Welcome to the Fall 2013 edition of our newsletter.
Cooper-Gordon LLP is maintaining its robust practice, specializing in the areas of Family Law, Estate Planning, Estate and Trust Administration and Estate and Trust Litigation.
So far this year has been filled with a number of interesting family law and estate administration cases, some going to trial, and some settling. In particular, the attorneys at Cooper-Gordon LLP have been involved in some interstate dissolution matters as well as several family law-estate litigation crossover cases in which dissolutions and a Party’s estate become intertwined in often convoluted ways.
Whether your case is complex or simple, at Cooper-Gordon LLP, each client and matter has the benefit of the Partners’ combined sixty years of experience along with the associates’ attention and cost-effectiveness.
In addition to their practice in Southern California, Cooper-Gordon LLP founding partners Avery and Frieda have been operating a satellite office in the Central Coast area. Avery and Frieda welcome new clients from Paso Robles in the North County through all of San Luis Obispo County, in addition to their clients from Santa Barbara County as well as all points south to the Mexican Border. If you wish to set up an appointment in San Luis Obispo County, please contact them at 1-800-561-6322 to set up an initial consultation.
Christine Donald, our trusted and longest serving employee, continues to interface with new clients, assist the attorneys with their litigation and transactional practices and generally keeps the office running smoothly and efficiently. In addition to her busy work life, Christine has had an exciting year, peppered with bicycle races all over the state, wine tasting along the central coast, and she plans to take a trip to Michigan this season to see friends and family. We are thankful for her continuous hard work and dedication to the practice.
Yana Rozovskaya, our paralegal who works primarily for Frieda, continues to be a substantial asset to the firm, as she is the first contact with clients and potential clients, sets all of the appointments and prepares much of the forms, transmittals and other documents for the attorneys who handle Frieda’s case load as well as for their own case loads. Recently, Yana traveled with her son to Montreal, Canada, for a wedding. When not busy assisting the attorneys at Cooper-Gordon, Yana enjoys taking her dogs, Tyson and Daisy to a local park near her house.
Avery, has been busy with various matters including estate planning, estate and trust administration and family law matters. Avery was also recently nominated to serve on the board of the Family Law Section of the Los Angeles County Bar Association.
Despite Avery’s substantial caseload and additional commitments, he consistently assures that his clients’ needs are met. Communication is key and Avery strives to keep his clients informed regarding the status of their cases.
In his spare time, Avery enjoys spending time with his yellow Labrador, Mickey, playing basketball, bicycle riding and collecting and consuming fine wines. He has also been busy with his book club and co-chairing a wine club. Additionally, he travels back and forth to his Central Coast home and office and this year, after a hiatus of several years, was able to go back to Europe for a wonderful vacation in Germany and the Czech Republic.
Frieda has been busy managing the firm as well as her own her case load. The attorneys here keep long hours, but also find the time to meet their personal needs, including spending time with family and maintaining active lifestyles. This balance gives the attorneys an opportunity to recharge and be at their best when it comes to taking care of their clients.
When it comes to work-life balance, Managing and Founding Party, Frieda, is no exception. In her spare time, Frieda shares most of Avery’s extracurricular pursuits. In addition, she enjoys playing with her 5 year old granddaughter, caring for her 89 year old mother and spending time with her two lovely and talented daughters. Frieda also enjoys gardening, yoga, knitting, studying languages and photography and playing and listening to classical music. Most of all, she enjoys hiking along the Central Coast of California with her dog Mickey.
Avery and Frieda recently took a trip to Berlin and Cologne, Germany and Prague and Czeny Krimlov (pictured below) in the Czech Republic. While there, they had many remarkable experiences, including visiting many museums which provided them with a great deal of historical education, eating in some of the great restaurants of the world, drinking excellent wines and beers, meeting the lovely people of the region and walking all over the cities they visited.
Frieda has authored an article on some important advice when preparing, updating and safeguarding Advance Health Care Directives, which is set forth in a separate blog.
