Two years after entry of a San Diego county Judgment dissolving the marriage of Joseph and MaryAnne Sorge, MaryAnne filed a motion for modification of custody and visitation of the minor child, with attendant requests for a modification of child support as well as attorney fees and spousal support arrears. Both parties were quite wealthy: MaryAnne had around $14 million in assets; Joseph’s income and assets situation was harder to discern as he had recently sold his business, Stratagene Holding Company, and was cagey regarding the disposition of the sale proceeds as well as money made before the 2007 sale. Several years and a motion to compel later, MaryAnne argued that Joseph had failed to disclose $12 million in earnings between 2006-7 as well as the more than $100 million Joseph got from the sale of the business.

The trial-court found that between Joseph and Maryanne, Joseph had 80% of the income and 85% of the assets. Pursuant to Family Codes 2030 and 2032, the court awarded Maryanne $200,000 in fees. The trial-court also sanctioned Joseph some $75,000 for failure to disclose his earnings pursuant to his obligation under §2102(c). Joseph appealed these orders arguing that MaryAnne didn’t need the money and that his obligation to disclose ended upon entry of judgment, not termination of the court’s jurisdiction over child support.

In a decision filed 1/5/12, the California Fourth District of Appeals rejected Joseph’s request to reverse the trial court’s order awarding attorney fees. The appellate court affirmed the findings of the lower court that, “The fact that Maryanne has ample resources to pay her attorney fees does not necessarily bar an order for attorney fees and costs,” noting that pursuant to California statutes and case law, a party’s ” ‘need’ is relative.” The lower court had also noted that, pursuant to §2030, there are a number of other factors besides availability of funds to the parties that need be considered in making an award, including the complexity of the case, the skill of counsel, the reasonableness of the fees, and any other factors affecting the parties’ abilities to pay.

The appellate court did, however, reverse the lower court’s sanctions order; it was concluded, “that any fiduciary duty that Joseph had to disclose material changes in his income to Maryanne ended upon entry of their 2002 divorce decree.” The sanctions request was remanded to the lower court for further proceedings (as there were still grounds for sanctions pursuant to §271 i.e. obstreperous conduct, even if the §2102(c) did not constitute a valid basis).

The full opinion can be found here.

In a decision filed August 11, 2011, the Third Division of the Fourth Californa Appelate District ruled, “In a marital dissolution proceeding to divide the community property, where the nonmanaging spouse has prima facie evidence that community assets..have disappeared while in the control of the managing spouse post-separation..the managing spouse [shall] have the burden of proof to account for the missing assets[.]”

Alan and Elaine Margulis were married for 33 years; Alan was the sole breadwinner and manager of community finances. After separation, Alan asserted that the hundreds of thousands of dollars in community investment accounts had been depleted in expenditures for the community’s or Elaine’s benefit or due to stock market losses. Alan presented no evidence at trial to show how he disposed of the funds under his control.

At trial, Elaine presented an account statement prepared three years after separation (and six years before trial) showing total assets of $1,305,500. She argued that she should not have to prove how Alan had disposed of these monies; rather, as managing spouse, the burden of proof should be on Alan. The trial court rejected this argument and said the statement wasn’t sufficient to establish the values of the community assets at separation These assets were thus excluded from the equalization calculation, and Elaine had to pay Alan a hefty sum.

The trial court reversal on appeal constitutes an exception to the general rule under Evidence Code §500, which states that “a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.” This exception is in line with the large body of case law, which allows courts to alter the normal allocation of the burden of proof in the interests of fairness and equal access to evidence, especially where a plaintiff has no access to records.

The appellate court noted that “the trial court’s failure to place the burden of proof on Alan relieved him of the duty to account for his postseparation management of these assters..This lack of accountability poses a risk of abuse and runs afoul of the statutory scheme imposing broad fiduciary duties of disclosure and accounting on a managing spouse.”

Indeed, pursuant to CFC §721(b), Alan was obliged to furnish information regarding his disposal of the community assets to Elaine even without demand. Relief for the sequestering and disposal of community assets is controlled by CFC §1101 et. seq. under which an injured party is mandatorily due half of the purloined asset plus fees and costs and under which an injured party may be awarded the entire asset. When the trial court revisits this issue, it will have to make a new decision with CFC §1101 et. seq. in mind.

