Marriage of Dang CA1/1 ( 2014 )

Filed 5/13/14 Marriage of Dang CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
FIRST APPELLATE DISTRICT
DIVISION ONE
In re the Marriage of XUAN and DUNG
DANG.
XUAN DANG, A139067
Respondent, (Alameda County
v. Super. Ct. No. HF10531756)
DUNG DANG,
Appellant.
Dung Dang (Husband) appeals from a judgment resolving outstanding property
issues arising from the dissolution of his marriage to Xuan Dang (Wife). We affirm the
trial court’s rulings.
I. BACKGROUND
The parties were married on September 20, 2002, and separated on August 6,
2010. They had one child together, born in 2008. After a two-day trial on outstanding
property issues, the trial court made the following rulings that are the subject of this
appeal: (1) Husband was liable to Wife based on losses of approximately $75,000
resulting from his unauthorized trading in a TD Ameritrade stock margin account (TDA
account) after their separation; (2) Husband is not entitled to reimbursement based on the
community use of proceeds from the refinance of his separate property; and (3) based on
the values of three community vehicles divided between the parties, Husband must
provide Wife an equalizing payment of $2,973.
A. TDA Account
Throughout the marriage, Husband engaged in online day trading with the TDA
account, which was in his name. Husband never claimed during the marriage that the
account was his separate property. Before their separation, Wife was aware of Husband’s
day trading but played no role in it and asked no questions about it.
Wife’s dissolution petition was filed on August 18, 2010. Husband was served the
next day with a summons and other papers notifying him he was subject to the standard
family law temporary restraining orders including that he was enjoined from
“[t]ransferring, encumbering, hypothecating, concealing, or in any way disposing of any
property, real or personal, whether community, quasi-community, or separate, without
the written consent of the other party or an order of the court, except in the usual course
of business or for the necessities of life . . . .” Husband admitted he received the papers
served on him, but he did not read them carefully and was unaware he could not continue
his day trading out of the TDA account without obtaining Wife’s consent or a court order.
He never informed her when the account balance rose to $200,000, never gave her an
option of removing her share of the funds from the account, and never discussed with her
what trades he was making or his trading strategy. Wife testified she asked him for her
share of the account many times but he refused, saying he would need to use her share to
offset what she owed him for the refinance debt he incurred on his house.
On September 3, 2010, Husband withdrew $5,100 from the TDA account and
deposited it in a checking account from which the funds were apparently used to pay off
an American Express credit card bill reflecting community debt.
Due to trading losses, the TDA account’s balance had dropped to slightly over
$26,000 by February 2012. On February 7, 2012, Husband disclosed to Wife for the first
time the substantial drop in value that had occurred. An immediate freeze was put on the
account and $13,000 was awarded to Wife.
2
The trial court found Husband had a duty under Family Code section 1100,
subdivision (e)1 to promptly notify Wife of all material facts concerning the TDA
account, and that by waiting until February 2012 to disclose the losses on the account to
her, he denied her the ability to avoid the losses by removing her share of the funds or
requiring her share be invested more conservatively. The court determined that Husband
owed Wife $37,175 as damages for this breach. Using the closing value of the account
for August 31, 2010 shown on the TDA account statement for the period August 1 to
August 31, 2010, the court found that the value of the account was $100,350 near the date
of separation.2 The court halved this amount to $50,175 to determine Wife’s share of it,
and then subtracted the $13,000 Wife was awarded in 2012 to arrive at her damages of
$37,175.
B. Recoupment of Refinance Proceeds
Before the marriage, Husband owned a residential property on Meek Avenue in
Hayward that the parties used as the family home. There were two refinances of the
property during the marriage, one in 2002 that resulted in the parties taking cash proceeds
of $136,000, and a second in 2005 resulting in a cash out of $95,587. There is no dispute
the 2005 proceeds were used to make a downpayment for the purchase of a community
investment property—a residence next-door to their Meeker Avenue home that was later
1
Family Code section 1100, subdivision (e) states: “Each spouse shall act with
respect to the other spouse in the management and control of the community assets and
liabilities in accordance with the general rules governing fiduciary relationships which
control the actions of persons having relationships of personal confidence 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 and debts for
which the community is or may be liable, and to provide equal access to all information,
records, and books that pertain to the value and character of those assets and debts, upon
request.”
2
The TDA account statement showed the account had a “Prior Value” of
$92,439.42 on July 31, 2010, and a “Current Value” of $100,350.66 on August 31, 2010.
