Marriage of Stewart CA2/1 ( 2022 )

Filed 12/21/22 Marriage of Stewart CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying
on opinions not certified for publication or ordered published, except as specified by
rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
In re the Marriage of COURTNEY B311315
and JAMES C. STEWART.
_________________________________ (Los Angeles County
Super. Ct. No. SD018483)
COURTNEY JANE,
ORDER MODIFYING THE
Appellant, OPINION (CHANGE IN THE
JUDGMENT) AND DENYING
v. APPELLANT’S PETITION
FOR REHEARING
JAMES C. STEWART,
Respondent.
THE COURT:
The opinion in the above-entitled matter filed on
November 22, 2022 is modified as follows:
1. On page 2, before the sentence “In all other respects, we
affirm.”, the following two sentences are inserted:
Finally, we conclude the court erred in denying Jane’s request
under section 2030 for attorney fees and costs, because the court did
so based on the view that Jane’s efforts to seek additional
child support from Stewart lacked merit—a view we reject in
deciding the child-support-related issues on appeal. We therefore
reverse the court’s denial of Jane’s fees and costs motion and
instruct the court, following remand, to consider whether, in light of
this opinion and the materials Jane submitted to support her
request, she has established entitlement to reasonable fees and
costs under section 2030, and if so, in what amount.
2. On pages 15-16, the entire paragraph, under part H.3.
of the Facts and Proceedings Below section, is deleted and replaced
with the following paragraph under the same heading:
Jane’s sanctions motion also included a request for
section 2030 attorney fees “predicated on [Jane’s] need and
[Stewart’s] ability to pay.” The supporting documentation for
this request did not include any invoices from Jane’s counsel,
although a subsequently filed updated declaration of Jane’s counsel
attached billing records reflecting 422.4 hours and approximately
$211,200 in fees. Jane also submitted an income and expense
declaration.
3. On pages 41-43, the entirety of part E. of the Discussion
(including the footnote contained therein), is deleted and replaced
with the following:
E. Attorney Fees Request
Section 2030 authorizes a court to order, “if necessary based
on the [court’s] income and needs assessments” of the two parties in
a dissolution or related action, that one party pay the attorney fees
and costs of the other party “reasonably necessary” to maintain or
defend the proceeding. (See § 2030, subd. (a)(1).) “[T]he making of
the award, and the amount of the award, [must be] just and
2
reasonable under the relative circumstances of the respective
parties.” (§ 2032, subd. (a).) In determining what a “just and
reasonable” amount of attorney fees and costs in a particular case
is, the trial court should consider, in addition to the parties’ relative
financial circumstances, “ ‘ “the nature of the litigation, its
difficulty, the amount involved, the skill required and the skill
employed in handling the litigation, the attention given, the success
of the attorney’s efforts, his learning, his age, and his experience in
the particular type of work demanded [citation]; the intricacies and
importance of the litigation, the labor and the necessity for skilled
legal training and ability in trying the cause, and the time
consumed. [Citations.]” [Citations.]’ ” (In re Marriage of Keech
(1999) 75 Cal.App.4th 860, 870.) The party seeking the fees bears
the burden of proving entitlement thereto, including providing
sufficient information about the services rendered to establish the
fees sought were reasonably necessary. (See Cal. Rules of Court,
rule 5.427(b); see Keech, supra, at p. 869.)
The court deemed the fees Jane sought to be unreasonable
based solely on the court’s view that Jane’s RFO and other efforts
lacked merit—that they amounted to “sort of a costly kind of fishing
expedition that really was based on . . . wishful thinking and a real
misunderstanding about how incentive compensation works and . . .
when it’s income for support purposes under both the parties’
agreed-upon orders and the background law.” For the reasons
discussed above, Jane’s RFO did not lack merit in this manner, so
the nature of the relief she was seeking could not render all the
services her counsel performed inherently unreasonable. The court
abused its discretion in denying Jane’s request for fees and costs as
unreasonable on this basis.
Because of the basis for the court’s denial, the court
did not have occasion to decide the numerous other factors relevant
3
to assessing what amount of attorney fees and costs, if any, she had
established a right to recover under section 2030. For example, the
court does not appear to have assessed Jane’s relative ability to pay
beyond generally noting that “certainly [Stewart’s] financial . . .
ability is better than [Jane’s],” or the reasonableness of the amount
of time Jane’s counsel spent to seek relief that, as we conclude
above, Jane was justified in seeking. The trial court is in the best
position to consider these issues, and we decline to address them for
the first time on appeal. We therefore reverse the denial of Jane’s
motion for attorney fees and costs and instruct the court upon
remand to consider Jane’s motion in light of our opinion and
determine whether Jane has sufficiently established her
entitlement to reasonable attorney fees and costs under section
2030 and, if so, in what amount.
4. On page 44, the entirety of the Disposition is deleted
and replaced with the following:
DISPOSITION
The court’s February 2021 order on the amended child
support RFO is reversed to the extent it denies Jane Ostler-Smith
child support based on the $800,000 cash bonus Stewart received
from MGM Growth around December 2017 and the $400,000 bonus
PSU grant Stewart received around December 2016. Upon remand,
the court is instructed to determine the pro rata portion of that
bonus income attributable to the support period, and to order the
corresponding amount of Ostler-Smith child support.
4
The court’s order imposing sanctions against Jane is reversed.
The court’s denial of Jane’s request for attorney fees and costs
under section 2030 is reversed. The trial court is instructed to
consider Jane’s request and determine whether, taking into
consideration our opinion and the materials Jane presented
to support her motion, Jane has sufficiently established her
entitlement to reasonable attorney fees and costs under
section 2030 and, if so, in what amount.
The court’s orders are in all other respects affirmed, including
specifically its denial of section 271 sanctions against Stewart.
The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED.
__________________________
These modifications constitute a change in the judgment.
Appellant’s petition for rehearing filed on December 7, 2022 is
denied.
_____________________________________________________________
ROTHSCHILD, P. J. CHANEY, J. BENKE, J.*
* Retired Associate Justice of the Court of Appeal, Fourth
Appellate District, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
5
Filed 11/22/22 Marriage of Stewart CA2/1 (unmodified opinion)
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying
on opinions not certified for publication or ordered published, except as specified by
rule 8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
In re the Marriage of COURTNEY B311315
and JAMES C. STEWART.
_________________________________ (Los Angeles County
Super. Ct. No. SD018483)
COURTNEY JANE,
Appellant,
v.
JAMES C. STEWART,
Respondent.
APPEAL from orders of the Superior Court of Los Angeles
County, Lynn H. Scaduto, Judge. Affirmed in part and reversed in
part with directions.
Robert K. Kent for Appellant Courtney Jane.
Kermisch & Paletz, Daniel J. Paletz and Eden C. Bautista for
Respondent James C. Stewart.
Appellant Courtney Jane appeals from several postjudgment
orders of the trial court in proceedings regarding child support
obligations of her former husband, respondent James Stewart.
Specifically, she challenges the court’s rulings: (1) denying
her request for an order that Stewart owed her child support
arrearages, (2) imposing sanctions against her under Family Code
section 2711 and Code of Civil Procedure sections 2030.090,
2031.060, and 2033.080, (3) denying her request for section 271
sanctions against Stewart, (4) granting Stewart a protective order
in response to Jane’s discovery requests, (5) denying her request for
need-based attorney fees under section 2032, and (6) failing to rule
on certain of Jane’s evidentiary objections. We conclude the court
erred in denying Jane’s request for certain child support arrearages
based on (1) a cash bonus Stewart received after the support period,
but which was in part compensation for work he had performed
during the support period, and (2) a stock grant bonus that vested,
but was not yet saleable, during the support period. We otherwise
affirm the court’s order regarding child support. We further
conclude the trial court erred in its ruling regarding sanctions
against Jane and reverse the court’s order imposing them. In all
other respects, we affirm.
FACTS AND PROCEEDINGS BELOW
Jane and Stewart married in 1993 and have two now
adult children together: Cecelia (24 years) and James (27 years).
Stewart and Jane divorced pursuant to a stipulated judgment of
dissolution in 2003 (the 2003 judgment).
1Unless otherwise indicated, all statutory references are to
the Family Code.
2
A. The Structure of Stewart’s Compensation
The 2003 judgment included detailed provisions regarding,
among other things, child support for Cecelia and James.
These provisions took into account the structure of Stewart’s
compensation at Morgan Stanley, where he was employed at the
time of the judgment. His compensation there was comprised of
a base salary, cash bonuses, and vesting stock grants. Vesting
stock grants are a promise to give an employee shares in the future
if certain conditions are met. They “vest[ ] and became saleable
on schedules set by the . . . compan[y], usually ranging over several
years.” Although Stewart changed employers several times
throughout the support period, his compensation at all of these
employers likewise had a base salary component, cash bonus
component, and a vesting stock grant component. At Morgan
Stanley, the vesting stock grant component was referred to
as the equity incentive compensation plan (EICP). At UBS,
it was referred to as the employee ownership plan (EOP). At
both Greenhill & Company LLC (Greenhill) and MGM Growth
Properties Inc. (MGM Growth), the vesting stock grant income was
referred to in terms of restricted stock units (RSUs) or preferred
stock units (PSUs).
