Opinion
H043170 H043753
06-29-2018
In re the Marriage of ARACELI HENLEY and GREGORY JACKSON. ARACELI HENLEY, Respondent, v. GREGORY JACKSON, Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Cruz County Super. Ct. No. FL034441)
In case No. H043170, appellant Gregory Jackson (Husband) appeals from the judgment of dissolution of his marriage to respondent Araceli Henley (Wife). While the appeal was pending in this court, the trial court sanctioned Husband for violating the terms of the judgment. Husband then appealed from the sanctions in case No. H043753. We ordered the appeals considered together for purposes of oral argument and disposition.
Husband raises numerous claims on appeal. First, he contends the trial court abandoned its obligation to settle the record on appeal. Second, he contends the trial court erroneously found the couple had separated while they were living together in the same house. Third, he contends the court erred by ordering him to reimburse Wife for various household living expenses. Fourth, he contends the court erroneously denied him spousal support. Fifth, he contends the court erred by awarding a piece of real property entirely to Wife on the ground that he concealed his purchase of the property from her. Sixth, he contends the court erred by ordering him to reimburse Wife for a portion of tax refunds the couple had agreed to divide equally. Seventh, he contends the court miscalculated the division of liquid assets. Finally, he contends the court erred by imposing sanctions for his post-judgment violations of the court's order. He argues that he failed to receive adequate notice of the basis for sanctions; the sanctions were unauthorized under Family Code section 271 ; and they were unsupported by substantial evidence.
Subsequent undesignated statutory references are to the Family Code.
We conclude the trial court correctly determined the date of separation even though the couple continued to share the same residence after that date. Second, we conclude the trial court erred in ordering Husband to reimburse Wife for certain living expenses and a portion of their tax refunds. Third, we conclude the trial court miscalculated the division of liquid assets controlled by Husband. Finally, as to the sanctions, we conclude the trial court erred by imposing sanctions in excess of attorney's costs and fees under section 271. We find all other claims without merit.
We will reverse both judgments and remand for further proceedings.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
Husband and Wife married in 1992. They had three children born in 1996, 1997, and 1999. Wife was 52 years old at the time of trial, and Husband was 59. The couple owned a three-bedroom house in Scotts Valley where the entire family resided.
Husband and Wife are both computer engineers, and Husband has additional experience in accounting and financial management. From 1996 to 2003, Husband earned an average of about $122,750 annually. He also received stock and stock options, which he invested. He was laid off in 2004, whereupon he returned to school to complete his undergraduate degree. From that point on, Husband's earnings were substantially diminished. He completed his undergraduate degree in 2008 and stayed in school to pursue graduate degrees. He completed a master's degree in 2015 and he was pursuing a doctorate at the time of trial. From 2005 to 2013, his average earnings were $7,953 annually.
From 2004 to 2013, Wife earned an average of $120,643 annually. From 2007 until the time of trial, Wife paid substantially all the household expenses, including the mortgage, property taxes, homeowners insurance, utilities, food, house maintenance, and medical bills. She was laid off in November 2014.
Wife filed a petition for dissolution in 2007, but she dismissed it soon thereafter. Up until 2007, Husband had controlled all the couple's finances. Wife would give her paycheck to him, and he would pay the bills and invest their savings. But around the time Wife filed for divorce in 2007, she stopped giving her paycheck to Husband and put it in a separate account he could not access. As of 2008, the couple had separated their earnings and Wife retained all her own earnings thereafter.
B. Dissolution Proceedings
Wife filed the instant petition for dissolution on June 25, 2012, and it was served on Husband on November 27, 2012. The petition listed the date of separation as "TO BE DETERMINED." The couple continued to reside together at the Scotts Valley home until the time of trial.
The parties held a three-day trial starting January 30, 2015. On the first day of trial, the court ordered Husband to vacate the residence within a week. He left on February 6. The second and third days of trial were held in March 2015.
The date of separation was hotly disputed. Wife argued they separated in June 2012, and Husband argued they did not separate until he left the residence in 2015. Wife testified she had informed Husband in June 2012 that she had filed the petition and asked him to leave the residence. According to the settled statement, "[Wife] testified she implored [Husband] to leave to the point she was begging him to leave the residence. He refused. She stated she felt trapped." Although the couple shared the same bed, Wife testified she did so reluctantly, sleeping on "the very edge of the bed." She imagined there was a wall between them or she pretended he was not present. All the bedrooms in the residence were occupied by other family members, and Wife felt she had nowhere else to sleep.
By contrast, Husband testified he did not know about the petition until it was served on him in November 2012. He testified he was "totally shocked" when he saw the documents.
The parties also gave conflicting testimony about when they informed the children about the divorce. In August 2012, the family went on a six-day rafting trip in Yosemite. Wife testified that she was "just trying to maintain normalcy for my kids," and she did not want them to suffer. In January 2013, Wife emailed Husband stating, "I don't want to tell the kids until June when they are out of school. That will give them the summer to recover from the shock." Husband testified he first told the children about the divorce in March 2014. He characterized this as a "reaffirmation of something they had gleaned from their mother."
On the eve of trial, Wife learned for the first time that Husband had used $260,000 of community funds to purchase a house in Vancouver, Washington in November 2007. In 2013, Husband had executed a quitclaim deed transferring the property to a Nevada limited liability company ("Solitude Capital LLC") of which he was the sole member.
C. Statement of Decision
The trial court issued a tentative statement of decision in July 2015, and the parties filed objections and responses. The trial court issued a final statement of decision in September 2015 and entered a judgment of dissolution in December 2015.
The court found the date of separation to be June 25, 2012, when Wife filed the petition for dissolution. The court confirmed the Scotts Valley house to Wife subject to an equalizing payment of $229,046. The court ordered Husband to reimburse Wife for various amounts, including $23,400 for tax refunds the couple received for taxes they had paid on separate income, and $65,379 for household expenses Wife had incurred after separation while the family was still living together.
Husband requested spousal support under section 4320, but the trial court denied his request based in large part on its imputation of $200,000 in annual income to Husband. Because neither party sought child support at the time of trial, the court made no such award.
Finally, as to the Washington house, the court found Husband had breached his fiduciary duties to Wife by concealing the purchase and existence of the property from her. On this ground, the court awarded the property entirely to Wife with no equalizing payment to Husband. The court ordered Husband to convey the title to the house and ownership of Solitude LLC to Wife.
Husband filed a notice of appeal from the judgment in January 2016.
D. Post-Judgment Sanctions
After entry of judgment, Husband failed to convey his interest in the Scotts Valley home to Wife and he attempted to sell the Washington house to a third party. In February 2016, Wife sought an order to enforce the judgment and she requested sanctions against Husband.
