So You Think You Know the Law…(Answers to the Fall Edition 2011 of Gray Matters)
December 2011
Fall 2011
1. A man is “on a break” from his wife when his leg is broken by a negligent snowmobile driver while skiing with his mistress. When his wife finds out about the mistress, she files for divorce. Subsequent to entry of the divorce decree, the man recovers $50,000 from the snowmobile driver. The ex-wife is entitled to 50 percent because the recovery is community property. (True or False)
True: The general rule is that money acquired by way of settlement of a cause of action that arose during marriage is community property (Family Code §2603). However, Family Code §781(a) states that personal injury proceeds are separate property if the cause of action arose after entry of judgment of dissolution of marriage or legal separation. This code section also states that the personal injury proceeds are separate property if the cause of action arose “[w]hile either spouse, if he or she is the injured person, is living separate from the other spouse.” At the time of this publication, no court opinion has defined “living separate” for the purposes of this code section. One court has ruled on an analogous code section that the critical question is whether the individuals’ conduct showed a complete and final break in the marital relationship (In re Marriage of von der Nuell (1994) 23 Cal.App.4th 730, 732, 734-736). Accordingly, under the facts of this hypothetical, it appears the ex-wife gets to go on her own ski vacation pretty much anywhere in the world. (But note, if your ex-wife was driving the snowmobile, it’s all yours (Family Code §781(c))).
2. You just bought a large specialized ten-year-old piece of machinery at an auction from a failed business voluntarily selling off its assets. You paid $60,000 for the piece, which retails brand new for $120,000. When the trucking company you hired to transport the machinery to your plant negligently crashes and destroys the machinery, the trucking company is obligated to buy you a new one because there are no more used ones on the market. (True or False)
False: In the State of California, to recover damages for destroyed personal property, the plaintiff must prove the fair market value of the destroyed item just before the harm occurred (Civil Jury Instruction No. 3903K). “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts” (United States v. Cartwright (1973) 411 U.S. 546, 551; See also Smith v. Hill (1965) 237 Cal.App.2d 374). In this hypothetical situation, the defendant would argue that the result of the open auction performed the function of determining the fair market value, and plaintiff is therefore only entitled to reimbursement of the $60,000. However, the plaintiff should be able to present evidence, such as expert testimony, that may persuade a trier of fact that the actual market value of the ten year old piece of specialized equipment is somehow greater than the $60,000 the plaintiff paid. In any event, the plaintiff would not be entitled to a brand new piece of machinery.
3. You are injured while vacationing in Sonoma by another vacationer who lives in Los Angeles. When you return to your home in Fresno you file a lawsuit against the negligent party at your local courthouse. If the defendant tries to have the case transferred to Los Angeles for their own convenience, you will most likely recover your attorney’s fees incurred in opposing the motion to transfer. (True or False)
False: In fact, the court will likely order you to pay the defendant’s attorney’s fees because you filed your lawsuit in the wrong court. In a personal injury action, the lawsuit must be filed in the county where the party was injured, or in the county where the defendant resides (Code of Civil Procedure §395(a)). Accordingly, the defendant in this hypothetical should prevail and you can be ordered to pay his attorney’s fees. Code of Civil Procedure §396b(b) states: “In its discretion, the court may order the payment to the prevailing party of reasonable expenses and attorney’s fees incurred in making or resisting the motion to transfer whether or not that party is otherwise entitled to recover his or her costs of action.”
4. You and your common law husband move from Texas to California for greater economic opportunities, (It could happen). While residing in California your common law husband is injured because of the negligence of another individual. You can recover loss of consortium damages from the negligent party as his common law wife. (True or False)
True: In California, loss of consortium damages (loss of love, companionship, comfort, care, assistance, etc.) are recoverable by the spouse of a person injured by a negligent party. While California does not recognize common law marriages (Family Code §300), a common law marriage valid in another state, such as Texas, is recognized by California law (Family Code §308). Accordingly, under this scenario, the “unmarried cohabitant” would be entitled to recover loss of consortium damages from the negligent party.
5. You are automatically entitled to punitive damages when you prevail against your insurance company in a bad faith insurance action. (True or False)
False: “In a bad faith action, evidence that the insurer has violated its duty of good faith and fair dealing does not alone necessarily establish that it has acted with the requisite intent to justify an award of punitive damages. Even if an insurer has acted unreasonably, it need not follow that it also acted with malice” (Patrick v. Maryland-Casualty Co. (1990) 217 Cal.App.3d 1566, 1575). In the Patrick case, the court found that even though there was substantial evidence that the insurer’s “claims handling practices were shoddy, and that its handling of the claim sought by the [insured] was at times witless and infected with symptoms of bureaucratic inertia and inefficiency,” the court found no substantial evidence that these actions were malicious, fraudulent, or oppressive. The court therefore, reversed the $250,000 in punitive damages awarded by the jury.
For any questions you may have regarding civil damages, please feel free to contact Kevin M. Cruz in our Encino office.
Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.
