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In Re the Marriage of Julie and Roger Schlafly. v. Roger Schlafly

December 21, 2010


(Santa Clara County Super. Ct. No. FL018328)

The opinion of the court was delivered by: Mihara, J.

Marriage of Schlafly CA6


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

The trial court found that appellant Roger Schlafly breached his fiduciary duty to respondent Julie Schlafly Travers, his former wife, and awarded her $277,121 in damages. On appeal, appellant contends that he never concealed his income and his payment of respondent's law school loans was not a gift. We find no error and affirm.

I. Factual and Procedural Background*fn1

Appellant and respondent were married in December 1996. In October 2003, respondent filed for dissolution of marriage. Appellant presented respondent with a "Confidential Financial Disclosure" statement, which was dated October 17, 2003. This document listed appellant's income from 1997 through 2003 as follows: $25,025 in 1997; $69,987 in 1998; $83,224 in 1999; $29,555 in 2000; $45,211 in 2001; $28,254 in 2002; and $43,000 in 2003. Appellant's income for 1997 through 2002 was designated as "taxable income" and for the period from January to October 2003 as "gross earned income."

In November 2003, the parties entered into a marital settlement agreement (MSA). The parties' intention was "to make a final and complete settlement of all" of their rights and obligations concerning, among other things, the division of property. The MSA stated that "[e]ach party has made a full and honest disclosure to the other of all current finances and assets, and each enters into this agreement in reliance thereon. Each warrants to the other and declares under penalty of perjury that the assets and liabilities divided in this agreement constitute all of their community assets and liabilities."

In August 2004, a hearing was held to determine appellant's income for purposes of child support. Appellant claimed that he received $6,000 per month in earned income and royalties from Information Security Corporation (ISC) and $2,167 per month in dividend income from his separate property assets of $2,500,000. Respondent took the position that appellant made $6,000 per month in income from ISC, $2,333 per month in royalty income, and $2,167 per month in dividend income, as well as $3,000 per month for mortgage-free housing for a total income of $13,500 per month. Despite respondent's request, appellant did not present any evidence of the checks sent to him from ISC. Appellant testified that the determination of the amount of royalty income from ISC was based on ISC's accounting. The trial court noted that appellant was "very vague" regarding his income and issued an order awarding child support that was "modifiable retroactive to the effective date when we have more information" on appellant's income.

On November 14, 2004, appellant gave respondent a schedule of assets and debts. With the exception of furnishings, this document did not provide the value of any assets. Though it listed accounts at Bank of America and Comerica Bank, it did not include the Vanguard account.

On May 13, 2005, the trial court held a hearing on discovery issues relating to appellant's current income for purposes of child support. Respondent asserted that appellant's income was $8,000 per month according to his 1099 tax forms. The trial court found that appellant had not provided respondent with sufficient information to determine his income, and issued a temporary order pending appellant's submission of additional information.

On October 20, 2005, appellant filed an income and expense declaration in which he indicated that his income was $1,000 per month and his dividend income was $3,250 per month.

In April 2006, respondent sought, among other things, to set aside the MSA based on appellant's failure to disclose community assets. At this time, appellant requested reimbursement for the $80,000 he paid in 1997 for respondent's law school loans. On April 17, 2006, the trial court denied respondent's request to set aside the MSA without prejudice, indicated that respondent could file a motion regarding appellant's violation of his fiduciary duties, denied appellant's request for reimbursement for the law school loans, and ordered further discovery on appellant's investment accounts and the use of community funds on appellant's residence.

On April 23, 2007, respondent filed a status conference statement in which she indicated that subpoenas had been issued to various entities based on account names and numbers that appellant had recently provided. As of March 14, 2008, respondent was ...

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