Recent 2014 Family Law Cases
| Publication year | 2015 |
The continuing collaboration between Continuing Education of the Bar (CEB) and the Family Law Section continues to reap benefits for our members. The Family Law News is pleased to once again publish the CEB Year in Review. Each year, CEB publishes a detailed compilation of important case law and legislative developments on issues ranging from attorneys fees to child custody to enforcement.
Reprinted below for your review and easy reference are the remaining summaries of 2014 cases in the Family Law arena. In the last two issues, you received the 2014 legislation and some of the 2014 case law analysis. Thanks again to CEB for supporting the education of the Family Law Section.
Agreements
Marriage of Evans, 229 Cal. App. 4th 374 (2014)
The failure to exchange preliminary and final financial disclosure declarations under Cal. Fam. Code §§ 2104-2105 did not invalidate a property settlement agreement entered into before the initial filing of a dissolution petition.
After separation but before filing a petition for marital dissolution, a couple entered into an agreement dividing their property rights with respect to their former residence. Under the agreement, the husband was to buy out the wife's interest for one half the value of its equity, which was approximately $600,000 at the time of signing. In reaching the agreement, neither party exchanged preliminary or final financial disclosure declarations. During the subsequent dissolution proceedings, however, the parties discovered that the property actually had a net equity value of only $70,000, approximately $230,000 less than the $300,000 amount the husband was required to pay the wife under the agreement.
The husband then filed a motion to set aside the agreement, claiming that the parties' failure to exchange disclosure statements rendered the agreement invalid and unenforceable. The trial court denied the motion, reasoning that the exchange of disclosure declarations required under Cal. Fam. Code §§ 2104-2105 did not apply before the filing of a petition for dissolution. The husband appealed.
The court of appeal affirmed. In examining the language of the relevant statutes, the court of appeal concluded that neither Cal. Fam. Code § 2104 (requiring preliminary disclosure statements) nor Cal. Fam. Code § 2105 (requiring final disclosure statements) applies to prepetition settlement agreements. The court noted that Cal. Fam. Code § 2104 requires a preliminary declaration only "[a]fter or concurrently" with the service of a petition for dissolution. Similarly, the term "agreement" under Cal. Fam. Code § 2105 refers only to postpetition agreements, and therefore did not encompass the prepetition agreement at issue. The court further reasoned that this interpretation is consistent with other relevant statutes under the Family Code, which require financial disclosure declarations only when there is a "proceeding" (Cal. Fam. Code § 2100), and further define a "proceeding" as commencing only after the filing of a petition for dissolution (Cal. Fam. Code § 2330).
Because the exchange of financial disclosure declarations was not required at the time the agreement was entered into, the failure to do so did not affect the agreement's enforceability.
Reference: Practice Under the California Family Code: Dissolution, Legal Separation, Nullity, chap 13 (Cal CEB).
Crosby v HLC Properties, Ltd., 223 Cal. App. 4th 597 (2014)
A broad release of all conceivable claims concerning a deceased wife's share of community property arising from her late husband's income (as an actor and singer) acted as res judicata to bar a later action by her estate for a share of the husband's publicity rights.
The celebrity Bing Crosby had two wives: his first wife, who died before he did, and a second wife who became heir to his estate when he died in October 1977. The first wife was survived by their four sons and her will specified that her community property interests were to be distributed to her sons through a trust. In 1996, the trust filed a declaratory relief action seeking a declaration that the trust was entitled to the deceased wife's share of all their community property income. The case settled in 1999 and the settlement agreement contained a broad release of all conceivable claims, known and unknown, suspected or unsuspected, with one exception. The trust would continue to be entitled to its share of any "other income derived from works or performances" of Bing Crosby during the marriage that was "discovered in the future." The agreement did not mention publicity rights. The action was dismissed with prejudice.
