Marriage of Keller and Kresl
Filed 4/2/12 Marriage of Keller and Kresl CA2/7
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
SEVEN
In re Marriage of PAUL KELLER
and ANNE KRESL
B222462
(Los Angeles
County
PAUL KELLER,
Petitioner, Appellant and
Cross-Respondent
v.
ANNE KRESL,
Respondent and Cross-Appellant.
Super. Ct.
No. BD461940)
APPEAL and
CROSS-APPEAL from orders of the Superior
Court of
County. Alan Haber, Temporary Judge. (Pursuant to Cal.
Const., art. VI, § 21.) Reversed.
Honey
Kessler Amado for Petitioner and Appellant.
Law Offices
of Marjorie G. Fuller and Marjorie G. Fuller for Respondent and
Cross-Appellant.
______________________
INTRODUCTION
This is an appeal and cross-appeal
from orders modifying obligations due under a stipulated judgment providing for
community property division as well as spousal and child support. We reverse.
FACTUAL AND
PROCEDURAL SUMMARY
Paul Keller and Anne Kresl were
married on April 5, 1997,
and they separated almost ten years later on April 1, 2007.
name="_ftnref1" title="">[1] Their daughter Alexandra was born in March
1995.
In May 2008, Paul and Anne entered
into a stipulated judgment, specifying division of property as well as spousal
and child support.
Paragraph 9 of the stipulated
judgment identifies 25 “business community assets” and provides as
follows:
“(i) The business community assets
of the parties consist of shareholder, partnership and limited liability
membership interests in various real estate development business projects (‘Projects’
conducted by [Paul], which as of the parties’ date of separation are owned
equally (50/50) by the parties. The
Projects are in various stages of completion.
Distributions from the Projects, in accordance with the particular
Project’s operating or partnership agreement, typically occurs upon completion
of the development. . . .
“(ii) Without in any way negating
either party’s community property ownership rights in the various entities
referenced in this Stipulated Judgment, distributions of Project revenues to
the parties, in accordance with the terms of the Project’s particular operating
agreement, occurs upon completion of the Project. Since each of the Projects is currently in development the court finds
that the parties recognize that significant post[-]separation efforts will be
undertaken by [Paul] to complete development.
As such, the parties have agreed and the court therefore orders that a
fair and equitable split of Project receipts derived from operations and
capital events giving credit to both the community interests of the parties and
subsequent separate property services to each project undertaken by [Paul]
shall be as follows:” The judgment then
sets forth different percentages due Paul and Anne when future distributions
for each of the Projects are made.
Generally, project distributions due Anne were to be paid within 14 days
of the close of a capital event (i.e., sale or refinance), with interest from
the date of distribution to the particular entity. Paul, a real estate developer, was appointed
sole manager and representative of the community for each of the entities
holding title to the business community assets and acknowledged his ongoing
fiduciary duties to Anne pursuant to Family Code sections 721 and 1100 et seq.
According to Paragraph 14 of the
Stipulated Judgment, “The Court makes the following orders regarding spousal
support:
“a) Commencing on September 1, 2007, [Paul] shall pay to
[Anne] the sum of $40,000 per month as and for spousal
support . . . . Said support shall continue
until the first of the following occurs:
[Anne] remarries; either party dies, further order of Court; or August 31, 2009. Said spousal support shall not be taxable as
income to [Anne] and shall not be deductible by [Paul].
“b) If by September 1, 2009, the Court’s jurisdiction over
spousal support from [Paul] to [Anne] has not otherwise terminated, then
commencing September 1, 2009,
[Paul] shall pay to [Anne] $20,000 per month as and for spousal
support . . . . Said support shall continue
until the first of the following occurs:
[Anne] remarries; either party dies; further order of Court; or August 31, 2011. Said spousal support shall not be taxable as
income to [Anne] and shall not be deductible by [Paul].
“c) If by September 1, 2009, the
Court’s jurisdiction over spousal support from [Paul] to [Anne] has not
otherwise terminated, then commencing September 1, 2009, and in addition to the
agreed-upon amount ordered in Paragraph 14(b), above, [Paul] shall pay to
[Anne] $20,000 as an advance against
[Anne’s] interest in the Projects pursuant to Paragraph 9 of this stipulated
Judgment, to be repaid by [Anne] to [Paul] out of [Anne’s] net share of the
last such project; however, [Anne] shall have no obligation to reimburse [Paul]
for any of these [$20,000] per month advances if upon completion of payment for
all of the Projects listed in paragraph 9, above, [Anne] has received less than
$5,000,000 (gross) total distributions from all such Projects. Said payments . . . shall
continue until the first of the following occurs: [Anne] remarries; either party dies;
shall not be taxable as income to [Anne] and shall not be deductible by
[Paul].
