DIVORCE STORIES -- WHY YOU SHOULD LISTEN TO YOUR LAWYER

The Story About the Contractor, or The Man Who Came to Dinner and Stayed to Remodel the House

The lessons learned from this story: Listen to your lawyer about the value of your case; just because you married the owner, it does not become community property and don’t remodel a house that isn't yours.

Dave loved to remodel houses. He loved high quality materials and foraged construction sites and surplus stores for sinks, unusual woods, windows and other tools of his trade. He had always loved remodeling houses. He remodeled a rather ordinary three bedroom rambler in a run down neighborhood turning it into a House Beautiful in the midst of Hot Rod Haven. They told him he could not sell it for an amount that would cover his costs even though he had done all the work himself and got most materials at bargain prices. He has, as they say, overbuilt for the neighborhood. Dave never got to find out what his house was worth as he lost that house in his first divorce.

After the divorce Dave continued to work odd jobs, Mostly what we call under the table. Cash or checks cashed at the issuing bank. Money that IRS and ex wives wouldn’t find. Dave’s reputation for quality work was impeccable although things didn’t get done on time and he usually forgot to keep financial records. Nonetheless, Dave had plenty of work.

Nadine was recently divorced and wanted to remodel her kitchen. She met Dave through friends. She paid him $20,000 and he did a craftsman like job with which she was pleased. He started hanging around the house more and more and soon they became romantically involved. Soon Dave moved in with Nadine. Dave started some more projects on the house. A sun room would be nice. One with large bay windows of the highest quality and the most energy efficient. The back deck was demolished in preparation for a project some day. Dave asked Nadine if his adult son could move in with them. Dave turned the garage into a separate bedroom with private bath. He found modern fixtures and even some marble countertops. He had enough marble left to refinish the laundry room. The only house in the neighborhood with marble counters in the laundry room. New wainscoting in the downstairs family room and a new fireplace mantle would be nice. Somewhere along the way, Dave and Nadine got married.

Dave and Nadine fell out of love. Or rather Nadine fell out of love with Dave and asked him to move out. Dave couch surfed for a while and his son went back to live with his mother. Dave had a great personality and always could find friends who could provide bed and board in return for some nice carpentry.

Come now the divorce lawyers. Nadine was in no mood for a cooperative divorce. In her mind, there was nothing to cooperate about. It was a short term marriage, they did not have children and, in her opinion, there was no property to divide. They had never comingled their finances or obtained joint bank accounts or credit cards. Nothing to it. Or so she thought.

Dave demanded his “community property” share of the house. Dave had the mistaken notion that because they were married in a community property state the house became community and he wanted Nadine to buy out his share of the equity, at that time about $100,000. Dave was on his third lawyer and he finally recognized that the house remained Nadine’s separate property. However, he was determined to get reimbursed for his expense and effort at remodeling the house.

As I said, Dave did have a disarming charm and I agreed to represent him in negotiating a reasonable settlement. It would be “unjust enrichment” for Nadine to reap the benefit of Dave’s remodeling work without any compensation. Dave had already spent more than fifteen thousand dollars on his previous attorneys and I thought I could resolve the case easily in a few weeks.

Dave had no records of his out of pocket expenditures and, of course, no records or even reasonable calculations as to the number of hours he spent. In his mind, however, he felt entitled to $125,000 reimbursement. Nadine believed he was entitled to nothing and even had some notion that Dave owed her rent for the time he and his son lived in her house.

I often cite the statistic that 95% cases do not go to trial. This was the exception. Despite my best efforts, the case did go to trial. Both Nadine and Dave were determined to spend whatever they needed to in order to be right. Mediation and two fairly amicable lawyers could not convince them otherwise. Each just knew the judge would decide they were right.

Any guess as to the outcome of the trial?

Dave believed he should be compensated for the actual cost for time and materials for the remodel. A legal principle law provides that if Nadine paid nothing she would be unjustly enriched. The law also provides that Dave could only be compensated for the amount he had increased the value of the house.

Nadine’s real estate appraiser testified that Dave had actually decreased the value of the house because the bedroom replaced the garage and a house without a garage was worth less than one with. Also the unfinished deck diminished the value. Nadine’s appraiser had never testified as an expert witness and he contradicted himself several times. Our appraiser had spent hours and countless cases testifying as an expert. His pictures, analysis and testimony convinced the judge that Dave’s work, which was of unquestionable quality made the house worth $60,000 more than if had not been remodeled. Even without a garage. Sound good doesn’t it? Well, remember, Nadine had paid Dave for the kitchen remodel before they were married. That took the value Dave had increased the value of the home by only $50,000. Dave wasn’t happy with that but was willing to settle for $50,000.

But wait, there’s more. Dave performed the work while they were married and his time, skill and effort as well as the money spent on materials was all community property.

Result: Dave was entitled to $25,000 reimbursement from Nadine.

Moral of the story? Listen to your lawyer about the value of you case, Mediation usually costs less and gets better results, and don’t remodel a house that isn't yours.

Tell it to the Judge

Most of my divorce cases are cooperative and are not litigated but occasionally I take on a heavily litigated case. Usually these litigated cases serve as a reminder of why I am so passionate about trying to change the way people divorce. The contrast is striking between a litigated case and a collaborative case. This week I worked on two cases that provide great illustrations of that difference.

