Marriage of Ferer
Filed 6/27/12 Marriage of Ferer CA1/2
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opinion has not been certified for publication or ordered published for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
TWO
In re the
Marriage of SHIRLEY FERER and AARON FERER.
SHIRLEY
FERER,
Appellant,
v.
AARON
FERER,
Respondent.
A132383
(San Mateo
County
Super. Ct.
No. FAM 089839)
Shirley
Ferer appeals from the final judgment dissolving her 26-year marriage to Aaron
Ferer and adjudicating their respective property rights. She presents three contentions, all of which
deal with property issues. We conclude
these contentions are without merit, and we affirm.
The
first notable thing about the record before us is the herculean efforts
expended by Temporary Judge Richard C. Berra.
The second is the inadequacy of the record as originally filed by
appellant.
The
trial court’s register of this action shows that appellant commenced this
proceeding with the dissolution petition
filed on May 25, 2006, almost exactly five years
before the final judgment was entered by Judge Berra. The register further shows that proceedings
between the parties were acrimonious and protracted. Not all of that history is relevant or needs
to be summarized here. The following
narrative will attempt to include only the pertinent events and information
necessary to resolve appellant’s contentions.
The
first of the three statements of decision prepared by Judge Berra was filed on October 29, 2008. The pertinent
language of its 11 pages was as follows (with minor nonsubstantive editorial
changes added by us):
“This
matter came on for trial on September 10, 11, and 18, 2008 . . . . The trial was limited to the bifurcated issue
of the characterization of numerous Crown Life annuity policies created with
Respondent’s (hereinafter ‘Aaron’
separate property funds in the name ofPetitioner (hereinafter ‘Shirley’
. Theparties stipulated . . . that the monies received from the surrender
of [three specified] annuity policies . . . traced to Aaron’s
premarital separate property, namely his interest in a Budget Rent A Car
franchise. Further, Shirley waived any
claim to an interest in said business or the sale proceeds under any theory
. . . . Shirley further
waived any claim that there was a transmutation by virtue of any estate
planning documents or commingling.
[¶] . . . The character of the annuities placed in
Shirley’s name is the sole issue bifurcated for trial.” (Fn. omitted.)
After
reviewing the parties’ contentions, Judge Berra then made the following
findings of fact:
“1.
The parties were married on May 31, 1980 and separated on May 3, 2006.
“2.
Aaron owned a 33.5% interest in a Budget Rent A Car franchise prior to the date
of marriage. Shirley has agreed there is
no community interest of any kind in this franchise.
“3.
In April 1983, Aaron sold his interest in Budget Rent A Car for
$4,900,000. He received a promissory
note payable with interest only at 12% per annum with all principal due and
payable on or before January 5, 1989.
“4.
The aforesaid promissory note produced approximately $588,000 in annual
interest income and said earnings were used primarily for family living
expenses.
“5.
In January 1989 when the note came due, Aaron desired to replace the income
that the notes generated. Aaron
consulted with Paul R. Castagna, who is a Registered Representative, Insurance
Agent, and Stock Broker. Mr. Castagna
suggested he deposit the principal of the note in a Crown Life single premium
settlement annuity and multiple Crown Life single premium deferred
annuities. This program afforded Aaron
the widest degree of flexibility and replaced a significant amount of the interest
income otherwise lost when the note was paid.
However, Mr. Castagna informed Aaron that he had to title some of the
annuities in his wife’s name because the insurance company had a threshold
amount of insurance they would allow on any single person. No one ever told Aaron that this might create
a gift of Aaron’s separate property to Shirley.
“6.
In January 1989, when the promissory note from Budget Rent A Car was paid, the
funds (approximately $4,900,000) were deposited in Aaron’s Bank of America account. Shirley has agreed that these funds were
Aaron’s separate property. On the same
day, Aaron caused approximately $3,000,000 to be electronically transferred to
Crown Life Insurance Company for a $1,000,000 (approx.) single premium
settlement annuity in his sole name and twenty $100,000 single premium deferred
annuities in his sole name.
“7.
At the same time, Aaron caused $2,000,000 to be transferred electronically from
the same bank account to Shirley’s Bank of America account. Shirley agrees that this transaction did not
change the character of the funds and there was no gift. Immediately thereafter Aaron (pursuant to Mr.
Castagna’s recommendations) instructed Shirley to authorize the electronic
transfer of the aforesaid $2,000,000 to Crown Life Insurance Company for twenty
$100,000 single premium deferred annuities in her name.
“8.
Aaron never signed any document related to the transfer of moneys into
Shirley’s account, or thereafter when the annuities were created. The only document that exists is the Transfer
Payment Order (Trial Exhibit 4), which neither party signed.
“9.
Throughout the marriage and up to January 2003, the community utilized the
income from these annuities of approximately $13,000,000 to meet community
expenses and investments. The original
$4,900,000 remained in various single premium and deferred variable annuities
in Aaron’s and Shirley’s names.
“10.
In January 2003, when Aaron turned 59 1/2 and insurance company rules were
changed concerning the amount of insurance on anyone person’s life, it became
financially more prudent to have all of the annuities in Aaron’s sole
name. The primary reason was that since
Aaron was now 59 1/2 years of age, he could withdraw funds from the annuities
without having to pay a 10% penalty. If
the policies had remained in Shirley’s name and since she was not yet 59 1/2,
they would not only pay ordinary income tax on any withdrawals but they would
also pay a 10% penalty. Shirley executed
three transfer forms transferring the existing annuity policies in her name to
Aaron (Trial Exhibit 13). She executed
these forms freely and voluntarily.