“d) If by August 31, 2011, the
Court’s jurisdiction over spousal support from [Paul] to [Anne] has not
otherwise terminated, and if by such date [Anne] has received $5,000,000
or more in gross receipts from the projects described in paragraph 9 of this
Stipulated Judgment, then on such date the Court’s jurisdiction over spousal
support from [Paul] to [Anne] shall terminate absolutely and forever. However, if by August 31, 2011, the Court’s
jurisdiction over spousal support from [Paul] to [Anne] has not otherwise
terminated and if by such date [Anne] has not received $5,000,000 or
more in gross receipts from the projects described in paragraph 9 of this
Stipulated Judgment, then spousal support as in years three and four shall
continue until the earlier of August 31, 2013 (i.e., two more years) or such
time as [Anne]
title="">[2] has received $5,000,000 or more in gross
receipts from the projects described in paragraph 9 of this Stipulated
Judgment, in the amounts of support and
advances stipulated and ordered in paragraph 14(c), above. Notwithstanding anything to the contrary
contained herein, if by August 31, 2013, the Court’s jurisdiction over spousal
support from [Paul] to [Anne] has not otherwise terminated, then on such date
the Court’s jurisdiction over spousal support from [Paul] to [Anne] shall
terminate absolutely and forever.”
(Italics added.)
Paul and Anne agreed that
Alexandra’s primary residence would be with Anne, and Paul would pay child
support in the amount of $5,000 per month, plus all uncovered medical expenses
and extracurricular activities.
The parties executed their
Stipulated Judgment on May 7, 2008,
and it was filed with the court six days later (on May 13, 2008).
Nine months later, in February 2009,
Paul filed an Order to Show Cause for Modification of Child and Spousal
Support, claiming that “due to significant deterioration in the real estate and
credit markets,” he was no longer able to pay $45,000 per month in
support. In addition to $5,000 in
monthly child support, he said, “I agreed to pay [Anne] the sum of $40,000 per
month as non-taxable spousal support. On
September 1, 2009, my spousal support obligation is automatically modified to
$20,000 per month plus the further sum of $20,000 per month to be personally
advanced by me and ultimately charged to [
against her share of business asset proceeds when such proceeds are eventually
realized, if the court still has jurisdiction over the issue.” (Italics added.)
In his declaration, Paul further
stated: “The monthly amount of child and
spousal support was not predicated on my Income and Expense Declaration
executed April 21, 2008;
the document [attached as an exhibit to his declaration] evidences a
significant loss. . . . The support amounts were
based on my borrowing ability.
Consistent with our marriage, I utilized my credit line through Urban
Partners and other sources to fund our lifestyle, with the expectation that the
loans would be paid off when certain real property developments were sold. This method allowed for a continued stream of
funds with which to live.” “As a result
of the significant deterioration in the real estate and credit markets, I no
longer have the ability to borrow from the credit facilities that I have utilized for years, namely, City
National Bank and another investment LLC.
No other business sources for financing are readily available.” His supporting income and expense declaration
indicated his income was “N/A” and his average monthly cash flow was $22,962
while his monthly expenses (excluding taxes) totaled about $47,500. He said the only “significant” cash he had
received in the previous year was about $1,600,000 from his share from the sale
of one of the business community assets pursuant to the stipulated
judgment.
In May, the parties stipulated to
the appointment of Hon. Alan B. Haber (Ret.) as “Temporary Judge (Judge Pro
Tem)” to hear and determine all issues between them.
Anne opposed the requested
had spent an “arduous” nine months in mediation at Paul’s request. “Paul told me that we were not going to spend
a fortune on attorneys’ fees and forensic accountants and that we should each
hire an attorney who was not a ‘heavy litigator.’” (Both Anne and Paul were represented by
family law and business attorneys.) She
said she trusted him to be fair and equitable with her and Alexandra and Anne
followed his instructions. Paul
negotiated the purchase of Anne’s $5.45 million home in Montecito in July 2007
and said the price range was reasonable given the amount of money Anne would
receive in the divorce. Paul also
negotiated and co-signed the loan for the purchase. Paul and his business attorney (Ellis Stern)
told Anne “in no uncertain terms” that she could expect to receive over $15
million from the real estate projects she and Paul owned which would allow her
to support herself. Because she had just
“locked into needing a set amount of money,” she rejected Paul’s initial offer
which would have provided no spousal support.
According to Anne, Paul had his
assistant work up the family’s monthly expenses during marriage and told Anne
the expenses averaged about $80,000 per month. Paul said he and Anne should divide that
figure in half so Anne’s and Alexandra’s living expenses should be $40,000.
receive “a great deal of money”—at least $5,000,000 from the real estate
projects, she agreed to limit spousal support to no more than six years
notwithstanding their 10-year marriage.
