Marriage of Pesner
Filed 4/9/12 Marriage of Pesner CA4/3
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IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH
APPELLATE DISTRICT
DIVISION
THREE
In re Marriage of ELIZABETH
KINNEY PESNER and GARY PESNER.
ELIZABETH KINNEY PESNER,
Respondent,
v.
GARY PESNER,
Appellant.
G045318
(Super. Ct. No. 08D000157)
O P I N I O N
Appeal from a judgment
of the Superior Court
of
County, Mark S. Millard, Judge. Affirmed.
Law Offices of Andrea L.
Mersel and Andrea L. Mersel for Appellant.
Law Offices of Jeffrey
W. Doeringer and Jeffrey W. Doeringer for Respondent.
* * *
This is an appeal from a
judgment in a divorce case involving a marriage that lasted just short of five
years. Appellant Gary Pesner challenges
four aspects about the judgment: (1) He
claims the court should have joined two businesses to the
marital community had an interest, namely the Goldman-Pesner partnership (GP)
and the IPR Fund III, LLC (IPR).
(2) He claims that the trial
court erred in charging him with the postseparation receipt of $137,000 of
community funds without taking into account evidence that he repaid most of the
money. (3) He claims that he should have received credit
for $140,000 of separate property that he claims he contributed to the family
home on Ridgewood Place in Yorba
Linda. (See
Fam. Code, § 2640, all further statutory references are to that
code.) And (4) he claims the trial court
abused its discretion when it imposed attorney fee sanctions of $40,000,
payable at the rate of $750 a month for his conduct in frustrating the policy
of the law to promote settlement or otherwise facilitate cooperation between
the parties and their attorneys. (See
§ 271.) Challenges (1) and (3) have
been waived by failure to raise the relevant arguments in the trial court. Challenges (2) and (4) fail on their merits.
FACTS
The background facts
salient to this appeal are these: Gary
Pesner (Gary) married Elizabeth
Kinney (Elizabeth) in October
2002. During the marriage Gary
worked as a self-employed real estate manager and investor. His work includes on-site property management
and renovation of rental properties. Elizabeth
worked as an investigator in the Orange County Coroner’s Office. At the inception of the marriage Gary
owned 50 percent of the Ridgewood residence, which
became the couple’s home. Gary’s
parents owned the other 50 percent. In
January 2003 Gary’s parents
quitclaimed their 50 percent to Gary and Elizabeth “husband and wife as Joint
Tenants.” The same day the quitclaim
deed was recorded, the Ridgewood property was
refinanced. The lender loaned Gary and
Elizabeth $300,000. About $177,000 of
that went to pay off the existing mortgage.
The balance of some $123,000 went to Gary’s
separate bank account, where it was used for various community purposes. Two business entities were formed during the
marriage, GP and IPR.
The parties separated in
2007, though there was a dispute over when.
Elizabeth said it was in
July, Gary said it was in December. The court would ultimately agree with Elizabeth
and rule that the date of separation was in July. In 2008, a refinance of real property owned
by GP resulted in Gary receiving a
partnership distribution, in two installments, amounting to $137,000. Gary had met a man at a “course at school”
about “being the best you can be” who convinced Gary to loan him $120,000 at an
interest rate of 10 percent per month in order to develop a cell phone
application which would tell customers which businesses in their zip code would
deliver food. The money was never paid
back.
In January 2008, Elizabeth
filed for dissolution. In March 2010, Gary
discharged his counsel and began representing himself. He was still representing himself when trial
began in December 2010. After one and
one-half days of trial, Gary found
an attorney to represent him for the rest of the trial. At the time his trial attorney took over, Elizabeth’s
counsel was in the midst of taking the testimony of Elizabeth’s
forensic expert. Trial finished in
January 2011. Gary’s
newfound counsel made a new trial motion.
The new trial motion was denied in April 2011.
Several weeks after the
conclusion of what the trial judge orally characterized as a “horrendous
trial,” the trial judge provided the parties with a thorough statement of
decision. The judge ruled that the
community had a 50 percent interest in the Ridgewood
property. Its fair market value was
$560,000, the debt on it was $482,242, yielding a net equity of $77,758. Of that net equity, Gary
was to pay Elizabeth her one-fourth
share, namely $19,439. (Gary
was to pay Elizabeth any increased
proportional share in the event the house sold for more than $560,000.)
The trial judge further
concluded that Gary had received $137,000 of GP’s funds, postseparation, lost
it, and should be charged for Elizabeth’s half of the community share,
amounting to $68,500. The trial judge
concluded there was “no believable evidence” that Gary
had paid back the funds.
Finally, the trial judge
ruled that Gary’s conduct during
the litigation was such as to merit sanctions under section 271. In an oral statement by the judge made on February 25, 2011, the judge
enumerated the reasons for the sanction order:
Gary had withdrawn community
funds for projects without telling Elizabeth. He rented out the family house without
telling her. He ignored filing deadlines
and property declaration exchange requirements.
