We recently prevailed on a civil cause of action in Wisconsin involving two divorcing, but not yet divorced, spouses that presented an interesting legal issue. If your spouse engaged in conduct that causes you harm, do you have a civil cause of action against him/her?
Each spouse in Wisconsin has a statutory obligation to “act in good faith with respect to the other spouse in matters involving marital property or other property of the other spouse.”[1] If a spouse breaches that duty, the other spouse “has a claim against the other spouse for breach of the duty of good faith…resulting in damage to the claimant spouse’s property.”[2]
There is an interesting interplay in Wisconsin law as to whether such a cause of action may only be filed in the family/divorce court or if such cause of action may be brought separately in a civil court. If the harm caused arises out of the marital relationship, then the divorce court has exclusive jurisdiction. But if the conduct complained of arises out of a relationship other than the marital relationship, the claim does not assert a breach of the good faith duty between spouses and is not subject to the exclusive jurisdiction of the divorce court. Some examples to help highlight the intricacy.
In Caulfield v. Caulfield, 515 N.W.2d 278 (Wis. Ct. App. 1994), the wife sued the husband for a judgment on a loan note executed during their marriage. When wife filed suit on November 19, 1992 for breach of contract, divorce proceedings had been pending between the two for more than 10-months.[3] Thereafter, husband “moved the trial court to dismiss the action on the note or, in the alternative, to consolidate the action with the pending divorce” arguing that “the trial court in the divorce action was ‘faced with the task of resolving all of the financial issues between the parties’ and, in doing so, it would necessarily ‘consider the note’ which was the basis of the separate action commenced by” wife.[4] The trial court declined to dismiss the civil action on the note and “reasoned that dissolution of a marriage is equitable in nature and that the issue of liability on the note was a legal issue that could be resolved in a separate action” holding that “issues raised in a contract action, like those in a tort action, are sufficiently different from an equitable action like divorce to maintain a separate action.”[5]
The Court of Appeals agreed and, most relevant here, held:
Although the instant case involves a contract action commenced during the pendency of the divorce, the same analysis obtains. Angela’s action on contract was one at law, triable to the court or to a jury, unlike the divorce action which was equitable in character and to be tried only to the court…Robert’s contention-that Angela could not commence a separate legal action on the notice outside the divorce-would force Angela to join a legal claim and an equitable claim, while depriving her of her right to try her legal claim to a jury. Nothing in Wisconsin law requires a claimant to relinquish the right to a jury trial on a legal claim.[6]
Five-years after the Caulfield holding, the Wisconsin Court of Appeals decided the matter of Knafelc v. Dain Bosworth, Inc., 591 N.W.2d 611 (Wis. Ct. App. 1999). The wife filed a complaint, during the course of divorce proceedings, against the husband alleging securities fraud violations and vicarious liability and negligent supervision against his employer, Dain Bosworth.[7] The trial court dismissed her complaint “for lack of subject matter jurisdiction because the claim had to be litigated in family court as part of a divorce action.”[8] The Court of Appeals disagreed, holding that because the complaint did not allege a “cause of action for breach of good faith duty between spouses, the action was not required to be resolved in the divorce court”.[9] Going further, the Court of Appeals held that the “mere categorizing of a claim as a dispute concerning marital property is insufficient to compel the litigation of that claim as part of the divorce proceeding.”[10]
In both Caulfied and Knafelc, independent civil causes of action were permitted to proceed outside of the jurisdiction of the divorce court.
On the other hand, in Gardner v. Gardner, 499 N.W.2d 266 (Wis. Ct. App. 1993), the wife claimed she had been deprived of ownership interests in certain marital property and suffered damages to real property during the marriage due to her husband’s misrepresentations. While her divorce was pending, she filed a separate civil cause of action for intentional misrepresentation seeking both compensatory and punitive damages. The Wisconsin Court of Appeals held that her claim was essentially a claim for breach of the statutory duty of good faith between spouses and dismissed her civil cause of action.
The pivotal question is thus the relationship which caused the harm. If it strictly the marital relationship, the harm likely must be pursued in the divorce court asserting a breach of the duty of good faith. But if the spouses also have another relationship (broker/client, co-trustees, or creditor/debtor, for example), damages can likely be pursued in the civil court. Such a claim opens up more avenues of recovery – avenues which we recently successfully obtained thereby granting the recession of two transactions of stock involving spouses.
This is a factually intensive inquiry, but one which can be a pivotal path to recovery. Having attorneys versed in civil, as well as family law, could be your key to such recovery.
[1] Wis. Stat. § 766.15(1).
[2] Wis. Stat. § 766.70(1).
[3] Id. at 280.
[4] Id.
[5] Id.
[6] Id. 281 (emphasis added).
[7] Id. at 612.
[8] Id.
[9] Id.
[10] Id. at 615.