“11.
In January 1989, at the time the annuities were put in Shirley’s name, Aaron
never told Shirley (or, anyone else) that he was making a gift of the
$2,000,000 used to purchase the annuities in her name nor did he tell Shirley
or anyone else that it was not a gift.
Mr. Castagna testified, without contradiction, that he did not intend
that implementing his recommended financial plan would result in a gift to
Shirley. He also testified that Aaron
never led him to believe that he intended a gift and he testified that
everyone’s conduct was consistent with the fact that the annuities in Shirley’s
name were simply held that way for convenience and they were always Aaron’s.
“12.
Shirley, throughout the marriage, never exercised any indicia of control or
ownership of the annuities in her name, save and except for signing documents
as requested by Aaron and Mr. Castagna.
To the contrary, Aaron and Mr. Castagna exercised all control over and
with respect to the annuities, including those in Shirley’s name, at all
times. Aaron did not intend to make a
gift to Shirley by either depositing the $2,000,000 into her bank account in
arranging for the 20 $100,000 annuity policies to be issued in her name. The annuities in Shirley’s name were treated
identically with the annuities in Aaron’s name.
“13.
In 2003, when Shirley executed the transfer forms (Trial Exhibit 13) she did
not read the forms nor was she coerced or forced into signing the forms. She signed them freely and voluntarily. Further neither Aaron nor Mr. Castagna
indicated to her that she was entitled to discuss the execution of the transfer
forms with a lawyer nor did they prevent her from seeking the advice of an
attorney. Shirley never asked to be
allowed to review the documents with an attorney. Shirley never asked Mr. Castagna what the
effect of executing the transfers was nor did Mr. Castagna volunteer any
information. Shirley confirmed that throughout
the marriage she always signed whatever document Aaron asked her to sign and
almost never read those documents and never asked questions about them. Shirley never told anyone she considered the
annuities in her name to be her separate property. She never inquired of either Aaron or Mr.
Castagna about the annuities. Mr.
Castagna testified that he had no ‘duty’ to Shirley because she was never his
client and all of the transactions were simply part of his plan to manage
Aaron’s money.”
Judge
Berra then set out his “Findings And Order,” as follows:
“TRANSACTIONS
OCCURRING JANUARY 1989:
“As
stated above, Shirley contends that Family Code Section 852 does not apply to
the transactions that occurred in January 1989.
Shirley’s contention is that ‘in this situation Evidence Code section
662 applies and the presumption of title has not been overcome by clear and
convincing’ evidence. Aaron contends
that Family Code Section 852 does apply.
“Shirley
argues that there are no California cases on point and that this is a matter of
first impression. The only case that
Shirley has cited is a federal Bankruptcy case entitled Hanf v. Summers (9th Cir. BAP 2002) (affirmed in
1240). In Summers the Bankruptcy Court was required to interpret California
law. The Bankruptcy Court found that
when Husband and Wife purchased a home with community funds and took title as
joint tenants the form of title controlled the character. The federal Ninth Circuit Court of Appeals
stated that the issue therein was a case of first impression. The Circuit Court of Appeals found that
‘[T]here are no California cases specifically addressing when transmutation
occurs or when the requirements of Section 852(a) must be met. However, application of Section 852(a) only
to interspousal transactions, rather than to acquisitions of property from
third parties, is consistent with the legislative purpose of the statute.’ Thus, when debtor and her husband took title
to real property in joint tenancy using community funds to purchase the
residence, the Circuit Court of Appeals found that the presumption of title
(joint tenancy) controls and any transmutation rules set forth in Family Code
Section 852(a) do not apply since this was an acquisition from a third party
and not a transaction between spouses.
“A
brief overview of the law pertinent to this matter seems to be in order. The presumption of Family Code Section 760
that property acquired during marriage is community property somewhat easily
gives way to the presumption of Evidence Code Section 662 that title gives rise
to a rebuttable presumption of its status or character. This presumption cannot be rebutted simply by
tracing nor testimony of an undisclosed intention. To rebut the presumption it requires the
higher standard of burden of proof in that the evidence to rebut the
presumption must be ‘clear and convincing’ of a communicated intention,
agreement or a common understanding that ownership is other than as indicated
by title.
“Notwithstanding,
transactions between spouses which advantage one spouse over the other create a
presumption of undue influence (In re
Marriage of Delaney (2003) 111 Cal.App.4th 991) and as a result Family
Code Section 721 invalidates the transaction unless the advantaged spouse can
prove by a preponderance of the evidence
that the transaction was freely and voluntarily entered into by the
disadvantaged spouse with the full
knowledge or the effect of the transfer.
“Further,
Evidence Code Section 662 alone does not determine characterization where an
alleged transaction between spouses is contested. Instead, the more specific rules governing
effective transmutations control. If the
formalities of Family Code Section 852 are not met, the presumption that title
controls as set forth in Evidence Code Section 662 does not apply. It should be noted here that in this case it
was uncontroverted that if Family Code Section 852 is applicable there was no
writing as required by Section 852.
“Generally
a transmutation between spouses changes the character of property spouses
already own. Spouses can convert
separate property to community, community to separate and separate to separate. However, the formalities of Family Code
Section 852 must be met.