Husband requests that we take judicial notice of various documents relevant to the Washington house. Wife does not object. Accordingly, we grant the request. (Evid. Code, § 452.)
After a hearing, the trial court ordered Husband to execute a deed within 72 hours transferring title of the Scotts Valley house to Wife, and the court ordered Husband to transfer the Washington house to Wife. The court also imposed $30,000 in sanctions and attorney's fees under section 271. Husband filed a notice of appeal from this second judgment in June 2016.
II. DISCUSSION
A. The Trial Court's Duty to Settle the Record on Appeal
Husband contends the trial court abandoned its obligation to settle the record on appeal. Husband argues that the court, by accepting all Wife's objections to the proposed settled statement, delegated its duty to settle the record to one of the parties in violation of his procedural and substantive rights. He contends this requires reversal. Wife contends the trial court considered the proposed settlement statement and properly ruled on the parties' objections.
1. Background
The parties held a three-day trial. A reporter transcribed the second and third days, but there is no transcript or recording of the first day. After the trial court entered the judgment of dissolution, Husband retained new counsel and filed this appeal. Through his new counsel, Husband submitted a proposed settled statement on appeal. Wife filed objections and proposed amendments.
The trial court held a hearing on the parties' submissions. At the start, the court stated, "My tentative ruling is to accept [Husband's counsel]'s proposal subject to all of the modifications set forth in—basically to sustain [Wife's counsel]'s objections and require that, to the extent there is any conflict between the two proposals, that [Wife's counsel]'s will be incorporated or supplemented—used to supplement the settled statement. [¶] Which means you're going to have to basically work together to draft a new statement that complies with that requirement. Basically, I'm adopting everything she said, and it's mostly because she was present throughout the whole trial, and [Husband's counsel] wasn't. [¶] So you start with your document and then, to the extent that her objections or her proposals add anything new, those have to be incorporated. To the extent there is a conflict between what your proposal says and what she says, you have to incorporate what she says."
Husband's counsel then addressed Wife's filed objections and amendments, and the court ruled on them in turn. In sustaining the first objection, the court stated, "I read through [Wife's] objections very carefully, and I didn't find anything in there that didn't comply with my recollection of what happened at trial." The court then issued rulings on the remaining objections and amendments. At the end of the hearing, the court ordered the parties to meet and confer on a final settled statement to reflect the court's rulings. After several more additional hearings on the matter, the parties submitted a final settled statement and the trial court approved it.
2. Legal Principles
"A settled statement is a summary of the superior court proceedings approved by the superior court." (Cal. Rules of Court, rule 8.137.) If the trial court does not or cannot order the proceeding transcribed, the court must review the proposed statement and make any corrections or modifications necessary to ensure it is an accurate summary of the evidence and the testimony of each witness. (Ibid.) Alternatively, the court can order the appellant to make the necessary corrections and modifications. (Ibid.) " '[U]nder the rules it is the duty of the trial court to settle a proposed statement, not to make one.' " (Marks v. Superior Court (2002) 27 Cal.4th 176, 195, quoting Stevens v. Superior Court (1958) 160 Cal.App.2d 264, 269.) We review a trial court's compliance with this procedure under an abuse of discretion standard. " 'The rules confer full power over such a record in the trial judge. As long as the trial judge does not act in an arbitrary fashion he has full and complete power over such a record.' " (Marks v. Superior Court, supra, 27 Cal.4th at p. 195, quoting St. George v. Superior Court (1949) 93 Cal.App.2d 815, 817.)
3. The Trial Court Did Not Abuse its Discretion in Settling the Record
Husband contends the trial court abused its discretion by adopting Wife's objections and amendments "without any argument or rationale." The record does not support this claim. It is true that the court stated a tentative ruling setting forth its intention to incorporate Wife's objections and proposed objections. But the court also stated it had reviewed her objections carefully and found them to be accurate. Then, after stating its tentative ruling, the court heard argument from Husband's counsel on specific amendments and objections, and the court ruled on each point raised. In the course of the argument, the court sustained several of Husband's objections. At Husband's request, the court struck several amendments proposed by Wife's counsel because they consisted of argumentative commentary on the state of the evidence. The court also specifically found that several of the challenged amendments were accurate based on the court's own memory of the testimony.
The record shows the trial court did not abandon its duties; it satisfied its obligation to settle the proposed statement, and none of the rulings it made in this regard constituted an abuse of discretion. We conclude this claim is without merit.
B. Date of Separation
Husband contends the trial court erred by finding the couple separated on June 25, 2012, when Wife filed the petition for dissolution. Husband points out that the couple continued to share the same residence. He contends they did not separate until he moved out of the home, based on the "bright-line" rule of In re Marriage of Davis (2015) 61 Cal.4th 846 (Davis) (spouses must live in separate residences for their earnings and accumulations to be considered separate property). Wife contends the trial court properly determined the date of separation.
1. The Trial Court's Findings and Order
The trial court's statement of decision set forth numerous factual findings relevant to the date of separation, as follows.
Wife initially sought a divorce in 2007. Prior to that time, Husband controlled the couple's finances. From 2007 on, Wife began depositing her paycheck in her own account because she distrusted Husband. She independently controlled her earnings and invested her own 401k contributions, but Husband continued to control the rest of the community assets. Wife had no idea where the accounts were located, and she had no access to them. He refused to provide her with any information about the investment accounts. Wife paid all the household bills, while Husband contributed very little to the household financially. And because she was the sole source of financial support for the family, she could not afford to move herself and the children out of the residence.
Husband also arranged to have his mail delivered to two other locations in Santa Cruz and Los Altos, away from the Scotts Valley residence. He testified he did this for the sake of convenience, but the court discredited this claim and found the conduct evidence of an intent to conceal financial and other information from Wife.
According to Wife, "the couple had stopped living together as husband and wife in any physical, emotional or financial sense." Husband left the house early each morning and returned late at night without telling Wife his whereabouts. Wife testified they no longer engaged in marital intimacy after she filed the petition. Wife implored Husband to leave to the point she was begging him to leave the residence. Husband ignored her requests to move out. They continued to share a bed because there was no other place for her to sleep given the 7 occupants of the residence, but she imagined he was not there. When space became available in the home, she moved into another room. They continued to attend the same church but sat on opposite sides. They stopped taking vacations with the children.
The trial court found Wife had clearly formed the intent to divorce Husband before filing the petition. Wife points to the filing of the petition as evidence of objective conduct of her intent to live separately.