“Our support was premised on the fact that since there were six (6)
years left until Alexandra graduated from high school and went to college, Paul
and I would split those six (6) years of spousal support 50/50. As a good faith compromise, we agreed that Paul
would pay me $40,000 per month for the first two (2) years [before she
collected her share of the asset distributions]; we would divide it
$20,000/$20,000 (with my portion coming via advances from Paul against property
distributions) during the third and fourth years, and I would pay $40,000 per
month for the last two (2) years.” Paul
was fully aware of her living expenses, including the mortgage on the house in
Montecito, Anne said, and the support order was tailored with her expenses in
mind.
“Since I had no guarantee of when I
would receive my portion from our real estate projects, we agreed that Paul
would ‘advance’ me the money for my half of the estimated family expense
($20,000) from September 2009 to September 2011. This arrangement is continued from 2011 to
2013 or until I received $5 Million from our projects. We agreed that if I did receive $5 Million, I
would ‘reimburse’ Paul the $20,000 of the $40,000 he was paying as an ‘advance’
of my one-half of the living expense (which was called ‘support’ in the
Stipulated Judgment). In other words,
$20,000 of the $40,000 that Paul is to pay me from September 1, 2009 through August 2013 is going to be an
advanced distribution of my share of the division of community
projects. . . . To ensure fairness, we agreed that if
I did not receive $5 Million from the sale of the projects, I would not be
forced to reimburse Paul for any of the $20,000
advances. . . . My hope was once the projects were
sold, I would have enough money to maintain Alexandra’s and my living expenses
without any support from Paul. . . . I would be able
to maintain my living expenses based on the millions I was to receive from
these projects.”
According to Anne’s declaration,
“After months of arduous negotiations, Paul and I agreed to a complicated
payout structure which intertwined support with the division of the community
estate. The payout structure was
specifically designed to provide me with sufficient monthly support to sustain
our living expense while affording Paul the benefit of completing the real
estate development projects and allowing for the fruition of their respective
profit margin[s]. . . .
“Since the support payments were
intended as an ‘advance’ against my interest in the various real estate
projects, and since a significant drop occurred in the third year, Paul and I
agreed that the payments were not taxable income to me or deductible to Paul as
it would have triggered tax consequences for Paul. Moreover, our intent was to tie in the
support payments directly to the community division payoff amount of at least
$5 Million.
“Paul and I agreed that every penny
of the ‘advances’ of $20,000 per month would be repaid as an offset from my
interest in the division of community property.
It was never intended that I retain the funds once the projects were
sold unless I had not received $5,000,000.
This intricate and detailed arrangement was negotiated for the sole
purpose of allowing Alexandra and me to maintain our standard of living while
Paul retained our investments in the various real estate projects.”
Although Paul’s original support
obligation was to pay $40,000 per month through August 31, 2009, Anne said he had unilaterally cut support
to $20,000 per month as of April 1,
2009 and owed her arrearages of $112,500.
In its order dated September 22, 2009 (ultimately filed
on February 18, 2010),
based on its review of the stipulated judgment, the court observed: “I found that I was dealing with support
issues with somewhat intertwining of community property issues, both
prospective and future matters. The
[i]ntertwining of the parties[’] agreement was that [Paul] would ‘advance’
[Anne] funds for her half of the estimated family expenses. The advance agreed upon in the Stipulation
required monthly advances by [Paul] to [Anne] in the sum of $20,000 over and
above the child and spousal support from two time periods: September 2009 through 2011, and through
2013. According to the terms of the Stipulated Judgment, $5,000,000 was
allocated [to Anne] as community property, with all of the required monthly
$20,000 advances to be a debit against [Anne’s]
“At the outset, I find that the use
of the Dissomaster program in determining modification of child and spousal
support in this case cannot by itself be the basis for the modification
issues. To a large extent the $20,000
advances and its impact plays [sic] a significant role in determining whether
modification is in order. I find that
some modification of the support amounts set forth in the Stipulated Judgment
are [sic] justified and reasonable under all of the circumstances. Some of the evidence that was presented
established that [Paul] has suffered some diminishment in his business, and
current income. However, I find it
difficult to understand how [Paul] was able to sustain approximately eight to
nine months of monthly expenses totaling $45,858 during a period according to
his Income and Expense Declaration, . . . that he claimed monthly income of
$22,000 plus for this eight to nine month period. My finding is that the evidence presented did
establish that [Paul] has had a material change in his monthly income since
April 2009. However, to some extent the
$143,000 income received by [Paul] for the first three months of 2009 skews the
overall income. Unfortunately, the
disparity between the forensic accountants’ claims have made it difficult to
completely understand [Paul’s] 2009 monthly expenses for the better part of
2009.
“Since I have found that the $20,000
advances are essentially support issues, I find that an appropriate
modification of $20,000 advances should temporarily be stayed with certain
provisions. [Paul] is required to
provide to [Anne] and her counsel, monthly documents containing all of [Paul’s]
income and receipts. I emphasize that
this stay is subject to review, and if such documents are not received, the
Court retains jurisdiction to modify and/or determine that the stay shall be
revoked.
