In re Marriage of Ciunkaite and Zhou
In re Marriage of Ciunkaite and Zhou
Filed 10/27/08 In re Marriage of Ciunkaite and Zhou CA1/4
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 FOUR
In re the Marriage of KRISTINA CIUNKAITE and JING FU ZHOU. | |
KRISTINA CIUNKAITE ZHOU,
Respondent,
v.
JING FU ZHOU,
Appellant. |
A120463
(Alameda County
Super. Ct. No. HF06249893) |
Appellant Jing Fu Zhou appeals, in propria person, from a judgment of dissolution, with orders for child and spousal support, property division, attorney fees and related matters. He asserts numerous instances of abuse of discretion and other ills. We affirm.
I. BACKGROUND
A. Family Matters
The parties married in September 1999 when respondent Kristina Ciunkaite Zhou immigrated to the United States from Lithuania.
A daughter, F.Z., was born in October 2000. In 2004 the couple purchased a home in Vancouver, Canada. Respondent and daughter have lived there since July 2004. Appellant continued living and working in Silicon Valley.
When F.Z. began kindergarten in 2005, respondent found a nanny job which lasted three months. Respondent also started English courses and ultimately enrolled in the Art Institute of Vancouver where she is pursuing studies in interactive media.
Appellant pays the mortgage and taxes on the Vancouver home and sends respondent $1,200-plus a month as child support. Respondent has no income. She has borrowed to pay her attorney fees.
Appellant is an engineer with Kla-Tencor Corporation. In 2007 he earned approximately $91,000 in salary or wages and commissions or bonuses. In addition, in 2001 he and his brother started a company called Innovative Technology & Trading, Inc. (ITTI), which operated from appellants home.
B. Dissolution Proceedings
Respondent petitioned for dissolution in January 2006. Thereafter, respondent served appellant with a document production request along with a deposition notice, but appellant refused to attend the deposition.
In June 2006, respondent submitted an order to show cause to compel discovery and requested attorney fees. In the supporting papers she maintained that appellant had not been forthcoming about ITTIs financial income or the income he derived from the company. That same month appellant unilaterally sold shares of stock in KLA-Tencor Corporation, for a sale price of $10,548.
In August 2006, appellant filed a civil RICO (Racketeer Influenced and Corrupt Organizations Act) lawsuit in federal district court against respondent and her counsel. (Zhou v. MacKenzie (U.S.D.C. N.D.Cal. No. C065036 JSW.) He asserted that defendants executed a sham and pretextual business transaction to steal ITTIs property. Ultimately the lawsuit was dismissed.
Then, in January 2007, appellant unilaterally dissolved ITTI and filed a competing dissolution action in British Columbia.
In October 2006, the trial court granted respondents motion to compel production, and directed appellant to pay $10,000 in attorney fees to be credited back in the final marital settlement, and an additional $5,000 to enable respondent to retain a forensic accountant. Appellant attempted to appeal from that order; we dismissed the appeal. (Inre Marriage of Zhou (June 15, 2007, A115470) [nonpub.opn.].)
C. Trial
The matter went to trial on issues of spousal and child support; valuation of ITTI; a Porsche; attorney fees, costs and sanctions; and related matters. Appellant stipulated to admission of all of respondents exhibits except two e-mails concerning purchase of the Porsche, and a ledger with respondents handwriting, which the court admitted over his objection.
1. ITTIs Valuation; Contributions to Appellants Expenses
The ITTI 2005 tax return reflected taxable income of $126,496 before net operating loss deduction and special deductions, on gross sales of $581,423. The 2006 tax return showed gross profits of $298,000, but a deduction of $325,708 which was much higher than in previous years. Appellant testified that $274,000 of this amount was the cost to buy the equipment, but he also acknowledged that he sold the equipment at a higher price.