“Judge
William P. Hogoboom and Justice Donald B. King, the authors of the Family Law
California Practice Guide, seem to agree with William W. Bassett, the author of
California Community Property Law who was quoted in Summers that the initial acquisition of property from a third
person does not constitute a transmutation and is not subject to Family Code
Section 852. None of these authors cite
any California case law for this proposition.
“Spouses
can indicate their intent with respect to the character of the property they
acquire by specifying the form of title or they can later transmute the
character of the property as between themselves. A transfer of property between spouses is not
necessarily a ‘transmutation’ that changes characterization or ownership. A transmutation to be effective, however,
must adhere to the provisions of Family Code Section 852.
“There
are three California cases which are not precisely on point but are instructive
on how to view the contentions of the parties in this case. The first case is Estate of McDonald (1990) 51 Cal.3d 262. Although this case was a death case, and like
Summers is not a California family
law case, at least it is a California Supreme Court case and not a Federal case
interpreting California law. McDonald
held that husband’s transfer (‘roll-over’
of commingled funds from his pensionto 3 newly created IRA accounts in his sole name was subject to Civil Code
Section 5110.730 (Family Code Section 852’s predecessor) and if there was no
writing as required by Section 5110.730 that transmuted the character of the
pension from community to his separate property there was no
transmutation. The three accounts
ostensibly were acquired from a third party and the court applied Civil Code
Section 5110.730 and did not apply Evidence Code Section 662 to the transfer of
the IRAs. The creation of three new IRAs
from an admittedly community property pension is reasonably similar to this
case.
“Similarly,
in Estate of Petersen (1994) 28
Cal.App.4th 1742, the Fifth District Court of Appeal held that the use of
community funds to acquire several annuity
contracts did not alter the character of the funds to that of Joint
Tenancy. Because the annuity contracts
were purchased with community funds and even though the contracts provided for
a right of survivorship, the community character, unlike Summers, was not altered to that of Joint Tenancy. The reasoning of the Petersen court seems to be that annuities are akin to contracts of
deposit of funds between a depositor and a financial institution such as a
bank, savings and loan, or credit union and although the insurance company is
not identical to such an institution the court held that ‘Metropolitan Life is
a “like organization.” ’ This court
can see no distinction between Metropolitan Life and Crown Life.
“Finally,
in Estate of Barneson [(1999)] 69
Cal.App.4th 583, the First District Court of Appeal held that husband’s
transfer of his separate property stock to his wife’s name and the journaling
of his stock in ‘street name’ into his wife’s account was subject to Family
Code Section 852 and did not transmute his separate property stock to the
separate property of his wife and Evidence Code Section 662 did not apply,
because there was no writing with the appropriate transmutation language. The court explained: ‘McDonald’s
interpretation of the “express declaration” language in [Fam. Code
§ 852(a)] can be viewed as effectively creating a “presumption” that
transactions between spouses are not “transmutations,” rebuttable by evidence
the transaction was documented with a writing containing the requisite
language.’ (Id. at p. 593.)
“Applying
the findings and law set forth above to the case tried herein, this court makes
the following conclusions:
“1.
The presumption of Evidence Code Section 662 that the annuity contracts in
Shirley’s name were her separate property was rebutted by ‘clear and
convincing’ evidence in that there was a clear understanding that ownership was
not that of Shirley’s separate property.
Aaron never transmuted the character of the annuities purchased in
Shirley’s name and they remained his separate property.
“2.
There was no gift of Aaron’s separate property funds to Shirley when the
annuities were placed in her name. Most,
if not all, of the elements of a gift were absent.
“3.
The transaction wherein Aaron’s separate funds were used and the annuities were
placed in Shirley’s name advantaged her.
After sharing in the benefit of the income generated by the use of
Aaron’s separate funds throughout the marriage, her position that the money
that funded the annuities in her name were her separate property is at best
disingenuous and at worst is a violation of Family Code Section 721.
“4.
Code Section 721 should apply to the transaction in January 1989. When Aaron made his decision to use his
separate property for the benefit of the family he did not have full knowledge
of the possible effect of the transaction nor the claim Shirley would make as
to the effect of the transaction.
“5.
Notwithstanding the foregoing and regardless of whether any of the aforesaid
conclusions are incorrect or unsubstantiated by the evidence, if Family Code
Section 852 does apply to this transaction, the evidence was uncontroverted
that there was never a writing signed by either party that complied with the
dictates of section 852 and Barneson,
and as a result there was no change in character when the annuity transaction
occurred using Aaron’s separate funds.
“6.
Based on the holdings of McDonald,
change the character of Aaron’s separate property and remain Aaron’s separate
property.
“TRANSACTIONS
OCCURRING JANUARY 2003:
“Based
on the findings and law set forth herein, the court makes the following
conclusions:
“1.
This was a transaction contemplated in Family Code Section 852.
“2.
If Shirley had an interest in the annuities at the time she executed the
transfer documents, she was the disadvantaged spouse and Aaron was advantaged
by the transaction. If she had no
interest, then Aaron obtained no advantage by the transaction.
“3.
The evidence is clearly sufficient to show that the transfer was freely and
voluntarily entered into. In fact,
Shirley so stipulated. She was not
coerced or forced to sign the transfer forms.
