OC Dispute Resolution Services, LLC

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What is Fraud, Concealment and Misrepresentation in California?

Fraud comes up in both criminal and civil cases.  In criminal cases, the District Attorney’s office will prosecute the defendant, and he or she may be subject to fines and/or imprisonment.  In civil cases, the plaintiff (or the person on whom the fraud was committed) will pursue the action.  If the plaintiff wins, the defendant may have to pay him or her money as damages.

In California, civil fraud comes up in two (2) contexts: torts and contracts.  “Tort” is just a fancy word for a wrongful act.  However, torts do not include breaches of contract.  As a result, there are different rules for dealing with fraud in torts and contracts cases.
Many courts use the terms “fraud” and “deceit” interchangeably, so don’t be thrown off.  The idea behind both is that if a person intentionally tricks you into doing something you otherwise would not have done, he or she should be liable.

For torts, California uses the term “deceit” rather than fraud.  The California Civil Code states that deceit can mean many things, including: (1) a knowingly false suggestion; (2) an assertion with no reasonable grounds for believing it; (3) a suppression of fact, which must be disclosed; (4) a misleading fact; or (5) a promise without any intention of performing it.

For contracts, the California Civil Code identifies two (2) types of fraud: actual and constructive.
Actual fraud may occur through: (1) a knowingly false suggestion; (2) a positive assertion with no information to warrant it; (3) a knowing suppression of fact; (4) a promise without any intention of performing it; or (5) any other act fitted to deceive.

On the other hand, constructive fraud means: (1) any breach of duty in which one person gains an advantage over another by misleading him; or (2) any act or omission that the law specifically states is fraudulent.

What Deed Do I Use to Transfer House in CA Divorce?

Which Deed To Use When Transferring The Family House Between Spouses

Often in a divorce, one of the parties is awarded the entire jointly owned family residence as his or her sole and separate property.  In such a case, the spouse giving up his or her portion of the real property must transfer their interest to the other spouse.  There are different deeds that can be used to transfer title between spouses; however, use of the improper deed to transfer real property in a divorce case can result in unintended tax consequences to the spouse retaining the house. 

California Constitution Article 13A §1, exempts a transfer between spouses as part of a divorce settlement from reassessment for tax purposes. Such a transfer can be accomplished by using an Interspousal Deed for the transfer of the spouse’s one-half interest in jointly owned real property to the other spouse’s as his or her sole and separate property.  

An Interspousal Transfer Deed is preferable to a Quitclaim Deed for a transfer of real property between spouses because it is not considered a “change” in ownership.  Thus, transferring the property to the other spouse does not trigger the re-evaluation of the property at current market value, which could translate into a significant increase in annual property taxes to the spouse retaining the property.   This is particularly important when the parties have owned the house for many years and the value of the house has significantly increased over time. 

Do Grandparent’s Have Right to Formal Visitation in California?

Do Grandparent’s Have Right to Formal Visitation in California?

Like most states, California law limits the access a grandparent has to a grandchild.   Parents have a fundamental liberty to make decisions about their children’s care, custody and control.  This includes the right to make a decision whether to allow contact with a grandparent.  

A grandparent will have a very difficult time convincing a court to allow them “visitation” time with a grandchild if the child’s parents are “fit” parents and already allow a grandparent even a small degree of contact with the child.

If you seek a formal visitation order from the court, you will have to overcome a rebuttable legal presumption that visitation with your grandchild is not in his or her best interest.  It will also be your legal burden to rebut the presumption that visitation with your grandchild is not in the child’s best interest if the grandchild’s parent (even if it is your own child) who has sole legal and physical custody of your grandchild objects to visitations between you and your grandchild, or if the parent with whom your grandchild lives objects to visitations, even if that parent does not have a formal custody order. 

The court will grant visitation rights to a grandparent upon a finding that visitation is in the child’s best interest; there is a pre-existing bond between the child and grandparent that would justify the visitation order; and the child’s best interest outweighs a parent’s right to exercise parental authority. The third element is particularly difficult to overcome.

Presently, the law allows three instances in which a grandparent may prevail regarding visitation with their grandchild:

1)     During the parent’s marriage if one of more of the following exists: the parents are living apart; one parent is absent and his or her whereabouts are unknown; one parent joins in the grandparent’s petition; or the child does not live with either parent.   Assuming visitation is granted, if none of these circumstances cease to exists, the court must terminate the grandparent visitation.

2)     The parents separate and during a custody proceeding, a grandparent may seek a visitation order from the court.  The grandparent must follow formal requirements including filing a Petition with the court, and give notice of the Petition to both parents, anyone who has physical custody of the grandchild and the child’s stepparent(s), if any, by certified mail.  The grandparent must again rebut the legal presumption that visitation with the grandchild is not in the child’s best interest if both parents (albeit separated and possibly going through a divorce) agree that the visitation should not be ordered by the court.

3)     A grandparent, as the parent of a deceased parent, may seek visitation with their grandchild.  Even in cases where a parent has dies, the best interest of the child is still controlling regarding the visitation between grandparent and grandchild. 

