Mediation Privilege is Fully Applicable in a Divorce
The Appellate Court agreed with wife’s divorce attorney and affirmed the divorce court’s holding that (1) parties to a divorce who reach an agreement on Marital Settlement Agreement (MSA) provisions by participating in private mediation may agree to make financial disclosures that do not strictly comply with statutory disclosure requirements; (2) local divorce court rules may not create their own rules of evidence and procedure in conflict with statewide divorce statutes; and (3) the presumption of undue influence arising from interspousal transactions where one spouse gains an advantage is not applicable when parties participate in private divorce mediation.
In this divorce proceeding, husband persuaded wife to participate in mediation. No agreement to reconcile was reached, so the focus of the divorce mediation was on division of property, custody, and other issues related to their divorce. The mediation was successful and the parties signed a MSA. Wife filed her preliminary and final declaration of disclosure; husband served his preliminary declaration of disclosure, but never filed his final declaration of disclosure.
Husband’s divorce lawyer first argued that the MSA must be set aside due to the failure of the parties to make the required financial disclosures in compliance with the Family Code. The divorce court disagreed, stating that parties to a divorce proceeding may opt out of divorce litigation by agreeing to an alternative dispute resolution mechanism that does not involve all of the formalities required of an adversarial system of justice. Requiring compliance with disclosure rules designed for adversarial litigation would undermine the strong public policy of allowing parties to choose speedy and less costly avenues for resolving their divorce related issues. Thus, strict compliance with Family Code disclosure requirements is not required for private mediations that address issues arising out of a divorce.
Moreover, while the Family Code requires the exchange of preliminary and final declarations of disclosure prior to entry of a divorce judgment, an exception exists when the parties make written waivers. In this case, the MSA declared that husband and wife agree that they have fully disclosed all financial matters. The divorce court also held that allowing husband, the noncomplying party, to unilaterally undo a divorce judgment would create a most pervasive set of incentives: a party could deliberately not comply, see if the divorce court results in an acceptable divorce judgment, and then have the opportunity to obtain a better result by pulling the non-disclosure card on appeal or new trial motion.
Husband’s divorce lawyer’s second argument was that the family law court erred in entering a divorce judgment on the MSA because it did not comply with local rules requiring that such agreements be notarized and admonish the parties of their right to seek legal counsel. The divorce court held the local rule invalid insofar as the rule imposes requirements on a MSA in addition to those required by the Evidence Code, the Family Code, and the Code of Civil Procedure. A divorce court is without authority to adopt local rules or procedures that conflict with statutes or with rules of court adopted by the Judicial Council, or that are inconsistent with the California Constitution or case law. Specifically, the Family Code allows parties to divide community property by written agreement; it does not require notarization or advisement to seek legal counsel. Since the local rule imposed requirements in addition to those in the statute, it was held invalid to that extent.
Husband’s divorce lawyer’s next argument was that the MSA is unenforceable because the family law mediator and wife engaged in undue influence during the mediation. The court concluded that husband’s assertion of undue influence is precluded by the mediation confidentiality imposed by the Evidence Code. Neither a mediator nor a party may reveal communications made during mediation. The confidentiality provisions of the Evidence Code protect the mediation process and preclude any claim of undue influence.
Husband’s divorce lawyer’s also asserts that the presumption of undue influence arising from interspousal transactions that advantage one spouse applies since wife, he argued, got a better deal. It has been held that MSA’s produced as a result of mediation cannot be presumed to be the product of undue influence. Divorce mediators generally work to balance the negotiation power between the parties, which tends to produce agreements that are more fair and voluntary, rather than coerced. Thus, application of the presumption would turn the shield of mediation confidentiality into a sword by which any unequal agreement could be invalidated; therefore, no presumption of undue influence exists when MSA’s are reached as a result of mediation.
In re Marriage of Woolsey (2013) 220 Cal. App. 4th 881