In re Marr. of Morgan

Filed 6/13/08 In re Marr. of Morgan CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment and order of the Superior Court of Orange County, Robert H. Gallivan and Franz E. Miller, Judges. Judgment reversed and remanded. Order affirmed.

Garrett C. Dailey and Karen A. Rhyne for Appellant Margaret B. Morgan.

Richard A. Higbie for Appellant Ralph P. Morgan, Jr.

* * *

Margaret and Ralph Morgan separately appeal various property division rulings of the trial court, and Ralph^[1]challenges an attorney fee award and a separate order requiring the parties to sell jointly owned real property to a third party.

Margaret contends the trial courts statement of decision is deficient because it was entered after the judgment, fails to adequately explain the legal and factual basis for the trial courts rulings, is inconsistent, and fails to include necessary findings. She further contends the trial court erred in accepting the asset tracing methodology of Ralphs expert in determining that certain accounts and properties were Ralphs separate property. Margaret also challenges the trial courts finding that she knowingly and voluntarily executed a quitclaim deed, thereby disavowing any interest in the Cabrillo real property. Finally, she contends the trial court improperly allowed Ralph to offset spousal support payments based on expenses Ralph paid for her, and misinterpreted a stipulation reached by the parties.

Ralph contends the trial courts attorney fee award was an abuse of discretion because Margaret advanced unreasonable arguments without legal support and refused to produce records. Ralph also contends the trial court lacked jurisdiction to order the clerk to execute documents on his behalf for the sale of jointly owned property, and that the court should have accepted his offer to purchase Margarets share of the property instead.

We conclude the trial courts statement of decision adequately explains most of the legal and factual bases for its decision, but agree with Margaret that it fails to address all of the issues raised. Significantly, the statement accepts the total recapitulation tracing methodology of Ralphs expert, but fails to find that through no fault of Ralph, it would have been impossible to ascertain the balance of income and expenditures at the time the parties acquired the property items in question. We also conclude sufficient evidence supported the trial courts conclusion Margaret knowingly and voluntarily executed the quitclaim deed. We do, however, agree with Margaret that the trial court erred by allowing Ralph an offset to his accrued spousal support responsibility.

Finally, we conclude the trial court did not abuse its discretion in awarding Margaret attorney fees, and in authorizing the court clerk to execute the property sales agreement. Accordingly, we affirm the trial courts order regarding sale of the property, but reverse the judgment and remand for further proceedings consistent with this opinion.

I

Factual and Procedural Background

In 1989, 69-year-old Ralph married Margaret, who was 53 years old. At the time of their marriage, Ralph was retired and owned $353,548 in separate property assets. In addition, Ralph and Margaret owned a property on 15th Street in Costa Mesa, purchased in 1984, as tenants in common with Ralph owning two-thirds, and Margaret owning one-third. Other than her interest in the 15th Street property, Margaret entered the marriage with no separate property.

In 1996, Ralph purchased for cash a residence at 191 Cabrillo Street. Believing Ralph used only his separate funds to purchase the property, Margaret executed a quitclaim deed disclaiming any community interest in it.

