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When you think about how much your law partner's new computer cost, you know instinctively that the bill is also your bill.
It's Partnership 101. But different rules apply with your "other partner." We're talking about when a spouse's computer bills become yours -- even if you are not in business together.
That's the problem that faced attorney Grant Brooks. It didn't turn out so well in Direct Capital Corporation v. Brooks.
Creditor v. Lawyer v. Lawyer
Like too many partnerships gone bad, Brooks filed for divorce from Mary Brooks, who was also an attorney. Like too many lawyers gone bad, Mary had been charged and disbarred for allegedly defrauding clients in her own practice.
Before all that happened, Mary had been leasing equipment from Direct Capital Corporation. The company had a judgment against her for $40,000 because she didn't pay her bills.
The company went after Grant Brooks in civil court, but he claimed the court lost jurisdiction once he filed for divorce. The company called it a sham divorce to defraud creditors.
The trial judge found it was a community obligation and issued a garnishment order. Grant appealed, but California's Third District Court of Appeals affirmed.
"Neccessaries of Life"
Generally, the court said, a spouse's separate property is not liable for debts incurred by the other spouse during marriage. However, a spouse is liable for a "debt incurred for necessaries of life" under Family Code Section 914.
The trial court found Mary's former law practice generated community income, and that computers were necessary to operate her law practice.
"A modern law practice entails a lot of paperwork, which commonly includes computerized forms," the appeals court acknowledged. "Frankly, it is difficult to imagine a reasonable attorney beginning or maintaining a California law practice without a computer."
It could have turned out better if the Brooks had a pre-nuptial or separation agreement. In the meantime, Grant got the worse part of the "better-or-worse" contract.