Marriage of Miller CA4/1 ( 2021 )

Filed 4/29/21 Marriage of Miller CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
In re the Marriage of LAUREEN
and STEPHEN ARMS MILLER.
D075425
LAUREEN ANN MILLER,
Appellant, (Super. Ct. No. D547235)
v.
STEPHEN ARMS MILLER,
Appellant.
APPEALS from a judgment of the Superior Court of San Diego County,
David Oberholtzer, Judge. Affirmed in part, reversed in part.
Laureen A. Miller, in pro. per.; Higgs Fletcher & Mack, John Morris
and Rachel E. Moffit for Appellant Laureen A. Miller.
Stephen Temko and Dennis Temko for Appellant Stephen A. Miller.
In this marriage dissolution proceeding, both wife Laureen A. Miller
(Laureen) and husband Stephen A. Miller (Stephen) appeal from the final
dissolution judgment.1 Although the underlying facts and factual findings
made by the trial court are largely undisputed, both parties contest portions
of the court’s division of property.
Over the course of a 29-year marriage, the couple acquired multiple
investment properties and lived off the income produced by those properties.
During a lengthy trial, the parties focused on the proper division of the
properties and whether Stephen could trace his separate property
investments in those real estate acquisitions. The trial court found in
Stephen’s favor on many issues and ultimately found he retained substantial
separate property interests, but also awarded Laureen a multi-million dollar
equalizing payment.
Even with the complexity presented by this case, involving a multitude
of properties owned by the spouses with commingled assets and a multi-
million dollar marital estate, we conclude the trial court’s division of the
marital property should substantially be affirmed. We find minor error only
regarding the disposition of one retirement account and the trial court’s
structured payment schedule in the judgment for the equalizing payment due
to Laureen. For these reasons, we reverse and remand for minor
modifications regarding these two issues, but otherwise affirm the trial
court’s judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Overview
“Following established principles of appellate review, the facts are
recited here in the light most favorable to the judgment.” (In re Marriage of
1 We refer to the parties by their first names for the sake of clarity and
intend no disrespect.
2
Hokanson (1998) 68 Cal.App.4th 987, 990, fn. 1.) Additional facts will be
discussed where relevant in the following section.
Laureen and Stephen married in 1984. Before the marriage, Stephen
was self-employed as a real estate investor and owned interests in four
income-generating properties, located on Fanuel Street, Commercial Street,
Thomas Avenue, and La Jolla Boulevard.2 Laureen was employed before
marrying Stephen, but stopped working six months after marriage. The
couple did not have a premarital agreement.
During the marriage, the couple had three children, all of whom were
adults by the time of trial. Stephen continued his real estate investing while
Laureen raised the children, maintained the household, and occasionally
assisted Stephen with property management.
The parties lived almost entirely on the income received from the rental
properties acquired before and after marriage. Those properties, along with
other real property owned by the parties, were the focus of many of the
disputes at trial and now on appeal.
Real Property Acquired During Marriage
In 1986, the Millers purchased land on Loring Street to build their
family home. The parties purchased the property as joint tenants and did not
dispute this property was community property.
In 1990, Stephen acquired a property on Tamarack Avenue in his name
only using proceeds from the sale of his properties on Thomas Avenue and La
Jolla Boulevard, combined with a loan secured with a deed of trust.3
2 For the sake of simplicity, this opinion refers to the properties by their
street name rather than the full address.
3 Stephen structured many of his real estate transactions in what is
referred to as a “1031 exchange” for tax purposes. The precise mechanism for
3
In 1993, Stephen acquired a property on University Avenue in his
name using a loan and, in part, the proceeds from the sale of his property on
Commercial Street.
In 1995, Stephen acquired a 20-unit apartment building on Third
Avenue. Both Stephen and Laureen were named on the title and there was
no dispute at trial that the building was community property.
Stephen acquired another property in 2003 on Midway Drive. Title
was held in Stephen’s name only and the property was acquired in part with
the proceeds from the sale of the Tamarack Avenue property.
In 2011, the Millers purchased a home in Long Beach (the Long Beach
property), held jointly, which was to be used primarily as a residence for their
adult son. Subsequently, their son paid for a 75 percent interest in the
property such that by the time of trial, the Millers retained only a 25 percent
interest in the property, which was agreed to be community property.
The next year, Stephen acquired a home on Wedeln Court in South
Lake Tahoe. Stephen purchased the Wedeln Court property in his name only
using cash.
Finally, in 2014, after Laureen and Stephen had separated, they
purchased a home on Caminito Arriata to be used by Laureen as her
residence. The property was purchased with cash and was held jointly by
both Laureen and Stephen.
Seeking to modify the original deeds on the property, Stephen hired an
attorney in 2012 to “update” and “modify” the Millers’ estate plan. Both
spouses were represented by the same attorney, retained by Stephen, and the
these exchanges is not relevant to the issues raised on appeal beyond the fact
that some of the assets used to acquire property during marriage can be
directly traced, in part, to Stephen’s real property owned before marriage.
4
plan purported to transmute Laureen’s community property interests in the
Midway property, the Wedeln Court property, and in other bank accounts
and assets to Stephen’s separate property.
Trial Court Proceedings and the Court’s Statement of Decision
In 2014, Laureen filed a petition for dissolution. At a trial focused
primarily on tracing the funds used to purchase each property, the validity of
the 2012 property agreement, and the current value of the properties, both
Stephen and Laureen testified.
After the parties rested, the trial court made some preliminary findings
and asked the experts to “re-crank” the numbers based on those findings.
After additional filings and argument, both parties requested a statement of
decision.4
In its final statement of decision, the trial court noted that it found
Stephen to be “particularly credible” and Laureen to be “too scripted in her
testimony.” Turning to the major issues to be litigated, the court found that
Stephen had failed to rebut the presumption of undue influence surrounding
the 2012 property agreement that transmuted some of Laureen’s community
property interests and, accordingly, disregarded that agreement. The court
further found that the loans received during marriage to acquire real
property were community property, affecting the characterization of many of
the properties.
Addressing the central issues on appeal, the court reconsidered two
rulings it had made in its earlier proposed statement of decision. First, it
found that because Stephen purchased the Midway and Wedeln Court
4 The parties filed their own proposed statements of decision, objections
to those proposed statements, other motions, and objections to the court’s
own proposed statement of decision. Those filings will be discussed where
relevant in the following section.
5
properties during marriage in his name alone, he was entitled to a pro rata
separate property ownership interest in those properties to the extent they
were purchased with his separate property. Second, the court found that
Stephen did not breach his fiduciary duty to Laureen by using his separate
property to partially fund those purchases because there is no “community
opportunity doctrine” applied during marriage such that he had no duty to
offer the investment opportunity to the marital estate before using his
separate property.
Finding that Stephen adequately traced his use of separate property to
partially fund the purchases, the trial court found that Stephen had a 64.73
percent separate property interest in the Midway property and a 44.19
percent separate property interest in the Wedeln Court property. For the
Long Beach property, the court found that the Millers had a 25 percent
community property interest, but because the Millers had agreed to allow
their son to purchase their interest as calculated based on the original
purchase price, the interest was only 25 percent of the equity in the property
based on the lower purchase price rather than the appreciated current value.