In 2002, Margaret filed for divorce. After a three-day trial, the court ordered the partition and sale of the 15th Street property, and issued its statement of decision, which included the following findings relevant to the present appeal: (a) the parties had agreed that Ralph would pay two-thirds of the expenses associated with the 15th Street property, and Margaret would pay one-third; (b) the parties had agreed to share one-half of their household living expenses; (c) Margaret made the payments agreed upon until May of 1999 and [Margarets] obligation to pay her proportionate share of the expenses was satisfied; (d) Margaret owes $19,602.31 as her share of the agreed expenses from July 1984 until June of 1989; (e) Margaret owes Ralph $15,877.50 for expenses in refinancing a CUNA loan on the 15th Street property; (f) the $44,789 Margaret removed from Ralphs American Airlines Credit Union account is community property, and the court would charge one-half of this amount against Margarets share of the 15th Street sales proceeds; (g) the $18,318 Margaret removed from the parties joint American Airlines Credit Union account is community property, one-half of which is charged against Margarets share of the 15th Street sales proceeds; (h) the parties jointly invested in a Palm Springs condominium, with the sales proceeds to be divided equally; (i) the parties agreed to use some of the sales proceeds from the Palm Springs condominium to improve the 15th Street property, and Ralph deposited $29,500, and Margaret deposited $10,000, of the proceeds in a Downey Savings account reflecting their two-thirds/one-third respective interests in the 15th Street property; (j) on separation, Margaret took the entire proceeds of the Downey Savings account, and is charged with $19,500 to be paid to Ralph from her share of the 15th Street sales proceeds; (k) $29,088 taken by Ralph from the parties joint Schwab account was community property and $14,544 is to be paid to Margaret from his portion of the 15th Street sales proceeds; (l) the parties Cal Fed account is a joint account with the parties each entitled to one half; Margaret took $2,000 from the account at separation, and is charged with $1,477 from her share of the 15th Street sales proceeds; (m) [t]he court finds that there was no community property interest in the Cabrillo house and finds that it was acquired with separate property funds. [Margaret] knowingly and voluntarily quitclaimed any interest in the property to [Ralph]; (n) [t]he court finds that the opinion of [Margarets] expert that the separate property was exhausted or gone is not supported by the evidence; (o) [t]he court finds the opinion of [Ralphs] expert, Mr. Sperry, was credible while the opinion of [Margarets] expert, Mr. Lesley was based on assumptions not supported by the evidence; (p) [t]he court finds that the Sperry recapitulation tracing is acceptable in view of the long record keeping required and considering the fact [Ralph] was not employed during the marriage and [Margaret] was the only wage earner.

The trial court also ordered Ralph to make $400 monthly spousal support payments to Margaret, but gave Ralph an offset against Margarets share of property expenses accrued after May 1999. The court awarded Margaret $52,000 as a contribution to her attorney fees, payable from Ralphs share of the 15th Street sale proceeds. The trial court retained jurisdiction to supervise the partition and sale of the 15th Street property.

The parties listed the 15th Street property for sale with a real estate broker for $899,000. The broker received three third party offers on the property, with the highest being $870,000. Ralph refused to accept any of the third party offers, and instead offered to purchase Margarets share of the property. Ralph, however, did not have the cash on hand to complete the transaction, but proposed paying Margaret in three payments with money borrowed from relatives. The trial court granted Margarets ex parte application to authorize the clerk of the court to execute a sales agreement for the property so that it could be sold to the third party offeror.

Both Margaret and Ralph appeal portions of the trial courts rulings on the property division issues, and Ralph challenges the attorney fee award and order selling the property to a third party.

II

Discussion

A. The Trial Courts Statement of Decision Fails to Address Certain Issues and Is Ambiguous in Part

Margaret contends the trial courts statement of decision is legally inadequate because it is vague, incomplete, and contradictory We agree in part.

Upon the timely request of one of the parties in a nonjury trial, a trial court is required to render a statement of decision addressing the factual and legal bases for its decision as to each of the principal controverted issues of the case. [Citation.] A statement of decision need not address all the legal and factual issues raised by the parties. Instead, it need do no more than state the grounds upon which the judgment rests, without necessarily specifying the particular evidence considered by the trial court in reaching its decision. (Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1124-1125.) The court is required only to state ultimate facts, not evidentiary ones. (People v. Casa Blanca Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509, 524 (Casa Blanca).) The failure to make a finding on an issue raised in the pleadings and supported by substantial evidence is harmless when the missing finding reasonably may be found to be implicit in other findings. The failure to find is also harmless when, under the facts of the case, the finding necessarily would have been adverse to the appellants. (McCullough v. Jones (1970) 11 Cal.App.3d 270, 275 (McCullough).)

Margaret first challenges the courts decision concerning the Cabrillo property, which reads: 16. The court finds that there was no community property interest in the Cabrillo house and finds that it was acquired with separate property funds. The petitioner knowingly and voluntarily quitclaimed any interest in the property to the respondent. Margaret argues the statement should have explained why the court characterized the Cabrillo house separate property even though most of the money used to purchase it came from a joint bank account. She also argues the statement should have specifically addressed her claim that Ralph coerced her into quitclaiming any interest in the property she may have held.