Stewart’s compensation at MGM Growth is the source of the
income at issue in this appeal, so we describe it in more detail. The
RSUs and PSUs offered at MGM Growth are long term incentive
compensation devices that, as noted, did not vest until years after
they were granted. Before vesting, these grants were subject to
forfeiture upon termination of employment. Whether Stewart
received any value from his RSUs and/or PSUs after they vested,
and in what amount, depended on various performance factors.
Stewart’s compensation at MGM Growth also included the
potential for a fourth type of compensation, referred to in 2016 as a
3
“bonus PSU” and in 2017 as a “bonus deferred RSU.”
(Capitalization omitted.) These components came into play
only if MGM Growth determined Stewart should receive an
end-of-year bonus in an amount more than the amount of his
base annual salary—that is, in 2016, a bonus of more than
$763,956 and in 2017, a bonus of more than $800,000. If that
occurred, MGM Growth “paid” Stewart the portion of his bonus
exceeding the amount of his base annual salary using these devices.
Put differently, if Stewart earned a bonus of more than $763,956
for the year 2016, he would receive $763,956 of that bonus in
cash, and the remainder of the bonus in the form of bonus PSUs;
if Stewart earned a bonus of more than $800,000 for the year 2017,
he would receive $800,000 of the bonus in cash, and the remainder
of the bonus in the form of bonus deferred RSUs.
“Unlike PSUs [or RSUs]”—which vest on a date years after
the company grants them—“[b]onus PSUs are ‘vested’ as of the
grant date” and they “are not subject to forfeiture in the case
of a participant’s termination of employment.” “Once granted,”
“payment of [b]onus PSU is based on the company’s TSR [total
shareholder return] as measured over a three[-]year performance
period,” meaning they become liquid, if at all, three years after
the grant date. (Capitalization omitted.) Similarly, the [b]onus
[d]eferred RSU awards for which Stewart was eligible in 2017 “are
‘vested’ as of the grant date.” “The payment of [b]onus [d]eferred
RSU awards is deferred until the third anniversary of the grant
date.”2 With this understanding of Stewart’s compensation, we
turn to the terms of the 2003 judgment.
2 Although not significant for our purposes on appeal, bonus
deferred RSUs are distinct from bonus PSUs in that, although both
types of stock grants are “vested” as of the grant date in the sense
4
B. Child Support Provisions of the 2003 Stipulated
Judgment
The child support provisions of the 2003 judgment required
Stewart to pay a monthly amount of child support “[b]ased on
his current base salary” as well as certain “add-ons” based on
additional income Stewart was eligible to receive at the end of
a year, if he received it.3 Specifically, the “add-ons” the 2003
judgment required Stewart to pay were (1) “[e]ight percent
(8 [percent]) of [any] gross bonus income” and (2) “[e]ight percent
that they are not forfeited upon termination of employment,
deferred bonus RSUs “are not subject to the achievement of
additional performance criteria.” By contrast, even after bonus
PSUs are “ ‘vested,’ ” they remain “subject to forfeiture in the event
that the threshold level of the company’s TSR measurement over
the performance period is not met.” (Capitalization omitted.) The
replacement of bonus PSUs with deferred bonus RSUs reflected a
change in compensation structure at MGM Growth starting with
compensation for the year 2017 (and thus affecting annual bonuses
received at the end of the year, and/or at the beginning of 2018).
“The board determined that this design change was appropriate
given that the executive had already achieved the level of
performance necessary in order to earn an annual bonus payout
in an amount exceeding his or her base salary.”
3 In family law parlance, an award of child support based
upon a percentage of bonus income is often referred to as a
“Ostler-Smith award” or Ostler-Smith support. (See In re Marriage
of Ostler & Smith (1990) 223 Cal.App.3d 33, 52−54 [permitting
such an award based on child’s right to “share his or her parents’
standard of living” and the code’s express reference to bonuses
as a source of income to consider].) Thus, the parties and
lower court refer to the percentage amounts of income the 2003
judgment obligated Stewart to pay as the Ostler-Smith percentage,
or Ostler-Smith support. We will at times employ this same
terminology.
5
(8 [percent]) of the gross amount of the [EICP] (includes units
and options . . . ) vesting during the term . . . not more than
ten (10) days after receipt of any bonus.” As to the first type
of “add-on,” the judgment defines “[b]onus income” as “all income
from employment in excess of base salary . . . and does not include
other investment income of any description.” As to the second type
of “add-on,” the judgment further provides that “EICP becomes
the property of [Jane] upon vesting and shall be paid to her
by [Stewart] upon EICP becoming saleable.” If and when Jane
receives child support funds based on EICP, she must deposit
those funds “into two equal long term investment accounts, one
for each of the children, to be turned over to the respective child
upon reaching age 25.”
Section 3.2 of the 2003 judgment further provides that the
child support obligations described in the judgment “shall cease
to be due for each child” when “[Jane] dies, the child dies, the child
is emancipated, or the child reaches the age of 18 (except that an
unemancipated 18-year-old unmarried child, who is a full-time
high school student and is not self-supporting, shall be entitled
to continued support until the completion of the 12th grade or
attaining the age of 19),” whichever occurs first. Notably for the
purpose of Jane’s arguments on appeal, section 3.2 also provides
that Stewart’s child support obligations under the stipulation
“include[ ] the pro rata portion of [Stewart’s] add-on income for
that calendar year, which is paid in the following calendar year
(currently January). For example, though child support may end
for one child in June, the pro rata share of add-on income would be
distributed the following January.” (Capitalization omitted.)
The 2003 judgment contemplated that Stewart’s child support
obligations could potentially increase or decrease with changes
in his compensation over time, and obligated Stewart to notify
6
Jane of any such changes. In addition, the judgment required
the parties to “exchange the following information each year when
filed: W-2’s,1099s, [and] federal and state income tax returns.”
(Capitalization omitted.) The judgment does not expressly state
when this obligation ends.
This court interpreted these EICP provisions in an
unpublished April 2010 decision. That decision clarified, inter alia,
that “EOP stock” grants—the vesting stock grants component of
Stewart’s compensation at UBS—were the equivalent of the EICP
stock grants the 2003 stipulated judgment expressly addresses, the
interpretation urged by Stewart on appeal.4 This court explained:
“The shared characteristics of these noncash stock benefits of
requiring vesting and lengthy periods before becoming convertible
into cash [are] unique to this category of compensation. In contrast,
when bonuses are awarded by either Morgan Stanley or UBS, their
value was set on an annual basis, expressed in dollar terms, and
paid in cash on a date certain. [¶] Because both EICP and EOP
share the same characteristics, they are the functional equivalent
of each other, and should have been treated the same under the
stipulated judgment.”
C. 2013 Stipulation Amending the 2003 Stipulated
Judgment
Pursuant to subsequent stipulations, the parties agreed
to increase Stewart’s monthly base child support obligation and
4 Specifically, Stewart argued that the lower court had
erred in failing to treat EOP stock as the equivalent of EICP stock,
and in instead treating EOP stock grants as “ ‘gross bonus income’ ”
for the purposes of calculating Ostler-Smith support under the
agreement. Stewart prevailed on this issue on appeal, but did not
prevail on other issues in the appeal.
7
Ostler-Smith percentage obligation in both 2010 and 2012. These
increases were a function of a raise in Stewart’s base salary and
Jane taking over full-time custody of the children, respectively.5
Sometime thereafter, Jane filed a request for an order to
determine child support arrears under the 2003 judgment and 2010
and 2012 stipulations. The court’s order on this request is not in
the record on appeal, nor are the contents thereof described in the
record. The order resulted in an appeal and cross-appeal, which,
in October 2013, the parties agreed to dismiss pursuant to a
stipulation (the 2013 stipulation) resolving all issues raised in
the appeals and amending the 2003 judgment. These disputes
included, inter alia, different interpretations of how the 2003
judgment’s provisions applied to dividends from RSUs, the form
of vesting stock grants Stewart received from his then-current
employer, Greenhill. The 2013 stipulation provided as follows:
“Commencing January 1, 2013, the [p]arties agree and confirm
that RSU [d]ividends received by [Stewart] from his employer,
Greenhill . . . or any other similar payment received by [Stewart]
from Greenhill or such other employer that [Stewart] may have
in the future, shall not be considered ‘earned income’ for purposes
of bonus child support (Ostler[-]Smith). The distinguishing
characteristic of income that will not be considered ‘earned income,’
even if it appears on [Stewart’s] W-2 as income, is that said income
will be passive in nature, such as dividends, interest or other
investment income, i.e., income derived from assets and/or
5Under the 2003 judgment as amended, the Ostler-Smith
percentage was 10.95 percent for two children. The parties
agree that, because James had aged out by the time of the
support payments at issue on appeal, the applicable Ostler-Smith
percentage for Cecelia alone is 62.5 percent of 10.95 percent, or
6.84 percent.