Regarding the other properties, the court found that they were all community
property to be divided equally because Stephen either failed to trace his
separate property contribution or the properties were purchased entirely with
community property.
Based on these findings, the court divided the marital property,
including requiring the sale of the Third Avenue property, and found Laureen
was entitled to a gross equalizing payment of $2,145,056. The court also
awarded Laureen permanent spousal support of $4,000 a month and
6
$275,000 in attorney fees.5 Recognizing that Stephen had limited cash
liquidity, the court ordered that he was to pay Laureen a $1.8 million
equalizing payment immediately with the remainder of the award to be paid
off at “$100,000 per year, payable quarterly, to draw interest at the . . . 30-
year Treasury Bond interest rate on January 2 of the year in which the
payments are made.” The court subsequently entered a final judgment
incorporating its rulings.
Both Laureen and Stephen appeal from the final judgment.
DISCUSSION
I. Laureen’s Appeal
A. The “Community Opportunity Doctrine”
Laureen does not challenge any of the trial court’s factual findings
tracing part of the Midway and Wedeln Court properties to Stephen’s
separate property. Instead, Laureen contends that the trial court erred as a
matter of law when it found that the “community opportunity doctrine” did
not apply. As framed by Laureen, the community opportunity doctrine would
require either spouse to first offer an investment opportunity to the
community before investing with separate property. As applied here,
Laureen contends that Stephen should have used community property to
purchase the Midway and Wedeln Court properties rather than his separate
property. Laureen asserts that because Stephen failed to do so, he breached
his fiduciary duty to Laureen, requiring a finding that Stephen forfeited his
separate property interests in those properties. We disagree.
5 The court had previously ordered Stephen to pay Laureen’s attorney
fees prior to trial.
7
Pursuant to Family Code section 721, subdivision (b),6 “spouses are
subject to the general rules governing fiduciary relationships that control the
actions of persons occupying confidential relations with each other. This
confidential 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.”
Although section 721 refers to certain sections of the Corporations Code
to define the scope of the fiduciary duties owed between spouses, courts have
specifically rejected that the entire Corporations Code is encompassed within
the fiduciary duties owed under section 721. (In re Marriage of Leni (2006)
144 Cal.App.4th 1087, 1092-1094 (Leni).)
Here, Laureen does not contend that the entire Corporations Code is
encompassed within section 721, but seeks to import at least some corporate
law into the marital context. As Laureen correctly notes, there is a general
doctrine of “corporate opportunity,” which prohibits a corporate officer from
taking advantage of an investment opportunity for herself that falls within
the corporation’s line of business activities. (See, e.g., Industrial Indemnity
Company, Ltd. v. Golden State Co. (1953) 117 Cal.App.2d 519, 533; Kelegian
v. Mgrdichian (1995) 33 Cal.App.4th 982, 988.) However, Laureen fails to
cite any decision applying the corporate opportunity doctrine in the marital
context to create a community opportunity doctrine during the marriage.
Instead, courts, including this court, have rejected its application.
In In re Marriage of Brandes (2015) 239 Cal.App.4th 1461 (Brandes),
this court considered a similar argument and found it unavailing. The trial
court in Brandes found that the husband purchased shares in a company
6 All further statutory references are to the Family Code unless
otherwise specified.
8
with his separate property during the marriage. (Id. at pp. 1481-1484.) On
appeal, the wife argued that the husband “breached his fiduciary duty by not
offering the community the opportunity to purchase the shares.” We rejected
that argument, relying on “relevant and instructive” existing case authority
which held that a spouse should not be “ ‘compelled to keep his separate
funds idle’ ” such that there is no breach of fiduciary duty by a spouse when
“ ‘purchasing property with his separate funds, and not using available
community funds.’ ” (Id. at pp. 1487-1488 & fn. 13, quoting Somps v. Somps
(1967) 250 Cal.App.2d 328, 338.)7
In her reply brief, Laureen dismisses Brandes as “an extremely stark,
sterile and antiseptic application” of what occurred here. She suggests that
the principle applied in Brandes to shares in a business should not be applied
here to real property. Laureen, however, offers no concrete reason to focus on
this distinction without a difference. At most, she contends that because the
separate property and community property interests here were commingled
and Stephen lost at trial concerning some of his claims regarding property
division, we should conclude that all of the property was community property.
However, the trial court was able to trace Stephen’s separate property
contributions to community property and Laureen does not dispute those
factual findings on appeal. To the extent she makes a general exception on
appeal to the trial court’s characterization of property without specific claims
demonstrating any error, we deem the argument waived.
7 The trial court relied upon Leni, supra, 144 Cal.App.4th 1087 to find
that there is no community opportunity doctrine that applies during
marriage. Although Leni does not involve the same situation present here, it
does support the general proposition that not every fiduciary duty principle
that applies to corporate officers can be applied wholesale in the marriage
context. (Id. at p. 1092.) As Stephen admits on appeal, Leni is not directly
applicable in this case.
9
We see no reason to depart from this court’s prior reasoning in Brandes
and hold that the corporate opportunity doctrine is not, and should not, be
imported into the scope of the fiduciary duties owed by one spouse to the
other during marriage. Stephen was not required to leave his separate
property idle during the marriage. Thus, we conclude that the trial court
correctly found that Stephen did not breach his fiduciary duty to the
community by using his separate property to partially fund the acquisition of
the Midway Drive and Wedeln Court properties.8
B. The Trial Court’s Award of Pro Rata Separate Property Interests to
Stephen
Laureen next challenges the nature of the trial court’s award to
Stephen for his separate property contributions to the acquisition of the
Midway and Wedeln Court properties. In a tentative decision, the trial court
ruled that Stephen was entitled only to reimbursement for his contributions
of his separate property to purchase those properties during the marriage.
Stephen challenged this ruling and the court revised its ruling to ultimately
conclude that because Stephen acquired the properties in his name alone, he
was entitled to a pro rata ownership interest, not a right of reimbursement
under section 2640. We conclude the trial court ultimately reached the
correct conclusion.
As the trial court recognized, the analysis in In re Marriage of Bonvino
(2015) 241 Cal.App.4th 1411 (Bonvino) applies to the situation in this case.
In Bonvino, the husband purchased real property with the deed held in his
name alone. (Id. at p. 1419.) The purchase was made during the marriage
8 Because we conclude that the community opportunity doctrine does not
apply here, we need not consider Stephen’s alternative argument that even if
it does apply, Laureen failed to establish each element necessary to its
application.
10
and was funded with a down payment of the husband’s separate property and
a loan ultimately deemed to be community property. (Id. at pp. 1418-1420.)
The trial court found the property to be community property with the
husband having a right for reimbursement of his original contribution for the
down payment. (Id. at pp. 1420-1421.) The appellate court disagreed,
concluding that the trial court’s finding that the property was community
property was not supported by substantial evidence. (Id. at p. 1422.)
