Hello and thank you for allowing me the opportunity to assist you.
If the harm for which she was compensated occurred before the marriage, then I think that she is correct that those funds were her separate property rather than community property
. It's no different than if you had worked before the marriage but weren't paid until after the marriage. The date of the payment is not the issue ... it's the date the payment was earned that's the issue. The same goes for the lawsuit. The compensation was for something that occurred before the marriage, so that should be separate property. So, it makes sense that you would be required to repay half of that in the settlement. The exception would be if she indicated at the time that the funds were going to be community property. In other words, separate property can become community property if the person who owns the separate property intends to make it community property. But if you were to make that argument in mediation, then you'd need to support it with some kind of evidence. Unfortunately, proving intent of another person is generally difficult since you can't crawl inside their mind. Nonetheless, you can argue that the fact that the money was used on community property items, like the house and furnishings, etc., indicates that she intended those funds to be considered community property.
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