Robert Laversin, a certified public accountant and partner in American Business Appraisers, LLP, testified as an expert on the fair market value of ITTI as of December 31, 2005, the date of separation. Per his report, Laversin valued the business at $244,000. He received disjointed information; check registers, deposit summaries, or any other business records that would allow the firm to compare operations to the income tax returns were not provided. Fundamental business records requested were not furnished. A significant portion of business was conducted with cash and cashiers checks. Cash transactions referenced borrowing and loan repayments but no copies of notes or a repayment schedule were forthcoming. Transactions conducted in ITTIs name were conducted through a Chinatrust Bank account, yet appellant did not provide any records for that bank. It was Laversins opinion that ITTIs record keeping did not meet the requirements of the Internal Revenue Service. The stock ledger showed 9 million shares outstanding, yet the corporation was authorized to issue 6 million shares.
Further, although appellant originally owned 50 percent of the companys 6 million authorized shares, he testified his position was diluted because he transferred 660,000 shares in exchange for the opening [of] the line of credit. No consideration was received for these shares. At trial appellant claimed he only owned 8 percent of the corporation.
2. Porsche
Appellant testified that an entry of $30,830.50 expensed to ITTI on December 17, 2005, as equipment represented ITTIs purchase of a Balzer E-gun, an electrical gun for the high tech equipment for the coating machines. Around that time appellant purchased a Porsche. Appellant testified he paid $27,000 to $28,000 for the car before taxes and the auction fee. He borrowed money from a friend. Confronted with trial exhibit 58, an e-mail dated December 15, 2005 advising him on the availability of a Porsche Boxster at the price of $30,830.50, appellant said he recognized the e-mail but started to complain that respondent tainted the document, stating she can enter any number she want. He testified the car had been repossessed by the lender and it was no longer in his possession.[1]
Haiqun Chu testified that in December 2005, he lent appellant $28,000. Appellant signed an agreement but Chu did not keep it. Appellant paid Chu for eight months and then stopped paying. Chu took the car back. He keeps it at his apartment, which is not near appellants apartment. Chu did not remember the license plate number of the car; he does not drive it on a regular basis. Sometimes Chu allows appellant to use the car at no charge.
3. Respondents Testimony
Respondent testified that she expects to earn $25,000 (Canadian dollars) a year when she secures employment. She explained that appellant shared with her what was happening with ITTI. He never took on other investors as he claimed. Further, the company made a profit every year. In 2005, he was putting aside money to purchase another condominium.
At the end of 2005 appellant told respondent that he purchased a Porsche, paying cash. At that time he also gave her a $9,000 ITTI check to deposit into his Vancouver account. Respondent identified nine presigned checks that appellant gave her to deposit into the Vancouver account at various times, according to his direction. Six totaled $51,000 and three were blank as to the amount. Appellant gave her a pen to date the checks so everything would be the same.
According to respondent, appellants brother and his wife were arrested in California for a prostitution-related crime. The brother served a year in jail then was deported to Vancouver, along with the family. He purchased a condominium in the same complex where respondent and F.Z. reside. Respondent explained that once the brother was suspected of illegal activities, appellant exchanged his computer for her clean one. In the summer of 2005, he brought all ITTI documents to Vancouver because he was afraid that his place [would] be searched and F.B.I. [would] find illegal things. He provided respondent with information regarding sales and asked her to go to Toronto to help pack machines for delivery to Asia if he got arrested. He also showed her the locker where money was hidden. Further, on more than one occasion appellant voluntarily gave her the password to his e-mail account.
Respondent received a call from appellants brother in December 2005, informing her that if she wanted something from the company, we will find a way to make you . . . get zero. We will dissolve this company.
4. Trial Court Decision
The trial court issued a statement of decision resolving the following issues pertinent to this appeal in respondents favor:
(a) Spousal Support: The court concluded that [w]ith a short-term marriage, a handicapped spouse[[2]] and the prospect of future earnings, limited term, step-down spousal support is reasonable. It ordered support as follows: $1,500 per month, to be reduced to $1,000 effective January 1, 2010, and further reduced to $500 per month for one year, with support terminating January 1, 201l.
(b) Valuation of ITTI: The court valued the communitys interest in ITTI at $63,248 (one-half the corporations net income in 2005) and charged appellant with that sum in the division of community property.
(c) Porsche: The court did not give credence to appellants testimony about the purchase of the Porsche or the companys purchase of German equipment at the same price as the car. The cars convenient home in appellants parking space also undermined his testimony. The court awarded the Porsche to appellant at a value of $28,000.
