Wife suing for investment losses

[Vinnie]

Hi, I just wanted to see if anybody had run into this.

Just when I thought the divorce was about done, her attorney found a case, and now I'm being accused of breach of fiduciary duty for investments made over 5 years ago.

They now want to move $250K of worthless investments to my side of the ledger, and move all the remaining assets to her side, including our IRA.  (I'm 58 and have no other retirement.) I would be left without a dime, owe her $78K, and still have to pay spousal and child support!

They aren't alleging I stole money or anything. From the case, re Marriage of Walker (2006) 138 CA 4th 1408 if you simply fail to adequately disclose to your spouse what you are doing with the money (which presumably could include how you're investing), you are liable for any losses.

Background: She brought nothing (except my three wonderful stepkids) into the marriage, and I made all the income for the entire 20 years.  She never had to work, so she did non-profit volunteering.

I always wished I had a wife that I could talk with about business and financial decisions, but I never could with her.  Either she was overwhelmed/depressed "about ready to break" or she would fly off the handle and/or mercilessly badger or criticize me when I did share stuff. Because of her black and white thinking, it was at best a waste of time to try to talk to her about these decisions, and at worst it became an ugly scene. I just couldn't run my businesses and conduct financial affairs without separating it from her crazy jealously, accusations, anxiety, distorted perceptions, etc.

She never liked not being able to control this part of my life, but didn't complain too much because I always made a lot of income.  That is, until 2008, when I starting hitting a bad streak, failed in a couple of business startups, and made some bad investments (though some of the investments did terrific, thank God). Our net worth went down 70%, but we never lacked for anything. Unfortunately her bitterness toward me turned to hatred, which led her to move out. Three months later she met someone... .filed for divorce 3 months after that.

Does anyone have experience with this? Again, I didn't run out and gamble it away or have a secret life or extravagant lifestyle.  I just made some stupid business decisions.

[livednlearned]

I looked at that case out of curiosity: www.lawlink.com/research/caselevel3/83297

I'm not a lawyer, so just guessing here. But one difference that seems very glaring is that the wife in the Marriage of Walker scenario was withdrawing funds from their IRA to pay bills without telling her husband. She also signed her husband's name on documents. And in your scenario, it sounds like 2008 hit you like a train, which it did to many people. An aggressive lawyer would ask your stbxw to explain why, in 2008, during the worst recession of our lifetimes, she didn't know that it was likely your combined marital investments depleted in value. Then your L would ask you about all the times you tried to talk to your wife about the investments, and how she expressed no interest repeatedly, and even became agitated when you mentioned your financial situation. You were an exemplary provider for 20 years, she didn't have to work, etc.

A lot of BPD sufferers distort the truth and sensationalize what went on in the marriage. Your wife's lawyer might not know what is true or not, but thinks he has a case. Unfortunately, you have to pay buckets of money to a lawyer to defend yourself, whether the suit is bogus or not.

Crazier things have happened to people on these boards, so I'm not saying you couldn't receive an unfair ruling. But if your net worth went down in 2008 and she's trying to say you hid it from her... .that seems like her hill to climb. You had to have your head in the sand to not know what was going on in the economy.

[ForeverDad]

Just when I thought the divorce was about done, her attorney found a case, and now I'm being accused of breach of fiduciary duty for investments made over 5 years ago.

They now want to move $250K of worthless investments to my side of the ledger, and move all the remaining assets to her side, including our IRA.  (I'm 58 and have no other retirement.) I would be left without a dime, owe her $78K, and still have to pay spousal and child support!

Was this case in your court's jurisdiction?  If not then it may not have much legal impact or weight with your court.  It's your lawyer's job to do a good job explaining and protecting you.

It is at least partly bluff and bluster.  That will never happen, at least not all of it.  The entire world lost money 5 years ago, why should you be blamed for financial losses that everyone experienced?  Good negotiators start with big demands so the negotiation has something to give back.  Sadly, she has BPD behaviors and perceptions, she can't fathom that the need to wheel and deal includes letting go some of the demands.  She wants her cake, your cake and everything else.  And of course her lawyer knows it is not illegal to ask for everything.  It's up to you to counter with, "No way, fair division at most." 

