Question on community property due to personal injury - CA code Section 780-783

What is the name of your state? California

I have a basic question that someone might be able to help -

Out of the blue my wife decided that our marriage isn't working and she is contemplating separation/divorce. I'm shocked about her decision and currently going through some counseling to better myself and how to cope with the situation.

The scenario is this - about a year ago my wife went through a surgery and 3 months after that we discovered that there was a foreign object left inside her. We naturally filed two lawsuits against the hospital/doctor for medical malpractice. One for her and one for me. We are in the process of settling this case and obviously there will be some compensation for both of us. Being that her lawsuit was the main one and mine was only for loss of consortium there obviously will be a large discrepancy between her settlement versus mine.

My question is - Will her settlement and my settlement be part of the community property should we divorce? Or will she get to keep all of her settlement? I am having a hard time getting a clear answer reading the CA. Family code section 780-783. My wife keeps telling me that this settlement is all hers to keep and I wanted to get an unbias opinion. Thanks in advance.

Here's the link to CA. Code 780-783:

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fam&group=00001-01000&file=780-783

My response:

Yours is an excellent question and, your wife will be very unhappy that you asked it. You see, you are correct and she is SO, SO, wrong . . .

The Community Property vs. Separate Property character of money or property received, or to be received, by a spouse in satisfaction of a personal injury damages judgment depends on the parties' marital status when the cause of action arose (i.e., when the injury was suffered):

• The money or property is community property if the cause of action arose during marriage and before separation. [Ca Fam §§ 780, 2603(a)]

• The money or property is the injured spouse's separate property if the cause of action arose (i) after entry of judgment of legal separation or dissolution; or (ii) while the spouses were living separate and apart. [Ca Fam § 781(a)(1) & (2)]

Recoveries included:
These statutory characterization rules apply to all compensation for damages arising from tortious injury to protected personal interests (bodily harm, defamation, emotional distress, etc.) regardless of the source of the payment--i.e., whether by the tortfeasor or his or her insurer. [See Marriage of Jackson (1989) 212 Cal.App.3d 479, 485-486, 260 Cal.Rptr. 508, 512-513--sums received in settlement under spouse's uninsured motorist coverage; Meighan v. Shore (1995) 34 Cal.App.4th 1025, 1034, 40 Cal.Rptr.2d 744, 749--loss of consortium damages]

But "personal injury damages" within the meaning of §§ 780, 781 and 2603 does not include a disability award. Concededly, disability pay "compares to" a personal injury damages recovery to the extent it compensates for the injured spouse's pain and suffering, disfigurement, etc. [See Marriage of Jones (1975) 13 Cal.3d 457, 462, 119 Cal.Rptr. 108, 112] However, that purpose is only secondary to the primary function of a disability award . . . which is to compensate the injured spouse for lost future wages and impaired earning capacity (diminished ability to compete in the labor market). [Marriage of Fisk (1992) 2 Cal.App.4th 1698, 1706, 4 Cal.Rptr.2d 95, 100]

Consequently, the Ca Fam §§ 780-782 and 2603 treatment of "personal injury damages" does not apply to workers' compensation and other disability awards. Rather, such awards are characterized in accordance with the injured spouse's marital status at time of receipt, regardless of when the injury occurred. [Marriage of Fisk, supra--workers' comp permanent disability award received after separation is injured spouse's SP and not subject to § 781(b) reimbursement]

IAAL

IAAL - Thanks for the response. Cut to the chase - Are you saying that her settlement and mine are both community property? I don't have a problem with that. I just needed some clarification as I have been told by her that her own settlement is hers. Reading the 780 gave me a headache on all the exceptions. Thanks again.

My response:

Okay, with the exception of disability money, all monies received in settlement (yours and hers) are Community Property; i.e., all the money is thrown into a pot, and divided equally.

So, if she gets the maximum of $250,000.00 and you get $20,000.00, then $270,000.00 gets split between you.

After you're done jumping up and down, and yelling "Yippppeee", let me know, was it Kaiser Permanente?

IAAL

IAAL - Thanks again....case is still in progress so all I can say is not Kaiser. It is wrapping up though. Will let you know after it is over.

IAAL - I spoke to a legal counselor on a free consultation and he told me that this is not a cut and dry situation as it could be taken to an appellate court to challenge it. Is this possible that it could be this way? The personal injury thing is a little sticky he said.

TIA