IN RE: the Marriage of FLORA S. and GEORGE L. RUIZ. FLORA S. RUIZ, Appellant, v. GEORGE L. RUIZ, Respondent.
In a decision filed April 14, 2011, the California Fourth District Court of Appeals affirmed a Riverside Superior Court’s characterization of a worker’s compensation payout during the marriage of Flora and George Ruiz as both community and separate property. The Ruizes were married in 1975 and separated in 2005. Flora sustained a permanently disabling injury in 1992, but she did not receive a disability payout until 2002. This payout, after deduction of attorney’s fees and medical expenses, was $172,364.
According to California Family Code §760, “Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.” In Raphael v. Bloomfield (2003) 113 Cal.App.4th 617, the Court determined that “..notwithstanding the section 760 community property presumption, a lump sum permanent disability award received prior to separation is the injured spouse’s separate property to the extent it is meant to compensate for the injured spouse’s diminished earning capacity (and/or medical expenses) after separation.”
Flora argued that this meant it was up to George to prove that some of the payout was community property. The Court interpreted Raphael differently, applying the general rule that a party who claims that property acquired during the marriage is separate property has the burden of proof on that issue. In the absence of any evidence of how the payout amount had been determined, the Court applied a formula based on the period Flora was disabled during the marriage and her remaining working life after the separation, based on her salary at the time of injury and the assumption that she would have retired at age 62.5. That formula determined that $103,033 of the award was community property and $ 71,311 was Flora’s separate property.
Flora appealed, stating that the allocation was arbitrary, but she did other than asserting that the entire award was hers, she did not suggest an alternate formula for splitting the award between community and separate property. The appellate Court affirmed the lower court’s decision, finding that, according to Raphael, a worker’s comp payout is supposed compensate for lost earning–earnings that would have been community property while the Ruizes were together. The appellate Court further found that in apportioning the payout between community and separate property, per In re Marriage of Lehman (1998) 18 Cal.4th 169, 187, the trial Court had “the discretion to use any method which is reasonable and which fairly apportions the value of the asset.” The appellate Court found that the lower court had not abused its discretion in applying its formula to apportion the payout.
Full transcript of the Court’s decision can be found here.