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Are Professional Licenses Property? : N.Y. Ruling May Raise Issue in California Again

January 31, 1986|LIZ MULLEN | Times Staff Writer

Janet Sullivan had put her highly publicized legal case behind her. She went to court seeking a divorce settlement that would recognize her husband's medical license as a piece of property to be divided. And she lost.

A year went by. Then in December, a New York woman named Loretta O'Brien succeeded where Sullivan had failed.

And now there's talk that the issue of whether professional licenses should be considered community property may not be settled in California. According to several prominent family-law attorneys, the recent New York ruling may bring up new challenges in this state.

Janet Sullivan worked as an accountant for 10 years while her husband, Mark, completed his medical training. Soon after Mark received his medical license, just as the Orange County couple were about to reap the economic benefits of a doctor's salary, they broke up.

Janet Sullivan went to court and for six years her case wound its way through the legal system. It finally reached the California Supreme Court, which had been hearing the case for two years when the Legislature passed the Sullivan Law a year ago.

The Sullivan Law states that if family income was contributed to education that enhanced the earning power of one spouse, the other spouse could be reimbursed for half of the contribution, plus interest, in a divorce action.

Janet Sullivan's case was sent back to the original Orange County trial court to be decided under the guidelines of the new law. In the end, there was an out-of-court settlement that, according Sullivan, fell far short of what she felt she was entitled to.

Sullivan's attorney, Patricia Herzog of Corona del Mar, argued that the cost of a college education does not approach the value of a medical license or law degree. If Janet Sullivan had won her case, those who support their spouses through medical or law school could get much larger divorce settlements than they now receive under the Sullivan Law, Herzog said.

New York's highest state court apparently agrees with Herzog. Last month, the New York Court of Appeals unanimously upheld a trial court's decision that Loretta O'Brien should receive $188,800--40% of the estimated value of her ex-husband Michael O'Brien's medical license.

Loretta O'Brien contributed 76% of the family's income by working as a schoolteacher while her husband was in medical training, according to Walter Mardaumt, a New York Court of Appeals public information officer. Michael O'Brien filed for divorce three months after he received his license to practice medicine, Mardaumt said.

Although still disappointed over her own loss, Sullivan said she was pleased that Loretta O'Brien had won. Patricia Herzog said the New York Court of Appeals justices "must have accepted the concept that we argued . . . that the degree was part of intangible property."

Herzog said: "When the community (the married couple) invests time and money into getting a professional degree, they do it for the community. It's like any other investment, like if you invest in a growth stock."

The seven New York Court of Appeals justices "made a mistake," said Morris Sorenson, the Costa Mesa-based attorney who represented Mark Sullivan. Sorenson contended that a professional license is "worth about two cents" unless the license-holder uses it. The value of the license depends on the person who holds it, and "a person is just not property," he said.

Janet Sullivan said she "learned a lot" from her six-year court ordeal, but she feels she received "a Band-Aid answer to the problem" a year ago.

"When two people get married, it is a partnership," she said. "They are working toward a career goal." She added that she believed her ex-husband's license was property and that she had a right to a portion of it. "Maybe now that New York has taken that stance, it will filter down to places that have inequality," Sullivan said.

Several California family law attorneys disagree on the question of what effect the O'Brien ruling will have in this state. Some say the issue was settled by the Legislature for good with the passage of the Sullivan Law. Others contend that the unanimous decision from the prestigious New York court will set a trend nationwide and that California eventually will adopt the same rule--either by statute or case law.

"This issue (professional licenses as marital property) will come up again in California," predicted Marvin M. Mitchelson, the Los Angeles attorney who won a 1979 California Supreme Court decision that established palimony, which granted unmarried couples the same community-property rights as married couples. The decision, which granted palimony to Mitchelson's client, Michelle Triola Marvin, has been adopted by 38 states, Mitchelson said.

Marvin Case Mentioned

"I think the Marvin case was a landmark case," he continued. "I think this case (the O'Brien case) is going to have the same trip (around the country). I think it's an extremely big decision. It's a well-reasoned decision.

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