He waited to the last day of trial to file his income and expense
declaration. His bookkeeping was so bad
that “no one could tell anything in terms of what the income and expenses” were
of the various properties owned by the community businesses. Elizabeth
had to make several motions to obtain discovery. Gary
delivered 15 boxes of documents to Elizabeth’s
forensic accountant just three weeks before trial. The judge determined that “$40,000 is an
appropriate sanction,” to be paid at the rate of $750 a month.
Judgment was filed March 29, 2011. There was a new trial motion filed on April
1. The new trial motion was denied May
20. The notice of appeal was filed May 26, 2011, making the appeal
timely.
DISCUSSION
1. Waived Issues
a.
joinder of GP and IPR
Gary made no effort in
the trial court to join GP or IPR to the dissolution. He has therefore waived any argument on
appeal to the effect that the trial court should have done, on its own, what he
never asked it to do in the first place.
(Baugh v. Garl (2006) 137
Cal.App.4th 737, 746 [“Points not raised in the trial court may not be raised
for the first time on appeal”].)
b. the claimed $140,000 separate property
reimbursement
There is no question
that the Ridgewood property was one-half community property (the half received
from Gary’s parents in 2003) and one-half Gary’s separate property. Accordingly, the trial judge took one-quarter
of the property’s net equity (almost $80,000) as it stood at the time of trial,
and awarded Elizabeth one-quarter of it (almost $20,000).
On appeal, Gary argues
that the trial judge ignored a putative $140,000 separate property
“contribution” he made to the property.
Here is his argument: In 2003,
the property was worth $440,000. Gary’s
parents gave their half to the marital community as a condition of allowing a
refinance that yielded $300,000. Ergo
there was still $140,000 worth of equity at the time of the change in title and
refinance. Gary’s half of that $140,000
was $70,000, which he, in effect, contributed to the property and was therefore
entitled to recover under section 2640.
In awarding Elizabeth one-quarter of the existing equity at the time of
trial, Gary says that the trial judge ignored the rule of decision in
should have been awarded at least $70,000 of the almost $80,000 in net equity
in the property.
The argument was never
raised to the trial court, a point practically conceded in his reply brief,
which admits Gary never mentioned the $140,000 figure in court.
We need only add two
things. First, while the record contains
a copy of Gary’s new trial motion filed April 1, the $140,000 theory was not
articulated. If Gary had somehow raised
the issue at trial, his new trial motion would have been the perfect chance to
remind the trial court of any error.
Second, even if the
issue had been raised, Walrath would
be of no benefit to Gary under the circumstances of this case. Walrath
ruled that a spouse may obtain reimbursement under section 2640
contributions to an original acquisition of community property, but also for
property “acquired later with funds traceable to” that “original
acquisition.” (See Walrath, supra, 17 Cal.4th at p. 925 (conc. & dis. opn. of
Kennard, J.).) Gary does not argue for
any traceability of the claimed $140,000 contribution here. (He just wants at least his half of the
$140,000 credited to him as regards the Ridgewood property.) In any event, he never gave the trial court a
chance to consider his argument. (See
590 [“‘“it is unfair to the trial judge
and to the adverse party to take advantage of an error on appeal when it
could easily have been corrected at the trial”’” (original italics)].)
Payback of the $137,000
There is substantial
evidence that Gary received two distributions of GP funds totaling $137,000 in
2008, after separation. There is no
dispute over the community nature of the distribution. Gary argues that the trial court ignored
evidence he had paid most of the money back.
The evidence of
repayment is this: (1) Gary’s testimony
before the trial court, (2) his own exhibit “S,” which is a list of checks
showing payments from Gary’s Bank of America account to GP, and (3) his own
exhibit “T,” which is another list of checks to GP, including several which
appear to show payments totaling $21,000.
As to (1), the trial
court was certainly not obligated to believe Gary’s testimony, even if
otherwise uncontradicted. (See
Cal.App.3d 964, 970-971 [“The trier of fact . . . is the sole judge of the
credibility of the witnesses [and] may disbelieve them even though they are
uncontradicted . . . .”].) Moreover, the
very nature of Gary’s testimony undercut any veracity it otherwise might have,
because it made no attempt to establish income and outgo that even remotely
approached $137,000.
We quote the relevant
testimony here: “I sold everything I
have. I had a Jeep that I bought when I
was in the Navy and I’ve had it for 20 years and restored it. I had 60,000 invested in it and I sold it for
20 grand. I had four go-karts when I got
married and I sold them and parts and the parts and things I had with
those. They are gone. [¶]
Anything I could return to Costco or -- I did some side jobs like we had
a fence that rotted out and we had a bid for 8,000 to repair the fence. My friends who knew this situation helped me
rebuild the fence. So we charge the
partnership, I think 6,500 or 7,000. So
the partnership saved money and I was able to pay that back. The Angel tickets I had, I sold them. The playoff tickets I sold. Anything that wasn’t nailed down that I had
that I owned has been sold.” He quickly
added, “Plus I borrowed money too from family and friends to help pay back.”
