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# 46 - Dissolution after legal separation.

Monograph # 46                                                                   Oct., 2009; ver 1.6

DISSOLUTION AFTER LEGAL SEPARATION

© Lawrence D. Gorin,  Attorney at Law, Portland, Oregon

Introduction

    It is the belief of many Oregon family law lawyers that when a divorce occurs after the parties have obtained a judgment of legal separation, the court lacks the legal authority to “rearrange” decisions and rulings that were rendered as part of the judgment of legal separation.  This view is apparently based on ORS 107.465(1), which allows a separation judgment to be “converted” into a dissolution judgment if done within two years after entry of the separation judgment.  ORS 107.465 further states that “A supplemental judgment of dissolution entered under this section does not set aside, alter or modify any part of the judgment of separation that has created or granted rights that have vested.”  [Emphasis supplied.]

    By its terms, the prohibition of ORS 107.465(1) against setting aside, altering or modifying any part of the judgment of separation that has created or granted rights that have "vested" applies ONLY to a proceeding under that particular ORS section that seeks to "convert" the separation judgment into a dissolution judgment.  The prohibition does not apply to a proceeding for dissolution of marriage that is commenced under an ORS section other than ORS 107.465. 

    Further, such an independent proceeding for dissolution of marriage may be commenced by either party at any time, be it within two years of entry of the separation judgment or at any time thereafter.  As expressly stated in ORS 107.465(2): "Nothing in this section is intended to prevent either party to a judgment of separation from commencing at any time in the manner required by law a suit for dissolution of the marriage."

    This article is intended to dispel the “vested right” fallacy and provide family law lawyers with an accurate understanding of the court's authority when dissolution of marriage occurs following a judgment of legal separation.

Background and Context

    The legal effects and consequences of a judgment of separation are different from those of a judgment of dissolution of marriage.  A married person who files a petition for legal separation is, by doing so, choosing to remain married rather than being divorced.  And by remaining married, the petitioning party is inherently recognizing that the other party may at some future time file a proceeding for dissolution of marriage.

    ORS 107.025 sets forth four specific situations (grounds) that authorize the court to render a judgment for separation, as follows:

    First, when irreconcilable differences between the parties have caused the irremediable breakdown of the marriage.
    Second, when irreconcilable differences between the parties have caused a temporary or unlimited breakdown of the marriage.
    Third, when the parties make and file with the court an agreement suspending for a period of not less than one year their “obligation to live together as husband and wife,” and the court finds such agreement to be just and equitable.
    Fourth, when irreconcilable differences exist between the parties and the continuation of their status as married persons preserves or protects legal, financial, social or religious interest.

 Legal Effect of Legal Separation

    Parties to a general judgment of legal separation remain “legally separated” until such time as the judgment of legal separation come to an end.  If the judgment of legal separation specifies the duration of the separation, it will terminate upon expiration of the specified time unless extended or renewed by a subsequent supplemental judgment.  ORS 107.475

    Alternatively, upon motion of either party filed within two years of the entry of a separation judgment, a judgment of legal separation may be “converted” into a judgment of dissolution of the marriage.  ORS 107.465(1).  In such a “conversion” proceeding, the resulting supplemental judgment simply changes the parties’ legal status from being legally separated to being legally divorced.  All else remains unaffected and unchanged.  As stated in ORS 107.465(1), “a supplemental judgment of dissolution entered under this section does not set aside, alter or modify any part of the judgment of separation that has created or granted rights that have vested.”

    Lastly, a judgment of legal separation will be superseded in its entirety, at any time, by a judgment of dissolution of marriage rendered in an action that is filed independently of the separation proceeding.  ORS 107.455; ORS 107.465(2).

    As stated in ORS 107.455, “the entry of a judgment of separation under ORS 107.475 shall not be a bar to a suit for dissolution by either party.”  Further, pursuant to ORS 107.465(2), “nothing in this section is intended to prevent either party to a judgment of separation from commencing at any time in the manner required by law a suit for dissolution of the marriage.

    Presumably, parties to a judgment for separation recognize that they remain legally married to one another and that either party may at any subsequent time commence an independent proceeding to dissolve their marriage.  Further, in the event either party commences such an independent action for dissolution of marriage, the dissolution court will have all of the statutory authority allowed by ORS 107.105(1) irrespective of the terms and provisions of the separation judgment, at least with respect to “property * * * of either or both of the parties” within the meaning of ORS 107.105(1)(f), even if such property had been divided and allocated or awarded to one spouse or the other by the terms of the separation judgment.  See Jones and Jones, 147 Or App 280, 936 P2d 372 (1997).

