Divorcing spouses are adding third parties to the divorce based on allegations of aiding and abetting one of the parties in filtering away community property. The inevitable question is whether these newly added parties are entitled to a jury trial on issues that would traditionally allow for it even though they are in family court. The First Appellate District Court of Appeal recently answered yes to that question.
In XIM, Inc., et al. v. The Superior Court of San Mateo County, Respondent; Ilona Rubashevsky, et al., Real Parties in Interest, A166173 (San Mateo Superior Court No. FAM00117405), Ilona filed a petition for marital dissolution against her husband (Alexander). Ilona subsequently filed complaints against third parties XIM, Inc. and XIMAD, Inc. stating causes of action for fraudulent conveyance, child support evasion, and an accounting after obtaining leave of the family court to join them as parties to the dissolution action. Ilona alleged that XIM hired IGWS to provide services for the development of electronic games. Alexander was designated to provide the services on behalf of IGWS. Ilona claimed that IGWS was controlled by Alexander. Under the contract between XIM and IGWS, XIM was required to pay IGWS a share of revenues from certain electronic games, depending on the performance of the games. IGWS, in turn, was required to pay compensation to Alexander for his work.
Ilona alleged that XIM stopped paying IGWS and diverted that income to Alexander’s stepfather via a fictitious business. Ilona claimed that XIM participated in the scheme so that Alexander could avoid paying support to Ilona on the income that he should have received from IGWS. Ilona alleged that XIM owed money to IGWS under the contract for work Alexander performed since 2014, which she further claimed was withheld or transferred to others so Alexander could avoid his support obligations to Ilona. As alleged, Alexander made himself judgment proof by fraudulently conveying his income.
The Family Court denied a timely request by XIM and XIMAD for a jury trial because: (1) there is no right to a jury trial for fraudulent conveyance; (2) Ilona’s claims are made under the Family Code; and (3) the “gist” of the action is for martial dissolution.
The Court of Appeal reversed and determined that XIM And XIMAD had a right to a jury trial on the causes of action for fraudulent conveyance and child-support evasion.
The addition of third parties to a divorce comes with a list of issues that should be addressed only one of which is whether there is a jury trial right. For assistance with these issues as they arise, please contact Joshua Borger, firstname.lastname@example.org or 408.286.5800.