(d) Attorney fees, costs and sanctions: The court ordered appellant to pay an additional $18,000 toward respondents fees of $89,000.[3] $5,000 of that award was denominated as sanctions for conduct that frustrated the policy favoring settlement and increased significantly the costs of litigation.
D. Events After Trial
On April 28, 2008, the trial court signed and entered the judgment submitted by respondents counsel. Judge Carville, who inherited the case from Judge Northridge, indicated he erroneously signed a judgment on February 19, 2008. This was a judgment submitted by appellant, without sending notice to respondents counsel, consisting of the Judicial Council form FL-180 with the statement of decision attached. Judge Carville vacated this judgment upon discovering the error.
II. DISCUSSION
A. No Judicial Bias or Conflict of Interest
Appellant says the entire proceedings were contaminated because Judge Northridge was biased against him and had a conflict of interest. Specifically, he claims Judge Northridge did not permit him to cross-examine respondents counsel and barred appellant from effectively cross-examining respondent. These actions purportedly were infected with bias because the judge possessed a silent and predetermined decision that [respondents] and [counsels] criminal theft of Appellants password protected e-mails . . . should not be adjudicated in [the] Family Law matter. This decision in turn led the judge to disregard respondents admission of criminal theft.
This argument is nonsense. First, the trial court properly denied appellants request to examine respondents attorney. Counsel had no independent knowledge of facts apart from what he learned in the course of representing respondent. Any testimony from counsel would invade the attorney-client privilege.
Second, the court did not improperly restrict appellants cross-examination of respondent. We have reviewed the record and find no impropriety on the courts part. In fact, the court tried to be helpful.
Third, there is no evidence in the record that appellant admitted criminal conduct or that the trial court concluded that she did. Appellant seizes on the following passage from the courts statement of decision: While [appellant] alleges [respondent] used his computer without his permission [which she admits] . . . . (Italics added.) ITTI was a community asset. Respondent was entitled to access information about the company with or without appellants permission. Further, respondent testified that appellant switched computers with her so he could have her clean machine. He then put all the ITTI data into her computer.
B. Trial Court Did Not Improperly Admit Criminally Obtained Evidence
Following on his original theme, appellant initially asserts that he submitted proof that respondent criminally hacked into his e-mail account, criminally intercepted financial documents and e-mails, and made summary notations on some downloaded documents or e-mails and then submitted these documents at trial. Again, ITTI is a community asset. Respondent testified appellant voluntarily gave her the password to his e-mail account so she checked the e-mails. ITTI data was transferred to her computer per initiation by appellant. Respondent acknowledged that she made explanatory notations on contracts and an e-mail printout as documentation she provided her lawyer.[4] And, it goes without saying, appellant had no legitimate expectation of privacy in these documents. There is no credible evidence of any criminal activity.
C. Trial Court Properly Designated Additional Income when Calculating Child Support
In a DissoMaster calculation for child support, the court entered $1,726 under [o]ther nontaxable income. Appellant states that this amount came from his paystub which showed nontaxable earnings listed as [e]xpense [r]eimbursement. He claims that these reimbursements are sums he spent on business trip and purchasing parts for the company. Appellant offered no evidence at trial to support this claim.
Family Code[5]section 4058, subdivision (a)(3) provides that in computing a parents annual gross income from whatever source derived, the court, in its discretion, can include employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts. Courts have concluded that reimbursed meal expenses incurred during a vocational training program (Stewart v. Gomez (1996) 47 Cal.App.4th 1748, 1755-1756), as well as an employer-financed car allowance and rent subsidy (In re Marriage ofSchulze (1997) 60 Cal.App.4th 519, 528-529), were properly included as income for purposes of ascertaining child support.
Appellant testified that ITTI had paid for his gasoline and mileage, and provided rent for the use of his apartment.
The trial court reasonably concluded that nontaxable earnings in the nature of expense reimbursements and benefits that appellant received from his employer should be included as part of his gross income for child support purposes. Given appellants lack of candor throughout the proceedings, the trial court was justified in inferring that appellants employer provided benefits and expense reimbursements that reasonably could be considered income.