    The provisions of a judgment for separation, including provisions for custody, parenting time, child and spousal support, are generally assumed and intended to be effective only for so long as the court-ordered period of “legal separation” continues.  Upon a judgment of dissolution of marriage being rendered by the court in a separate legal action seeking dissolution of marriage, the parties are no longer “legally separated” and the terms and provisions of the previously-issued judgment of legal separation no longer have any force or effect.  This is so because the judgment of dissolution of marriage supersedes and abrogates the judgment of legal separation.

    If the judgment of legal separation specifies a fixed period of time as the duration of the separation, i.e., a judgment of “limited separation,” the court may, on motion of a party and notice to the other party, renew or extend the duration.  Unless renewed or extended, a judgment of limited separation terminates by operation of law upon expiration of the specified duration and thereafter “shall have no further effect.”  However, when such termination occurs, “no rights created or granted in the [separation] judgment that have vested shall be affected by its termination.”  ORS 107.475

    If the judgment is for “unlimited separation,” either party may by motion “apply for an order modifying or vacating the judgment, subject to the provisions of ORS 107.135.”  ORS 107.475.  If what is sought is modification (rather than vacating the entire judgment), the motion must allege that the cause for separation no longer exists.  If the judgment is vacated, the legal separation comes to an end and the parties are simply no longer “legally separated.”

    Although as a general rule the provisions of a judgment of separation are subject to being superseded by a judgment of dissolution of marriage, there are some statutory restrictions.  For example, pursuant to ORS 107.455, an award of support or maintenance in a judgment of separation made pursuant to ORS 107.095 or 107.105 would not be affected by a subsequent judgment of dissolution of marriage granted upon constructive service of summons..

    Further, pursuant to the policy expressed in ORS 107.104(1), to the extent that the parties to a separation judgment have by stipulated agreement resolved issues that might otherwise be subject to litigation upon dissolution of marriage, the parties’ agreements may be binding and enforceable in a subsequent proceeding for dissolution of marriage, if it is determined that that is what the parties intended.  See Patterson and Kanaga, 206 Or App 341, 136 P3d 1177 (2006).

“Must read” caselaw

    The aforementioned cases of Jones and Jones and Patterson and Kanaga are “must read” cases for any practitioner involved in a proceeding for legal separation.

    In Jones and Jones, 147 Or App 280, 936 P2d 372 (1997), a judgment of separation was obtained by wife upon default in 1988, awarding to wife the family residence and a portion of husband’s retirement.  Five years later, in 1993, wife filed a petition for dissolution of marriage, independent and apart from the separation case.  In the dissolution case, wife asked the court “to preserve the disposition reflected in the separation judgment.”  In opposition, husband asked the dissolution court to simply make an equal division of the parties’ property, including the house and the retirement account.  The dissolution court granted husband’s request (along with an additional provision requiring husband to pay $500 per month indefinite spousal support).  147 Or App at 282.  Husband appealed, and wife cross-appealed.

    On her cross-appeal, wife argued, in apparent reliance on ORS 107.465, that the trial court erred in awarding husband any interest in the family residence, because she was awarded the residence in an earlier separation judgment.  The Court of Appeal responded:

    “We do not agree with wife’s contentions. Even assuming, for the sake of argument, that her rights in the house vested by virtue of the separation judgment, it does not necessarily follow that the trial court was without authority to dispose of the property as it did in the dissolution.”   147 Or App at 283.

    The court recognized that ORS 107.465(1), by its terms, applies only to supplemental proceedings commenced upon motion filed within two years of the entry of a separation judgment.  No such motion had been filed by either party.  Instead, wife had filed a petition seeking a judgment of dissolution of marriage.  Consequently, the limitations on the court’s authority under ORS 107.465(1) (the “conversion statute,”) do not apply to a proceeding other than the “supplemental proceeding” mentioned in ORS 107.465(1).  This is made clear by ORS 107.455, which says, in part, that “The provisions of law pertaining to separation are not intended to and shall not repeal or affect any existing law pertaining to the granting of a decree of dissolution of marriage.”  147 Or App at 283.  [ORS 107.465 was amended in 2003, replacing “decree” with “judgment.”]