As the Bonvino court explained, “ ‘[t]he character of property as
separate or community is determined at the time of its acquisition. []’
‘Property that a spouse acquired before the marriage is that spouse’s separate
property. Property that a spouse acquired during the marriage is community
property unless it is (1) traceable to a separate property source, (2) acquired
by gift or bequest, or (3) earned or accumulated while the spouses are living
separate and apart.’ ” (Bonvino, supra, 241 Cal.App.4th at pp. 1422-1423
[internal citations omitted].) Additionally, property that a spouse purchases
with separate property funds continues to be separate property, even if the
spouse makes the purchase during the marriage. (Id. at p. 1423.) So long as
the separate property can be traced, separate and community property can be
commingled and that commingling does not alter the status of the separate
property. (Ibid.) Spouses can agree to alter the character of their property
(id. at p. 1424), but the Legislature established strict requirements to prove
such a transmutation, requiring a written declaration “ ‘made, joined in,
consented to, or accepted by the spouse whose interest in the property is
adversely affected.’ ” (Id. at p. 1428, quoting § 852, subd. (a).) “A married
person may transmute the character of property from separate to community
or from community to separate by agreement or transfer, with or without
11
consideration, but the transmutation must meet the statutory requirements
to be valid.” (Bonvino, at p. 1428.)
In Bonvino, the court noted that pursuant to section 2640, a spouse is
entitled to reimbursement for separate property contributions to the
acquisition of community property. (Bonvino, supra, 241 Cal.App.4th at
pp. 1431-1432.) However, the court held that when a spouse uses both
separate property and community property to purchase real property during
marriage but held in separate title, the statutory requirements of section 852
for transmutations must be satisfied before the reimbursement provisions of
section 2640 apply. (Bonvino, at p. 1432.) “By the plain language of the
statute, section 2640 applies to contributions to the acquisition of community
property. In other words, it applies to separate property contributions that
are traceable from a community property asset at dissolution. Section 2640
does not purport to apply to separate property used during marriage to
acquire an asset that retains its character as separate property. In order for
section 2640 to apply, the asset purchased during marriage must be
characterized as community property, and in order for separate property to
become community property, the transmutation provisions must be satisfied.”
(Id. at p. 1433.)
The Bonvino court concluded that when the requirements of section 852
are not satisfied, the spouse who contributed separate property to acquire
real property held in separate title during marriage retains a separate
property pro rata interest in the property. (Bonvino, supra, 241 Cal.App.4th
at pp. 1434-1435.)
Here, the trial court found—and Laureen does not dispute on appeal—
that Stephen adequately traced his use of separate property to acquire the
Midway Drive and Wedeln Court properties during marriage and, most
12
importantly, that he held those properties in separate title. No evidence was
presented regarding any writing meeting the transmutation requirements of
section 852. Accordingly, the trial court properly followed Bonvino to find
that Stephen owned a separate property interest in both properties despite
the use of a community property loan to partially fund the acquisitions.
On appeal, Laureen does not dispute the correctness of Bonvino’s
analysis, but contends it does not apply here because the trial court found the
properties to be community property. However, as discussed ante, the trial
court did not find that the properties were entirely community property, but
rather that the properties were mixed assets, consisting of Stephen’s separate
property interest and a community property interest. The existence of a
partial community property interest, however, does not require application of
section 2640’s right of reimbursement when a mixed asset is held in separate
title.
Laureen also attempts to distinguish Bonvino from the current
circumstance by relying on several irrelevant factors that she deems
“significant”: the difference in the length of marriages and the focus in
Bonvino on a single property versus two properties here. She also suggests
that awarding Stephen a pro rata share is “simply unfair.” She fails,
however, to suggest how any of these factors change the analysis outlined in
Bonvino under the plain language of the applicable statutes. Similarly,
Laureen’s characterization of the trial court as “reluctant” to apply Bonvino
does not require us to decline to apply the law. Laureen suggests the trial
court was appealing to a “higher authority” to overrule Bonvino, but as the
trial court recognized, any change in law must come from the Legislature, not
this court. Applying the current law, we conclude the trial court reached the
correct result.
13
C. Laureen’s Request for an Accounting of Post-Separation Rental Income
Next, Laureen contends the court erred in not ordering an accounting
to ascertain the total amount of rental income generated from the income-
generating properties between the date of separation and judgment to ensure
it was equally distributed and to ensure Stephen did not fail to disclose all
the assets held in various bank accounts. Laureen requested such an
accounting, but the trial court concluded it was not necessary given an earlier
interim spousal support order. When the entire history of the case is
considered, we conclude Laureen fails to demonstrate any reversible error.
1. Additional Background
Following their separation in 2014, Stephen claimed that the income-
producing real property along with bank accounts holding over $1 million
were entirely his separate property. He retained control of the couple’s bank
accounts where rent was deposited.
Subsequently, Laureen requested an order not “for support in the
traditional sense,” but rather an order requiring an equal division of all
rental income during the pendency of the proceeding. The trial court entered
in interim order requiring Stephen to pay temporary spousal support of
$20,000 and to provide an accounting of all income and monthly profit and
loss statements for the Midway Drive and Third Avenue properties.
In an order entered in September 2015 following a hearing on
Laureen’s request for order, the trial court noted that Stephen was claiming
the Midway Drive property as his separate property but conceded the Third
Avenue property was community property. The court found that the Midway
Drive property was generating approximately $35,000 per month and the
Third Avenue property was generating approximately $18,000 per month in
rental income. The court declined to determine the proper characterization
14
for each property at that early hearing, but ordered that Laureen was to
receive one half of the rental income from the Third Avenue property plus
$13,000 in spousal support. The court made the award retroactive and
calculated Stephen owed Laureen a total of $124,000 in arrears. The court
noted that Laureen “requested additional relief in her Request for Order,
including financial disclosures and an accounting, but those issues are no
longer in dispute.”
Only months later, Laureen returned to court seeking sanctions and to
modify the spousal support order. She declared that Stephen had
unilaterally hired a third-party management company to manage the Third
Avenue property, which had resulted in a reduction in rental income. In an
order entered after a hearing in June 2016, the trial court agreed, sanctioned
Stephen, and modified the spousal support order to require Stephen to pay
Laureen a total of $22,000 per month in lieu of the earlier support order
including an equal share of the Third Avenue property rental income.
As trial approached, Laureen asserted she was owed approximately
$186,000 in “community income receivable” from the date of separation
through September 2014, the month before she started to receive spousal
support. She clarified that this was her equal share of the $46,646 in
monthly rental income from the Third Avenue and Midway Drive properties.
In her trial brief, she also claimed that the Third Avenue property was, at
that time, generating about $18,000 per month and the Midway Drive
property was generating about $37,000 per month.
In her request for statement of decision, Laureen asked the court to
explain the basis for its denial of her request for an accounting on the post-
separation rental income and request to “equally divide that rental income
15
with an offset to Stephen for the spousal support paid by Stephen.” Laureen
continued to receive $22,000 per month following trial.
After trial, at a hearing in April 2017, Laureen’s counsel again asserted
that an accounting was necessary. Her counsel pointed to a depletion in bank
accounts controlled by Stephen as evidence of the need to account for post-
separation rental income. In response, Stephen’s counsel represented that
Stephen had been spending money on maintaining the properties and that “a
lot of the funds . . . have gone to Ms. Miller for court ordered fees, for back
support.” At the conclusion of the hearing, the court declined to order an
accounting.
