It is old news that Khloe Kardashian filed for divorce from her husband Lamar Odom back in 2013. According to this article, however, there is a possibility that her divorce action could be dismissed by the Court in Los Angeles. It would appear from this article, that under California law, a party has an affirmative duty to keep a divorce action moving; otherwise, the case could be dismissed. It would appear that she started her action in December 2013 and, if nothing else is filed by the end of April, her case will be dismissed. It is not clear from the article what either Khloe or Lamar will have to file to preclude the dismissal of her divorce action.
So, what would have happened if Khloe had filed her divorce action in Pennsylvania. In many counties in Pennsylvania, the divorce action is driven by the parties, not by the court system. If either party files the appropriate document, the case moves through the system. If neither party files anything to move a case forward, the case sits dormant if not for months, then for years. In 2003, a Rule of Civil Procedure was implemented by the Supreme Court of Pennsylvania authorized a trial court to terminate any case “in which there has been no activity of record for two years or more by serving a notice of proposed dismissal of court case.” Pa.R.C.P. 230.2. Not long after this rule was implemented, county courts were sending our many notices and/or publishing notices regarding which cases would be terminated if there was no activity. To avoid having one’s case dismissed, a simple “Statement of Intent to Proceed” would be filed with the Court within 30 days of the Notice being sent. If the Statement were filed, the case could sit inactive for another two years before another notice could be sent. The filing of the Statement of Intent to Proceed was like re-setting the shot clock.
On April 23, 2014, however, the PA Supreme Court issued an order suspending this rule. According to the text of the order that was issued, Rule 230.2 was going to be under “review and revision.” Almost 1 year later, this rule is still suspended. However, this did not preclude the courts from dismissing inactive cases. The April 2014 Order from the PA Supreme Court specifically provided that the Court could still proceed under Rule of Judicial Administration (Pa.R.J.A.) 1901.
This administrative rule provides that the county trial courts have the discretion to develop a local rule which provides for the termination to inactive cases. At least 30 days notice still has to be given before the termination. Instead of their being a universal procedure throughout PA, it was left up to the county.
So where would this leave Khloe if she filed in PA? It would depend upon the county where she filed. If she wants to get a divorce, she or Lamar should move the case forward to its conclusion.
In most divorce cases, a party is served with the divorce complaint by mail or through personal service. As reported in this article, a NY judge allowed a person to be served with notice of a divorce action via Facebook. Anyone having difficulty serving a divorce complaint on the other side should not start posting things on Facebook and assuming they have good service.
Service is the way in which a person is given notice that a law suit has been initiated. Some form of notice is required in every type of law suit. This makes sense because a person should know if someone is suing him or her, why the suit is being brought, and what the remedy is that the person is seeking. Usually, delivering to the defendant a copy of the complaint or other paperwork which initiates the lawsuit provides all of this information.
Under Pennsylvania law, a party starting a divorce action (the plaintiff) can serve the other party (the defendant) by mail. However there are some strict requirements. Original service, which would include service of an initial divorce complaint, can be completed by mail if it sent by certified mail, for the recipient’s signature only. If the certified mail is accepted, i.e. signed for by the defendant, there is good service. The Plaintiff has to sign an Affidavit affirming that the signature on the green card is that of the defendant. If the green card is signed by any other person even if that person lives with the defendant, it is not good service and other means have to be taken to properly serve the defendant.
If the certified mail is unclaimed, which happens in many situations, it is also not good service. If the certified mail is refused, if the same documents were sent to that same address by regular mail, and if the regular mail does not get sent back because there is no one living at that address with name of the defendant, then there is good service. The presumption is that the intended recipient of the mail is the person who refused to sign for the certified mail. It is important to keep in mind that refused certified mail, which means the intended recipient affirmatively refused to accept the mail., i.e. told the mail carrier that he or she is not going to sign for the certified mail, is only good service if regular mail sent to that same address does not get returned. In more than 25 years of practice, I think I have had certified mail refused twice. Someone simply not being home to sign for the certified mail or not going to the post office to sign for the certified mail does not make it “refused”; rather it is just “unclaimed.”
So what is the average person in Pennsylvania to do if the certified mail is unclaimed. The person has to look into having the documents personally served by any adult who is not the Plaintiff. A process server or private investigator can be hired to do this. Actually, under the Pennsylvania Rules of Civil Procedure, any adult who is not the Plaintiff can do this.
