BILL ANALYSIS                                                                                                                                                                                                    Ó





                             SENATE JUDICIARY COMMITTEE
                         Senator Hannah-Beth Jackson, Chair
                             2015-2016  Regular  Session


          SB 1255 (Moorlach)
          Version: February 18, 2016
          Hearing Date:  May 3, 2016
          Fiscal: No
          Urgency: No
          NR   


                                        SUBJECT
                                           
                    Dissolution of marriage:  date of separation

                                      DESCRIPTION 

          This bill would define "date of separation" for purposes of the  
          Family Code as the date that a complete and final break in the  
          marital relationship has occurred, as evidenced by a spouse's  
          expression of his or her intent to end the marriage and conduct  
          that is consistent with that intent, and would update the Family  
          Code to reflect this definition. 

                                      BACKGROUND
                                           
          California is a community property state.  Except as otherwise  
          provided by statute, community property is generally defined as  
          all property, real or personal, wherever situated, acquired by a  
          married person during the marriage while domiciled in  
          California. (Fam. Code Sec. 760.) Under a community property  
          system, one-half the earnings of each spouse is owned by the  
          other spouse.  Separate property, which is property acquired  
          before marriage, by gift or inheritance, or after the spouses  
          are living "separate and apart," is the separate property of  
          that spouse. (Fam. Code Secs. 770-771.) 

          Unlike a determination of spousal support where courts are given  
          certain amounts of discretion to create a fair award based on  
          the circumstances of the parties (see Fam. Code Sec. 4320), the  
          disposition of separate and community property are strictly  
          governed by statute.  Existing case law over the past 140 years  
          (with the exception of the Supreme Court's decision In re  








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          Marriage of Davis (2015) 61 Cal.4th 846) has required that to  
          qualify as living "separate and apart" a party must have no  
          intention of resuming marital relations and that the conduct of  
          the party evidences a complete and final break in the marital  
          relationship.  Davis and In re Norviel (2002) 102 Cal.App.4th  
          1152 are the only published cases to analyze the circumstances  
          of a party claiming to be separated while living in the same  
          residence, and both cases concluded that living in separate  
          residences is a threshold requirement. 

          In Davis, the husband argued that spouses cannot be living  
          "separate and apart" while maintaining a single residence.  He  
          contended that this bright-line rule served to provide clear  
          guidance to judges and offered predictability to litigants.  
          Inversely, the wife argued that the court should instead  
          consider the totality of the circumstances when determining the  
          date of separation based on the conduct of the spouse(s)  
          "evidencing a complete and final intent to part ways with no  
          plan of resuming the marital relationship, even if at that time  
          they are still living in the same residence." (Davis at 850.)   
          Both parties claimed that the other spouse's proposed  
          interpretation was unworkable and would lead to harsh results. 

          The California Supreme Court reversed the lower court's  
          decision, thereby affirming Norviel which held that "living in  
          separate residences is an indispensable threshold requirement  
          for finding that spouses are "living separate and apart" for the  
          purposes of determining what is separate, and not community,  
          property.  (Davis at 865.)   Chief Justice Tani Cantil-Sakauye,  
          writing for a unanimous Supreme Court, emphasized both the plain  
          language and historical interpretations of the statute, and the  
          public policy considerations behind the statutory language,  
          namely that a bright-line rule protects the lower earning  
          spouse. 

          This bill, seeking to restore the discretion that many courts  
          exercised in determining the date of separation, would abrogate  
          both the Davis and Norviel cases, and would define "date of  
          separation" as the date that a complete and final breakdown of  
          the marital relationship has occurred, as evidenced by a  
          spouse's express intent to end the marriage, coupled with  
          conduct consistent with that intent, and would require the court  
          to consider all relevant evidence when determining a date of  
          separation. 








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                                CHANGES TO EXISTING LAW
           
           Existing law  provides that, except as otherwise provided by  
          statute, all property, real or personal, wherever situated,  
          acquired by a married person during the marriage while domiciled  
          in California is community property.  (Fam. Code Sec. 760.)

           Existing law  provides that the earnings and accumulations of a  
          spouse while living separate and apart are the separate property  
          of the spouse. (Fam. Code Sec. 771.)

           Existing law  provides that the community estate is liable for a  
          debt incurred before or during marriage, which does not, subject  
          to agreement, include any period during which the spouses are  
          living separate and apart. (Fam. Code Secs. 910, 914, and 4302.)

           This bill  would define "date of separation" to mean the date  
          that a complete and final break in the marital relationship has  
          occurred, as evidenced by the spouse's expression of his or her  
          intent to end the marriage and conduct that is consistent with  
          that intent. 

           This bill  would require a court to consider all relevant  
          evidence in determining the date of separation.

           This bill  would recast provisions of the Family Code in terms of  
          "date of separation" rather than any period in which spouses are  
          "living separate and apart."
          
