Family Law Case Studies - Volume 11, Number 4
Published and Unpublished Appellate Court Opinions for April 2013
Published as a service to the Family Law Bar Association.
Compiled by the Hon. E. J. Burke, 1035 Palm Street, Room 355, San Luis Obispo, CA 93408, firstname.lastname@example.org.
Published and unpublished slip opinions can be secured from www.courts.ca.gov/opinions.htm.
Irmo Simmons (2013) ___ Cal.App.4th ___ (CA 4/1 – Opinion filed April 18, 2013)
The remedies in FC § 1101(g) & (h) for failing to disclose an asset applies only to community property. it does not apply to the non-disclosure of a separate property asset.
The parties married in 2008 and separated 2009. They have one child. "Astoundingly lengthy, circuitous, and expensive" litigation followed.
Husband's initial pleadings requested nullification of the marriage based upon Wife's alleged fraud, dishonesty, affairs and drug and alcohol abuse. Husband asked for paternity testing, custody if he were the father of the child with visitation reserved to Wife. Husband requested spousal and child support and claimed he needed help from Wife with his attorney fees and costs.
Wife claimed both parties had sizable financial assets and had no need for support or help with attorney fees and costs. Wife acknowledged her earning capacity as a CPA and detailed the income she derived from her separate property estate. Wife informed the court that Husband was the CEO of a "wetsuit business" and alleged that he told her that his interests in this enterprise and another property were worth about $3 million.
Wife's response denied Husband's various accusations. She requested a psychological evaluation of Husband and said his visitation should be supervised because he was mentally unstable. The trial court's initial ruling awarded primary physical custody to Wife with visitation to Husband. The court also ordered a paternity test, drug testing and a custody evaluation.
As to whether Husband needed spousal support, Husband did not disclose his business ownership interests in his initial I&E and discovery responses. He said his income was limited to a $4,166 monthly salary from the wetsuit company and averred he had only $14,332 in the bank. In 2009, he testified that his only income was his $70,000 salary. In 2010, his I&E stated he had only $3,136 in the bank.
For two years Wife battled to obtain accurate information from Husband about his financial assets. The trial court eventually appointed a discovery referee who repeatedly sanctioned Husband for discovery abuse. In June 2010, Husband finally acknowledged that he earned both a salary of $60,000 and received "ownership income" of $215,870. In 2010 he acknowledged receiving $350,000 in "extraordinary distributions" from the company. He disclosed $321,649 in a checking account and revealed an ownership interest in a building in La Jolla.
Nevertheless, even after these grudging disclosures, Husband continued to refuse full disclosure or adequate responses to discovery requests concerning his assets. In 2010, the discovery referee recommended sanctions of $11,000. In 2011 sanctions of $6,475, $3,200, $3,000, $1,600, $1,580, $2,362 and $1,780 were imposed.
In May 2011, the discovery referee reported, "Husband has ... refused to provide full and complete information and documentation pertaining to his finances." The referee recommended precluding Husband from introducing any evidence about his finances in support of his claims for spousal support, past child support, or attorney fees and costs. The referee also recommended that his request for attorney fees and costs be stricken as an issue and that another $7,500 in sanctions be imposed. The trial court adopted the referee's recommendations.
The CA also described other uncooperative and obstructive conduct by Husband including his misuse of a copy of the hard drive on Wife's computer and his violation of court orders in this regard. The CA also noted that Husband filed a civil complaint against Wife alleging fraud, intentional infliction of emotional distress, and other causes of action. In November 2009, the court granted Wife's Anti-SLAPP motion, dismissed Husband's civil complaint, and awarded her $24,318 attorney fees and costs.
At Husband's request, trial on the bifurcated issues was set for two consecutive Fridays in April 2011. Husband appeared on the first day of trial representing himself. Pre-trial motions produced an order that Husband could testify on his own behalf but would not be permitted to call any witnesses due to his failure to exchange a witness list or designate any experts. Husband then told the court that he would not be able to attend the second day of trial. Although Husband failed to appear on the second day, the court completed the trial in his absence.
By July 2011, Wife had spent more than $800,000 on attorney fees and costs. The trial court's statement of decision said Husband intentionally and in bad faith refused to comply with "even the most basic" financial disclosures, filed misleading and delayed disclosures, failed fully to disclose his assets, misused a copy of Wife's computer hard-drive to distribute embarrassing emails to third parties, failed to respond to discovery requests and failed to appear at his own deposition and trial. The trial court imposed $150,000 in sanctions against Husband under FC § 2107 for breach of his fiduciary duties of disclosure and $250,000 in sanctions under FC § 271 for his uncooperative conduct.
On August 4, 2010 Husband averred in an I&E that he had a total of $44,530 in his bank accounts. The trial court found that this was "clearly a falsehood" because his Wells Fargo bank statement showed that on August 1, 2010 he had $245,850 in a savings account. Applying the remedy in FC § 1101 (h) for Husband's fraudulent failure to disclose the account, the court awarded Wife the entire value the account; viz., $245,850.
Husband appealed. REVERSED AND REMANDED
Section 2107 and 271 Sanctions and Denial of Need-based Attorney Fees (Unpublished.)
Husband argued that he did not have the ability to pay the sanctions, and that Wife should pay his fees because she has superior financial assets. The CA disagreed.
The CA rejected the argument, saying there was ample support in the appellate record to permit the conclusion Husband's financial situation warranted the denial of his request for need-based attorney fees. For example, Wife's expert testified that when his "business ownership income" was included, Husband's monthly income in 2009 was $22,864, and in 2010 it was $60,379. Husband continued to receive distributions from his one-third ownership interest in the wetsuit business and had received $50,000 from the sale of his interest in the real property in La Jolla. According to Husband, his one-third ownership interest in La Jolla Wetsuits "may be worth up to $10,000,000."
Husband no need for help with his attorney fees.
Award of Section 2107 Sanctions for Failure To Disclose (Unpublished.)
Section 2100 requires the parties to a dissolution proceeding to fully disclose their community and separate property assets. FC § 2107 (c) provides for a monetary remedy for a party's failure to comply with this fiduciary duty of disclosure. (Irmo Fong (2011) 193 Cal.App.4th 278, 286-287; Irmo Sorge (2012) 202 Cal.App.4th 626, 651-652.)
The CA rejected Husband's assertion the trial court's § 2107 award was excessive. It noted that the sanctions that were repeatedly imposed did not deter Husband's discovery abuse and he continued to be noncompliant in his disclosure duties. The CA also said the $150,000 award was not excessive considering that Wife incurred over $800,000 in attorney fees to force Husband to comply with his disclosure obligations.
As to Husband's ability to pay the sanctions, the CA said this was sufficiently demonstrated by his monthly salary of $16,000, continuing distributions averaging $2,581 per month from his former employer, plus his receipt of large sums in the recent past and his allegedly multimillion dollar ownership interest in La Jolla Wetsuits.
Award of Section 271 Sanctions for Noncooperation (Unpublished.)
FC § 271 (a) authorizes an award of attorney fees and costs as a sanction for conduct that frustrates settlement and increases the cost of litigation. Husband disputed the factual basis for the trial court's assessment of $250,000 as sanctions and argued the amount of the award was beyond his ability to pay. "Contrary to Husband's contentions, 'the trial court was relying on Husband's behavior throughout the entire litigation when ordering this sanction.'" The CA said the trial court "could reasonably rely on the high value of Husband's ownership in the business based on Husband's own representations to the court in January 2011 that his business partners had offered him $400,000 for his share of ownership, but he was not going to accept the offer because his expert valued his shares at $7 to $10 million."
Denial of Section 2030 Need-based Attorney Fees (Unpublished.)
FC § 2030 is intended to ensure that each party will have access to legal representation during dissolution proceedings. (§ 2030 (a)(1).) The trial court must make findings as to whether an award of fees is appropriate, whether there is a disparity in access to funds to retain counsel, and whether one party is able to pay for both parties' representation. (§ 2030 (a)(2).) If there is a disparity in access to funds and ability to pay, the trial court should award fees.
The CA observed that "the court is authorized to make the section 2030 award if it is 'just and reasonable under the relative circumstances' of the parties, based on a consideration of 'the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately,' and considering all relevant circumstances including income, assets, debts, earning ability, and investment and income-producing properties. (§ 2032 (b); Irmo Duncan (2001) 90 Cal.App.4th 617, 630.) The fact that a party has resources from which the party could pay his or her own attorney fees does not bar an award. (Irmo Cryer (2011) 198 Cal.App.4th 1039, 1056.) Also, when deciding whether an award of fees is appropriate, the court may consider whether the party has engaged in unreasonable litigation tactics. (Irmo Huntington (1992) 10 Cal.App.4th 1513, 1524.)"