With that amount of money at risk, you need a very proactive lawyer with lots of good strategies.  If you have a forms-filer and hand-holder, look for another.  As I wrote, they can demand it but that's not going to happen.  Well, not unless you let it happen.  With that much money at risk, if she won't budge then there's no way you can settle with that, you'd have to have a trial and let the judge rule

I would think that would be less likely to apply in your case since (1) none of it was money she brought into the marriage, (2) none of it was her earned income, (3) she never tried to know about it, you weren't blocking, (3) she might have to prove you purposely squandered it to keep her from getting it , that is, ulterior motives, and probably other reasons I haven't thought of off the top of my head.

You might have to give her half but not more, I would think.  Also, depending on where you live, more and more courts are seeing alimony as a stepping stone into post-marriage single life, not a life-long albatross.  If she's already got a BF then that may give you incentive to seek to shorten alimony.  These days fewer care about marriage and just shack up together, especially if remarriage would end alimony.  So come up with a strategy on how to arrange terms for the length of alimony since she may avoid marriage.  People with BPD are quite dumb with many things but when it comes to money, they know what that means.

Why would you pay her child support?  A year and a half ago you wrote that you had your son most of the time.  That 'history' should have worked for you.  Did your lawyer at least get you to keep 50% parenting?  You might pay child support with equal time because of the income disparity, but very important is not to give up any edge you have in parenting time a decision making.  You only get to parent your son once, in 8 years he will be legally an adult, he needs you still.  That means not 'gifting' her any more parenting time or responsibility than absolutely necessary.  Don't feel sorry for her, rather, feel sorry for your son if he doesn't have substantial time with you.

You haven't posted here much lately.  Why is that?  We may not be lawyers, but we're good peer support.  We've been there, done that.  We have a vast collective insight on separations and divorces.  Are you settling?  Be aware that if she's not under pressure, such as an impending hearing or trial, she will be too entitled to agree to a reasonable settlement.  What are the other terms of the divorce case?

[Vinnie]

livednlearned, I think you're awesome for taking time to look at the case and then commenting. I just realized how alone I started to feel again. After 18 months in a divorce, not many friends or family IRL want to hear the continuing saga... .  Thanks.

You haven't posted here much lately. Why is that?

  ForeverDad, I still read these boards almost every day! About six months ago, I got a bit aggravated with some people inferring that co-dependent/pleaser types are just as manipulative and narcisstic as their user/abusers mates. So I posted my opinion of that opinion by calling it "a*sinine" and for that I got a "blocked" notice for a couple months from posting to this site. (In reality, I WAS PROUD OF MYSELF FOR THAT 'ACHIEVEMENT' because I've been Mr. Nice Guy all my life, teacher's pet, never made anyone mad, etc... .I told my divorce care group at church that "I was nurturing my inner a-hole -HA!" This is the first time since then that I've posted. 

Anyway, thanks for remembering me ForeverDad. Update: had a year of custody court battles, since she actually went for full legal custody. That was ugly; for example documenting her lying and child neglect in filed declarations that anyone can walk into the courthouse and ask to read (she is a public figure). She claims lots of people have read them, and she still rants  at me for that. Then she enrolled him in a school in a part of town neither of us lived in, in violation of a court order. We petitioned for, and won, sanctions from her for that ($3000 fine!). Both those attempts were pretty easy to beat down (with $20,000 for the lawyer, that is  ). I have tried to settle spousal with her both directly and through the attorneys but she expresses her insult from those offers by more raging texts and emails.

The main reason why I didn't feed her regular information on my activities was that when she was depressed and overwhelmed (often), it was my instinct to insulate and protect her. And when she was in an upbeat mood (not often), I certainly didn't want to trigger her fearful, anxiety ridden state, which could happen at the flip of a switch. Question: Do you think courts would give this any credence, or do only those of us who have trod the BPD trail of tears really understand this?

[livednlearned]

The main reason why I didn't feed her regular information on my activities was that when she was depressed and overwhelmed (often), it was my instinct to insulate and protect her. And when she was in an upbeat mood (not often), I certainly didn't want to trigger her fearful, anxiety ridden state, which could happen at the flip of a switch. Question: Do you think courts would give this any credence, or do only those of us who have trod the BPD trail of tears really understand this?