How do assets from our marriage get split up?

How do assets from our marriage get split up?

Characterization Generally

"Characterization of property, for the purpose of community property law, refers to the process of classifying property as separate, community, or quasi-community. Characterization must take place in order to determine the rights and liabilities of the parties with respect to a particular asset or obligation and is an integral part of the division of property on marital dissolution." 

Generally speaking, property characterization depends on three factors: (1) the time of acquisition; (2) the "operation of various presumptions, particularly those concerning the form of title;" and, (3) the determination "whether the spouses have transmuted (transferred)" the property in question, thereby changing its character. Id. In some cases, a fourth factor may be involved: (4) whether the parties' actions short of formal transmutation have converted the property's character, as by commingling to the extent that tracing is impossible. 

"The character of the property as separate or community is fixed as of the time it is acquired; and the character so fixed continues until it is changed in some manner recognized by law, as by agreement of the parties." 

Community Property Presumption

There is a presumption in family law that all property acquired during marriage is community property. Fam. Code § 802. Once it has been shown that an asset was acquired by either spouse during marriage (other than by gift or inheritance), that asset will be treated as community property, unless proven otherwise. If one spouse contends the property is his or her separate property, he or she bears the burden of proving that claim. 

Valuation is most often done as of the time of trial. Family Code, section 2552, subdivision (a), states: “For the purpose of division of the community estate upon dissolution of marriage . . . of the parties . . . the court shall value the assets and liabilities as near as practicable to the time of trial.”

Inaccurate Reporting of Income in Divorce May Cost You Much More Than It’s Worth!

Inaccurate Reporting of Income in Divorce May Cost You Much More Than It’s Worth!

When making or opposing a request for modification or termination of spousal support and/or modification of child support in a divorce or a paternity case from the other parent, California law requires that each spouse prepare, file and serve Judicial Counsel Form FL-150, Income and Expense Declaration. The Declaration is typically referred to as an “I & E” and is signed under penalty of perjury. 

The 4-page form requests among other things, that each party disclose his or her income from all sources, e.g. salary, overtime, bonuses, royalties, investment income, and income from self-employment efforts. The form further requires proof to support the income disclosed on the I&E. Proof of income may be submitted in the form of paystubs for the two (2) months immediately before the hearing, or a copy of the party’s latest tax returns. 

Pursuant to Family Code section 3667 if the court finds that the I&E of the responding party is incomplete, inaccurate, missing tax returns or not submitted in good faith, the court is permitted to award attorney fees and other costs as sanctions against that party. In this situation, the fees and sanctions are awarded because the responding party was not truthful in reporting his or her income on the I&E. 

The sanctions may include payment of all costs of the modification motion, including the filing fee, and costs of any necessary deposition and subpoena to obtain complete and accurate information. The cost of the motion, depositions and subpoenas can easily add up to hundreds of dollars, and depending on the extent of the responding party’s financial circumstances, even thousands of dollars. 

The take away? … Be accurate in reporting your income.

How Do I Get Out of a Partnership in California?

Getting into a partnership, like a marriage, is easy. Getting out, however, is also like a marriage and is at times quite challenging.

1. Review the Partnership Agreement First, if you have a Partnership Agreement, it may provide your options for exiting or dissolving the partnership. Revisit the Agreement and review your options. If you do not have a Partnership Agreement that outlines an exit or dissolution strategy, you and the remaining partners can try to work out the terms together or seek the help of a mediator. If the terms of the split cannot be resolved amicably, the Court can divide the partnership’s assets and liabilities. Absent a Partnership Agreement, general partnership law applies, as codified in Corporations Code §§ 16000 et seq. and Business & Professions Code.

2. Is a Buy-out an Option? If the partnership wants to continue without you, it may be interested in purchasing your interest. If there is a Partnership Agreement, the formula may already be established. If there is no set formula, the buy-out price may be based on the liquidated value of the partnership or the sale of the business as a going concern, whichever is greater. There is no set formula here.

3. Dissolution If an agreement on a buy-out cannot be reached, the business in many cases will have to be dissolved. This can be accomplished by agreement amongst the partners or by a provision in the Partnership Agreement. If there is no agreement or procedure set forth, Judicial Dissolution is likely. In California, the partnership must file a Statement of Dissolution with the Secretary of State. The partnership is then responsible for distributing or liquidating the partnership assets. It must also inform all known creditors, vendors, suppliers, and customers that the partnership is being dissolved. In addition, the partnership must publish notice of the dissolution in a paper “of general circulation” for twelve (12) consecutive days. After a partnership has been dissolved, no partner may transact on behalf of the partnership. In addition, unknown creditors will have 90 days to make any unknown debts known. Consult your CPA to address any tax issues.

4. Conclusion.  Again, check the written Partnership Agreement first if you have one. If not, your best bet is to try to work out an agreeable split amongst the partners. If a Judicial buy-out or dissolution is required, this will likely be costly and protracted

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