The statement did not show the account’s daily fluctuations during the month.
3
lost to foreclosure. Husband contended the 2002 proceeds were used to (1) pay $25,000
to Wife’s attorney in Canada and for her travel to Canada in connection with a custody
dispute over her child by a previous marriage;3 (2) pay Husband’s support obligation
from a prior marriage; (3) purchase a Mitsubishi vehicle; and (4) pay for general family
expenses. Wife contended she had no knowledge of the 2002 refinance, which occurred
two months after the couple married. Her understanding was that Husband used the 2002
cash out proceeds to pay off his ex-wife, remodel his house, purchase a BMW, and send
money to his relatives in Vietnam. Although she did have to hire a Canadian lawyer, she
testified the lawyer’s fees were ultimately paid by her ex-husband under court order.
In his trial brief, Husband stated: “[Husband] is now stuck with the indebtedness
from both re-finances. At the very least [Husband] should receive judgment against
[Wife] for one-half of the amount of the second re-financing which was a joint
investment opportunity both parties decided to undertake. Although a full detailed
accounting cannot be provided of all of the expenditures out of the first re-financing, it is
certain that [Wife] benefitted from said loan and therefore any claim to reimbursements
or credits which the Court might uphold in her favor should be negated.”
The trial court denied Husband any reimbursement for one-half of the
downpayment on the investment property that had been lost to foreclosure. The court
found that reimbursement for separate property contributions to the acquisition of
community property real estate by law must come from the purchased property. Since
the property was a complete loss, and had no value, the court held Husband was not
entitled to reimbursement from Wife. The court did not identify any claim arising from
the 2002 refinance of Husband’s property as one of the five issues “identified as
remaining for the court’s determination,” and did not address any such issue.
C. Division of Vehicles
The parties divided up three community vehicles. Wife had a 2010 Lexus.
Husband had a 2002 Lexus and a 2006 Yamaha motorcycle. Wife came forward with
3
Wife was living in Toronto when the parties met.
4
evidence the 2010 Lexus was worth $30,535 less a lien of $30,186, the 2002 Lexus was
worth $5,410, and the motorcycle was worth $3,585. Husband did not produce any
values at trial but argued the 2010 Lexus was worth more than $30,535. In his trial brief,
Husband also sought reimbursement for a $4,600 credit the couple received toward the
purchase of the 2010 Lexus based on the trade-in of his separate property Toyota Previa.
This consisted of a $4,500 credit under the “cash for clunkers” program in effect in 2009,
and $100 for the scrap value of the Previa.
Based on the Kelley Blue Book values provided, the court valued the 2010 Lexus
at $33,235, its trade-in value, and found it had a net value of $3,049. It accepted Wife’s
proposed values for Husband’s motorcycle and 2002 Lexus. It determined Husband
therefore owed Wife $2,973 as an equalizing payment, and did not address Husband’s
claim for a $4,600 reimbursement.
II. DISCUSSION
A. Standard of Review
We review the trial court’s judgment dividing marital property for abuse of
discretion, reversing only if its decision is not supported by substantial evidence. (In re
Marriage of Dellaria & Blickman-Dellaria (2009) 172 Cal. App. 4th 196, 201; In re
Marriage of Quay (1993) 18 Cal. App. 4th 961, 966.) This court views the entire record in
the light most favorable to the prevailing party to determine whether there is substantial
evidence to support the trial court’s findings. (Bowers v. Bernards (1984)
150 Cal. App. 3d 870, 873–874.) We must resolve all conflicts in the evidence and draw
all reasonable inferences in favor of the findings. (Watson v. Department of
Rehabilitation (1989) 212 Cal. App. 3d 1271, 1289.) We review questions of law de novo.
(In re Marriage of Rothrock (2008) 159 Cal. App. 4th 223, 230.)
Because no statement of decision was requested or prepared, under the doctrine of
implied findings, we infer the trial court made any and all findings necessary to support
the judgment, and review the implied findings under the substantial evidence standard.
(In re Marriage of Arceneaux (1990) 51 Cal. 3d 1130, 1133–1134.)
5
B. TDA Account
Husband contends the court erred in awarding any damages to Wife based on his
claimed violation of Family Code section 1100, subdivision (e) or other breach of duty.