The CA said the large sums of income Husband received from his business ownership income and his salary and his mismanagement of that income supported the trial court's conclusion there was not such a disparity in access to funds so as to make a fee award appropriate. Husband's intentional choice to obstruct the discovery process also warranted the conclusion he was neither in need of assistance nor without access to funds to finance his own trial tactics.
FC § 1101 (h) - Remedy of Value of Undisclosed Asset (Published) – General Principles
As noted, the trial court relied upon FC § 1101 (h) to award Wife the entire balance of Husband's separate property $245,850 savings account as a sanction for his failure to disclose this asset. The CA concluded this was error.
FC § 721 creates a broad fiduciary relationship between spouses in their transactions with each other. This relationship "imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other." (§ 721 (b).)
FC § 1100 delineates rules governing a spouse's management of marital property. It references the FC § 721 fiduciary relationship and declares it to be operative with respect to the management and control of community property, "until such time as the assets and liabilities have been divided by the parties or by a court." (§ 1100 (e).) The section further specifies that the fiduciary duty "includes the obligation to make full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest . . . ."
FC § 1101 sets forth the remedies that are available for breach of a fiduciary duty. FC § 1101 (a) provides that a spouse has a claim for breach of the fiduciary duty that results in impairment of the "undivided one-half interest in the community estate . . . ." FC § 1101 (g) allows for an award of 50% of the value of the asset, and subdivision (h) allows for an award of 100% of the value of the asset if the breach can be classified as "oppression, fraud, or malice."
The CA reiterated the remedies in the Family Code that allow for sanctions in contexts outside the management and control of marital property. (See FC §§ 2107 and 271.)
Interpretation of FC 1101(h)
FC § 1101(h) states: "Remedies for the breach of the fiduciary duty by one spouse, as set forth in Sections 721 and 1100, when the breach falls within the ambit of Section 3294 of the Civil Code shall include, but not be limited to, an award to the other spouse of 100% of any asset undisclosed or transferred in breach of the fiduciary duty." The question addressed by the CA was whether "any asset" should be construed to mean "any community asset."
The CA acknowledged FC § 1101(h) authorizes the trial court to assess a 100% penalty for the nondisclosure of "any asset" without specifying whether its remedy is confined to nondisclosure of a community property asset or whether it also applies to nondisclosure of a separate property asset. Other appellate courts have not addressed the issue.
The CA concluded the Legislature intended FC § 1101(h) to apply only to undisclosed community property. The CA reasoned that the § 1101(h) remedy is found in the portion of the Family Code that exclusively concerns matters associated with community property. Second, FC § 1101 (f) provides that the § 1101(h) remedy may be pursued in an action even when the parties have not filed for dissolution. It said the availability of the remedy during the existence of the marriage supports the thesis that the remedy was not intended to extend to separate property, which is generally not subject to the control of the non-owner spouse and which typically only becomes relevant upon the filing for dissolution. (§§ 752, 770 (b).)
Third, the Legislature enacted other remedies that are expressly applicable to separate property. (FC §§ 271, 2107.) Fourth, a fundamental principle of family law is that each spouse has a one-half interest in community property. (FC § 2550.) The fiduciary duty with respect to marital property is designed, among other things, to preserve that one-half interest. Through the enactment of the section 1101 value-of-the-asset remedy, the Legislature has in effect altered the one-half interest community property formula in the event a spouse egregiously violates his or duty to preserve the other spouse's one-half right to the property by awarding the aggrieved spouse more than his or her one-half interest.
Accordingly, the portion of the judgment awarding the $245,850 value of Husband's separate property savings account was reversed. But since the trial court might have awarded greater sanctions under sections 2107 and 271 had it known the section 1101 remedy was not available, the entire issue of sanctions was remanded for reconsideration.
Denial of Continuance of the Second Trial Date (Unpublished)
The CA found no error in the trial court's decision to carry on with the trial in Husband's absence.
Irmo Kahn (2013) ___ Cal.App.4th ___ (CA 4/2 – Opinion filed April 26, 2013)
A default judgment awarding $275,000 for breach of a fiduciary duty is void unless the petition states the nature of the breach and amount of the relief requested.
Wife and Husband married in 1958 and separated in 2009. Wife checked the box on her dissolution petition that informed Husband that she was seeking "Other Relief for [Husband's] breach of fiduciary duty pursuant to Family Code sections 1100 et seq." The petition did not specify the factual grounds for her claim and did not specify the amount of the monetary relief she sought.
Wife believed Husband directly or indirectly owned numerous parcels of real property. Husband claimed that the properties had either been sold or were "owned and in the possession of his girlfriend." He admitted having an interest in a commercial building in Los Angeles but said it operated at a loss. He said his only income was $570 a month from Social Security.
Wife served Husband with form interrogatories and a request for production of documents. Husband failed to respond and Wife filed a motion to compel. Husband filed no opposition to Wife's motion to compel and it was granted. Husband was directed to respond within 30 days. Husband refused to do so. Wife then moved to strike Husband's responsive pleading as a discovery sanction.
While the motion for sanctions was pending, the trial court appointed a receiver to manage the commercial building. In 2010, the receiver reported that Husband had failed to turn over the books, records and bank accounts relating to the property, citing his Fifth Amendment rights and right to privacy. He also interfered with the receiver's business relationships with employees and tenants.
About 10 days before Wife's sanction motion was to be heard, Husband filed responses to Wife's discovery requests that were either evasive or objections that again asserted his privilege against self-incrimination. He refused even to answer questions about whether he was living with anybody or had insurance coverage. Although his responses included objections, his attorneys did not sign the responses.
In July 2010, the trial court granted Wife's motion. Husband then moved to set aside his default arguing that terminating sanctions were disproportionate and punitive. He also pointed out the various errors and omissions of his attorney. The trial court denied Husband's motion based upon a finding that Husband's failure to respond to Wife's discovery requests was willful.
After a prove-up hearing, the trial court entered a default judgment, that among other things, awarded Wife $275,000 for Husband's breach of his fiduciary duty to make full disclosures.
Husband appealed. AFFIRMED IN PART, REVERSED IN PART
Standard civil discovery procedures apply in family law proceedings. If a party fails to obey an order compelling a response, the trial court "may make those orders that are just," including an order striking the party's pleadings. (C.C.P. §§ 2030.290 (c); 2031.300 (c).)
The CA observed that in this case Husband did not provide any response until a year after the original request – six months after he was ordered to do so. "He simply blew off the discovery process." The CA said the fact he was representing himself at times was no excuse since "self-represented parties are entitled to no greater consideration than other litigants and attorneys." (Irmo Falcone & Fyke (2008) 164 Cal.App.4th 814, 830.) The CA also rejected Husband's complaint that he was injured for part of this time since he was only "incapacitated" for less than a month and because if it were difficult for him to respond, he should have sought an extension of time, a protective order, or similar relief. He was not entitled to exercise self-help by unilaterally postponing a response.
The CA said Wife's form discovery requests were not burdensome or oppressive and were directed to the issues surrounding Husband's fiduciary duty to fully disclose all community assets and liabilities (FC § 1100 (e)).) Husband's argument that his late responses required Wife to file a new motion to compel was rejected because his attorney did not, as required, sign the responses. (C.C.P. §§ 2030.250 (c); 2031.250 (c).) "For this reason alone, the trial court could properly disregard the responses as invalid."
The CA said, "Husband's responses were grievously defective. First and foremost, he had no right to raise any objections. If a party fails to serve a timely response, that party waives 'any objection . . . , including one based on privilege . . . .' (C.C.P. §§ 2030.290 (a); 2031.300 (a).) The CA pointed out that Husband's "Fifth Amendment objections to producing corporate and partnership business records were invalid because 'an individual cannot rely upon the privilege to avoid producing the records of a collective entity which are in his possession in a representative capacity, even if these records might incriminate him personally.' (Citations)"
The CA concluded it was reasonable to infer that Husband's attorneys knew the responses were defective. "There was ample evidence that Husband and his attorneys were playing fast and loose with the court. ¶ Based on the foregoing, the trial court could reasonably conclude that the violation was willful and that no lesser sanction was going to be successful in obtaining compliance."
Setting Aside Husband's Default
C.C.P. § 473 (b) allows the trial court to relieve a party from a default. There are two alternative grounds for relief from default, one mandatory, one discretionary. Under the discretionary provision, the court "may" set aside a default "taken against [a party] through his or her mistake, inadvertence, surprise, or excusable neglect." (C.C.P. § 473 (b). ) Under the mandatory provision, the court "shall" set aside a default based on "an attorney's sworn affidavit attesting to his or her mistake.
