Marriage of Erndt & Terhorst ( 2021 )

Filed 1/11/21
CERTIFIED FOR PARTIAL PUBLICATION *
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
In re the Marriage of
NANCY G. ERNDT and A157876
MICHAEL A. TERHORST
____________________________ (Solano County
Super. Ct. No. FFL113303)
NANCY G. ERNDT,
Plaintiff and Appellant,
v.
MICHAEL A. TERHORST
Defendant and Respondent.
Nancy G. Erndt (wife) and Michael A. Terhorst (husband) entered
into a settlement agreement, in the form of a verbal stipulation,
regarding the terms of their marital dissolution (“the stipulation”). The
stipulation included an equal division of the community property
portion of wife’s retirement plan without any mention of the plan’s
survivor benefits. Thereafter, the parties could not agree as to whether
* Pursuant to California Rules of Court, rules 8.1105(b) and
8.1110, this opinion is certified for publication with the exception of the
following portions of the Discussion: Section I. The Trial Court Rulings
Regarding Division of Community Retirement Plan and Refusal to Set
Aside Stipulation; and Section III. Husband’s Motion for Sanctions on
Appeal.
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husband had survivor benefits under wife’s retirement plan and they
asked the court to resolve their dispute; in the alternative, wife asked
the court to vacate the stipulation.
The trial court ruled as follows: the survivor benefits were found
to be an “omitted asset” (Fam. Code, 1 § 2556) subject to an equal
division under section 2610, subdivision (a)(2); wife was not entitled to
an order vacating the stipulation; and judgment was to be entered
accordingly. The court also awarded husband $800 in attorney fees and
$180 in costs in the nature of sanctions under section 271.
On appeal, wife contends the court erred in treating the survivor
benefits as an omitted asset as the stipulation provided husband would
not receive a survivor benefit by virtue of its silence on the topic.
Alternatively, she seeks to vacate the stipulation in its entirety based
on there being no “meeting of the minds” concerning the division of
survivor benefits. We see no merit to wife’s contentions and,
accordingly, we affirm that portion of the judgment that provides
husband is to receive a survivor benefit related to his community
property share of the retirement plan. We reverse, in part, that portion
of the judgment and order awarding husband the sum of $800 in
attorney fees as section 271 does not permit an award of fees to a self-
represented party.
We deny husband’s separate motion for sanctions for the filing of
a frivolous appeal and to cause delay.
1 All further statutory references are to the Family Code unless
otherwise specified.
2
Factual and Procedural Background
The parties were married in 1986 and wife filed a petition for
dissolution in 2010.
In January 2018, after a three-day settlement conference with
the trial court, the parties entered into a stipulation to resolve the
entire matter and the settlement terms were recited in open court.
Relevant to this appeal, the stipulation included the following
provisions:
Wife had certain retirement benefits through the federal
government commonly known as FERS . . . for Federal
Employees Retirement System. The parties will be equally
dividing the community property portion of Wife’s FERS
retirement, with the exception that Wife had purchased
some additional retirement benefit of service years based
on her prior service in the military. Several years of that
prior service in the military [were] during the marriage.
Husband is waiving his right to receive, in his share of the
FERS retirement, those service credits that were for
community property years from the military service.
The stipulation did not mention the retirement plan’s benefits (basic
pension, survivor, death), specific exclusion of any benefit from the
equal division of the “Wife’s FERS retirement”, or waiver of either
party’s right to receive their community property share of any plan
benefit. The trial court confirmed the parties understood the terms of
the stipulation, were entering into the stipulation freely and
voluntarily, and had adequate time to consult with counsel. The
parties also agreed the court would retain jurisdiction to resolve any
disputes.