At another hearing in May 2017, Laureen again requested an
accounting of the “community property rental income.” The court indicated it
intended to deny the request for an accounting and later stated it was “off the
table” as an option. The court noted that the parties lived on the rental
income “[a]nd to assume that the balance of that is in an account someplace
and ought to be divided is a real stretch.” Concerning the bank accounts
controlled by Stephen, with approximately $1.1 million in deposits near the
date of separation, the court found that $300,000 could be sourced to a
deposit consisting of Stephen’s separate property resulting from a sale of real
property. The court also found Stephen was entitled to a credit for the
approximately $200,000 in legal fees paid to Laureen, leaving $600,000 in
deposits to be equally divided, resulting in a $300,000 payment to Laureen.
Laureen prepared a proposed statement of decision incorporating the
court’s rulings. Her proposed statement stated that “[t]he court finds that, as
of a date closest to the date of separation, Stephen possessed financial
accounts subject to division. Those accounts had a total value of $1,107,502.
The Court finds that, after taking into consideration expenses paid by
16
Stephen post-separation—such as payment of his own legal fees, payment of
his children’s education expenses, and expenses related to the parties’ Lake
Tahoe Property—$600,000 of the total amount is subject to equal division.”
After the court’s proposed statement of decision ruled that only $300,000 was
subject to equal division, Laureen objected and reminded the court of its May
2017 ruling finding that Laureen was entitled to $300,000 out of the bank
accounts, meaning that $600,000 was subject to equal division. The trial
court responded to the objection by noting the amount subject to division was
“corrected.”
In its final statement of decision, the trial court divided the assets and
ordered Stephen to make a net equalizing payment to Laureen of $2,063,056.
The court declined Laureen’s request for an accounting of the rental income
of the Third Avenue property after the date of separation to ensure there was
an equal division of the income. The court found that Laureen’s receipt of
$22,000 in monthly spousal support “more than compensated for her share of
the Third Avenue rent.”
2. Analysis
On appeal, Laureen contends the trial court failed to order an
accounting to determine her share of the post-separation rental income and
to determine how the funds in the bank accounts under Stephen’s control
“somehow disappeared . . . between the date of separation and the time of
trial.” In response, Stephen asserts the issue was forfeited, conceded, and is
meritless.
Even assuming the issue was not forfeited or conceded, we agree that it
has no merit. Pursuant to section 2550, a trial court must “divide the
community estate of the parties equally.” Although the value of the
community property is adjudged at the time of trial, any earnings and
17
accumulations after the date of separation are the separate property of each
spouse. (§§ 2552, subd. (a), 771, subd. (a).) On appeal, Laureen focuses on
the community assets in this period between the date of separation and the
date of trial.
As Laureen notes, each spouse has a fiduciary duty to account for
community assets during the period between separation and final
distribution. (See, e.g., In re Marriage of Prentis-Margulis & Margulis (2011)
198 Cal.App.4th 1252, 1280.) Here, she claims that Stephen failed to account
for the funds held in the bank accounts he controlled after their separation
and the trial court’s failure to order an accounting prevented a proper
distribution of the post-separation rental income. Her claims, however, are
undermined by the record.
Concerning the bank accounts, Laureen claims that funds somehow
“disappeared” after separation. As she notes, the accounts held over $1.1
million shortly after separation, but were nearly depleted by the time of
trial.9
The parties and the court, however, used the value of those bank
accounts at the date nearest to separation in determining the proper division
of assets. The court used the $1.1 million value of those bank accounts near
9 Laureen implies that Stephen improperly squandered or
misappropriated these funds. Although the post-separation use of the funds
is largely irrelevant, as we discuss post, the record suggests the funds were
primarily used to pay the attorney fees and expert costs for both parties,
along with paying taxes. The record does not support the implication that
Stephen breached his fiduciary duties after separation by hiding assets or
otherwise improperly disposing of community property.
18
the time of separation, with specific credits amounting to approximately
$500,000, when dividing assets.10
Accordingly, although Stephen represented that the bank accounts held
only $200,000 near the time of the trial, the court valued the bank accounts
at $600,000, to be divided into equal shares of $300,000, in its statement of
decision and judgment. Given the trial court’s focus on the bank account
balances near the date of separation rather than the balance at the time of
trial, Laureen fails to demonstrate how she was prejudiced by the trial court’s
refusal to order a detailed accounting of Stephen’s use of those balances after
separation.
Similarly, Laureen fails to demonstrate any need for an accounting of
the post-separation rental income. In March 2015, the trial court ordered
Stephen to provide a detailed accounting of the rental income. Stephen
complied and by September 2015, the court noted in an order that the issues
regarding “financial disclosures and an accounting . . . are no longer in
dispute.” Based on the information produced, the trial court was able to find
that “Midway generates approximately $35,000 per month and Third Avenue
generates approximately $18,000 per month.” By the time of trial, the rent
on the Midway property had increased to $36,050 per month.
Following their separation, each spouse was entitled to their
proportional share of the rental income. (See, e.g., § 770, subd. (a)(3); Hicks
v. Hicks (1962) 211 Cal.App.2d 144, 152-153; In re Marriage of Mohler (2020)
47 Cal.App.5th 788, 795 [explaining that post-separation rental income is
divided between spouses in proportional shares].) Here, there is no dispute
that the Third Avenue property was community property, with each spouse
entitled to an equal share of the post-separation rental income, or about
10 Laureen does not challenge the application of those credits on appeal.
19
$9,000 per month. In its statement of decision, the court found that the
Midway Drive property was 35.27 percent community property and 64.73
percent Stephen’s separate property. Thus, Laureen was entitled to only half
of the proportional share of the community property interest, or 17.64
percent, of the Midway Drive property rental income. Assuming a monthly
rent of $36,050 for the entire post-separation period, Laureen was entitled to
$6,357.42 in monthly rental income.11 Considering the Third Avenue and
Midway Drive property rental income together, Laureen was entitled to, at
most, $15,357.42 in post-separation monthly rental income. Although she
requests an accounting, the record clearly establishes the basis for this
amount and Laureen fails to establish how any additional information would
have benefitted her in the final outcome at trial. If anything, more detailed
information would lower this amount.
On appeal, Stephen contends that awarding Laureen one half of the
rental income would be a “double dip” because she also received monthly
spousal support. In reply, Laureen confirms that she has consistently
conceded that any award of post-separation rental income must include a
“monetary offset” to credit Stephen for his spousal support payments. As the
trial court noted, Laureen’s monthly support payment of $22,000 far exceeds
her entitlement to slightly over $15,000 in monthly post-separation rental
income. Thus, any credit arising from the payment of spousal support is
more than enough to also compensate Laureen for the period between the
date of separation and the first spousal support payment even if the amount
11 The record reflects that the rent for the Midway Drive property
increased during the period between separation and trial. Because it does
not affect our analysis, we use the higher rate for our calculations given the
record on appeal does not appear to include a month-by-month analysis of the
rent.
20
of rental income received during that period wasn’t awarded to Laureen via
the division of the bank account balances. Accepting her concession that the
support payments must be credited against her entitlement to post-
separation rental income, Laureen effectively concedes that the trial court did
not err in failing to order a more detailed accounting of the post-separation
rental income or in reaching its final determination of the division of
community property.