She chose not to read the transfer forms despite having the opportunity
to do so. While she was not advised to
seek the advice of an attorney before signing the documents, likewise she was
not prevented from doing so. She chose
not to ask Mr. Castagna nor Aaron any questions about them. She just signed them when asked to do
so. Any presumption of undue influence
was rebutted.
“4.
Because Shirley failed to read or question the transfer forms, the court cannot
find by a preponderance of the evidence that she entered into the
transaction/signed the transfer documents with the full knowledge of the effect
of the transfer, except to the extent that her entire participation in the
annuity process from 1989 thru 2003 showed that she clearly understood that she
had no interest in the annuities and that they were Aaron’s.
5.
Notwithstanding findings 1, 2, and 3, the court does not have to determine
whether Shirley’s failure to read or question the transfers constitutes a valid
defense to them because the effect of the transactions is moot. The signing of the transfer documents had no
effect on their characterization herein because Shirley had no interest in the
policies, separate or community, to transfer to Aaron.
“ORDER
“All
annuities purchased with Aaron’s separate property proceeds from the sale of
his interest in the Budget Rent A Car franchise regardless of whose name in
which they were titled are Aaron’s separate property, as were the proceeds
received therefrom.”
Judge
Berra’s second statement of decision was filed on March 22, 2010. As relevant here, the pertinent language of
its seven pages is as follows:
“This
matter came on for trial on November 2, 2009 . . . with respect to
the bifurcated issue of whether Respondent [Aaron] should receive reimbursement
of approximately $5,000,000 pursuant to the dictates of In re Marriage of Epstein (1979) 24 Cal.3d 76
. . . . By stipulation,
said trial was conducted with direct evidence being submitted by declarations,
subject to cross-examination. Both
parties submitted voluminous trial exhibits.
[¶] . . . [¶]
“After
considering the pleadings filed herein, the testimony of the parties’ trial
exhibits and closing argument of counsel, and good cause appearing, the court
issues the following statement of decision:
“The
narrow issue before this court is Aaron’s right to reimbursement for his using
$5,059,242 of his separate property assets postseparation to pay off a
community property obligation in the form of a line of credit to Greater Bay
Bank. This court has previously found
the annuities from which the funds were used to make said payment to be Aaron’s
separate property. Shirley conceded at
this trial that Aaron had used his separate property to pay off a community
property obligation, postseparation.
Although this satisfies the prima
facie showing required for Aaron to be reimbursed, Shirley’s arguments as
to why reimbursement should not be granted were primarily the following:
“That
Aaron’s postseparation conduct vitiates his Epstein
claim.
“That
Aaron was not entitled to reimbursement because the debt was incurred in
fulfillment of his duties pursuant to Fam. Code § 4300 to support his
family.
“That
Aaron was not entitled to reimbursement because all money spent by the parties
throughout their marriage constituted ‘necessaries of life’ and thus
reimbursement was barred by Fam. Code §§ 913-914. In fact, at Shirley’s request, the parties
submitted posttrial briefs on this issue, namely, do all expenses incurred by a
couple during marriage qualify as ‘necessaries of life’ pursuant to Fam. Code
§ 914 In her brief Shirley raised
some additional arguments which are also addressed herein.
“The
line of credit was incurred for a variety of purposes but primarily for
investments made during the marriage.
Because this debt was incurred during marriage and before the date of
separation it is presumed to be a community debt. No evidence to the contrary was introduced at
trial and Shirley conceded as much.
“The
income from Aaron’s separate property annuities was used by the parties during
the marriage for living expenses. The
annual income from the annuities was substantial, sometimes in excess of $500,000
per year.
“The
parties lived an extravagant lifestyle which included a 10,000 square foot
mansion in Hillsborough. Aaron was in
charge of the parties’ finances, but made efforts to keep Shirley informed. They financed their lifestyle through a combination
of Aaron’s efforts as the manager of restaurant investments, income from the
annuities, and investment income from the many business opportunities he
pursued during marriage. He certainly
never breached his statutory obligation
to support his family. Although Shirley
argues that Aaron somehow breached his fiduciary duty by not receiving W-2
income during marriage, this argument is rejected by the court. The community accumulated significant wealth
not only through his efforts, but also his ability to leverage assets and
invest wisely. Shirley’s Exhibit N shows
that as of June 8, 2006, the estate had total equity (net worth) of
$13,845,949. Through his efforts Aaron
supported his family in a lavish fashion and suggesting that his failure to
receive it as W-2 income somehow makes it less honorable is not a good faith
argument. In addition, even if this
court were to accept Shirley’s premise, she failed to meet her burden in that
she did not provide evidence as to Aaron’s W-2 income throughout the
marriage. The argument that he failed to
support Shirley after separation is also rejected. Pursuant to the order of October 4, 2006,
both parties received $10,000 per month in draws from community assets/income. Shirley never made a subsequent motion for
spousal support.
“Shirley’s
argument that it is unreasonable to reimburse Aaron for the use of his separate
property to satisfy a community obligation is rejected. Prior to using his separate annuities to pay
the line of credit to Greater Bay Bank, Aaron tried diligently to avoid having
the loan called. Aaron testified to his
efforts to try to convince Shirley of the need to sell the residence commencing
in 2003. The family residence was a very
large and lavish house in which only the two parties resided. The residence had significant equity and a
very large debt service to maintain. Had
they sold it, their financial statement would have been improved and they would
have been able to renew the line of credit either with Greater Bay Bank or
another lender. There were no minor
children living in the residence at the time.