Full transcript of the Court’s decision can be found here.

IN RE: the Marriage of FLORA S. and GEORGE L. RUIZ. FLORA S. RUIZ, Appellant, v. GEORGE L. RUIZ, Respondent.

E049310

In a decision filed April 14, 2011, the California Fourth District Court of Appeals affirmed a Riverside Superior Court’s characterization of a worker’s compensation payout during the marriage of Flora and George Ruiz as both community and separate property. The Ruizes were married in 1975 and separated in 2005. Flora sustained a permanently disabling injury in 1992, but she did not receive a disability payout until 2002. This payout, after deduction of attorney’s fees and medical expenses, was $172,364.

According to California Family Code §760, “Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.” In Raphael v. Bloomfield (2003) 113 Cal.App.4th 617, the Court determined that “..notwithstanding the section 760 community property presumption, a lump sum permanent disability award received prior to separation is the injured spouse’s separate property to the extent it is meant to compensate for the injured spouse’s diminished earning capacity (and/or medical expenses) after separation.”

Flora argued that this meant it was up to George to prove that some of the payout was community property. The Court interpreted Raphael differently, applying the general rule that a party who claims that property acquired during the marriage is separate property has the burden of proof on that issue. In the absence of any evidence of how the payout amount had been determined, the Court applied a formula based on the period Flora was disabled during the marriage and her remaining working life after the separation, based on her salary at the time of injury and the assumption that she would have retired at age 62.5. That formula determined that $103,033 of the award was community property and $ 71,311 was Flora’s separate property.

Flora appealed, stating that the allocation was arbitrary, but she did other than asserting that the entire award was hers, she did not suggest an alternate formula for splitting the award between community and separate property. The appellate Court affirmed the lower court’s decision, finding that, according to Raphael, a worker’s comp payout is supposed compensate for lost earning–earnings that would have been community property while the Ruizes were together. The appellate Court further found that in apportioning the payout between community and separate property, per In re Marriage of Lehman (1998) 18 Cal.4th 169, 187, the trial Court had “the discretion to use any method which is reasonable and which fairly apportions the value of the asset.” The appellate Court found that the lower court had not abused its discretion in applying its formula to apportion the payout.

Full transcript of the Court’s decision can be found here.

IN RE: MARRIAGE OF Sandra and Edward FOSSUM

In a decision filed January 28, 2011, the Court of Appeal for the Second Appellate District held that, under CFC §1101(g), attorney fee awards are mandatory when a party breaches fiduciary duty by failing to disclose the transfer of a community asset into a separate account.

Los Angeles residents Sandra and Edward Fossum were married in 1994 and separated in November 2002. In Spring 2002, Sandra took a $24,000 cash advance on a community credit card, citing financial need, and she transferred the funds to her personal bank account. She did not disclose the transaction to Edward, who learned about it later. Edward asserted that at least half of the funds were spent on non-essentials including a horse trailer and a car for Sandra’s son.

Under §§721 and 1100, spouses have fiduciary duties to each other as to the management and control of community property. When, as happened here, the trial court finds a spouse has breached her fiduciary duty, but not in a manner rising to the level of sanctionable conduct under §271, nor by conduct rising to the level of fraud, malice, or oppression, §1101(g) governs the applicable remedies. §1101(g) states that its remedies “shall include, but [are] not limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs.”

In a judgment issued January 2009, the trial court found Sandra had breached her statutory fiduciary duty to her spouse (CFC§721(b)) and ordered Sandra to reimburse half the charged amount ($12,000) to Edward Pursuant to §2030, the Court ordered Edward to pay Sandra $20,000 in attorney’s fees and rejected Edward’s request for fees from Sandra. Edward objected, and in its Statement of Decision, the court rejected Edward’s objection, observing that the remedy was in accord with §1101(g). Edward appealed the Court’s decision.