In determining the date of separation, the trial court looked to then-controlling case law, including Davis, supra, 61 Cal.4th 846 and In re Marriage of Norviel (2002) 102 Cal.App.4th 1152, 1158-1159 (Norviel). The trial court discussed at length the bright-line rule of Davis, but the court also considered the exception set forth in footnote 7, in which the Supreme Court allowed for the possibility that a couple could separate even while living together.
Based on the circumstances in which Husband and Wife lived in the Scotts Valley residence, as well as Husband's refusal to leave it, the trial court concluded their living arrangement fell within Davis's footnote 7 exception. The court found Wife had formed the intent to dissolve the marriage upon filing the petition; that the parties "fundamentally lived separate financial, social and emotional lives"; that Wife had communicated her intent to separate to Husband and others; and that Wife's conduct at the time of and subsequent to the filing of the petition provided objective evidence sufficient to support a separation date of June 25, 2012.
2. Legal Principles
"Date of separation is a factual issue to be determined by a preponderance of the evidence. [Citation.] 'Our review is limited to determining whether the court's factual determinations are supported by substantial evidence and whether the court acted reasonably in exercising its discretion.' [Citation.]" (In re Marriage of Manfer (2006) 144 Cal.App.4th 925, 930.)
Under the version of section 771 in effect when the trial court determined the date of separation, "The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse, are the separate property of the spouse." (Former Fam. Code, § 771, subd. (a).) "Drawing from the relevant judicial decisions, two factors emerge as prerequisites to separation. First, at least one spouse must entertain the subjective intent to end the marriage; second, there must be objective evidence of conduct furthering that intent." (Norviel, supra, 102 Cal.App.4th at p. 1158.) A trial court should look to "the parties' words and actions during the disputed time in order to ascertain when during that period the rift in the parties' relationship was final." (In re Marriage of Hardin (1995) 38 Cal.App.4th 448, 453, fn. omitted.) "The ultimate test is the parties' subjective intent and all evidence relating to it is to be objectively considered by the court." (Id. at p. 452.)
The Supreme Court in Davis construed former section 771 to mean that " 'living separate and apart' . . . requires both separate residences and accompanying demonstrated intent to end the marital relationship." (Davis, supra, 61 Cal.4th at p. 864.) The court concluded that "living in separate residences 'is an indispensable threshold requirement' [citation] for a finding that spouses are 'living separate and apart' for purposes of section 771(a)." (Id. at p. 865, quoting Norviel, supra, 102 Cal.App.4th at p. 1162.) But in footnote 7 of the opinion, the court expressly reserved the question "whether there could be circumstances that would support a finding that the spouses were 'living separate and apart,' i.e., that they had established separate residences with the requisite objectively evidenced intent, even though they continued to literally share one roof." (Davis, supra, 61 Cal.4th at p. 864, fn. 7.) In a concurring opinion, Justice Liu opined that "[i]n order to qualify as 'living separate and apart,' the spouses must have a living arrangement that clearly and objectively signals a complete and final termination of the marital relationship. Neither the Legislature nor this court has foreclosed the possibility that such a living arrangement may occur within a single dwelling." (Id. at p. 870 (conc. opn. of Liu, J.); see also Norviel, supra, 102 Cal.App.4th at p. 1166 [rule requiring separate residences is not a workable rule in the realm of family law] (dis. opn. of Manoukian, J.).)
After the trial court in this case issued the statement of decision, the Legislature amended the Family Code to abrogate Davis and Norviel effective January 1, 2017. The newly-enacted section 70 defines the date of separation as "the date that a complete and final break in the marital relationship has occurred, as evidenced by both of the following: (1) The spouse has expressed to the other spouse his or her intent to end the marriage. (2) The conduct of the spouse is consistent with his or her intent to end the marriage." (§ 70, subd. (a), added by Stats. 2016, ch. 114, § 1.) Section 70 requires the court to consider "all relevant evidence" in determining the date of separation. (§ 70, subd. (b).)
Notwithstanding this change in law, we must review the trial court's determination under the law in effect at the time the order was made. "If an order is made before the operative date [of a new law], or an action on an order is taken before the operative date, the validity of the order or action is governed by the old law and not by the new law." (§ 4, subd. (e).) Accordingly, we will apply the principles set forth in Davis, supra, 61 Cal.4th 847. For the reasons below, however, we would reach the same conclusion under the newly enacted law.
3. Substantial Evidence Supports the Trial Court's Determination
Husband contends the trial court failed to properly apply the bright-line rule of Davis in determining the date of separation. He asserts that he and Wife shared the same residence until the start of trial in January 2015 when he was ordered by the trial court to move out of the Scotts Valley property, and he argues that the proper application of Davis would thereby make that the correct date of separation. He points to several additional facts to support this argument. For example, in August 2012, the family went on a six-day rafting trip. In 2013, Wife sought Husband's assistance with litigation she was pursuing against an employer. Wife used Husband's university office for job interviews. In 2014, the couple discussed moving the family to San Ramon, and they entered a bid on a house at auction. Finally, the couple routinely communicated with each about other employment and family matters. Husband contends these facts are comparable to those in Davis.
We are not persuaded. First, Wife disputes Husband's characterization of the facts. For example, as to the bid they entered on a house at auction, she denied she had any intent to move to another home with Husband. She testified she only engaged in the bidding process as part of attempt to uncover information about the community assets Husband controlled. She testified the rafting trip was planned before she told the children about the divorce, and she only went to maintain normalcy with the children, who had been looking forward to the trip. Husband disputes Wife's version of events. But in reviewing a trial court's factual findings for substantial evidence, we defer to the court's credibility determinations and its resolution of conflicting evidence.
Under this standard of review, substantial evidence supports the trial court's determination of the date of separation. Here, the trial court was concerned with the coercive nature of Husband's refusal to peacefully acquiesce to Wife's stated desire for a physical separation of the type described in Davis. The court found that "[Husband] bullied his way into staying in the house in the face of [Wife's] repeated requests that he leave." This was consistent with his refusal during marriage to disclose information about where their community funds were invested, his dissimulation about the purchase of the Washington house, and his refusal to obtain employment he believed was beneath him. Wife testified she informed Husband of her intent to divorce at the time she filed the petition, and she asked him to vacate the house. Husband refused. Wife had no choice but to remain in the home because she was almost entirely responsible for financially supporting the family, and she could not afford to move them or herself. Thereafter she suffered from depression because Husband refused to leave the residence, and because she lost her employment. She was treated by a physician and prescribed medication. The trial court reasonably characterized this as a trap Husband created by failing to contribute financially or leave voluntarily.