Shirley refused to agree. After the dissolution commenced, Shirley
continued to resist selling it. Judge
Cretan noted in his orders of November 29, 2006 and March 29, 2007, that she
was being unrealistic regarding the sale of the residence and the orders
reflected the court’s willingness to ‘entertain fee requests against [her]’ if
she continued to do so. When the
residence was finally sold pursuant to court order, it had lost significant
value.
“Aaron’s
separate property annuities were cashed in and the funds used to satisfy the
Greater Bay Bank line of credit . . . . As shown on trial
Exhibit N, the community had more than enough assets available to satisfy the
obligation. However, most of the
community’s assets were illiquid and could only have been liquidated at
significant discounts in value. Had
Aaron done so, he would have preserved his separate property annuities and the
issue of Epstein credits would not
have arisen. Community assets would have
been used to satisfy community obligations and Aaron’s separate property would
have been intact. This also answers Shirley’s
claim that Aaron’s using his separate property as opposed to community assets
to pay the obligation was a choice he made so as to preserve his
the payment of the Greater Bay Bank obligation until after separation so as to
preserve his right of reimbursement, she introduced no credible evidence to
support it and given the availability of significant community assets to
satisfy the obligation, it is a moot argument.
Thus, the court sees nothing inequitable or unreasonable about
recognizing his right of reimbursement.
Moreover, the community received the benefit of the substantial income
generated by Aaron’s separate property annuities throughout the marriage. Thus, there is nothing inappropriate in
recognizing Aaron’s right of reimbursement pursuant to Epstein or Fam. Code § 2626.
“Shirley’s
contention that reimbursement should be denied because every dollar spent by
the parties for any purpose during marriage constitute ‘necessaries of life’
within the meaning of Fam. Code § 914 is rejected. Such an interpretation would render the
reimbursement rules of Epstein and
Family Code Section 914(b) meaningless and is inconsistent with the holdings in
Ratlaff v. Portillo (1971) 14
Cal.App.3d 1013, In re Marriage of
McTiernan & Dubrow (2005) 133 Cal.App.4th 1090 and In re Marriage of Rosen (2002) 105 Cal.App.4th 808, 828. As stated above, Aaron supported his family
extremely well. There is no evidentiary
basis for any finding that Aaron mishandled and misused community funds during
marriage. There is certainly no evidence
to deny reimbursement based on a finding of unclean hands.
“Shirley’s
argument that Epstein reimbursement
should be denied pending determination of her postseparation claims is
denied. Said claims are reserved for
future determination.
“Based
on the foregoing, Aaron’s request for $5,059,242 in reimbursement is
granted.” (Fns. omitted.)
The
last of Judge Berra’s decisions was filed on March 17, 2011. It took 11 pages to dispose of “all remaining
issues.” As relevant here, its pertinent
language is as follows:
“This
matter came on for trial on all remaining issues . . . on February 9,
2011 and February 10, 2011. . . . The court received testimony of both parties
and their witnesses. The court also
received numerous exhibits and took judicial notice of pleadings and
declarations filed in earlier proceedings.
The parties submitted their written closing arguments . . .
and the court having considered all of the foregoing renders its . . .
Decision as follows:
“A.
Background Facts: [¶] . . .
[¶]
“B.
Issues:
[¶] . . . [¶]
“C.
Value and Disposition of Remaining Community Assets and Liabilities:
“Respondent’s
[Aaron’s] testimony and his Schedule of Assets and Debts which was tab A of his
Exhibit 1 were uncontested and unrefuted by Petitioner [Shirley]. Petitioner offered no contrary evidence. As a result the court finds that the
remaining community assets and debts are as follows:
“[Inventory
of property totaling approximately $740,000.]
“The
disposition of these assets will be as set forth later in this Statement of
Decision.
“D.
Confirmation of Respondent’s Separate Assets and Liabilities:
“Again,
in view of no contrary testimony or evidence presented by Petitioner, all
assets and liabilities not otherwise set forth above which are listed in
Respondent’s aforementioned Schedule of Assets and Liabilities . . .
shall be confirmed to Respondent as his sole and separate property and with
respect to the liabilities, he shall assume and indemnify and hold Petitioner
harmless therefrom.
“E.
Confirmation of petitioner’s Separate Assets and Liabilities:
“All
clothing, personal effects and personal property in the use and possession of
Petitioner and all bank accounts in her name and credit cards in her name shall
be confirmed to her as her sole and separate property. With respect to any debts or liabilities in
her name she shall assume and indemnify and hold Respondent harmless therefrom.
“F.
Respondent’s Epstein reimbursement
request:
“By
previous order, this court has determined that Respondent’s separate property
annuities were liquidated in the sum of $5,059,242 to pay community debts
postseparation and said debts were not in lieu of support or for the
necessaries of life. Thus, Respondent
should be reimbursed from the community, to the extent there is community, for
said amount subject to Petitioner’s fiduciary duty breach claims, her
reimbursement claims or Watts
claims. Petitioner offered no evidence
to substantiate her claim that Respondent violated his fiduciary duty to her
(see section H. hereinafter), any reimbursement she may have or her
hereinafter). As a result, the court
grants Respondent’s claim of reimbursement to the extent of the community as
listed in section C. above and all such assets shall be confirmed in their
entirety to Respondent rather than be equally divided between the parties. Respondent shall be solely responsible for
all the listed community obligations and shall assume and hold Petitioner
harmless and indemnify her therefrom. By
such confirmation the remainder of his reimbursement shall be extinguished.
