O.C. Case May Set Precedent : Court Says Woman Must Help Ex-Spouse Pay Fees

A state appellate court, ruling against a prominent Orange County woman, declared Thursday that she has to help pay the legal damages and fees--totaling perhaps a half-million dollars--that her ex-husband incurred because of his negligence as a director of the bankrupt U.S. National Bank.

The ruling carries potentially broad and precedent-setting implications for divorce settlements in California courts, possibly making a person equally liable for monetary damages that are a result of the ex-partner’s negligent or even criminal conduct during their marriage.

In Hirsch vs. Hirsch, the 4th District Court of Appeal in Santa Ana reversed an earlier Orange County Superior Court decision in favor of the former Claudia H. Hirsch--now Claudia Mirkin--of Newport Beach and Beverly Hills.

The trial court had essentially found that Mirkin, 57, should not be held financially responsible for the mistakes ex-husband Clement L. Hirsch, 75, had allegedly made as a bank director while the two were married.

Hirsch’s role from 1966 to 1971 as a director helping to oversee the U.S. National Bank, based in San Diego, made him one of several dozen targets of federal lawsuits when the billion-dollar bank collapsed in 1973 under mismanagement.

The civil charges against him were never tried in court. But Hirsch, described by his own attor ney as having shown “gross negligence” in failing to protect the bank against obvious abuses, said he had to spend about $850,000 in legal fees to settle those claims.

After their separation in 1971, Hirsch sought to have his estranged wife pay half those expenses as a “community debt.” She balked at the idea, as did Superior Court Judge Robert A. Knox, who heard the dispute.

But in the opinion released Thursday, the appellate court asserted that Claudia Mirkin must bear responsibility for up to half her ex-husband’s financial liability because Clement Hirsch was acting in their common interest while he was a bank director.

“This is a real expansion of the law that could very well establish precedent,” said legal specialist Lawrence M. Gassner of Ontario, who is an executive committee member of the State Bar Assn.’s family law section.

“I’d say it’s a pretty scary ruling,” Gassner continued. “I may be going a bit far, but it suggests that maybe marriages should break up a little sooner at the first sign of financial risk to either party. I don’t think that’s good public policy.”

Fees to Be Evaluated

The appellate court ordered the Superior Court judge in the Hirsch case to now assess whether the husband’s attorney’s fees were reasonable. If the costs are found fair, attorneys on both sides agreed, that could mean Mirkin would have to pay $423,130--half the reported legal expenses--plus possible interest accrued over the past 15 years.

Writing for the court, Associate Justice Edward J. Wallin assailed an earlier opinion on the issue at the appellate level as “over-broad” and incorrect. He suggested that Thursday’s ruling should help settle confusion caused by “a surprising absence of guidelines for classifying debts arising out of allegedly (damaging) conduct.”

Mirkin, when informed of the court’s ruling, said: “I’ve never heard of anything so mad in all my life--it’s ridiculous.” She and her attorney said they will appeal.

A wealthy land investor who is prominent in Southland social circles, Mirkin said her ex-husband took the post as a director of U.S. National Bank more for the prestige than the salary--reportedly $10,000 a year. Clement Hirsch then had a net worth of more than $10 million, according to court records.

“We pleaded with him to be off that board, but he was a very stubborn man,” Mirkin said. “When one partner goes and takes a terrific risk and gets almost nothing for it . . . I don’t think (the spouse) should get stuck for that.”

Impact of Case

But the case’s impact could well extend beyond Claudia Mirkin and Clement Hirsch, attorneys said.

The appellate court, in illustrating its point, gave several hypothetical cases in which the spouses assume a “community debt” and should share financial liability for the negligent actions of either.

As examples, the court pointed to an attorney who is sued for malpractice in the course of his professional duties, a driver who gets into an accident in the family car while on a personal errand or a person who shows “even criminal or intentionally (damaging) conduct”--such as a fraud scheme--that produces “substantial ill-gotten assets for the community.”

Clement Hirsch, a wealthy businessman who lives in Newport Beach and is an executive with the Oak Tree Racing Assn. of Santa Anita, was out of town Thursday and could not be reached for comment. But his attorney, Michael W. Robinson of Costa Mesa, hailed the ruling as an important affirmation of the shared community-debt principle that is inherent in marriage.

Explaining the Idea

Robinson explained the idea this way:

“If I go out with a client to go golfing and negligently slice a shot--as I often do--and injure someone, my wife had nothing to do with it. But because I’m benefiting our family by entertaining clients and by relaxing myself so I can work better later, we would share the liability.”

But others saw the ruling as dangerous.

Randall S. Waier, an attorney representing Mirkin, said that the decision, if taken to a literal extreme, suggests that the spouse of a person who “goes out and hurts or kills his creditor” could be held partly liable for a wrongful death or other civil action that results--all because the assailant was acting in the best interests of the couple’s financial status.

“The way this case is outlined, it has tremendously far-reaching implications,” Waier said. “And I think that ought to scare anybody, to be quite frank about it.”