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Community Opportunity Doctrine

Community Opportunity Doctrine
COVID 19 update administrative order 20-09

Hello, Carla Hartley here. I am discussing today the Community Opportunity Doctrine. The Community Opportunity Doctrine is unique in California to the family code cases that come before it and within the family court cases that we have, it is further unique to the dissolution of marriage cases, your divorces.

The reason for that is without a marriage, you don’t have a legal community, a community property estate in California, or the duties to manage in the highest good faith and fair dealing with the other party in the context of marriage, which is what we have in California’s marital dissolutions. So the Community Opportunity Doctrine pretty much holds that the spouse that has a separate property fund and wants to invest has to first make an offer or has an obligation to use community funds for that good investment.

Now, this is kind of intricate but I’m going to use a really simple example. Say the community, you know husband-wife, the community has $100,000 sitting in a bank account and savings and the wife has $100,000 of her own that she has for instance inherited sitting in a savings account that does not have husband’s name on it. It is her separate property.So this business opportunity comes up, I don’t care what it is. Any kind of business opportunity.

The wife in this case wants to invest her separate $100,000 in this. Well, the Community Opportunity Doctrine says that the community gets that opportunity first. What’s supposed to happen is the husband and wife are supposed to have a discussion and decide whether or not to use community money for this or not. I’m just going to go out here and say that if you did have this discussion and you better have some kind of resolution in writing because we’ve hit a point today once litigation starts and once that $100,000 for example has turned into a half million dollars as a result of a wise investment, what you’re going to have is different memories. One party is going to remember, the spouse that was the other part of the community said they didn’t want any part of it.

The other party is going to say “Oh no, I said I did but you used your separate money anyways!” Get it in writing. Memorialize your stuff, get it in writing. The $100,000 gets invested, becomes a half million dollars, the separatist is going “Oh this this is my half million dollars of separate property.” If you cannot prove that the community, the other person in the community, said “No, you are not investing our $100,000 in this,” then you have violated the Community Opportunity Doctrine and the remedy for that would be to find that the $500,000 was community money, but to give the separatist a reimbursement for that $100,000, so that the separatist is also made whole.

That is so over simplified, it hurts my teeth, but I want to get the general concept of the Community Opportunity Doctrine out to you so that if you’re looking at something and thinking “I should have had a chance at that,” or you know, this person throughout the marriage has just tended their separate property estate while just spending all the community property money on whatever, that becomes problematic. Now for the Community Opportunity Doctrine to apply, the community has to have had money available to invest and this is going to go into tracing and into reimbursements and into all sorts of other stuff that I’m not getting into in a brief video context. I just want you to know that the Community Opportunity Doctrine is out there. That it has been out there for many years and it has been us to equalize the party’s estate when they separate upon divorce in many many cases. I hope this has been helpful. I hope you guys have a good day and I hope to see you again soon.