           This bill  would state that the Legislature intends to abrogate  
          In re Marriage Davis and In re Marriage Norviel. 
                                        COMMENT
           
           1.Stated need for the bill
           
          According to the author: 

            Currently, under the California Family Code, in order to  
            establish date of separation in anticipation of dividing  
            property through divorce proceedings, a couple must  
            demonstrate that they are "living separate and apart."  In the  
            recent case of In re Marriage of Davis (2015), the California  
            Supreme Court ruled that in order to be living separate and  
            apart, a couple must have separate residences.  








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            The Court's ruling removes the ability for a divorcing couple  
            to continue to co-parent their children in the same house  
            during the divorce proceedings and still keep their finances  
            separate. This forces at least one spouse to find and pay for  
            alternative housing in order to establish a date of separation  
            earlier than the final court order date at a time when  
            families are trying to closely monitor their spending and  
            transition the family unit through a trying time.

            Often, one spouse cannot afford to move to a separate  
            residence, and can only afford such a move once a divorce is  
            finalized. This bill would remedy this situation, ensuring  
            nobody is forced to either continue in a bad marriage, or face  
            being thrown out in the streets.

           2.This bill would require a court to evaluate parties' opposing  
            evidence in determining a date of separation
           
          This bill would require a court to look at the particulars of a  
          situation and determine a date of separation that reflects both  
          a party's express intent and actions supporting that intent.  If  
          courts are required to determine the date of separation based on  
          evidence, the parties may benefit from the court's ability to  
          apply the facts of the case to the law and determine what is  
          fair given the parties' unique circumstances. However, creating  
          a rule which relies heavily on judicial discretion encourages  
          parties to litigate the facts of each case, which results in  
          more litigation and higher attorney's fees.   Money spent on  
          these disputes often comes out of the community estate, thereby  
          reducing the award to both parties.   
          In addition, discretionary rules arguably also open the door for  
          manipulation of the facts.  Unless a physical separation is  
          required for a married couple to be "living separate and apart,"  
          one spouse may be able to manipulate the finances by  
          "back-dating" the date of separation upon filing for dissolution  
          to a date during which the parties continued to reside together  
          but the marriage was rocky and difficult. Thus the  
          higher-earning spouse may continue to reap the benefits of  
          living in the home - eating meals, doing laundry, and receiving  
          mail - and then years later, upon filing for dissolution, refer  
          back to other, more subtle conduct  as evidencing a breakdown in  
          the marriage and claim that all earnings form that day forward  
          are separate.  (See, e.g., In re Marriage of Baragry (1977) 73  
          Cal.App.3d 444, 446-448.)








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          The proposed legislation would also affect cases falling outside  
          the Davis scenario (see Background).  Specifically, existing law  
          provides for a "period of separation" where the parties are  
          living separate and apart and have the requisite intent to make  
          a final and complete break.  Nothing in the existing law,  
          however, has been interpreted to foreclose the possibility of  
          multiple periods of separation. For example, Family Code Section  
          4336 refers to "periods of separation" in determining whether a  
          marriage is of long duration. By requiring that a court pinpoint  
          a final break in determining a "date of separation," this bill  
          could inadvertently prevent a court from finding multiple  
          periods of separation. This could arguably require parties, who  
          have separated but later reconcile, to account for all of their  
          earnings and accumulations that they may have spent or given  
          away, based on a genuine belief that they had the right to do  
          so, during "separation." A party may also end up being liable  
          for debts incurred by the other party during the period they  
          believed that they were separated.  This may have the unintended  
          consequence of discouraging separated parties from reconciling,  
          which is contrary to California's stated public policy of  
          preserving marriages.  Additionally, this bill would not account  
          for "conditional separations," such as where one spouse  
          separates in all respects not intending to return unless the  
          other spouse corrects some undesired behavior (substance abuse,  
          infidelity, gambling, inattention, etc.). 
           
            3.Judicial discretion versus bright-line rule
            
           This bill would abrogate both In re Davis and In re Norviel,  
          which established a bright-line rule that required parties to  
          live separately in order for income to be considered separate  
          property. The bill would instead define "date of separation" to  
          mean the date that a complete and final break in the marital  
          relationship has occurred as evidenced by a party's express  
          intent to end the marriage and conduct consistent with that  
          intent.     
           
           In 2002, the Sixth District in Norviel created a bright-line  
          rule that parties cannot live together and yet be separated. The  
          court specifically held that, in the absence of what it termed  
          unambiguous, objectively ascertainable conduct amounting to a  
          physical separation under the same roof, parties could not be  
          deemed living separate and apart under Family Code Section 771  
          while they still lived in the same house. (Norviel at 1164.)  
          Bright-line rules generally provide clear directives and  







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          guidance to judges and a measure of predictability to attorneys  
          and litigants.  They create uniformity among courts in the  
          dispensing of justice and the enforcement of statutes.  
          Uniformity, in turn, encourages a general understanding that  
          laws are applied fairly, without an undue subjectivity that  
          would allow certain people to be treated differently than  
          others.  Pointing out practical benefits of bright-line rules in  
          the Davis controversy, the petitioner argued that "family courts  
          have enough difficulty trying to determine date of separation in  
          contested cases without the standard for 'living separate and  
          apart' to include couples who continue to live together.  While  
          the existence of separate residences is easy enough to prove,  
          the existence of objective conduct evidencing 'a final break in  
          marriage' and trying to determine when that occurred based upon  
          the totality of the circumstances is not." (Petitioner's Opening  
          Brief On the Merits (2014) WL 1674529, p. 6.)
            