D. The Structure for Satisfaction of the Equalizing Payment
Laureen contends the court erred in structuring its final judgment to
allow Stephen to make his equalizing payment periodically and at a low
interest rate rather than making the payment due immediately and carrying
the statutory rate of interest for money judgments. On this contention, we
agree the trial court erred as a matter of law.
In its statement of decision, the trial court acceded to the requests of
the parties and awarded three properties to Stephen and only one property to
Laureen. Given this uneven division of real property, Stephen owed a gross
equalizing payment of $2,145,056 to Laureen. Recognizing that Stephen did
not have liquid assets to make the entire payment, the court ordered Stephen
to make a lump sum payment from the proceeds of the sale of the Third
Avenue property and then pay the remaining balance plus attorney fees in
quarterly payments of $100,000, bearing interest at the “30-year Treasury
Bond interest rate on January 2 of the year in which the payments are
made.” The judgment reflected the same payment schedule for the total
outstanding balance owed of $538,056.
Laureen contends that the court’s judgment was a money judgment,
due immediately and bearing interest at the statutory rate of ten percent
established by section 685.010 of the Code of Civil Procedure. In response,
21
Stephen asserts that Laureen forfeited the issue of quarterly payments by
not raising it below and, alternatively, that the trial court did not abuse its
discretion in structuring the payment in the final judgment.
As an initial matter, we reject Stephen’s assertion that the issue is
forfeited due to Laureen not raising the issue below. The issue is one that
involves a pure question of law on undisputed facts. Accordingly, even
assuming Laureen did not adequately raise the issue below, we can consider
this matter of law for the first time on appeal. (See, e.g., OCM Principal
Opportunities Fund, L.P. v. CIBC World Markets Corp. (2008) 168
Cal.App.4th 185, 195, fn. 8 [no forfeiture of issue regarding rate of interest on
money judgment due to failure to raise issue in trial court].)
Marriage dissolution proceedings are generally governed by the same
rules of practice and procedure as civil actions, as set forth in the Code of
Civil Procedure. (Fam. Code, § 210.) Unless settled beforehand, the
judgment of dissolution of marriage must also divide the community estate of
the parties equally. (Id., § 2550.) Family Code section 155 acknowledges
that the Code of Civil Procedure applies to judgments in family law
proceedings and that only an initial support order shall be considered an
“installment judgment,” which is payable over time. For all other money
judgments, interest commences to accrue on the date of entry. (Code Civ.
Proc., § 685.020, subd. (a).) Pursuant to section 685.010, subdivision (a) of
the Code of Civil Procedure, “[i]nterest accrues at the rate of 10 percent per
annum on the principal amount of a money judgment remaining unsatisfied.”
Nothing in the Code of Civil Procedure grants a trial court discretion to
select a different interest rate or delay accrual of interest. To suggest
otherwise, Stephen relies on authority involving the situation present here,
where a trial court’s award of community property to one spouse requires an
22
equalizing payment to the either spouse. As Stephen notes, these cases
reveal that the court has broad discretion to divide assets equitably to
achieve a net equal division. (See, e.g., In re Marriage of Connolly (1979) 23
Cal.3d 590, 603.)
However, as Stephen also acknowledges, “[t]he asset distribution or
cash out method involves distributing one or more community assets to one
spouse and other community assets of equal value (which may include an
equalizing promissory note) to the other.” (In re Marriage of Cream (1993) 13
Cal.App.4th 81, 88 [italics added].) Every case cited by Stephen regarding an
equalizing payment due over a period of time involved the use of a secured
promissory note. (In re Marriage of Bergman (1985) 168 Cal.App.3d 742, 761
[trial court ordered wife to execute promissory note secured by a second deed
of trust on the family residence]; In re Marriage of Slater (1979) 100
Cal.App.3d 241, 244 [husband ordered to execute promissory note in favor of
wife, secured by a pledge of the husband’s one-half interest in partnership
investments].) Although he quotes In re Marriage of Stallcup (1979) 97
Cal.App.3d 294, as supporting his claim that the trial court had discretion to
determine the rate of interest, that decision is premised entirely on In re
Marriage of Tammen (1976) 63 Cal.App.3d 927, which involved the use of a
secured promissory note to effectuate an equal division of property. (Id. at
pp. 929-931.)
These decisions establish that when a trial court exercises its discretion
under section 2601 to award an asset to one spouse and the other spouse
cannot receive an equal share of community property by receiving other
assets, the court may either order an equalizing payment or order execution
of a secured promissory note to allow payment over time at a reasonable
interest rate selected by the trial court.
23
Here, the trial court did not order Stephen to execute a secured
promissory note, but rather simply included an equalizing payment in the
final judgment. In In re Marriage of Pollard (1988) 204 Cal.App.3d 1380, this
court considered a similar situation and held that “part of a judgment of
dissolution which awards money in lieu of an in-kind division of nonmonetary
community property is a money judgment on which interest accrues from the
date of its entry, in the absence of an express or implied agreement by the
parties to the contrary.” (Id. at p. 1382.) More recently, the Second District
reached a similar result in In re Marriage of Dalgleish & Selvaggio (2017) 17
Cal.App.5th 1172, concluding that an equalizing payment in a dissolution
judgment is a money judgment with interest commencing to accrue upon the
date of entry of the judgment. (Id. at pp. 1177-1180.) The Second District
further held that the trial court had no discretion to adopt a different date for
the accrual of interest. (Id. at p. 1182.)
Without the execution of a promissory note, the trial court had no
discretion to sidestep the statutory requirements for money judgments. By
ordering Stephen to make an equalizing payment, the judgment was a money
judgment on which interest began to accrue immediately at the statutory
rate. By ordering otherwise, the trial court erred, warranting a reversal to
modify the judgment in this regard.
E. Valuation of the Community Interest in the Long Beach Property
Next, Laureen challenges the trial court’s handling of the Long Beach
property, arguing she was entitled to a larger equalizing payment arising
from her interest in the property. We disagree.
1. Additional Background
The evidence at trial established that the parties purchased the Long
Beach property to use as a residence for their adult son. The property was
24
purchased in 2011 for $752,000, financed with a $488,800 loan. Laureen
testified that their son was making all of the loan payments and would
continue to do so. Stephen testified at trial that the loan had been paid down
to an amount slightly less than $460,000, later specified to be $455,000.
Stephen testified that the agreement with their son was that “he could buy us
out at what we paid.” By the time of trial, their son had acquired a 75
percent interest in the property, leaving the parties with a 25 percent
interest. It was undisputed that the 25 percent interest was community
property and that the property had an appraised market value of $1,100,000
by the time of trial.
At trial, Laureen asserted she was entitled to an equal share of 25
percent of the current appraised value, or $275,000. The trial court
disagreed, instead finding that based on the agreement with their son, the
value of the parties’ interest was based on the original purchase price, not the
current appraised value. Recognizing an outstanding loan balance of
$455,000, the court calculated the total equity in the Long Beach property,
based on the original purchase price of $752,000, to be $297,000, of which 25
percent belonged to the parties. Accordingly, the court determined that the
entire community property interest totaled $74,250, which was assigned to
Stephen with an equalizing payment due to Laureen.