We conclude the foregoing paragraph sufficiently states the grounds for the courts conclusion the Cabrillo property was Ralphs separate property. The courts finding that Margaret knowingly and voluntarily quitclaimed her interest in the property alone is sufficient to support the courts separate property determination; the court was not required to specify the evidence it relied on in making this finding.

Margaret also challenged the trial courts finding on the credibility and methodologies of the two competing expert witnesses, which reads: 18. The court finds that the opinion of petitioners expert that the separate property was exhausted or gone is not supported by the evidence. The court finds the opinion of respondents expert, Mr. Sperry, was credible while the opinion of petitioners expert, Mr. Lesley[,] was based on assumptions not supported by the evidence. [] 19. The court finds that the Sperry recapitulation tracing is acceptable in view of the long record keeping required and considering the fact the respondent was not employed during the marriage and the petitioner was the only wage earner.

Margaret contends the foregoing fails to explain the trial courts legal reasoning and ultimate result because the court did not specify the appropriate starting point for a tracing analysis, and did not address potential perjury issues arising from a large discrepancy between an asset schedule Ralph provided to Sperry and testimony Ralph provided in connection with a previous divorce. We disagree. In finding Sperry a credible expert and that he used an acceptable method of tracing, the court implicitly found Sperrys use of the disputed asset schedule Ralph provided was an appropriate starting point for tracing.

Margaret also contends the statement of decision failed to address her request for a Moore/Marsden interest^[2]in the 15th Street property, or a Watts credit^[3]for Ralphs use of the property after separation. Ralph agrees with Margaret on her Moore/Marsden claim, and contends the court also failed to address his own Moore/Marsden request. Ralph offers no comment concerning Margarets Watts reimbursement request. Because the trial court failed to address these issues in its statement of decision, we must remand for the trial court to resolve the matter.

Finally, Margaret contends the statement of decision is inconsistent regarding premarital household living expenses. The court found the parties had agreed before marriage to share property expenses of the 15th Street property, with Margaret paying one-third, and Ralph paying two-thirds. The court also found the parties had agreed before marriage to share household living expenses equally. The statement of decision at paragraph four states that the petitioner [Margaret] made the payments agreed upon until May of 1999 and the petitioners obligation to pay her proportionate share of the expenses was satisfied. In paragraph seven of the statement of decision, however, the court purports to find that petitioner owes $19,602.31 as her share of the agreed expenses from July 1984 until June of 1989 when the parties moved to Durham.

Because the statement of decision refers simply to expenses in both paragraphs four and seven, it is not clear whether the statement contains an inconsistency, or whether it is referring to property expenses in one paragraph, and household living expenses in the other. The attachment to the judgment clarifies that paragraph seven refers to agreed expenses of the jointly owned property, but does not clarify what expenses are being referenced in paragraph four. Although we might assume paragraph four refers to household living expenses, it is far from clear. Ralph does not address Margarets contention that the statement of decision is self-contradictory. Accordingly, on remand, the trial court shall clarify the statement of decision regarding what expenses are being referenced in paragraphs four and seven, and resolve any inconsistency between the two.

Finally, Margaret contends the judgment was a nullity because a statement of decision was required, but was not filed until after the trial court entered judgment. A judgment entered without findings where findings are required is a nullity . . . [citation], and findings signed and filed after entry of such a judgment cannot resurrect it. (In re Marriage of Davis (1983) 141 Cal.App.3d 71, 77.) As Margaret acknowledges, however, our reversal of the judgment and remand for additional findings will cure this defect, assuming the trial court files the amended statement of decision before entering the new judgment.

B. The Trial Court Failed to Make a Required Finding Before Accepting Sperrys Tracing Methodology

Margaret contends the trial court erred in accepting the tracing method employed by Ralphs expert. We conclude the expert used an appropriate methodology, but the courts failure to make preliminary findings requires us to remand the matter for further proceedings.