“My order is that [Paul] shall continue
to pay to [Anne] the existing spousal support sum of $20,000 per month on the
same dates as currently set in the Stipulated Judgment. I also order that all of the Stipulated
Judgment terms regarding [Paul’s] obligation to supplement
certain . . . expenses for the parties[’] daughter
Alexandra shall remain in place. In
making my decisions regarding spousal support and child support, I have
considered that with the uncontroverted evidence that [Anne] receives a monthly
sum of $8,149 according[] to her income and expense declaration, no
modification of the existing $20,000 and $5,000 agreement [is warranted]. The ne[]t effect is that [Anne] would be left
with at least $33,149 monthly. This
Order is to commence forthwith on the same dates for [Anne’s] receipt of child
and spousal support. . . . [¶] My further decision
and further Order concerning the $20,000 advance is as follows[:] [T]he Court shall retain complete
jurisdiction as to the $5,000,000 community property asset owing to [Anne] for
the reason that the advance amounts are essentially spousal support
issues. Furthermore, I order that all
other spousal support issues are within the Court[’s] jurisdiction until such
time that [Paul] has met each and every [one] of his financial obligations to
[Anne].”
Paul then filed a motion for
clarification and reconsideration of the court’s order. As relevant, he said (1) the court did not
have jurisdiction to order a stay of spousal support pursuant to paragraphs
14.c and 14.d; (2) the court did not have jurisdiction to order monthly
accountings by Paul to Anne; (3) the court did not properly address the issue
of retroactivity of spousal support; and (4) the court did not have
jurisdiction to extend the time of spousal support from Paul to Anne pursuant
to the absolute waiver provisions of the stipulated judgment (among other
requests for reconsideration and/or clarification). In her response, Anne said Paul had failed to
present new facts and the court acted within its jurisdiction in ordering Paul
to submit monthly accountings, to pay arrearages and to pay in accordance with
his stipulation on the record at trial.
As Paul requested, the court issued
“orders re: requests for clarification and reconsideration of previous orders
regarding child and spousal support issues dated September 22, 2009.”
The court rejected Paul’s calculation of $7,922 as a reasonable sum for
both child and spousal support, “particularly since [Paul] spends approximately
two-thirds of his claimed monthly income [$23,835],” determining instead “the
only fair and reasonable sum for child support should remain as $5,000 per
month, and spousal support for the sum of $7,000. Accordingly, . . . the
aggregate sum of $12,000 per month is the appropriate amount that [Paul] should
pay forthwith to [Anne].”
name="_ftnref6" title="">[6] “All references made in my previous [o]rder
of September 22, 2009 regarding the matter of $20,000 advances should not have
been dealt with or resolved and are deemed
void. . . . Furthermore, the issues of community
property issues between the parties raised in the September proceedings should
not have been raised and . . . should not have [been]
discussed [in the prior o]rder, and any such matters are deemed voided.”
Paul then disputed that he was
obligated to pay the $20,000 advances pursuant to the order on reconsideration,
and Anne sought clarification. Anne also
filed notice of appeal from the December 2009 order (filed in February 2010),
and Paul cross-appealed. Paul also
appealed from the reconsidered September 2009 order and Anne
cross-appealed. In July 2010, the trial
court confirmed: “My finding in this
matter, after reviewing my notes and documents regarding the advances in the
sum of $20,000 monthly, is that [Paul] is obligated to pay to [Anne] monthly
per said sum.” Anne then dismissed her
appeal from the December 2009 order (filed February 22, 2010), and the remittitur issued in December
2010.
Paul’s appeals from both the
December 2009 order of reconsideration and the original September 2009 order
remain pending along with Anne’s protective cross-appeal from the original
September 2009 order in the event the December 2009 order is reversed pursuant
to Paul’s appeal.
Paul’s Appeal from
the December 2009 Order.
According
to Paul, the judgment is ambiguous as to whether the reimbursable “advances”
described in paragraphs 14.c and 14.d are spousal support or property
distributions. In Paul’s view, the
“‘advances’ carry all the indicia of spousal support” and were properly
modifiable upon a showing of changed circumstances. If the advances are spousal support he says,
given that the trial court found a change of circumstances, the trial court
erred by declining to address whether to modify or terminate the advances. In the alternative, he argues, although the
court is without jurisdiction to modify a property distribution, even assuming
the paragraph 14.c and 14.d “advances” are property, the court could
nevertheless modify or terminate them as they do not impact the property
distribution.
General Legal Principles Governing Modifications of Spousal Support and
Property Division.
“‘Modification of spousal support, even if
the prior amount is established by agreement, requires a material change of
circumstances since the last order.