Husband was directed to prepare a stipulated judgment and, over
the course of several months, the parties unsuccessfully attempted to
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agree on a stipulated judgment. Ultimately, husband submitted for
wife’s approval a proposed stipulated judgment that largely mirrored
the stipulation (the parties “[would] be equally dividing the community
property portion of Wife’s FERS retirement” other than the additional
retirement benefit based on wife’s prior service in the military), but
also included a sentence awarding each party “any survivor’s benefits . .
. related to their share of the community interest awarded to them.” 2
Wife refused to sign the proposed judgment, and the parties
proceeded to file separate requests asking the court to adjudicate their
dispute regarding the survivor benefit and for entry of a stipulated
judgment reflecting their respective views. Husband’s proposed
judgment included an award of a survivor benefit as an omitted asset
under section 2556, which grants the court “continuing jurisdiction” to
award community assets to the parties that have not been previously
adjudicated by a judgment in the proceeding; if the court finds there
was an omitted asset it is directed to “equally divide the omitted or
unadjudicated community estate asset . . ., unless the court finds upon
good cause shown that the interests of justice require an unequal
division of the asset.” Wife asked the court to enter judgment based on
the terms of the stipulation (thereby excluding any award for survivor
benefits) and, in the alternative, sought an order setting aside the
stipulation in its entirety. The parties lodged no objections when their
2 This sentence also provided for an award to each party of “any
death benefits” related to their share of the community interest.
However, wife made no separate argument directed at the award of a
death benefit either in the trial court or on appeal. Consequently, we
do not further mention the death benefit except to give context to our
decision.
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requests were assigned to the same trial court judge who had conducted
the settlement conference.
A. March 14 and April 3, 2019 3 Hearings
On March 14, the trial court presided at a hearing concerning
husband’s request to award him a survivor benefit. Wife was
represented by counsel and husband, an attorney, appeared in propria
persona after the court granted his counsel leave to withdraw. Both
parties testified concerning the settlement conference negotiations that
led to the stipulation.
Husband testified that during negotiations no one – not the
parties, either of their counsel, or the trial court – mentioned the issue
of a survivor benefit. He was not aware of a survivor benefit or that
there was any issue concerning a survivor benefit until his former
counsel included it in the proposed stipulated judgment that wife then
refused to sign. Wife never told him she wanted the survivor benefit
solely for herself or that she wanted him to waive his right to a survivor
benefit. Nor did husband’s former counsel ever tell husband that wife
wanted a survivor benefit “to go to . . . [her] only.”
Wife testified that she did not say anything during negotiations
about a survivor benefit because she did not want husband to receive
that benefit. During her private discussions with the trial judge 4, wife
asked the court if husband had mentioned a survivor benefit. The
judge replied she had not and asked if wife wanted the issue to be
raised; she declined. Wife also did not tell her counsel to say that she
3 All further unspecified dates occurred in 2019.
4 Neither party lodged any objection to the wife’s testimony
concerning her ex parte discussion with the trial court during the
settlement conference.
5
wanted to keep the survivor benefit and did not want husband to share
in that benefit. During the verbal recitation of the stipulation, wife did
not mention anything about the survivor benefit. Wife believed that if
the survivor benefit were not mentioned then husband’s right to it
would terminate upon entry of the judgment of dissolution.
The trial court granted husband’s request, directing that the
judgment include a provision awarding each party a survivor and/or
death benefit related to their community property share of the
retirement plan under section 2610. The parties were directed to meet
and confer and submit a stipulated judgment incorporating the terms of
the agreement and the court’s ruling regarding the survivor benefit
(hereinafter “court-ordered stipulated judgment”) at the next hearing
on April 3.
On April 3, the trial court held a hearing to consider wife’s
alternative request to set aside the stipulation. The parties presented
arguments but did not offer any additional evidence. The trial court
denied wife’s motion and wife was directed to sign and resubmit the
court-ordered stipulated judgment within a few days.