We decline to second-guess the court's findings on this point. Wife's testimony provided sufficient evidence of her intent to end the marriage, and her conduct provided sufficient evidence she furthered that intent. (Norviel, supra, 102 Cal.App.4th at p. 1158.) Furthermore, Husband's conduct provided a sufficient basis to invoke the exception in footnote 7 of Davis; he created circumstances in which the parties objectively manifested the requisite evidenced intent, "even though they continued to literally share one roof." (Davis, supra, 61 Cal.4th at p. 864, fn. 7.) To hold otherwise would incentivize a recalcitrant spouse to manipulate the law by ignoring the partner's expressed intentions and refusing to move out based on strategic or psychological motives. The trial court recognized this when it ordered Husband to vacate the residence and stated, "This is sick,"—a succinct description of the pathology at work here. Davis did not explicitly address the circumstance of a spouse using ongoing occupation of the family residence as a form of emotional abuse. Here the trial court viewed Husband's conduct in that light and therefore invoked its authority to order Husband to move out under sections 6321 and 6340. We conclude the record supports the trial court's determination of the date of separation and, like the trial court, we decline "to reward his bullying behavior."
This determination would also be supported under the newly enacted section 70. First, by filing the petition and communicating to Husband her desire to divorce, Wife sufficiently evidenced her intent to end the marriage under subdivision (a) of that statute. Her contemporary and subsequent conduct was entirely consistent with her intent to separate. The trial court properly considered "all relevant evidence" in making this determination, and we defer to the court's findings in that regard. We conclude this claim is without merit under either version of the law.
C. Reimbursement for Household Expenses Wife Incurred During the Pretrial Separation Period
Wife paid for substantially all the household's living expenses from the date of separation up until the start of trial. She sought reimbursement based on an exhibit itemizing payments she made for property taxes on the Scotts Valley house; homeowner's insurance; utility bills; house maintenance and improvements; medical bills for the minor children; and other miscellaneous living expenses. (Petitioner's Exhibit 16.) The trial court also estimated the amount Wife spent on food during this period. Husband paid a much smaller amount for some of his own bills and medical expenses for the children. Based on its calculations, the court ordered Husband to reimburse Wife a total of $65,379 for her expenditures.
The trial court separately accounted for the mortgage payments Wife made on the Scotts Valley home during this period. These amounts are not at issue on appeal.
Husband contends the trial court erred in requiring him to reimburse Wife for these expenses because the court effectively entered a retroactive order for spousal and child support without notice and a hearing. He further contends the court failed to account for whatever portion of community funds Wife spent to pay the expenses. Wife contends the court properly ordered reimbursement, and she argues retroactive support orders are permissible under the Family Code. She further contends Husband forfeited these claims by failing to raise them below.
1. Legal Principles
" '[A]s a general rule, 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. However, there are a number of situations in which reimbursement is inappropriate, so reimbursement should not be ordered automatically." (In re Marriage of Epstein (1979) 24 Cal.3d 76, 84, quoting In re Marriage of Smith (1978) 79 Cal.App.3d 725, 747) Courts distinguish community obligations from other kinds of expenditures. The reimbursement rule applies to a party's use of separate funds for payments on "preexisting community obligations." (Id. at p. 83.) "[A]lthough a spouse is generally not entitled to reimbursement for separate funds utilized to meet community obligations, that rule does not apply to expenditures subsequent to separation." (Id. at p. 80.) Generally, reimbursable community obligations may include community debts in addition to expenses for the maintenance and improvement of the family home. (Id. at p. 86; see also In re Marriage of Smith, supra, 79 Cal.App.3d at pp. 744-745; but see In re Marriage of Reilley (1987) 196 Cal.App.3d 1119, 1123 [reimbursements for expenditures on home improvements may be limited where the payments do not increase the value of the home or the improvements are slight compared to the amount paid for them].) Courts typically refer to reimbursement for such payments as "Epstein credits."
The spouse seeking reimbursement must show the expenditures were paid from separate funds. "[I]f the managing spouse uses community money to pay a community obligation, there is no basis for reimbursing the spouse for that payment." (In re Marriage of Margulis (2011) 198 Cal.App.4th 1252, 1280; see In re Marriage of Smith, supra, 79 Cal.App.3d at p. 744 [judgment reimbursing husband for postseparation payments on community debts reversed because there was no showing the payments by husband were made with his separate funds].)
Some kinds of expenditures, however, are more appropriately treated as spousal or child support. While courts may support reimbursement in such cases, support orders must be grounded in the proper procedures and factual findings. "California law provides for two distinct types of spousal support—temporary and permanent. 'Awards of temporary spousal support do not serve the same purpose, nor are they governed by the same procedures, as awards for permanent spousal support. "Pendente lite allowances and permanent allowances differ fundamentally in nature [citation] and function [citation]." ' [Citation] Whereas the latter is intended to make an equitable apportionment between the parties, the former is meant to allow a spouse to continue to live in the manner to which he or she is accustomed during the time the dissolution action is pending. [Citation.] It is also used to provide a spouse ' " 'with whatever is needed by [him or] her to litigate properly [his or] her side of the controversy.' " ' [Citation.]" (In re Marriage of Mendoza and Cuellar (2017) 14 Cal.App.5th 939, 942-943.)
While a trial court has discretion to make a temporary support order retroactive to the filing of the dissolution petition, section 4333 limits the retroactive imposition of a permanent support order to the date of the filing of a notice of motion or order to show cause for such an order. (In re Marriage of Mendoza and Cuellar, supra, 14 Cal.App.5th at pp. 943-944.) Section 4320 sets forth multiple factors a trial court must consider in making a permanent spousal support order.
We apply a deferential standard of review to Husband's claim of error. The judgment is presumed to be correct on appeal. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) " '[A]ny conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision. [Citations.]' [Citation.]" (Estate of Young (2008) 160 Cal.App.4th 62, 75-76.) We " 'uphold judgments if they are correct for any reason, "regardless of the correctness of the grounds upon which the court reached its conclusion." ' " (Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 443.)
2. The Trial Court Erred by Ordering Reimbursement for Certain Living Expenses
We first consider Wife's contention that Husband forfeited his claim. " ' "As a general rule, theories not raised in the trial court cannot be asserted for the first time on appeal; appealing parties must adhere to the theory (or theories) on which their cases were tried . . . ." ' [Citations.]" (In re Marriage of Nassimi (2016) 3 Cal.App.5th 667, 695.) Husband contends he sufficiently contested the issue at trial. We agree. The central issue at trial was whether the Wife's earnings following her filing of the petition constituted community or separate funds. In his response to the trial court's tentative statement of decision, Husband specifically objected to Wife's itemized list of expenses and her request for reimbursement on that basis.
