Separate Property and Fiduciary Duties: Is There Really a Community Opportunity Doctrine?

Dawn Gray, CFLS

Dawn Gray has practiced family law for 35 years and has been a Certified Specialist in Family Law for 28 years. Since 1994, her practice has been dedicated to research and writing projects for family law and civil attorneys. She works with many family law attorneys throughout the state on their cases, doing research, drafting pleadings and appellate briefs. She is a past president of ACFLS and is currently on its Amicus committee. She is also a past member of FLEXCOM, serving as the Executive Editor of the Family Law News. She gives frequent presentations and continuing education classes on family law issues. Dawn is also the principal author of the 11-volume series "Complex Issues in California Family Law." She is a member of the editorial board of the California Family Law Monthly and a frequent contributor to family law publications throughout the state.

For the past decade or so, creative family law attorneys carefully considering California’s fiduciary duty statutes argued that the spouse controlling the community’s financial affairs during marriage were subject to something called the "community opportunity doctrine." They asserted that the managing spouse had a duty to use community property before separate property when taking advantage of an investment opportunity. They based this argument on Family Code section 721(b), which incorporate a Corporations Code statute that expressly forbids a partner from taking advantage of an opportunity that rightly belongs to the partnership.

However logical these arguments may have been, the judiciary did not necessarily receive them enthusiastically, nor have they been successful. This article will explore the history of the fiduciary opportunity doctrine that became the so-called community opportunity doctrine, its elements and policy underpinnings, countervailing policies, and the cases and statutes that bear on the issue of whether such a doctrine exists in reality or only in the hopes of good advocates. Stay with me, fair reader, and decide for yourself whether the community opportunity doctrine is a phantom or a realistic basis for a remedy.