    The court explained that the enactment of the separation statutes did not change ORS 107.105(1)(f), which authorizes the dissolution court to dispose of “the real or personal property, or both, of either or both of the parties as may be just and proper in all the circumstances.”  And with that in mind, the court said: 

    “[I]n this case, even if wife’s interest in the residence vested before the dissolution, the property remained ‘property * * * of either or both of the parties’ within the meaning of ORS 107.105(1)(f) and remained within the dispositional authority of the [dissolution] court.  Such property may be disposed of in a manner that is ‘just and proper in all the circumstances’ [as allowed by] ORS 107.105(1)(f).”  147 Or App at 284.

Effect of settlement agreements in separation proceedings

    In 2001, the legislature enacted ORS 107.104, allowing judges in marital annulment, dissolution and separation actions to “enforce the terms set forth in a * * *  marital settlement agreement as contract terms using contract remedies.”  Consequently, if the parties to an action for legal separation entered into a settlement agreement, the terms thereof may have contractual enforceability not only in the separation proceeding itself but also in any subsequently filed proceeding for dissolution of marriage.  Much depends on the intent of the parties in formulating the settlement agreement.  Did the parties intend that the agreement have force and effect only as to the separation proceeding? Or did the parties intend that the terms of the agreement remain in effect and be applicable in the event of a subsequent dissolution proceeding?

    In Patterson and Kanaga, 206 Or App 341, 136 P3d 1177 (2006), the parties negotiated an agreement, expressly denominated a “Separation Agreement,” that was incorporated into a 1995 Judgment of Unlimited Separation.  The agreement recited that “[t]he parties desire by this agreement to voluntarily and equitably settle the issues between them, including spousal support, property division, and responsibility for debts and attorney fees and costs.”  The agreement stated that it was the parties’ intent that the agreement “be binding and finally settle all the issues covered herein.”  The agreement included terms of settlement relating to spousal support, waiver of inheritance rights, tax allocations for 1995, husband’s maintenance of life insurance for the children, distribution of the parties’ property, subsequent acquisitions, debts, and attorney fees.  The parties agreed that all property acquired after the effective date of the agreement was to be the sole and separate property of the party acquiring it, and that each party waived “all rights in and to such future acquisitions of the other.”  Each party agreed “to ask the court in either their pending separation proceeding or any other separation proceeding to approve, ratify and confirm this agreement, to incorporate it in any judgment and to require each party to comply with all the terms thereof.” 

    However, notwithstanding the separation agreement and the Judgment of Unlimited Separation, the parties did not separate.  They moved into a new house and continued to live together until 2001, when separation actually occurred.  Wife then filed a petition for dissolution in 2002.  In the dissolution proceeding, wife argued that the 1995 separation agreement controlled all issues pertaining to the distribution of property.  Husband argued that the agreement did not control, that it was intended to govern a separation that never actually happened, and that the trial court should determine what is a just and proper distribution of property under the circumstances pursuant to ORS 107.105(1)(f).  In the alternative, husband argued that the agreement was ambiguous and that the trial court should take evidence from the parties as to the circumstances surrounding its execution and the parties’ intentions with respect to its scope and applicability.

    The trial court concluded that the 1995 separation agreement unambiguously applied to the dissolution and rendered judgment in accordance with its terms.  Husband appealed.  The appellate court disagreed with the trial court, concluding that the separation agreement was subject to more than one plausible interpretation as to whether the parties intended that it apply in the context of a dissolution some eight years after its execution.  The appellate court therefore remanded the case to the trial court for reconsideration.  In doing so, the court said the parties’ agreement would be enforceable under ORS 107.104 if the terms of that statute are satisfied.  Consequently, “if the trial court determines on remand that the parties intended their agreement to apply in the context of a dissolution, it will need to address whether enforcement of its terms would violate the law or clearly contravene public policy.  If it finds that the enforcement of the agreement would not do either, then the court will be required, under ORS 107.104, to enforce the agreement according to its terms.”  206 Or App at 351-352.

Tips for the practitioner

    Practice tip # 1:  In drafting a settlement agreement in connection with an action for legal separation, be sure to clearly and unambiguously express the parties’ intent regarding the applicability and duration of their agreement.  In essence, are the terms of the parties’ agreement intended to be effective only during the duration of their legal separation?  Or is the agreement intended to be applicable and controlling in the event of any dissolution proceeding that might be subsequently filed?

    Practice tip # 2:  Spouses otherwise desiring a divorce sometimes seek the alternative remedy of legal separation in the belief that retention of their husband-wife legal status will allow for one spouse to continue to be eligible for health insurance coverage under the health insurance program provided through the other spouse’s employer.  It is advisable to closely examine the specific eligibility terms of the insurance program, as many employer-provided health insurance programs nowadays specifically exclude coverage for a spouse who is separated from the employee spouse under a judgment of legal separation.