8
investments owned by [Stewart] as contrasted with income from
[Stewart’s] labor.” The 2013 stipulation went on to provide “[a]s
further clarification . . . annual bonus income is defined as follows:
[¶] . . . annual income . . . [on W-2] less base salary . . . less the
line item RSU dividends [year-to-date] amount from Stewart’s]
year[-]end pay stub.” (Capitalization omitted.)
D. 2014 Stipulation Further Amending 2003
Judgment
In November 2014, through another stipulation (the
2014 stipulation), the parties “modified” the portion of the 2013
stipulation quoted above—and, by extension, the 2003 judgment—
“to state that [Stewart] shall pay Ostler/Smith bonus child support
based on his gross income as reflected on his pay check stub less
base salary, RSU dividends and dental-SEC 125 and medical
SCE-125 under ‘other deductions from pay’ on said pay check
stub.” (Capitalization omitted.) The 2014 stipulation resulted
from a request for order (RFO) Jane had filed seeking child support
arrears. The stipulation also required, as “full settlement of all
monetary claims of [Jane] in her . . . request for order” that Stewart
pay Jane $20,0000. (Capitalization omitted.)
E. Jane’s Efforts To Secure Tax and Other
Documents From Stewart
According to Jane, since 2015, Stewart refused her requests
for the tax documents the parties had agreed to exchange in the
2003 judgment so that she could determine whether the support
payments she had received were complete and accurate. The record
reflects that, with each Ostler-Smith payment, Stewart provided
to Jane an accounting of how he had calculated the amount paid,
but did not provide documentation to support those calculations.
9
In June 2017, Cecelia graduated high school, thereby
terminating Stewart’s monthly child support obligations. The
parties disagreed as to whether Stewart could owe Ostler-Smith
child support based on income he received in 2018 as a bonus for
work performed, at least in part, in the first half of 2017 before
the child support obligation terminated.
Jane took the position that he could, and her counsel
requested from Stewart’s counsel an informal production of
documents regarding Stewart’s income that “would enable [Jane’s
counsel] to determine if there was an arrearage in child support
payments” based on income received after the support period
ended. Specifically, in a February 19, 2019 letter to Stewart’s
counsel (Daniel Paletz), Jane’s counsel (Robert Kent) requested
11 categories of documents and information, including Stewart’s
federal income tax returns for the years 2015, 2016, and 2017,
Stewart’s final pay check stub for 2018, W-2’s, 1099’s and all similar
documents for the years 2015 through 2018, “[c]opies of all written
agreements between . . . Stewart and his present employer,” “[a]
statement as to the date and amount of each payment that . . .
Stewart has received from his present and past employers other
than base salary since November 26, 2014,” and several other
categories of documents and information. Some of these requests
required Stewart to compile and analyze information; for example,
Kent’s request for “[a] detailed statement or explanation from . . .
Stewart concerning whether any payments or benefits he has
received from his present employer subsequent to the termination
of child support in or about June 2017 relates to services rendered
by . . . Stewart in whole or in part prior to the termination of child
support.”
The record on appeal indicates that, in response, Stewart’s
counsel refused to produce any documents or provide any
10
information concerning Stewart’s income and threatened to seek
sanctions if Jane pursued these requests through formal court
channels.
F. Jane’s 2019 RFO to Determine Past Due Child
Support and Compel Production of Related
Documents
In October 2019, Jane filed a request for an order (the child
support RFO) seeking “determination of past due child support
re[garding] Cec[e]lia Stewart” and further seeking to “compel[ ]
[Stewart] to produce documents necessary” to determine any past
due amounts of support. As the basis for her RFO, Jane cited the
2003 judgment’s requirement that the parties exchange various tax
and financial documents, which she claimed Stewart had not done
since 2014, and Stewart’s refusal to provide these documents in
response to the informal requests by her and her counsel. Jane
argued these documents were necessary to determine what portion
of Stewart’s bonus income received between June 2017 and 2018
was attributable to labor performed before June 2017, and thus,
according to Jane, subject to Stewart’s Ostler-Smith support
obligation. She also cited, through her own declaration and that
of her attorney, Stewart’s “incessant efforts . . . to chip away at
the child support he pays” over the years, and that “[i]n the past
it [had] tended to be very difficult to obtain information and
documents.” The child support RFO also cited the “historical
problem” that, based on the information Stewart provided to
substantiate the child support payments he made, and the fact that
he often did not receive bonus income for a given year until the next
calendar year, “it [was] very difficult . . . to reconcile the payments
[Jane] received” with the tax documents Stewart later provided.
11
G. Jane’s Discovery Requests and Related
Correspondence Between Counsel
In December 2019, Jane served Stewart with a set of requests
for production seeking 20 categories of documents similar to those
Jane had informally requested earlier the same year. Stewart
agreed to and did produce some of the requested documents,
including some tax documents for 2015 and 2016, but the record on
appeal does not show that he produced any tax documents or pay
stubs for 2017 or 2018 or any complete tax returns for any years.
The parties conferred further via subsequent correspondence
through the first half of 2020. Jane’s counsel requested more
complete responses, including specifically 2017 and 2018 tax
documents. Stewart’s counsel maintained that Stewart had
provided, contemporaneous with each Ostler-Smith payment,
detailed calculations and pay stubs explaining and supporting
the payment amount, and was not obligated to provide additional
documentation. Specifically, Stewart’s counsel indicated:
“Stewart’s only affirmative obligations are those outlined in the
[j]udgment and subsequent orders. The documents you purport
to need are irrelevant to this proceeding and the pay stubs [are]
all that were needed to run the proper calculations. [¶] . . . [Jane]
would have properly been within her rights to ask annually for
an updated income and expense declaration and tax returns using
a form FL-396. It appears that she failed to do that ever in this
matter.” (Capitalization omitted.)
Stewart’s counsel further indicated that, since approximately
2014, Stewart had actually been paying more Ostler-Smith support
than the 2003 judgment, as amended by subsequent stipulations,
required, in part because he had incorrectly failed to deduct his full
base salary from the amount to which he applied the Ostler-Smith
percentage. Stewart’s counsel provided detailed calculations in his
12
correspondence explaining this position and the amount Stewart
believed Jane owed him as a result of overpayment.
Although Jane’s counsel did not offer specific calculations
as to the amount of child support she believed Stewart owed her,
she identified specific income that she believed Stewart had not
disclosed and on which he had not paid child support. This income
was reflected in certain key documents Jane’s counsel identified
in the parties’ correspondence: (1) a W-2 from MGM Resorts
International (MGM Resorts) that Stewart produced in discovery,
reflecting that MGM Resorts had paid Stewart $89,231 in early
2016; and (2) 2017 and 2018 MGM Growth proxy statements that
Jane had obtained from public records, reflecting approximately
$4 million MGM Growth had paid Stewart between 2016 and 2018
for work he performed in 2016 and 2017, but that Stewart had
not included in the income he had previously reported to Jane and
paid child support on. This income was comprised of cash bonus
payments, vesting stock grants (specifically RSUs and/or PSUs),
bonus PSUs (as part of his 2016 bonus) and deferred bonus RSUs
(as part of his 2017 bonus).6
6 The MGM Growth proxy statements use a dollar amount,
sometimes referred to as a “grant date fair value of award”
to describe the amount of RSUs, PSUs, bonus PSUs, and bonus
deferred PSUs awarded in a given year. The manner in which
the proxy statements calculate this amount is not relevant to
our analysis. It bears mention, however, that this value is not
necessarily the value Stewart will be able to realize, if and when
the stocks underlying the grant vest and/or become saleable years
after the grant date.
13
H. The Parties’ Motions for Sanctions
1. Stewart’s motion for sanctions
On May 5, 2020, Stewart’s counsel informed Jane’s counsel
Stewart would file a motion for sanctions if Jane did not take the
child support RFO off calendar. On May 21, 2020, Stewart served
a sanctions motion on Jane. Jane did not take the child support
RFO off calendar, and Stewart filed his sanctions motion on
June 12, 2020.
The motion argued that the child support RFO was frivolous
and in bad faith. Stewart supported the motion with declarations
indicating he had “consistently sent [Jane] the guideline child
support payments and Smith/Ostler payments, along with
correspondence that explained the breakdown of his Smith/Ostler
calculation as well as copies of his paycheck stubs,” yet Jane had
never challenged the amount of these payments until years after
the child support period ended. As to Jane’s concerns regarding
income reflected in the MGM Growth proxy statements, the
motion argued the plain language of the parties’ stipulations, as
interpreted and applied by the trial court and Court of Appeal,
did not require him to report or pay child support on the unreported
income Jane identified. In so arguing, Stewart’s sanctions motion
raised two related issues that would become the cornerstone of
virtually every filing made by either party thereafter: (1) whether
and to what extent the 2003 stipulation, as amended, required
Stewart to pay Ostler-Smith support based on stock grants he
received for work performed during the support period, but that
did not become liquid/saleable until after the support period
(the stock grant issue), and (2) whether the 2003 stipulation, as
amended, required Stewart to pay Ostler-Smith support based on
bonus income received after the conclusion of the support period,
but based on work performed during the support period (the
14
deferred compensation issue). Stewart argued that Jane’s
interpretation of the applicable stipulations on these points was
frivolous, and that Jane’s RFO therefore “lack[ed] any evidentiary
support” and was being brought solely to harass Stewart.
