August 4, 2011

Can California Divorce Court Force Sale of L.A. Dodgers Despite Federal Bankruptcy Court's Control of the Team?

Jamie McCourt, the highly controversial co-owner of the Los Angeles Dodgers baseball team, is considering asking the family law divorce court to order all of her husband Frank's business assets sold, including the team, according to a report in the LA Times.

This, of course, brings up the conflict we run into in family law cases -- the authority of the California family court to make orders with respect to marital property, versus the power of the Federal court to control assets contained in a bankruptcy petition. In virtually every case, when the Federal court receives a petition for bankruptcy, an automatic "stay" (or "time out") is placed on the ability of the California state court to make any orders with respect to property and/or debt contained within the petition. This same stay is the same order that stops the creditors' calls to debtors.

Whenever federal law conflicts with California law regarding the same issue, the outcome is generally always the same -- the federal law supersedes California law. This comes from the Supremacy Clause of the United States Constitution. However, Ms. McCourt's attorneys are considering asking the family court to order the sale of the parent company that owns/controls the Dodgers, and apparently believe that if a potential buyer comes along who wants to buy the parent company, that the bankruptcy court might just permit the transaction.

The McCourt divorce has given us many juicy stories over the past year, including the takeover of the Dodgers baseball franchise by Major League Baseball. Stay tuned for how this latest development proceeds.

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October 31, 2010

Impending California Divorce Does Not Lead to Automatic Kick-Out of Spouse

I find it fascinating when celebrities in the Southland discover that California's community property rules apply to them, too.

Pop diva Christina Aguilera is divorcing her husband, Jordan Bratman. However, she apparently finds herself living in a luxury hotel in Los Angeles nowadays, according to the Daily News. It's not that she doesn't have a house of her own. Far from it. The problem is that her soon-to-be ex-husband still lives there.

Under California community property law, a home acquired during marriage is presumed to be community property. Even if the home was acquired in one spouse's name, both spouses have an equal right to possession and occupancy of the home during the divorce proceedings. Only when a divorce becomes final, and the property disposed of, does the obligation to move out apply.

There are exceptions, of course. One spouse might successfully convince the Court to make a pre-trial determination that a house is separate property and not community, in which case an early kick-out order may apply. Or, there might be domestic violence or other harassment which could lead to an order for a spouse to vacate the home (along with a restraining order).

However, there is no law in California that permits one spouse to simply just order or demand that the other spouse vacate the house just because the parties are divorcing, no matter how bad the situation might be.

Seasoned California family law attorneys know that this is the case; however, I have been bombarded in the past two years with motions from opposing parties and their attorneys requesting exclusive use and occupancy of a home without any kind of a showing that there is any violence, harassment or threat of such. Perhaps the stress of our current economic conditions is leading to more of these requests, in that the parties simply cannot tolerate being in the same home together. However, even in poor economic times, there is no authority for the proposition that one spouse has superior rights to possession and/or occupancy of a community home absent extenuating factors.

Continue reading "Impending California Divorce Does Not Lead to Automatic Kick-Out of Spouse" »

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April 17, 2009

California Divorce Attorney Cautions Clients About Mortgage Foreclosure and Modification Scams

With the recent news that home foreclosures reached a historic high last month, more and more divorcing Californians are trying to stave off foreclosures and considering whether to apply for mortgage modification.

mortgagemoney.jpgCalifornia has one of the highest default rates for home mortgages in the country, which makes our borrowers ripe targets for many of the scam artists that have popped up over the past few years. As is is typically the case, thousands of people fall victim to mortgage scams before the government becomes aware of the problem and can step in to address it. Fortunately, according to USA Today, both federal and state authorities have recently begun to address the problem and are clamping down on refinancing schemes.

If you find yourself facing an impending balloon payment, interest rate adjustment or even foreclosure, you may still want to consider a mortgage modification. However, it is generally best if you work with an experienced real estate attorney who can walk you through the process and can help you ensure you are working with a legitimate provider and not an unscrupulous thief. While no attorney can guarantee that your home won't ultimately fall victim to foreclosure, you give yourself the best odds when you work with an attorney.

Should you choose to move forward with mortgage modification on your own, pay close attention to the following red flags:

(1) Guarantees to save your home from foreclosure

(2) Unknown telemarketers who cold-call you with promises of saving your home

(3) Companies that ask for sensitive and confidential information over the phone

(4) Demands for large, up-front payments

(5) Promises of making large chunks of your principal "go away"

If you see any of these red flags, or have an uncomfortable feeling that someone is probing you far too extensively, then walk the other direction immediately. We've seen far too many stories of creative identity thieves weaseling their way into borrowers' bank accounts, draining all of the funds, and then disappearing into the night only to attack another unsuspecting victim the next day.


For more information about community property and other California family law issues, please contact attorney Gary D. Sparks.