The legal system will give lots of things credence. Lawyers will let people natter on about anything, because: kaching. Whether it goes to court or not depends on how aggressive and competent your L is, and how involved you are, and how the chess game goes with your ex's L. If there is a deposition, and your ex lies during her testimony, and you come across as a very competent and credible witness while she looks like a trainwreck, the other L may try to settle something with you that isn't quite as disastrous as moving the $250K in worthless investments over. Maybe he suggests half. Then the ball is in your court to decide whether to take it to court or not. So you choose between spending tens of thousands of dollars to gamble on winning, or you spend thousands of dollars to only lose $125K in assets.

If you do go to court, ask for sanctions. Make sure you have a very aggressive lawyer who has lots of trial experience, and who is good at cross-examining. My ex is a former trial attorney. At our deposition, he stated he himself had conducted more depositions than he could remember (probably true). He was all-out arrogant. My L destroyed him. It was by far the most satisfying experience during this entire experience. She flattered him in the beginning, and said all the right things. Then started to set him up very slowly. He is so narcissistic that he just talked and talked and talked, breaking the cardinal rule of depositions. And then she sat back with a bucket of popcorn and watched while N/BPDx tried to dig his way out of the hole he just dug.

His L saw that I was a credible witness. I got help from friends here about how to deal with the deposition, and prepared for it like it was an exam to get into heaven. My facts were straight, I was calm, I didn't get trapped by any trick questions, and I had three binders filled with emails N/BPDx had been sending all along. When the L saw those binders, he realized immediately that he was in trouble and that his client wasn't being straight with him.

Your job is to believe your story. You don't need to be defending yourself or explaining yourself.

Did you make bad investments? Yes. When the rest of the economy was reeling.

Did you tell your wife? You don't recall a specific conversation, but given what was happening in the economy, you assumed she knew. Everyone knew.

Did she have access to the paperwork? Yes.

Why did you not tell her about the bad investments? Your question assumes that I did not tell her. Earlier I stated that I do not remember exact conversations.

Why did you not discuss the status of your financial investments? Your question assumes that I did not tell her. Earlier I stated that I do not remember exact conversations.


You don't say, "I tried to talk to her and she wouldn't listen." You say you are sure in 20 years of marriage that you discussed finances like any married couple.

Then your lawyer comes along and says,

Vinnie, you have provided very well for your family and your wife, enough that she could serve our town in a public position and draw no salary. Did she ever complain about her standard of living to you? "No, never."

Did she ever ask you if she could afford this or that? "No, never."

Did she ever express concern in the family finances. "No, quite the opposite. She became very annoyed when I discussed money. I don't recall specific conversations, but I do know that she became very agitated when I tried to discuss money with her."

That kind of thing.

Your decision is probably going to be at what dollar amount are you going to concede. You'll have to factor in the cost of settling, both in legal fees and in the amount of assets you give her, and the cost of going to trial, and the gamble you might still have to split the amounts because family law judges don't like one party to win. At least in my experience.

[Vinnie]

livednlearned, I finally spoke with my lawyer. Officially, her opinion is I'm pretty much screwed. This is mostly because of a letter I haven't mentioned here yet. I wrote it to STBX back in Jan 2012, and she just submitted it into evidence.

I wrote this letter in a state of shock and depression. I had just found out about the other guy, and she had just told me she wanted a divorce. I was beaten down from 20 years of abuse and depletion. It was my final effort to save the marriage. (Ironically, the letter was an attempt to put into practice the validation concepts I was learning on this site.) FULL DISCLOSURE: I ADMIT I AM AN IDIOT AND PROBABLY DESERVE TO BE  DESTITUTE, to whit: In the letter I told her I was attaching a list of everything I could think of that she had complained about and accused me of over the previous 5 years. I prefaced the list as follows: "Some of these are completely true, and all have a kernel of truth.  Please forgive me." They were mainly relational things but they also included things like, "I didn't protect you financially," I pissed away our security," and "I didn't allow you to share in business and financial decisions."

My lawyer said that despite the explanation, it comes across as an admission. On the witness stand, I would have the burden of proving that I didn't really mean each statement. Too high a mountain to climb.

I'm probably going to have bite the bullet and acquiesce to her demands.  My lawyer said the issue of her lying, abuse, and emotional instability were somewhat tangential. Plus hard to prove. (BTW, my lawyer just won a case last month regarding fiduciary duty after a 3 day trial. She was representing the other side... .the husband didn't tell the wife what he was doing with her inheritance money... .So she has already done her homework on this issue.)

