Unprincipled family dissolution: the American Law Institutes recommendations for spousal support and division of property.

• Author: Westfall, David

1. INTRODUCTION A. Why Serious Reform of Family Law Is Needed B. Basic Flaws in the Reporters' Response C. The Reporters' Failure to Reign In Judicial Discretion II. THE REPORTERS' RATIONALES FOR "COMPENSATORY PAYMENTS" A. Compensation for Loss of Marital Living Standard Under Section 5 B. Back Pay for Child Care Under Section 5.05 C. Back Pay for Morally Obligated Care Under Section 5.11 D. Claims for Restoration of Premarital Living Standard After A Short Marriage Under Section 5.13 E. Claims for Contributions to the Other Spouse's Education or Training III. THE REPORTERS' RECOMMENDATIONS FOR DURATION, JUDICIAL MODIFICATION, AND TERMINATION OF AWARDS OF COMPENSATORY PAYMENTS A. Termination of Awards B. Duration and Judicial Modification of Awards Made Under Sections 5.04 and 5.05 C. Effect of Obligee's Cohabitation IV. CHARACTERIZATION AND DIVISION OF PROPERTY ON DISSOLUTION A. Enhancement of Separate Property by Spousal Labor 1. The Definition of "Substantial Time" 2. The Determination of the Marital Property Portion B. Property Derived from Earnings Before Marriage or After Divorce 1. Goodwill 2. Employee Stock Options C. Financial Misconduct as Grounds for Unequal Division of Marital Property D. Recharacterization of Separate Property as Marital Property Under Section 4.12 V. SEPARATION AGREEMENTS VI. CONCLUSION I. INTRODUCTION

   Principles of the Law of Family Dissolution: Analysis and Recommendations (the "Principles") (1) reflects eleven years' work by a massive team of reporters, advisors, and consultative groups. (2) A former director of the ALl described the project as "among the most important that the Institute has ever undertaken." (3) The task took on Herculean dimensions. Unfortunately, the final result is profoundly disappointing, particularly in contrast to the ALI's outstanding work in the Restatements, which have often exerted a strong positive influence on major areas of law. (4)

   My concern is that the Principles, published with the prestigious imprimatur of the ALl, may impede much needed reforms and even lead the legislators, judges, and rule makers to whom they are addressed to adopt unsound policies. In seeking to ward off these potentially harmful effects, I want first to analyze exactly what the Institute's imprimatur on the Principles really means and then to demonstrate why their uncritical acceptance as guideposts would be unwise. They contain serious deficiencies that should be corrected.

   At the outset, I have concerns about the procedures under which the Principles were passed. Although its bylaws require authorization by the membership and approval by the Council for publication of any work as the Institute s position, (5) the bylaws also provide that [a] quorum for any session of a meeting of the members is established by registration during the meeting of 400 members...." (6) Thus a quorum is conclusively deemed to be present for all sessions of a meeting as soon as a little over 10% of the approximately 3800 members (7) have registered, even though the number present and voting at a given session may be minimal. "A majority of the members voting on any question during any meeting or session is effective as action of the membership," (8) and there is no proxy voting. As a result, fundamental matters of policy may be decided by a handful of votes, (9) and may reflect the views of only a tiny fraction of the membership. Yet the Principles are published as the position of the Institute, with no indication of the number of members who actually voted on any given portion or the narrow margin by which it was adopted. Even a careful reader of the Proceedings of the Institute's Annual Meeting may learn no more than that a given motion was adopted (or defeated) by a voice vote, with no way of knowing how many voices were heard.

   If the Principles are to guide legislative action or judicial decision, it should be either because of their inherent merit or the reputations of the Reporters themselves, (10) rather than the eminence of the many distinguished lawyers, judges, and academics listed as members but largely absent from the meetings at which the Principles were approved. To emphasize their source, I will often refer here to "the Reporters," rather than to "the Principles."