[Citations.] Change of
circumstances means a reduction or increase in the supporting spouse’s ability
to pay and/or an increase or decrease in the supported spouse’s needs. [Citations.]
It includes all factors affecting need and the ability to pay.” (In re
Marriage of McCann (1996) 41 Cal.App.4th 978, 982 [48 Cal. Rptr. 2d
864].) ‘A trial court considering
whether to modify a spousal support order considers the same criteria set forth
in Family Code section 4320 as it considered in making the initial order.’ (In re Marriage
of West (2007) 152 Cal.App.4th 240, 247 [60 Cal. Rptr. 3d 858].)
“Section 4320 provides:
“In
ordering spousal support under this part, the court shall consider all of the
following circumstances:
“(a) The
extent to which the earning capacity of each party is sufficient to maintain
the standard of living established during the marriage, taking into account all
of the following:
“(1) The
marketable skills of the supported party; the job market for those skills; the
time and expenses required for the supported party to acquire the appropriate
education or training to develop those skills; and the possible need for
retraining or education to acquire other, more marketable skills or employment.
“(2) The
extent to which the supported party's present or future earning capacity is
impaired by periods of unemployment that were incurred during the marriage to
permit the supported party to devote time to domestic duties.
“(b) The
extent to which the supported party contributed to the attainment of an
education, training, a career position, or a license by the supporting party.
“(c) The
ability of the supporting party to pay spousal support, taking into account the
supporting party's earning capacity, earned and unearned income, assets, and
standard of living.
“(d) The
needs of each party based on the standard of living established during the
marriage.
“(e) The
obligations and assets, including the separate property, of each party.
“(f) The
duration of the marriage.
“(g) The
ability of the supported party to engage in gainful employment without unduly
interfering with the interests of dependent children in the custody of the
party.
“(h) The
age and health of the parties.
“(i)
Documented evidence of any history of domestic violence … .
“(j) The
immediate and specific tax consequences to each party.
“(k) The
balance of the hardships to each party.
“(l) The
goal that the supported party shall be self-supporting within a reasonable
period of time. …
“(m) The
criminal conviction of an abusive spouse shall be considered in making a
reduction or elimination of a spousal support award in accordance with Section
4325.
“(n) Any
other factors the court determines are just and equitable.” (In re
Marriage of Dietz (2009) 176 Cal.App.4th 387, 396-398.)
“Appellate
review of orders modifying spousal support is governed by an abuse of
discretion standard, and such an abuse occurs when a court modifies a support
order without substantial evidence of a material change of circumstances.” (In re
Marriage of McCann, supra, 41
Cal.App.4th at pp. 982–983; see In re
Marriage of West, supra, 152 Cal.App.4th at p. 246 [‘A spousal support
order is modifiable only upon a material change of circumstances since the last
order,’ and ‘[w]here there is no substantial evidence of a material change of
circumstances, an order modifying a support order will be overturned for abuse
of discretion’]; In re Marriage of Smith
(1990) 225 Cal.App.3d 469, 480 [274 Cal. Rptr. 911] [‘Absent a change of
circumstances, a motion for modification is nothing more than an impermissible
collateral attack on a prior final order.’].) “‘So long as the court exercised
its discretion along legal lines, its decision will not be reversed on appeal
if there is substantial evidence to support it.’” (In re
Marriage of Biderman (1992) 5 Cal.App.4th 409, 412 [6 Cal. Rptr. 2d
791].)” (In re Marriage of Dietz (2009) 176 Cal.App.4th 387, 398.)
Unlike
support, however, as Paul concedes, “The general rule is that once property is
divided and the judgment is final, the court loses jurisdiction to modify or
alter the division of the property.” (
Cal.App.3d 695, 702 [“The division of assets and liabilities cannot be modified
after it has become final unless there is an explicit reservation of jurisdiction
to do so”]; Hamilton v. Hamilton (1949)
94 Cal.App.2d 293, 298 [this rule also applies where the judgment is based on
an agreement].)
“When a
property settlement agreement is presented for approval in a divorce action and
it is not clear whether payments therein provided are part of the division of
property or are in the nature of alimony, the court should receive evidence and
clearly and concisely make its determination in the decree of divorce. When the decree of divorce approves the
agreement and incorporates it as a part of the decree and orders the payment of
money as provided in the agreement but does not clearly determine whether such
payments are part of the division of property or in the nature of alimony then
in any subsequent proceeding the question is to be determined from the decree,
including the agreement as a part thereof, and the intention of the parties as
expressed therein. Of course, if the
agreement is ambiguous the court should receive extrinsic evidence in aid of
its interpretation as in other cases . . . . If it appears that it was the
intention of the parties to definitely, fully and permanently adjust
and settle their property rights, and the provision for support and
maintenance constitutes an integral and important element in the amicable
adjustment of the property rights of the parties, the court is without power to
thereafter modify the decree. (Adams v.