In her spare time, our Senior Associate, Katherine Su O’Connor, spends time with her French Bulldogs, Sarge and Lola. She has also been busy moving into and decorating a new home and spending time with family. Over the summer, she traveled to Massachusetts and Upstate New York for a long overdue visit with her in-laws and visited with other extended family in Utah. She has tried to stay active as well, running her tenth half-marathon in April, finishing ninth in her division, and hiking the Subway and Angels Landing trails in Utah’s Zion National Park. She and her husband Brian are expecting their first child in early December.
Katherine has been busy assisting with the preparation of a number of estate plans, starting new divorce matters and handling several complicated Probate litigation cases. She has written an article which is set forth below.
The Marriage of Green: Are Funds Used to Purchase Premarital Retirement Credits and the Benefit from that Purchase Community Property?
Some fortunate employees are given the option of purchasing additional retirement credits for years of service rendered to another employer. The added retirement benefits for exercising such options are oftentimes far more substantial than the cost of purchasing the additional credits, and thus, is a very appealing offer for many employees.
However, when people divorce, they may be surprised as to what their rights are when they or their spouses have exercised this valuable right.
The Marriage of Green case which dealt with this issue was decided this year. The Marriage of Green provides that retirement credits attributable to employment by a spouse prior to marriage are that spouse’s separate property, and remain that spouse’s separate property even if community funds are used to purchase those additional years of service. In such case, the community may be entitled to reimbursement only for the funds used to purchase the retirement credits and the community is not entitled to any interest in the actual added benefit of the purchase.
In Marriage of Green, Husband served in the military prior to his marriage. At the time he married Wife, Husband was employed as a firefighter and participated in the California Public Employees’ Retirement System (CalPERS) Plan. Husband was given the option of purchasing an additional four years’ retirement credits in his CalPERS Plan for his years of military service rendered prior to marriage. After Husband married Wife, Husband chose to exercise his option of purchasing four years’ of additional retirement credits for his premarital military service, choosing to pay for the purchase of the credits via an installment plan, under which twice monthly payroll deductions were made from Husband’s paycheck. At the time the Parties separated, $11,462.56 of community funds had been used to pay for the purchase of the premarital retirement credits. The added value to Husband’s CalPERS Plan of the additional retirement credits far outweighed the cost of purchasing the credit.
At trial, the court held that the purchased service credit was Husband’s separate property, found that the community was entitled only to reimbursement for its payments towards the acquisition of the service credits, and ordered Husband to pay Wife one-half of the community funds used for the purchase, plus 6% interest. The community was not otherwise given any interest in the four years of additional service purchased by Husband.
Wife successfully appealed and the Court of Appeal concluded that “because the military service credit was purchased with community funds during the parties’ marriage, it was community property.”
Thus, it determined that Wife was entitled to one-half of the increased benefit resulting from the purchase of the four years of additional retirement credit.
Thereafter, Husband appealed and the California Supreme Court ultimately agreed with Husband and the trial court and reversed the Court of Appeal.
The California Supreme Court reiterated the principal that whether pension and retirement benefits are characterized as separate property or community property is determined in accordance with the employee spouse’s marital status at the time the services are rendered. Thus, despite the fact that the four years’ worth of additional service were purchased partly with community funds and were purchased during the marriage, the Court found that the four years’ worth of purchased retirement credit for Husband’s premarital military service was entirely Husband’s separate property. The Court then went on to find that the trial court had properly exercised its discretion in limiting the community to reimbursement only for its contributions towards the purchase of the retirement credit, plus interest. The community (and Wife) were not entitled to any of the increased benefits attributable to the four years of additional service credit purchased with community funds.
When not working on dissolution of marriage or probate cases, associate Drorit Bick Raiter has been spending time with her husband, Shay, their toddler, Naveh and their dog, Boston (a.k.a. Bobo). This summer, they enjoyed hiking in Solstice Canyon and Runyon Canyon, spending time with relatives visiting from Israel (many of whom were meeting Naveh for the first time), and traveling to Henderson, California, to visit with cousins.