[Page 14]
In 2010, the deceased wife's estate petitioned for an order stating that the deceased wife possessed a community property interest in Bing Crosby's right of publicity, which should be passed on to her heirs according to her will. The surviving wife opposed the action, primarily arguing that the 1996 action was res judicata on the claim for publicity rights. A trial court disagreed, stating that the 2008 amendment of Cal. Civ. Code § 3344.1 created a new right concerning the publicity rights of deceased celebrities who died before January 1, 1985; it then granted the estate's petition. The appellate court reversed.
The primary right involved in both actions was the same: the asserted right of the deceased wife to her share of community property, which triggered a res judicata analysis. Both the trust and the estate were in privity with one another and the 1999 release of claims was broad enough to encompass publicity rights. The exception for later-discovered income could not be construed to cover publicity rights that were not an undiscovered asset at the time of the settlement, particularly because doing so would vitiate the express provisions of the release.
Legislative history and the language from all three versions of Cal. Civ. Code § 3344.1, particularly the 2008 amendment, created no new right for publicity rights of deceased celebrities who died before January 1, 1985. The legislature intended merely to clarify existing law after federal courts misinterpreted the application of section 3344.1. There was no intent to "treat people differently depending on whether they died before or after 1985." Thus, the estate's petition was barred by res judicata. The appellate court declined to decide whether the right to publicity constitutes community property.
Reference: Practice Under the California Family Code: Dissolution, Legal Separation, Nullity, chap 5 (Cal CEB).
Marriage of Burwell, 221 Cal. App. 4th 1 (2013)
Property interests in the proceeds of an individually purchased term life insurance policy depend on the source of the funds that paid the final insurance premium.
In 1996, a husband purchased a term life insurance property that named his then wife (Becky) as the beneficiary. She remained the listed beneficiary until October 7, 2008. In 2004, however, she filed for divorce and a status-only judgment of dissolution was entered in August 2005. In November, 2006 the husband married for a second time (to Cynthia).
In August 2008, the husband and Becky stipulated to a "further" judgment resolving some property issues and warranting that neither had any undisclosed assets. The stipulation reserved five issues for trial, among them "claims for breach of spousal fiduciary duty." In October 2008, the husband changed the beneficiary on the term life policy from Becky to Cynthia. At a trial on the reserved issues, the court found that the husband's disclosures had been problematic but did not amount to breach of a fiduciary duty obligation.
In April 2010, after trial had commenced but before the trial court's ruling, the husband committed suicide. Becky, his first wife, filed a civil action to prevent the life policy's proceeds from going to Cynthia. Becky also filed a probate action seeking letters of administration for the husband's estate and sought to consolidate the civil and family court actions. Becky also moved to adjudicate the issue of the life insurance policy proceeds. The court ruled that the husband failed to disclose the policy and thereby violated his fiduciary duty to Becky. As a result, the policy was deemed an omitted asset to which the family law automatic temporary restraining orders (ATROs) continued to apply, thus making the husband's change of beneficiary to Cynthia void. The policy was ruled a community asset, and Becky was awarded one-half of the $1 million proceeds, with the other half becoming part of the husband's estate (about which the probate court would resolve creditor priority). Both Becky and Cynthia appealed, with Becky also moving to dismiss Cynthia's appeal for lack of standing.
The court of appeal vacated the order adjudicating the policy proceeds, but ruled that Cynthia did have standing to appeal. On the standing issue, the appellate court applied the rule that "one who is legally 'aggrieved' by a judgment may become a party of record and obtain a right to appeal by moving to vacate the judgment pursuant to Code of Civil Procedure § 663." (County of Alameda v Carleson, 5 Cal. 3d 730 (1971). Although Cynthia did not bring a Cal. Civ. Proc. Code § 663 claim specifically, the court reasoned that the rule would apply to any motion to vacate or set aside an order.
On the characterization of the life insurance proceeds, the court addressed the split of authority in California regarding whether term life proceeds are community or separate property. In Estate of Logan, 191 Cal. App. 3d 319 (1997), the First District found that life term insurance policies only remain community property after separation for as long as community funds are used to pay the premium. On the other hand, in Biltoft v Woten, 96 Cal. App. 3d 58 (1979), the Fourth District held that proceeds from life insurance "must be apportioned between community and separate property in the same ratio that the...
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