If personal service is not successful, as in the article referenced above, the Plaintiff has to file a Petition for Special Service. That special service can be to have a notice published in the local newspaper of general circulation, i.e the major newspapers in that area, or service at the address of a relative who is likely to have contact with the defendant, or service at the defendant’s place of employment. The person asking for permission to specially serve the defendant can be creative in offering suggestions to the Court. Those suggestions need to be likely to get the defendant’s attention; there needs to be some likelihood that the defendant will see the paperwork or receive notice that the divorce action has started.
In Philadelphia, before one files a petition for special service, there are numerous steps that must be taken. The person seeking special service needs to have confirmed the defendant’s address with the US Post Office, which is a simple form. The plaintiff needs to check with local Board of Elections to see where the Defendant is registered to vote. The Plaintiff has to check with the Pa Department of Transportation to find out the address associated with the Defendant’s driver’s license. There is a list of steps that the Plaintiff must take before filing the Petition for Special Relief. It would appear from the facts set forth in that article that NY has similar requirements.
When all the required steps have been exhausted and the defendant still can not be served, then a person can file for special service. In this particular case, the plaintiff was fortunate to know that the defendant has a Facebook account which he checks on some regular basis. Otherwise, the plaintiff may have had to resort to other, more expensive options.
The novel solution in this New York case is not going to apply to every other divorce case. However, it does provide an additional option where all other options have been exhausted.
Although I have not yet seen the movie Big Eyes, I am familiar with the premise of the movie. This movie tells the story of the relationship between Margaret Keane and her second husband, Walter Keane. Ms. Keane is known for her paintings (usually of children) with very large eyes. This “based on a true story” film, shows the rise in popularity of the paintings, how Walter took credit for the paintings, and how Margaret eventually brought a law suit to reclaim her own artwork.
The purpose of this blog is not to provide a review of the movie, but rather to look at certain facts in this story through the lens of current Pennsylvania Family Law. So, let’s posit that we have a couple. One of the spouses is a prolific painter. The other is not. (Let’s avoid the whole aspect of one person taking credit for the paintings of the other). Let’s also assume, the parties are divorcing, which is what the Keanes actually did. How could these paintings be treated?
There are several ways that this situation could be considered. First, the paintings could be considered as personal property, like any other piece of art owned by either of the parties. If the artwork came into the possession or control of either or both parties at any point between the date of the parties’ marriage and the date of their final separation, there would be a presumption that the artwork was marital property subject to equitable distribution. It would not matter which of the spouses painted the picture; the time when the painting came into existence would determine whether or not the painting was marital property.
Whether either party created the painting would go to the value of the asset. So, if one spouse were an established painter, that piece of artwork may have a greater value than the art created by the unknown artist. If one spouse were the actual painter (Margaret) and the other spouse was taking credit for the paintings (Walter), then if it was eventually disclosed that Margaret was the actual painter, it could have an impact on the value of the paintings. Further, under this analysis, the marital estate would only include those paintings owned by the parties that were not yet sold. Walter would have no claim to the future paintings.
It is also possible, that this painting enterprise can be viewed as a business. It would depend upon how the parties operated it. If there was also posters, postcards, refrigerator magnets, t-shirts, etc. using designs from the paintings, being sold by the parties or being sold on their behalf, the parties probably established some type of corporation to protect their personal assets. There might have been a corporation, LLC, a partnership or some other business entity established to pitch these wares. In such a case, the unsold paintings could be considered inventory owned by the business. The business itself would also have a value with or without the inventory.
However, under Pennsylvania law, personal goodwill is not an asset subject to equitable distribution. Personal goodwill is the additional value that a company has due to the efforts of a specific person. Without that person’s involvement, does the value of the business change? For example, suppose someone always goes to the same person to get his or her hair cut. If that barber/hairdresser changes locations, does that person go to the new location? If the answer is yes, then there is some personal goodwill connected to that barber/hairdresser. If that same person goes to a particular location for a haircut because of the price or where it is located, then personal goodwill is not a factor. In the present situation, the question then becomes what would this business be worth without the painter in the picture. Could the business be sold without the painter creating the underlying artwork? It may still have a value is it were possible to license out the mass production of the posters, cards, etc. based on the paintings.
In addition, one of the factors that the Court considers when dividing the marital estate is the ability of each of the parties to acquire assets in the future. The ability of the painter-spouse to continue creating artwork that sells would be a factor that the Court would have to consider when dividing the marital estate. Until what age can someone continue to paint? For how long would there still be a market for the artwork and the other merchandise?