But, "the mandatory provision . . . 'protects only the innocent client [and] provides no relief for the culpable client who participates in conduct which led to the default . . . .' (Citations.)" (See Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1247-1252 ["a party can rely on the mandatory provision of section 473 only if the party is totally innocent of any wrongdoing and the attorney was the sole cause of the default or dismissal"].)
Here, the trial court found that Husband's failure to produce documents was "willful" and part of "a pattern of noncooperation designed to frustrate the process."... The CA said, "Husband failed to comply with his discovery obligations when he was in propria persona; he continued to failed to comply with his discovery obligations when he was represented, despite their promises that he would comply. ... Thus, it could properly refuse to grant relief based on attorney fault."
Breach of Fiduciary Duty
Although Wife's dissolution petition informed Husband that she was seeking relief for his breach of fiduciary duty pursuant to Family Code sections 1100 et seq. she did not specify any factual grounds and did not specify the amount she sought to recover.
C.C.P. § 580 (a) provides that "[t]he relief granted to the plaintiff, if there be no answer, cannot exceed that which he shall have demanded in his complaint . . . ." Defendants must be informed of the scope of the potential consequences of a refusal to pursue their defense. (Greenup v. Rodman (1986) 42 Cal.3d 822, 829.) Thus, a "default judgment greater than the amount specifically demanded is void as beyond the trial court's jurisdiction." (Greenup at p. 826.)
Citing Irmo Andresen (1994) 28 Cal.App.4th 873 and Irmo Lippel (1990) 51 Cal.3d 1160 Wife argued that her petition gave Husband sufficient notice of the nature of the relief she sought. The CA disagreed.
In Irmo Lippel (1990) 51 Cal.3d 1160, 1163-1165 the Supreme Court determined that not checking the box for child support on a form dissolution petition renders a default judgment awarding child support void. In Andresen the wife request a division of the community property of the parties and listed certain assets but did not list any values for them. After the husband defaulted, the trial court entered a judgment dividing the community assets and ordering the husband to make an equalizing payment of nearly $10,000. The panel agreed with wife that because "she properly and fully completed the petition and its necessary attachments to the extent of the relief requested on the face of those documents, the husband was given adequate notice that the wife sought a division of the property and liabilities identified in the wife's papers. [Citation.] If he desired to be heard on the subject of the valuation and division of the listed items, he should have appeared." (Andresen at pp. 879-880.)
Here however, the CA said "[i]t would be stretching Andresen too far to apply it in this case. ... [T]he checkbox for "[o]ther" relief is distinguishable from the checkboxes for a division of community property. It is a catch-all category; it could encompass practically any kind of relief, including relief that is not statutorily required in a marital dissolution action. The respondent is therefore entitled to notice of the specific nature and amount of any "[o]ther" relief sought before defaulting."
Thus the CA concluded the judgment was void to the extent it awarded Wife $275,000. The matter was remanded to the trial court with directions to determine whether the judgment should be modified by striking the award of $275,000 or wholly vacated so that Wife could amend her petition and litigate her claim for damages for breach of fiduciary duty."
Please note: The following digests of unpublished opinions of the California Courts of Appeal are presented as case studies to illustrate how commonly recurring family law disputes were resolved in trial and appellate courts.
Caution: Rule 8.1115 (a), California Rules of Court, prohibits courts and parties from citing or relying on any unpublished opinion in any action or proceeding, except in the limited circumstances specified by rule 8.1115 (b).
Irmo Charles – Unpublished opinion of District 4, Division 3 (April 2, 2013)
Gambling with the timing of a motion for an alternate valuation date coud be a bad bet.
Husband and Wife separated in 2006. In 2011, trial commenced of reserved property and support issues.
In 2007, the parties jointly retained a forensic accountant to value the community's interest in an interior design firm that was half owned by Husband. In April 2009, Husband told the accountants that the business was in trouble and projected a $100,000 loss for first quarter of 2009. Based on these remarks, the CPA opined the value of the community's half of the firm was $198,000, down from an earlier estimate of $226,000 as of the date of separation.
In 2010 however, the CPA revised his estimate upward from $198,000 to $716,000. The revision was based on the fact that gross revenues in 2009 were actually $2.4 million. This produced a profit of $1.3 million instead of the projected loss of $100,000. The CA observed that the timing of the revised report was "[in]convenient for Husband" because only a month earlier Wife asked for a trial date in an AIM that declared "all discovery has been completed." A TSC was set for mid-November 2010.
In December 2010, Husband employed new counsel who filed a motion to value the community's interest in the business at the date of separation. By this time however, a trial date had been set for mid-February 2011. Wife's opposition correctly pointed out that at that time a motion to value assets of the date of separation had to have been heard by the time of the trial setting conference. (CRC, rule 5.175(a) ["On noticed motion of a party, the stipulation of the parties, or on its own motion, the court may bifurcate one or more issues to be tried separately before other issues are tried. The motion must be heard not later than the trial-setting conference."].)
The trial court agreed the motion was untimely and denied it. Trial was continued a couple of times and during this break in the action Wife filed a motion to preclude Husband from presenting evidence of the value of the community business at the date of separation. The motion was granted. The CA observed, "Judge Waltz's statement of decision was extremely thorough and cogent."
The CA noted that at trial, "the main difference in the valuation of the competing experts was the calculation of goodwill, which in turn depended on how much 'reasonable compensation' was to be attributed to Husband. Ironically, the higher the reasonable compensation, the lower the goodwill. That is, the greater the income of the business can be attributable to the operating spouse, the less an investor will be willing to pay to buy it and replace the operating spouse." Not surprisingly, the three accounting experts (Wife's, Husband's' and the one jointly employed in 2007) posited three different values for reasonable compensation that ranged from $649,000 (Wife's expert) to $1.342 million (Husband's expert) proving once again that business valuations is a black art based upon voodoo economics.
The trial court found Wife's expert to be most persuasive and set goodwill at $1.45 million. When combined with fixed assets of some $190,000 and another $190,000 in owners' equity, the total value of the firm was ascertained at about $1.8 million, which translated into $918,000 as the community interest. For purposes of setting post-judgment spousal support, the trial court fixed Husband's monthly income at $51,530 based upon his expert's calculation of the parties' financial circumstances at the time of trial.
Husband appealed. AFFIRMED
Husband argued the trial court erred by failing to value the community business at the date of separation or, if the date of trial had to be used, by failing to reduce the value by an amount that accounted for the value of Husband's post-separation efforts. The CA rejected the arguments.
The CA pointed out that in 1975 the Legislature enacted legislation that states the court "shall value the assets and liabilities as near as practicable at the time of trial, except that, upon 30 days' notice by the moving party to the other party, the court for good cause shown may value all or any portion of the assets and liabilities at a date after separation and prior to trial to accomplish an equal division of the community property and the quasi-community property of the parties in an equitable manner." (FC § 2552(a).)
Thus the issue was not whether the court "erred," but whether it abused its discretion in refusing to switch the normal default setting of valuation of date of trial to the optional date of separation. "An abuse of discretion is only demonstrated when no reasonable judge could have made the challenged order." (Irmo Barth (2012) 210 Cal.App.4th 363, 374.)
Here, "Husband brought his motion too late, at a point when discovery had already been completed, and when considerable discovery would have been necessary to test the issue of a date of separation valuation. Prejudice to Wife alone, even if the motion was not formally untimely, made the decision to deny eminently reasonable." Moreover, "the trial judge's decision can also be justified independently by the need to deter operating spouses from gamesmanship in the control of community businesses. Husband was content to let more than four years go by without making a motion to value at the date of separation. The trial judge could reasonably infer that if Husband was serious about his contention [the business] was fundamentally a two-man show, he could easily have brought his motion to value as of the date of separation sometime in 2007, or 2008, or maybe even 2009."
The CA also rejected Husband's other complaints about the trial court's assessment of the evidence that was elicited at trial, concluding some of his arguments were belied by the record while others were simply a restatement of the reasons he disagreed with the trial court's rejection of the propositions he advanced at trial.
Catyas v. Trebowski – Unpublished opinion of District 6 (April 8, 2013)
Actual knowledge that a trust was revoked bars a claim the revocation violates the Family Code automatic temporary restraining orders.
In 2008, Wife filed a petition for dissolution of the parties' marriage. The summons included the standard automatic restraining orders that prohibit "creating a non-probate transfer ... in a manner that affects the disposition of property subject to the transfer, without the written consent of the other party or an order of the court. Before revocation of a non-probate transfer can take effect or a right of survivorship to property can be eliminated, notice of the change must be filed and served on the other party." (FC § 2040(a)(4), (b)(2).)