B. May 15, 2019 Hearing
In early April, wife made handwritten changes to the court-
ordered stipulated judgment and signed it as modified. Shortly
thereafter, husband filed a motion for the court elisor to sign the court-
ordered stipulated judgment, for $6,102 in attorney fees and $180 in
costs, and for “section 271” sanctions for wife’s repeated refusal to
follow court orders and sign the court-ordered stipulated judgment.
While the relevant Judicial Council forms direct a party requesting
attorney fees to provide certain information concerning counsel’s billing
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rates and the attorney’s experience in the particular type of work, the
record does not include any documents indicating husband provided
such information to the court. Wife opposed husband’s requests in full.
Both parties appeared in propria persona at the May 15 hearing.
After the trial court found no basis to change its previous orders, wife
complied with the court’s direction that she sign the court-ordered
stipulated judgment in open court. The court granted, in part,
husband’s request for attorney fees and costs, specifically awarding
$180 (filing fees for two motions) in costs and $800 in reasonable
“attorney fees” for husband’s preparation for and attendance at that
day’s hearing. Wife made no objection to the award of attorney fees
and costs.
The trial court entered a judgment of dissolution with several
attachments, including the executed court-ordered stipulated judgment
and a written order awarding husband the sum of $980 in attorney fees
and costs “in sanctions.” Wife’s timely appeal ensued.
DISCUSSION
I. The Trial Court Rulings Regarding Division of
Community Retirement Plan and Refusal to Set Aside
Stipulation
Our Legislature has mandated that “[o]nce a petition for
dissolution has been filed, the community property needs to be divided,
either by the parties or by the court. If the court divides the
community property, it must do so equally. . . . If the parties
themselves want to agree upon another disposition, they must do so
either in writing or in open court.” (In re Marriage of Dellaria &
Blickman-Dellaria (2009) 172 Cal.App.4th 196, 203.)
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If the court is asked to divide a community retirement plan, each
party is entitled to receive their full community property share
including all survivor benefits. Section 2610, subdivision (a), provides
the court shall make orders to ensure that “each party receives the
party's full community property share in any retirement plan, . . .
including all survivor and death benefits” and such orders include the
disposition of survivor benefits consistent with Section 2550. Section
2550 provides the court shall divide the community estate equally
absent agreement of the parties in writing or verbally in open court.
(see In re Marriage of Cooper (2008) 160 Cal.App.4th 574, 580 [trial
court’s statutory mandate to divide “ ‘the community estate of the
parties equally’ ” applies to “retirement plan survivor benefits”]; In re
Marriage of Higinbotham (1988) 203 Cal.App.3d 322, 334 [even though
no request or objection was made in the trial court a party was entitled
to payment of a suitable share of any survivor benefit available under a
community pension plan (decided under former Civ. Code § 4800.8
continued without substantive change in § 2610); a party’s “entitlement
. . . ‘involves only a question of law determinable from a factual
situation already present in the record’ ”].)
Where the parties fail to provide for the division of community
property in a written agreement or verbal stipulation, Section 2556
grants the trial court “continuing jurisdiction” to adjudicate an omitted
asset claim. An omitted asset claim does not seek to modify or reopen a
previous agreement, but instead seeks to divide community assets
which were not divided between the parties. (Huddleson v. Huddleson
(1986) 187 Cal.App.3d 1564, 1573, citing to Casas v. Thompson (1986)
42 Cal.3d 131, 141-142, fn. 4.) “Section 2556 applies even when former
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spouses were aware of the community property at the time” they
agreed on a division of community property. (In re Marriage of Huntley
(2017) 10 Cal.App.5th 1053, 1060.) “ ‘ “The mere mention of an asset in
the [agreement or stipulation] is not controlling. [Citation.] ‘[T]he
crucial question is whether the [community property] benefits were
actually litigated and divided’ ” ’ ” in the agreement or stipulation.
(Ibid., quoting In re Marriage of Georgiou & Leslie (2013) 218
Cal.App.4th 561, 575, quoting In re Marriage of Thorne & Raccina
(2012) 203 Cal.App.4th 492, 501.)
