Complex Family Law Cases And Commonsense Approaches
How the Attorneys at Cooper-Gordon LLP Identify a Complex Family Law Case
A Family Law Attorney needs to be able to determine at the outset whether a matter is "simple" or "complex." Cases involving particular sub-issues may become "complex.” These types of cases will involve not only some or all of the more straightforward issues of child custody, child visitation, child support, spousal support, property division and attorneys’ fees and costs, but also extremely fact-driven and technical sub-issues within each issue as well.
A case may appear to be a simple one involving the common, every day issues of spousal support, property division and attorneys’ fees only. However, if one or both Parties are making separate property claims to various types of property or claiming reimbursement for expenditures made after separation towards the other spouse’s separate property or community debt, the issue of property division suddenly becomes much more complicated. The ultimate resolution of this issue, taking into account the Parties' various claims, makes the entire matter that much more complex. Using the same case as an example, if the higher-earning Party operates his or her own business and is self-employed, the issue of spousal support and attorneys’ fees can become much more complicated because the business will have to be valued, its cash flow analyzed and the cash flow of the operator-spouse analyzed to determine the proper amount of spousal support and attorneys’ fees and costs to be paid.
This process becomes even more complicated if the business was owned by the operator-spouse before the marriage, and the value of the business had increased during the marriage. In that situation, the appreciation or depreciation of the business will have to be valued, as well as the amount of appreciation or depreciation apportioned as the operator-spouse's separate property or community property, depending upon the circumstances giving rise to the appreciation in the business. These are just a few examples of how cases which seem fairly straightforward can become suddenly very complex, depending upon the sub-issues which may be involved.
Approaches to Dealing with More Fact-Driven Family law Cases
The Attorneys at Cooper-Gordon LLP regularly handle all varieties of complicated cases, employing different strategies in handling each one. In one marital dissolution matter, Cooper-Gordon LLP represented the Wife who suffered from severe schizophrenia and was under a conservatorship. Wife's schizophrenia was so severe, that she could not actively participate in the dissolution proceedings, but rather, the matter had to proceed forward with her mother acting on her behalf as her conservator. The case involved only the issues of spousal support following a long-term marriage, simple property division with no reimbursement claims and attorneys’ fees and costs. The Parties had two (2) sons, but both were adults by the time the divorce proceedings began, and thus, there were no issues regarding child custody, child visitation or child support.
The complexity of this particular matter was made more challenging by virtue of the fact that Wife was not able to participate in the proceedings. However, the real complication was the Parties' dispute over the date of separation. Wife's Petition for Dissolution claimed a date of separation in 2008. Husband's Response and Request for Dissolution claimed a date of separation seventeen (17) years earlier, in 1991. Husband claimed that Wife had stated to him in 1991 that the marriage was over, and thereafter, the two lived separate and apart. Conversely, Wife's Conservator claimed that Wife had suffered from severe schizophrenia dating back prior to 1991, and that she lacked the capacity to form the requisite intent to separate from Husband at the time the alleged statement was made. Furthermore, Wife's Conservator claimed that she and a number of other individuals had witnessed firsthand that the two continued to live as a married couple in the years following the alleged statement.
Naturally, with such a dramatic discrepancy in the Parties' claims regarding the date of separation, there was a dramatic discrepancy in the Parties' claims regarding the extent of the community estate. Husband, a doctor with substantial income, claimed that all he earned after 1991 was his separate property and, given the passage of time, the community estate had long since been exhausted. Alternatively, Wife claimed that everything earned by the Parties up until 2008 was community property, and therefore, she was entitled to half of the then-existing multi-million dollar estate controlled by Respondent. In addition, and more importantly, Husband's income at the time the Parties separated would be relevant for purposes of determining the amount of spousal support payable to Wife.
With millions at stake, each Party propounded voluminous discovery aimed at gathering evidence to support his and her respective date of separation as the correct date of separation. At the same time, each side also conducted a large amount of discovery aimed at determining the extent of the community estate as of both alleged dates of separation and each retained a forensic accountant to prepare a tracing of same to the present. This discovery was done in anticipation of the possibility that the matter would have to be tried, and the Parties had to immediately ready themselves to proceed forward to litigate the remaining issues based upon one date or the other.