In 1999, Husband created The Trebowski Family Trust that held Husband and Wife's Los Altos Hills home and other household and personal assets. The trust permitted revocation with respect to community property held by the trust if the revocation was by a written instrument, signed and dated by either Husband or Wife and delivered to the Trustee and the other Settlor.
In 2008, Wife decided to buy a new house in Contra Costa County. She informed Husband that in order to close the escrow, she needed access to the assets in their non-IRA accounts. Husband objected to her offer to revoke her interest in the trust and to waive any claim to its assets after her half was transferred out, explaining that he wanted to set up a separate trust before any money was moved out of their accounts.
In September 2008, Wife and Husband authorized a transfer of half the assets in the family trust to Husband's new trust. On the same day, Husband revoked his family trust and his will and created a new "living trust" instrument that appointed his son, Robert and his sister Mary Ann as successor trustees. Husband's family law attorney then notified Wife's family law attorneys and Wife's financial advisor at Morgan Stanley by e-mail informing them that Husband's estate plan was complete and that the Morgan Stanley assets should be divided.
At trial, Wife denied receiving any notice from her counsel or anyone else that Husband had revoked his family trust and said she did not receive a copy of any of Husband new estate-planning documents before he died in March 2009.
Following Husband's death, Husband's brother and sister as successor trustees served Wife and her attorneys with a notice of administration of Husband's 2008 trust, together with a copy of the trust. Wife did not file a contest to Husband's trust within 120 days, as required by Probate Code § 16061.8. And periodically throughout 2009, Wife submitted multiple requests for reimbursement of expenses Wife had advanced for the Los Altos Hills property.
In September 2009, Wife filed a petition that sought orders declaring Husband's 2008 revocation was invalid, confirming her as sole successor trustee of the 1999 family trust, and declaring that she held legal title to the Los Altos Hills residence. Wife asserted that she did not receive a written revocation of the family trust and argued that because her marriage to Husband had not been terminated by a judgment before he died, and because their respective rights to the Los Altos Hills property had not been adjudicated, Husband's revocation was invalid and the property remained an asset of the family trust, of which she was the sole successor trustee.
Husband's brother and sister as successor trustees responded with a petition to establish that Husband's estate owned the Los Altos Hills residence and other properties. They urged the court to find that Husband's 2008 trust held equitable title to his real and personal property, even though he had been unable to transfer from the family trust to his own name or his individual trust before he died. Husband's brother and sister sought an order that directed Wife to transfer the residence and other properties to them as executors of Husband's will.
In April 2010, after having approved successive reductions in the listing price of the Los Altos Hills residence without notice to the successor trustees, Wife executed an agreement for the sale of the property again without notifying or seeking the authorization Husband's brother and sister to do so. The sale closed in April 2010 and half of the proceeds were placed into a trust account for Husband's sister and brother's benefit.
Following a trial in 2011, the court found, (1) Wife waived her contention that Husband's brother and sister notice of revocation was untimely; (2) that Wife's petition contesting the validity of the 2008 trust was untimely; and (3) that Wife was estopped to contest the validity of the revocation through her conduct both before and after Husband's death.
The trial court awarded Husband's brother and sister half the proceeds from the sale of the Los Altos Hills property, all of Husband's separate personal property, and a one-half interest in the community's personal property. Wife appealed. AFFIRMED
Notice of Husband's Revocation
Wife argued Husband's 2008 revocation of the 1999 family trust was invalid because the automatic temporary restraining orders restrained Husband from creating a non-probate transfer without her written consent or a court order. (FC § 2040 (a)(4).) Wife said the exception to this restriction found in subdivision (b) was inapplicable because it applies only if notice of the revocation is "filed and served on the other party." Here she argued, Husband's revocation of the 1999 trust had not been filed and served before September 11, 2008, or even before his death.
The CA disagreed, saying Wife had actual knowledge that Husband revoked his interest in a trust that released his interest in property he wished to transfer into his own trust and allowed Wife to access the remaining funds for her real estate purchase. "Not only was Wife aware of the revocation both before and after its completion, but a copy of the executed document was provided to her. ¶ To ignore these facts ... would elevate hyper-technical applications of statutory procedure to new heights without serving the legislative purpose of protecting the property rights of both parties during dissolution proceedings."
Compliance with the 1999 Trust
Wife also argued Husband's revocation of his trust was ineffective because a copy of it was sent to Wife's attorneys who forwarded it to her by e-mail. She contended this did not comply with the revocation provisions in the trust instrument. The CA disagreed.
The CA endorsed the trial court's conclusion that Husband complied with the explicit revocation provision in his trust. The trust stated that revocation was permitted with respect to community property held in the trust [through] a written instrument, signed and dated by either Settlor and delivered to the Trustee and the other Settlor." The CA rejected Wife's argument that the provision should be interpreted to mean that written revocation had to be given to the recipient personally or sent by postal service in order to constitute a valid delivery.
Irmo Humphries – Unpublished opinion of District 4, Division 3 (April 9, 2013)
A temporary order to pay college expenses that is not incorporated in the final judgment of dissolution is unenforceable.
Wife and Husband married in 1990 and separated in 2006. They have three children.
In August 2006, the parties stipulated to an order concerning custody, visitation and that requires Husband to "pay the children's private school tuition and for their tutors, lessons, special programs, camps and doctors," and "for the children's church mission." Additionally the order required Husband to "pay for four years of undergraduate education at a certified university of the child's choice, at the rate of a school in the UC system in California as well as book and living expenses so long as the child is a full time student taking at least 14 units per semester and maintaining a G.P.A. of at least 2.5."
In 2008, Wife and Husband stipulated to an order on Wife's OSC that Husband would "continue to support Wife and the children," and provided "all other orders contained in the 2006 Order shall remain in full force and effect." Over the next two years, five different judgments on reserved issues were entered, none of which made any mention of the college expense provision.
In April 2009 a judgment was entered that divided various financial accounts that recited "the funds in these accounts shall be used for the children's college educational expenses and tuition, or for other expenses as mutually agreed to by the parties." The last of the judgments on reserved issues was entered in August 2010. It recites that it "contains provisions for child support or family support" and requires Husband to pay child support of $4,340 per month for the term prescribed by the Family Code and spousal support of $3,000 a month.
In September 2011, Wife filed an OSC seeking an order that directs Husband to comply with the college expense provision contained in the 2006 and 2008 orders. She contended the college expense provision constituted a permanent adult child support order that survived the final judgment. Husband opposed Wife's OSC arguing the college expense provision was a part of a temporary order that terminated upon entry of the final judgment.
The trial court denied Wife's motion. It found the college expense provision did not constitute a permanent child support order. The college provision in the 2006 Order and the April 2008 Order was a pendente lite order that was not included in the August 2010 Judgment, which the court found was the final and controlling judgment. Additionally, the court concluded the college expense provision was too vague to be enforceable—there was no way to calculate what was owed in accordance with the provision.
Wife appealed. AFFIRMED
The CA concluded the trial court correctly found the college expense provision was not enforceable because it was part of a temporary order that was not incorporated into the final judgment in this matter.
"[I]n California the child support obligation normally ends when the child reaches 18 years of age. (§ 6500.) Parents have no legal obligation to pay for the college education of an adult child. (Irmo Smith & Maescher (1993) 21 Cal.App.4th 100, 107-108.) A parent may agree to pay for such expenses, but the court's jurisdiction in a dissolution proceeding to enforce the agreement is statutory. (§ 3587.)" (Irmo Jensen (2003) 114 Cal.App.4th 587, 597.)
The CA rejected Wife's argument that the college expense provision was an enforceable agreement to pay adult child support under FC § 3587. The CA said, "That section allows a court 'to approve a stipulated agreement by the parents to pay for the support of an adult child or for the continuation of child support after a child attains the age of 18 years and to make a support order to effectuate the agreement.' Assuming for our purposes an agreement to pay an adult child's college expenses constitutes an agreement to pay adult 'child support, we nonetheless agree with the trial court the provision at issue here was only part of stipulated temporary orders. It was not part of a martial settlement agreement incorporated into the final judgment."
Various interim orders may issue in family law proceedings. One or both parents can be ordered to pay "any amount necessary" to support the children. (FC § 3600.) But, there are fundamental differences in the functions and purposes of pendente lite support and permanent support orders. A temporary support order is to maintain the living conditions and standards of the parties pending the ultimate disposition of the action. It is based on need and is not an adjudication of any of the issues in the litigation. "A temporary support order terminates upon entry of a permanent support order. (Irmo Hamer (2000) 81 Cal.App.4th 712, 717-718; Irmo Horowitz (1984) 159 Cal.App.3d 377, 380.)
