returns, and a cover sheet that allows for certain other disclosures. A full disclosure here can prevent later claims that a settlement should be set aside based on misrepresentations or omissions in the disclosure documents. With limited exceptions, the court will not enter a judgment in the case before both parties have filed a form showing that each party has served his or her PDD on the other party. Failure to comply with the PDD process can result in an award of attorney fees and an award of damages to the injured spouse.
Thus, other than with child custody and child support issues the parties have a lot of freedom in arranging their financial matters as they can agree. The courts have document examiners that will go over judgment papers and settlement agreements to make sure they comply with required legal formalities, but the court will not scrutinize the settlement terms to make sure they are fair or will actually have the effect that the parties intended, unless and until a party challenges the agreement or requests that the court declare the meaning of its provisions.
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Di Maria & Cone
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Di Maria & Cone, located in Palo Alto, represents clients throughout California, primarily on the San Francisco Peninsula and in Silicon Valley — in communities such as Atherton, Cupertino, Los Altos, Menlo Park, Mountain View, Palo Alto, Portola Valley, Redwood City, San Jose, Sunnyvale, and Woodside.