Drorit has been drawing on her experience volunteering at the domestic violence clinic in the Santa Monica courthouse in several new cases brought to the firm which, sadly, involve domestic violence allegations. Drorit writes:
It is clear that there are cases of real domestic violence and abuse that require protective orders. However, unfortunately, protective orders are sometimes being used for litigation purposes, rather than real protection. It is an economic strain on the Courts and law enforcement officials, both entities which are already suffering from economic cut-backs, to be forced to issue and enforce restraining orders that have been sought under false pretenses and for less than honest purposes. In more and more cases, Parties to a dissolution of marriage action abuse the restraining order process in order to try to obtain some sort of leverage in their divorce.
Although the bar for granting Temporary Restraining Orders is often quite low, a low bar makes good public policy sense: the Court has not had a full Hearing on the matter and the alleged abuser is ostensibly “only” losing his right to be free from restraining orders for a period of 21 days, at the most. However, upon a full Hearing on this matter, the Petitioner must be held to a higher standard of proof. Specifically, the Petitioner must show that there exists reasonable proof of a past act or acts of abuse, with corroborating evidence.
Additionally, Drorit has recently authored an article about the level of mental capacity needed to obtain a dissolution of the marriage. Her article is set forth below.
The Capacity To Divorce: How “With It” Do You Need to Be to Get Divorced?
This past summer, in the case of In re Marriage of Greenway (2013) 217 Cal.App.4th 628, the California Court of Appeal affirmed the Trial Court’s decision which held that the level of capacity required to end one's marriage is, much like the capacity required to start one’s marriage, subject to a relatively low bar.
In Greenway, Joann Greenway appealed the Trial Court’s ruling which found that her husband, Lyle Greenway, was mentally capable of filing for divorce. The Parties had been married for 48 years and Lyle was 76 at the time, and in poor health.
Nevertheless, Lyle filed legal separation from Joann based on irreconcilable differences. Joann objected to ending the marriage or dividing the marital estate valued at several million dollars. She argued that Lyle was not mentally competent to maintain a dissolution of marriage action.
After reviewing written arguments and hearing testimony from the Parties, their three adult children, and four healthcare professionals who had evaluated Lyle’s mental state, the Trial Court concluded that Lyle was mentally capable of making a reasoned decision to end his marriage and granted his request for status-only dissolution.
In her appeal, Joann argued, inter alia, that the evidence of Lyle’s capacity to enter into a dissolution of marriage was insufficient to support the Trial Court’s ruling.
In making its decision, the Court of Appeal pointed out, “The experts all agree that Lyle...has [at least some level of] dementia. The question is, however, not whether Lyle has dementia, but whether his impairment is such that he no longer has the capability of making a reasoned decision to end his marriage.”
The Court of Appeals observed that the determination of a person’s mental capacity is fact specific and must be measured on a sliding scale depending on the issue at hand. On the high end of the scale is the mental capacity required to enter contracts, followed by testamentary capacity, and, at the low end of the scale, marital capacity. Id at 637.
The Court of Appeals noted that there is a “...large body of case authority reflecting an extremely low level of mental capacity needed before making the decision to marry or execute a will.”
Although marriage arises out of a civil contract, case law has recognized that marriage is, “...a special kind of contract that does not require the same level of mental capacity of the parties as other kinds of contracts…” Id at 640. Further, the Court of Appeal points out that, “...even a person under a conservatorship, who is generally without contractual power, may be deemed to have marital capacity.” Id at 640 (citing Prob. Code § 1900).
Likewise, the Court of Appeals also pointed at that Probate Code § 810 provides that there is a, “...rebuttable presumption affecting the burden of proof that all persons have the capacity to make decisions and to be responsible for their acts or decisions."
Thus, the burden of proof required to determine that a person lacks the capacity to marry or dissolve their marriage, is quite high.
Greenway has taken the holding in Andersen v. Hunt, 196 Cal. App. 4th 722 (2011) one step further. In Anderson, the Court held that the standard of capacity to marry cannot simply be a set of facts that are plugged into a route equation, and that in evaluating mental capacity to marry, a Court should evaluate the person's ability to "appreciate the consequences of the particular act he or she wishes to take." The Greenway case takes this reasoning and applies it to the standard of capacity required to dissolve ones marriage, as well.
