Important family law decisions wrap up 2017

2017 IN REVIEW

In the final weeks of 2017, California appellate courts were busy handing down a few important family law decisions. Rulings covered military rights vis-a-vis preemption and custody, calculation of date of interest, and a couple's fiduciary duty to one another pre-separation.

For at least the second time this year, the Court of Appeal in In re Marriage of Steiner reminded us that when dealing with military personnel and their dissolution, one ought not forget the supremacy clause of the Constitution -- i.e., "state law is pre-empted to the extent of any conflict with a federal statute." 2017 DJDAR 11374 (Cal. App. 4th Dist., Nov. 30, 2017). In Steiner, the couple "stipulated to an order requiring Husband, then an active duty service member, to maintain Wife as the beneficiary of all of Husband's current active duty survivor's and/or death benefits pending further court order (stipulated order)." Notwithstanding this "stipulated order," without notice or consent from the Wife, Husband changed beneficiary to his sister and a few months later he passed away. His sister received the policy proceeds.

This case is another example of how a lack of understanding of federal preemption rules can have disastrous results on a bargained-for dissolution judgment. As the court observed in finding for the sister's right to recover as beneficiary, "[a] necessary consequence of the Supremacy Clause is that a state divorce decree ... must give way to clearly conflicting federal enactments." Since the insurance was pursuant to federal enactment and allowed for a change of beneficiary without notice to the ex-spouse, the result is what Congress intended. "Like comparable federal enactments, the [insurance] evinces Congress's intent to accord service members an unfettered freedom of choice in selecting the beneficiary of the insurance proceeds." However, since this is a congressional enactment, it can be changed tomorrow if Congress so desires. Until then, counsel need to be careful in drafting such judgments against military personnel.

Another military case, this one dealing with custody and visitation rights post-deployment, defines the parameters of Family Code Section 3047. In re Marriage of Vargas and Ross, 2017 DJDAR 11490 (Cal. App. 3rd Dist., Dec. 4, 2017). Section 3047 guarantees military personnel certain custody and visitation reinstatement rights when their deployment has interfered with their "sole or joint physical custody or visitation." While the facts are confusing, the rules enunciated could not be clearer. The court found that by "enacting section 3047, the Legislature guaranteed that when active military duty parents are deployed, any change in custody required as a result of their deployment will be a temporary one." In other words, "when the deployed parent returns, he or she will not be required to show a significant change in circumstance in order to return to status quo prior to deployment." Rather, the presumption shifts: "the parent opposing a return to the status quo and not the parent returning from deployment" carries the burden of proof.

The Vargas decision also reminds us that Section 3047 cases are entitled to priority. "The Legislature also made the process of resolving these unique custody disputes more 'expeditious' and 'efficient' for returning military parents." It did so by, "direct[ing] trial courts to 'prioritize the calendering [of] these cases' to the extent feasible within existing resources and court practices." Courts continue to try and balance the importance of welcoming our troops home while doing what is best for our children.

In November, Division 8 of the 2nd District Court of Appeal in Garcia v. Escobar held that a "family law court has jurisdiction under Family Code section 6345, subdivision (a) to renew domestic violence restraining orders initially granted by the juvenile court." 2017 DJDAR 10912 (Nov. 17, 2017). In December, Division 4 of the same court came to the same conclusion. Priscila N. v. Leonardo G., 2017 DJDAR 11445 (Dec. 1, 2017). The latter decision is worth reading for its analysis of the legislative history; the former is worth reading for its analysis of the jurisdiction of the superior court. Both are must reads if your practice involves domestic violence restraining orders.

One area many civil practitioners (not just family law) make mistakes involves post-judgment interest. It appears both sides made such a mistake in In re Marriage of Dalgleish and Selvaggio, 2017 DJDAR 11406 (Cal. App. 2nd Dist., Nov. 30, 2017). The 2009 stipulated judgment provided for an equalization payment once the property in question had been appraised. The property was appraised in 2013 and the court adopted that appraisal in 2015. The question then became: Does interest accrue as of 2009, 2013 or 2015? The trial court ruled 2015, because that was the date there was "a sum certain." The appellant argued for the 2013 date. While the appellate court reversed, granting the 2013 date, it seemed to suggest the correct date is 2009 (which I agree with). In a footnote, the court wrote, "In any event, [appellant] seeks interest only from [2013] ... and we therefore need not consider any argument that interest on the Equalization Payment should have begun to accrue at the time the Judgment was entered in 2009." Since the equalization payment in this case was over a million dollars, this may have been a costly mistake.

Finally, in In re Marriage of Kamgar the appellate court affirmed an almost $2 million judgment for breach of fiduciary duty a spouse owes another. 2017 DJDAR 11672 (Cal. App. 4th Dist., Dec. 8, 2017). In this case, the husband was given permission to invest $2.5 million of the parties' assets (roughly 25 percent). Yet without her permission, he invested and subsequently lost almost all of it (about $10 million). He did so without her knowledge and did so by also signing her name to certain financial documents. In a very fact-specific decision the court upheld the judgment. This case is a cautionary tale of what happens when one spouse acts unilaterally (especially when the marriage is going south), and getting caught-up in high-stakes investing (which at times can feel like gambling).

With the year has come to an end, family law practitioners would do well to stay abreast of these new cases; especially since they touch on areas that are not traditionally (and not necessarily substantively) family law.