A. The Trial Court Properly Directed the Equal Division of
the Retirement Plan’s Survivor Benefit as an Omitted
Asset Under Section 2556
The trial court found the survivor benefit was an “omitted asset”
subject to the court’s discretionary authority to make an equal division
of that community asset under sections 2556 and 2610. On appeal,
wife’s sole complaint is that the trial court was not statutorily
authorized to adjudicate the survivor benefit as an “omitted asset”
under section 2556 as the stipulation provided husband would not
receive a survivor benefit. Because the facts regarding the nature of
the “omitted asset” are undisputed, and the issue presented concerns
the interpretation of a statute and its application to the facts, our
review is de novo. (Estate of Thomas (2004) 124 Cal.App.4th 711, 717-
718 [“[s]ince this issue involves the interpretation of a statute and the
application of that statute to undisputed facts, it is subject to this
court’s independent review”].)
Wife correctly asserts her retirement plan consists of
“inextricably” entwined benefits including a basic pension benefit and a
survivor benefit funded by annuities. (See In re Marriage of Peterson
9
(1974) 41 Cal.App.3d 642, 656 (Peterson) [retirement plan consisted of a
“bundle” of benefits (pension benefit, a survivor benefit if any, and a
lump-sum death benefit, if any)]. 5) But, absent an agreement between
the parties to the contrary, husband, as “a partner in the community”
who contributed to a portion of wife’s retirement plan, was entitled to
receive his full community share in “any single stick in the bundle [of
plan benefits]” (id. at p. 656), including a survivor benefit as mandated
under section 2610.
Here, the clear language of the stipulation – that the parties
“[would] be equally dividing the community property portion of the
Wife’s FERS retirement” – does not manifest an intent or agreement
that husband would not receive a survivor benefit. Rather, the
language shows an intent and agreement that the equal division of the
community retirement plan would include all plan benefits, there being
no specific exclusion for any survivor benefit. Wife’s reliance on her
subjective intent, based on her belief that husband would not receive a
survivor benefit, is irrelevant. “ ‘Contract formation is governed by
objective manifestations, not the subjective intent of any individual
involved.’ ” (Allen v. Smith (2002) 94 Cal.App.4th 1270, 1277.) In other
words, the question is not what wife “subjectively intended, but what a
reasonable person would believe the parties intended.” (Beard v.
Goodrich (2003) 110 Cal.App.4th 1031, 1038 (Beard).) Given the
Legislature’s mandate that absent any agreement to the contrary, a
party is entitled to his full community share of a retirement plan
including a survivor benefit, an agreement to exclude a survivor benefit
5 Peterson was disapproved on another ground in In re Marriage of
Brown (1976) 15 Cal.3d 838 at page 851, footnote 14.
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“is uncommon” and “[a] reasonable person would expect such an
arrangement to be clearly defined” by the parties. (Id. at p. 1039.)
Accordingly, we reject wife’s contention that the stipulation
shows the parties intended or agreed to a different and unequal
division of a survivor benefit such that there was no omitted asset to be
later adjudicated by the court under section 2556. The general
language used in the stipulation is not ambiguous and an objective
reading would lead a reasonable person to believe that the parties
intended and agreed that the equal division of the community property
share of the retirement plan would include all plan benefits with no
exclusion for a survivor benefit.
B. The Trial Court Properly Exercised its Discretion in
Denying Wife’s Request to Set Aside the Stipulation
Wife alternatively argues that if the trial court’s equal division of
the survivor benefit is upheld, she is entitled to an order setting aside
the stipulation as “there was no meeting of the minds” concerning the
material terms of the settlement in that she was denied the benefit of
the bargain she believed she was making in settling the entire case.
We see no merit to her argument as again it is based on her subjective
belief that husband would not receive a survivor benefit.