Greenway is an important case because it highlights the fact that the right to marry is an important fundamental right which the Courts aim to protect. This case underscores the concept that the capacity required to make the decision to divorce must be, like the capacity required to make the decision to marry, held to a very low standard. The Courts and the legislature have again and again upheld the notion that proving incapacity to marry, and now incapacity to divorce, must be explicitly proven.
Our associate, Erin Louria Zivic found time to travel last summer with her husband and sister-in-law to Costa Rica to volunteer with Globe Aware, an organization that serves various factions of local communities throughout the world. While in the Orosi Valley of Costa Rica, Erin and her family helped revitalize a local elementary school by planting a butterfly garden and medicinal plant garden, worked with a local ecological society to build worm boxes for composting, and harvested produce on a women-run organic farm. Erin was nominated as Globe Aware’s Volunteer of the Month in August.
Erin has also been busy with her Family Law, Estate Planning and Administration caseload. She has been working on a number of interesting Estate Litigation and Family Law matters.
Specifically, Erin has been involved in a Post-Judgment family law matter in which one Party has accused the other of breaching a fiduciary duty and is thus seeking to be compensated for same. While that case was pending, the Court of Appeal issued an opinion in the recent case, Leslie v. Georgiou, which dealt precisely with the issue of fiduciary duties following a Judgment of dissolution. Erin has written a brief article on that case which is set forth below.
The Marriage of Georgiou v. Leslie: A Review of the Applicability of Family Code § 1101 (Breach of Fiduciary Duty) to post-Judgment Dissolution Proceedings
In the recent case of The Marriage of Georgiou v. Leslie, Leslie appealed the Family Court’s granting of summary judgment in favor of Georgiou and determination that, once a judgment in a dissolution of marriage has already been entered, a party could not later bring an action against the other party under Family Code § 1101 for breach of a fiduciary duty when the parties litigated the particular issue in question and the judgment fully adjudicated the asset.
On appeal the Court of Appeal, Fourth Appellate District, found that Family Code § 1101 for breach of a fiduciary duty did not authorize Leslie’s action because the issue which she was litigating had already been fully litigated and adjudicated. The Court further found that Leslie could have sought relief under a different statute, but that statute of limitations passed and thus any such action would be untimely.
Accordingly, the Court of Appeal affirmed the Family Court Order.
Byron Georgiou and Maria Leslie married in 1985 and separated in 2003 and Byron filed for dissolution that same year. Byron is an attorney and in 2000, prior to the parties’ separation, he became “of counsel” at a law firm. In that position, in 2002, Byron secured a client for the firm and became entitled to a 10 percent referral fee in a class action litigation lawsuit. In a contingency fee agreement between the firm and the lead plaintiff, the agreement provided that attorneys’ fees would be between 8-10 percent of the recovery.
In 2005, the marital status was terminated in a bifurcated Judgment. In 2007, two years after the marital status was terminated, Byron and Maria entered a marital settlement agreement (“MSA”). Maria knew about Byron’s contingency fee agreement with his firm and the lead plaintiff. Maria also knew that the firm recovered approximately $7.2 billion in settlement and she had received a copy of the fee agreement from Byron.
Maria had deposed a partner at Byron’s firm regarding the contingency fee agreement. She also learned through Byron’s settlement conference brief that Byron’s referral fee could be between $9 million and $33 million. She was also aware that the firm intended to seek fees in excess of $330 million and that Byron intended to “vigorously argue” that he was entitled to a 10 percent fee.
The MSA divided the referral fee unevenly, with Maria receiving 10% of the fee, in exchange for $7 million in other assets including the family home, among other assets, which was Byron’s separate property. Byron received 90% of the fee, life insurance policies, loan receivables, business interests and significant debt.