“G.
Respondent’s Claims of breach of fiduciary duty by Petitioner:
“Refusal
to sell family residence:
“Throughout
the marriage Respondent was a successful ‘managing spouse’ and during the later
years of the marriage the parties, as a result, were able to live a fairly
lavish lifestyle. The foundation for
this lifestyle primarily came from Respondent’s proceeds from the sale of his
premarital separate property rental car agency which were invested in annuities
which this court has determined were Respondent’s separate property. Through Respondent’s efforts, encouraged and
assisted by his business ‘advisors,’ Respondent built a highly leveraged high
risk investment portfolio, a lot of which was invested in restaurants by
leveraging the family home. It would
appear that the basic premise was that real estate would be secure and always
appreciate.
“Sometime
in 2003 to 2004 Respondent and his business ‘advisors’ decided that the best
course of action was to sell the family residence. This would protect his separate property
annuities and the parties’ cash flow and they could use some of the money from
the sale to retire some of the debt. It
would mean, however, that they would have to downsize their residence. As one could expect, Petitioner resisted this
plan. This issue ultimately led to the
demise of the marriage and the parties separated in May 2006 and Petitioner
filed for Dissolution. Early on in the
Dissolution proceeding Respondent sought court assistance to force the
residence to be sold. The residence was
ultimately sold in the fall of 2007.
Respondent contends that Petitioner’s resistance to the sale was
reckless and grossly negligent and cost the community at least $2,500,000 if
not more.
“This
court finds that this was a situation created by Respondent wherein both
parties were riding the high risk bandwagon and Respondent now charges that
Petitioner violated her fiduciary duty to him by not wanting to get off the
high risk bandwagon at the same time he did.
“Respondent’s
argument that her behavior in not agreeing to sell the house before they
separated was reckless and/or grossly negligent is not persuasive. Although it is clear that Petitioner is a
highly intelligent person, in fact, she wasn’t represented by counsel. It can be argued that this may have been a
bad investment decision on her part.
However, to do that one has to have the benefit of hindsight. One can only speculate what Respondent’s
position would have been had the real estate market continued to appreciate
during this time. Nevertheless, at the
time this was not necessarily a reckless or grossly negligent decision by
Petitioner.
“Once
the parties separated and the court ordered the residence to be sold
. . . , Petitioner certainly can be criticized as being uncooperative
in the sale of the residence and her behavior did not meet the standard
required by Family Code Section 271.
Despite the fact that Respondent would prefer for tactical reasons that
this court not sanction Petitioner pursuant to Family Code Section 271, but
would prefer the court to find that she violated her fiduciary duty to
Respondent with respect to selling the house, the facts adduced at trial and
Respondent’s arguments do not support such a finding.
“Respondent’s
request to find Petitioner violated her fiduciary duty to him with respect to
the sale of the family residence is denied.
“Petitioner’s
sale/disposition of the family furniture:
“The
facts are clear that Petitioner sold or gave away most of the contents of the
family residence without written agreement of Respondent or court order. It also appears from the testimony that she
received approximately $65,000 from the sale of the furniture and that during a
hearing in which the court was marshalling assets to acquire funds for this
litigation, she sat mute and did not inform the court that she had sold and/or
given away the furniture. However,
Petitioner testified and there was no contrary evidence, that she used the
funds for her attorney fees and costs.
While this testimony is suspect, there was no clear and convincing
evidence introduced by Respondent to the contrary. Petitioner’s accounting for the total amount
she has spent and/or incurred to date for her fees and costs was
incomprehensible at best and at worst was deliberately obfuscated. Nevertheless, this court finds that
Petitioner did not violate the ATROs [automatic temporary restraining orders]
and did not violate her fiduciary obligations to Respondent.
“Notwithstanding,
Petitioner’s behavior at the hearing mentioned above in not informing the court
that the furniture had already been disposed/sold and her seemingly misdirected
responses to her accounting for the entirety of her fees to date would and
should subject her to the sanctions set forth in Family Code Section 271.
“Petitioner’s
refusal to renew the LOC [Line of Credit] leading to the loss of a $3 M
Life Insurance Policy:
“The
facts for this claim by Respondent all arose after the Dissolution was filed
and while Petitioner was represented by counsel. The facts are equally clear that Petitioner’s
counsel advised her not to sign the renewal until he got more information. As soon as her counsel got more information
he advised her to sign and according to the documents presented at trial,
Petitioner did so immediately.
Respondent contends this is no defense and Petitioner should have known
a Notice of Default was already filed and that she should have ignored her
counsel’s advice and signed the renewal documents earlier. This is not persuasive. Respondent’s claim is denied.
“Petitioner’s
refusal to sell Grill Concepts Stock:
“This
situation and claim is not too dissimilar to the one immediately above. During a time that the ATROs were in place
and one where Respondent’s counsel advised petitioner and her counsel that
there was a potential buyer for the stock (apparently at a good price if one
looks at the situation in hindsight) but that Respondent would not advise
whether he thought this was a good deal, Respondent now contends that she
violated her fiduciary duty to him by not agreeing to sell the stock.
“Respondent’s
claim is denied.
“Petitioner’s
Bad Faith Actions During the Dissolution Proceeding:
“This
court does not believe this is a fiduciary duty issue and will deal with it in
the Fees Section herein below.
“H.
