Doherty v. Doherty

[897]Opinion

GILBERT, P. J. During wife and husband’s marriage, wife’s employer pays a portion of the couple’s mortgage directly to the lender. Here we conclude there is no community interest in this mortgage subsidy after wife and husband separate.

Judith J. Doherty appeals an order of the family law court that characterizes an employment-related mortgage subsidy as community property, subject to division. We dismiss the appeal but issue a peremptory writ of mandate, directing the trial court to vacate its November 20, 2001, order, and enter a different order finding there is no community interest in the mortgage subsidy that is received after separation of the parties.

Facts

Judith J. and Dennis G. Doherty married in 1988 and resided in New York, where Judith was employed by the Eastman Kodak Company (Kodak).1 In 1997, Kodak transferred Judith to Southern California to work in its professional motion imaging division in Hollywood. Kodak offered relocation benefits to Judith to assist her in obtaining housing in Southern California. The relocation housing benefits included a cash allowance payable every four weeks over a 20-year period, or alternatively, a “mortgage buydown” or subsidy payable directly to a specified lender over 20 years. Either benefit was based upon 10 percent of Judith’s 1997 salary, payable for 11 years, and then a gradually reduced percentage of her salary payable for nine years. The amount of the housing benefit was fixed as of April 1997; it would not vary with Judith’s salary changes. In Judith’s case, the housing benefit amounted to approximately $115,000 overall.

By a written agreement with Judith, Kodak agreed to pay the housing benefit to her for 20 years unless: 1) she transferred from the professional motion imaging division; 2) she relocated from Southern California; 3) she retired, resigned, or was dismissed from employment (“All termination reasons”); or 4) the housing benefit policy was “changed or revoked.”

The agreement between Kodak and Judith stated that the mortgage subsidy would be taxable income to Judith. It also provided that Judith would forfeit any unused benefit.

Judith opted for the mortgage subsidy alternative and in 1997, she and Dennis purchased a residence in Thousand Oaks. Approximately two years [898]