D. Trial Court Did Not Abuse Its Discretion in Entering Spousal Support Order
Appellant first complains about the trial courts reference to respondent as a handicapped spouse in the spousal support section of its decision. Respondents hand injury was mentioned in the trial brief as a limitation on her earning capacity. The trial court could observe respondents condition. Appellant suggests without citation to any authority that her condition needed to be certifi[ed]. Further, he did nothing to refute the condition in the trial court.
Appellant challenges the length of spousal support, given the courts finding that it was a short-term marriage. The court ordered spousal support through January 1, 2011, such that respondent would have been paying support for more than four years. The duration of the marriage was over six years.
The court analyzed all the applicable factors set forth in section 4320, which the court must consider when ordering spousal support. Appellant seizes on the courts reference to section 4320, subdivision (l), which states: The goal that the supported party shall be self-supporting within a reasonable period of time. Except in the case of a marriage of long duration . . . , a reasonable period of time for purposes of this section generally shall be one-half the length of the marriage. However, nothing in this section is intended to limit the courts discretion to order support for a greater . . . length of time, based on any of the other factors listed in this section . . . .
The court specifically underscored its discretion to order support for a greater length of time. It properly considered a number of section 4320 factors, including respondents expectation of being fully employed in July 2008 with earnings of about $25,000 annually; the extent to which respondents earning capacity was impaired by virtue of being F.Z.s primary caregiver; respondents continued need for support; and appellants ability to pay. The trial court was well within its discretion ordering appellant to pay limited term, step-down spousal support through January 1, 2011.
E. No Abuse of Discretion in Valuation of ITTI
1. Date of Valuation
Section 2552, subdivision (a) sets forth the general rule that community assets must be valued as near as practicable to the time of trial. However, the trial court has discretion to value such assets at an alternate date upon a showing of good cause. (Id., subd. (b).) Under the good cause exception to the trial date valuation, reviewing courts have condoned setting the date of separation as the valuation date for professional practices and small businesses which rely on the skill and reputation of the spouses who operate them. (In re Marriage of Duncan (2001) 90 Cal.App.4th 617, 624-626; In re Marriage of Stevenson (1993) 20 Cal.App.4th 250, 253-254.) This valuation date also relieves any concern that an operating spouse might deliberately trash the business before trial. (In re Marriage of Stevenson, supra, at pp. 254-255.) Additionally, the date of separation has been upheld on appeal where the state of the operating spouses recordkeeping made it difficult if not impossible to calculate the value of the business postseparation. (In reMarriage of Nelson (2006) 139 Cal.App.4th 1546, 1550-1551.)
Here the trial court selected a valuation date of December 31, 2005, based on its assumption that the parties agreed to that date. Respondents expert valued ITTI as of that date, which was within days of the date of separation. Appellant challenges this date on appeal, although he stipulated to the admission of Laversins report and never objected during the trial to the valuation date reflected in that report.[6]
Notwithstanding any confusion on the trial courts part as to the parties agreement, the date of separation was the appropriate valuation date given that the business was operating as a personal venture of appellant alone. As well, appellant did not provide Laversin with sufficient documentation to otherwise value ITTI. In addition, respondent testified that at the end of 2005, appellants brother told her the brothers would dissolve ITTI if she want[s] anything from the company. Further, the fact that appellant formally dissolved the corporation at the beginning of January 2007 supports an inference that he began winding down its affairs in 2006. Therefore, good cause existed to value the enterprise prior to its wind-down and dissolution.
2. Documentation
The trial court valued the community interest in ITTI at $63,248, or half the companys net income for 2005. It noted there was no evidence of any agreements with third parties to whom shares were purportedly transferred; no entries showing the sale of securities to third parties in any documents or financial records; no records showing how shares were issued or the investors financial commitment; no reflection on the balance sheet of the existence of capital stock or paid in capital; no general ledger; and no documentation showing deposits into Chinatrust Bank. The court further explained that it evaluated the absence of documentation as to share transfers, ledgers, tax return back up, the book value as of December 31, 2005 and the various tax returns of the corporation as well as the ability of [appellant] to use the corporation funds on an as-needed basis.
