Kees v. Kees
509 So.2d 189 (1987)
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Rule of Law:
Severance pay received by a spouse after the termination of the community property regime is classified as separate property, as the right to the payment is acquired at the time of involuntary termination and serves as a substitute for future lost wages, not as deferred compensation for past services.
Facts:
- Sandra Smith Kees and Thomas Hickman Kees were married.
- During the marriage, Thomas Kees was employed by Ethyl Corporation.
- The parties divorced on June 9, 1975, terminating their community property regime.
- Ten years later, on May 31, 1985, Ethyl Corporation permanently terminated Thomas's employment due to 'excess manpower.'
- Upon his termination, Thomas received a lump-sum severance payment from Ethyl.
- The amount of the severance payment was calculated based on Thomas's total years of service with the company, which included the years he was married to Sandra.
- The company's severance plan stated that an employee was eligible for the payment only if they were permanently and involuntarily terminated for reasons such as excess manpower, and it was explicitly not available upon voluntary resignation or retirement.
Procedural Posture:
- After their divorce, Sandra Smith Kees initiated a proceeding in a Louisiana trial court to partition the former community property.
- Sandra filed a detailed descriptive list asserting that the severance pay received by her ex-husband, Thomas Hickman Kees, was community property.
- Thomas filed a motion to traverse (a formal challenge to) Sandra's list, arguing the severance pay was his separate property.
- The trial court ruled in favor of Thomas, holding that the severance pay was his separate property.
- Sandra Smith Kees, as plaintiff-appellant, appealed the trial court's judgment to the Court of Appeal of Louisiana, First Circuit.
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Issue:
Is severance pay, received by a spouse ten years after the legal termination of the community property regime, considered community property when its amount is calculated based on years of service that include the period of the marriage?
Opinions:
Majority - Chief Judge Grover L. Covington
No. Severance pay received after the termination of the community is the recipient's separate property. The court reasoned that the crucial factor is when the right to the payment was acquired. Unlike retirement benefits, which accrue over time as a form of deferred compensation, the right to severance pay does not vest during employment. Instead, the right is acquired only at the moment of involuntary termination, a contingent event that may never occur. Because Thomas Kees's termination happened more than ten years after the community was dissolved, the right was acquired when his earnings were his separate property. The court views the severance payment as a substitute for future lost wages, not as remuneration for past services. The method of calculating the payment (based on years of service) was deemed an arbitrary choice by the employer and irrelevant to the legal classification of the property.
Analysis:
This decision establishes a key precedent in community property jurisdictions for classifying post-divorce employment benefits. It distinguishes between benefits that are deferred compensation for past labor (like pensions), which are community property to the extent earned during marriage, and benefits that are substitutes for future earnings (like severance pay), which are separate property if the right is acquired post-divorce. This ruling forces courts to look beyond the calculation method of a benefit and instead analyze its fundamental purpose and when the legal right to it is acquired. The case provides a clear framework for analyzing novel forms of employee compensation in divorce proceedings.