Case one had gone on for more that a year and was scheduled for trial March 9. A few days before trial we tried to resolve the matter through a mandatory settlement conference. These conferences are intense and emotionally draining but not nearly as much as trial can be. As is typical in these settlement conferences, the parties were in separate rooms with their respective attorneys as the mediator shuttled between rooms. The parties were wide apart and neither was willing to compromise. No settlement was reached and my opposing counsel took my client's deposition. Again my client endured four emotional hours during which irrelevant but potentially embarrassing questions came one after the other. These questions could never be asked at trial but an attorney has wide latitude during deposition. After the deposition I used my best negotiating skills to find resolution. Both parties remained intransigent. Somehow both parties believed they would prevail if they could just "tell it to the judge". So both attorneys prepared for trial.

Although trial date was March 9 we were on hold waiting for an available court. A divorce without children is lowest priority and we waited more than two weeks. Last Friday we received notice that trial would begin Monday morning on March 23. My client lives out of state and would have to find last minute plane tickets.

Both attorneys worked hard at coming to resolution. We know that trial would be very expensive and neither client would like the end result. We had been working at resolutions that would meet each of our clients priorities. Results of trial would "split the baby". We knew both parties were at risk of a property division that would not serve them well. So why would the parties continue to hold out for trial? They each believed that if they could just "tell it to the judge" the judge would realize how virtuous they each were and would find for them. My client had complaints about what her husband did for the last 20 years. Similarly her husband knew he would receive sympathy by relating his list of complaints. The truth is none of their complaints would even be heard by the judge.

Washington is a no fault, community property state. That means the bad acts of a party are not relevant. All the property in this case is community. A court would merely divide all property equally. My opposing counsel and I were working on an equitable division that would divide property in a way that made sense to the individual parties. She needed cash and he wanted to keep his business. We had that resolution well worked out and knew our clients would not do better at trial.

Late Friday we thought we had a good resolution and had agreement in principle. Where were we stuck? The wine glasses! She wanted them and he, who was still living in the house, claimed he did not know where they were. Stalemate. Does anyone believe the battle was really over the wine glasses? Years of anger and disappointment were wrapped up in those goblets. Both were still convinced they would get the sympathetic ear of the judge. Both attorneys knew these emotional issues would not be addressed at trial and were frustrated about preparing for trial when the relevant issues were relatively simple to resolve and the emotional issues were not relevant and the rules of evidence would prevent introduction of most testimony the clients wanted to present.

Sanity prevailed at 10 p.m. Friday as my esteemed opposing counsel and I worked out the last of the logistics by cell phone and e mail. Both attorneys are satisfied and neither client is. We saved our clients thousands of dollars and forged what we know is as equitable result as we could have in this situation. We gave our all only to end up with dissatisfied clients.

Case two also has gone on for over a year. However the delay has been at the clients' request. They have endured several traumatic events recently and needed to pause the divorce discussions. The clients had already crafted interim agreements with the help of their attorneys, financial planner and mental health coaches. Both husband and wife were content with the interim agreements and were not prejudiced by the delay.

Last week we had a "team meeting" with husband and wife, their attorneys and the financial planner. A lot has changed since our last meeting. The home value has plunged, the retirement accounts are significantly reduced, wife has lost her job and husband's job is at risk. Rather than expressing bitterness, both husband and wife expressed understanding and empathy. Both were concerned about the well being of the other in the future. They still want to dissolve the marriage but want to do so with dignity and respect. They have adult children and want to maintain a family relationship. They are my poster illustrations of the ideal collaborative case. This couple could easily have been in the same position as the litigious couple but they made a different choice early on in the divorce process. And that choice has made all the difference.

My mission is to change the way people divorce. I recruit others to help me spread the word that there is a different way. I hope these two stories provide incentive to choose a different way.

Washington State's Community Property Laws -- It's Not Always 50-50

Many people are under the misunderstanding that community property means a 50-50 division in a divorce. While that may be true in some other community property states such as California, it is not true in Washington.

Washington law provides that property must be divided "equitably". Specifically, Washington provides:

"the Court shall, without regard to marital misconduct, make such disposition of the property and liabilities of the parties, either community or separate, as shall appear just and equitable after considering all relevant factors, including but not limited to:
1. The nature and extent of the community property
2. The nature and extent of the separate property
3. The duration of the marriage, and
4. The economic circumstances of each spouse at the time the division of the property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to a spouse with whom the children reside the majority of the time." (Revised Code Of Washington 26.09.080)

Often "just and equitable" will mean a greater than 50% to a spouse who has forgone a career and does not have the ability to build retirement assets. The other surprise to some people is that separate property is considered when making this distribution.

I worry about people who believe they can do their divorce without lawyers. Particularly if one has more financial savvy than the other and perhaps also more bargaining power.

You should always at least consult with an attorney for advice in your particular situation.

Why your neighbor is wrong

This morning I received another "my neighbor says" e mail. Everyone seems to be an expert on divorce because they either have been divorced, know someone who has been divorced or their hairdresser knows someone who has been divorced. There are certain myths that keep making the rounds. Even my professional family law lawyers list serve occasionally gets a question from a novice lawyer who believes some of these myths. So here goes:

Myth: A minor can choose which parent he or she lives with when he or she is 14 (or 15 or 12 or 16) The correct answer is 18 -- the age of majority in this state.

Myth: The judge will ask the kids where they want to live. Fact -- the children will never be called upon to testify and the judge does not want to talk to them. The children's preferences are heard through an intermediary, typically a Guardian ad Litem (GAL)

Myth: If you move out of the house it will be considered abandonment and you will lose all rights to the asset. Again, correct answer is NO. All assets are considered and available for division, even if the person moved out of the house.

Myth: If you have an affair you will lose custody of the children. Fact -- it is how you behave as a parent that will factor in the custody determination. (Incidentally, we no longer use the word custody, it is a parenting plan)

There are many more myths I hear and a few of them are even true. I would love to answer your questions. Either post to this blog or send me an e mail and I will answer directly or in a future posting.