Dawes v. Rich
60 Cal. App. 2d 24, 70 Cal. Rptr. 2d 72, 60 Cal. App. 4th 24 (1997)
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Rule of Law:
A creditor's claim to satisfy a community debt from a deceased spouse's share of community property is subject to the one-year statute of limitations for actions against a decedent's estate because the claim is considered a 'liability of the person' of the decedent for the purpose of the statute.
Facts:
- In the early 1980s, tenants of the Rancho Carlsbad mobilehome park began litigation against its owner, David F. Dawes, concerning rent increases.
- In 1983, David F. Dawes and his wife, Dorothy Dawes, transferred their community property into a revocable inter vivos trust.
- The trust instrument stipulated that upon the death of either spouse, the decedent's one-half share of the community property would be transferred into two irrevocable trusts (the B and C trusts).
- Dorothy Dawes died in January 1990.
- Following her death, Dorothy Dawes's one-half share of the community property was transferred into the irrevocable B and C trusts, as specified by the trust instrument.
- Between November 1992 and 1996, more than two years after Dorothy Dawes's death, the tenants obtained final judgments against David F. Dawes in their lawsuits.
Procedural Posture:
- Tenants filed three actions against David F. Dawes and his company in the early 1980s.
- The trial courts entered judgments in favor of the tenants and against David F. Dawes in 1992, 1993, and 1996.
- David F. Dawes filed for bankruptcy; the bankruptcy court found it lacked jurisdiction over the B and C trusts.
- On December 29, 1995, the tenants levied writs of execution on the trustees of the B and C trusts.
- The trustees filed a petition in probate court seeking a determination that trust assets were not subject to the tenants' judgment.
- The tenants filed separate complaints against the trustees seeking a declaration that the trust assets were subject to their judgment.
- The probate court entered judgment in favor of the trustees, finding the claim was time-barred.
- In the declaratory relief action, the trial court sustained the trustees' demurrer, also on the ground that the action was untimely.
- The tenants (appellants) appealed from the probate court's judgment and the trial court's dismissal of their complaints to the Court of Appeal.
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Issue:
Is a creditor's action to enforce a community debt against a deceased spouse's share of community property, held in trust, subject to the one-year statute of limitations applicable to claims against a decedent's estate under former Code of Civil Procedure section 353?
Opinions:
Majority - Benke, Acting P. J.
Yes, a creditor's action is subject to the one-year statute of limitations. Although a deceased spouse's share of community property remains liable for community debts incurred by the surviving spouse, any action to enforce that liability must be commenced within one year of the deceased spouse's death. The court first determined that the historical rule of post-marital liability for community debts applies when a marriage ends by death without a court-supervised allocation of debts, meaning the assets in the B and C trusts were, in principle, liable for David F. Dawes's debts. However, the court held that this liability is a 'liability of the person' of the deceased spouse, Dorothy Dawes, within the meaning of the applicable statute of limitations (former Code of Civil Procedure section 353). This liability is analogous to transferee liability, making the recipient personally liable up to the value of the property received. The court found this interpretation consistent with the treatment of surviving spouses under Probate Code section 13550 and supported by the strong public policy of ensuring the expeditious administration of estates and providing finality for distributees. Because the tenants did not attempt to execute against the trusts until 1995, well after the statutory deadline of January 1, 1992, their claim was time-barred.
Analysis:
This case clarifies the intersection of community property liability and probate statutes of limitation, prioritizing the finality of estate administration. It establishes that while the substantive liability for community debts survives the death of a non-debtor spouse and attaches to their share of the community property, creditors must act within the strict one-year probate claim period. This decision forces creditors with long-pending claims against one spouse to monitor the life status of the other spouse and be prepared to file a claim against their estate promptly upon death. The ruling effectively prevents creditors from treating a deceased spouse's estate as a perpetual backup source of recovery for community debts, thereby strengthening the security of title for heirs and beneficiaries.