    Practice tip # 3:  Spouses otherwise desiring a divorce sometimes seek the alternative remedy of legal separation in the belief that retention of their husband-wife legal status will allow them to continue to file joint tax returns as a married couple.  However, federal income tax law, 26 USC § 7703, deems a person as being “not married” for tax filing purposes if the person is “legally separated” from his or her spouse under a divorce or separate maintenance decree (and this would include a judgment of legal separation).  Consequently, parties who are legally separated are not permitted to file a joint tax return.  Each must file separately, either as “single” or, if eligible, as “head of household.”

Legal separation vs. dissolution of marriage:  What can and cannot be done

    The legal and procedural ramifications of legal separation vis-à-vis dissolution of marriage may be summarized as follows:

    1.  Pre-judgment “upgrade.”  Prior to entry of general judgment, while a separation proceeding is pending, the court has authority, upon motion of either party (and payment of an additional filing fee of $1.00), to “upgrade” the proceeding so as to change the relief sought from separation to dissolution.  ORS 107.400.

    2.  Post-judgment “conversion.”  Within two years after entry of a judgment of legal separation, the court may upon motion of either party render a supplemental judgment “converting” the judgment of separation into a judgment of dissolution.  ORS 107.465(1).  The supplemental judgment simply changes the legal status of the parties from being legally separated to being legally divorced.  Except for the change of legal status, all other provisions of the separation judgment remain in full force and effect.  A motion filed pursuant to ORS 107.465(1) is not a vehicle for reopening or relitigating substantive issues, nor may the supplemental “conversion” judgment set aside, alter or modify any part of the separation judgment that created or granted rights that have vested. 

    3.  Motion to vacate or modify a judgment of separation.   Pursuant to ORS 107.475, when the judgment is for unlimited separation, a party may by motion alleging that the cause for separation no longer exists and after due service of notice upon the other party in the manner provided by law for service of summons, apply for an order modifying or vacating the judgment, subject to the provisions of ORS 107.135.

    4.  Independent proceeding for dissolution of marriage.  At any time after entry of a judgment of separation, whether within two years from the entry of the separation judgment or thereafter, either party may commence an entirely separate and independent action seeking a general judgment of dissolution of marriage.  ORS 107.465(2). Such a lawsuit is, in essence, a whole new ball game and is not affected by the terms and provisions of the previously rendered judgment of separation.  And this is true even as to rights created or granted by the separation judgment that have vested.  See Jones and Jones, 147 Or App 280, 936 P2d 372 (1997).  However, if the separation judgment involved a stipulated agreement of the parties, the terms of their agreement may be applicable and enforceable in a subsequently filed dissolution proceeding, in accord with ORS 107.104, if such was the intent of the parties.  See Patterson and Kanaga, 206 Or App 341, 136 P3d 1177 (2006).

Conclusion

    There is a fundamental but essential difference between legal separation and divorce.  Legal separation is not permanent and final.  In contrast, dissolution is.   Parties to a separation judgment presumably understand that they are still married to one another and that either party may at any subsequent time initiate an independent proceeding for dissolution of marriage, wholly apart from the proceeding for legal separation, and that the court in the subsequent dissolution proceeding will not necessarily be bound by the terms and provisions of the previously-entered separation judgment.

    If a married person wants to resolve the issues of property division, debt responsibilities, custody, parenting time, support, and other issues, to be effective only during the period of legal separation, a proceeding for legal separation is just fine.  But parties to a separation proceeding need to understand that the provisions of the separation judgment are subject to being “revisited” and perhaps changed through a subsequent independent proceeding for dissolution of marriage.

    However, if the parties to the separation proceeding have reached and executed a stipulated agreement settling issues that would otherwise be subject to dispute and resolution upon dissolution, and their stipulated agreement is clear and unambiguous as to their intent regarding the agreement’s permanent and binding effect and its applicability to any subsequent proceeding for marital dissolution, the agreement will be enforceable pursuant to ORS 107.104 so long as the terms thereof do not violate the law or clearly contravene public policy.

    In most cases, nonetheless, it may be cheaper and more practical to proceed directly with a marital dissolution proceeding rather than an action for legal separation.

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LAWRENCE D. GORIN
Attorney at Law
6700 S.W. 105th Ave., Suite 320
Beaverton, Oregon  97008
Phone:  503-71608756
Fax:    503-646-1128
E-mail:  LDGorin@pcez.com
http://ldgorin.justia.net/index.com