Here, the college expense order "was plainly one maintaining the parties' status quo by affirming Husband would continue paying for all the family's expenses in accordance with the current practice .... Nothing indicates it was intended as a final determination of the parties' rights and responsibilities. ... There was no marital settlement agreement. Rather, the court held an 11-day trial on this dissolution case, that resulted in a final judgment awarding permanent spousal and child support and that judgment did not provide that any prior orders would remain in effect."
The 2006 order was a temporary order and was not incorporated into the final judgment. The college expense provision is not enforceable.
Irmo Bettanini – Unpublished opinion of District 5 (April 10, 2013)
Permitting a child to participate in the soap box derby, target practice and ride a motorized scooter does not warrant modification of permanent custody and visitation orders.
Husband and Wife married in 1995 and separated in 2005. They have a daughter who is now about nine years old. Following a hearing in 2005, the trial court found Wife was the primary caretaker of their daughter and awarded her temporary physical custody with visitation reserved to Husband one day per week with telephone access on Sundays, Tuesdays and Thursdays. The order required Husband's mother to monitor his time with the child.
The parties attempted to reconcile their differences and during this time the child regularly spent more time with her father. In 2010 however, Wife reignited the family law proceedings and the more frequent visits of the child with her father ended. Husband then filed and served an OSC to modify the 2005 custody orders requesting joint legal and physical custody. Husband alleged the child wished to spend more time with him and said Wife unreasonably refused his requests for additional time.
Wife's response stated the "current temporary order" should be continued, but should be modified to allow Husband more visitation time. She expressed concerns about making sure the child had a regular bedtime and that the structure that Wife's home provided was maintained. She said frequent exchanges would not be good for the child.
Following an evidentiary hearing, the trial court awarded Wife and Husband joint legal and joint physical custody with visitation for Husband on the first, third, fourth and fifth weekends during the school year. In March 2011, a judgment of dissolution was filed that incorporated the 2010 custody orders.
In April 2011, Wife filed a motion to reconsider the custody and visitation orders in the judgment and an OSC seeking a modification of the 2010 custody orders. She alleged safety issues concerned her because Husband involved the child in dangerous activities such as entering a soap box derby, riding a small motorized scooter and by allowing her to play with a neighbor's dog. Wife claimed that the trial court should have treated the 2005 custody order as though it were a permanent order that required a strong showing to justify any change.
Following an evidentiary hearing, the trial court denied the motion for reconsideration as untimely. The trial court concluded the 2010 orders were "permanent" and thus modifiable only upon a showing of a substantial change of circumstances affecting the child's best interests. The trial court found Husband did not expose the child to any substantial risk of danger in his care and concluded Wife had not shown a change of circumstances warranting modification of the permanent custody order.
Wife appealed. AFFIRMED
Preliminarily, the CA rejected Wife's appeal from the 2010 custody and visitation orders as untimely. "The issues raised by Wife to attack the 2010 custody order were forfeited by her and are not reviewable by us because she did not file a timely notice of appeal from the 2010 custody order." Similarly, Wife's motion for reconsideration was untimely since it was not filed within 10 days of service of the subject order. (CCP § 1008 (a).)
The trial court has wide discretion to choose a parenting plan that is in the best interests of the child. (Montenegro v. Diaz (2001) 26 Cal.4th 249, 255.) Once there has been a final or permanent custody determination, the parent seeking to alter the order for legal and physical custody can do so only on a showing that there has been a significant "'change of circumstances'" indicating that a different custody arrangement would be in the child's best interest. (Irmo Brown & Yana (2006) 37 Cal.4th 947, 956; Irmo Burgess (1996) 13 Cal.4th 25, 37.) However, if the requested modification would only alter the details of the parenting schedule or visitation arrangements, and would leave the existing custody order otherwise the same, the trial court applies the best interest of the child standard. (Irmo Lucio (2008) 161 Cal.App.4th 1068, 1077-1080.)
The CA rejected Wife's argument that the child was not safe in Husband's care based on certain activities that he allowed her to participate in. "Husband's version of what happened was credible, reasonable and supported by the evidence. ... As the trial court properly held, no significant change of circumstances was shown by Wife that would warrant a modification of the 2010 custody order."
Irmo Fry – Unpublished opinion of District 6 (April 11, 2013)
It is not error to order guideline temporary spousal support that exceeds the average monthly expenses in the year preceding the date of separation.
Husband and Wife married in 1985 and separated in 2003. They have three children.
In 2004, Wife sought an order for spousal and child support and an award of attorney fees. Wife alleged that Husband, as President of Fry's Electronics stores, controlled his income. She also asserted Husband and his brothers controlled vast wealth including the real estate and buildings from which the Fry's Electronics stores operate, a sheep ranch in New Zealand, a fleet of aircraft that they enjoy for their personal pleasure, an island in the Bahamas, a tract of land in Morgan Hill which they developed as a private golf course with single family homes available for personal or business use, a sports team franchise, a bank in Utah, and a company in the Cayman Islands.
Wife's pleadings averred she was a homemaker without either a college education, marketable skills or work experience. She said that since 1985 she had devoted herself to raising the children and maintaining their home.
In June 2006, the trial court heard from the parties and their accounting experts at a four-day evidentiary hearing. Husband's expert calculated that the total expenses of the family in 2002 - the year before they parties separated - averaged $25,000 per month.
In July 2008, the trial court made a variety of findings about the income available to the parties for support and other issues. In December 2008, without making findings about the amounts due in 2004, 2005, 2006, 2007 and 2008, the trial court ordered Husband to pay guideline temporary spousal and child support to Wife that was based upon the court's specific findings of fact for those years. The court ordered the parties and their accountants to meet and confer to determine the amount of support due, reserving jurisdiction to resolve any continuing disputes.
Husband appealed from the statement of decision and while his appeal was pending, he refused to comply with the trial court's order to meet and confer about the amount of temporary support, taking the position that his appeal stayed the support proceedings.
In June 2009, Wife unsuccessfully moved to set the amount of Husband's support arrearages under the December 5, 2008 statement of decision and order. After Husband's appeal was dismissed, the parties and their accountants met to calculate the amounts of guideline child and spousal support due under the court's December 2008 statement of decision and agreed $873,186 was the net amount due.
In March 2011, Wife filed a second motion to quantify arrearages owed by Husband for temporary child and spousal support. She cited the parties' agreement as to the amount, but alleged Husband refused to abide by the stipulation. Wife requested an order that required Husband to pay support arrearages of $873,186 plus interest at 10% from December 2008. She also requested FC § 271 sanctions.
Husband's opposition conceded that if the court's order were followed, the amount due would be $873,186. He requested the court make its order effective as of the date of the 2011 while reserving "his right to argue later that the underlying methodology outlined in the December 5, 2008 order is erroneous." Husband said interest on this amount should only run from the time a money judgment was entered; viz., 2011.
The trial court found Husband owed a net amount of $873,186 as of December 31, 2008 and ordered the money paid within ninety days. The trial court also found Husband's position in regard to interest was "frivolous" and said he was "bound by his attorneys' earlier, multiple representations and stipulations." The court ordered interest to commence on December 31, 2008. Finally, the court imposed $5,000 in sanctions.
Husband appealed. AFFIRMED
Temporary Spousal Support
FC § 3600 authorizes an order requiring a spouse to pay any amount necessary for temporary support based on the party's need and the other party's ability to pay. Generally, temporary spousal support is to "maintain the living conditions and standards of the parties in as close to the status quo position as possible pending trial and the division of their assets and obligations. ... The court is not restricted by any set of statutory guidelines in fixing a temporary spousal support amount." (Irmo Wittgrove (2004) 120 Cal.App.4th 1317, 1327.)
Santa Clara County provides a guideline for the calculation of temporary spousal support. "[I]n exercising its broad discretion, the court may properly consider the 'big picture' concerning the parties' assets and income available for support in light of the marriage standard of living." (Wittgrove at p. 1327.)
Husband argued the trial court erred in using the Santa Clara County temporary support guideline because it produced an award that exceeded Wife's needs that he believed should be capped at $25,000 per month – a sum Husband's CPA calculated was the total of the expenses for the entire family of five for the year 2002. The CA disagreed.
First, it was not error to use the Santa Clara County Guideline. (Wittgrove at p. 1327.) "Where, however, there are 'unusual facts or circumstances,' the court may appropriately apply the guidelines "as modified by such facts or circumstances." (Irmo Burlini (1983) 143 Cal.App.3d 65, 70.) Second, a retroactive order must be guided by the supported spouse's need and the supporting spouse's ability to pay. The supported spouse's need is the amount needed to maintain the pre-separation marital standard of living, thus "[t]rial courts may properly look to the parties' accustomed marital lifestyle as the main basis for a temporary support order." (Wittgrove at p. 1327.)