The appellate court determined that the trial court had been mistaken. “The language of §1101(g) is unambiguous and mandatory,” the court stated noting that the use of the word “shall” (as opposed to may) connotes mandatory action rather than discretionary acction. The court went on to cite

Citing Brewer & Frederici (2001), the appellate court stated that once a breach is shown, the trial court lacks discretion to deny an aggrieved spouse’s request for attorney’s fees. “Accordingly, the trial court lacked discretion to deny Edward’s fee request.” The matter was remanded back to the trial court to determine the amount of attorney’s fees to which Edward is entitled under §1101(g) for Sandra’s violation of §721.

Justice Rothschild gave a dissenting opinion, stating that 1101(g) is not self-executing, and as Edward never explicitly asked for attorney’s fees pursuant to 1101(g), he was not due any pursuant to that statute. Rothschild also recommended that 1101(g) be modified by the legislature to be discretionary, rather than mandatory stating that, “A mandatory award of attorney fees, imposed regardless of the value of the asset at issue and irrespective of need and ability to pay, is a harsh remedy for a violation that is merely technical and wholly innocent, as might often be the case, so it is unlikely the Legislature intended such a result.”

Full transcript of the Court’s decision can be found here.

IN RE: the Marriage of SOLOMAN ROBERT and CAROL ADRIANNE STANTON, D056713

Affirming the decision of San Diego Superior Court Judge Patricia Garcia, the California Fourth Appellate District Court of Appeal held, November 24, 2010, that the military basic allowance for housing (BAH) and basic allowance for subsistence (BAS) were includable in a soldier’s gross income for the purposes of calculating child and spousal support obligations.

San Diego residents Soloman Stanton, active-duty Naval serviceman and his wife, Carol, were granted dissolution, effective March 2008. Spousal and Child support amounts were stipulated to in their Marital Settlement Agreement (MSA), but at a hearing September 1, 2009, Judge Garcia granted Soloman’s order to show cause (OSC) to set aside the MSA for equitable reasons, save for the termination of marital status. The Court issued temporary support orders, factoring in BAH and BAS.

On October 29, 2010, Soloman filed an OSC to reduce child support followed by a petition to modify spousal support on November 4. His main argument was that including BAH and BAS in his gross income violated the fedeal preemption doctrine as military allowances are exempt from federal taxes and not subject to garnishment for support arrears under federal law.

The Court denied Saloman’s OSC on December 3, stating,”[I]f it looks like income, it is income no matter how it’s paid to you. And this court has always considered BAH and BAS to be income.” Court also denied Salomon’s motion to modify child support.

On appeal, CA-4 affirmed Judge Garcia’s decision, holding that the federal preemption doctrine is inapplicable to California Support Law under the Rose doctrine:

“We have consistently recognized that ‘the whole subject of the domestic relations of husband and wife, parent and child, belongs to the laws of the States and not to the laws of the United States.’ … ‘On the rare occasion when state family law has come into conflict with a federal statute, this Court has limited review under the Supremacy Clause to a determination whether Congress has “positively required by direct enactment” that state law be pre-empted.’ … Before a state law governing domestic relations will be overridden, it ‘must do “major damage” to “clear and substantial” federal interests.’ ” (Rose v. Rose (1987) 481 U.S. 619, 625)

Saloman’s appeal was denied because he failed to cite any direct enactment showing Congress intended to disallow the inclusion of BAH and BAS in a party’s gross income for support calculation. The appellate Court further noted that CFC §4053, which lists the principles to be followed by the Court in setting a child support award, says guideline takes into account “actual” income, not “taxable” income.

Full transcript of the Court’s decision can be found here.

In a decision issued August 4, 2010, Vaughn Walker, Chief Judge of the United States District Court for the Northern District of California, ruled that Proposition 8, which defines marriage as strictly between a man and a woman, is unconstitutional as violative of both the Due Process and Equal Protection Clauses. Proposition 8 was passed by a narrow majority of voters in November 2008 and has been in litigation ever since.

According to Walker, the 18,000 gay marriages granted between June 16, 2008 and November 5, 2008 (the brief window during which same-sex marriages were legal) have not and do not pose any public harm. Walker ordered an entry of judgment permanently enjoining enforcement of Proposition 8. However, Walker also ordered a temporary stay of execution of that judgment pending the anticipated appeals to higher courts, perhaps all the way to the Supreme Court.

