In re Marriage of Tong and Samson: Severance pay in a divorce

A review of a case in the CFLR regarding the treatment of severance pay. In a partial reversal, Second District holds that trial court erred by allocating husband’s severance pay to month in which it was received when it calculated his obligation for pendente lite spousal support under stipulated provision for percentage payment of monthly earnings in excess of $25,000. See the case at CFLR.

Los Angeles Divorce

Danger of Oral Agreements: In Re Marriage of Dellaria

In Re Marriage of Dellaria, Fioled March 17,2009, the Court of Appeal held that Family Code 2550 only permits the parties to agree on an unequal division of assets if it evidenced by a written agreement or by an oral stipulation in open court. The case illustrates the problems that can arise if the parties reach an agreement in good faith and dvide the assets in reliance on that agreement but fail to reduce it to a writing. In Dellaria The parties married in August 1989 and separated in December 2001. Husband and Wife began discussing the division of their property in 2002 and reached an oral agreement dividing their major community assets in 2003. Briefly, the jointly owned family home was transferred to Wife. The residence was refinanced and $217,562 in cash was given to Husband. In addition, two Wachovia brokerage accounts that were in Husband’s name alone were transferred to Wife. A second jointly owned real property was transferred to Husband. A third real property and the community’s business, were already in Husband’s name and were retained by him alone. Wife testified that under the oral agreement, each party was to retain his or her retirement plans. Husband was to keep two vehicles and she was to keep one. The trial court bifurcated the issues surrounding the agreement. The court found that Husband and Wife fully executed their oral agreement and that there were no issues remaining to be litigated over the valuation and disposition of their real estate, the Wachovia accounts, and Husband’s business. The trial court assigned values to and disposed of specific items of community property in accordance with the terms of the parties’ agreement. The trial court observed that this disposition resulted in an unequal division of community property that favored Husband. The Court of Appeal reversed.


Divorce Attorney Los Angeles

Welcome to California: why wealthy spouses often seek out other jurisdictions

Further evidence that California is an excellent jurisdiction for a spouse who does not have complete knowledge of the other spouses’s financial condition is supplied by the just-issued decision in In re Marriage of Straus, 2009 WL 98447 Cal.App. 4 Dist.,2009.

In that case the appellate court upheld an award of $3,000 in sanctions against the husband because he did not voluntarily respond to two letters from his wife’s attorneys seeking information about his retirement benefits.

Section 271 of the California Family Code provides that “the court may base an award of attorney's fees and costs on the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys.”

Since the wife filed a motion to compel discovery the trial court required the husband to pay a penalty which was in excess of the amount of the legal fees that the wife had paid her attorneys to make the motion.

The appeal court ruled that, “These facts support a finding that James's conduct frustrated the policies of promoting cooperation, settlement of litigation and reduction of litigation costs that underlie section 271, because Candyce was forced to file a motion and serve discovery to obtain James's cooperation. Because section 271 allows the imposition of sanctions when a party's conduct frustrates its underlying policies, the trial court was within its discretion to impose sanctions on James.”

California’s approach to discovery, which requires litigants to voluntarily provide full access to their financial circumstances, stands in total contrast to the approach in most other jurisdictions, and especially civil law jurisdictions in other countries. It is why wealthy international spouses with a potential California divorce will often look for any possible way of avoiding the California courts, perhaps by asserting lack of jurisdiction or by rushing to file first in another jurisdiction.


California Supreme Court states that family court may not restrict oral testimony

The California Supreme Court has invalidated a county court rule that required divorce trials be submitted on written declarations and prohibited oral testimony except in “unusual

circumstances.”  The rule also required parties to establish in their pretrial declarations the admissibility of all exhibits they sought to introduce at trial. A divorce litigant whose evidence was excluded because he had failed to establish its admissibility in the pretrial stage challenged both sets of rules.  Download elkinssupreme_court_decision.pdf