Adams, 29 Cal.2d 621 [177 P.2d 265]; [additional citations omitted].)” (Hamilton
v. Hamilton, supra, 94 Cal.App.2d at pp. 298-299 [“We think it
unequivocally appears from the agreement in the case at bar that the
monthly payments to the wife were a part of the division of property and not
alimony. After the interlocutory decree
became final the court was without power to vacate or modify its
provisions.”].)
As a
preliminary matter, we note that Paul’s claim on appeal that the stipulated
judgment is ambiguous is contrary to his position in the trial court. There he asserted “parol evidence is
inadmissible” because “[t]he parties’ Judgment is clear, explicit and
unequivocal. The document speaks for
itself. As such, any interpretations of
the Judgment should be based on what is maintained within the four corners of
the document alone. If the evidence is
not in the Judgment, then it is inadmissible when considering the terms of
same.” Anne says it would be unfair to
permit Paul’s new theory to be reviewed on appeal.
In any
case, to the extent Paul now argues the judgment is ambiguous, extrinsic
evidence is admissible to aid in interpretation, but not to vary the meaning of
a written agreement. “Unless a more
specific statute otherwise provides, agreements between spouses and prospective
spouses are construed under the statutory rules governing interpretation of contracts
generally . . . .”
(Hogoboom and King, California Practice Guide: Family Law (The Rutter Group 2011), ¶ 9:115,
p. 9-36.6, citing Civil Code § 1635 et seq.;
Marriage of Simundza (2004) 121 Cal.App.4th 1513, 1518 [stipulated judgment
of dissolution], additional citations omitted.)
As explained in
1159, “We begin by noting the oft-stated rule that parol evidence is properly
admitted to construe a written instrument when its language is ambiguous. The test of whether parol evidence is
admissible to construe an ambiguity is not whether the language appears to the
court to be unambiguous, but whether the evidence presented is relevant to
prove a meaning to which the language is ‘reasonably susceptible.’ (Pacific
Gas & E. Co. v. G. W. Thomas Drayage etc.
[69 Cal.Rptr. 561, 442 P.2d 641, 40 A.L.R.3d 1373].) The decision whether to admit parol evidence
involves a two-step process. First, the
court provisionally receives (without actually admitting) all credible evidence
concerning the parties’ intentions to determine ‘ambiguity,’ i.e., whether the
language is ‘reasonably susceptible’ to the interpretation urged by a
party. If in light of the extrinsic
evidence the court decides the language is ‘reasonably susceptible’ to the
interpretation urged, the extrinsic evidence is then admitted to aid in the
second step--interpreting the contract.
(Blumenfeld v. R. H. Macy & Co.
(1979) 92 Cal.App.3d 38, 45 [154 Cal.Rptr. 652].) Different standards of appellate review may
be applicable to each of these two steps, depending upon the context in which
an issue arises. The trial court’s
ruling on the threshold determination of ‘ambiguity’ (i.e., whether the proffered
evidence is relevant to prove a meaning to which the language is
reasonably susceptible) is a question of law, not of fact. (Madison
v. Superior Court (1988) 203 Cal.App.3d 589, 598 [250 Cal.Rptr. 299].) Thus the threshold determination of ambiguity
is subject to independent review. (Equitable
Life Assurance Society v. Berry (1989) 212 Cal.App.3d 832, 840 [260
Cal.Rptr. 819].)
“The second step--the ultimate
construction placed upon the ambiguous language--may call for differing
standards of review, depending upon the parol evidence used to construe the
contract. When the competent parol
evidence is in conflict, and thus requires resolution of credibility issues,
any reasonable construction will be upheld as long as it is supported by
substantial evidence. (Stratton v. First
Nat. Life Ins. Co. (1989) 210 Cal.App.3d 1071, 1084 [258 Cal.Rptr.
721].) However, when no parol evidence
is introduced (requiring construction of the instrument solely based on its own
language) or when the competent parol evidence is not conflicting, construction
of the instrument is a question of law, and the appellate court will
independently construe the writing. (Parsons
v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [44 Cal.Rptr. 767, 402
P.2d 839].)” (Winet v. Price, supra, 4 Cal.App.4th at pp. 1165-1166.)
To the extent there is ambiguity in
the language used to describe the $20,000 “advances,” the fact remains that the
parties agreed in the stipulated judgment that payment of these “advances”
“shall continue until the first of the following [specified events, including]
further order of Court.” In other words,
the parties expressly agreed that the payment of these “advances” was subject
to modification. Because the trial court
concluded in its December 2009 order that “the matter of $20,000 advances should
not have been dealt with or resolved,” “the issues of community property issues
between the parties raised in the September proceedings should not have been
raised and . . . should not have [been] discussed [in the
prior o]rder, and any such matters are deemed voided,” we reverse the December
2009 order and remand for the trial court to determine whether any modification
of the $20,000 per month advances is appropriate.