Here, the trial court awarded retroactive temporary spousal support for the period of 2004-2008. The trial court rejected Husband's contention that the marital standard of living should be capped at $25,000 per month because that was the amount of the family's expenses in 2002. The trial court rejected the limit because it covered only a single year and because there was evidence that the family's activities in that year were not typical of the years before separation. The trial court also found that the annual cost of the pre-separation marital standard of living was far more than $25,000 because various living expenses were ignored by Husband's expert; viz., the use of the family residence; an annual contribution to a retirement plan; the lease value of a newer automobile for Wife; fees to join a country club; and the rental value of vacation properties.
The CA found no abuse of discretion in the trial court's findings. The trial court was not required to accept the un-refuted testimony of Husband's accounting expert. (Irmo Rosen (2002) 105 Cal.App.4th 808, 820.) Moreover, the trial court's rejection of the testimony was not arbitrary because 2002 was not a typical year for the Fry family. Finally, the trial use the Santa Clara County guideline formula was not error since the trial court properly modified it for the unusual circumstances that applied to 2006, 2007, and 2008.
Husband denied the language used by his counsel, represented an agreement interest would run from the date of the court's order; viz., December 2008. Husband said his agreement was conditioned on a court of appeal ruling affirming the December 2008 orders. The trial court characterized this argument as frivolous and the CA agreed.
FC § 271 Sanctions
The CA concluded the evidence supported the trial court's findings that Husband refused to agree that his own expert's calculations of guideline temporary support under the December 5, 2008 statement of decision were correct, which necessitated Wife's second motion to quantify arrearages. "It may be inferred from this evidence that Husband failed to cooperate and engaged in conduct that increased the cost of litigation."
Irmo Muraoka – Unpublished opinion of District 4, Division 3 (April 16, 2013)
A 42-hour work week is not an extraordinary work regiment.
Husband and Wife married in 1996, separated in 2007, reconciled and separated for good in 2010. They have two children.
Husband and Wife stipulated to a permanent custody order and to the division of property and debts, reserving the issues of child and spousal support and the allocation of attorney fees and costs.
At trial, the evidence showed Husband completed his medical training and residency during the marriage. At the time of separation, he earned $23,350 per month as an anesthesiologist. Wife was a teacher, earning $6,420 per month.
The trial court set the amount child support by applying the guideline formula to Husband's $23,000 monthly income and set spousal support after specifically considering the factors outlined in FC § 4320. Husband was ordered to pay a percentage of his bonus and overtime income in addition to the base amount of support. Finally, he was ordered to contribute to Wife's attorney fees and costs.
Husband appealed. AFFIRMED
Husband argued the trial court erred in its calculation of guideline child support by failing to change the DissoMaster™ tax settings for Wife to reflect the fact FICA is not deducted from her teacher's salary. The CA concluded Husband forfeited this argument because he "fail[ed] to provide any argument, legal authority, or citations to the record, supporting his claim that the trial court erred by using an incorrect tax status for Wife."
Husband claimed the trial court erred in setting spousal support because the order was based on the amount Husband said he actually earned which, he argued, required extraordinarily long working hours. (See Irmo Simpson (1992) 4 Cal.4th 225, 234-235.) The CA disagreed.
The CA pointed out that the trial court's spousal support award was based on the amount of income Husband testified he earned and the amount that he reported on his I&E that he said he was paid for a 42-hour work-week. The CA said there was nothing about Husband's work-week that seemed out of the ordinary.
The CA also approved the trial court's order for contingent additional support based upon overtime and bonuses Husband may receive. (See Irmo Ostler & Smith (1990) 223 Cal.App.3d 33, 37. "This order does not require Husband to work overtime; it merely mandates that if Husband does earn additional income by working overtime, Wife and the minor children have a right to share in Husband's higher standard of living."
Husband also claimed the trial court erred by basing it on a marital standard of living that was unsustainable. The CA rejected his contention.
The CA said courts must premise the amount and duration of spousal support on the standard of living established during the marriage. "Nonetheless, the marital standard of living is not the sole focal point ..... Rather, ... the Legislature intended [it to be] a reference point against which the other statutory factors ... may be weighed and applied." (Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2012) ¶ 6:838, p. 6302.14.) "The Legislature intended 'marital standard of living' to be a general description of the station in life that the parties had achieved by the date of separation." (Irmo Nelson (2006) 139 Cal.App.4th 1546, 1560.)
Citing Irmo Weinstein (1991) 4 Cal.App.4th 555, Husband argued the trial court's spousal support order provided for maintenance of a marital standard of living that was clearly beyond the parties' means. "[W]here parties live beyond their means during marriage, the appropriate measure of their post-separation needs is 'what would have been a reasonable standard of living' if they had not been doing so. (Id. at p. 569.)" The CA disagreed.
"[T]he trial court's judgment is completely consistent with the holding of In re Marriage of Weinstein. [Here,] 'During the course of this 14-year marriage, the parties enjoyed an upper-middle class marital standard of living. They owned their home, dined out, enjoyed nice vacations, and drove expensive automobiles (BMW's). They vacationed occasionally in places like Las Vegas, Napa and Hawaii. Their adjusted gross income for the three years prior to the date of separation (2008-2010) was $430,545, $449,384, and $456,774. Although after separation, [Husband] chose to reduce his income by working less overtime, the parties enjoyed a marital standard of living based on a combined income of about $450,000 per year.'"
The CA specifically approved basing the marital standard of living on income rather than expenses. "[This] is exactly the approach of which Irmo Weinstein approved." The CA also specifically approved using the three years prior to separation as the basis for the marital standard of living determination. "As with many marriages, Husband and Wife's standard of living improved over time. To have used their income over the entire course of their marriage ... would have created a false picture of the marital standard of living at the time of separation. (See Nelson at p. 1560.)"
The purpose of an award of attorney fees under section 2030 is to ensure parity between spouses in their financial ability to retain counsel and have adequate representation. (Alan S. v. Superior Court (2009) 172 Cal.App.4th 238, 251-252; see FC § 2032 (b).)" Husband argued the billings from Wife's attorneys rose significantly during the three months before trial and claimed they were overcharging and overbilling. The CA rejected the argument finding substantial support in the record for the trial court's assessment of the need for the legal services rendered and the ability of Husband to cover the cost of both his and Wife's fees.
Irmo White – Unpublished opinion of District 4, Division 2 (April 16, 2013)
It is error to reduce a parent's child support obligation by the SSA benefits paid to a disabled child.
Mother and Father have three minor children. The youngest child receives a Social Security disability benefit of $631 per month based upon his chronic, severe asthma. In 2011, Father filed an OSC seeking changes in existing custody and child support orders.
After an evidentiary hearing, the trial court set guideline child support for all three children at $702 per month. The trial then court concluded Father was entitled to credit against his entire child support obligation for the payments made by the SSA based upon the youngest child's disability, thus reducing Father's child support obligation to $71.66 per month for all three children.
Mother appealed. REVERSED
FC § 4504 (b) provides that "payments for the support of the child made by the federal government pursuant to the Social Security Act . . . because of the . . . disability of the noncustodial parent ... shall be credited toward the amount ordered by the court to be paid by the noncustodial parent for support of the child ...." In this case, there was no evidence that Father, the noncustodial parent, had any disability. A child support credit was therefore not authorized under section 4504 (b).
The CA referenced the general discussion of child Social Security benefits in Irmo Robinson (1998) 65 Cal.App.4th 93. There, thecourt said: "In considering whether a child's Social Security insurance benefits were 'child support' within the meaning of federal welfare statutes, the Supreme Court declared that although such payments are 'support' in the generic sense, they are not child support payments from absent parents but are '"insurance" benefits and are paid out of the public treasury to all applicants meeting the statutory criteria.' [Citation.] [The minor child's] insurance benefits are an entitlement paid because [the child] presumably met the statutory criteria, not because [the parent] was subject to a judgment for support." (Robinson at p. 97.)
The CA approved the following explanation of credits against a parent's child support obligation when the disabled parent receives a SSA benefit: "Any sums received by the custodial parent or other child support obligee on account of the obligor's disability must be credited toward the obligor's support obligation. . . . [¶] Note that this is NOT the same as funds received based upon the child's disability. Those funds are the child's separate estate and are not relevant to the determination of support and, therefore, are not to be credited to the obligor's account." (See also Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2012) ¶ 6:417, pp. 172-173.)
Irmo Loveman – Unpublished opinion of District 2, Division 6 (April 22, 2013)
- A party's spousal support obligation is not limited to the supported party's current living expenses.
- Substantial credit card debt does not impact a party's obligation to contribute to the attorney fees of the other party.
The parties married in June 1986 and separated in August 2008. They have two adult daughters.