Wife correctly asserts the stipulation, a contract, is not
enforceable unless there has been a “ ‘meeting of the minds’ ” [i.e.
mutual consent] on all material points and “mutual consent means the
parties must assent to the same thing in the same sense.” (Beard,
supra, 110 Cal.App.4th at pp. 1039-1040, citing to Civ. Code, § 1580;
Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th
348, 358-359.) “The rule, however, is that ‘ “[t]he existence of mutual
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consent is determined by objective rather than subjective criteria, the
test being what the outward manifestations of consent would lead a
reasonable person to believe.” ’ ” (Beard, supra, at p. 1040.)
Here, as we have concluded, the stipulation’s general language
objectively manifested an agreement to an equal division of the
retirement plan with no specific exclusion for a survivor benefit,
especially as an agreement to exclude a survivor benefit “is uncommon”
such that “a reasonable person would expect such an arrangement to be
clearly defined” by the parties. (Beard, supra, 110 Cal.App.4th at p.
1039.) Therefore, wife’s “subjective consent,” based on her belief that
husband would not receive a survivor benefit, “is irrelevant. It is
enough that a reasonable person would understand that the parties
consented . . . and consented to the same terms in the same sense.” (Id.
at p. 1040; id. at pp. 1039-1040 [appellate court found no merit to claim
that there had been no meeting of the minds as to contingency fee
agreement where appellant asserted he had intended and consented to
a “reversal” contingency fee agreement, believing he would receive an
award of 40 percent for unrecovered claims, but the contingency fee
agreement did not mention and the language therein did not support
such an award, and, if the parties had intended and agreed to a
“reversal” contingency fee agreement, a reasonable person would expect
such an “uncommon” arrangement would have been defined in the
agreement].)
C. Funding of Survivor Benefit
Finally, as wife concedes in her reply brief, the trial court made
no ruling and consequently we are not here concerned with how a
survivor benefit would be funded by the parties, i.e., which party would
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be responsible for the payment of husband’s survivor benefit annuity
under the retirement plan.
II. The Award of Attorney Fees was Improper
Section 271, subdivision (a), provides that “the court may base an
award of attorney’s fees and costs on 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. An award of attorney’s fees and costs pursuant to this
section is in the nature of a sanction.” “ ‘ “Thus, a party who
individually, or by counsel, engages in conduct frustrating or
obstructing the public policy is thereby exposed to liability for the
adverse party’s costs and attorney fees such conduct generates.” ’ ”
(Menezes v. McDaniel (2019) 44 Cal.App.5th 340, 348-349 (Menezes),
quoting In re Marriage of Tharp (2010) 188 Cal.App.4th 1295, [1318];
italics added.)
Wife argues the trial court erred in awarding attorney fees as a
section 271 sanction since husband, while an attorney himself, had not
in his role as litigant incurred any attorney fees related to the May 15
hearing. While this specific issue was not raised in the trial court, we
address the issue on appeal as it is a question of law based on
undisputed facts. (Ward v. Taggart (1959) 51 Cal.2d 736, 742.)
We have not found a case that directly addresses whether a self-
represented attorney litigant may recover attorney fees in the nature of
sanctions under section 271. However, we agree with those courts that
have concluded section 271 mandates that sanctions be “tethered” to
attorney fees and costs. (Menezes, supra, 44 Cal.App.5th at p. 350;
13
Sagonowsky v. Kekoa (2016) 6 Cal.App.5th 1142, 1153 (Sagonowsky).)
“ ‘The plain language of section 271 authorizes the court to impose
“attorney fees and costs” as a sanction for conduct frustrating
settlement or increasing the cost of litigation.’ . . . ‘Here, the words
“attorney fees and costs” are not ambiguous. . . . Section 271 “means
what it says” – sanctions available under the statute are limited to
“attorney fees and costs.” ’ ” (Menezes, supra, at p. 350, quoting in part
Sagonowsky, supra, at p. 1153; see Menezes, supra, at p. 351 [section
271 sanctions could not be awarded to a party for travel expenses to
attend court hearings and vacation time, used for relief from work
obligations, where expenses were not tethered to attorney fees and
costs]; Sagonowsky, supra, at pp. 1153 fn. 9, 1156 [section 271
sanctions could not be awarded to a party to punish the opposing party
for relentless and culpable conduct, where monetary sum bore “no
relationship” to attorney fees and costs].)