In Re Marriage of Ackerman and spousal support

    The California Court of Appeal recently handed down an interesting decision in the case of In Re Marriage of Ackerman which discusses a number of issues including the award of spousal support.Download ackermanmarital_standard_of_living.pdf
     Unlike the calculation of child support, the Court has traditionally had much greater discretion in calculating the award of spousal support using a list of factors set forth in Family Code 4320 Read section.  In calculating spousal support the court usually starts with a determination of the marital standard of living at the date of separation sufficient to meet the needs of the supported spouse.
    Unfortunately, under California law there is no hard and fast way of calculating the marital standard of living.  One approach the courts have taken is to look at the "reasonable" expenses of each party at the date of separation and see whether the supporting spouse has sufficient cash flow to pay support to cover these expenses.  For example, if the supported wife spends $6,000 a month on her living expenses a court might use that figure as the marital standard of living if the husband has sufficient income to pay that amount. In other words, husband ends up paying spousal support so that after taking account child support and wife's other sources of income, her total income is topped up to $6,000. But it needn't do so.
    The case of In Re Marriage of Akerman illustrates what happens when the spouse claiming support claims unreasonably high expenses. In this case Anne Ackerman claimed that her monthly expenses as a stay at home wife were $50,000 a month. She claimed she needed two nannies, a cook and several babysitters based on the fact that her eldest son was autistic. However the parties stipulated that, her husband, Boris Akerman, a plastic surgeon, only had GROSS monthly cash flow of $61,000 a month. Further, the parties tax return for 2001 (the year in which the parties separated) showed that the parties monthly net income was $36,000. The trial court therefore halved this amount and rounded it up to $20,000 and used this as the marital standard of living. In other words, instead of looking at the parties income and expenses, the trial court only looked at the family's average income as evidence of the standard of living.
    The trial court then said that once you took into account Anne's award of child support, spousal support, the reasonable rate of interest on her investments (4.3-4.5% government bond rate) and what she could earn working as a paralegal because she had a law degree, her monthly income would be at least $20,000.
Anne's initial Child support:    $10,070
Spousal support:                    $7,500
Anne's imputed income
working as a paralegal:           $3,000
      The Court of Appeal affirmed the trial court's approach. It also affirmed the trial court's approach of imputing income to Anne because she had a law degree and although she hadn't passed the bar exam she could earn at least $3,000 as a paralegal. The Court didn't seem particularly impressed by her arguments that her employability was limited by her need to look after an autistic child. However, from the record there doesn't appear to be any expert evidence presented on this issue.

Warren Shiell is a divorce lawyer in Beverly Hills

C.A.: Ex-Couple’s Date of Separation Determined by Subjective Intent

From the Metroplitan News:

In re Marriage of Manfer, G037269.

The date of a couple’s legal separation is determined using a subjective intent rather than a public perception standard, the Fourth District Court of Appeal has ruled.

Div. Three on Thursday reversed an order by retired San Diego Superior Court Judge Thomas R. Murphy, sitting by assignment in Orange Superior Court, who deferred a privately separated couple’s legal separation date based on an “objective test.”

Murphy’s focus on the couple’s public persona was misdirected, the court held, because the question was what the parties’ subjective intent was and not what society at large would have perceived.

The couple, Samuel and Maureen Manfer, wed in 1973 and broke marital ties with each other following a quarrel shortly after their 31st wedding anniversary. The split was mutual, he moving out of the family residence and into a previously leased apartment, and she resolving that the marriage was over.

Out of concern for their three daughters, however, the two agreed to hide their split from family and friends until after the year-end holidays passed. Although they did not have sexual relations with each other, commingle their funds or support each other in the interim, they kept up appearances by engaging in sporadic social contacts and taking trips together occasionally.

They finally told their daughters and friends in early 2005 that they were not living together.

The husband filed for divorce in April alleging a March 15, 2005 date of separation, and the wife contended the separation date had been nine months earlier on July 1, 2004.

After a two-day hearing, Murphy concluded “the [parties’] private conduct evidence a final and complete break in their marital relationship in June of 2004,” but set the date of separation as March 15 based expressly on an “outsider’s viewpoint” standard.

The wife, whose annual income of over $1 million made the parties’ incomes significantly disparate, appealed the characterization of the property as community property during the disputed period. With the earlier separation date, she would be entitled to keep potentially several thousands of dollars that would otherwise go to the community.

Relying on In re Marriage of Baragry (1977) 73 Cal.App.3d 444, the husband argued that the couple did not officially part ways until after their rift became public.

In Baragry, the husband had moved out of the family residence, into an apartment with his girlfriend, and split time between her and his wife for four years before filing for divorce.

Though he did not sleep at the family residence, he ate dinner at home with his wife almost every night and otherwise openly maintained continuous and frequent contacts with his wife and children. He preserved the façade of marriage by, among other charades, continuing to file joint income taxes. She continued to perform domestic services for him.

The court rejected the husband’s attempt to set the separation date on the day he moved in with his girlfriend.

Justice Raymond J. Ikola, writing for the Court of Appeal, said Baragry bore no resemblance to the Manfers’ case:

“Samuel and Maureen essentially disentangled their lives in all respects, save occasional social engagements, to carry out their mutual agreement to keep their separation secret so as not to spoil the holidays for their daughters and friends, whereas in Baragry, wife, unaware of her husband’s decision never to return, dutifully did his laundry and cooked his meals for four years! Enough said.”