We further agree with Husband that at least some portion of Wife's expenditures included living expenses that constituted spousal or child support—e.g., utilities, medical, insurance, and food bills—not the kind of preexisting community obligations typically treated under the rubric of Epstein credits. As to such living expenses, Husband accurately characterizes the trial court's order as effecting a retroactive order for spousal or child support. Wife made no motion or request for temporary or permanent spousal support or child support. Wife nonetheless contends the reimbursement order was proper under sections 3653 and 4009.
Section 3653 provides in part: "If an order decreasing or terminating a support order is entered retroactively pursuant to this section, the support obligor may be entitled to, and the support obligee may be ordered to repay, according to the terms specified in the order, any amounts previously paid by the support obligor pursuant to the prior order that are in excess of the amounts due pursuant to the retroactive order." (§ 3653, subd. (d).) But this presumes the existence of an initial order in the first place. The same holds true for section 4009, providing in part: "An original order for child support may be made retroactive to the date of filing the petition, complaint, or other initial pleading." (§4009, subd. (a).)
As mentioned, Wife never requested or moved for any temporary or permanent spousal support or child support. To the contrary, she expressly abandoned any claim for child support in her trial brief. As to spousal support, she disputed Husband's claim for support, and she never made a claim of her own. In fact, her trial brief asserted that no record existed to support such an order: "[Wife's] proposal is if either party seeks spousal support, he or she should file a post judgment '4320 motion' as neither party actually elicited much testimony and or presented any documentary evidence as to the parties' standard of living or other factors to be considered in accordance with [Family Code] § 4320." Although Wife checked a box requesting spousal support on the form for the dissolution petition, this was insufficient to constitute a motion for support. (In re Marriage of Mendoza and Cuellar, supra, 14 Cal.App.5th p. 943.)
Given the absence of any motion or request by Wife for any kind of support order, her position on appeal is somewhat puzzling. Temporary support orders may be made retroactive. (In re Marriage of Dick (1993) 15 Cal.App.4th 144, 165-166.) But Wife never moved for or requested one in the first place, and apart from the reimbursement order itself, the court never issued such an order. In the absence of any request for temporary support, the trial court's order could at best be construed as the retroactive imposition of a permanent spousal support order. (In re Marriage of Mendoza and Cuellar, supra, 14 Cal.App.5th at p. 943 [because Wife never made a request for temporary spousal support, support order was treated as a permanent support order].) But under section 4333 governing permanent support orders, "An order for spousal support in a proceeding for dissolution of marriage or for legal separation of the parties may be made retroactive to the date of filing the notice of motion or order to show cause, or to any subsequent date." (See ibid.) Again, this presumes the existence of an initial motion or an order to show cause in the first place; neither exists here. Even if one did, the support order could only be made retroactive to the date of filing of the notice of motion or order to show cause, not to the filing of the dissolution petition. (Ibid.)
Thus, to the extent some portion of the trial court's reimbursement order could be construed as a retroactive support order, Husband is correct that nothing in the law or the record supports it. Accordingly, we will instruct the trial court to vacate the order imposing the reimbursement payment on Husband. On remand, the trial court shall order reimbursement solely for those expenses properly considered "community obligations" under Epstein and its progeny. As to the parties' dispute over whether Wife made the payments using separate or community funds, the record provides an inadequate basis for adjudication on appeal. Because we must remand for reconsideration of the reimbursement payment, we will allow the parties to litigate the source of the funds in the trial court. On remand, the trial court must limit any reimbursement to payments for community obligations using funds that Wife proves she made from separate property. (See In re Marriage of Margulis (2011) 198 Cal.App.4th 1252, 1281.)
D. Denial of Spousal Support to Husband
Husband requested permanent spousal support in the amount of $5,000 per month. The trial court denied his request, based largely on its imputation of income to Husband estimated at $200,000 per year. Husband contends the trial court erred by denying him spousal support. Wife contends the court did not abuse its discretion in doing so.
1. Legal Principles
Section 4320 sets forth factors a trial court must consider in deciding whether to award permanent spousal support. (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 308.) These include, among other things, the extent to which a party's earning capacity is sufficient to maintain the marital standard of living; the marketable skills of the supported party; the job market for those skills; the extent to which a supported party contributed to the attainment of an education or training; the needs of the parties given their standard of living; the parties' obligations and assets; the duration of the marriage; the ability of the supported party to engage in gainful employment; the age and health of the parties; and any other factors the court deems just and equitable. (§ 4320.)
Furthermore, "a trial court may consider earning capacity in determining spousal support, just as it may with child support." (In re Marriage of Cheriton, supra, 92 Cal.App.4th at p. 308.) "It has long been the rule in this state that a parent's earning capacity may be considered in determining spousal and child support." (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 642.) "California courts have long asserted the power to impute income to supporting spouses and parents based on ability to earn income, as distinct from actual income." (In re Marriage of Bardzik (2008) 165 Cal.App.4th 1291, 1299.) "The 'capacity to earn standard' may only be applied where there is evidence of the ability, opportunity, and willingness to work." (In re Marriage of Reynolds (1998) 63 Cal.App.4th 1373, 1378.)
We review a trial court's decision whether to award spousal support for abuse of discretion. "In awarding spousal support, the court must consider the mandatory guidelines of section 4320. Once the court does so, the ultimate decision as to amount and duration of spousal support rests within its broad discretion and will not be reversed on appeal absent an abuse of that discretion. [Citation.]" (In re Marriage of Kerr (1999) 77 Cal.App.4th 87, 93, fn. omitted.)
2. Denial of Spousal Support to Husband Was Not an Abuse of Discretion
In its statement of decision, the trial court stated it considered all the section 4320 factors for which evidence was introduced. These included the length of the marriage, and the parties' job histories, earning capacities, and expenses. The court made several relevant factual findings, as follows. Wife had been unemployed since 2014. Over the prior decade, she earned an average of $120,643 annually. The court described husband as "a long-term college/graduate student" who had been supported by Wife for eleven years while he pursued his undergraduate, masters, and PhD degrees. From 1995 to 1999, he earned average of $111,294 annually. From 2000 to 2003, he earned an average of $130,720 annually, including $218,186 in 2000. He then returned to school from 2004 until May 2015, earning an average salary of $7,953. By the conclusion of trial, he had completed his master's degree in computer architecture, and he was expected to complete his PhD in 2018. As to Husband's efforts to find employment, the court found "he claimed that he had been diligently seeking work and provided some information about job search efforts, all of which seemed to have been done in a narrow window just before trial, efforts that the Court finds to be pretextual."