To determine the parties rights and liabilities with regard to a particular asset or obligation, the trial court must characterize the asset or liability as community or separate property. (In re Marriage of Haines (1995) 33 Cal.App.4th 277, 291.) The trial courts finding that an asset is separate or community property is a question of fact, subject to limited review. (Bono, supra, 103 Cal.App.4th at p. 1421.) Our duty is to determine whether any substantial evidence supports the trial courts finding. (Ibid.)

By contrast, the selection of the legal principle to determine whether an asset is separate or community property is a question of law we review independently. (Bono, supra, 103 Cal.App.4th at p. 1421.) [W]here mixed questions of fact and law require a critical consideration, in a factual context, of legal principles and their underlying values, the question is predominantly legal and its determination is reviewed independently. [Citation.] [Citation.] (Ibid.)

Family Code section 760 provides: Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. As the California Supreme Court explained in See v. See (1966) 64 Cal.2d 778, 783 (See), Property acquired by purchase during a marriage is presumed to be community property, and the burden is on the spouse asserting its separate character to overcome the presumption. [Citation.] The presumption applies when a husband purchases property during the marriage with funds from an undisclosed or disputed source, such as an account or fund in which he has commingled his separate funds with community funds.

Separate property commingled with community property does not lose its characterization as separate property if the components of the commingled mass can be adequately traced to their separate property and community property sources. [Citation.] But if the separate property and community property interests have been commingled in such a manner that the respective contributions cannot be traced and identified, the entire commingled fund will be deemed community property pursuant to the general community property presumption of section 760. (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 822-823 (Braud).)

Courts may use either of two tracing methods to determine the characterization of the disputed property interests: direct tracing, or family living expense tracing. (Braud, supra, 45 Cal.App.4th at p. 823.) Whether the spouse claiming a separate property interest has shown a separate property source for the asset is a question of fact for the trial court, and we must uphold the courts finding if supported by substantial evidence. (Ibid.)

As Braud explains: Under the direct tracing method, the disputed asset . . . is traced to the withdrawal of separate property funds from the commingled account. This method requires specific records reconstructing each separate and community property deposit, and each separate and community property payment as it occurs. Separate property status cannot be established by mere oral testimony of intent or by records that simply total up all separate property funds available during the relevant period and all the separate expenditures during that period; such records do not adequately trace to the source of the purchase at the time it was made. [Citation.] (Braud, supra, 45 Cal.App.4th at p. 823, original italics.)

Under the family living expense or recapitulation method, it is assumed that family living expenses are paid out of community property funds. [Citation.] Payments may be traced to a separate property source by showing community income at the time of the payments or purchase was exhausted by family expense, so that the payments or purchase necessarily must have been made with separate property funds. [Citation.] The recapitulation must be sufficiently exhaustive to establish not only that separate property funds were available to make the payments, but that they were actually used. [Citation.] As with direct tracing, the record must demonstrate that community income was depleted at the time the particular asset was acquired. [Citation.] (Braud, supra, 45 Cal.App.4th at pp. 823-824.)

Although Sperry performed direct tracing in certain accounts, he also relied on the recapitulation method for determining separate property. Sperry did not, however, determine for each of the accounts and assets analyzed whether the community income had been depleted at the time the account received funds or the asset was acquired. Indeed, Sperry noted that Margaret whose salary provided virtually all of the couples community funds had not supplied any information that would indicate where any of her earnings ever went.

The requirement that a recapitulation must demonstrate that community income was depleted at the time the particular asset was acquired is subject to a narrow exception. When, through no fault of the party asserting the separate nature of the asset, it is impossible to ascertain the balance of community income and expenditures at the time the parties acquired the properties, a party may recapitulate the total community expenses and income throughout the marriage to establish the propertys character. (See, supra, 64 Cal.2d at p. 783; Estate of Arstein (1961) 56 Cal.2d 239, 242; Estate of Ades (1947) 81 Cal.App.2d 334.) The trial court did not make this express finding, but simply noted Sperrys method was acceptable in view of the long record keeping required . . . . As Margaret correctly notes, the difficulty in recordkeeping posed by a long marriage alone does not justify application of a total recapitulation method.