Appellant contests the courts finding, arguing that it abused its discretion by claiming absence of documentation . . . .
Ample evidence supports the absence of documentation, in particular (1) Laversins testimony about the dearth of documentation and (2) appellants admission at trial that he didnt provide all the ITTI documentation requested by respondent following the trial courts order to produce.
Appellant points to reams of documents that were filed and scanned into the trial courts computers on (CT 35-155). However, only two of appellants exhibits were admitted at trial: a stock certificate showing appellants 480,000 shares of ITTI and a stock transfer ledger showing issuance of only 6 million shares. The trial court did not abuse its discretion in rendering a value based on the limited information forthcoming on ITTI.
3. ITTI Equalization Payment
Appellant also faults the order charging him with the value of the communitys half-interest in the company. He construes this order as requiring him to pay $63,248 in the division of the community property. Appellant misunderstands the order. The court awarded the value of ITTI to appellant, which means he owes respondent one-half that amount.
F. Award of Porsche to Appellant
Awarding the Porsche to appellant at a value of $28,000, the court determined that appellants story about the Porsche and the German equipment itemized on an ITTI expense sheet was not credible. Appellant repeats his claim that the court admitted altered evidence regarding sale of the Porsche. We previously disposed of this concern.
Appellant also charges that the court suppress[ed] appellants witness and documents as evidence. The court did not mention Chus testimony in its decision, nor did it reference the witnesss documents, which were not admitted into evidence. The court had no duty to do so. It is clear that the court did not accept Chus testimony as validation for appellants testimony, concluding that appellants statements about the purchase of the 2002 Boxster Porsche over the Internet, his borrowing of money and the cars convenient home in his parking space do not ring true. It is the trial courts job to make credibility determinations. In this case, the determination did not favor appellant.
G. Attorney Fees and Sanctions
Respondents attorney fees and costs for the dissolution ($70,806.02) and the appeal ($6,801.75) approached $80,000. The trial court ordered appellant to pay $18,000 (in addition to his prior payment of $16,000), with $5,000 of the current sum denominated as sanctions. Appellant claims the court abused its discretion in awarding these fees.
Section 2030, subdivision (a)(2) authorizes an award of fees based on the parties relative needs and ability to pay. The court noted that appellant is fully employed with a greater ability to pay than respondent, who will just be entering the job market. The court was well within its discretion to order the additional fees on these facts.
Section 271, subdivision (a) authorizes a court to base an award of attorney fees and costs on the extent to which [a partys] conduct . . . 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. Fees imposed under this section is in the nature of a sanction. (Ibid.) As an example of appellants negative conduct, the court pointed to the filing of a dissolution proceeding in Canada a year after commencement of the California case. Other examples are the pursuit of a RICO suit against respondent and her counsel and his refusal to produce documents and attend his deposition. Again, the court was well within its discretion to denominate $5,000 as sanctions.
III. DISPOSITION
The judgment is affirmed. Respondents motion for sanctions on appeal is denied.
_
Reardon, J.
We concur:
_
Ruvolo, P.J.
_
Rivera, J.
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[1]Respondent identified photographs she took in August 2007 showing the Porsche parked in appellants parking space at his Fremont apartment.
[2]According to respondents trial brief, she is partially disabled as a result of an automobile accident which occurred during her childhood and severely injured her right ha[n]d. She can only type using one finger of her right hand.
[3]This amount included $9,904.18 incurred in the federal action which the trial court did not consider.
[4]Appellant similarly argues that the court admitted altered evidence at trial, namely exhibit 44A. This exhibit contains a line in a running ledger for December 2005, with the entry: 30830.50 Equipment (he actually bought a car). When respondents counsel showed the exhibit at trial, he admitted, I agree that her handwriting appears in here. At the time of admission of the exhibits, the court was well aware that appellant had added notations to several documents. Respondent acknowledged that she changed the font size and added the phrase about buying a car.
[5]All statutory references are to the Family Code.
[6]In written closing statement filed after trial, appellant urged the court to base its valuation on a number of factors, thus suggesting, but not stating, valuation at the date of trial.
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