The MSA was incorporated in a judgment of dissolution which was entered on December 12, 2007. In 2008, the federal district court granted Byron’s firm’s fee request, awarding the firm $688 million in fees. That same month, Byron negotiated a 9 percent referral fee with his firm and paid Marie $4 million for her 10 percent share of the fee. Maria realized that Byron was entitled to a fee larger than she originally anticipated, i.e. over $33 million dollars. She later learned that she was entitled to an additional $1.56 million based upon her award of 10 percent of Byron’s actual recovery, which was approximately $62 million.
Three years following the MSA, on December 13, 2010, Maria filed an action under Family Code § 1101 for Byron’s breach of his fiduciary duty of disclosure. She alleged that Byron led her to believe he would receive between $9 million and $33 million, that he did not provide her with a copy of the fee agreement with the firm’s client and that he fabricated or exaggerated a dispute he had with the firm regarding the fee. She argued that if she knew the terms of the fee arrangement, she would have been able to calculate the fee. Maria sought either one-half or 100 percent of Byron’s referral fee based on his alleged breach.
In response, Byron moved for summary adjudication, arguing that Maria’s action was not timely. On its own accord, the Court found that Maria could not seek relief for breach of a fiduciary duty under Family Code § 1101 because such relief “is not legally available in a post-marital dissolution judgment action.”
Instead, the Court found that relief could be sought under Family Code § 1101 either, “(1) during an intact marriage; (2) in conjunction with a dissolution proceeding; or (3) after the death of a spouse.”
The Court reasoned that spouses have a fiduciary duty to each other during the marriage. As stated in Family Code § 721, “in transactions between themselves, a husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.” Additionally, Family Code § 1100 provides, “ Each spouse shall act with respect to the other spouse in the management and control of the community assets and liabilities in accordance with the general rules governing fiduciary relationships . . .” This duty extends throughout the dissolution of marriage up to and including the distribution of the community and quasi-community property. Each Party’s duty extends through preparing and serving of a Final Declaration of Disclosure which contains “all material facts and information regarding the valuation of all assets that are contended to be community property.” (Family Code § 2105, subd. (b)(2).)
Each spouse’s fiduciary duty includes updating and supplementing that disclosure if there have been any material changes.
Because Maria filed a post-Judgment action in this case, there was no longer (1) an intact marriage, (2) a current dissolution proceeding between the Parties, and (3) no spouse passed away. Therefore, Maria could not file for relief under Family Code § 1101. Maria could have sought relief under Code of Civil Procedure § 473 to set aside the Judgment based on mistake, inadvertence, surprise, or excusable neglect.
Additionally, Family Code § 2122 provides relief under limited circumstances, including actual fraud, perjury, duress, mental incapacity, mistake (in stipulated or uncontested judgments), and failure to comply with the disclosure requirements. In the instant case, although Maria may have sought relief based on the failure to comply with disclosure requirements, she did not timely bring her action. The statute of limitations is one year from the Party’s date of actual or implied discovery of the failure to comply. In September of 2008, Maria discovered the amount of Byron’s referral fee, yet she did not file her action until December of 2010.
The purpose of having Statutes of Limitation is to promote California’s strong public policy of assuring finality of Judgments within a reasonable time.
The Court of Appeal found that in the instant case, Byron disclosed the asset, it was a substantial issue in the negotiations for the MSA and the Judgment fully adjudicated the issue. The Court further found that it was not required to determine whether section 1101 never authorizes a post judgment action for breach of fiduciary duty. Instead, it found that it did not apply in this case where the issue was fully litigated and determined.
The Court further stated that Maria “cannot take the benefits of the judgment and also obtain 50 percent or 100 percent of the referral fee.” To do so would ignore the policy in favor of protecting the finality of Judgments.
Since Maria’s only remedy was under Family Code § 2122 and she did not timely file an action, the Court lacked jurisdiction over the matter and summary adjudication was proper.
We thank all of you for your generous referrals throughout the past year.
If you have questions or comments about any of the news provided here or about anything related to family law and/or probate and estates, please send us an email, call or blog us and we will respond right back.
As always, it is a pleasure to serve our community.