Appellant filed two ex parte motions to strike Stewart’s
sanctions motion, which the court denied. In her opposition to the
sanctions motion, Jane argued it would be illogical for her to take
the child support RFO off calendar—the only alternative to the
sanctions motion that Stewart had indicated he would consider—
given the MGM Growth and MGM Resorts documents suggesting
Stewart had not fully reported his 2016 and 2017 income from
MGM Growth and MGM Resorts. Jane argued that Stewart’s claim
that the child support RFO was frivolous was based on his clearly
erroneous interpretation of the 2003 judgment. Finally, Jane also
argued that the requested sanctions would cause her unreasonable
financial hardship.
2. Jane’s motion for sanctions
In addition to opposing Stewart’s motion for sanctions, Jane
filed her own motion for sanctions against Stewart pursuant to
section 271, based on largely the same arguments she had raised
in opposing Stewart’s motion. Jane took the position that her child
support RFO was plainly meritorious, rendering Stewart’s refusal
to provide related documents and refusal to negotiate a settlement
involving less than a full withdrawal of the child support RFO
obstructionist and worthy of sanctions.
3. Jane’s motion for section 2030 attorney
fees
Jane’s sanctions motion also included a request for
section 2030 attorney fees “predicated on [Jane’s] need and
[Stewart’s] ability to pay.” The supporting documentation for
15
this request did not include any invoices from Jane’s counsel.
Rather, as support for the amount of fees reasonably incurred,
Jane offered the declaration of her attorney, describing much of the
correspondence between himself and Stewart’s counsel, indicating
that he “ha[d] spent more than 350 hours on this matter,” that
“[m]ore than eighty percent (80 [percent]) of [his] time ha[d] been
spent on matters that should not have been necessary, such as
[Stewart’s] discovery obstruction,” and that his “customary hourly
billing rate and my agreement with [Jane] is $500.00.” Jane also
submitted an income and expense declaration.
4. Jane’s additional filings regarding
Stewart’s sanctions motion
Both contemporaneous with her opposition to Stewart’s
motion for sanctions, and in the months that followed, Jane filed
numerous additional documents related to Stewart’s sanctions
motion. These included evidentiary objections to and a motion to
strike various declarations of Stewart’s counsel, multiple requests
for judicial notice, multiple responsive declarations, and multiple
“sur declaration[s] . . . in support of opposition to [Stewart’s]
sanction motions.” (Boldface & capitalization omitted.)
I. Jane’s Motion to Compel Discovery Responses
and Stewart’s Protective Order Request
Correspondence between the parties reflects that, throughout
2020, Jane continued to view Stewart’s discovery responses to
her first set of interrogatories and requests for production as
insufficient. Stewart’s counsel continued to maintain that Jane
had been provided all documents in his possession that, based on
his interpretation of the stock grant and deferred compensation
issues, were relevant to his child support obligations.
16
Jane moved to compel Stewart to provide further responses
and documents. On June 17, 2020, Stewart filed a request for a
protective order and a request for sanctions under Code of Civil
Procedure sections 2030.090, 2031.060, and 2033.080. Following
a hearing, the court granted the protective order. Specifically,
the court found Jane’s interrogatories and requests for production
were “unduly burdensome” and ordered that Stewart “need not
produce further responses.” The court deferred Stewart’s request
for sanctions for consideration at the hearing on the child support
RFO and the other sanctions requests.
J. Jane’s Amended Request for Order Focusing
on Income Reflected in MGM Resorts and MGM
Growth Documents
On December 15, 2020, Jane filed an “amended RFO
to determine child support arrearage, to order [Stewart] to pay
arrearage, and for punitive damages” (the amended child support
RFO). (Capitalization omitted.) It argued Stewart owed child
support based on income he had not reported, but that was reflected
in the MGM documents Jane had obtained since filing the original
child support RFO (the 2016 MGM Resorts W-2 and 2017 and
2018 MGM Growth proxy statements discussed in the parties’
correspondence and sanctions motion briefing). Specifically, she
sought child support based on approximately $1 million in RSU
and PSU grants Stewart received in April 2016, approximately
$1.5 million in RSU and PSU grants Stewart received in April 2017,
$400,000 in bonus PSUs granted to Stewart around December 2016,
and an $800,000 cash bonus Stewart received around December
2017.
As with the briefing regarding the motions for sanctions, the
amended child support RFO primarily focused on the stock grant
issue and the deferred compensation issue as determining whether
17
these MGM documents reflected additional income on which
Stewart should have to pay child support. Specifically, Jane argued
that Stewart had “intentionally misread” the applicable stipulations
as excluding from the income on which he was to pay Ostler-Smith
child support: (1) stock grants MGM Growth paid Stewart for
services Stewart rendered during the support period (regardless
of when they vested or became liquid/saleable), and (2) bonuses in
the form of both cash and stock grants (specifically, bonus PSUs
and bonus deferred RSUs) that MGM Growth paid Stewart after
the support period for services Stewart rendered during the support
period. As proof that the MGM Growth bonuses at issue were
compensation for work that was, at least in part, performed during
the support period, Jane pointed to the description in the MGM
Growth proxy statements of Stewart’s bonus income. For example,
the 2018 proxy statement reflects that, in calculating Stewart’s
bonus amount for 2017, the board considered his “business
contributions . . . in connection with the issuance of equity at a
public offering” that occurred in 2017 as well as his “assistance in
the re-pricing of the Operating Partnership’s Term Loan B facility
in May 2017” and “[t]he successful execution of the MGM National
Harbor Transaction.”
In addition to child support that Jane argued Stewart owed
based on his unreported MGM Growth bonus and stock grant
income, the amended child support RFO claimed Stewart had not
paid support based on $89,230.79 worth of non-bonus cash income
reflected in the 2016 MGM Resorts International W-2.
The amended child support RFO also sought “punitive
damages” “based on [Stewart’s] fraud including concealing from
[Jane] compensation and bonus compensation paid to [Stewart]
that was subject to child support obligations.”
18
The amended request contained nearly 600 pages of
supporting documents, including a declaration of Fred Quiel,
an attorney “specializ[ing] in labor matters,” who opined, based
on an analysis of Stewart’s employment agreement with MGM
Growth, that “bonus compensation was guaranteed by the terms of
the contract.” Specifically, he opined: “[T]he contract signed by . . .
Stewart [in 2016] guaranteed that all components of compensation
awarded for the next three years (the term of the contract),
including stock grants were payable as of the date the contract
was signed and executed. The three-year-contract states that all
compensation awarded during the term is earned as awarded and
not subject to forfeiture. Specifically, any compensation awarded
in 2016 and 2017 is earned and payable even if it vests/pays in
subsequent years. The contract supersedes the ability to lose
portions of compensation awards.” (Italics omitted.) Jane offered
this declaration in response to an argument she anticipated Stewart
would make, that stock grants could not constitute earned income
because they “had a contingency component” and thus were to
be treated like the EICP grants referred to in the 2003 judgment
and discussed in the Court of Appeal decision summarized above.
Jane’s supporting documentation also included a declaration
of forensic accountant expert Renee Howdeshell. Howdeshell
calculated the amount of unpaid child support Stewart owed, based
on her review of various income and tax documents from Stewart,
as well as an assumption that “all bonuses initially awarded in 2017
should be included [as a basis for Ostler-Smith support] until such
time as it is demonstrated that they do not relate to activity in the
covered period.”
In response to Jane’s amended child support RFO, Stewart
took the position, via responsive declarations of himself and
his counsel, that (1) he had fully complied with the relevant
19
stipulations and was not in arrears, (2) he had in fact overpaid
Ostler-Smith support based on a calculation error, and (3) Jane’s
arguments to the contrary were attempting to relitigate an issue
that had been repeatedly settled by the parties and the court via
the 2003 judgment and multiple stipulations. Stewart sought
reimbursement of $54,354.48 in claimed overpayment. Stewart’s
responsive papers did not address the income from MGM Resorts
Jane claimed he had failed to report.
K. The January 20, 2021 Hearing
On January 20, 2021, the court partially heard the amended
child support RFO, sanctions motions, request for section 2030
attorney fees, and request for attorney fees in connection with the
previously granted protective order. At the hearing, the court heard
argument regarding the parties’ differing views on the stock grant
and deferred compensation issues, as well as their differing views
on the provisions of the parties’ stipulations and law that should
determine those issues.
The court expressed skepticism that Jane had provided any
basis in fact or law for her argument that Stewart could owe child
support on bonuses received after the child support period ended,
and/or that Stewart could owe child support on stock grants that
became saleable after the child support period ended. The court
continued the hearing “so that [the court] [could] digest the
law and the relevant agreements a bit more.” Further to this
end, the court instructed the parties to prepare a “side-by-side
[comparison] showing [Jane’s] analysis versus [Stewart’s] analysis”
of the amounts of child support owed and paid that reflects an
“assumption . . . that any compensation that didn’t vest until after
Cecelia graduated from high school . . . should not be included.”
20
L. February 18, 2021 Hearing and Decision
The parties did not jointly prepare the comparison requested
by the court.