This testimony is too
indefinite to establish, as a matter of law as against disbelief by the trier
of fact, any sort of payback, either directly to the community or indirectly to
the community via GP. Indeed, almost all
his points (sale of go-karts, returns to Costco, valuation of fence repair,
sale of Angel tickets) practically invite disbelief because of their
undocumented nature.
That leaves (2) and (3),
respectively exhibits S and T. Each
belies any theory that the funds involved were to “repay” the
on an improvident loan. Exhibit S is
supported by copies of the actual checks from Gary’s “3732” bank account to
either his partner Craig Goldman (the “G” in GP) or to “GP Partnership.” With the exception of four checks (numbers
9221 for $4,000, 9227 for $5,000, 9231 for $5,000, and 9261 for $7,000), all
the checks indicate they are a “capital contribution.” The four exceptions say they are for loan
repayment. Exhibit T shows three checks
from Gary’s 3732 account in the period March to May 2010 all denominated
In sum, nothing on the
face of exhibits S and T compels the conclusion that the payments from the 3732
account were repayments to the community
for money wasted on the loan to the cell phone application entrepreneur. A capital contribution to a separate business
entity is by definition an investment, not a repayment of money to the marital
community already distributed from that business entity. And the small total of the four checks
labeled loan repayment ($21,000) undercuts any theory that the $137,000
distribution was a “loan” from GP that Gary was paying back.
The $40,000 Sanction Order
a. notice
Gary argues he had no
notice of Elizabeth’s request for sanctions.
Not so. At the very least she included a request for attorney fee costs
under section 271 in her trial brief.
That brief was served on Gary by courier on December 21, 2010, which was
more than a week before trial began.
b.
financial burden
points to Elizabeth’s ability to pay her own fees. The argument is of no merit given that the
$40,000 fee order was imposed under section 271, which by its terms says it is
independent of the moving party’s financial need. While the statute says that “the court shall
take into consideration all evidence concerning the parties’ incomes, assets
and liabilities,” it also says: “In order to obtain an award under this section,
the party requesting an award of attorney’s fees and costs is not required to
demonstrate any financial need for the award.”
Gary asserts that
$40,000 is, on balance, an unreasonable financial burden on him. (See § 271, subd. (a) [“The court shall not
impose a sanction pursuant to this section that imposes an unreasonable
financial burden on the party against whom the sanction is imposed.”].) There was enough evidence, though, to place
the trial court’s figure within the bounds of reason, particularly given that
the award was made payable in installments of $750 a month. Gary was awarded a three-quarters interest in
the Ridgway property. Three quarters of
the net equity of $77,758 in Ridgewood amounts to $58,318.50. His own income declaration showed $3,742
income per month. The trial judge noted
that, given the nature of his work as a property manager, he receives free rent
and the use of an office, which the court valued at $1,500 a month. We might add that he retains a quarter
interest in GP. Elizabeth’s property
declaration asserted a net value of about $275,000 in the various interests
held by GP, which would mean the value of Gary’s interest would be around
$69,000. There was thus enough in the
way of assets and income for the trial court to reasonably conclude that Gary
could accommodate a $40,000 penalty, even on top of the $34,000 or so
equalization payment he would also be required to make.
c. merits
Finally, Gary argues
that the sanction was itself arbitrary and capricious. Again, the argument is meritless. The very disorganized nature of Gary’s case
imposed considerable costs on Elizabeth.
He ignored declarations of disclosure.
He produced 15 boxes of documents within weeks of the trial for
Elizabeth’s expert to examine, putting her forensic account under undue
pressure, particularly given that the relevant document request was about two
years old. He failed to file a trial
brief. He filed his income and expense
declaration on the last day of
trial. His trial presentation -- which
the trial judge noted was not his attorney’s fault, having been brought in at
the last minute -- was so disorganized that on several occasions the trial
judge expressed frustration with its incomprehensibility. Here are some examples: “The court:
I don’t know what we’re doing here” (referring to Gary’s apparent
attempt to trace certain assets); “The court: . . . this is just confusing,”
(referring to evidence that funds were constantly going back and forth between
IPR and GP); “The court: “This case has
been confused enough,” (making overall comment on trial); “The court: “I have no idea and neither do you as to what
he was doing,” (apparently referring Gary’s attempt to show he had paid back
the $137,000); and “The court: [this has
been] a horrendous trial that we had to put up with,” (referring how Gary’s
lack of a trial brief led to a disorganized presentation at trial).
DISPOSITION
The
judgment is affirmed. Elizabeth shall
recover her costs on appeal.
RYLAARSDAM,
ACTING P. J.
WE CONCUR:
ARONSON, J.
IKOLA, J.
