When is your separate property liable?

I am sometimes compelled to admit that to a client that there is no easy answer. This frustrates clients, who want to know what the chances are of prevailing. Thanks to a Court of Appeal case, family law attorneys can answer with more clarity questions concerning when a spouse's separate property is liable for the other spouse's debt incurred before or after the split.

The Family Code lays out the general rules: A spouse's separate property is liable for the other spouse's necessaries of life incurred before separation, and is liable for the other spouse's debt incurred after separation for common necessaries of life. Family Code Sections 913, 914. However, what constitutes a "necessary of life" and when are they "common"? These terms are not defined.

The Court of Appeal in Direct Capital Corp. v. Brooks, 2017 DJDAR 8556 (Aug. 30, 2017), shed light on the meaning of these terms. In that case, prior to the parties' separation, a corporation leased computer equipment to Wife, an attorney. She failed to pay for the equipment. After she was disbarred, the corporation obtained a judgment for $43,000. The corporation then attempted to garnish Husband's wages to collect. Husband filed for divorce and, since it was a pre-separation debt, he argued that the computers were not necessaries. Therefore, his post-separation wages, as his separate property, could not be garnished.

The court said the term "necessaries" is not confined to what is essential to support life. It may include many of the conveniences of society. It may be construed with respect to a person's economic and social station in life. However, "common necessaries," as it relates to liability for debts incurred post separation, means such things as are ordinarily required for sustenance by everyone, such as food, clothing and shelter.

Husband noted that lawyers practiced law for many years without computers. The Court of Appeal rejected this argument, ruling that since the parties' marital station in life included the Wife's operation of a law practice, the trial court appropriately granted the request to garnish Husband's wages. The fact that Wife's law practice generated income to the community was also something to consider.

It is helpful to receive some clarity via the analysis in Direct Capital. However, questions remain. Is a health club membership a necessary of life? What about art work for an office or home? Or music lessons for a child? Will the station in life test require comparing the parties' financial situation to others in the community? If so, will this test require expert analysis and testimony by an economist or reference to cost of living charts and other economic data? Notwithstanding Direct Capital, family law attorneys still need to answer these questions cautiously.