The purpose of this posting is not to answer all of these questions. There are so many other facts and factors that would go into answering these questions. Rather, I wanted to offer something to consider when watching the movie or reading about the legal drama that took place between the Keanes.
I remember back when I was first starting to practice law. At that time, there were three possible locations for a family law matter in Philadelphia: some matters were in City Hall, some were at 1801 Vine Street, and other matters were at 1600 Walnut Street. At some point in the 1990’s, Family Court was to be consolidated into a single building: 34 South 11th Street. This location was just to be for Domestic Relations Matters. Juvenile and Dependency proceedings and Adoption proceedings were to remain at 1801 Vine Street. Since that move, the needs of Family Court in Philadelphia have expanded – or at least there was a recognition that it would be better for people to use different entrances to different aspects of Family Court instead of walking through the maze of hallways that connected 34 South 11th Street (main court building), 42 South 11th Street (custody and divorce masters), 27 South 12th Street (support masters and some judicial chambers), and 1133 Chestnut Street (court filings). All of these addresses have been used by Family Court in Philadelphia for different proceedings.
All that is changing in the next few weeks. The new Family Court building, which is going to be named after Justice Ronald Castille, will be open for business on November 17, 2014. The new building is located at 1501 Arch Street. It is a single multi-level building which will house ALL of Family Court – Domestic Relations and Dependency. Family Court will be closed from November 7th through November 14th as the courthouse files and other things are physically moved and the new courthouse is set up.
Things may be hectic for parties who have been scheduled for hearings in the old buildings as they will be getting notices of the new location (if not a new date) for their court appearances.
As I write this post, Thanksgiving Day is less than a week away. Christmas and New Years Day will be upon us sooner than we would like. For many this is the time of the year when people get together with their families (family of birth, or family by choice) to enjoy the holidays.
For married couples who are separated, this can be a difficult time of year. When there are children involved, there can be squabbles about where the children should be for the holiday. Parents can’t afford to get what they want for their children because they do not have enough money. Children are often caught in the middle as they want to spend time with both parents. The better thing for parents to do is work out as many of these issues in advance and outside of the hearing of the children. Better to work out the pick up/drop off time and place for Thanksgiving a few days before the holiday as opposed to resolving it on Thanksgiving Day.
For divorcing parties who have no children or for whom there are no problems regarding custody, the end of the year can have an important impact for tax purposes. For federal income tax purposes, a person’s filing status is determined by that person’s marital status as of December 31st. If a divorce decree is not entered before 12/31, then the parties can either file jointly or “married filing separate.” For some individuals, they want to rush that divorce decree to make sure it is entered before the end of the year. For others, they prefer to delay the entry of the divorce decree until after December 31st. If you are not sure which way is better for you, you should consult your attorney and/or an accountant.
So one of the latest stories that has been circulating the internet concerns the pending divorce of Harold Hamm, the founder and CEO of Continental Resources, a prominent US oil company. One such article, found here, lists 10 facts that you need to know about the divorce. Really, some of the fact are more about the company and some are about the people involved. However, there are lessons to be learned by anyone who is involved in a divorce case – even those not worth billions of dollars. Through this article I want to highlight some of those lessons.
1. Hamm is America’s 32nd Richest Man: The lesson here is that, rich or poor, people get into relationship and sometimes those relationships end. Being worth millions or billions of dollars does not guarantee happiness.
2. The Couple Didn’t Sign a Prenup: This may be the one fact that can hurt Mr. Hamm and benefit Mrs. Hamm. People enter into prenuptial agreements for many reasons. One reason is to decide, before the parties marry, what will happen in the event of death or divorce. For reasons probably known only to the parties, their attorneys, and their financial advisors, they decided not to have a prenuptial agreement. You do not need to be worth millions to have a prenuptial agreement. If two people are planning to get married and the parties have assets they want to protect from distribution in the event of death or divorce,a prenuptial agreement is the best way to proceed. Without one, however, the law of the state where one of the parties files for divorce (not where the parties married necessarily) will determine what assets are marital property subject to division by the court.
3. This Could be the Most Expensive Divorce Ever: This “fact” remains to be seen. Mr. Hamm is reported to be worth over 11 billion dollars. That is not the size of the marital estate. There may be assets that are not part of the marital estate. Under Pennsylvania law, those assets and debts that existed prior to marriage and those that came into being after separation are not marital property subject to equitable distribution. Only the increase in value of pre-marital assets is subject to division as part of a divorce. In Pennsylvania, this is true whether or not either party had a hand in the increase in value. This is not true of every state. Gifts and inheritances to one of the parties would also be excluded from the marital estate and not subject to equitable distribution, except for the increase in value. It is not uncommon for parties, through pre-nuptial agreements, to exclude certain assets from the division as part of a divorce, including the increase in value.
