Why Sterling's mistress has to pay the wife $2.6 million

A judge has tentatively ruled that V. Stiviano has to return to Donald Sterling's wife of 60 years the value of the millions in cash and gifts Mr. Sterling gave Ms. Stiviano during their years of friendship. If the tentative ruling remains substantially unchanged, and survives on appeal, it will transform gifts to women from married men who stray but never quite leave into borrowed property.

Former team owner Donald Sterling of the Los Angeles Clippers and V. Stiviano watch the San Antonio Spurs play
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Former team owner Donald Sterling of the Los Angeles Clippers and V. Stiviano watch the San Antonio Spurs play

Ms. Stiviano, of course, captured the attention of the public about one year ago — almost to the day — when tapes of Mr. Sterling making racially charged comments in an argument with Ms. Stiviano were disclosed to the public. That set in motion a chain of events that led to Mr. Sterling and his wife relinquishing ownership of the Los Angeles Clippers basketball franchise.

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The two principles of California law in the case that Rochelle Sterling brought against Ms. Stiviano were straightforward enough. First, a spouse can't give away community property without the written consent of the other spouse. Second, anything a spouse earns while he is living "separate and apart from the other spouse" is the spouse's separate property, not community property, and he is free to do what he wants with it. It is the application of those principles that both sides in this case agreed has no precedent.

The key finding that Judge Richard Fruin made was that Shelly and Donald Sterling weren't living "separate and apart" while Mr. Sterling was funding an expensive lifestyle to which Ms. Stiviano became accustomed. Yes, there were marital difficulties. The couple was even at one point "estranged," as Mrs. Sterling told Barbara Walters in an interview. And yet during this entire time period, the Sterlings "continued to live together, to travel together, to hold parties together and to celebrate birthdays and anniversaries together." There also was evidence of "birthday and anniversary cards that contain hand-written love notes from Donald Sterling to his wife."

By contrast, Ms. Stiviano denied under oath that she and Mr. Sterling were ever in a romance or had sex. Instead, she testified that Mr. Sterling was a father figure and a lover according to an AP report, whatever that means. The judge didn't mention any of that testimony in support of his conclusion that Mr. and Mrs. Sterling never lived separate lives. The judge didn't have to.

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The question then was whether what Mr. Sterling gave Ms. Stiviano were gifts of money and property belonging to Mr. and Mrs. Sterling both. If they were gifts, Mr. Sterling could not give them without Mrs. Sterling's written consent and the rest was math. The judge's findings that the gifts of cash, cars, and a home were based almost entirely on Ms. Stiviano's own sworn oral and written statements.

The judge rejected as "unbelievable" Ms. Stiviano's trial testimony that her friends and family, not Mr. Sterling, were the source of the $1 million-plus used to buy a Los Angeles home. The judge found the evidence was "overwhelming" that Mr. Sterling funded the purchase of the home. The judge credited Mr. Sterling's trial testimony that he paid for the house "100 percent." Ms. Stiviano testified under oath at a pre-trial deposition, according to the ruling, that "she had no money and that she did not contribute money toward the purchase of the house."

And in a nice "live by the tape, die by the tape" twist, the judge quoted a clip from a taped telephone conversation between Ms. Stiviano and Mr. Sterling, that Ms. Stiviano agreed could be used as evidence, in which Ms. Stiviano was heard telling Mr. Sterling: "I want Shelly to know you bought me the house."

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Without Ms. Stiviano being the lover of Mr. Sterling she insisted she never was, it was going to be tough for her to establish that Mr. and Mrs. Sterling were living separate lives when he bought her all those gifts. If Mr. and Mrs. Sterling weren't living separate lives, the prizes that Ms. Stiviano got from Mr. Sterling, to edit a familiar phrase from "Wheel of Fortune," weren't hers to keep. That left her with not much to show for her role in the damage to Sterling's reputation.

And yet, this is not the last word on this issue. The ruling could be overturned on appeal. Different courts in different cases could reach different conclusions. The importance of the case is that the question is now squarely on the table. Companions of whatever stripe take notice.

CORRECTION: This article had been updated to correct the spelling of V. Stiviano's name.

Commentary by Dan Eaton, a partner with the San Diego law firm of Seltzer Caplan McMahon Vitek, where his practice focuses on defending and advising employers. He also is a professor at the San Diego State University College of Business Administration, where he teaches classes in business ethics and employment law. Follow him on Twitter @DanEatonlaw.