In the alternative, he argues the court overstated the amount of damages to which Wife
was entitled by (1) using the value of the TDA account on August 31, 2010, rather than
its lower value of $92,439.42 on July 31, 2010, to calculate Wife’s damages; and
(2) failing to give him credit in determining damages for net deposits he assertedly made
into the account after separation, or for one-half of the $5,100 withdrawn from the
account after separation to pay off the parties’ American Express credit card debt.
1. Liability
“A spouse has a claim against the other spouse for any breach of the fiduciary
duty that results in impairment to the claimant spouse’s present undivided one-half
interest in the community estate, including, but not limited to, a single transaction or a
pattern or series of transactions, which transaction or transactions have caused or will
cause a detrimental impact to the claimant spouse’s undivided one-half interest in the
community estate.” (Fam. Code, § 1101, subd. (a).)
Spouses have fiduciary duties to each other with respect to the management and
control of community property. (In re Marriage of Georgiou & Leslie (2013)
218 Cal. App. 4th 561, 569.) Those duties last throughout the dissolution proceedings,
(ibid.), and include the affirmative duty to “reveal[] any material changes in the
community estate, such as the transfer or loss of assets.” (In re Marriage of Prentis-
Margulis & Margulis (2011) 198 Cal. App. 4th 1252, 1271.) The fiduciary duties of
disclosure specified in Family Code section 1100, subdivision (e) thus apply without
regard to whether the nonmanaging spouse requests the information. (In re Marriage of
Walker (2006) 138 Cal. App. 4th 1408, 1419–1428.) In addition, improvident investments
of community property can amount to a breach of fiduciary duty if they rise to the level
of grossly negligent or reckless conduct. (Hogoboom & King, Cal. Practice Guide:
Family Law (The Rutter Group 2013) ¶ 8:606.2, p. 8-156.7.)
6
In our view, the trial court did not abuse its discretion in holding Husband liable
for the loss in value of the TDA account after separation. His daily margin trading
activities were inherently risky and violated the automatic temporary restraining orders.
There was substantial evidence he refused Wife’s request for her share of the account,
failed to notify her of material losses in the account, and deprived her of the opportunity
to protect the value of her interest in the account. He breached his fiduciary duty to her,
and the trial court therefore acted within in its discretion in holding him liable for Wife’s
share of the losses.
2. Damages
The trial court also did not abuse its discretion in using the value of the TDA
account on August 31, 2010 to measure the losses. That date was near the date of
separation, August 6, 2010, and therefore constituted substantial evidence of the
account’s value on that date. August 31 was also closest to the date Husband was served
with notice of the temporary restraining orders in effect. For substantial evidence
purposes, it is irrelevant that the court had another data point close in time to August 6
that it could have chosen. We note Husband came forward with no evidence of his own
as to the account’s value on August 6, even though the value of the account on that day
might have been obtainable from TD Ameritrade, or by reconstructing it based on the
trading and holdings records available to Husband. In the absence of such direct
evidence, and given the likely amount of daily fluctuation in account value, it was within
the trial court’s discretion to choose either of the two dates for which valuation evidence
was available.
Husband asserts the award to Wife for his breach of fiduciary duty is also
overstated because it fails to take into account net deposits of approximately $10,000 he
alleges he made into the TDA account between August 31, 2010 and February 2012. He
also proposes the trial court should have deducted $5,220.02 from the value of the
account on August 31, 2010, since that amount was used postseparation to pay off a
community debt—the American Express card bill—and was not a trading loss on the
7
account.4 We find nothing in the record to indicate that Husband raised either of these
arguments in the trial court. He bases his net deposit argument on a chart apparently
produced by Wife that was never authenticated or admitted in evidence. There was no
testimony about who prepared it and how it was prepared, and no testimony tracing the
source of the funds deposited to the account. Husband referred to the chart in his trial
brief, but only to make the point that the diminution in the TDA account was not due to
net withdrawals. We found no argument in the trial court record that the interests of the
parties in the TDA account, or the determination of Wife’s damages for Husband’s
breach of fiduciary duty should be adjusted to reflect Husband’s asserted net deposits.
Regarding the American Express card bill, Husband took the position in the trial
court that he paid it with his separate funds, a position the trial court rejected when the
evidence showed the funds used to pay it came out of the TDA account. Husband did not
argue for any adjustment in the determination of his stock losses based on the source of
the funds. Points not raised in the trial court are forfeited on appeal. (Kaufman & Broad
Communities, Inc. v. Performance Plastering, Inc. (2006) 136 Cal. App. 4th 212, 226.)