4. Sue Ann Has Been Surveying Harold Since 2007: The article referenced above indicates that the Daily Mail reported that Sue Ann Hamm has been spying on her husband since 2007 electronic surveillance. There are several important considerations raised here. First, electronic surveillance is not automatically legal and/or admissible in Court. Factors that influence this how the surveillance was obtained and whether or not Mr. Hamm had knowledge/had consented to it. Under federal law, only 1 party to a telephone conversation has to consent for the conversation to be recorded. So, under federal law, whomever Mr. Hamm was talking with can consent to a call being recorded without Mr. Hamm’s knowledge. Under Pennsylvania law, however, BOTH parties have to consent. Otherwise, the recording of the conversation is illegal. Since this is a divorce action, state law will control.
5. The Couple Agreed on a ‘No-Fault’ Divorce: So, despite the surveillance, the parties have agreed to a no-fault divorce. Under Pennsylvania law, there is a preference for a “no-fault” divorce over a fault divorce. A fault divorce can be entered for such reasons as Mr. Hamm having committed adultery. There are several reasons why, however, parties can agree not to proceed with a fault divorce:
- Under Pennsylvania law, the person seeking a fault divorce has to be the “innocent and injured spouse”. So, if Mr. Hamm would be able to prove that Mrs. Hamm engaged in conduct which would also give rise to a fault divorce, she could not obtain a fault divorce;
- Perhaps, Mrs. Hamm did not have enough conclusive evidence to prove Mr. Hamm had engaged in adultery;
- The parties do not want to “air their dirty laundry”. In many instances, if a party wants to obtain a fault divorce, there will have to be a hearing.
- The parties do not want to pay for a fault divorce. As will be mentioned again below, under Pennsylvania law, the fault of a party which resulted in the divorce will not entitled the other party to more in the division of assets.
6. Harold’s Lawyers Want Sue to Turn Over the Recordings: Supposedly, Mr. Hamm wants the recordings to show that the marriage of the parties was over long before the date of separation claimed by Mrs. Hamm. If that is proven, then the end point for determining what is part of the marital estate has been shifted possibly 10 years earlier. As mentioned above, under Pennsylvania law, the court will divide the assets and debts that were acquired prior to separation. The assets that exist after separation are not divided by the Court.
7. Hamm’s Company Has Nearly Quintupled Since 2007: If Mr. Hamm can prove that the parties’ date of separation was 10 years earlier, as he is alleging, then a significant portion of the increase in value of Continental Resources is excluded from division by the Court. Of course, this can result in Mrs. Hamm getting a greater portion of the marital estate if there is a sizable amount of assets to which Mrs. Hamm has no claim.
8. They Initially Tried to Keep Divorce a Secret: In many jurisdictions, family court records, like those in divorce cases, are not readily subject to public scrutiny. In Pennsylvania, even in counties where one can free access the docket entries for any case, the general public is not allowed free access to the actual documents filed. In some situations, where there is a legitimate reason to keep the names of the parties private, especially in cases where children are involved, courts have used the initials of the parties instead of the parties full names.
9. Hamm Could Lose Controlling Stake of His Company: It is speculated that Mrs. Hamm could receive half of Mr. Hamm’s 68% interest in Continental Resources. While this is for the judge in the case to decide, if Mrs. Hamm were to receive 50% of the marital estate (which is not automatic under Pennsylvania law), a court could decide that Mrs. Hamm is not going to get any percentage of the business. Mr. Hamm might have to give Mrs. Hamm more of other assets so that she does not end up going into business with him. Or, Mr. Hamm may have to liquidate some of his shares of Continental Resources in order pay Mrs. Hamm her share of the marital estate.
10. The Couple Has Two Daughters: These parties’ daughters are adults. The should not be thrust into the limelight as a result of their parents’ divorce. Even if the children were minors, the children should not be the focus of any divorce case. A divorce case involves the end of the relationship between a husband and a wife. The relationships between parents and their children should not be legally impacted by the entry of a divorce decree. All too often, parents drag their children into the divorce proceedings telling them the details of the divorce. One does not have to be a mental health professional to know that this is not good for the children – especially for minor children.
There may be many more lessons that one can learn from high-profile divorce cases such as the one between Harold and Sue Ann Hamm.