Instead, Jane filed a document styled a “joint supplemental
brief ” containing a table with narrative descriptions of Jane’s
positions on various issues under the heading “[Jane’s] brief.”
(Capitalization omitted.) Under the heading “[Stewart’s] brief,”
the table contained the notation “[n]o submission received from
[c]ounsel for [Stewart].” (Capitalization omitted.) Jane also
submitted two declarations “re[garding] [Jane’s] joint supplemental
brief.” (Boldface & capitalization omitted.) As the court had
requested, Jane’s submissions did not identify any amounts she
was seeking based on stock grants that did not vest until after
the support period. Rather, Jane identified the following amounts
sought: $7,597.11 (plus interest) in unpaid child support based
on the undisclosed income from MGM Resorts in January and
February of 2016 and $8,220.00 (plus interest) in support based
on the applicable Ostler-Smith percentage of a pro rata share of
the $800,000 cash bonus Stewart received in December 2017 from
MGM Growth (half of the bonus, given that the support period
ended in June 2017). Jane also argued that no support was owed
to Stewart based on his claimed overpayment during the support
period, arguing that his calculations leading to this conclusion
misread the stipulations and were flawed.
Stewart submitted a declaration regarding “side-by-side
[of] base child support and Smith-Ostler payments” that, like
Jane’s “joint submission” included a blank column for Jane’s
competing claims. (Boldface & capitalization omitted.) Stewart’s
table identified: (1) the specific amounts of base child support
and Ostler-Smith support Stewart believed he owed for the period
between December 1, 2014 and June 9, 2017, (2) the specific
21
amounts he paid Jane for each type of child support during this
period, and (3) the specific amount that he believed Jane owed
him as a result of his overpaying Ostler-Smith support during this
period (essentially the difference between categories (1) and (2)).
Attached to the declaration were Stewart’s pay stubs for the period
of December 1, 2014 through June 2017, as well as cancelled checks
reflecting the payments listed in the chart. Among the pay stubs
were several from MGM Resorts covering the January through
February 2016 time period. The amount of income reflected
in these corresponds with the $89,230.79 in income reflected
in the MGM Resorts W-2 Jane had obtained in discovery. The
total base salary amount indicated for 2016 in these tables also
takes into account this $89,230.79 in income from MGM Resorts,
as indicated in a footnote to the table and consistent with the
supporting documentation. In her briefing, Jane took issue with
various aspects of the calculations reflected in the tables Stewart
offered, but she did not claim that the amounts he calculated were
unsupported by or inconsistent with the pay stubs attached thereto.
Stewart’s tables reflect that the Ostler-Smith support
he claimed he owed was calculated using only cash bonuses he
received, or stock grants that became saleable, prior to June 2017.
Thus, Stewart’s table does not indicate that Stewart paid child
support based on any portion of his 2017 annual bonus, nor does
it attach any pay stubs or other income documentation dated after
June 2017.
At the hearing on February 18, 2021, the court described
the amended child support RFO as “entirely driven by what I
would describe kindly as wishful thinking” and as reflecting a
“fundamental misunderstanding” that child support can be owed
on income that vests or is received after the support period ends.
The court rejected “the idea that [Stewart] would owe support in
22
the sort of community property way based on . . . any potential for
a bonus” because he “received that potential . . . before [the child]
aged out.” The court concluded this concept was inconsistent with
the parties’ 2003 judgment (both its original form and as amended
by subsequent stipulations), and that it “just doesn’t fit with the
law,” “common sense” or “the definition of income under I.R.S.
regulations, under the Family Code.”
The court questioned the reliability of the Quiel and
Howdeshell declarations. Specifically, it noted a “huge disconnect”
in Howdeshell’s opinion “projecting that [a] father will owe child
support for a child who ages out in 2017 for years after that.” And
the court concluded Quiel’s opinions that “any compensation under
[Stewart’s employment agreement] . . . awarded in 2016 and 2017
was earned and payable even if it vests/pays in subsequent years,”
“doesn’t fit with the face of the agreement,” and “doesn’t fit with
common sense.”
The court’s resolution of the stock grant and deferred
compensation issues in this manner—namely, its conclusion that
Stewart was not obligated to report or pay child support based on
income he received or that vested after the conclusion of the support
period—disposed of most of Jane’s claims for arrearages. As to
Jane’s claim that Stewart had failed to pay child support based
on the income he earned from MGM Resorts in January and
February 2016—the only claim not affected by the deferred
compensation or stock grant issues the court decided in Stewart’s
favor—the court found that this income already “was included in
the computation of support for 2016.” Accordingly, the trial court
found that Jane had not shown Stewart had received income on
which he was obligated, but failed, to pay child support, or that he
had hidden any such income from Jane. The court further found
23
Stewart had “compl[ied] in good faith with the obligations that
he understood.”
The court found that “no child support arrears owed by
[Stewart] as [Jane] had alleged in [the amended child support
RFO]. The court also concluded that, even if [Stewart] had
overpaid child support as he contended, the court would not order
[Jane] to pay any such amounts back and instead would view
any such overpayments as a gift to the parties’ daughter, who is
now 22.”
The court denied Jane’s request that it impose sanctions on
Stewart, relying on the court’s earlier findings that Stewart had
been acting in good faith and had been “quite transparent in his
efforts to comply with the support obligations as he reasonably
understood them.”
The court granted Stewart’s request for sanctions against
Jane “in the amount of $48,000 . . . under . . . section 271,” $4,100
of which the court noted were “also warranted and authorized
under the provisions of the [Code of Civil Procedure] cited in
[Stewart’s]” motion for protective order, based on Jane “imposing
disproportionate discovery and other litigation burdens without
sufficient justification or reflection and demonstrating an inability
to cooperate or compromise with opposing counsel.” The court
expressly declined to reach the issue of whether Jane’s requests for
order had been frivolous, and instead based its sanctions order on
its finding that Jane “behaved unreasonably in these proceedings”
and engaged in “over-litigation” that had “consumed tremendous
resources on the side of the parties and a lot of court resources, as
well,” such that section 271 sanctions were “warranted.”7 The court
7“As just one example,” the court noted that instead of
providing the side-by-side comparison the court had requested for
24
afforded both parties’ counsel the opportunity to address “whether
or what amount” of sanctions would impose an unreasonable
burden on Jane.
The court denied “[a]ll other relief ” “including [Jane’s] . . .
request for need-based attorney’s fees.” In so doing, the court
acknowledged Jane’s financial ability was significantly less than
Stewart’s, but noted that “one of the questions the court has to
answer [in deciding a request for such fees] is whether the fees
were reasonably incurred.” The court found this factor dispositive.
It characterized the fees sought as “fees for what seems to have
been sort of a costly kind of fishing expedition that really was based
on . . . wishful thinking and a real misunderstanding.” The court
further noted that “everything here got so complicated and so
drawn out, there was just a lot of sort of misunderstanding and
bluster.”
Jane timely appealed.
DISCUSSION
On appeal, Jane challenges: (1) the denial of the amended
child support RFO, (2) the sanctions award against her, (3) the
denial of her request for section 271 sanctions against Stewart,
(4) the denial of her request for attorney fees, (5) the protective
order, and (6) the court’s failure to rule on, and thus implicit
overruling of, certain evidentiary objections.
the hearing, Jane had made “at least six other filings . . . none
of them being [what] the [court] needed.”
25
A. Interpretation of the 2003 Judgment Provisions
Governing the Deferred Compensation and Stock
Grant Issues
How to properly interpret the 2003 judgment regarding the
stock grant issue and deferred compensation issue are threshold
questions for analyzing all of Jane’s appellate challenges. We
therefore answer these questions at the outset of our analysis.
We then consider each of the rulings Jane challenges with these
answers in mind.
A trial court’s interpretation of a stipulated judgment is
a question of law that we review de novo. (DVD Copy Control
Assn., Inc. v. Kaleidescape, Inc. (2009) 176 Cal.App.4th 697, 713.)
A stipulated judgment is a contract to which we apply the same
legal principles we apply to contracts generally. (Stewart v. Preston
Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1585.)
Jane’s positions as to both of these key issues is driven by her
view that, under the 2003 judgment, which bonus income Stewart
must pay child support on depends on when that income is earned—
not when it is actually received, vests, or becomes liquid. Jane
argues that as long as the income compensates Stewart for work he
did during the support period, it is income on which Stewart must
pay child support. Stewart counters that the 2003 judgment only
requires him to pay support on income that is either (1) received
in liquid form during the support period, or (2) EICP or equivalent
stock grant compensation that vests during the support period.
Neither party is entirely correct.