The court imputed an additional annual income to Husband of $200,000 based on his "demonstrated prior ability to earn more than $200,000 per annum in the computer industry with no college degree, and his subsequent completion of the BA and BS with honors and his master's degree, and internships and research that have kept him at the forefront of his field." The court found Husband had the ability to support himself at all times at the marital standard of living. On this basis, the court denied Husband's request for spousal support, but the court reserved jurisdiction over the matter.
Husband challenges the trial court's imputation of $200,000 in income to him. He contends the trial court failed to consider that he was suffering from type 2 diabetes and progressive heart disease. At the time of trial, he was also facing surgery to determine the cause of his choking symptoms. He took beta blockers and hypertension medicine.
Given the extent of Husband's education and training, and given that he had previously earned more than $200,000 before attaining his degrees, we perceive no abuse of discretion in the trial court's imputation. Nor did the trial court abuse its discretion in considering any of the other section 4320 factors as set forth in the statement of decision. The record does support a finding that Husband suffered from adverse medical conditions, but as Wife points out, he introduced no evidence that any of these conditions impeded or prevented him from working.
Although the trial court did not make an express finding on whether Husband had an opportunity for employment, the court found his attempts to find a job were "pretextual." Under these circumstances, the denial of spousal support did not constitute an abuse of discretion. (See, e.g., In re Marriage of Regnery (1989) 214 Cal.App.3d 1367, 1373-1376 [upholding finding of earning capacity based on the "speciousness" of Husband's justifications for lack of employment].)
Husband further contends the trial court's ruling will become law of the case "effectively preventing [him] from seeking income in the future." The logic of this is unclear, but in any event, the trial court retained jurisdiction over the matter, so Husband has the ability to seek a modification of the order based on changed circumstances. Finding no abuse of discretion, we conclude this claim is without merit.
E. Award of the Washington House to Wife
Husband purchased the Washington house in 2007 using community funds, and he attempted to conceal its existence from Wife. Based on Husband's breach of his fiduciary duties, the trial court awarded the entire house to Wife without requiring any equalizing payment to Husband. Husband contends the trial court erred in doing so. He asserts that he disclosed the existence of the house in pretrial discovery, and he argues his failure to reveal the house to Wife was consistent with his having control over their finances. Wife contends the trial court properly awarded the house to her because Husband willfully violated his fiduciary obligations.
1. Legal Principles
Section 721 sets forth certain fiduciary obligations owed by a spouse. With exceptions not at issue here, "in transactions between themselves, spouses are subject to the general rules governing fiduciary relationships that control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other." (§ 721, subd. (b).) A spouse's obligations under this section include: "(1) Providing each spouse access at all times to any books kept regarding a transaction for the purposes of inspection and copying. [¶] (2) Rendering upon request, true and full information of all things affecting any transaction that concerns the community property. . . . [¶] (3) Accounting to the spouse, and holding as a trustee, any benefit or profit derived from any transaction by one spouse without the consent of the other spouse that concerns the community property." (Ibid.)
Section 1101 sets forth remedies for a breach of these fiduciary duties, "includ[ing], but not be limited to, an award to the other spouse of 100 percent, or an amount equal to 100 percent, of any asset undisclosed or transferred in breach of the fiduciary duty." (§ 1101, subd. (h).) Under Civil Code section 3294, a trial court must find "by clear and convincing evidence that the [spouse] has been guilty of oppression, fraud, or malice . . . ." (Civ. Code, § 3294, subd. (a).)
"We review factual findings of the family court for substantial evidence, examining the evidence in the light most favorable to the prevailing party. [Citations.] ' " 'In reviewing the evidence on . . . appeal all conflicts must be resolved in favor of the [prevailing party], and all legitimate and reasonable inferences indulged in [order] to uphold the [finding] if possible.' " [Citation.]' [Citation.] Because Civil Code section 3294 requires proof by 'clear and convincing evidence' of fraud, oppression, or malice, we must inquire whether the record contains ' "substantial evidence to support a determination by clear and convincing evidence . . . ." ' " (In re Marriage of Rossi (2001) 90 Cal.App.4th 34, 40 (Rossi).)
2. Substantial Evidence Supports the Award of the Washington House to Wife
The trial court made several factual findings in support of its ruling, as follows. Husband bought the Washington house in 2007 with $260,000 of community funds without informing Wife. His mother lived at the house. Husband and his mother took title jointly with the right of survivorship. He identified himself as an unmarried man. He testified that he had identified himself as an unmarried man so nobody would think he was married to his mother.
Husband never told Wife about his plan to acquire the property, and he never disclosed to her any details of the purchase or the arrangement with his mother. His mother lived at the house until she passed away in 2010, whereupon Husband took full title as an unmarried man. He then deeded the home to Solitude LLC, a Nevada limited liability company of which he was the sole member. He did not provide Wife with the address of the property until the eve of trial.
In his pretrial financial disclosures, Husband provided a schedule of assets and debts. The "real estate" section in the schedule of assets did not list the house. Another section of the schedule listed Solitude LLC with no indication the entity owned any real property. The schedule stated Solitude LLC was inherited in 2010, and the fair market value of the LLC was listed as "unknown." Elsewhere in the discovery, Husband produced a real estate tax affidavit from 2007 detailing the purchase of the house by Husband and his mother. He also produced an unsigned, undated copy of a quitclaim deed granting title to Solitude LLC. Finally, he produced the operating agreement, charter, and business license for the LLC, but these papers made no mention of the house. Apart from those documents, Husband does not dispute that he never informed Wife about his purchase or ownership of the house. When questioned about the absence of the house on the asset schedule of his disclosure statement, he testified that he completed the statement "as directed by my attorney" and claimed the attorney "helped me fill this out."
Two versions of the statements with different dates appear in the record, but the relevant portions are identical.
Although no specific date appears on the deed, the year 2013 appears next to a blank line for the date. Assuming Husband executed the deed in 2013, he did so after learning Wife had petitioned for dissolution. We further note he was served with the petition in November 2012, and he organized Solitude LLC in December 2012.
The trial court found this conduct provided clear and convincing evidence of "a complete violation of [Husband's] fiduciary duties with regard to the community." Under subdivision (h) of section 1101, the court awarded the house entirely to Wife with no equalizing payment to Husband. The court ordered Husband "to execute any documents needed to convey good and marketable title to the property to Wife, free of all liens, including transfer to her of any and all ownership rights in Solitude LLC and giving her sole authority to manage and control the LLC."