Ralph contends the evidence demonstrated Sperry was hampered by Margarets refusal to produce needed records. Although we find support in the record for this contention, the trial court failed to make any finding on the issue and nothing in the record demonstrates the court considered the matter. Accordingly, we direct the trial court on remand to determine whether, through no fault of Ralph, it was impossible to ascertain the communitys income and expenditures at the time the disputed properties were acquired, so as to justify Sperrys use of the total recapitulation method. If the trial court determines the answer to the foregoing question is no, the court may nonetheless consider whether the evidence at trial demonstrated a sufficient showing of direct tracing or recapitulation pertaining to specific assets.

C. Substantial Evidence Supports Sperrys Conclusion on Total Recapitulation

Assuming the trial court finds Ralph could not, through no fault of his own, calculate the community income and expenses, we conclude substantial evidence demonstrates the parties expenses consumed virtually all of their community income during the marriage. As Ralph notes, the evidence shows he was retired when he married Margaret, and earned little during the marriage. Although Margaret was employed, she testified that after regular living expenses, buying a car, and fixing her teeth, there wasnt a whole lot left.

Substantial evidence also demonstrates Ralph had considerable separate assets entering the marriage. In performing his analysis, Sperry testified Ralph had approximately $353,548 in separate property before his marriage to Margaret, not including his two-thirds interest in the 15th Street property. Sperry identified the initial source of this information as a spreadsheet dated March 1989 that Ralph represented to Sperry was kept in the normal course of business to track his investments. Sperry verified the information by looking at backup statements to the extent available, along with Ralphs 1989 tax return. Sperry testified he verified all of the amounts on the spreadsheet with the exception of approximately $36,000 in one fund. Margaret decries the use of Ralphs 1989 spreadsheet and Sperrys inability to independently verify the $36,000. But she provides no authority demonstrating Sperry could not rely on this information in performing his analysis. Moreover, she did not object to this portion of Sperrys testimony; thus, any inadequacy in the source documents Sperry relied upon would bear upon the weight and credibility of Sperrys testimony, which we presume the trial court considered in making its decision.

D. The Trial Court Correctly Determined Margaret Waived Any Interest in the Cabrillo Property

The trial court found that Margaret knowingly and voluntarily quitclaimed any interest she had in the Cabrillo property to Ralph. Margaret contends the trial court erred by not considering the presumption of undue influence. Specifically, she relies on her testimony that she feared Ralph and that Ralph misled her regarding the source of the funds used for the down payment. We do not find the contention persuasive.

When an interspousal transaction provides one spouse an unfair advantage over the other, a presumption of undue influence arises. (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 734.) In such instances, the benefitted party must demonstrate the transaction was freely and voluntarily made, with full knowledge of all the facts, and with a complete understanding of the effect of the transfer. (In re Marriage of Delaney (2003) 111 Cal.App.4th 991, 1000.) [W]hether or not the spouse gaining such an advantage has overcome the presumption of undue influence is a question for the trier of fact, whose decision will not be reversed on appeal if supported by substantial evidence. (Weil v. Weil (1951) 37 Cal.2d 770, 788.)

Although Margaret testified she felt threatened and intimidated by Ralph when she signed the quitclaim deed, substantial evidence supports a contrary view. Ralph testified he asked Margaret to go with him to the escrow office because he had not signed escrow papers before, and she had been in the escrow business. Ralph denied asking Margaret to sign the quitclaim deed, testifying the escrow agent presented it to Margaret without any input from him. Ralph testified that Margaret read the deed over before she signed it.

Moreover, Margaret acknowledged in her testimony she had been a real estate agent for several years when she signed the document and knew the significance of a quitclaim deed. She also testified she intended the Cabrillo property to be Ralphs separate property, and believed at the time that Ralph used separate funds to purchase the property. Ralph testified that although most of the down payment came from a joint account, the money in that account was his separate property and that any money Margaret deposited was money she owed him.

The foregoing testimony demonstrates substantial evidence sufficient to overcome the presumption of undue influence. Accordingly, the trial court did not err in determining Margaret voluntarily and knowingly executed a valid quitclaim deed.

