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Class 20 – 3/28/17

Marital Property III – Community Property

• Community Property, 410-412
• Common-Law Concurrent Interests, 412-413
• Problem, 413
• Management of Community Property, 413-414
• Problem, 414-415
• Mixing Community with Separate Property, 415
• Problems, 416
• Migrating Couples, 416-417
• Problem, 417-418
• Texas Marital Property Law
• Rights of Domestic Partners, 418-419
• Notes on Same-Sex Marriage, 438-440

The lecture notes are here.

This is the section of the Texas code that governs equitable distribution of community property after a divorce:

Sec. 7.001.  GENERAL RULE OF PROPERTY DIVISION. In a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage.

Added by Acts 1997, 75th Leg., ch. 7, Sec. 1, eff. April 17, 1997.

Sec. 7.002.  DIVISION AND DISPOSITION OF CERTAIN PROPERTY UNDER SPECIAL CIRCUMSTANCES. (a) In addition to the division of the estate of the parties required by Section 7.001, in a decree of divorce or annulment the court shall order a division of the following real and personal property, wherever situated, in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage:

(1)  property that was acquired by either spouse while domiciled in another state and that would have been community property if the spouse who acquired the property had been domiciled in this state at the time of the acquisition; or

(2)  property that was acquired by either spouse in exchange for real or personal property and that would have been community property if the spouse who acquired the property so exchanged had been domiciled in this state at the time of its acquisition.

(b)  In a decree of divorce or annulment, the court shall award to a spouse the following real and personal property, wherever situated, as the separate property of the spouse:

(1)  property that was acquired by the spouse while domiciled in another state and that would have been the spouse’s separate property if the spouse had been domiciled in this state at the time of acquisition; or

(2)  property that was acquired by the spouse in exchange for real or personal property and that would have been the spouse’s separate property if the spouse had been domiciled in this state at the time of acquisition.

(c)  In a decree of divorce or annulment, the court shall confirm the following as the separate property of a spouse if partitioned or exchanged by written agreement of the spouses:

(1)  income and earnings from the spouses’ property, wages, salaries, and other forms of compensation received on or after January 1 of the year in which the suit for dissolution of marriage was filed; or

(2)  income and earnings from the spouses’ property, wages, salaries, and other forms of compensation received in another year during which the spouses were married for any part of the year.

Here is a recent story, similar to the W.C. Fields case,where a mistress is ordered to pay her dead lover’s wife:

Kathie O’Keefe, a former lounge singer turned political activist, spent two “happy” decades with another woman’s husband and now she’s being ordered to pay up.

When her former lover, Jack McCarthy, died 16 months ago at age 78, O’Keefe made a claim against the estate of the wealthy real estate broker.

O’Keefe, 69, wanted a watch and ring he had given her, and the $200,000 she said he promised her.

Not only was O’Keefe turned down, but McCarthy’s wife of 30 years, Margaret, turned the tables and sued.

Now, according to a court ruling in favor of Margaret McCarthy, O’Keefe owes $200,000, to her dead lover’s family.

“I was really shocked,” O’Keefe said on ABCNEWS’ Good Morning America. “I thought of it as a nuisance suit and I didn’t think they had a chance of actually getting a judgment against me,” she said.

McCarthy’s wife relied on an obscure 90-year-old Washington law that forced O’Keefe to account for all the gifts and money he’d ever given her — and pay it all back in cash.

“It doesn’t matter to me if it’s $200,000 or $2 million,” she said. “I didn’t do anything wrong. It was Jack who broke the law and I don’t think I should be punished for the sins of a dead man,” she said.

George Smith, O’Keefe’s lawyer, said the court’s ruling now exposes every extra-marital partner in the area to serious financial risk.

“The old law says, and it’s still in effect, that one spouse cannot gift community property to an individual without the consent of the other spouse,” Smith said. “I think the girlfriend should look at the heading on the check, and if it says, ‘the account of Mr. and Mrs.,’ she’s got problems coming down the road.”

The McCarthy estate demanded $400,000, but after the court ruling, both parties reached a settlement.

The McCarthy estate’s lawyer, Kurt Olson, said things might have been different for O’Keefe if she had what she claimed McCarthy promised in writing.

“If it were a legitimate claim that she was asking for, if she had some evidence that he had intended to give her the money, then obviously that would heve been very important to the estate,” Olson said. “If there was any writing if it had been in any estate planning documents that would have been very relevant but we had nothing except for her word about what a deceased person had said according to her,” he said.