The Trial Court Is Bound to
Give Effect to the Parties’ Intent and Reasonable Expectations As Expressed in
the Stipulated Judgment Executed Just Nine Months Before Paul Filed his OSC.
“‘[A] marital settlement agreement is a contract between the parties.
[Citations.] Where the agreement permits modifications, those modifications
require a showing of a change in circumstances.
[Citations.] Moreover, in
determining what constitutes a change in circumstances the trial court is bound
to give effect to the intent and reasonable expectations of the parties as
expressed in the agreement,’ and, thus, ‘the trial court’s discretion to modify
the spousal support order is constrained by the terms of the marital settlement
agreement.’ (In re Marriage of Anninger (1990) 220 Cal.App.3d 230, 238 [269 Cal.
Rptr. 388].) In In re Marriage of Norvall (1987) 192 Cal.App.3d 1047, 1061 [237
Cal. Rptr. 770], the appellate court held that evidence of income produced from
a community property source awarded to the wife in a stipulated settlement
agreement did not constitute substantial evidence of a material change of
circumstances to justify a reduction in the husband’s spousal support
obligation.” (In re Marriage of Dietz (2009) 176 Cal.App.4th 387, 398.)
“Similarly,
in In re Marriage of Rabkin (1986)
179 Cal.App.3d 1071, 1081 [225 Cal. Rptr. 219], the appellate court reversed
an order reducing the husband’s spousal support obligation, stating in part:
‘We have concluded that none of these factors furnished a proper basis for the
trial court’s $ 250 per month reduction in wife’s permanent spousal support. As for the sale of the family residence and
wife’s resulting right to receive approximately $1,800 in monthly mortgage
payments, such right constituted the single major asset awarded to wife as her
one-half share of the community property.
The parties’ agreement, which was very carefully drafted by skilled
attorneys, provided that wife would receive her share of the community property
and spousal support.
spousal support because she received her rightful share of the community
property than it would to increase wife’s spousal support because husband
received his rightful share of the community property. . . . (In re
Marriage of Dietz, supra, 176 Cal.App.4th at p. 399, italics added.)
Likewise,
in this case, in determining whether a material change of circumstances had
occurred, necessary to support a modification of Paul’s spousal support
obligation, the trial court is required to “give effect to” Paul and Anne’s
“intent and reasonable expectations . . . as expressed in the agreement” they
entered into nine months before Paul filed his OSC. (In re
Marriage of Aninger, supra, 220 Cal.App.3d at p. 238.) The stipulated judgment reflects Paul and
Anne’s bargained-for exchange through which they agreed how they would divide
their assets, including their business community assets, as well as provide for
Anne’s support. (In re Marriage of Dietz, supra, 176 Cal.App.4th at p. 399.)
First and foremost, regarding the parties’ mutual
intent, the stipulated judgment reflects the parties’ expectations with respect
to spousal support. If the second
$20,000 “advance” over and above the first $20,000 straight spousal support
payment was also simply spousal support just like the first $20,000, there
would have been no reason to treat it separately in the stipulated
judgment. Moreover, Anne was to retain
the advances and did not have to reimburse Paul if she did not receive at least
$5,000,000 in property distributions from the projects—her share of business
community assets.
In paragraph 9 of their stipulated
judgment, Paul and Anne expressly agreed to the percentages each would receive
in the division of their “business community assets,” but “[w]ithout in any way
negating either party’s community ownership rights in the various entities
referenced in the Stipulated Judgment,” further agreed that because the listed
projects were “currently in development” and “significant post[-]separation
efforts will be undertaken by [Paul] to complete development,” “
parties, in accordance with the terms of the Project’s particular operating
agreement, occurs upon completion of the Project.” (Italics added.)
Then in paragraph 14, the parties
agreed to certain “orders regarding spousal support.” Pursuant to paragraph 14.a, commencing on September 1, 2007, Paul was obligated
to pay Ann the sum of $40,000 per month “as and for spousal
support . . . . Said
support shall continue until the first of the following occurs: [Anne] remarries; either party dies, further
order of Court; or August 31, 2009. Said spousal support shall not be taxable as
income to [Anne] and shall not be deductible by [Paul].”