We disagree with Jane that the 2003 judgment requires
Stewart to pay child support on any income beyond his base salary
that he receives in any form, as long as it was earned during the
support period. This is not what the 2003 judgment (or any
subsequent stipulation amending it) states. Other portions of the
26
2003 judgment—those involving spousal support—do speak
in terms of when income is “earn[ed]” as the dividing line. This
makes the lack of such language in the child support provisions
or any of the subsequent stipulations all the more telling. Even if
we were to accept Quiel’s “expert” conclusion that all compensation
contemplated by Stewart’s MGM Growth employment agreement
is guaranteed at the time of signing—and we are skeptical that
such legal interpretation can ever be the proper subject of expert
opinion—neither the 2003 judgment, nor any subsequent
stipulation, assigns child support obligations based on whether
or not income is “guaranteed” or when it is guaranteed.8
The judgment explicitly addresses which bonus income is
to be considered a basis for Stewart’s Ostler-Smith child support
obligations in two sections. First, section 3.1 requires Stewart to
pay as “additional child support” beyond the monthly amount based
on his regular salary, certain “add-ons,” defined as including only
two things: “Eight percent (8 [percent]) of [Stewart’s] gross bonus
8 The cases Jane cites in arguing to the contrary are of no
assistance to her in that they do not address the interpretation of
a stipulated judgment even similar to the one at issue here. These
cases are also inapposite in that they address community property
concepts or factual scenarios entirely distinguishable from that
presented by this appeal. (See In re Marriage of Nelson (1986)
177 Cal.App.3d 150 [a stock option that cannot be exercised until
after the date of separation is recognized as community property if
the stock options were awarded prior to separation]; In re Marriage
of Hug (1984) 154 Cal.App.3d 780 [stock options granted during
the marriage deemed a community asset although they were not
exercisable until after the date of separation]; In re Marriage of
Berger (2009) 170 Cal.App.4th 1070 [father could not avoid his child
support obligations by voluntarily deferring receipt of his salary
until after the obligation was due].)
27
income”—defined as “all income from employment in excess of
base salary . . . not includ[ing] other investment income of any
description”—and “[e]ight percent (8 [percent]) of the gross amount
of the Equity Incentive Compensation Plan (includes units and
options and is hereinafter referred to as ‘EICP’) vesting during the
term.” In the unpublished opinion summarized above, this court
deemed another form of vesting stock grant compensation offered
by UBS (EOP stock grants) to be the “functional equivalent” of
EICP and thus subject to the provisions governing EICP stock
grants in the 2003 judgment. By the logic of that opinion, other
vesting stock grant compensation that is the “functional equivalent”
of EICP in the manner the opinion described would likewise be
included in this obligation, to the extent it “vest[s] during the term”
of Stewart’s support obligations. Section 3.1 further clarifies that
such child support based on EICP (or similar) stock grants becomes
the property of Jane as of the date of vesting, but need not be paid
to Jane until the subject “EICP becom[e] saleable.”9
Second, section 3.2—on which Jane primarily relies—
addresses termination of child support obligations and, more
importantly for our purposes, how to handle certain bonus income
Stewart receives after the termination of the support period.
Namely, section 3.2 provides that the income on which Stewart
must pay child support “includes the pro rata portion of [Stewart’s]
add-on income for that calendar year [that the support obligation
ends], which is paid in the following calendar year (currently in
January).” (Capitalization omitted.) Via the definition of “add-on”
9 As noted above, although the stock grants become Jane’s
property upon vesting, if and when Jane receives child support
funds based thereon, she must deposit those funds “into two equal
long term investment accounts, one for each of the children, to be
turned over to the respective child upon reaching age 25.”
28
discussed above, section 3.2 requires that Stewart pay child
support based on (1) “gross bonus income” he receives after the
termination of the support period, but that is in recognition of
work performed during the covered portion of the year his support
obligations ended; and (2) EICP grants (or similar stock grants)
that “vest[ ] during the [support period],” but that do not actually
pay out/become saleable until the following calendar year.
We turn now to the effect of subsequent stipulations
amending the 2003 judgment on our analysis of sections 3.1
and 3.2. Stewart points in particular to the requirement in the
2014 stipulation that “[Stewart] shall pay Ostler/Smith bonus
child support based on his gross income as reflected on his pay
check stub less base salary, RSU dividends and dental-SEC 125
and medical-SCE 125 under ‘other deductions from pay’ on said
pay check stub.” (Capitalization omitted.) Stewart treats this
language of the 2014 stipulation as trumping section 3.2, such
that the judgment now requires him to pay child support based
solely on cash bonuses reflected in pay stubs for the support period.
But the 2014 stipulation does not require that the “gross [bonus]
income” to which Ostler-Smith obligations attach be reflected
on a pay stub issued during the support period; it only requires
such bonus income be reflected on a pay stub. Nor does the 2014
stipulation purport to amend section 3.2 to the extent it applies to
“add-on” income in the form of EICP (or equivalent) stock grants
that vest during the support period, but may not become liquid
until the following year.
We therefore conclude that the 2003 judgment, as amended
via the parties’ stipulations, requires Stewart to pay Ostler-Smith
support on (1) bonus income, to the extent it is reflected in a
pay stub, including bonus income attributable to work performed
during some portion of the year the support period ended, even if
29
Stewart does not receive the bonus until after the support period is
over, and (2) bonus income in the form of EICP (or their functional
equivalent stock grant compensation) that vests during the
support period, regardless of when the underlying stock becomes
saleable/liquid.
We note that the resolution of the deferred compensation and
stock grant issues is not simple or obvious. Nevertheless, each of
the parties has argued, both on appeal and below, that the other
party’s interpretation of the 2003 judgment as to these issues is
plainly erroneous and without merit. In this respect, both parties
are wrong. Given the complicated child support provisions in the
2003 judgment and multiple potentially relevant stipulations
amending it, neither party’s position appears to have been in bad
faith.
B. The Court’s Ruling on the Amended Child
Support RFO
We now apply our resolution of the deferred compensation
and stock grant issues to the specific income on which Jane
claimed, via the amended RFO, that Stewart owed her child
support. Specifically, we consider whether substantial evidence
supports the court’s findings that, under the 2003 judgment as
we interpret it above, Stewart does not owe Jane child support
based on the following income she claims he failed to report:
(1) stock grants from MGM Growth that did not vest during the
child support period, (specifically, the April 2016 PSU award, April
2017 RSU award, April 2017 PSU award, and 2017 deferred bonus
RSU award), (2) the $400,000 bonus PSU stock grant that vested
upon its grant date around December 2016, and thus did vest
during the child support period, (3) a cash bonus from MGM
Growth of $800,000 that Stewart received around December 2017,
and (4) approximately $89,000 in non-bonus income from MGM
30
Resorts between January and February 2016. As discussed further
below, we agree with Jane that Stewart owes her child support on
some, but not all, of this income.
1. Stock grant income not vesting during
the support period
Under our interpretation of the 2003 judgment above,
Stewart is not obligated to pay child support on stock grants vesting
after termination of the support period. Jane did not present any
evidence suggesting that the April 2016 PSU award, April 2016
RSU award, April 2017 RSU award, April 2017 PSU award, and
2017 deferred bonus RSU award identified in the MGM Growth
proxy statements vested during the support period. To the
contrary, the description of RSU and PSU stock grants suggests
they vest, if at all, several years after their grant dates. And
according to the MGM Growth proxy statements Jane offered at
the hearing, deferred bonus RSU awards vest on the date granted
(here, around December 2017, several months after the conclusion
of the support period).
Section 3.2’s pro rata allocation language does not render
the December 2017 deferred bonus RSU award a proper basis for
support, because section 3.2 applies to only two types of “add-on”
compensation (gross bonus income reflected in a pay stub and EICP
or functional equivalent stock grant income that vests during the
support period), neither of which encompasses the 2017 deferred
bonus RSU award.
Therefore, substantial evidence supports the court’s
conclusion that Stewart was not obligated to pay child support
based on the April 2016 PSU award, April 2016 RSU award, April
2017 RSU award, April 2017 PSU award, and 2017 deferred bonus
RSU award identified in the MGM Growth proxy statements.
31
2. December 2016 bonus PSU award
We turn next to the bonus PSUs MGM Growth granted
Stewart around December 2016. As outlined above, stock grants
that are the “functional equivalent” of EICP in that they are
“noncash stock benefits requiring vesting and lengthy periods
before becoming convertible into cash” “should . . . be[ ] treated
the same [as EICP] under the stipulated judgment.” Bonus PSUs
meet this criteria and are thus subject to the terms of the judgment
governing EICP, which require Stewart to pay Ostler-Smith support
on EICP grants that vest during the support period. Unlike the
other stock-based compensation discussed above, nothing in the
record supports a conclusion that the December 2016 bonus PSU
award did not vest during the support period. To the contrary,
the 2017 MGM Growth proxy statement describes bonus PSUs
as vesting on the date granted—here, around December 2016, six
months before the support period ended. Therefore, the additional
child support Stewart owes based on these stock grants “bec[ame]
the property of [Jane]” as of December 2016, and Stewart must
pay that support once the underlying stock become saleable.
3. December 2017 cash bonus
Under our interpretation of the 2003 judgment, Stewart
was obligated to pay child support based on “gross bonus income”
reflected in pay stubs and received after the termination of the
support period if they were compensation for work performed, in
whole or in part, during the last year of the support period. Stewart
does not dispute that he received an $800,000 cash bonus around
December 2017 for work he performed throughout 2017, including
during the first half of that year, and thus in part during the
support period. He does not dispute that such income would have
appeared on his pay stubs. Nothing in the record suggests
32
otherwise.10 Nor does the record contain evidence that Stewart
made any child support payments based on this bonus income.