In the interim, neither side was able to engage in any meaningful settlement discussions. Husband made offers based upon the relatively small community estate existing at his alleged date of separation in 1991, while Wife's offers were based upon the extensive multi-million dollar community estate existing at her alleged date of separation in 2008. Thus, neither side was able to make any palatable settlement offer to the other side, but rather, became further and further enmeshed in propounding and responding to discovery requests for information, documents, etc.
In order to move the matter forward and streamline the litigation process, Cooper-Gordon LLP filed a Motion for a Bifurcated Trial on the issue of the date of separation alone. In deciding to have a separate trial on the sole issue of the date of separation, the goal was to limit the initial round of discovery to only that which was necessary to determine this one issue. Once adjudicated, the Parties could then quickly move towards propounding a second round of discovery aimed solely at ascertaining the extent of the community estate, preparing any necessary tracings of the community property, etc., based upon the previously determined date of separation. Otherwise, the Parties would be forced to prepare for possible litigation of the issues of spousal support, property division and attorneys’ fees and costs based upon two (2) very different scenarios: one which assumed the Parties separated in 1991, requiring a detailed tracing of the community estate through the present, and another which assumed the Parties separated in 2008.
The Motion was granted and Trial on the issue of the date of separation was held over a number of days, and in fact, before Trial was completed, the Parties settled all issues in the matter. Presumably, Husband felt that the cost of litigating the date of separation and the risk of losing on that issue was too great to continue forward.
In another interesting complex case, Cooper-Gordon LLP represented Husband in a marital dissolution matter involving only the issues of spousal support following a long-term marriage, property division and attorneys’ fees. There were no children of the marriage. The complexity of this particular matter arose out of the sheer number of sub-issues and contentions raised by the Parties regarding the issue of property division, which totaled no less than forty-four (44) separate claims.
In that case, Wife contended that she had contributed her separate property funds towards the acquisition and improvement of two (2) community property residences purchased during the marriage (e.g., Family Code § 2640 claims ) and that post-separation, she paid for repairs and maintenance to the properties and Husband had failed to make the proper mortgage payment to the detriment of the community. Wife also contended that she was entitled to Epstein reimbursements, and that Husband had misappropriated community funds and property with which he should be charged. Husband had similar claims of his own, claiming that he was entitled to Epstein reimbursements as well and that post-separation, Wife had misappropriated Husband's property and community funds and property by making unauthorized transfers from his bank accounts and stealing his jewelry.
Rather than have a lengthy Trial on all of the Parties' various claims, Cooper-Gordon LLP proposed a two (2)-day mediation with a retired Judge, subject to the condition that if the Parties could not successfully mediate their claims thereat, the retired Judge would be appointed as a Special Referee pursuant to Code of Civil Procedure § 639 to make binding rulings on all of the Parties' reimbursement claims. Wife agreed and the agreement was set forth in a Stipulation, which also included the condition that either Party's failure to raise any form of reimbursement claim existing at the time of the mediation would preclude the Party from raising same at Trial. This Stipulation forced each side to timely prepare, quantify and document each and every claim well in advance of Trial. Ultimately, the mediator made detailed findings resolving each and every one of the Parties numerous claims, which the trial court was able to easily reference at Trial. The trial court simply received evidence regarding the extent of the community property as of the date of separation, divided the assets equally, and then used the mediator's findings to make the appropriate offsets against each Party's share of the community assets to come to an ultimate division of the community property.
In yet another case, Cooper-Gordon LLP represented Husband in a dissolution matter involving only the issues of spousal support following a marriage of nine (9) years and two (2) months, property division and attorneys’ fees. The complexity of this particular matter also arose out of the issue of property division. The complication in this matter arose out of the need to determine the proper characterization of the family residence and to characterize and trace the funds used to improve same.
Prior to Husband's marriage to Wife, Husband's mother gifted a portion of an undeveloped lot to Husband. Husband's mother remained owner of the remaining portion of the lot. Shortly after Husband and Wife married, Husband's mother gifted another portion of the lot to him "as a married man, as his separate property." Then, via a third gift, Husband's mother gifted her remaining interest in the undeveloped lot, again to Husband "as a married man, as his separate property." Following the third conveyance, Husband was the sole owner of the property, and his mother no longer retained any ownership interest in the property. Husband then deeded the property to a Family Trust created by the Parties.