A March 2009 stipulated judgment of dissolution distributed the parties' marital property and required Husband to pay temporary spousal support of $3,000 per month commencing in 2011. The parties agreed that the trial court would reserve jurisdiction to make a permanent spousal support order at the request of either Husband or Wife.
In June 2011, only two months after his spousal support obligation commenced, Husband filed an OSC to modify spousal support. He said his "financial situation had deteriorated" because between 2009 and 2011 he withdrew $45,000 from his thrift savings plan to pay for the college education and living expenses of their daughters. The early withdrawal created a $21,000 tax obligation.
Husband's I&E showed his average monthly gross income was $9,838. He claimed monthly expenses of $9,689 that included $3,834 in payments on non-mortgage debt of $72,796. His liquid assets totaled $31,000. Husband's adult daughters lived with him but did not contribute to the household expenses.
Wife, 52, opposed Husband's request. She said she had not worked since 1982, had "actively sought employment to no avail," and was living with her parents because she had no income. Wife's I&E showed monthly expenses of $3,170 that, according to the trial court, "falsely and fraudulently" included a claim she paid rent of $1,500. Her liquid assets totaled $30,000. She had no debt.
The trial court treated Husband's OSC as a request for a permanent spousal support order based upon FC § 4320. Following a hearing, the trial court denied Husband's request to reduce his spousal support obligation and set permanent spousal support at $3,000 per month. The trial court said the ruling was made after consideration of the spousal support factors set forth in FC § 4320. Neither party requested a statement of decision.
Husband's motion for a new trial was denied. The trial court's written ruling on this motion included findings about the parties marital standard of living, Wife's dependence upon her parents for housing at a cost of $1,500 and the trial court's conclusion that Husband's contributions to the support of their adult children was not a factor it could consider. The trial court ordered Husband to pay Wife's attorney fees of $9,700. The court later said Wife's misstatements in her I&E about rent did not affect its conclusions.
Husband appealed. AFFIRMED
Permanent Spousal Support
"Permanent spousal support 'is governed by the statutory scheme set forth in sections 4300 through 4360. Section 4330 authorizes the trial court to order a party to pay spousal support in an amount, and for a period of time, that the court determines is just and reasonable, based on the standard of living established during the marriage, taking into consideration the circumstances set forth in section 4320.' ... (§ 4320 (c)-(e), (n).) ...." (Irmo Blazer (2009) 176 Cal.App.4th 1438, 1442-1443.)
The CA concluded the trial court did not abuse its discretion in setting permanent support at $3,000 per month. Husband's average monthly gross income was $9,838. The fact his monthly expenses exceeded his income was of no moment because his "obligation to provide for [his] wife is not subordinate to [debts] owed other persons." (Rosenthal v. Rosenthal (1961) 197 Cal.App.2d 289, 298.)
The CA also noted that Husband's substantial non-mortgage debt burden was attributable to his expenditures for his adult daughters' college education and living expenses. The CA said, "Neither party had a legal obligation to support the adult daughters or fund their college education. (Irmo Serna (2000) 85 Cal.App.4th 482, 489, 491.) It would be improper to reduce 'what a supporting spouse pays because that spouse has voluntarily undertaken a duty that the supported spouse has no obligation to fund.' (Serna at p. 492.)"
The CA rejected Husband's argument that it was reversible error for the trial court not "to state with particularity the [FC §4320] factors he considered" but instead "simply stated that he had considered [them]." First, "Section 4320 provides that the court 'shall consider all' of the factors '[i]n ordering spousal support.' [It] does not require express findings on each factor." (FC § 4332 on the other hand does require the court to "make specific factual findings with respect to the standard of living during the marriage.")
Second, the CA said that if Husband wanted an explicit analysis of each of the applicable section 4320 factors, he should have requested a statement of decision. (C.C.P. § 632; see Hebbring v. Hebbring (1989) 207 Cal.App.3d 1260, 1274; Irmo Reilley (1987) 196 Cal.App.3d 1119, 1125-1126.) The CA distinguished Irmo Geraci (2006) 144 Cal.App.4th 1278. "Unlike the instant case, in Geraci the trial court issued a statement of decision." In any event, "the record here did not suggest the trial court failed to weigh or give due consideration to the statutory factors. Its statement of additional findings expressly considered several FC § 4320 factors, including the age and health of the parties, their hardships, the duration of the marriage, the needs of each party based on the marital standard of living, and the earning capacity of each party."
The CA rejected Husband's argument that the trial court erred by denying his request to set aside the support order on the ground that Wife committed actual fraud by claiming she paid rent of $1,500 per month. FC § 3691 provides that a support order can be set aside for actual fraud, perjury, or lack of notice. Here, the trial court found Wife committed actual fraud and perjury by falsely testifying that she paid monthly rent of $1,500.
The CA said a finding of actual fraud or perjury is not alone sufficient to warrant the setting aside of a support order under section 3691. "[B]efore granting relief, the court [must] find that the facts alleged as the grounds for relief materially affected the original order." (§ 3690 (b).) Here, the trial court found that Wife's misrepresentation did not materially affect its order and the CA said there was support in the record for this conclusion.
The CA noted that there is no authority that requires spousal support not to exceed the supported spouse's actual expenses. In fact, FC § 4320(d) requires consideration of '[t]he needs of each party based on the standard of living established during the marriage.'" In this case, the trial court properly determined that Wife's needs based on the marital standard of living exceeded her current monthly expenses of $1,670 and properly said she should not be penalized for living frugally.
"Where, as here, the supported spouse has no income, largely as a result of the devotion of time to domestic duties in a marriage of long duration, and the income of the supporting spouse is insufficient to permit both parties to live at the marital standard of living, the court's primary task is 'to fairly allocate the funds that [are] available.'"
The CA approved the trial court's award of $9,700 in fees to Wife, payable at the rate of $850 per month.
"'The trial court may in its discretion award fees or costs reasonably necessary to maintain or defend any proceeding occurring after entry of judgment. The trial court is to decide "what is just and reasonable under the relative circumstances", taking into consideration "the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately.' (Irmo Dietz (2009) 176 Cal.App.4th 387, 405-406.)"
Although Husband's expenses in 2012 had increased to $12,481, the jump was due to the fact his monthly non-mortgage debt payments had increased 63% to $6,258. Of Husband's monthly debt payments, $5,000 was attributable to two credit cards. The CA said the trial court's order that Husband pay Wife's attorney fees at a rate of $850 per month "could have reasonably [been based upon the conclusion] that, by stretching out his monthly payments on the Chase and Discover cards, Husband could afford to pay $850 per month in attorney fees."
Irmo Rica – Unpublished opinion of District 1, Division 5 (April 30, 2013)
It was error to base support on husband's 2008 earnings where the sources of those earnings no longer existed.
Husband and Wife married in1985. They have two children. A 2006 judgment of dissolution incorporated the terms of an MSA that required Husband to pay child support of $2,264 per month and spousal support of $1,833 per month. The awards were based on Husband's monthly income of $12,695 and Wife's of $1,500.
In November 2008, Wife moved to modify child support stating Husband's income had increased since the judgment was entered. Wife's I&E acknowledged monthly income of $2,496. She claimed she owed her boyfriend $75,000.
Husband agreed support should be modified but only to reflect the fact his income decreased in 2008 when he was laid off. Husband's I&E estimated his average gross monthly income was $8,781 against $7,714 in average monthly expenses.
In 2009, the parties stipulated to a temporary order that reduced Husband's child support obligation to $1,438 a month. But the trial court reserved jurisdiction to modify the support amount up or down from the date Wife filed her motion when Husband's income was determined. Husband's motion alleged his earnings fell in 2008 when he lost his job and his new work as a consultant was not as productive. Husband also alleged that the money Wife received from her boyfriend was not a loan and should be regarded as income and factored into the calculation of support. In addition, Husband alleged his house was under water and he could not afford the mortgage payments and was forced to rent it at a $3,000 a month loss. Husband's I&E showed average income of $5,042 a month.
Husband's child and spousal support obligation ended in 2010 when the parties' remaining minor child graduated from high school and Wife married her boyfriend. The hearing was about the amount of Husband's child support and spousal support obligation from November 2008 to 2010 when his support obligations expired.
In 2012, the court granted Wife's motion to modify child support. The trial court found Husband's gross monthly income for the purpose of setting support was $20,052. This sum was derived by dividing the annual income shown on his 2008 tax returns by 12. The trial court increased Husband's monthly child support to $2,414 for the period following the 2008 order. The court denied Husband's motion to modify support finding Husband's testimony was not credible.
