Divorces often end in some kind of agreement between the parties. Frequently, the parties will hash out a deal in a Marital Settlement Agreement (MSA), which is signed by the parties (and their counsel, if there be any), attached to a judgment and then signed (entered) by the Court. The MSA contains provisions regarding property division, support, payment of attorney fees, custody and visitation. This is an enforceable contract between the parties (provided it be a valid contract) the moment it is signed, before a judge ever signs.
This was affirmed by the California Fourth Court of Appeals (CA-4) on April 10, 2012, in the case of Litke O’Farrell, LLC (Litke) v. Marcia Tipton, Case # A132327. Judgment had been entered on Ms. Tipton’s divorce from Richard Tipton January 31, 2011, but the MSA had been signed January 18, 2011. In motions served January 24 and 28, 2011, Litke attempted to charge community assets to collect on a prior judgment against Richard Tipton. The trial court granted Litke’s motion, whereupon Ms. Tipton appealed.
Prior to 1984, a spouse who received community property in a divorce was still liable after division for community debts incurred by the other spouse during the marriage. But in 1984, the legislature enacted Civil Code sec. 5120.160 (now Family Code sec. 916), which provides that property received in the division is not liable for such a debt, nor is the non-incurring spouse personally liable for his/her spouse’s separate debt (unless otherwise specifically stated when dividing property).
Litke’s argument hinged on the assertion that division of property does not occur prior to entry of judgment; Litke stated that “the court…approves and effectuates a division by entering a judgment dividing the property.” Ms. Tipton disagreed, asserting that property division is effectuated with the signing of the MSA.
CA-4 agreed. It noted that the Family Code empowers a husband and wife to alter their property rights by a marital property agreement, which when recorded has the same effect as a recorded grant deed; thus, spouses can contract with each other at any time regarding property. CA-4 further determined that property provisions of a proper, non-fradulent MSA are valid and binding on the Court, and the Court does not have a role in approving or disapproving property divisions agreed to by the parties. It can only accept the agreement and incorporate it into a judgment. CA-4 also stated that a written agreement to separate may provide for child and spousal support during separation or upon dissolution of marriage, and that was similarly binding and not requiring the Court’s approval.
The bottom line: “Court approval in a dissolution proceeding is not a prerequisite to the enforcement of an MSA in an independent action, unless the agreement requires such approval…As a policy matter it would be unfair to require parties to an MSA to await entry of a judgment on some uncertain, future date in order to effect the disposition to which they have already agreed.”
CA-4 reverse the trial-court’s judgment; Litke was not entitled to orders collecting against Mr. Tipton’s debt from Ms. Tipton’s confirmed separate property.
Read the whole decision here.
(This article is part of the Marcus Family Law Center, PLC’s series on late-breaking Family Law news. Family Law is perhaps the most complicated of legal fields. The information provided in this blog is for general informational purposes and it should not be relied on as legal advice. An attorney-client relationship is not formed by reading the information on this site and can only be formed by a written agreement that sets forth the scope of the relationship and the fee arrangement. There is no substitute for expert legal assistance. If you need representation, schedule a consultation with the Barefoot team.)