E. The Trial Court Erred in Permitting Ralph to Offset Expenses Margaret Owed Him Against His Unpaid Spousal Support Obligation

The trial court ordered Ralph to pay Margaret temporary spousal support pending the trial. Instead of paying the support, Ralph used as an offset a debt Margaret owed him under an agreement to pay one-third of the expenses associated with the 15th Street property. In its ruling, the trial court approved Ralphs unilateral offset. We agree with Margaret the trial court erred in giving its imprimatur to this reduction.

It is settled that a decree for spousal support may be modified as to installments to become due in the future. As to accrued installments it is final. [Citations.] [] A subsequent order which relieves the husband from paying accrued spousal support in cash as ordered, and discharges said spousal support by offsetting it against an indebtedness of the wife to the husband existing at the time of entry of the divorce decree is a modification as to past due installments, just as is an order requiring the wife to accept in full settlement of accrued spousal support less than the full amount due. (Keck v. Keck (1933) 219 Cal. 316, 320; Williams v. Williams (1970) 8 Cal.App.3d 636, 638.) The trial court thus erred in allowing Ralph an offset against accrued spousal support payments.

F. Substantial Evidence Supports the Trial Courts Orders Regarding Unpaid Property Expenses

In addition to contending the $19,602.31 charged against her in paragraph seven of the statement of decision is inconsistent with paragraph four, Margaret asserts substantial evidence does not support the award itself. Specifically, the court reached its result by relying on trial exhibit 115, which Ralph prepared. Margaret contends the trial court erred because Ralph failed to lay a foundation identifying the document, establishing the method of its preparation and the steps taken to ensure its accuracy. We disagree.

Margaret never raised foundational objections to exhibit 115 at trial. Indeed, her counsels sole comment to the court on the exhibit was 115, theres no objection. She therefore forfeited any objections to the exhibit on appeal.

Similarly, Margaret challenges the sufficiency of the evidence to support the trial courts allocation of $15,877.50 as her share of Ralphs refinancing the 15th Street property. She asserts the trial court simply adopted exhibit 119, and accepted Ralphs testimony on the subject. Margaret argues that Ralph produced no records to verify the expenditures listed on the exhibit and introduced no evidence regarding the source of money he used in paying the expenses.

Again, Margaret did not object to the admission of exhibit 119, telling the court, 119 can come in. In addition, Ralph testified that he, and not Margaret, paid the expenses of the loan listed on the exhibit. We conclude the evidence presented supports the trial courts finding.

G. The Trial Court Did Not Err in Dividing the Assets Subject to the Parties Stipulation

Margaret contends the trial court erred when it divided certain assets in accord with a stipulation she reached with Ralph during the trial. We disagree.

During trial, Margarets counsel stipulated that upon her separation from Ralph, Margaret withdrew $2,000 from the couples California Federal Bank account, $19,500 from a joint Downey Savings account, and $19,080 from an American Airlines Credit Union account. Margaret contends the trial court erred by ordering her to pay these amounts to Ralph from her share of the community property, instead of simply adding these amounts to her side of the community property balance sheet. She also contends the court charged her with a total of $63,107 ($18,318 plus $44,789) in connection with the American Airlines Credit Union account.

We perceive no error. The stipulation reached did not dictate how much reimbursement Margaret would have to make; instead, Margarets counsel suggested: Your honor, well stipulate that my client did, in fact, take those amounts. Ralphs counsel responded, No objection. Thus, the parties did not stipulate she would only have to repay one-half of the amounts, nor did they agree this constituted the only money Margaret took upon separation.

Accordingly, the terms of the stipulation did not prevent the trial court from ordering Margaret to pay all of the $19,500 taken from the joint Downey Savings account, where the court determined that the money represented Ralphs share of condo sale proceeds. Moreover, the court ordered Margaret to pay one-half of some of the amounts she had taken. For example, the trial court ordered Margaret to pay Ralph one-half of the $18,318 Margaret had taken from the couples joint American Airlines Credit Union account.^[4] True, the trial court also charged Margaret one-half the additional $44,789.93 taken from a purported separate property American Airlines Credit Union account the court determined was actually community property. Although Margaret treats these accounts as one, the trial court did not. Again, nothing in the parties stipulation limited Margarets reimbursement of money taken upon separation to only those three items specifically mentioned.