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April 14, 2009

Mel Gibson's California Divorce Could Set Settlement Record

Mel Gibson's wife of 29 years, Robyn, has filed for divorce in California, citing irreconcilable differences. According to the Seattle Post-Intelligence, MSNBC, and other media sources, there are no indications that the couple had a prenuptial agreement.

Under California's community property laws, each spouse is entitled to one-half of all assets acquired during a marriage; that is, from the date of marriage until the date the parties separate. According to People Magazine, Gibson has amassed nearly $1 billion since the couple married in 1980. Accordingly, Robyn Gibson is likely entitled to half of that amount, or close to $500 million.

People reports that this amount will dwarf previous record holders Michael Jordan ($168 million), Neil Diamond ($150 million) and Steven Spielberg ($100 million).

For more information about prenuptial agreements, community property division and other California family law issues, please contact attorney Gary D. Sparks.

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September 26, 2008

Division of Retirement Plans in California Divorce and the QDRO

So, your divorce is final, the house has been sold, and you've reached agreement with your former spouse regarding custody, visitation and support of your children together. You're done, pour the champagne and launch the fireworks... or not?

If your Judgment of Dissolution includes the division of retirement and/or pension accounts, you may not be done after all.

1020934_29278712.jpg Some retirement plans fall under the body of federal law known as the Employee Retirement Income Security Program or ERISA for short (29 U.S.C. Chapter 18). If the retirement plan in question falls under ERISA (also called a "qualified plan"), then your Judgment of Dissolution may not be sufficient to protect the interest of the non-employee spouse.

This is one of those times that it helps to understand the relationship between California law and federal law. The Supremacy Clause of the United States Constitution requires that state laws must yield to federal laws whenever the United States Congress creates laws as permitted by its delegated powers.

Practically what this means with respect to these "qualified" retirement accounts is that you must obtain two orders from the family court: the first order (generally the Judgment of Dissolution) defines the community property rights of each party in that particular retirement account. The second order is called a Qualified Domestic Relations Order, or QDRO (pronounced "quad-row") for short. The QDRO is a specialized order from the family court that complies with all of the requirements in the federal ERISA law to actually make the division of the retirement account happen. QDROs are highly specialized orders that are best prepared by an attorney familiar with ERISA requirements as well as with the retirement plan's own unique requirements.

The consequences of failing to prepare and serve an appropriate QDRO on the retirement plan are serious. The non-employee spouse may lose out on survivor benefits, or may have to pay substantial taxes on his/her retirement distribution, or may under some circumstances lose ALL of his/her interest in the retirement plan. Make sure that you don't simply file your Judgment away in a file cabinet if retirement plans are to be divided, but instead move forward immediately with the preparation of the necessary QDROs to ensure the plans are properly divided between the parties. I generally suggest that the QDROs be prepared at the same time as the Judgment and not left until afterwards.

For more information about the division of retirement accounts, community property and other California family law issues, please contact attorney Gary D. Sparks.

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September 3, 2008

California Divorce and the Family Residence

So what do you do when you're getting a divorce in California and you have a home that is rapidly losing value? Who gets to keep the house? How can you sell it when the home is worth less than what you owe on it? How do you get the home sold as quickly as possible while there still is some equity in it, but your spouse refuses to move out or cooperate with you?

house.jpg

Unfortunately, there are no easy answers to these questions, and the detailed responses necessary to address all of them adequately could take weeks to write. We are obviously in difficult economic times, both here in California and nationally. Property values (except for very expensive, high-end homes) continue to plummet, and more and more clients are faced with the reality that the home they thought had hundreds of thousands of dollars in equity is actually upside down, or close to it. Not to mention those homes facing foreclosure.

As family law attorneys, we are charged with looking at a wide variety of solutions for families facing a brutal economy at the time of their divorce. The family residence may be community property, but what happens if the the house has no equity? What if you want to keep the home because you are convinced the market will recover next year, but your spouse insists that it must be sold? The truth is, the solution that is right for one family may not be right for the next family. On top of that, we have to consider what the mortgage lender(s) will and/or won't be willing to agree to in the aftermath of a divorce. Maybe your case is appropriate for a "deferred sale" agreement, whereby both spouses maintain title to the home but it is agreed that the home will sell at a future date and the proceeds split at that time. Or maybe your spouse is willing to keep the house and the debt while you simply want "out" and to get a fresh start.

In these troubled times, it may be worth a consultation with an experienced family law / divorce attorney who can help you with these questions. Even if you plan on handling your divorce yourself without an attorney, an attorney can help you understand your rights and obligations, offer suggestions to help ease the transition from married back to single life, and provide a range of possible alternatives for what to do with the family home (and the pros and cons of each) that perhaps you hadn't yet considered.

For more information about community property division and other California family law issues, please contact attorney Gary D. Sparks.

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