Murphy had placed a single-minded and speculative concern on how things might have looked to outsiders, the justice wrote.

“There was no evidence at all on the issue of what an outsider might have believed, and we could as easily speculate that all of the couple’s friends and family knew they were witnessing a charade when the couple interacted on social occasions and trips, but were too polite or embarrassed to bring up the subject preemptively,” he noted.

On remand, Ikola said, the trial judge must pick a specific date based on the record that could be as early as the July 1, 2004 date alleged by Maureen Manfer.

C.A.: Spouse’s Duty to Support Needy Parent a Community Obligation

Article by By TINA BAY, Metropolitan News

A husband did not have to reimburse his wife for community funds he used to care for his ailing mother, the Third District Court of Appeal held yesterday.

Reversing a ruling by Placer Superior Court Commissioner Colleen M. Nichols, the justices concluded a spouse’s duty to support a needy parent is a community obligation.

Justice Vance W. Raye, writing for the Court of Appeal, explained that adult children are obligated by state law to care for their parents, much as parents are obligated to care for their minor children.

The justice cited Family Code Sec. 4400, which imposes a support obligation with respect to a parent who is in need and unable to maintain himself or herself by work, and Penal Code Sec. 270c, under which adult children may be guilty of a misdemeanor for failing to provide necessary food, clothing, shelter, or medical attendance for an indigent parent.

An obligation imposed by statute is a “debt” for which the community estate is liable if it was incurred by either spouse before or during marriage, Raye said. Spending community funds to satisfy the obligation thus does not constitute an unauthorized gift requiring reimbursement, he wrote.

Nichols had told the husband’s counsel, “You know as well as I do that you’re under no obligation to pay for your parent’s expenses just as you’re under no legal obligation to pay for your child’s expenses once they are over the age of eighteen.”

The commissioner accordingly ordered Charles A. Leni to make an equalizing payment of $12,000 to his ex-wife, Constance P. Leni, for spending a portion of proceeds from the sale of the marital residence to care for his mother.

The Lenis wed in 1977 and eventually divorced in 2003. The wife’s first petition for divorce, filed in 1985 after the parties initially separated, was dismissed when they reconciled.

Escrow instructions pertaining to the sale of their home during their period of separation were never amended, however. The instructions provided for “proceeds to be split 50/50” and as a result, each party received an equal share of sale proceeds following their reconciliation.

At trial, the husband asserted that the escrow instructions were sufficient to transmute the proceeds of the sale from community property to separate property, which he was then free to use to help his mother. Both the commissioner and the Court of Appeal rejected that argument.

The “50/50” notation did not satisfy the rigid statutory requirement for an express declaration that the property’s character is being changed, Raye wrote, noting that the parties reconciled and the divorce was dismissed by the time escrow closed.

Instructions notwithstanding, the husband could use community funds to fulfill statutory obligations to his mother, the justice said.

On remand, he wrote, the husband was entitled to establish that he used the funds at issue to support his mother.

Justices George Nicholson and Ronald B. Robie concurred in the opinion.

The case is Marriage of Leni, 06 S.O.S. 5543.

In Re Marriage of Geraci

Case law:In re Marriage of Geraci - filed November 20, 2006, Second District, Div. Seven--Read case here

Where husband acquired residence as his separate property and later razed the structure and rebuilt the residence completely prior to marriage, and where parties refinanced or took out home equity loans on several occasions during the course of the marriage, but husband did not present any evidence as to how the rebuild was financed or of how much equity he had in the property at time of marriage, trial court did not abuse its discretion in concluding that parties’ pretrial settlement regarding the division of the house's sales proceeds was the best evidence of each side's respective interest. Trial court erred in treating business began by husband during marriage--and continued by him after separation--as a general partnership between husband and wife, thereby entitling wife to half of the profits earned post-separation, where it was undisputed that business was operated solely by husband and had no capital assets, and that wife had no involvement beyond fact that husband listed her on the fictitious business name statement. Monetary sanctions for breach of fiduciary duties must be reconsidered where predicated on erroneous ruling that parties were partners in husband's business. Award of spousal support to wife was an abuse of discretion where trial court generally cited statutory factors but failed to explain how evidence related to each factor and how each factor was weighed in reaching amount, and where trial court apparently failed to take into consideration wife's special skills and fact that she was cohabitating, which presumptively reduced her need for support