The courts have similarly interpreted “attorney fees” – that it
means exactly what it says – in the context of sanctions under Code of
Civil Procedure section 128.7 and in the context of contractual attorney
fees awarded under Civil Code section 1717. (Musaelian v. Adams
(2009) 45 Cal.4th 512, 515 [Code of Civil Procedure “section 128.7 does
not authorize sanctions in the form of an award of attorney fees to self-
represented attorneys”]; Trope v. Katz (1995) 11 Cal.4th 274, 292 [“an
attorney who chooses to litigate in propria persona and therefore does
not pay or become liable to pay consideration in exchange for legal
representation cannot recover ‘reasonable attorney’s fees’ under [Civil
Code] section 1717 as compensation for the time and effort he expends
14
on his own behalf or for the professional business opportunities he
forgoes as a result of his decision”].)
Husband’s sole assertion in opposition is that the trial court did
not abuse its discretion in ruling that wife’s conduct warranted a
sanction. We do not reach that issue as the award of attorney fees as
section 271 sanctions is not tethered to any attorney fees and hence
cannot stand, irrespective of wife’s conduct. Therefore, we shall reverse
that portion of the judgment and order awarding $980 in sanctions and
on remand direct the trial court to enter a new order awarding solely
$180 in costs as sanctions. 6
III. Husband’s Motion for Sanctions on Appeal
We deny husband’s motion for sanctions for pursuing “a frivolous
appeal or appealing to cause delay.” (See Code Civ. Proc., § 907; Cal.
Rules of Court, rule 8.276(a)(1).) Having found merit to wife’s
contention that a portion of the section 271 sanctions must be vacated,
we cannot say her appeal was only “prosecuted for an improper motive”
or “indisputably” had no merit. (In re Marriage of Flaherty (1982) 31
Cal.3d 637, 640; see Contreras v. Dowling (2016) 5 Cal.App.5th 394,
421[“ ‘[o]ur reversal of the trial court’s ruling established that [the]
appeal is meritorious and obviates any need to discuss the issue of
sanctions’ ” on appeal].)
6 While the trial court awarded $800 in attorney fees and $180 in
costs at the May 15 hearing, its written order directed payment of $890
in attorney fees and $90 in costs. On remand the court will be able to
correct its written order to reflect an award of $180 in costs as
sanctions. (See In re Merrick V. (2004) 122 Cal.App.4th 235, 249
[“[c]onflicts between the reporter’s and clerk’s transcripts are generally
presumed to be clerical in nature and are resolved in favor of the
reporter’s transcript unless the particular circumstances dictate
otherwise”].) .
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DISPOSITION
The portion of the judgment and order awarding $980 in attorney
fees and costs as sanctions against Nancy G. Erndt and payable to
Michael A. Terhorst is reversed. On remand the trial court is directed
to enter a new order awarding $180 in costs as sanctions against Nancy
G. Erndt and payable to Michael A. Terhorst.
In all other respects the judgment is affirmed. Michael A.
Terhorst’s motion for sanctions on appeal is denied. Each party is
directed to bear their own costs on appeal.
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_________________________
Petrou, J.
WE CONCUR:
_________________________
Siggins, P.J.
_________________________
Fujisaki, J.
A157876/Erndt v. Terhorst
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Trial Court: Solano County Superior Court
Trial Judge: Hon. Christine A. Carringer
Counsel: Codekas Family Law, Matthew J. Smith, for Plaintiff and
Appellant.
Beeson Terhorst, Jeffrey E. Beeson, for Defendant and
Respondent.
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