Community property and the legend of 'separated' spouses

On Monday, in In re Marriage of Davis, 2015 DJDAR 8320, the California Supreme Court clarified once and for all whether a couple may be "living separate and apart" for purposes of Family Code Section 771(a) while they still live together in the same home. That statute provides that "[t]he earnings and accumulations of a spouse ... while living separate and apart from the other spouse, are the separate property of the spouse."

After Davis, for a separate property interest to arise, Section 771(a) requires the spouses to be living in "separate residences." In so ruling, the Supreme Court reversed the 1st District Court of Appeal, Division 1, and approved of a divided 6th District opinion, In re Marriage of Norviel, 102 Cal. App. 4th 1152 (2002). Yet, while the Supreme Court believes it is establishing a bright-line rule, its Footnote 7 and a separate concurring opinion may cloud things.

Before Davis, most family lawyers thought you could still be "separated" from your spouse for community property purposes even if you lived under the same roof, so long as you leave the marital bed and decamp to the guest room or the den, subjectively consider the marriage to be over, and act in accordance with that subjective belief. Davis upends that view and suggests that if we aren't happy with the result, "take it up with the Legislature."

Keith and Sheryl Davis married in 1999. They had two children, a daughter born in 1995 and son born shortly after they married. Sheryl filed for dissolution in 2008.

At trial, Sheryl described the marriage as turbulent, and said the couple stopped being intimate after their son was conceived. The parties disagreed as to when they stopped sharing a bedroom. Keith said Sheryl moved to another bedroom in 2001; Sheryl said it was 2004. The parties testified that they both attended the children's activities, but went in separate cars. Sheryl did her own and the children's laundry while Keith did his own. Both parties cooked, but Sheryl would not prepare something different for Keith if he was dissatisfied with the meal she made for herself and the children. The parties took some family vacations together, but also took separate vacations. Sheryl claimed that by 2004, she and Keith were "living entirely separate lives." They spoke about divorce, but stayed together for the children.

On June 1, 2006, Sheryl announced that she was "through" with the marriage. A month later, she began working full time, substantially increasing her earnings. The parties nonetheless continued to live in the marital home. That August, the whole family took a vacation to Hawaii, though they subsequently took no out-of-state vacations together. Keith left his lucrative job in September 2006. The family continued to celebrate special occasions, such as birthdays and holidays, together, and they also both continued to use a joint bank account.

In 2008, when Sheryl filed for divorce, she listed the date of separation as June 1, 2006. Keith responded with a date in 2009. Sheryl did not end up moving out until July 1, 2011, and Keith amended his response to reflect that as the date of separation.

The trial court found the date of separation to be June 1, 2006. The Court of Appeal affirmed, disagreeing with the majority decision in Norviel, which held that physically living apart is "an indispensable threshold requirement" for separation under Section 771(a).

In the high court, Keith contended that spouses cannot be "living separate and apart" for purposes of Section 771(a) when they continue to share a residence. He argued for such a bright-line rule to provide clear guidance to judges and a measure of predictability to litigants. Sheryl contended that no particular fact, including the place of residence, is determinative. She argued that a court should consider the totality of the circumstances and decide the date of separation based on conduct by either or both the spouses evidencing a complete and final intent to part ways with no plan of resuming the marital relationship, even if they are still living in the same residence. According to her, Keith's rule would lead to harsh results, for example, where the parties could not afford separate residences.

The court's unanimous opinion, by Chief Justice Tani Cantil-Sakauye, traces the statutory language of Section 771 to legislation enacted in 1870 ("An Act to protect the rights of married women in certain cases") to understand whether the colloquial understanding of the phrase "living separate and apart" cannot mean "living in the same home." Alternatively, but less likely (to the court's mind), the phrase "living separate and apart" could be read to mean living separate lives even under one roof, but with the requisite intent to end the marital relationship.

The court found evidence in the legislative history bolstering the ordinary and common meaning of the language as requiring separate residences before spousal earnings and accumulations are considered that spouse's separate property. While not providing a definition of "living separate and apart," the Legislature's understanding that the phase connoted a threshold requirement of separate residences may be discerned from an additional section of the 1870 act allowing a wife who is living "separate and apart" from her husband to sell her real property without joining her husband. In such an instance, the wife needed her own place of residence. This legislation, in the majority's view, "was intended to afford married women some additional protection from the rigors of the law generally denying them control of their earnings and separate property." Further, the court found that the lack of a statutory definition of "living separate and apart" might indicate that the Legislature intended the ordinary meaning to apply. Otherwise, from 1870 to the present the Legislature would likely have provided a specialized definition, but it did not.

The court also canvassed case law, paying particular attention to Norviel. The majority there recognized that "[d]ecisional law ... clearly establishes that parties may live apart and yet not be separated." Norviel concluded, however, that the reverse is not also true. The majority in Norviel held that "living apart physically is an indispensable threshold requirement to separation, whether or not it is sufficient, by itself, to establish separation." It found that substantial evidence supported the trial court's finding of a date of separation that was prior to the husband moving out of the marital home, because the husband had clearly communicated his intent to end the marriage, and the parties' conduct afterwards was consistent with that intent. According to the dissent in Norviel, the majority's rule was unworkable because it did not allow a couple who has decided to end their marriage "a transition period to take the necessary steps to untangle a financial, legal and social ties incident to their decision."

In Davis, the Supreme Court found it noteworthy that there has been no reaction from the bench or bar since Norviel contending that that case had introduced a sudden new rule that was legislatively unintended and unworkable, and that a legislative clarification was thus necessary to promote the position of the dissent. This reasoning is tantamount to the guidance "if you don't like it, talk to your elected officials."

There is, however, an important wrinkle to note in Davis. Justice Goodwin Liu, joined by Justice Kathryn Werdegar, wrote a concurring opinion to stress that the legislative history does not preclude spouses living under the same roof from "living separate and apart" for purposes of the statute. According to them, spouses can be living separate and apart if they "have a living arrangement that clearly and objectively signals a complete and final termination of the martial relationship." Liu latches onto Footnote 7 of the lead opinion, which states:

"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 find 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."

Thus, while the Supreme Court has concluded in Davis that living in separate residence is "an indispensable threshold requirement" for finding that spouses are "living separate and apart" for purposes of Family Code Section 771(a), its Footnote 7 and the concurring opinion still leave open the question of when parties could live under the same roof but still be considered "separate and apart." Perhaps, therefore, the bright-line will not foreclose substantial litigation at the trial court level.