C. 2002 Refinance
Husband contends the trial court failed to rule on whether he was entitled to
reimbursement based on proceeds from the 2002 refinance of his separate property
residence that he asserts were used to pay for Wife’s attorney and travel expenses in
connection with her custody dispute in Canada, vocational education she received, a
Mitsubishi automobile purchased for her use, and general family expenses. He is seeking
reimbursement of $68,000 from Wife, half of the cash proceeds from the 2002 refinance.
It has long been the rule that a spouse who elects to use his or her separate
property to meet community expenses (apart from the acquisition of property) cannot
claim reimbursement, in the absence of an agreement. (See In re Marriage of Lucas
(1980) 27 Cal. 3d 808, 816; See v. See (1966) 64 Cal. 2d 778, 785; In re Marriage of
4
Elsewhere, Husband states $5,100 was withdrawn from the TDA account for this
purpose. The record shows the amount was $5,100.
8
Nicholson & Sparks (2002) 104 Cal. App. 4th 289, 294–295.) In any event, Husband
admitted in his trial brief that he could not provide a full accounting of all the
expenditures made out of the 2002 refinancing. He put in no evidence of the amounts
spent that benefitted Wife. He did not in fact seek reimbursement in the trial court for
any funds spent out of the 2002 refinance proceeds, but only requested the court to negate
or offset any claim to reimbursement or credit by Wife that it might otherwise award to
her. Thus, even assuming for the sake of analysis that (1) there was a legal basis for
Husband’s reimbursement claim in whole or in part, and (2) he did not waive the claim
prior to trial, there was simply no evidentiary basis in the record for granting him relief.
Substantial evidence supports the trial court’s implied finding that Husband was not
entitled to reimbursement in connection with the 2002 refinancing.
Husband raises no issue with respect to the trial court’s ruling on the second
refinance.
D. Vehicle Equalizing Payment
Husband contends the trial court erred by ordering him to make an equalizing
payment to Wife of $2,973 in connection with the division of the parties’ three vehicles
without considering the $4,600 “cash for clunkers” credit the parties were given for
trading in Husband’s separate property Toyota Previa when they purchased the 2010
Lexus in 2009. Allocating the Previa credit to himself, Husband maintains the court
should have ordered Wife to make an equalizing payment to him of $1,625.5
The “cash for clunkers” program was established by the Consumer Assistance to
Recycle and Save Act of 2009 (CARS program). (74 Fed.Reg. 37878 et seq. (Jul. 29,
2009).) Under the CARS program, which lasted from July 1 to November 1, 2009,
consumers who traded in an eligible older model vehicle and purchased a new fuel
efficient vehicle received a monetary credit of $3,500 or $4,500 toward the purchase or
lease of the new vehicle. (Ibid.) The vehicles traded in were required to be crushed or
shredded. (74 Fed.Reg. 37879.) The CARS program was designed promote new car
5
The credit exceeds the trial court’s $3,049 valuation of the 2010 Lexus.
9
purchases as well as to remove older less fuel efficient vehicles from the road. (Ibid.;
U.S. Dept. of Transportation, Nat. Highway Traffic Safety Admin., Rep. to Congress,
Consumer Assistance to Recycle and Save Act of 2009 (Dec. 2009) pp. 2–3.) Thus, the
trade-in vehicle had to be in drivable condition, and continuously insured for one year
prior to the trade-in. (74 Fed.Reg. 37884.)
In our view, Husband was not entitled to an equalizing payment based on the 2009
CARS program rebate. This was a rebate given as much (if not more) for the
community’s purchase of a new Lexus as for the trade-in of Husband’s separate property
automobile. The Previa would not even have been eligible for the CARS program if the
community had not expended funds to maintain it in a drivable condition and insure it
during the marriage. Moreover, the CARS program rebate was not based on the Previa
having any actual trade-in value. The purpose of the incentive was to get owners to
relinquish old vehicles such as the Previa, and make sure they were not driven again.
Awarding Husband a higher value for the Previa than the value of the 2010 Lexus
received by Wife would be an undeserved windfall to Husband. Based on these
considerations, we find no error or abuse of discretion in the trial court’s implied finding
Husband was not entitled to a credit based on the Previa trade-in.
III. DISPOSITION
The judgment is affirmed.
10
_________________________
Margulies, Acting P.J.
We concur:
_________________________
Banke, J.
_________________________
Becton, J.*
*
Judge of the Contra Costa County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
11