Starting over at 58 is what I'm probably facing right now... . 

[ForeverDad]

Sounds to me like an appeasement letter, being in full appeaser mode, you listed everything, said it was all your fault and blah, blah, blah.  Basically nothing was held back, that doesn't make sense in such a long marriage.  You have essentially said she should have the sun, moon and stars if only you owned them.  Probably you wrote what she told you to write, you were so deep in fixer/compliance programming.

I think it would be worth it to make a stand.  It's only one letter, nothing else to support it, you could have a forensic accountant (Special Master) come in, review all the financial records and the accountant could testify that they were all within normal range considering the financial environment of the time.  Hey, you could even say that you realized you weren't behaving normally, the marital relationship was creating situational issues (situational = outside causes, not you) and sought out counseling.

[livednlearned]

Does your L recommend settling this out of court? Or go to trial... .

Do you think you would fare any better if a judge sizes up the situation than if you settled out of court?

I've written two appeaser letters myself. They make me cringe when I read them. Yours unfortunately has financial consequences, and you are probably getting ready to beat yourself up for years to come. Don't do that if you can help it. You're leaving this marriage because you don't want someone abusing you anymore, so that means you have to stop doing it to yourself as well.

[Vinnie]

My attorney thinks I risk getting eaten alive going to court, particularly if we draw one female judge in particular (we live in a small rural county).

It's interesting... .it just occurred to, if I net all the investment gains and losses together, there's a net GAIN. You wouldn't think one would be liable for individual investments that lost money when overall the portfolio made money, right?  It hadn't occurred to me to tell my attorney that.

Where I lost all the money was a couple of business endeavors, which she was fully aware I was doing. In fact, I can get sworn testimony from my ex-employee that she discussed with him two of the business activities cited by her attorney in his letter as her being kept in the dark about! That would also show the court that she has no trouble lying about stuff (I can easily get 3-4 more letters from her own ex-employees and board members about her lying about serious stuff).

So after a couple days to reflect, I'm feeling better about countering her allegations. At least to get a little less drastic outcome.

Thanks again for you encouragement and insights.  I promise to keep you posted on the outcome.

Vinnie

[livednlearned]

So after a couple days to reflect, I'm feeling better about countering her allegations. At least to get a little less drastic outcome.

I think it's always worth putting together a strategy as though you're heading to court, even if you don't intend to go. There are a lot of moves that happen between standing in front of a judge and where you are now. I gained a lot of ground during my deposition that did two important things: it showed N/BPDx's L that I was a solid, credible witness. Even more important, it also showed the opposing L that his client, N/BPDx, was a serious liability.

A deposition is like an audition to show each of the lawyer's what they're really dealing with. Maybe you can achieve the same outcome without a deposition, but if you want your ex wife's lying to make her lawyer nervous, then that's the way to go. Lying to other people is one thing, lying in a deposition is bad news.

I hope you do ok with this, at least minimize the amount of damage. And yes, do let us know how things go!

LnL

[ForeverDad]

My attorney thinks I risk getting eaten alive going to court, particularly if we draw one female judge in particular (we live in a small rural county).

It's interesting... .it just occurred to, if I net all the investment gains and losses together, there's a net GAIN. You wouldn't think one would be liable for individual investments that lost money when overall the portfolio made money, right?  It hadn't occurred to me to tell my attorney that.

I agree it is unrealistic and weak logic surely to pick successes for yourself and failures for your spouse but that's she is attempting.  Nothing illegal to try but it's up to you to stand up for yourself and the facts, paint the full picture and defend yourself with it.

I noticed your two extremes - hopelessness from attorney and hope after you've thoroughly pondered your situation.  I was away at a religious event with 30K people this weekend and one of the final scriptures mentioned reminded me of what you just went through, attitude and perspective can make the difference, be victims or be proactive... .

All the days of the afflicted one are bad, but the one with a cheerful heart has a continual feast. - Proverbs 15:15

[Vinnie]

Foreverdad,

I "discovered" that proverb about 3 years ago! Awesome. Definitely needed reminding... .

Settlement conference is next week. I'm trying not to be be on pins and needles. Knotted stomach at 3am is not good.