2. Analysis
On appeal, Laureen contends “[t]here was no evidence at trial to
support the trial court’s conclusion . . . that Stephen and Laureen had an
agreement that the community’s interest in the Long Beach Property was
equal to only 25% of the equity at the time of purchase.” However, she also
admits that Stephen directly testified that the agreement was that their son
would “buy us out at what we paid.”
25
Seeking to push aside this evidence, Laureen suggests Stephen’s
testimony should be regarded with “skepticism” and points to the absence of
evidence regarding an express agreement between Stephen and Laureen in
this regard. This assertion, however, runs counter to well-established
principles of appellate review under the substantial evidence standard of
review.12
“On review for substantial evidence, we examine the evidence in the
light most favorable to the prevailing party and give that party the benefit of
every reasonable inference. [Citation.] We accept all evidence favorable to
the prevailing party as true and discard contrary evidence.” (In re Marriage
of Hokanson, supra, 68 Cal.App.4th at p. 994.) “ ‘ “ ‘To warrant the rejection
of the statements given by a witness who has been believed by a trial court,
there must exist either a physical impossibility that they are true, or their
falsity must be apparent without resorting to inferences or deductions.
[Citations.] Conflicts and even testimony which is subject to justifiable
suspicion do not justify the reversal of a judgment, for it is the exclusive
province of the trial judge or jury to determine the credibility of a witness and
the truth or falsity of the facts upon which a determination depends.’ ” ’ ”
(Bloxham v. Saldinger (2014) 228 Cal.App.4th 729, 750.)
Here, the trial court found Stephen to be “particularly credible.” We
cannot, and will not, reverse the trial court’s judgment simply because
Laureen believes Stephen to be so contemptible that the entirety of his
testimony should be disbelieved. “Ad hominem arguments, of course,
12 Laureen does not directly address the standard of review, but asserts
that “no substantial evidence” supports the trial court’s findings. As Stephen
discusses in his brief, and Laureen does not dispute in her reply brief, we
apply the substantial evidence standard of review to the trial court’s findings.
(In re Marriage of Campi (2013) 212 Cal.App.4th 1565, 1572.)
26
constitute one of the most common errors in logic: Trying to win an
argument by calling your opponent names . . . only shows the paucity of your
own reasoning.” (Huntington Beach City Council v. Superior Court (2002) 94
Cal.App.4th 1417, 1430.)
Following the lead of the trial court, we accept Stephen’s credibility and
conclude his testimony supports the court’s determination of the value of the
parties’ interest in the Long Beach property. At the time they purchased the
property for $752,000, the parties had an outstanding mortgage of $488,800.
They subsequently sold a 75 percent interest in the property to their son and
agreed that their son could purchase their remaining interest over time “at
what we paid.” By the time of trial, the mortgage had been paid down to
$455,000, creating a total equity interest of $297,000 based on the original
purchase price. Using these figures, the court found that the 25 percent
community property interest in the total equity interest of $297,000 equaled
$74,250. Laureen’s equal share of this community property interest was
$37,125. This value, based on the original sales price due to Stephen’s
testimony regarding the agreement with their son, is supported by
substantial evidence.13
13 Some of the confusion regarding the precise value of the community
interest in the Long Beach property arises from what appears to be an
accounting discrepancy: there is no dispute that the parties purchased the
property for $752,000, but the record suggests the purchase was
accomplished with a $488,800 mortgage and a $324,052 down payment,
which would total $812,852. The parties do not explain this discrepancy. If
anything, the trial court overvalued the 25 percent community interest:
accepting the original mortgage amount of $488,800, the total equity in the
property was $263,200, leading to the parties’ 25 percent interest totaling
only $65,800 rather than $74,250. Although the equity interest had grown as
the mortgage had been paid down, Laureen testified that their son was
paying the mortgage such that any increase in equity should be attributed to
27
F. Stephen’s Alleged Breaches of Fiduciary Duty
In her final argument, Laureen asserts the trial court erred in not
finding that Stephen breached his fiduciary duties owed to Laureen. She
asserts that “[t]he conclusion is inescapable that Stephen repeatedly,
intentionally, and maliciously breached his fiduciary duties to Laureen, and
consequences for those breaches should have been imposed, under [] section
1101, subdivision (g) . . . or, more appropriately, under [s]ection 1101,
subdivision (h).” She points to what she deems to be “overwhelming and
undeniable” evidence to support her assertion.
However, as Stephen notes, Laureen fails to establish that she
requested such broad relief in the trial court or that the court made the
findings regarding a breach of fiduciary duty implied by her argument on
appeal. Instead, the record establishes that the issue of breach of fiduciary
duty was limited to two narrow issues.
First, Laureen asserted that if the trial court found any separate
property interest in the Midway or Wedeln Court properties, the court must
find that Stephen breached his fiduciary duties by failing to offer the
community estate an opportunity to invest in those properties. As discussed
ante, we conclude the trial court properly determined that the community
opportunity doctrine does not exist in this context. Accordingly, Laureen fails
to establish a breach of a nonexistent duty.
Second, after trial, Laureen asserted that Stephen breached his
fiduciary duties relating to some gold coins owned by the parties. Before
trial, Stephen represented that the parties owned 200 gold coins, which the
court ruled were community property to be divided equally. Following trial,
him. Regardless, any valuation error in this regard would benefit Stephen,
not Laureen, and Stephen does not raise this issue on appeal.
28
the court indicated that each spouse should receive 100 coins, but Stephen’s
counsel replied that although Stephen agreed to divide the coins equally, his
pre-trial representation that he possessed 200 coins was just a “best
estimate.” Claiming he was dividing the coins in his possession equally,
Stephen gave Laureen 90 coins altogether: 10 of the coins shortly after she
filed for divorce and another 80 coins after trial.
Believing she was entitled to more coins, Laureen subsequently filed a
request for order with additional evidence regarding the true number of gold
coins. After two additional evidentiary hearings, the court ultimately
determined that the parties owned 222 gold coins it total, but acknowledged
that Stephen had sold 20 coins and placed the proceeds in a bank account.
The court’s final judgment ordered Stephen to make an additional equalizing
payment of $21,840 to compensate for the missing coins.14 To reach this
total amount, the court ordered Stephen to make an equalizing payment
based on the value of 11 coins. Regarding the 20 coins that were sold, the
court accepted Stephen’s representation that he ultimately invested the
proceeds in the Wedeln Court property—which was determined to be
partially community property and that Laureen therefore benefitted from the
investment in that property—but still found that Laureen was entitled to a
credit for five additional coins. Finding no malfeasance, the court denied
Laureen’s request for attorney fees and costs.
Laureen contends the court erred in not finding that Stephen concealed
the gold coins and therefore breached his fiduciary duties. As discussed ante,
section 721 imposes fiduciary duties on spouses “of the highest good faith and
fair dealing.” (Id. at subd. (b).) Section 1100 further defines the scope of the
14 At a hearing, the parties consented to the court’s valuation of the gold
coins at $1,356 each.