Thus, substantial evidence does not support that Stewart paid
the Ostler-Smith support the 2003 stipulation requires him to pay
on the December 2017 cash bonus he received from MGM Growth.
4. 2016 MGM Resort income
Jane’s claim for child support based on Stewart’s 2016 MGM
Resorts income is the only issue in her RFO that does not depend
on resolution of the deferred compensation and stock grant issues.
Stewart provided pay stubs from MGM Resorts covering the entire
January through February 2016 period that correspond with the
approximately $89,000 in income reflected in the MGM Resorts
W-2 Jane identifies. He also provided paycheck stubs reflecting
his payment of child support on those amounts. This constitutes
substantial evidence to support the court’s conclusion that the
MGM Resorts W-2 does not reflect income on which Stewart owes
additional child support. This would be the case even if Jane had
identified any evidence contradicting the pay stubs and checks
Stewart offered into evidence, which she has not.
In sum, substantial evidence supports the court’s order on the
amended child support RFO, except to the extent that it concluded
Stewart had paid child support he owed based on the $800,000 cash
portion of his 2017 bonus from MGM Growth and the $400,000 of
bonus PSUs MGM Growth granted him around December 2016.
Stewart has owed Jane child support based on the 2017 cash bonus
10 The evidence and tables Stewart presented at the February
2017 hearing detailed how he had paid child support on all income
reflected in pay stubs through June 2017. These thus do not speak
to whether Stewart paid support on a bonus received after June
2017.
33
since he received it. The applicable percentage of the bonus
PSU grant became Jane’s property as of the date it vested
(approximately December 2016), but Stewart only owes her
payment based on this property right beginning when the
stocks underlying the grant become/became saleable. The record
does not definitely indicate whether or when that has occurred.
C. Court’s Ruling on Stewart’s Motion for Sanctions
We review sanctions awards for abuse of discretion. (In re
Marriage of Tharp (2010) 188 Cal.App.4th 1295, 1316; In re
Marriage of Corona (2009) 172 Cal.App.4th 1205, 1225 (Corona).)
“Accordingly, we will overturn such an order only if, considering all
of the evidence viewed most favorably in its support and indulging
all reasonable inferences in its favor, no judge could reasonably
make the order. [Citations.] ‘We review any findings of fact that
formed the basis for the award of sanctions under a substantial
evidence standard of review.’ [Citation.]” (Corona, supra, at
pp. 1225−1226.) Here, the court ordered sanctions against Jane
under both section 271 and various sections of the Code of Civil
Procedure cited in Stewart’s motion for protective order. We
address each basis in turn below.
1. Section 271 sanctions
Section 271 authorizes the imposition of attorney fees and
costs as a sanction against litigants whose conduct undermines the
policy of promoting settlement of litigation and cooperation between
litigants. (See § 271, subd. (a).) Although the party asking the
court to impose such sanctions is not required to show financial
need, “the court shall not impose a sanction pursuant to this section
that imposes an unreasonable financial burden on the party against
whom the sanction is imposed,” and in making an award pursuant
to this section, the court “shall take into consideration all evidence
34
concerning the parties’ incomes, assets, and liabilities.” (§ 271,
subd. (a).) We review the trial court’s decision on whether to
impose sanctions for abuse of discretion.
Jane argues the court abused its discretion in imposing
section 271 sanctions against her because, contrary to the
contentions in Stewart’s motion for sanctions, her child support
RFO and amended child support RFO were meritorious, and her
efforts to doggedly pursue them therefore justified. She further
argues the court erred because it did not sufficiently take into
account the unreasonable financial burden the sanctions would
impose on her.
Stewart’s motion for section 271 sanctions was premised
in large part on the argument that Jane’s child support RFO
and amended child support RFO were frivolous in that Jane was
interpreting the 2003 judgment in a manner inconsistent with clear
guidance from the Court of Appeal and the unambiguous language
of the parties’ stipulations. We disagree that the Court of Appeal
decision clarified the stock grant issue, because that decision dealt
with a separate and much narrower question. And although the
parties may have intended to clarify the treatment of stock grant
compensation with their stipulations, they did not do so to such
an extent that Jane’s proposed interpretation could be deemed
frivolous. Further, we have concluded that the court erred and
Jane was correct that Stewart did, in fact, owe her child support.
Moreover, Jane’s initial child support RFO sought tax and
other financial documents from Stewart that the parties had
unambiguously agreed to provide each other, and that Stewart
had refused to provide to Jane or her counsel through informal
channels. Jane was not required to take Stewart at his word that
the calculations he presented alongside his child support payments
accurately reflected his income. Nor was she required to accept as
35
sufficient the tax documents Stewart later provided that did not
include information about bonus income received in late 2017
or early 2018, given our interpretation of the 2003 judgment.
Nevertheless, the court did not base its sanctions award on
Stewart’s argument about the merits of Jane’s request. Instead,
the court focused on findings that Jane had failed to cooperate
with opposing counsel and had “over-litigat[ed]” the dispute and
rendered it unnecessarily complicated, wasting the court’s and the
parties’ time, and unnecessarily causing Stewart to incur attorney
fees and costs. The record does not support these findings.
First, substantial evidence does not support that Jane refused
to cooperate with opposing counsel. Jane did not refuse to engage
in efforts to resolve the parties’ dispute informally, nor did she
refuse to meet and confer with opposing counsel. The parties
corresponded—albeit at times using the extreme language of
impassioned advocates—extensively regarding Jane’s requests for
documents and her view that Stewart was withholding information,
based on which he owed child support. Jane refused to back down
from these requests as Stewart demanded. But Stewart was in fact
withholding documents—specifically, full 2017 and 2018 tax and
financial documents—to which Jane was entitled under the 2003
judgment and that reflected Stewart did, in fact, owe additional
child support. As noted above, it was not immediately apparent
how to interpret the 2003 judgment as to the vested stock grant
issue, so the fact that Jane—like Stewart—did not back down from
her stated view of the appropriate interpretation is not a lack of
cooperation. The record does not support that Jane acted in bad
faith in insisting her interpretation of the issue was correct, nor
does it suggest that any lack of cooperation, rather than the parties’
contrary interpretations of the judgment, prevented meaningful
cooperation or settlement.
36
Second, as to Jane’s “over-litigat[ion]” of the issues, the
court correctly noted that Jane made numerous and voluminous
filings. But the record does not support that such filings are to
blame for the proceedings becoming complicated and drawn out.
The stock grant issue was never simple, and the parties’ opposite
interpretations of the 2003 judgment also belies the idea that the
dispute could have been resolved informally, quickly, or simply.
Moreover, in assessing whether to impose section 271
sanctions, the court should consider the extent to which “the
conduct of each party or attorney furthers or frustrates the policy
of the law to promote settlement of litigation and, where possible,
to reduce the cost of litigation by encouraging cooperation between
the parties and attorneys.” (§ 271, subd. (a), italics added.) Here,
the record as a whole reflects that both parties took an approach
that, overall, expanded the length and scope of the proceedings
below. For example, Jane chose to request from Stewart numerous
detailed categories of documents, as opposed to simply asking for
the tax documents to which she was clearly entitled. But Stewart
also initially refused to provide even those tax documents, and to
instead seek a protective order. Similarly, although there does not
appear to have been any meaningful movement towards settlement
regarding the child support RFO or the amended child support
RFO, this was at least in part attributable to Stewart’s position
that the only way Jane could avoid his filing a sanctions motion
was to withdraw her child support RFO which, as noted above,
was not without merit. Another example expressly noted by the
trial court in its decision is that Jane failed to provide the requested
side-by-side comparison, and that she instead made numerous
other filings. But both parties failed to provide such a side-by-side
comparison, and the record does not support that this is solely
attributable to Jane’s refusal to cooperate. And the court did not
37
find—nor does the record support—that Jane’s supplemental brief
or the related documents Jane submitted instead were frivolous or
that they attempted to avoid addressing the court’s question. It is
true that Jane’s submissions include a fair amount of repetition, as
the cross-motions for sanctions, motion for protective order, child
support RFO, and motion for attorney fees all turned, to some
extent, on the stock grant and deferred compensation issues. But
neither this overlap, nor the fact that the court found many of the
filings unhelpful, supports that Jane over-litigated the matter
to such an extent that it would be within the court’s discretion to
impose sanctions.
We acknowledge that trial courts have broad discretion
in assessing section 271 sanctions. (See, e.g., Corona supra, 172
Cal.App.4th at pp. 1225−1226.) But given that the record does not
support that Jane refused to cooperate with opposing counsel,
and that both sides refused to budge from positions that were not
frivolous, and that nothing suggests Jane acted in bad faith in what
the court deemed to be over-litigation of the case, even “considering
all of the evidence viewed most favorably in . . . support [of the
court’s award] and indulging all reasonable inferences in its favor,
no judge could reasonably make the [sanctions] order” against Jane.
(Ibid.) We therefore need not consider Jane’s arguments that the
court failed to sufficiently consider whether the sanctions imposed
an undue financial burden on her.