Petitioner’s Breach of Fiduciary Duty Claims by Respondent:
“Petitioner
made general claims that Respondent violated his fiduciary duty to her which
she then specified in her closing argument.
In both instances, however, she presented no evidence that would
substantiate such a claim, except that apparently these investments lost
money. She listed Verona Partners
$2,612,430; Hyannis Port Capital $300,000; Chianti LLC $1,896,000 and AGL Life
Insurance $1,256,239, but produced little or no evidence that would
substantiate her claim. Her claim is
denied.
“
“Both
parties made claims that the other party should be charged a use value for the
postseparation use of community residences.
Petitioner sought to charge Respondent for residing in the Utah
residence since separation and Respondent sought to charge Petitioner for
residing in the family residence for 14 months until it was sold. These claims are denied. First, and foremost, the rental value of the
family home is so much greater than the Utah home that even though Petitioner
only resided there a little over a year that rental value would clearly offset
the rental value of the Utah home for Respondent’s use which was for a much
longer period of time. Secondly, the
community paid the expenses for the family residence while Respondent’s
postseparation income paid for the expenses of the Utah home and that
reimbursement claim would further offset any differences. Finally, under the circumstances of this case
it simply would not be equitable to charge either party a use value for either
residence.
“J.
Spousal Support:
“Petitioner
is 62 and Respondent is 68. Petitioner
never worked outside the home during the 24 years of marriage. Respondent’s Income and Expense declaration
as well as his testimony indicate he has income each month of approximately
$12,000. His expenses are somewhat
higher each month. Petitioner has no
income and although she is quite accomplished in the charitable planning area,
she does not appear to have any readily employable skills. There was no evidence introduced from which
the court could consider how long it would take Petitioner to acquire such
skills either.
“The
court has considered all the relevant factors of Family Code Section 4320 and
finds that although the marital standard of living was fairly lavish and that
it seems unlikely that Petitioner could attain that standard on her own,
Respondent clearly doesn’t have the ability to support [her] at the marital
standard of living (or any standard of living) at this time. This is especially true since Respondent is
receiving all of the remaining community assets because of his
minor children, the ages are as stated above and although Petitioner testified
to some health issues there was no testimony that either party was incapable of
employment of some kind.
“The
goal that the supported party (Petitioner) be self-supporting within a
reasonable period of time (half the length of marriage) would seem to be
unattainable. Nevertheless, Petitioner
is advised that she is expected to do all that she can to earn as much income
as she can.
“Based
on the foregoing, this court orders Respondent to pay Petitioner the sum of
$5,000 per month as and for spousal support commencing March 1, 2011 payable on
the first day of each and every month thereafter until the death of either
party, the remarriage of Petitioner or court order. As and for additional spousal support,
Respondent shall pay Petitioner an amount equal to 40% of any realized
income (active or passive) received by
him in any month in excess of $12,000.
“Attorney
Fees and Costs:
“Family
Code section 2030: Based upon the
allocation of the assets in this case as set forth above, Respondent will have
a substantial net worth and Petitioner’s net worth will be nominal. From Petitioner’s testimony however, the
court cannot tell if she still has outstanding attorney’s fees and costs. It is clear however, that she has paid from
the community significant fees in this matter.
It appears that she has paid at least $500,000 and maybe as much as
twice that amount. Since the court is
not charging her with having received that amount in the division of the
community assets, it can be said that Respondent has contributed his half of
the community funds she has paid, which would be somewhere between $250,000 to
as much as $500,000. That amount is a
sufficient contribution by Respondent and no additional fee contribution by
Respondent will be ordered.
“Family
Code Section 271: Petitioner’s behavior
during these proceedings such as referenced above with respect to the furniture
and resisting the sale of the family residence during these proceedings and in
addition, but not mentioned above, her behavior in the regrettable domestic
violence incident that occurred at the Capellini restaurant would certainly
subject her to Family Code Section 271 sanctions. However, under the circumstances of this case
it would most certainly create an unreasonable hardship for her. An award of fees as sanctions pursuant to
Family Code Section 271 against Petitioner is denied.” (Fns. omitted.)
Judge
Berra’s statements of decision were quoted at great length for a purpose. They demonstrate that the proceedings were
protracted and bitterly contested—and thoroughly analyzed. All of the statements recite that both sides
produced mountains of testimony and documentation to address numerous
issues. Yet appellant has provided a
reporter’s transcript for only one of the proceedings, the one leading to the
second of Judge Berra’s statements of decision.
This paucity of background will prove severely disadvantageous to
appellant, who is representing herself.
Appellant
advances three contentions. The first is
that “The trial court committed reversible error by failing to apply Family
Code Section 2550 given the inequities between appellant and respondent’s
respective positions.” The second is
that “The trial court committed reversible error in failing to characterize
various annuities granted to appellant during the marriage as appellant’s
separate property.” The third is that
“The court committed reversible error in awarding any Epstein claim of reimbursement to respondent.”
Family
Code section 2550 provides: “Except
upon the written agreement of the
parties, or on oral stipulation of the parties in open court, or as otherwise
provided in this division, in a proceeding for dissolution of marriage or for
legal separation of the parties, the court shall, either in its judgment of
dissolution of the marriage, in its judgment of legal separation of the
parties, or at a later time if it expressly reserves jurisdiction to make such
a property division, divide the community estate of the parties equally.” This statute expresses only a general
rule. (See In re Marriage of Wiener (2003) 105 Cal.App.4th 235,
239.) Its opening language proves that
the rule is subject to exceptions. An
exception: “ ‘The rule denying
reimbursement in the absence of an agreement therefor is based largely on the
presumption the paying spouse intended a gift.
