Adventures in Community Property Breaking News – Clayton v. Wilson (2010)

In two previous pop quizzes, we discussed previous Washington court decisions regarding community property and community liability for torts committed by one spouse.  To recap:  Washington is a community property state, which generally means that all property that a couple acquires during their marriage is considered to be jointly owned by both spouses, and neither spouse can transfer or destroy the property of the other without that spouse’s consent.   All other property (such as property acquired before marriage, or property received as a gift) is considered separate.  The issue of community property has created some interesting and difficult questions for Washington courts in the context of monetary liability for torts (lawyer jargon for wrongful conduct that injures someone else).

As discussed in our previous articles, there are several general rules that courts rely on in deciding if a victim of one spouse’s tort can be awarded community property as compensation for his injuries.  First, the court has to determine whether the spouse who committed the tort was acting for the benefit of the community when he committed his tort.  That rule was set out in two cases, including LaFramboise v. Schmidt, which we discussed in our first article on this issue.

So, if the community is liable, then the victim may collect from community property.   If not, the victim must first collect his award from the separate property of the tortfeasor spouse (i.e. the spouse who injured the victim).  But – if there is not enough separate property to fully compensate the victim, then the victim can go after community property.  This last rule was set out in the case  deElche v. Jacobsen, back in 1985.

The Washington Supreme Court recently dealt with this issue again in a case called Clayton v. Wilson.  Armed with your knowledge of community liability from our previous articles, let’s take a look at the facts of Clayton, and see if you can guess how the Court decided.

Clayton v. Wilson

The Wilsons owned several rental properties.  In about 1993, the Clayton family rented one of these rental homes.  They had a young son named Andrew.  Mr. Wilson hired Andrew to do yard work at some of the rentals, as well as at the Wilsons’ own home.  He began sexually abusing Andrew by requiring him to perform various sexual acts before he paid him (out of community-owned money) for the day’s work.  This abuse continued until Andrew was about 16 years old.

In December of 2002, when Andrew turned 18, he told his mother about the sexual abuse.  His mother called the police, and Mr. Wilson was arrested.  Shortly after he was arrested, Mr. Wilson admitted to his wife that he had abused other boys, and the couple eventually filed for divorce.  They also entered into a property settlement agreement which divided up their assets.  The agreement gave Mrs. Wilson approximately 90% of the couple’s community property, which meant that most of the property previously owned by both Mr. and Mrs. Wilson became Mrs. Wilson’s separate property.

The Wilsons were divorced in March of 2003.  A little over a year later, Andrew sued both Mr. and Mrs. Wilson for injuries suffered as a result of Mr. Wilson’s abuse.  Andrew was eventually awarded $1.4 million to compensate him for his physical and emotional injuries.  At trial, Mrs. Wilson argued that she was not liable to Andrew for Mr. Wilson’s wrongdoing because the abuse was not committed while Mr. Wilson was acting for the benefit of the community.

If the court had bought Mrs. Wilson’s argument, then Andrew would have only been able to collect from community property (i.e. community owned by the Wilsons 50-50) if Mr. Wilson did not have sufficient separate property to pay him.  This would have been a good result for Mrs. Wilson because, due to the separation agreement, there was almost no community property left!

However, the trial court did not buy her argument, and found that she was liable for her husband’s terrible acts.  Mrs. Wilson appealed, again arguing that the sexual abuse was Mr. Wilson’s separate tort for which she could not be liable.

How did the court decide?

A. Mrs. Wilson was not liable for Mr. Wilson’s egregious crime because the abuse was not committed while Mr. Wilson was acting for the benefit of the community. Furthermore, there was no evidence that Mrs. Wilson knew what was going on at the time.  Andrew could only collect his damages from Mr. Wilson, and if Mr. Wilson did not have enough property to pay him, he would not get his full award.

B. Mrs. Wilson was not liable to for Mr. Wilson’s tort.  Andrew first had to collect from Mr. Wilson’s separate property, and could only collect damages from Mrs. Wilson’s portion of the community property if Mr. Wilson’s separate property was insufficient.

C. Mrs. Wilson was liable for Mr. Wilson’s tort because Mr. Wilson’s abused Andrew while acting for the benefit of the community.  Andrew could collect his damage award from either Mrs. Wilson or Mr. Wilson, regardless of whether their property was separate or community-owned.

D. Mrs. Wilson was not liable because she was no longer married to Mr. Wilson.

Answer:  C.

The Clayton court found that the community (i.e. both Mr. Wilson and Mrs. Wilson) was liable to Andrew because:

Mr. Wilson used yard work as a means to groom the young boy. The abuse always occurred within the context of yard work, which consisted of community business. Mr. Wilson sexually abused Clayton while overseeing him as an employer, supervisor, landlord, and caretaker. The marital community benefited from Clayton’s labor. Mr. Wilson paid Clayton for his work with community funds, and only after he finished abusing Clayton on each occasion. these facts point confidently toward community liability because Mr. Wilson’s torts occurred while he was on “some community errand, affair, or business at the time of the tort.”

So, Mrs. Wilson was just as liable as Mr. Wilson for the sexual abuse, and Andrew could collect his judgment against either Mr. or Mrs. Wilson, regardless of the character of the now-divorced spouses’ property.

It should also be noted that the court believed that the separation agreement signed by the Wilsons was designed to stop Andrew from collecting on his judgment – 90%/10% splits are very rare in divorce settlements, after all. Because of that, the court held that the agreement was void.

So, even if Mrs. Wilson had not been found liable for Mr. Wilson’s tort, Andrew still would have been able to collect his award, as all of the property “awarded” to Mrs. Wilson was still legally community property reachable by Andrew if Mr. Wilson did not have a sufficient amount of separate property from which to pay him.

Lessons To Be Learned

Obviously, this whole chain of events was very rough on Mrs. Wilson, who in short order found that her husband was a pedophile and that they would both lose almost everything they had worked for as a result. But as innocent as Mrs. Wilson might have been of the original crimes, her after-the-fact efforts – working with the guilty party to do move assets to avoid having to pay off a victim – did nothing to help her with the court. In fact, the Washington Supreme Court confirmed that her actions constituted fraud. So in addition to the lessons about community property, this case also shows that Washington courts take quite a dim view of moving assets to avoid paying off litigation verdicts.

There are two clear morals to this story: First, pay attention to what your spouse may be doing, especially while making money or caring for community property – don’t live in denial. Second, if you want the court to think you’re innocent, don’t work with your spouse to stiff the people your spouse hurt.

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