          However, in support of this bill, the Executive Committee of the  
          Family Law Section of the State Bar (FLEXCOM) argues that a  
          bright-line rule creates harsh results.  FLEXCOM writes: 

            The Supreme Court's ruling removes the ability for a divorcing  
            couple to continue to co-parent their children in the same  
            house during the divorce proceedings and still keep their  
            finances separate.  This forces at least one spouse to find  
            and pay for alternative housing in order to establish a date  
            of separation earlier than the final court order date at a  
            time when families are trying to closely monitor their  
            spending and transition the family unit through a trying time.  
             Often, one spouse cannot afford to move to a separate  
            residence, and can only afford such a move once a divorce is  
            finalized.  This bill would remedy this situation, ensuring  
            nobody is forced to either continue in a bad marriage, or face  
            being forced out of the residence.

          While the reasoning noted by FLEXCOM supports a discretionary  
          rule in a situation where both parties have adequate income to  
          support themselves because both parties would be equally  
          effected by the division of community property, a question  
          remains as to whether a discretionary rule best protects a lower  
          earning (or unemployed) spouse when the breadwinner decides to  
          "separate" but remains in the home.  A discretionary rule in  
          this situation allows the breadwinner, who presumably has  
          resources to attain an attorney, to backdate the "date of  
          separation" without the knowledge or consent of the economically  







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          vulnerable spouse. The further back in time the "date of  
          separation," and the longer it takes to resolve the disputed  
          "date of separation,"the more community property an economically  
          vulnerable spouse stands to lose.  Thus, if a divorce is not  
          finalized until years later, the economically vulnerable spouse  
          (who arguably contributed to the household with domestic  
          activities and caretaking) may lose a significant amount of  
          money that would otherwise have been community property and  
          could have helped her establish a new residence after  
          dissolution. 

          At the same time, a discretionary rule would allow a court to  
          protect a party against a spouse that refuses to contribute or  
          to move out, and thereby drains the community estate.  That  
          being said, staff notes that the court in both Norviel and Davis  
          did not foreclose on the possibility that a couple may live  
          "separate and apart" even though they continued to share a  
          residence.  (See, e.g., In re Davis, fn. 7, stating: "Under the  
          facts presented by this case, we have no occasion to consider,  
          and expressly reserve the question, whether there could be  
          circumstances that would support a finding that the spouses were  
          'living separate and apart,' i.e., that they had established  
          separate residences with the requisite objectively evidenced  
          intent, even though they continued to literally share one roof;"  
          see also In re Norviel at 1164.) 

          Ultimately, either approach will, in at least some situations,  
          yield unfair or harsh results.  As a matter of public policy,  
          the Legislature should seek to approve the method by which fair  
          and just results are most often achieved, taking into account  
          the growing percentage of self-represented litigants in family  
          law and the continuing stress on judicial resources.

           4.Retroactivity 
           
          This bill would apply retroactively to cases pending on January  
          1, 2017.  Proponents argue that Norviel was an "outlier" and  
          courts typically looked to a "totality of the circumstances" in  
          determining the legal date of separation, and therefore  
          retroactivity is necessary to provide uniform treatment to cases  
          filed prior to the Supreme Court's decision in Davis through the  
          enactment of this bill.  

          As a matter of public policy, it is preferable to ensure that  
          bills apply prospectively, so as not to change the outcome of  







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          ongoing litigation in favor of one party. Looking specifically  
          at marital property classification, applying this bill  
          retroactively will affect thousands of cases and awards that  
          would have otherwise been governed by the holdings in Norviel  
          and Davis. Such retroactive application could unconstitutionally  
          affect property rights. Given the concerns that arise with  
          retroactive application of any bill, the Committee may wish to  
          consider whether the bill should be limited to apply  
          prospectively only.  The following amendment would remove the  
          retroactive language, as well as the language that would affect  
          pending litigation.

             Author's amendment:
             
            Section 6 reads: This act shall apply to all cases filed on or  
          after January 1, 2017.


           Support  :  American Academy of Matrimonial Lawyers, Southern  
          California Chapter; Association of Family Conciliation Courts;  
          Executive Committee of the Family Law Section of the State Bar;  
          Family Law Section Beverly Hills Bar Association 

           Opposition  :  None Known 

                                        HISTORY
          Source  :  Author

           Related Pending Legislation  : None Known

           Prior Legislation  : None Known

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