[Citations.] . . . When the parties have separated in
anticipation of dissolution of the marriage, the rational basis for presuming
an intention on the part of the paying spouse to make a gift is gone. [¶] . . . [¶] So, we
are persuaded the rule disallowing reimbursement in the absence of an agreement
for reimbursement should not apply and that . . . a spouse who, after
separation of the parties, uses earnings or other separate funds to pay
preexisting community obligations should be reimbursed therefor out of the
community property upon dissolution.’ ”
(In re Marriage of Epstein,
section 2626, which is part of the “division” mentioned in Family Code section
2550, i.e., Division 7 of the Family Code, covering “Division of Property,” and
extending from section 2500 to section 2660.
Thus, allowance of an Epstein
reimbursement credit is not contrary to Family Code section 2550.
Appellant’s
second and third contentions also involve a presumption, specifically, the
presumption that the annuities in her name were her separate property. That presumption, codified in Evidence Code
662, can, like most presumptions, be overcome by tracing the source of the
funds that were used to purchase the annuities.
(See In re Marriage of Walrath
(1998) 17 Cal.4th 907, 918; In re
Marriage of Green (1989) 213 Cal.App.3d 14, 22-23.) In his first statement of decision, Judge
Berra found that respondent had overcome the presumption. “[I]t is axiomatic that the issue of whether
the evidence is sufficient to overcome the presumption is a question of fact
whose determination will not be overturned on appeal if supported by
substantial evidence.” (
Cal.App.3d 489, 496.) More precisely, we
have held that “Whether the spouse claiming a
separate property interest has adequately traced an asset to a separate
property source is a question of fact for the trial court, and its finding must
be upheld if supported by substantial evidence.” (In re
Marriage of Braud (1996) 45 Cal.App.4th 797, 823; accord,
Cal.App.4th 842, 849 [“Appellate review of a trial court’s finding that a
particular item is separate or community property is limited to a determination
of whether any substantial evidence supports the finding.”].)
The
issue of the annuities was heard over three trial days. No reporter’s transcript for any of those
dates is a part of the record on appeal.
Also lacking are the exhibits to which Judge Berra referred in his first
statement of decision. These omissions
doom appellant’s attempt to overturn Judge Berra’s determination that the
annuities remained respondent’s separate property. “Where no reporter’s transcript has been
provided and no error is apparent on the face of the existing appellate record,
the judgment must be conclusively
presumed correct as to all
evidentiary matters. To put it
another way, it is presumed that the unreported trial testimony would
demonstrate the absence of error.
[Citation.] The effect of this
rule is that an appellant who attacks a judgment but supplies no reporter’s
transcript will be precluded from raising an argument as to the sufficiency of
the evidence. [Citations.]” (Estate
of Fain (1999) 75 Cal.App.4th 973, 992.)
The
crucial parts of Judge Berra’s decision were that the presumption of Evidence
Code section 662 had been rebutted because respondent had produced clear and
convincing evidence, and that appellant “clearly understood that she had no interest in the annuities
and that they were Aaron’s.” It is
obvious that, not having the evidence before us, we cannot undertake to
review whether that evidence was legally sufficient.
The
same result largely obtains with respect to Judge Berra’s decision to allow
respondent. That decision was also
predicated on the issues of how assets are characterized and whether money
spent by respondent could be traced.
Although we do have the reporter’s transcript, we do not have the
“voluminous trial exhibits” mentioned by Judge Berra. It must be presumed that those exhibits
support Judge Berra’s decision. (Hughes v. De Mund (1936) 7 Cal.2d 504, 505-506;
697, 709.)
We feel constrained to comment
further. Even if appellant had produced
a record not subject to the deficiencies just noted, she would still be obliged
to follow the same rules of appellate procedure that govern attorneys. (City of Los Angeles v. Glair (2007) 153 Cal.App.4th
813, 819.)
Appellant would still be required to persuade us by discussing
connection with the findings or conclusions she is challenging, on penalty of
having the point summarily denied against her. (In re Marriage of Fink (1979) 25 Cal.3d 877,
887-888; In re Marriage of Steiner &
Hosseini (2004) 117 Cal.App.4th 519, 530.) The same consequence would follow from
failing to support any legal argument. (
Cal.App.4th 1375, 1392-1393; Harding v. Harding (2002) 99 Cal.App.4th
626, 635.) She could not merely
reiterate arguments made to Judge Berra.
(In re Marriage of Davenport
(2011) 194 Cal.App.4th 1507, 1531.)
Nor could she shift to respondent the burden of defending the
judgment. (Paterno v.
State of California (1999) 74 Cal.App.4th 68, 102), or assume
that this court would “comb the record on [her] behalf” (In re Marriage of
Fink, supra, at p. 888) if she
failed to comply with the rules requiring close citation to the record. (Cal. Rules of Court, rule 8.204(a)(1)(C);
Lewis v. County of
Sacramento (2001) 93 Cal.App.4th 107, 113.)
The
motions to augment the record are granted.
The judgment is affirmed.
_________________________
Richman,
J.
We concur:
_________________________
Kline, P.J.
_________________________
Haerle, J.