Pursuant to paragraphs 14.b and
14.c, however, the judgment provided:
“If by September 1, 2009, the Court’s jurisdiction over spousal support
from [Paul] to [Anne] has not otherwise terminated, then commencing September
1, 2009:” (1) “[Paul] shall pay to
[Anne] $20,000 per month as and for
spousal support . . . ,” and (2) “in addition to the
agreed-upon amount ordered in paragraph 14(b), above, [Paul] shall pay to
[Anne] $20,000 per month as an advance
against [Anne’s]
9 of this stipulated Judgment, to be repaid by [Anne] to [Paul]
such project; however, [Anne] shall have no obligation to reimburse [Paul]
for any of these $20,000 advances if
upon completion of payment for all of the Projects listed in paragraph 9,
above, [Anne] has received less than $5,000,000 (gross) total distributions
from all such Projects.” “Said spousal
support” as described in paragraph 14.b and “[s]aid payment” as described in
paragraph 14.c “shall continue until the first of the following occurs: [Anne] remarries; either party dies;
paragraph 14.b and “[s]aid payments” under paragraph 14.c “shall not be taxable
as income to [Anne] and shall not be deductible by [Paul].”
The
stipulated judgment expressly acknowledged the uncertainty of Paul’s income,
and notwithstanding the length of their marriage (during which Paul worked
outside the home while Anne was home with their daughter), the stipulated
judgment provides that spousal support would be paid in the manner described in
paragraph 14 and would absolutely terminate at that time “notwithstanding
that she may have a material change
of economic or other circumstances.”
Moreover,
the judgment also expressly provided for the division of the business community assets as defined under the
agreement with distributions to occur
on a deferred basis so as to allow for each project’s completion while
providing for Anne’s support for the specified term. Consistent with the provision that the
“advances” were “advances against [Anne’]s interest in the Projects pursuant to
paragraph 9,” the judgment further specified that such advances were “to be
repaid by [Anne] to [Paul] out of [her] net share of the last such project,”
except that she would “have no obligation to reimburse [Paul] for any of these
$20,000 per month advances if upon completion of payment for all of the
Projects listed in paragraph 9, above, [Anne] has received less than $5,000,000
(gross) total distributions from all such Projects.” In other words, the $20,000 advances were
Anne’s share of property, advanced by
Paul, subject to reimbursement by Anne so long as she ultimately received at
least $5,000,000 from the Projects.
Consistent with the parties’ stipulated judgment providing that Anne would
receive no less than $5,000,000 in distributions from the projects identified
in the list of the parties’ business community assets, Anne would only avoid
the obligation to repay Paul for the advances if her effectively guaranteed
$5,000,000 minimum share of the projects was not received as contemplated. As Paul concedes, modifying the advances
cannot alter the amounts due Anne in
the division of their business community assets—only the timing of such
payments, which will be a matter for the trial court’s consideration.
While we
have determined that, by its terms, the stipulated judgment expressly provided
that the “advances” were subject to modification in light of the parties’
inclusion of the “further order of Court” language, in assessing whether
modification is appropriate with respect to the $20,000 advances, the trial
court is “bound to give effect to the intent and reasonable expectations of the
parties as expressed in the agreement,” and as such, “the trial court’s
discretion to modify the spousal support order is constrained by the terms of
the marital settlement agreement.” (In re
Marriage of Anninger, supra, 220 Cal.App.3d at p. 238; In re Marriage of Dietz, supra, 176 Cal.App.4th at p. 398)
Paul’s Appeal and
Anne’s Cross-Appeal from the September 2009 Order.
Paul says the September 2009 order
must be reversed because the trial court lacked jurisdiction to stay the
“advances”
because they were
spousal support, not property distributions.
Anne argues that if the trial court’s reconsidered order is reversed and
the original order is reinstated, the portion of that order staying the payment
of the $20,000 monthly advances of community property distribution from Paul to
Anne should be reversed as well. She
says Paul himself argued the trial court had erred in this regard in filing his
motion for reconsideration and the trial court agreed when it reconsidered the
original order and voided the original stay order.
For the same reasons we have determined
the December 2009 order must be reversed, we conclude the September 2009 order
should be reversed. We note that the
trial court, in evaluating Paul’s claimed change of circumstances, initially
stayed the $20,000 advances subject to Paul’s accounting and later repayment
while keeping the full $20,000 spousal support payment in place (meaning Anne
would receive $20,000 per month at the time, and would still receive the
advances due her but at a later date), and in its reconsidered order, after
determining it could not modify the $20,000 advances, reduced Anne’s spousal
support to $7,000 per month. While we
have determined the “advances” are subject to modification under the terms of
the parties’ stipulated judgment, it remains the trial court’s province to
determine whether such modification is appropriate and to what extent.
DISPOSITION
The orders dated December 21, 2009 (and filed March 5, 2010) and September 22, 2009 (and filed February 18, 2010) are reversed and
the matter is remanded to the trial court with directions to determine whether
modification of the $20,000 advances is warranted. The parties are to bear their own costs of
appeal.
WOODS,
J.
We concur:
PERLUSS, P. J. ZELON,
J.
ease of reference, we identify the parties by their first names as the parties
themselves have done. (
Cal.App.4th 1509, 1513, fn. 2.)
judgment identifies “Petitioner” (Paul) at this point, but both Paul and Anne
agree the judgment should refer to Anne (“Respondent”
instead. 