Husband contends the trial court erred because he properly disclosed the existence of the Washington house to Wife by listing Solitude LLC in his financial disclosures, and by producing the real estate tax affidavit together with the quitclaim deed granting title to the LLC. Husband relies on In re Marriage of Georgiou and Leslie (2013) 218 Cal.App.4th 561, 573. In that case, the husband (an attorney) stood to collect a portion of a prospective referral fee, but the exact amount of the money he would receive could not be determined at the time of the dissolution proceedings. (Id. at p. 566.) The wife knew about the prospective referral fee and she knew husband stood to receive a substantial sum for it, but the husband did not give her a copy of the fee agreement. In settlement, the wife agreed to accept a percentage of the ultimate fee award, but the husband eventually received a larger amount than the wife ostensibly anticipated. The wife filed an action under section 1101 claiming she would have sought a larger percentage if she had been provided a copy of the referral fee agreement. The court of appeal rejected this claim in part because the husband had disclosed the prospective referral fee and the matter was the subject of much discovery by the wife's attorneys. (Id. at p. 574.) This case provides no support for Husband's argument here. Unlike the husband in that case, Husband never told Wife about the existence of the asset in question. Furthermore, unlike the prospective referral fee that case, here the value of the house was reasonably ascertainable at the time of the dissolution proceedings, but Husband never provided any statement or estimate of its approximate value.
The trial court relied on Rossi, supra, 90 Cal.App.4th 34. In Rossi, the wife won the lottery while she was married, but then she initiated divorce proceedings and failed to disclose her lottery winnings to her husband. (Id. at pp. 36-37.) The husband discovered this fact after the parties settled and he moved to set aside the settlement. The trial court found the wife's failure to disclose constituted a breach of her fiduciary duties and awarded all lottery winnings to the husband. The court of appeal affirmed.
Rossi supports the trial court's ruling here. Like the wife in Rossi, Husband failed to inform Wife about his acquisition of the house, and he actively took steps to conceal it from Wife, including the creation of an LLC into which he transferred the house as "an unmarried man." His production of several documents relating to the LLC was insufficient to adequately apprise Wife of the arrangement. To the contrary, the scheme appeared designed to obfuscate his acquisition of the house. We conclude substantial evidence supports a finding that Husband intentionally concealed the Washington house during the dissolution proceedings and that his conduct constituted fraud, oppression, and malice within the meaning of Civil Code section 3294 and section 1101, subdivision (h). (See Rossi, supra, (2001) 90 Cal.App.4th at p. 40.)
Husband contends his failure to inform Wife about the house was consistent with how they managed their relationship, in which the parties consensually maintained separate financial lives. But the trial court rejected this characterization of their relationship. The court found Husband ignored Wife's repeated requests for information about where and how their financial assets were invested. Husband had invested portions of their assets in off-shore accounts to which Wife had no access. Finally, the court found Husband intended to conceal information from Wife by establishing two separate mailing addresses away from the Scotts Valley residence. We will not second-guess the trial court's factual findings on this point.
Husband further contends Wife is guilty of unclean hands because she failed to disclose certain assets and transactions herself. Husband lists four financial accounts and a grant of stock options wife failed to disclose in her schedule of assets. When asked by Husband's counsel about these assets, Wife testified that she did not intentionally omit any information about them and she claimed the relevant documents had been lost. It may be that the trial court credited this testimony, in which case we must defer to a trial court's credibility determinations. In any event, Husband never raised any claim below asserting fiduciary violations by Wife under sections 721 and 1101 or any other law. To the contrary, in his trial brief Husband argued, "It is questionable if either petitioner or respondent were guilty of breaches of fiduciary duties under Family Code §§ 721 and 1100 since they both tacitly agreed to handle their finances separately without notice to the other and they both had errors on their pleadings." He has thereby forfeited any claim of fiduciary breaches by Wife.
Finally, Husband briefly contends Wife suffered no harm as a result of his fiduciary breaches. He cites no legal authority to support this argument. And in fact, the record shows Husband left the property vacant and failed to collect rents on it, causing Wife financial harm that she could have remedied herself if she had been informed about the house sooner. But even assuming Wife suffered no harm, this would only be true because she eventually discovered the existence of the house that Husband attempted to conceal. If Husband had succeeded, the harm to Wife would have been substantial. We decline to excuse Husband's conduct based on his failure to complete the deception.
We conclude the trial court's findings of fiduciary breaches and the award of the Washington house to Wife were supported by substantial evidence. This claim is without merit.
F. Reimbursement for Tax Refunds
Although the parties earned separate income in 2013, they filed joint returns for the 2013 tax year. They received federal and state refunds and divided them equally, even though Wife had earned substantially more income and had substantially greater withholdings. The trial court ruled that the refunds should have been divided in proportion to the parties' relative withholdings. Accordingly, the court ordered Husband to reimburse Wife $23,400 for the excess amount of the refunds he had received.
Husband contends the trial court erred in ordering this reimbursement because the parties had agreed to divide the refunds equally. Wife contends any agreement was the result of coercion because Husband threatened to file separately if he did not receive an equal portion of the refunds. She argues the court properly exercised its equitable power to reapportion the refunds according to their withholdings.
1. Factual Background
The couple reported total wages of $199,551 for the 2013 tax year. Of that, Husband earned $16,206 and had $1,581 withheld in state and federal taxes. By contrast, Wife had $74,673 withheld or prepaid from her separate income. The combined state and federal refund was $38,331, which the couple divided equally into two portions. The trial court ruled that the refund should have been divided in proportion to the couple's relative withholdings. Because Husband's withholdings accounted for about 2 percent of total withholdings, the court ruled that he should have received only 2 percent of the total refund, not half.
The court calculated the percentages for the state and federal refunds separately, but the distinction is immaterial to our analysis.
According to the settled statement, Wife testified that "the tax refunds were equally divided as this was the only way she could compel [Husband] to file joint returns. [Wife] also testified [Husband] told her if they filed separately he would take all of the losses." On the second day of trial, Wife testified that "[Husband] was going to force us to file separately." However, Husband "had a significant loss in . . . the stock he was managing" and "he said that I could claim that loss" if they filed jointly. She explained she was going to lose "an incredible amount of money" if she had to file separately, but that they could take advantage of the capital loss if they filed jointly. So she concluded that "it's better to cooperate and to split it" rather than allowing the money to "evaporate."
Schedule D of the federal return showed the couple reported total capital gains of $93,867 from the sale of various stocks, most of which consisted of Yahoo shares acquired before separation. Wife testified that she received Yahoo stock shares while she was employed at Yahoo prior to separation. However, the couple paid no taxes on the capital gains because they were completely offset by capital losses of about $200,000 carried forward from prior years. The record does not reveal the precise source or timing of the prior capital losses, but about half of the total carryover was reported as a long term capital loss.