2. Sanctions under the Code of Civil
Procedure
The court noted that $4,100 of the sanctions it ordered
against Jane were also recoverable under Code of Civil Procedure
sections 2030.090, subdivision (d), 2031.060, subdivision (h), and
2033.080, subdivision (d), because Jane unsuccessfully opposed
38
Stewart’s request for a protective order.11 These sections authorize
sanctions for unsuccessfully opposing a motion for a protective
order “unless [the court] finds that the one subject to the sanction
acted with substantial justification or that other circumstances
make the imposition of the sanction unjust.” (Code Civ. Proc.,
§ 2033.080, subd. (d); id., §§ 2030.090, subd. (d) [same], 2031.060,
subd. (h) [same].) We conclude the court abused its discretion
in awarding sanctions under these sections as well. As discussed
above, Jane was substantially justified in seeking income and tax
documents from Stewart, including from the latter half of 2017 and
from 2018. The court’s award of sanctions against Jane was thus
an abuse of discretion to the extent it was based on the Code of Civil
Procedure sections cited in the protective order motion as well.
D. Sanctions Motion Against Stewart
Jane next argues that the court abused its discretion in
denying her motion for section 271 sanctions against Stewart.
Because Jane bore the burden of proof on her sanctions motion
below, our substantial evidence review of implicit and express
factual findings supporting the court’s denial of the motion—that
11 Jane also appeals the court’s ruling granting the protective
order. Stewart argues that this order is not appealable at this
stage. We need not consider these issues. Even if Jane is correct
that the court erred in imposing the requested protective order,
based on our analysis above, any such error was not prejudicial
to Jane’s child support RFO or amended child support RFO.
(See Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 801 [“ ‘No
form of civil trial error justifies reversal . . . where in light of
the entire record, there was no actual prejudice to the appealing
party.’ [Citation.] Accordingly, errors in civil trials require that
we examine ‘each individual case to determine whether prejudice
actually occurred in light of the entire record.’ ”].)
39
is, the court’s conclusion that Jane had not met her burden of
proof—looks slightly different than usual. Namely, “where the
issue on appeal turns on a failure of proof at trial, the question for
a reviewing court becomes whether the evidence compels a finding
in favor of the appellant as a matter of law.” (Shaw v. County of
Santa Cruz (2008) 170 Cal.App.4th 229, 279; Roesch v. De Mota
(1944) 24 Cal.2d 563, 570–571 [question is whether the appellant’s
evidence was (1) “uncontradicted and unimpeached” and (2) “of
such a character and weight as to leave no room for a judicial
determination that it was insufficient to support a finding”].)
Jane argues sanctions were justified because Stewart
(1) refused to provide documents in response to her discovery
requests, (2) threatened to seek sanctions if Jane did not
withdraw her child support RFO, (3) filed a procedurally defective
sanctions motion, (4) made a single “onerous and totally one-sided
[settlement] offer,” and (5) rejected mediation and settlement
efforts, and (6) “intentional[ly] distort[ed] . . . applicable [c]ourt
[o]rders” in his sanctions motion and other filings. As to the
final basis, the record does not compel the conclusion that Stewart
intentionally misread the 2003 judgment as to the deferred cash
compensation issue. As noted, neither party’s position was
frivolous, nor does any other evidence in the record compel the
conclusion that Stewart’s approach to this issue was intentionally
incorrect.12 As to the remainder of the conduct identified, accepting
12 Jane argues that Stewart changed his interpretation
of the 2003 judgment as to the stock grant and deferred cash
compensation issues over the course of the proceedings below,
and that this supports a conclusion that the trial court erred in
denying sanctions against him. To the extent Jane is arguing that
such changes constitute evidence supporting a finding that Stewart
40
for the purposes of argument that it is all supported by the
evidence in the record, we conclude that it does not establish the
court abused its discretion in denying sanctions against Stewart.
Particularly when we consider this conduct in the broader context
of the parties’ interactions discussed above in the context of the
sanctions imposed on Jane, and “considering all of the evidence
viewed most favorably in its support and indulging all reasonable
inferences in its favor,” a judge “could reasonably make the
order” denying sanctions against Stewart. (Corona, supra, 172
Cal.App.4th at p. 1225.)
E. Attorney Fees Request
Section 2030 authorizes a court to order, “if necessary based
on the [court’s] income and needs assessments” of the two parties in
a dissolution or related action, that one party pay the attorney fees
of the other party “reasonably necessary” to maintain or defend the
proceeding. (See § 2030, subd. (a)(1).) “[T]he making of the award,
and the amount of the award, [must be] just and reasonable under
intentionally misinterpreted the judgment, we are not persuaded.
First, Jane does not support this argument with any citations to
the record. (See Sharabianlou v. Karp (2010) 181 Cal.App.4th
1133, 1149 [“We may disregard a [party’s] statements of fact
when those statements are unsupported by citations to the record.
[Citation.] And we will not scour the record on our own in search
of supporting evidence. [Citation.] Where, as here, [parties] have
failed to cite that evidence, they cannot complain when we find
their arguments unpersuasive.”]; Bullock v. Philip Morris USA, Inc.
(2008) 159 Cal.App.4th 655, 685 [“[a]n appellant must affirmatively
demonstrate error through reasoned argument, citation to the
appellate record, and discussion of legal authority”].) Second,
Jane offers no legal support for the proposition—of which we are
skeptical in any event—that a party’s changing position in litigation
alone is evidence of intentional misinterpretation.
41
the relative circumstances of the respective parties.” (§ 2032,
subd. (a).) The party seeking the fees bears the burden of proving
entitlement thereto, including providing sufficient information
about the services rendered to establish the fees sought were
reasonably necessary. (See Cal. Rules of Court, rule 5.427(b); see
In re Marriage of Keech (1999) 75 Cal.App.4th 860, 869 (Keech)
[court could not determine whether fees reasonably necessary
without information establishing that fees were actually incurred
and for what].)13
Jane failed to provide sufficient documentation, based
on which the court could conclude that the fees she sought were
reasonably incurred. She offered no invoices from her counsel, no
description of the work performed or hours spent on specific tasks
or even categories of tasks. Instead, she offered a rough estimate
of the number of hours her counsel had worked on the matter and
his hourly rate. The court thus did not have a basis on which to
13 This rule states in pertinent part: “[T]o request attorney’s
fees and costs, a party must complete, file and serve the following
documents: [¶] . . . [¶] (B) request for attorney’s fees and costs
attachment (form FL-319) or a comparable declaration that
addresses the factors covered in form FL-319; [¶] (C) [a]current
income and expense declaration (form FL-150); [¶] (D) [a] personal
declaration in support of the request for attorney’s fees and costs,
either using supporting declaration for attorney’s fees and costs
attachment (form FL-158) or a comparable declaration that
addresses the factors covered in form FL-158; [and] . . . [¶] . . . [¶]
(2) The party requesting attorney’s fees and costs must provide
the court with sufficient information about the attorney’s hourly
billing rate; the nature of the litigation; the attorney’s experience
in the particular type of work demanded; the fees and costs
incurred or anticipated; and why the requested fees and costs
are just, necessary, and reasonable.” (Cal. Rules of Court,
rule 5.427(b)(1)(B), (C), (D) & (b)(2), capitalization omitted.)
42
determine whether the specific legal work performed, and the hours
it took, were reasonably necessary. “Without ascertaining . . . that
the work was ‘reasonably necessary’ in light of the issues in the
case, the trial court [cannot] properly find that imposing upon [one
party responsibility for the other party’s] legal bill was ‘just and
reasonable under the relative circumstances of the respective
parties’ as required by section 2032.” (Keech, supra, 75 Cal.App.4th
at p. 869.) The court thus did not abuse its discretion in denying
Jane’s request for fees.14
F. Evidentiary Rulings
Jane challenges the court’s failure to rule on several of her
written evidentiary objections, which we treat as a presumptive
overruling of those objections. (See Reid v. Google, Inc. (2010)
50 Cal.4th 512, 535.) But Jane offers no argument or legal
authority supporting that the court erred in presumptively
overruling these objections. She appears to argue that the trial
court reversibly erred by the mere fact that it failed to rule on
the objections. This is not reversible error.
14 The parties have also briefed the issue of whether Jane
sufficiently established her relative ability to pay. We need not
reach this issue, as our conclusion above is a sufficient basis on
which to affirm the court’s decision.
43
DISPOSITION
The court’s February 2021 order on the amended child
support RFO is reversed to the extent it denies Jane Ostler-Smith
child support based on the $800,000 cash bonus Stewart received
from MGM Growth around December 2017 and the $400,000 bonus
PSU grant Stewart received around December 2016. Upon remand,
the court is instructed to determine the pro rata portion of that
bonus income attributable to the support period, and to order the
corresponding amount of Ostler-Smith child support.
The court’s order imposing sanctions against Jane is reversed.
The court’s orders are in all other respects affirmed, including
specifically the court’s denial of attorney fees for Jane and its denial
of section 271 sanctions for Stewart.
The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J.
We concur:
CHANEY, J.
BENKE, J.*
* Retired Associate Justice of the Court of Appeal, Fourth
Appellate District, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
44