One of the more esoteric issues of family law, and one about which many litigants are concerned, is the “value” of a professional education. Spouses of doctors, lawyers and engineers want to know whether the community will be compensated for their spouse’s education, which was paid for during the marriage.
The recent case of In re Marriage of Weiner, 105 Cal.App.4th 235 (2003), discusses the California statutory scheme for determining the extent to which the community can be reimbursed for the costs of a professional education paid for during the marriage but acquired prior to the marriage.
Michael and Kelly Weiner were married in 1993. Michael Weiner had graduated from medical school in 1991. The parties separated in late 1999 and had no children. During the course of the marriage, the community paid a total of $12,217.14 towards educational loans that the husband had incurred in medical school prior to marriage.
In 2000, Michael Weiner received a bonus check from the U.S. Navy, in which he served as a medical doctor; the bonus check was an annual bonus that all navy doctors received, as well as an additional bonus that he received because he was board certified in internal medicine. He divided this bonus money and paid half to Kelly Weiner.
The trial court found that the educational loans had been incurred by the husband prior to marriage and, erroneously, concluded that they were not subject to the California statutory scheme of reimbursement. The appellate court reversed the judgment and remanded the case for further proceedings consistent with the opinion.
The statute and procedure governing the treatments of educational loans in a dissolution proceeding is laid out in Family Code Section 2641 (b):
(1) The community shall be reimbursed for community contributions to education or training of a party that substantially enhances the earning capacity of the party.
(2) A loan incurred during the marriage for the education or training of a party shall not be included among the liabilities of the community for the purpose of division pursuant to this division, but shall be assigned for payment by the party.
The appellate court reasoned that a plain reading of the language of this statute did not require that the underlying loan or obligation had to be incurred during the marriage, only that the community had to make payments on the loan or obligation.
The court found this statute consistent with the scheme of Family Code Section 2627, which provides that the underlying education loan should be assigned to the party who incurred the loan, whenever acquired without offset.
However, under Section 2641, any reimbursements owed the community can be reduced. The statute provides as follows:
“(c) The reimbursement … required by this section shall be reduced or modified to the extent circumstances render such a disposition unjust, including but not limited to, any of the following: (1) the community has substantially benefited from the education, training or loan incurred for the education or training of the party. There is rebuttable presumption effecting the burden of proof, that the community has not substantially benefited from the community contributions to the education and training made less than ten (10) years before the commencement of the proceeding, and that that community has substantially benefited from community contributions to the education and training made more than ten (10) years before the commencement of the proceeding.”
Michael Weiner’s evidence regarding the bonus monies received from the Navy for being a medical doctor and the monies received by the community from the Navy because of his board certification may well trigger this provision. As the court stated:
“Michael presented evidence his medical education provided him with monthly allotments which rose to $1,000.00 per month and annual bonuses of $15,000.00, neither of which would have been paid to him by the Navy if he had not been a doctor.”
Since this was a marriage of less than 10 years, the rebuttable presumption was that the community had not benefited from the education. On remand, evidence will be relevant as to whether the community already has benefited by the husband’s education. The trial court should reduce any reimbursement to the community because of loan payment based upon proffered evidence.
The court also points out that Section 2641 is the exclusive remedy for when a party to a dissolution’s income and overall station in life has been improved significantly by some education that the community paid at least a part of.
Citing In re Marriage of Slikva, 183 Cal.App.3d 159 (1986), the court found that Section 2641 (and its predecessor Civil Code Section 4800.3) were intended to remedy the inequity that occurred in a dissolution proceeding when one party was economically enhanced by some education that he or she received that the community paid for.
Jack and Sandra Slikva were married in 1969. The husband attended medical school from 1969 to 1973. Then he began his employment with Kaiser Permanente in 1978. He became a partner there in 1980. The parties separated in the latter part of 1982. At trial, Sandra Slikva was unsuccessful in her request for the court to find any value of Jack Slikva’s partnership interest. However, the court did find that it was appropriate to apply Section 4800.3 to Jack’s professional education.
As the court in Slikva stated:
“This inequity resulted after the working spouse supported the community, and the student spouse during the acquisition of the professional education. The parties left the marriage with an equal share of the fruit of community efforts. The injustice of the scheme is evident in that the student/spouse acquires an increased opportunity for higher earning and fulfillment from which the other spouse may derive no benefit.”
As the Slikva case pointed out, most times when professional education is involved in a dissolution of marriage, that education has resulted in some community goodwill asset (i.e., a medical or legal practice) that has some type of value. However, as the court stated:
“[B]ecause the community lays claim to the fruits of the effort of the spouses during marriage, earnings from the spouse’s professional practice redounded to the community . … Nevertheless in marriages in which dissolution closely follow the spouse’s graduation, or, … the spouse’s post-graduate training, the community lacked this opportunity to benefit from its efforts.”
As can be seen from Weiner, the California courts have extended liberally the provisions of Section 2640 to cover even situations when the professional education was acquired prior to marriage. The question becomes to what extent the community has been compensated for the education acquired prior to marriage if the loan was paid for during the marriage.