Immediately thereafter, the Parties began constructing a custom home on the lot, initially funding the construction with their respective separate property funds. After the Parties exhausted their separate property funds on the construction project, they obtained a construction loan, secured against the undeveloped land. The Parties then took out several additional, smaller loans and Home Equity Lines of Credit to provide additional monies to fund the construction. When Husband's mother made a large cash gift to Husband alone, those funds were also used to pay the costs of the construction project. When the project was finally completed, the Parties had borrowed and otherwise spent millions of dollars in construction. The property was eventually sold during the divorce proceedings, and the sales proceeds were held in an account pending a determination as to their division.
The issue of property division was fairly straightforward in this case, with the exception of the property sale proceeds. At separation, the Parties had several bank accounts, credit
cards, vehicles and retirement accounts which were easily allocated and divided between the Parties. However, the Parties could not have been further apart on their positions with regard to the proper division of the property sale proceeds, each Party making various
claims of transmutation (e.g., that the property was converted from separate property to community property), Moore/Marsden claims, Family Code § 2640 reimbursements
(e.g., reimbursements to each spouse for his or her separate property contribution towards the construction of the residence), Watts credits, Epstein reimbursements (e.g., reimbursements for post-separation payments of separate property towards community obligations), etc.
Specifically, Wife claimed that Husband had transmuted the undeveloped lot from his separate property to community property at the time he transferred it to the Family Trust. Wife also claimed that she had contributed several hundred thousand dollars of her own separate property funds towards construction of the residence on the previously undeveloped lot, Husband had not contributed any separate property funds towards the construction of the residence and that all the loan proceeds and Home Equity Line of Credit funds were community property. Therefore, Wife contended, the monies used for construction of the property (and resulting appreciation) were largely community property. Wife also claimed that she was entitled to Watts credits for the period of time which Husband enjoyed the exclusive occupancy of the property after separation, and to reimbursement for her post-separation payment of property-related expenses from her separate property.
On the other end of the spectrum, Husband contended that the undeveloped lot remained his separate property notwithstanding the transfer, pursuant to the terms of the Trust which stated that all separate property transferred to the Trust remained the separate property of the contributing spouse. Husband also disputed the amount of Wife's separate property claim and claimed that he had contributed nearly a half million dollars of his separate property towards the construction project and that the loan proceeds and Home Equity Line of Credit funds were his separate property. Therefore, Husband claimed that the entire property was his separate property, subject to reimbursements owed to Wife and the community for any provable amounts paid by Wife and the community towards actual improvements to the property or pay-down of Husband's separate property loans. Moreover, Husband contended that Wife was not entitled to any Watts credits for his post-separation occupancy of the residence, as Wife had not paid him any of the spousal support to which he was entitled during that period.
Neither side would budge whatsoever with regard to their positions on the division of the property sale proceeds. Ultimately, the Parties agreed to non-binding mediation of their claims, hiring a retired Judge as mediator. Although the Parties were not able to settle the matter after two (2) full sessions with the mediator, the mediator's opinions at the sessions eventually led each side to reevaluate their positions and compromise. The Parties were able to eventually settle the matter a number of months later.
General Advice for Handling an Intricate, Fact-Intensive Family Law Matter
When dealing with a complicated family law matter, we are careful not to be overwhelmed by the particular complexities of a case, no matter how many claims and sub-issues there may be. By breaking each issue down into its smallest parts and sub-issues and tackling each separately, even the most complex and complicated of cases can be manageable. We routinely explore whether the other side may be willing to engage in mediation with a retired family law judicial officer, whether binding or not. Even non-binding mediation has its merits, as it may cause one or both sides to reevaluate the reasonableness of their positions after they have heard the opinion of an experienced, learned judicial officer on the subject. At the least, it may help the Parties to realize that settling the matter on their own terms would be better than facing the costs and uncertainties of litigating the matter.
Pursuant to Family Code § 2640(b), a Party who contributes his or her separate property towards the acquisition or improvement of a community asset is entitled to reimbursement for those contributions, absent a written waiver of same.
Pursuant to Marriage of Epstein (1979) 24 Cal. 3d 76, a spouse who, after separation, uses earnings or other separate property funds to pay preexisting community obligations, is entitled to reimbursement from the community for same.
Pursuant to Marriage of Moore (1980) 28 Cal. 3d 366 and Marriage of Marsden (1982) 130 Cal. App. 3d 426, to the extent community funds are used to reduce the principal balance on the mortgage on a spouse’s separate property, the community obtains a pro tanto interest in that spouse’s separate property.