Is your separate property responsible for your spouse’s debts? That was a question answered yesterday by the California Court of Appeal involving two attorneys who ended up getting divorced.
The wife was an immigration attorney who leased computer equipment. She defaulted on her payment and the computer company got a judgment against her of about $40,000.00. The computer company sought the money not only from the wife but from her husband because they were married and because the debt was incurred during the marriage and before the parties got divorced. After all, California is a community property state.
The law in California is that a married person is personally liable for debts incurred for the necessaries of life of the person’s spouse before the date of separation — assuming that there is a date of separation, followed by a divorce. (Another part of the law says that even after separation, but before the divorce is entered, the non-debtor spouse is responsible for a debt incurred for the “common necessaries of life”.)
In this case, involving the computer company as plaintiff and the husband as defendant (remember, the company already had a judgment against the wife and was now just trying to get permission to enforce the judgment against the husband), the husband said that he had filed for divorce the day before and this should have made the whole matter moot.
But the trial court, located up in San Joaquin County, said “‘there is evidence that the Computers (sic) were for necessities of life as it went to the wage earnings for the community”. Therefore, the computer company was allowed to garnish the husband’s wages, even though he had nothing to do with the computer equipment.
Ruling 3-0, the Court of Appeal affirmed the trial judge. First, it noted that “while common necessaries are those that all families need (e.g., food, clothing, & shelter), what constitutes necessaries depends on the circumstances of the particular marriage”. In this case, the court wrote, “a] modern law practice entails a lot of paperwork, which commonly includes computerized forms. Frankly, it is difficult to imagine a reasonable attorney beginning or maintaining a California law practice without a computer”.
As for the fact that a divorce case was filed and a judgment was ultimately entered, none of this changed the Court of Appeal’s opinion. First, the debt was incurred before the divorce was entered and even before the parties had separated. Second, although it is true that the law is slightly different regarding spousal liability once the divorce has been finalized and a debt is assigned to a particular spouse by the divorce judge, the appeals court said the husband could go back to the trial court and try to get it to change its decision by arguing that circumstances had changed — namely, since the parties were last in court a divorce had been entered.
Most of the Court of Appeal’s decision in the case, entitled Direct Capital Corporation v. Brooks, was certified for publication which means the case may be cited as precedent by judges and lawyers throughout California and is binding authority on lower, i.e., trial courts.