29
duties owed by one spouse to the other, including “to act as a fiduciary toward
the other in the management of community assets ‘in accordance with the
general rules governing fiduciary relationships . . . as specified in Section
721, until such time as the assets and liabilities have been divided by the
parties or by a court. This 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 . . . .’ ” (In re Marriage of Prentis-
Margulis & Margulis, supra, 198 Cal.App.4th at pp. 1269-1270, quoting
§ 1100, subd. (e).)
Section 1101 in turn creates a right of action and specific remedies for
breach of the fiduciary duty between spouses “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[.]” (Id. at subd. (a).) Under
subdivision (g) of section 1101, one spouse may be awarded “50 percent, or an
amount equal to 50 percent, of any asset undisclosed or transferred in breach
of the fiduciary duty plus attorney’s fees and court costs.” Under subdivision
(h) of section 1101, if the breach falls within the “ambit of Section 3294 of the
Civil Code,” the spouse is entitled to an award of “100 percent, or an amount
equal to 100 percent, of any asset undisclosed or transferred in breach of the
fiduciary duty.”
Here, Laureen claims she is entitled to an award under section 1101,
subdivision (h). Such an award, however, requires a showing that the alleged
breach falls within the “ambit” of Civil Code section 3294, which requires a
showing that Stephen is “guilty of oppression, fraud, or malice.” (Id. at subd.
(a).) The trial court, however, found that Stephen “was testifying to the best
of his ability” and while he was “misinformed” about the true number of
30
coins, the court did not believe he was trying to mislead the court. The court
“conceded” that there was no malice regarding Stephen’s representations
regarding the coins. Finding Stephen’s representations regarding the coins
to be “a matter of omission, not commission,” the court declined Laureen’s
request to find a breach of fiduciary duty warranting additional relief.
Although Laureen contends otherwise, she offers no evidence supporting a
finding under Civil Code section 3294.
Laureen further contends that “the trial court’s finding that Stephen’s
deceptive conduct [regarding the gold coins] did not constitute a breach of his
fiduciary duties is not supported by the evidence.” As the trial court found,
Stephen openly testified regarding his recollection of the gold coins and we
will not second guess the trial court’s credibility determination. At most,
Laureen faults Stephen with gifting a single gold coin in his possession to a
“lady friend” after their separation. While Laureen characterizes this as an
“insult” to her given the romantic insinuation, it is not sufficient to prove a
breach of fiduciary duty warranting additional relief under section 1101,
subdivisions (g) or (h). Although the court found Stephen inadvertently
omitted some of the gold coins in his asset disclosures, Laureen’s right to her
equitable share of the value of the coins was not impaired by Stephen’s
innocent misstatements. We see no error in the trial court’s finding that
Stephen did not breach his fiduciary duties regarding the gold coins.
On appeal, Laureen also contends that Stephen breached his fiduciary
duty in relation to other property and in the handling of the parties’ finances
and records. However, the record is devoid of any mention of a breach of
fiduciary duty in relation to these issues. Beyond the issue relating to the
community opportunity doctrine, her mandatory trial statement and trial
brief did not include the issue of breach of fiduciary duty as an issue to be
31
resolved at trial. Likewise, her request for statement of decision focused only
on a theory of breach of fiduciary duty centered on the community
opportunity doctrine.
To the extent Laureen is now attempting to expand her claims to cover
additional grounds for finding a breach of fiduciary duty, those claims should
have been raised in the trial court and cannot be raised for the first time on
appeal. “ ‘ “As a general rule, theories not raised in the trial court cannot be
asserted for the first time on appeal; appealing parties must adhere to the
theory (or theories) on which their cases were tried . . . . [I]t would be unfair,
both to the trial court and the opposing litigants, to permit a change of theory
on appeal.” ’ ” (In re Marriage of Nassimi (2016) 3 Cal.App.5th 667, 695.)
Accordingly, we will not address Laureen’s request that we reverse the trial
court’s judgment on a basis not raised in that court. Thus, Laureen fails to
demonstrate any reversible error regarding her assertions arising from a
claim of breach of fiduciary duty.
II. Stephen’s Appeal
Stephen filed his own cross-appeal challenging portions of the
judgment. One of his arguments is conditioned on a finding of error
regarding the property distribution to Laureen. Because we find no error, as
discussed ante, we need not consider that argument. We consider his other
arguments in turn.
A. The Court’s Disposition of Jewelry
Stephen first contends that there was insufficient evidence to support
the trial court’s conclusion regarding the disposition of jewelry owned by the
parties. He contends the trial court erred in failing to determine the value of
32
the jewelry and neglecting to require Laureen to present evidence that it was
a gift given to her by Stephen. We see no error.
1. Additional Background
In his initial asset disclosure, Stephen recognized the parties owned
jewelry of unknown value, which Stephen represented was all in Laureen’s
possession. Laureen valued the jewelry at $50,000 and did not claim a
separate property interest. In her mandatory trial statement, Laureen
asserted that the jewelry should be distributed to allow each spouse to retain
the jewelry in their possession. The trial court’s proposed statement of
decision adopted Laureen’s disposition of the jewelry, but Laureen objected
by noting the trial court indicated during trial that the disposition of the
jewelry and other personal property was to be referred to a special master. In
its final statement of disposition, the trial court noted that the disposition of
the jewelry had been referred to the special master.
The special master’s report was focused on the personal property in
each residence, but also discussed the jewelry. The special master reported
that he lacked the expertise to value the jewelry and explained that if any
party intended the jewelry to be treated as anything other than gifts deemed
to be separate property under section 852, the special master would be
available to assist in such a valuation. The record does not include any
indication that either party responded to the special master’s invitation. In
its judgment, the court referred to the special master report and ruled that
“[a]ll jewelry in the possession of each party are assigned to that party as
their separate party. []§ 852(c).”
2. Analysis
On appeal, Stephen now contends there was insufficient evidence to
support the trial court’s judgment awarding each spouse the jewelry in their
33
possession pursuant to section 852, subdivision (c). That section provides
that although a transmutation of property must be made in writing with
specific requirements, that rule “does not apply to a gift between the spouses
of clothing, wearing apparel, jewelry, or other tangible articles of a personal
nature that is used solely or principally by the spouse to whom the gift is
made and that is not substantial in value taking into account the
circumstances of the marriage.”
By finding that section 852, subdivision (c) applied, the trial court
impliedly found that Stephen gave the jewelry as a gift to Laureen and that
the jewelry was not “substantial in value taking into account the
circumstances of the marriage.”15 (Ibid.) Stephen contends there was no
evidence at trial regarding whether a gift had been made, but he expressly
testified that he “bought substantial jewelry for Mrs. Miller.” Based on this
representation, the trial court could determine that he gifted the personal
jewelry to Laureen. (See, e.g., In re Marriage of Mix (1975) 14 Cal.3d 604,
614 [testimony of a single witness may constitute substantial evidence to
support the trial court’s factual findings].)
Stephen relies on In re Marriage of Steinberger (2001) 91 Cal.App.4th
1449 (Steinberger) to support his contention that section 852, subdivision (c)
does not apply to the gift of jewelry, but that case is inapposite. In
Steinberger, the trial court concluded the husband gave a ring to his wife as a
gift, but also found the ring was substantial in value. (Id. at p. 1456.) Thus,
on appeal, the court concluded that section 852, subdivision (c) did not apply
because the ring was of substantial value. (Id. at p. 1466.)