Both current governor, Arnorld Schwarzenegger, and former governor and current gubernatorial candidate, Jerry Brown, delivered letters to the Chief Judge on August 7, 2010, opposing the stay. “The Administration believes the public interest is best served by permitting the court’s judgment to go into effect, thereby restoring the right of same-sex couples to marry in California,” Schwarzenegger wrote in his letter.

IN RE: the MARRIAGE OF XIA GUO AND XIAO HUA SUN, No. B215595.

In a July 28, 2010 decision, the 3rd California Court of appeal denied the petition of Xiao Hua Sun to appeal the 2008 decision of the Los Angeles County Superior Court which denied Sun’s request for a finding of putative spouse status.

California Family Code Section 2251 outlines “putative spouse” status, preserving community property rights for someone “if a determination is made that a marriage is void or voidable and the court finds that either party or both parties believed in good faith that the marriage was valid…” In Xiao Hua Sun vs. Xia Guo, the Los Angeles-residing couple had been married on Feb. 14, 2001 in Las Vegas. However, Sun was, at the time, already married to a woman in Italy. Guo believed, on the representation of Sun, that Sun had divorced his wife prior to Feb. 14, 2001. In fact, Guo did not file for divorce until Feb. 15, 2001, and judgment was not entered until August 21, 2001. In 2008, Guo filed a petition for nullity which was granted on August 15, 2010. Sun then sought to be declared a putative spouse on the grounds that Guo had a good faith belief in the validity of the marriage, even if Sun didn’t. The L.A. Superior Court denied Sun’s request on December 28, 2008. Sun then appealed to CA-3.

In 2009, the 6th California Court of Appeals ruled, in Tejeda (2009) 179 Cal.App.4th 973, that section 2251 must be applied “without regard to guilt or innocence, when the court makes the predicate findings that (1) the marriage is void or voidable, and (2) at least one party to the union maintained a good faith belief in the validity of the marriage.” This language would seem to support Sun’s request. However, it should be noted that, in Tejeda, the court permitted an innocent spouse to assert a putative spouse status. By contrast, Sun clearly is not an innocent party.

In its decision, CA-3 deliberately repudiated (or perhaps clarified) Tejeda, stating that “the purpose of section 2251 is to protect innocent parties of an invalid marriage from losing community property rights… If Tejeda were correct, then a party who fraudulently and in bad faith conceals his or her bigamy can reap the benefits of putative spouse status even when his or her innocent spouse does not contend that there was a putative marriage. This result is inconsistent with the equitable principles underlying 2251. We thus hold that a party who seeks to be a putative spouse must have an objective good faith belief in the validity of the marriage.”

Full transcript of the Court’s decision can be found here.

Proposition 8, the constitutional amendment passed into law by the majority of California voters in November 5, 2008, provides that “Only marriage between a man and a woman is valid or recognized in California.”

But on October 12, Governor Arnold Schwarzenegger signed into law SB 54 which states that while California’s constitution remains unchanged, California courts will recognize out-of-state same-sex marriages which contracted prior to the passing of Proposition 8.

The new law does not recognize out-of-state same-sex marriages contracted after November 5, 2008, but it does provide that parties contracted in out of state same-sex marriages would be afforded the same rights, protections, and benefits, and shall be subject to the same responsibilities, obligations, and duties under law, as specified, as are granted to and imposed upon spouse with the sole exception of the designation of “marriage”.

A legal challenge to constitutionality of Proposition 8 goes before the Supreme Court early next year.

The text of the new law can be found here.

by the Judicial Council of California

SAN FRANCISCO—A new domestic violence study has found that the strongest predictors of success in treating offenders convicted of a criminal domestic violence offense were the individual characteristics of the offenders, not the features of batterer intervention programs (BIPs) or the attributes of the court jurisdiction.

The study, conducted by researchers at the Administrative Office of the Courts’ Office of Court Research, found that offenders who are more educated, are fully employed, have short criminal histories, and show no clear signs of drug or alcohol dependence are more likely to successfully complete batterer intervention programs and are least likely to be re-arrested.

The results of the study indicate how the justice system can increase the likelihood that batterers will complete court-ordered education and training programs and not commit new acts of domestic violence either during or after attendance in the programs.

