1. You have two (2) hours to complete this exam.
2. This is a closed book examination. No materials are allowed.
3. The exam consists of two (2) essay questions of equal value. The suggested time for each essay question is one hour but you may allocate your time as you wish.
4. In grading the essay questions, considerable weight is given to the organization of your answers. I therefore suggest that you devote time to analyzing and outlining your answer before writing. Your answer should be directed to an intelligent person who is NOT an expert in the area of community property.
5. Your answer should demonstrate your understanding of California community property as applied to the facts presented. Conclusions without explanation nor analysis will not receive credit.
6. All facts take place in California and all parties are residents of California unless otherwise stated.
7. In the blue books provided to you, please write your answers on the right hand side of the page and double-space your answer (written or typed).
8. Write your exam number on your exam envelope, at the top of this question packet and your used blue books. Do not use your name, student ID number or Social Security Number on any exam materials.
9. At the conclusion of the exam, return all exam materials to the exam envelope and submit it to the proctor. Do not seal the envelope. Students who do not return all exam materials at the end of the exam may not be graded.
10. Good Luck! Have a wonderful New Year!
ESSAY QUESTION I
Harvey Hitterelli married Wilma Wit in 1970. Shortly thereafter, Harvey took the $50,000 balance in his bank account and bought a $50,000 house in San Diego (SD) taking title in his wife’s name. He then bought a second house in San Francisco (SF) for cash and took title in his own name. Larry the Shark had paid him in cash to do a little work for him right after the wedding and he saw no reason to tell Wilma about the money or the SF house.
In January, 1974, while on a job in Las Vegas, Harvey met Polly at the craps table at the M and M Casino. It was love at first sight, and after a magical night, Harvey asked Polly to marry him. She accepted and they were married in the Little White Wedding Chapel on the Strip. They returned to San Francisco and went to live in Harvey’s house. Polly never knew about Wilma. A month later, Harvey sold the SF house and immediately bought a new house in SF putting title in Polly’s name only. He figured Wilma would not find him this way.
When Harvey didn’t return by March, Wilma asked Harvey’s best friend Rocko Looselips where he was. Rocko was secretly in love with her and so he told her the truth. Wilma hired an investigator, who confirmed Rocko’s story. She filed for dissolution in June, 1974 and had Harvey served in front of Polly. Polly was furious and kicked Harvey out of the SF house that day.
After a contentious court battle, Harvey and Wilma were divorced and their property divided. Wilma had been assigned the SD house in the dissolution decree. Wilma began dating Rocko and fell in love. Rocko proposed and they wed in January, 1983. At that time the SD house was worth $100,000. Right after marriage they took out a $10,000 loan on it so they could honeymoon in Bora Bora. The lender put the house in both names when preparing the loan documents; Rocko and Wilma as joint tenants. When Wilma saw this she was uncomfortable. Rocko told her not to worry, it was her house, and they didn’t have time to redo all the papers before leaving on their trip. Wilma acquiesced and signed the documents. They paid off the entire loan with Rocko’s wages as a union boss.
Ten years into the marriage, Rocko used $50,000 of the couples’ savings to bail out his cousin Vinny by buying his restaurant in North Beach. Rocko hired Vinny to stay on and manage “Little Vinny’s” for them at a salary of $2500 per month. The restaurant made about $5000 profit a year.
In July, 2003, Wilma decided she would like to change the restaurant and rename it “Veggies”, serving high end vegetarian Italian food. At the same time, Wilma decided she was unhappy in her marriage and wanted out. She hired a lawyer and filed for dissolution. Meanwhile, Veggies had become the new hot spot and was flourishing. She had let Vinny go before reopening and had been paying herself the same $2500 per month as manager. At separation, the restaurant had been worth $50,000. At the time of trial over a year later, the SD house was worth one million dollars, and the restaurant was worth $500,000.
How should the court characterize and divide Harvey and Wilma’s property, and reimbursement rights, if any?
What claim(s) does Polly have, if any, and how should the court deal with them? Explain.
How should the court characterize and divide Rocko and Wilma’s property, and reimbursement rights, if any? Make sure to discuss what each party’s attorney would argue and any counter arguments the opposing attorney would make.
ESSAY QUESTION II
Baby Tears was 21 and a huge pop star. While on tour to promote her latest album, she fell madly in love with her back up dancer Devin. After a month of living together at her house in Beverly Hills, Baby decided he was “the one” and proposed. Devon readily accepted.
Succumbing to her manager’s warnings to protect her millions, Baby gave Devon an agreement her lawyer had prepared. Reluctantly she said he needed to sign it or they could not get married. Devon went to a lawyer and was told the agreement contained standard provisions which said that Baby’s future earnings and what she has now were her separate property. Devon signed it and returned it to Baby.
Baby bought her own wedding ring, paid for the very public wedding and honeymoon, and they moved into her Beverly Hills house. A few months later Devon told Baby he was going to the gym and would be back later. He was actually going to meet an old flame for a fling at a hotel. On the way home, he was driving too fast and skidded on the wet road hitting a pedestrian and a tree. The pedestrian sued Devon and Baby for his injuries demanding one million dollars.
Devon was also injured. He lost his leg and could no longer work as a dancer. Upon further investigation it was discovered that the car’s tire was defective. The tire company agreed to give Devon two million dollars even though he was partly at fault if he agreed to sign a non disclosure agreement. Devon signed and put the settlement in a joint account at SF Bank which already contained two million dollars of Baby’s earnings. He then bought two million dollars of stock in ABC Corp. in his name. The next month he bought one million dollars of DEF Corp. stock in his name. He did not keep any records.
Baby stuck with him. When Devon said he wanted to be a pop star she tried to be supportive by using her earnings to pay for him to attend the Hollywood Conservatory of Music which cost $100,000. When he did not do well she gave him a Mercedes paid from the SF Bank account. Baby subsequently bought a second house with her earnings held in CAL Bank and took title only in her name.
Shortly after, two law firms filed papers to attach onto Baby’s bank account at CAL Bank. They were seeking to garnish unpaid child support for Devon’s two children fathered with two prior girlfriends.
The following week Devon was caught in a compromising position with a prostitute named Candy. A reporter discovered it and took photos which were sold to every supermarket tabloid and television gossip show. Baby was heart broken and vowed to get even. She instructed her lawyer to file for dissolution the next day.
Devon got a lawyer who placed a lien on the second house to secure his fees. At the time of trial the ABC stock was worth one hundred dollars and the DEF stock was worth two million dollars.
I. If the agreement is held valid what would be the result?
II. If the agreement is declared invalid, what would be the result?
Make sure to explain how the court would characterize and divide the parties property/debts and deal with any reimbursement rights, if any. Also make sure to discuss what each party’s attorney would argue and any counter arguments the opposing attorney would make.
END OF EXAM