H. Ralphs Cross-Appeal

1. The Trial Court Did Not Abuse Its Discretion in Denying Some of Ralphs 15th Street Property Improvement Costs

Ralph contends the trial court abused its discretion in denying Ralphs request for Margaret to pay one-third of the $15,194.79 he spent in improving the 15th Street property. In support, Ralph cites only to a printed schedule with numerous cross‑outs and handwritten notations. True, the amounts appear to add up to $15,194.79. But without any further evidence, we cannot determine from this schedule alone that the trial court abused its discretion in denying reimbursement.

2. Substantial Evidence Supports the Trial Courts Equal Division of the Schwab Account No. 5610

Ralph contends the trial court erred in equally dividing Schwab account No. 5610, arguing the only evidence presented demonstrated four-fifths of the fund belonged to Ralph. As Margaret points out, however, Sperry Ralphs own expert initially identified this account as community property, and charged Ralph with the full amount he withdrew. This testimony constitutes substantial evidence supporting the trial courts ruling.

3. The Trial Court Did Not Abuse Its Discretion in Awarding Attorney Fees to Margaret

Ralph contends the trial court abused its discretion by awarding Margaret $52,000 in attorney fees, arguing it rewarded Margaret for advancing untenable legal positions which violated the spirit of the Family Law Act. We disagree.

Attorney fee awards in family law cases are reviewed under the deferential abuse of discretion standard. (In re Marriage of Sullivan (1984) 37 Cal.3d 762, 768-769; In re Marriage of McTiernan & Dubrow (2005) 133 Cal.App.4th 1090, 1110.) We may overturn the trial courts order only if, considering all the evidence viewed most favorably in support of its order, no court could reasonably issue the order. (In re Marriage of Cueva (1978) 86 Cal.App.3d 290, 296.) The Family Law Court has jurisdiction to make attorney fee awards under Family Code section 2010, subdivision (f), with need based awards authorized by Family Code sections 2030 and 2032, considering the parties relative circumstances to insure parity. Nonetheless, the record must establish that the trial court actually exercised its discretion and, in doing so, followed applicable legal principles. (Braud, supra, 45 Cal.App.4th at p. 827.) Even if an abuse of discretion is shown, the error must also be prejudicial to justify reversal. (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1286, 1297-1298.)

Ralph does not attempt to compare the parties relative financial positions, and does not contend the trial court failed to exercise its discretion or follow the applicable legal principles. Ralph also concedes testimony was presented demonstrating Margaret had fewer resources than Ralph. Ralph notes, however, that Margaret has approximately $300,000 equity in the 15th Street house and substantial retirement and savings accounts. He also argues Margarets litigation tactics of using an expert witness whose methodology purportedly did not comport with the law and her attempt to recuse Ralphs counsel cost Ralph $86,000 to defend. Ralph asserts Margarets case was groundless, and that a referee could have settled the characterization issues for 1/10th the cost of trial.

That Margaret may have substantial assets does not mean the trial court could not have awarded fees based on the parties relative financial condition. Moreover, the trial court is in a better position to determine whether Margarets litigation decisions unreasonably increased attorney fees in the action. Accordingly, we conclude Ralph has not shown the trial court abused its considerable discretion in awarding Margaret attorney fees. Consequently, we affirm the award.

I. Ralphs Separate Appeal of the Order Authorizing the Clerk to Execute the Sales Contract for the 15th Street Property Fails

The judgment provides: The court orders that the property held by the parties as tenants in common at 206 E. 15th Street, Costa Mesa, be sold on such terms as mutually agreed by the parties as far as listing with a broker. . . . [] . . . [] The court orders a partition by sale of the parties property at 215 E. 15th Street on terms to be agreed to by the parties. If the parties are unable to agree the court retains jurisdiction to supervise the sale. The parties listed the property for $899,000, and the agent received offers from three potential buyers. The agent recommended the parties accept the highest offer received, $870,000, with escrow to close in 60 days. Ralph had previously stated he would be satisfied with a sales price of $850,000.