15 Neither party requested a statement of decision on the issue of the
jewelry and, accordingly, the court made no express findings in this regard.
34
Here, on the other hand, the trial court made no express finding
regarding whether the jewelry was “substantial” in value. Laureen
represented in her asset disclosure statement that the jewelry was worth
$50,000, which would equate to gifts of less than $2,000 for every year of the
marriage. Altogether, the jewelry was worth less than one percent of the
entire marital estate. Stephen did not offer opposing evidence and did not
take advantage of the special master’s offer to obtain a valuation “[i]f counsel
or the parties are seeking evaluation of individual items as to whether they
should be treated differently than [section] 852 property.” On this record, the
trial court did not err in determining the jewelry in Laureen’s possession was
her separate property under section 852, subdivision (c).
B. The Judgment Regarding Laureen’s IRA Account
Next, Stephen contends the trial court’s judgment is ambiguous
regarding the disposition of an “IRA” account. The judgment suggests that
the retirement account was Laureen’s separate property, but also ordered
that it be divided by the time rule. We agree with Stephen that the judgment
must be clarified.
Before trial, Stephen identified an “IRA,” or individual retirement
account, with a balance of $38,500 among the marital assets. During trial,
Laureen testified that it was her IRA and that she contributed to the account
both before and during marriage. At the end of trial, the court found that
there was no testimony regarding the timing of the contributions and ruled
that it would be divided “according to the time rule.”16 In its statement of
16 Under the “time rule,” “the community interest in the retirement
benefits is determined ‘to be that fraction of retirement assets, the numerator
of which represents the length of service during the marriage but before the
separation, and the denominator of which represents the total length of
35
decision, the court found the account had a value of $22,604 and again stated
it would be divided by the “time rule.”
By the time of judgment, however, the court made two irreconcilable
rulings regarding the IRA account. The court again ruled that the account
would be divided by the “time rule,” but also stated in the same judgment
that the “Fidelity IRA account 5606 is assigned to Laureen as her sole and
separate property.”
As Stephen suggests, the judgment is ambiguous as to the proper
disposition of the IRA account. The court ruled both that it should be divided
between the spouses, based on Laureen’s testimony that she contributed to
the account during marriage, but also that the account was entirely
Laureen’s separate property. Additionally, the disposition of that account
may affect the amount of the equalizing payment. On remand, the court
must make a clear ruling on the proper disposition of the IRA account and, if
necessary, adjust its judgment accordingly.
C. Stephen’s Request for a “West Warning”
Finally, Stephen contends the court neglected to give a “West warning”
to Laureen, in reference to In re Marriage of West (2007) 152 Cal.App.4th 240(West). As Stephen explains, he requested that the court inform the parties
that they must “manage the assets they received in the division of property
wisely to accomplish self-support.” Although Stephen asked for a “West
warning,” and the court suggested it would include such a warning, the court
did not reference West in its statement of decision or judgment. Although
Stephen asserts this omission constitutes reversible error, he does not
explain how the court’s judgment was insufficient. Our review of the
service by the employee-spouse.’ ” (In re Marriage of Bowen (2001) 91
Cal.App.4th 1291, 1295.)
36
statement of decision and judgment leads us to conclude that it substantially
fulfills the purpose of a “West warning” such that reversal is not warranted.
Stephen’s request arises from the decision in West. As part of a marital
settlement agreement, the parties agreed to a significant equalizing payment
and the wife was awarded spousal support with the expectation that she
would make a reasonable good faith effort to become self-supporting. (West,
supra, 152 Cal.App.4th at pp. 242-243.) Years later, the husband requested
an order to reduce the spousal support, based in part of the wife’s failure to
make a reasonable good faith effort to become self-supporting. (Id. at
pp. 243-244.) The trial court agreed and reduced support after finding the
wife did not adequately exercise her ability to prudently invest the equalizing
payment. (Id. at p. 246.)
On appeal, the court in West held the trial court could not penalize the
wife for failing to invest her share of the marital property “without first
warning her that she would be expected to invest it.” (West, supra, 152
Cal.App.4th at p. 251.) The court concluded that the wife’s receipt of “a
substantial cash asset upon termination of the marriage provides no grounds
for later reducing support, and even if it did, it would be an abuse of
discretion to penalize her for failing to invest that asset without providing
her with fair warning of the court’s expectations.” (Ibid.) However, the court
implied that no such warning was necessary to deny a spouse’s request to
increase support based on the disposition of income-earning property. (Id. at
p. 250.)
Here, the trial court awarded Laureen permanent spousal support of
$4,000 per month. Laureen was also awarded a gross equalizing payment of
$2,145,056 and Stephen asked the court to warn her that “any decrease[d]
income whether because (1) the rate of return on the sale proceeds is less or
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(2) she loses the sale proceeds because of unwise investments, this loss will
not be a ground to return to court and seek spousal support.” At a
subsequent hearing, Stephen’s counsel explained he was seeking a “West
warning” “so that . . . that spouse does not come back into Court months later
after they spent all their liquid funds asking for another contribution from
the payor spouse.”
Stephen’s concern that Laureen would return to court seeking an
increase in spousal support based on a failure to reasonably invest her capital
is different than the situation present in West, where the court held that a
trial court may not order a reduction in spousal support based on a failure to
invest without first warning the spouse she was expected to invest. Nothing
in West supports Stephen’s assertion that a warning was necessary to
preclude a denial of a potential future request to increase spousal support.
Instead, as the West court noted, “a party cannot dispose of income-earning
property and expect the supporting spouse to make up the difference.” (West,
supra, 152 Cal.App.4th at p. 250.)
Regardless, the trial court’s order did inform Laureen that she was
expected to invest her post-dissolution share of the marital property. In the
statement of decision, the trial court based its spousal support calculation on,
in part, its conclusion that “Laureen is capable of managing her assets and
providing earnings for herself.” The court assumed a “prudent” rate of return
and set the award of spousal support on the court’s expectation that Laureen
would, and could, invest her share of the marital property. Although the
court did not specifically reference West, the court’s statement of decision
adequately conveyed the court’s expectation that she would invest her
equalizing payment. This statement substantially fulfilled the purpose of
Stephen’s requested “West warning” and put Laureen on notice that she could
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not imprudently squander her share of the marital property and then return
to court seeking an increase in spousal support without an adequate
explanation. We see no reason to reverse the judgment to direct the trial
court to add a citation to West to its statement of decision or judgment that
adequately conveyed the expectation that Laureen would prudently invest
her share of the marital property.
DISPOSITION
The judgment is reversed as it relates to the equalizing payment
schedule, the trial court’s selected non-statutory interest rate, and regarding
Laureen’s IRA account. The matter is remanded to the trial court for further
proceedings consistent with this opinion. In all other respects, the judgment
is affirmed. The parties shall bear their own costs on appeal.
BENKE, Acting P. J.
WE CONCUR:
HUFFMAN, J.
O’ROURKE, J.
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