The Doctrine of Collateral Estoppel
This is one of the more interesting cases I had. The Plumber was the husband who was my client. The Embezzler was his wife Although she had embezzled close to a million dollars, and some time in the Central California Woman’s Facility in Chowchilla, California, the Embezzler still wanted half of the Plumber’s pension, half of all their property and Spousal Support. The Plumber won on the Doctrine of Collateral Estoppel, which is an aspect of res judicata or, the law had already adjudicated this issue.
The parties were married on 5/30/90 and separated 7/27/2005. The Plumber raised the Embezzler’s two sons as if they were his own, participating in sports and school activities for these two, who are not grown up. The Plumber worked through his Union Hall. The Embezzler was working at an H&R Block office in Alameda in1995 when the Embezzler befriended the Victim, , who came to her for tax preparation services. The Victim formed a friendly and trusting relationship with the Embezzler and even her husband, the Plumber, who visited the Victim from time to time bringing her food and checking on her condition.
Around 2000 The Victim came into some money through inheritance of approximately one million dollars. She continued to do business with H&R block and with the Embezzler. In April of 2003, the Client Manger of the Bank of America in Alameda received a call from The Victim, saying that a person al check would clear her checking accent for her taxes that the Embezzler said she owed. Mr. Conrad became suspicious because he knew The Victim did not have the income that would generate that much in taxes.
When the manager looked at The Victim’s account, he questioned this and other irregularities as well as the fact that The Victim had a joint account with the Embezzler at that bank. The Embezzler refused to discuss this with him The next day, the manager received another call from The Victim, who said the Embezzler came to her house the night before with a two cashier’s checks, one for $11,418.44 and another for $130,710 which the Victim deposited into her BOFA account . Further investigation by the bank and by the district attorney showed that between 2001 and 2003, a total of sixteen checks were signed over to the Embezzler, totaling $729,512. A warrant issued on in January 2004 charging the Embezzler with twenty-three counts of fraud, theft and elder abuse. In July of 2004, pursuant to a please bargain the Embezzler pleaded no contest to two counts of theft from an elderly dependent adult and one count of filing a false tax return. Restitution was set at $648,520. And her total prison time was set at 2 years 8 months. The Embezzler served sixteen months for her crime. The IRS sent her a bill for what she owed on the money she had embezzled.
The district attorney also investigated whether hi her grown sons or the Plumber ever benefited from her embezzlement. The two adult children did pay restitution but the District Attorney found that the Plumber did not benefit from the embezzlement and had no idea what the Embezzler was doing.
During their divorce proceedings, the Embezzler claimed that the Plumber bore half the responsibility for the tax debts and criminal restitution half of his pension, and spousal support, and whether or not the Plumber must be reimbursed by the Embezzler for his community property share of assets spent on her taxes and restitution.
The Plumber argued that (1) the issues the Embezzler wanted to try in the Family court were already decided, because three separate government agencies had already found that he Embezzler and the Embezzler alone was responsible for the debts and restitution, and that the marital community did not benefit from these criminal acts. The lifestyle of the arties did not change appreciably during the period of embezzlement, so there were no warning signs the Plumber could pay attention to; (2) the Embezzler claimed that the Plumber should waive his claims to reimbursement with regards to his share of community property assets (the home was sold) to pay for her restitution.
Plumber claimed that the Doctrine of Collateral Estoppel operates to stop a party form a prior action from receiving a different outcome by getting another chance to relitigate the issues in another court. Both the plumber and the embezzler, and her two sons, were sued by The Victim and the sons plus their mother were responsible for the Victim’ s loss and are paying restitution. The Plumber was “dismissed with prejudice” (which means no one can bring those same issues up to attack him): He did not have to pay restitution. Moreover the District Attorney declined to prosecute, which means that a government body charged with enforcing the law did not believe the Plumber shared in any culpability for the theft; thus he did not share any responsibility for restitution, and the community does not share in any culpability for the theft. If the community does not share any culpability, then it follows that the community did not share in any benefit from the theft.
The plumber asked for an ‘innocent spouse” declaration and was told that the IRS that none was necessary because the IRS did not consider him responsible for the taxes do. Thus there are three governmental agencies, which have concluded the Plumber was not responsible: the District Attorney, the IRS and the civil court that tried the suit the Victim brought against the parties. Thus, the Plumber could use the holding in the prior actions to prevent him having to pay the Embezzler any part of his pension or spousal support. It was assumed that the Embezzler had at least $350,000 in hiding somewhere because it could not be accounted for, which the Embezzler tacitly admitted in a confidential “four way” where the parties and their lawyers try to settle the case. When I stated that we would be making her prove she didn’t have the rest of the money she tacitly admitted that she had it by say8ing. “You’ll never find it.” I was sitting right there and took notes while she said that;
In the end, although the Plumber had lost his home to pay for reimbursement, the Embezzler was charged with making him whole, repaying his community property share. Further she could not get spousal support and or part of his pension, plus the entire tax debt incurred to her thorough her criminal activity. The Plumber was then able to use the conclusions of the IRS, the District Attorney and the civil court, which did not hold him responsible for any of the Embezzler’s debts, as a shield to stop the Embezzler from sharing in the community property. Needless to say, the Plumber went home happy.
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