 

Under California community property law, gifts given by the husband to a mistress, without the wife’s permission, can be set aside by the wife. This is precisely what happened to Donald Sterling, former owner of the Los Angeles Clippers, who gave millions of dollars of gifts to his mistress V. Stiviano. Shelly Sterling, Donald’s wife, sued Stiviano. In 2015, a court ruled that Stiviano was required to pay back more than $3 million to the Sterlings.

Former Los Angeles Clippers owner Donald Sterling had no right to spend millions of dollars to give luxury cars, a duplex and other gifts to his alleged mistress, V. Stiviano, an attorney for Sterling’s wife told a Los Angeles County judge Wednesday.

The lawyer’s assertion came during opening statements of a trial in which Shelly Sterling is attempting to recoup more than $3 million in gifts that she alleges Stiviano seduced Donald Sterling into giving her.

Stiviano was at the center of last year’s controversy that led to Donald Sterling being stripped of his ownership of the NBA team after she recorded him making racially charged remarks.

Attorney Pierce O’Donnell, who represents Shelly Sterling, told Superior Court Judge Richard L. Fruin Jr. that Donald Sterling used community property — assets he legally shares with his wife — to pay for gifts to Stiviano, including a Ferrari, two Bentleys, a Range Rover, a duplex near Beverly Hills and a Paris shopping spree.

“He’s an older, vulnerable man, susceptible to the wiles of a younger woman, like the defendant,” O’Donnell told the judge.

Stiviano, seated with her attorney in the downtown L.A. courtroom, glared and shook her head.

The courts of appeals permit cases to bypass the three-judge panel, and proceed directly to the full en banc court.For  my discussion of Hobby Lobby in Unraveled, I researched initial en banc, and found about two dozen instances over the last three decades where the three-judge panel was skipped. It is rare, but not unheard of. In recent years, the 10th Circuit heard Hobby Lobby through initial en banc, as did the D.C. Circuit for the Clean Power Plan case. However, the 11th Circuit denied initial en banc review in Florida v. HHS (the Obamacare litigation).

The 4th Circuit has asked the parties to state their position on “the appropriateness of initial en banc review.” If ever there was a case that screamed for expedited treatment, it is this one.

Last week, with zero fanfare, the Supreme Court posted the rules of the Supreme Court dating all the way back to 1790. I reviewed the first PDF, which includes rules from 1790 till 1850.

The Court also posted the journals of the Supreme Court from 1889 to 1992. For example, on May 1, 1890 (Bates #67, page 147 of PDF), you see the notation that “Grover Cleveland, of New York City” was admitted to practice. Yes, former-President Cleveland.

I summarize the highlights in this Twitter moment.
The Rules of the Supreme Court – 1790-1850

Some moms put their daughter’s work on the refrigerator. Justice Ruth Bader Ginsburg cited her daughter Jane C. Ginsburg’s article in the U.S. Reports.

H/T to my colleague Phillip Page.

 

My new article, Presidential Maladministration, will be published in the Illinois Law Review. This timely article analyzes how courts should consider the President’s influence in rulemaking process. Here is the abstract:

In Presidential Administration, then-Professor Elena Kagan re-envisioned administrative law through the lens of the President’s personal influence on the regulatory state. Rather than grounding Chevron deference on an agency’s “special expertise and experience,” Kagan would “take unapologetic account of the extent of presidential involvement in administrative decisions in determining the level of deference to which they are entitled.” The stronger the President’s fingerprints on the executive action, a practice she praises as “presidential administration,” the more courts should defer.

There is a flipside to Kagan’s theory: four species of high-level influence, which I describe as “presidential maladministration,” are increasingly problematic. First, where an incoming administration reverses a previous administration’s interpretation of statute, simply because a new sheriff is in town, courts should verify if the statute bears such a fluid construction. Second, where an administration discovers a heretofore unknown power in a statute that allows it to confer substantive rights, courts should raise a red flag, especially when the authority exercised was one Congress withheld. Third, where an administration declines to enforce a statute that Congress refuses to repeal, under the guise of prosecutorial discretion, courts should view the action with skepticism. Fourth, where evidence exists that the White House attempted to exert its influence, and intrude into the rulemaking process of independent agencies, courts should revisit the doctrine concerning altered regulatory positions.

As the Federal Register turns the page from Obama to Trump, this article provides a timely analysis of how courts react to unpresidented approaches to maladministration.