   1. Why Serious Reform of Family Law Is Needed

      This comment will deal with only two aspects of divorce, as well as those "domestic partnerships" between unmarried cohabitants whose termination the Reporters would generally treat like divorce: (11) alimony (increasingly referred to as maintenance) and division of property. These are both areas in which family law cries out for serious reform. The economic consequences of divorce in a given state are often highly unpredictable because of statutes and court decisions that accord trial judges a large measure of discretion in allocating property between the spouses and in setting the amount and duration of any alimony payments, (12) as well as the lengthy lists of factors that judges often are either directed or authorized to consider in deciding these matters. (13)

      Because of the unpredictability this judicial discretion creates, spouses and their lawyers may have little guidance in negotiations for settlement of their claims, and the more risk averse party may suffer a substantial disadvantage as a result, (14) In addition, the negotiating process is likely to be more time-consuming and expensive because of the large number of factors to be considered and the parties' uncertainty as to how they will be viewed by the particular judge who hears the case. And if the spouses do not settle, a trial may be even more costly if the parties seek to introduce relevant evidence for all of the factors that the judge may consider.

      A further result of this unpredictability is that both the parties and the general public often may perceive the results to be unfair, with couples who appear to be similarly situated experiencing vastly different economic consequences from divorce. The inevitable result is diminished respect for the legal system and reduced confidence that justice will be done in family law cases, which constitute one-third of the civil actions filed in state courts. (15)

      Even if the rules were clear in each state, wide variations in state law would produce major disparities in results for married couples divorced in different states. And the consequences of the end of the kind of cohabitation that the Principles treat as dissolution of a "domestic partnership" are even more unpredictable, because of the absence of relevant statutes, (16) as well as the paucity of judicial decisions dealing with claims of former cohabitants after the end of their relationship. (17)

      The quest for a uniform law of marriage and divorce goes back at least as far as the formation of the National Conference of Commissioners on Uniform State Laws in 1892, (18) but did not lead to the promulgation of the Uniform Marriage and Divorce Act (UMDA) until 1970. (19) Although the Act was adopted by only eight states, (20) it embodied fundamental changes that are now reflected in the laws of many other states. It "totally eliminated the traditional concept that divorce is a remedy granted to an innocent spouse, based on the marital fault of the other spouse which has not been connived at, colluded in, or condoned by the innocent spouse." (21) That principle is now generally accepted with the widespread adoption of provisions for no-fault divorce, although many states merely added a no-fault alternative to existing fault-based grounds, (22) with New York a prominent exception that stands by the old rule. (23)

   2. Basic Flaws in the Reporters' Response

      The Reporters' effort at family law reform falls short in three major respects:

      (1) it fails to promote interstate uniformity, so that under the proposed system the economic consequences of divorce would continue to vary greatly depending upon which state granted the divorce;

      (2) it would curtail the autonomy of prospective spouses, domestic partners, and divorcing couples to structure the economic consequences of their relationship or its termination to meet their individually perceived needs; and

      (3) it would make only a limited attempt to reign in the role of judicial discretion in determining those consequences.

      Unlike the UMDA, the Reporters' objective is not uniformity (except within a state). (24) Rather, It is "to promote ... the law's 'clarification,' its 'better adaptation to social needs," and its securing 'the better administration of justice.'" (25) They do recommend rules that would make some issues clearer, but often leave to the rule-making authority the determination of both the requisite threshold for a rule's application and the rate at which its effect increases. (26) In addition, they sometimes offer no guidance at all as to the choice between contrasting rules. (27) While complete unanimity among the states on the economic consequences of divorce is not a realistic goal, the Reporters should have done more to guide policymakers and to encourage conformity, rather than inviting individual variations.

      The law of family dissolution could serve another important goal: confirming that spouses, prospective spouses, and domestic partners may, if reasonable requirements to protect the parties' interests are satisfied, structure the terms of their divorce to meet their individually-perceived needs. Instead, the Principles would curtail the increased autonomy granted to prospective spouses and divorcing couples by the Uniform Premarital Agreement Act (28) and the UMDA. (29) This unhappy consequence follows from provisions in the Principles for more intrusive judicial review of the parties' agreements when enforcement is sought. (30) A far better alternative would be to protect the more vulnerable party by requiring independent advice when the agreement was made in order for it to be enforceable against her, without creating...