“Screening mechanisms should seek, to the extent possible, to include needs assessment to assist in directing offenders to resources that might improve their chances of successfully completing the BIP and remaining violence free during and following their attendance in the program,” concluded the study, which is entitled Batterer Intervention Systems in California – An Evaluation and can be found online at www.courtinfo.ca.gov/reference/batintsys.htm

The federally funded study, the largest of its kind ever conducted, examined data on nearly 1,500 offenders enrolled in 53 different batterer intervention programs in Los Angeles, Riverside, San Joaquin, Santa Clara, and Solano Counties. The study sought to identify variations in policies and practices across courts, probation departments, and batterer intervention programs that affect the likelihood of an offender completing the program and the probability of being re-arrested.

However, the data revealed that the strongest predictors of outcomes were the individual characteristics of the offenders, not the programs in which they were enrolled or the characteristics of each court jurisdiction. The study has been submitted to the National Institute of Justice, which provided $250,000 in funding for the three-year study.

Under California law, persons convicted of a criminal domestic violence offense must attend a 52-week batterer intervention program as a condition of probation. The programs are structured courses designed to stop the use of physical, psychological, or sexual abuse to gain or maintain control over a person such as a spouse or cohabitant.

# # #

The Judicial Council is the policymaking body of the California courts, the largest court system in the nation. Under the leadership of the Chief Justice and in accordance with the California Constitution, the council is responsible for ensuring the consistent, independent, impartial, and accessible administration of justice. The Administrative Office of the Courts carries out the official actions of the council and promotes leadership and excellence in court administration.

By Rivka Israel, Esq. Marcus Family Law Center, PLC

(originally published in Lavender Lens, 11-08)

In my prior article I began with the statement “Now that marriage is possibly on the horizon…” The reason for my careful phrasing has now become clear. Between the time of the Supreme Court ruling in May and the “amendment” to the California constitution earlier this month, I and many other attorney’s were recommending that same-sex couples register as DP’s in addition to marrying. This was aimed at protecting the legal rights of couples and their families the validity of whose marriages would be in question if proposition 8 passed.

The Prop 8 issue has been on everyone’s minds. Why it passed and why it is so wrong? Why shouldn’t such a law pass by majority vote in a democracy? What effect, if any, does it have or is it only a ‘feel good’ issue with no real legal or social effect? Though many same-sex couples are not interested in getting married, everyone, regardless of race, religion or sexual orientation should be interested in the potential civil rights ramification of the legitimacy of such an “amendment” to our constitution.

Our system and our laws are designed to afford equal rights to everyone and to protect minorities from the oppression of the majority. This is one of the basic foundations that make our country so great. Here in California, there are two distinct procedures for making changes to our constitution. These procedures reflect the seriousness of the change. A change that is relatively minor and does not effect substantive rights is considered an amendment and can pass by way of obtaining sufficient signatures and then passing by majority vote. A change to the constitution that has a more profound effect, such as one which eliminates the fundamental rights of a minority group, must first be presented to both legislative houses and pass by a 2/3rds vote before being submitted to the voters. In addition, enforcement of equal protection is placed in the hands of the judiciary. The issue of people’s rights is not left to the majority. If the rights of an entire minority group can be eliminated by a simple majority vote, just think what other 1discriminatory laws can be enacted by a majority vote.

In May the Supreme Court concluded that 1) gay and lesbian citizens are a protected class of minority entitled to heightened protection and 2) marriage is a fundamental right under the due process and equal protection clauses of our state Constitution. The Supreme Court has now agreed to hear the matter of the legality of the amendment and its effects in the context of several cases filed after the election.

The issues which the Court will address are: 1) Is proposition 8 a revision rather than an amendment of the state Constitution? 2) Does proposition 8 violate the separation of powers doctrine of the state Constitution? & 3) If the proposition is constitutional, what effect will it have on the same-sex marriages performed before the adoption of the amendment? As a family law practitioner, I believe that the third issue is the most important on an individual basis, as it will determine many of the rights of these couples, relating to issues such as custody and property. Argument on the case is anticipated to take place in March of 2009.

Rivka Israel is an attorney with the Marcus Family Law Center.  She can be reached at marcussd@barefootlawyer.com.