When the agent presented the offer to Ralph, he did not immediately respond or provide a timeframe in which he would do so. Margaret petitioned for an order to show cause why the offer should not be accepted. On December 18, 2006, Ralph opposed Margarets petition with a declaration from his attorney representing that Ralph had suffered a stroke, and was under a cardiologists care. The declaration stated that showing the house had harmed Ralphs health, and that his family had made it possible for him to purchase [Margarets] interest in the house. The declaration represented that Ralph had offered $270,000 for Margarets one-third interest in the property, with an immediate payment of $50,000, $100,000 to be paid on February 28, and the balance to be paid on March 30, 2007. The declaration represented that Ralph needed to purchase Margarets share of the property from her to avoid the stress of moving. The trial court rejected Ralphs offer to purchase Margarets share of the property, and entered an order authorizing the court clerk to sign on behalf of Ralph Morgan any documents necessary to accept the offer and open escrow on [the property].

Ralph contends the trial court lacked jurisdiction to enter the order authorizing sale of the property for $870,000 to a third party. We disagree.

Ralph asserts the listing agreement he and Margaret signed with the real estate agent was a binding contract to sell the property only for the listed price, $899,000. Ralph notes that Family Code sections 2553 and 2550 prevent the court from interfering with the parties written agreements to divide property. But the listing agreement is not an agreement between Margaret and Ralph to sell the property only for the specified price. Rather, it simply lists the property for sale. Nothing in the record discloses that Margaret believed or understood she was giving up her right to sell the property for a lower price when she signed the listing agreement.

[T]he superior court, sitting in a dissolution of marriage proceeding, does have jurisdiction to order the sale of community property, including community real property, where such sale is necessary or appropriate to the discharge of its obligations under Civil Code section 4800. (In re Marriage of Davis (1977) 68 Cal.App.3d 294, 308-309.) Given the evidence that Ralph had previously stated he would accept $850,000 as a selling price, the trial court did not abuse its discretion in ordering a sale at a higher amount.

Ralph also argues the trial court erred in not following the procedures for a civil partition in Code of Civil Procedure section 873.600 et seq. before selling the property. But Ralph cites no legal authority for this argument and we are aware of none supporting it.

Finally, Ralph contends the trial court abused its discretion by accepting a third partys offer when his own offer would generate more money to each of the parties. We disagree. The third partys offer, unlike Ralphs, was an all cash transaction. Ralph admittedly did not have the money to purchase the property outright, and proposed to borrow the money needed from family members. In addition, the trial court noted that Ralph previously had dragged his heels in every manner possible to prevent the sale, and that the real estate market was declining. In light of these circumstances, we cannot say the trial court abused its discretion.

III

Disposition

The judgment is reversed, and the cause remanded for further proceedings consistent with this opinion. The trial courts order authorizing the clerk to execute documents on behalf of Ralph for sale of the 15th Street property is affirmed. In the interests of justice, each side is to bear his or her own costs of this appeal.

ARONSON, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

IKOLA, J.

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^[1] We refer to the Morgans by their first names for clarity and ease of reference, and intend no disrespect. (See In re Marriage of Olsen (1994) 24 Cal.App.4th 1702, 1704, fn. 1.)

^[2] When community property is used to reduce the principal balance of a mortgage on one spouse's separate property, the community acquires a pro tanto interest in the property. [Citations.] This well-established principle is known as the Moore/Marsden rule. (Bono v. Clark (2002) 103 Cal.App.4th 1409, 1421-1422 (Bono).) The Moore/Marsden rule also applies to capital improvements made to separate property with community assets. (Id.at p. 1423.)

^[3] The Wattsrule provides that the community is ordinarily entitled to reimbursement for the value of the exclusive use of a community asset by one party after separation. (In re Marriage of Bell (1996) 49 Cal.App.4th 300, 311.)

^[4] We presume the $19,000 amount in the stipulation was an approximation, and the $18,318 amount referenced in the judgment is the correct amount taken.