Marriage of Klug

Published in 2005 at 130 Cal.App.4th 1389. Mr. Sargeant represented the wife in a dissolution proceeding. During marriage the husband had retained an attorney to prepare a limited partnership to protect the couple's assets from possible litigation involving his medical practice. Later, after the husband filed a petition for dissolution, the same attorney assisted husband in moving millions of dollars overseas into trust accounts. Eventually, the couple entered into a marital settlement agreement, dividing their assets. In the meantime the wife sued the attorney for legal malpractice and eventually recovered $346,000 by settlement. Husband then filed a motion to divide the proceeds as an "omitted community property asset" that wife had failed to disclose. The Third District Court of Appeal agreed with Mr. Sargeant that the malpractice did not "arise" until after the parties separated. Additionally, although not required for the decision, the court found that, under the equitable doctrine of unclean hands, the husband's post-separation financial transfer conduct would bar him from claiming any interest in the settlement proceeds.