2. The Trial Court Erred by Ordering Reimbursement for the Tax Refunds
Husband contends the couple entered into an agreement to divide the tax refunds equally, and that the trial court erred by setting aside the agreement. Wife contends Husband "coerced" her into filing joint returns because he threatened to file separately—thereby threatening to deprive her of the ability to offset the capital gains with the carryover losses—if she did not agree to divide the refund. Husband refutes the claim that Wife was coerced. He points out that the parties stood to benefit by filing jointly because it allowed them to reduce their tax liability substantially by offsetting the capital gains with carryover losses.
Wife's position is not persuasive. According to the settled statement, it was Wife who compelled Husband to file jointly. The trial court made no finding that Wife was coerced or under duress, and the record does not support such a finding. The trial court did not attempt to account for the capital gains and losses, but the record shows Wife stood to benefit substantially by taking advantage of the joint filing. Parties are entitled to enter into agreements allocating separate income while dissolution is pending. (See See v. See (1966) 64 Cal.2d 778.)
We conclude Husband's claim as to the tax refund is meritorious. We will instruct the trial court to vacate the order requiring him to reimburse Wife.
We further note the court incorrectly calculated the reapportioned state tax refund based on Husband's receipt of a refund for $9,336. The correct amount of the refund Husband received was $4,187. It appears the court arrived at the figure of $9,336 by incorrectly halving the total amount of withholdings, not the total amount of the refund. --------
G. Calculation Error in the Division of Liquid Assets
Husband contends the trial court erred in calculating the division of liquid assets. The court found Husband controlled a net amount of $496,736 of community liquid assets, with each party entitled to $248,188. Husband correctly points out that half of $496,736 is $248,368. Wife does not dispute this claim.
The record supports Husband's assertion. We will instruct the trial court to vacate that portion of the order and enter a new order with the correct amount.
H. Imposition of Sanctions
After entry of judgment, Husband failed to convey his interest in the Scotts Valley home to Wife as ordered by the court. He also attempted to sell the Washington house to a third party in violation of the court's order. In February 2016, Wife sought an order to enforce the judgment and requested sanctions against Husband.
After a hearing on the matter, the trial court ordered Husband to execute a deed within 72 hours transferring title of the Scotts Valley house to Wife, and to transfer the Washington house to Wife. The court also imposed sanctions and attorney's fees under section 271 totaling $30,000. This included $2,000 for attorney's fees incurred by Wife, and $3,000 for "anticipated expenses of the attorney in Washington." The court also imposed $25,000 in sanctions "for [Husband's] attempt to sell the house without any notice to [Wife] and in violation of the court's order and his fiduciary obligations."
Husband contends he did not receive adequate notice of the sanctions order. He contends Wife's request failed to set forth the amount of sanctions she sought and the basis for such an amount. He further contends the sanctions were unauthorized under section 271 as construed by Sagonowsky v. Kekoa (2016) 6 Cal.App.5th 1142 (Sagonowsky) and he argues the sanctions are not supported by substantial evidence. Wife contends Husband received adequate notice, and she argues the sanctions were supported by substantial evidence.
1. Legal Principles
Section 271 authorizes a trial court to award attorney's fees and costs based on " 'the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys. An award of attorney's fees and costs pursuant to this section is in the nature of a sanction.' (§ 271, subd. (a).) "The purpose of the statute is ' " 'to promote settlement and to encourage cooperation which will reduce the cost of litigation.' [Citation.]" ' [Citations.]" (Sagonowsky, supra, 6 Cal.App.5th at p. 1152.) Sanctions awarded under section 271 are limited to attorney's fees and costs. (Id. at p. 1144.)
"A sanctions order under section 271 is reviewed for abuse of discretion. [Citation.] Accordingly, we will overturn such an order only if, considering all of the evidence viewed most favorably in its support and indulging all reasonable inferences in its favor, no judge could reasonably make the order. [Citations.] 'We review any findings of fact that formed the basis for the award of sanctions under a substantial evidence standard of review.' [Citation.]" (In re Marriage of Corona (2009) 172 Cal.App.4th 1205, 1225-1226.)
2. The Sanctions Order Was Unauthorized Under Section 271 to the Extent the Amount Exceeded Attorney's Fees and Costs
The trial court issued the sanctions order in May 2016. Several months later, the First District Court of Appeal decided Sagonowsky, supra, 6 Cal.App.5th 1142. In Sagonowsky, the trial court had imposed sanctions based on a party's misconduct in addition to attorney's fees and costs. The court of appeal construed section 271 as authorizing sanctions limited to the amount of attorney's fees and costs only based on the "plain language" of the statute. (Id. at p. 1144.) The court of appeal reduced the sanctions award accordingly. (Id. at p. 1157.) We find Sagonowsky's statutory analysis of section 271 persuasive and apply it here.
In addition to sanctioning Husband $5,000 for Wife's attorney's fees and costs, the trial court imposed $25,000 in sanctions based on Husband's refusal to obey the court's order and his attempt the sell the Washington house, which the court had awarded to Wife. Wife points to nothing in the record showing she incurred attorney's fees or costs in the amount of $25,000. This portion of the sanctions is indistinguishable from the kind of sanctions for misconduct held to be unauthorized in Sagonowsky, supra, 6 Cal.App.5th at page 1153 (amount awarded was excessive because it was untethered to attorney fees and costs). Accordingly, that portion of the court's order was unauthorized under section 271.
Because we will vacate the sanctions award and remand for a new sanctions order, we need not consider Husband's claim of inadequate notice. As to Husband's claim of insufficient evidence, we note that the trial court estimated "anticipated attorney fees" as part of the sanctions. By this time, however, the exact amount is likely ascertainable. We will therefore allow the parties to present further evidence on this matter below.
III. DISPOSITION
The judgments are reversed and the matter is remanded with the following instructions. First, the trial court shall vacate its order requiring Husband to reimburse Wife for $65,379 in household living expenses. The court shall enter a new order requiring reimbursement for payments for community obligations, as defined by Epstein and its progeny, to the extent Wife can prove she paid them from her separate funds. Second, the trial court shall vacate its order requiring Husband to reimburse Wife $23,400 for the 2013 tax refund. Third, the trial court shall vacate that portion of its order finding each party entitled to $248,188 as half of the liquid assets controlled by Husband, and the court shall enter a new order based on the amount of $248,368. Fourth, the trial court shall vacate its order imposing $30,000 in sanctions, and the court shall enter a new sanctions order following a hearing to determine the appropriate amount consistent with section 271 or any other applicable authorities.
/s/_________
Greenwood, P.J. WE CONCUR: /s/_________
Bamattre-Manoukian, J. /s/_________
Grover, J.