Are You Financially Responsible for Your Spouse’s Bad Behavior?

While Bob Filner, who now has resigned from his position as mayor of San Diego, is not currently married, he serves as a good example of bad behavior.  I do not say “allegedly” bad behavior because there are already reports of financial settlements, and of course attorney’s fees, being incurred in connection with the sexual harassment claims against him.  But, if Bob Filner was married – or if anyone is married to someone who engages in any intentional or criminal conduct or even gross negligence – the question arises whether or not the other spouse (which in Filner’s case is symbolically the entire community of San Diego taxpayers) should bear the financial liability caused by one spouse’s misconduct.

Was the bad act “for the benefit of the community?”

The answer depends upon whether or not the misconduct was “for the benefit of the community.”  While I am fairly confident no one could argue that sexually harassing women was for the benefit of the community, there are examples where otherwise illegal or intentional activity is for the benefit of the community when defined as the married couple.  An example of such a situation is a California case involving a spouse’s embezzlement of funds.  Because the married spouses as a community benefitted from the use of those funds, the misconduct was actually deemed to have been “for the benefit of the community.”

Separate property or community property liability?

If an activity was “for the benefit of the community,” then the financial consequence (i.e., attorney’s fees, payment of damages, restitution, etc.) also belongs to the community.  However, if the activity was not for the benefit of the community, then liability should first be paid from the wrongdoer’s separate property.  If there is no separate property available, then the community property or estate is liable.  While this seems entirely unfair to the innocent spouse, it is the creditor (the injured third party) whose interest is paramount.

Despite the potentially unfair result to the innocent spouse by having his or her share of the community property used to pay for the other spouse’s misconduct, the community (i.e., the innocent spouse) may have a right of reimbursement from the wrongdoing spouse’s separate property.  However, this claim must be brought within seven years after the innocent spouse had knowledge that community’s funds were used to satisfy this liability.

The lesson

If one spouse has any reason to believe the other spouse is engaging, or may engage, in misconduct, it may be wise to speak with a family law attorney even before civil or criminal damages are incurred. By understanding beforehand one’s options as an innocent spouse, it may be possible to limit financial liability.