Marriages, unfortunately, often end in divorce. However, that doesn’t mean that legal entanglements, such as debts guaranteed by your spouse, go away. Unlike diamonds, debts do not last forever, but they may last longer than the marriage.
That’s underscored by a decision in Comerica Bank v. Runyon by the California Court of Appeal, in Riverside, reversing a decision by the Orange County Superior Court.
The dispute has a long and tangled history, including three previous trips to the Court of Appeal. It involves a $474,500 loan by Comerica Bank to a business; the loan was guaranteed by the husband (Gordon Runyon) and several other persons.
The business defaulted and filed for bankruptcy in 2010, whereupon the bank sued the guarantors. Comerica settled with several of the guarantors, and in 2011 obtained a court judgment against Runyon alone. The judgment grew over time as it accrued interest.
Gordon and his wife Donna subsequently divorced. Comerica pursued collection efforts against property of the guarantors, including real estate owned by Donna. The debt was almost paid in full – over $603,000 by Gordon and Donna, $80,000 by two other guarantors, and $1,144 by another. Just $1,350 in legal costs remained unpaid.
In December of 2015, Gordon asked the court to rule that he had paid more than his proportional share of the 2011 judgment because of the sale of his community interest in Donna’s property, and to order the other guarantors to pay him back what he had allegedly overpaid. Donna made a similar claim.
The other debtors and Comerica objected on a variety of grounds, including that Gordon’s application was made too late, and that Donna was not a judgment debtor, so Gordon had no right to the contribution made on her behalf, and she had no standing to sue.
It’s not clear why the bank bothered to object to Gordon's effort to seek contribution from other guarantors, especially after Gordon and his ex-wife had paid the bank over $600,000, but that's what the bank chose to do.
The lower court rejected Gordon’s and Donna’s applications, and they appealed.
The appellate court said Gordon’s filing was not made too late. The deadline for such a filing is 30 days after a judgment is satisfied in full. Although most of the judgment had been paid, the issue of the $1,350 in costs was still undecided, so the judgment had not been satisfied. Thus the the deadline could had not have passed.
However, the appellate court agreed with the lower court that Donna had no standing to intervene in the case because she was not a judgment debtor. For the same reason, it said, she did not have standing to appeal.
The appellate judges sent the case back to the lower court with instructions to reverse its denial of Gordon’s application, and awarded Gordon his costs on appeal. It dismissed Donna’s appeal because of her lack of standing.
While a marriage may be long over, complications caused by pre-divorce business activities – and indebtedness – can linger on.
By Lynda I. Chung