The trial court awarded Wife about $41,000 in attorney fees and costs finding there was a disparity in the income available to Husband and Wife (FC § 2030) and based upon a finding Husband egregiously failed to present full, accurate, and timely financial information to Wife and her counsel.
Husband appealed. REVERSED
The Support Orders
A party moving for modification of support "has the burden of showing a material change of circumstances since the last order was made." (Irmo Tydlaska (2003) 114 Cal.App.4th 572, 575.) "The key financial factor in the guideline formula is net disposable income'" (Irmo Hubner (2001) 94 Cal.App.4th 175, 186), which is computed by determining the parties' gross annual income less allowable deductions and dividing by 12 (Irmo LaBass & Munsee (1997) 56 Cal.App.4th 1331, 1336)."
Husband argued it was error to base a support order on wage and pension income he no longer received. He pointed out that his job that terminated in 2008, his severance package was a one-time payment and the loan he received from his 401(k) in 2007 was not income. The CA agreed.
"The assumption underlying [support] calculations is that past income is a good measure of the future income from which the parent must pay support." (County of Placer v. Andrade (1997) 55 Cal.App.4th 1393, 1396. Here, the trial court was asked to modify Husband's support obligation for an 18-month period in the past, not to determine support prospectively; but the court effectively predicted his income from November 21, 2008 to June 2010 using his income in 2008 from sources that no longer existed.
"The uncontroverted facts demonstrate that there is no basis for concluding that Husband would continue to receive the wages/salaries income from his 2008 tax returns: his regular wages had ceased in 2008, and his severance package and pension income were one-time events unlikely to recur. ... [T]o the extent the trial court relied on the wages/salaries and pension income reported on Husband's 2008 tax returns ($11,617 a month), its income determination is arbitrary."
The CA rejected Wife's argument that Husband's 2008 tax returns were the last best evidence the trial court had on which to rely, given the paucity of credible evidence introduced by Husband." "She fails to note, however, that it was her burden, not Husband's, to provide evidence his financial situation had changed, justifying an increase in support. (Tydlaska at p. 575.) And while the trial court was entitled to reject the evidence of Husband's income on credibility grounds, the credibility finding does not constitute substantial evidence of any particular income figure to utilize in the support calculation."
Husband's motion was a different story. The trial court found Husband had "presented insufficient credible evidence and "[w]e do not revisit the trial court's credibility findings. ... ¶ Having found that Husband was not credible, the trial court could properly reject, in whole or in part, documentary evidence based on information he provided. (Calcaterra at pp. 31, 36.)"
The Attorney Fee Award
The CA affirmed the trial court's award of fees and costs to Wife because even if the trial court based the award on arbitrary conclusions about Husband's 2008 income, the error was harmless since Husband challenged only the trial court's attorney fee award under FC § 2030. He did not address the propriety of the trial court's alternative award of attorney fees under FC § 271.
Irmo Trejo – Unpublished opinion of District 4, Division 2 (April 26, 2013)
When a breach of fiduciary duty is the reason for the use of an alternative valuation date, the date selected must be one specified in FC § 1101 (g). The date of separation is not on the list.
Wife's 2006 petition for dissolution seeks custody and visitation orders, spousal support and a division of the parties' community property. Wife alleged Husband breached a fiduciary duty by forging her signature on a deed to the family residence that transferred the property to himself as his sole and separate property. The deed was forged in July 2003, the parties separated in 2006 and the property was lost to foreclosure in June 2008.
On June 1, 2008, Husband was ordered to pay temporary child support in the amount of $692 per month. There was also a spousal support order. The trial court made its support orders "without prejudice subject to final determination at the time of trial." Neither party field an OSC or motion to modify support before trial commenced in 2009.
At trial, Wife's attorney asked the court to measure the amount of the impairment to Wife's present undivided one-half interest in the community estate on the date the parties separated.
Following a trial, the court found Husband, without Wife's permission and in her absence, signed her name on a deed that transferred the family residence to himself as his sole and separate property. The trial court also found that Husband withdrew $97,300 from an equity line of credit secured by the residence without informing Wife he intended to do so. The trial court concluded that these fraudulent acts warranted the 100% penalty authorized by FC § 1101(h).
The trial court awarded Wife 100% of the community's interest in the residence based upon its value as of the date of separation. The trial court also found that the community had an interest in Husband's pension and also awarded Wife 100% of that asset as well.
The trial court reset child support at $1,154 per month and made the new order retroactively effective on June 1, 2008. Spousal support was raised from $266 per month to $300 per month, retroactive from the filing date of July 6, 2009, to May 1, 2009.
Husband appealed. REVERSED
Notice of Alternate Valuation Date
The trial court granted Wife's request to change the valuation date based upon FC § 2552 (b) which authorizes the court to do so upon 30 days' notice if a party shows "an equal division of the community estate of the parties in an equitable manner" will be accomplished if the property is valued at some date after separation and before trial.
Husband argued he was not given the requisite 30-day notice, but the CA said this was not error. "[T]he notice provision of section 2552, subdivision (b) applies only when a party seeks a separate trial of the issue. The notice provision would therefore not apply to the request here, which merely advised Husband and the court that Wife would be seeking an alternative valuation date during the trial."
The CA added that there was no violation of the notice requirement even if it were required. "[Wife's] attorney, in court, gave [Husband] more than 30 days notice of his intention to seek an alternative valuation date."
FC § 721 (b) confirms the fiduciary duty between husbands and wives and imposes a duty of the highest good faith and fair dealing on each spouse that requires them never to take any unfair advantage of the other. FC § 1101 (a) authorizes a claim by one spouse against the other spouse for any breach of the fiduciary duty that results in impairment to the claimant spouse's present undivided one-half interest in the community estate.
Remedies for an actionable breach of a fiduciary includes an award to the other spouse of 50% of the value of an undisclosed asset or an illicit transfer plus attorney's fees (FC § 1101(g) or 100% if the nature of the breach is such that it falls within the ambit of C.C. § 3294. (FC § 1101(h).)
Here, the CA said the evidence of forgery and undisclosed use of the equity line was uncontested and agreed that the application of section 1101 (h) was an appropriate remedy. Nevertheless, the CA said it was error to determine the value of the damage suffered by Wife by Husband's fraudulent transfer as of the date of separation rather than the date of the breach. The deed was forged in July 2003, the property was lost to foreclosure in June 2008, and the award was made in July 2009.
The CA explained FC § 2552 does not permit using the date of separation to measure the effect of Husband's fraudulent acts because the purpose of using a valuation date other than the date of trial was not in this case to accomplish an equal division of the community estate but was instead to punish Husband under FC § 1101 (h). "When a breach of fiduciary duty is the reason for the use of an alternative valuation date, the language of FC § 1101 (g) is unambiguous and mandatory: The trial court should have selected one of the dates specified in section 1101, subdivision (g)."
Husband's Pension Benefits
The CA acknowledged that FC § 1101 (g) and (h) allow for the unequal distribution of a community asset where a breach of fiduciary duty has been proved. "But, by their terms, [FC 1101(g) and (h)] apply only to the asset that was undisclosed or transferred in breach of the fiduciary duty." Here, Husband's breach of his fiduciary duty was related to his conduct with respect to the residence. Since Husband did nothing that breached any fiduciary duty with respect to the pension plan "the general rule of equal distribution must [be applied] to it."
Child and Spousal Support
FC § 3653 (a) provides that "an order modifying or terminating a support order may be made retroactive to the date of the filing of the notice of motion or order to show cause to modify or terminate, or to any subsequent date, except as provided in subdivision (b) or by federal law (42 U.S.C. § 666(a)(9).)"
Here, temporary child and spousal support orders were issued in June 2008. Although the orders in 2008 say they are "temporary and without prejudice," federal law (42 U.S.C § 666(a)(9)) limits retroactivity to the date the OSC or motion to modify was served.
In this case, there was neither a motion nor an OSC. Support was an issue addressed at trial but "[a]s our Supreme Court indicated in County of Santa Clara v. Perry (1998) 18 Cal.4th 435, 446, at least part of the legislative intent was to encourage the filing of motions to encourage prompt establishment of child support. Without such a filing, we conclude there cannot be a retroactive order."
(Wiles v. Pratt – Unpublished opinion of District 4, Division 3 (April 25, 2013))
Melinda Julie LaMere and Gary Alan Wiles married in April 2012. They did not, either before or after the ceremony, obtain a marriage license. LaMere died less than a month after the wedding ceremony. Wiles filed a petition to establish the fact, date, and place of the marriage. The trial court denied the petition, and Wiles appealed.
California law mandates issuance of a marriage license, as well as consent of the parties and solemnization, in order to have a valid marriage. Lacking a marriage license, the marriage of LaMere and Wiles was not valid. The order denying Wile's petition was affirmed.