Opinion
H047046
05-28-2021
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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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) MEMORANDUM OPINION
We resolve this case by memorandum opinion under California Standards of Judicial Administration, section 8.1. (See also People v. Garcia (2002) 97 Cal.App.4th 847, 853-855.)
In 2018, this court reversed the trial court's orders regarding reimbursements and sanctions issued in the dissolution proceedings between appellant Gregory Jackson and respondent Araceli Henley. (Henley v. Jackson (June 29, 2018, Nos. H043170, H043753) (Henley).) The trial court held a hearing on remand, following which it ordered Gregory to pay $31,691 in reimbursements, and $13,481.41 in attorney fees and costs under Family Code section 271. On appeal, Gregory contends the trial court again violated the principles set forth in In re Marriage of Epstein (1979) 24 Cal.3d 76 (Epstein), allegedly requiring him to reimburse Araceli for expenses that were not reimbursable preexisting community obligations that she paid from her separate property. He further argues the trial court erred in issuing its attorney fees award, claiming the amount ordered includes attorney fees Araceli incurred after the trial court issued its initial order in 2016. We agree that the trial court abused its discretion in ordering over $31,000 in reimbursements. It did not abuse its discretion as to attorney fees and costs under section 271. We will modify the judgment of the court after retrial, and affirm it as modified.
Undesignated statutory references are to the Family Code.
1. Background
In December 2015, the trial court entered a judgment of dissolution, in which it determined the parties' date of separation was June 25, 2012. The court ordered Gregory to reimburse Araceli $65,379 for household expenses she had incurred after separation while the family was still living together. The trial court did not include payments Araceli made on the mortgage of the family home in this amount. Rather, when it determined each party's interest in the property, it ordered Gregory to reimburse Araceli for her reduction of the principal balance on the mortgage. In our opinion in Henley, we noted that "[t]he trial court separately accounted for the mortgage payments [Araceli] made on the Scotts Valley home during this period. These amounts are not at issue on appeal." (Henley, supra, at p.*14, fn. 3.) Subsequently, in June 2016, the court ordered Gregory to pay $5,000 in attorney fees and $25,000 in sanctions under section 271. Our opinion in Henley sets forth the factual and procedural history leading to the issuance of these orders, and we will not repeat it here.
On our own motion, we take judicial notice of the December 4, 2015 judgment, and June 10, 2016 findings and order after hearing, both of which were part of the record in the prior appeal, but were not designated by the parties in this appeal.
On appeal, we found no error in the trial court's determination of the date of separation. (Henley, supra, at pp. *8-14.) We held that, pursuant to Epstein and its progeny, the trial court's order for reimbursements 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." (Id. at p. *17.) Thus, we instructed the trial court to vacate the order, and, on remand, order "reimbursement for payments for community obligations, as defined by Epstein and its progeny, to the extent [Araceli] can prove she paid them from her separate funds." (Id. at p. *33.)
As for attorney fees under section 271, we held that the amount of fees was not authorized, as the amount of sanctions the trial court ordered was not tethered to the amount of attorney fees and costs Araceli had incurred, a requirement articulated in Sagonowsky v. Kekoa (2016) 6 Cal.App.5th 1142 (Sagonowsky), a case decided after the trial court issued its attorney fee order. (Henley, supra, at pp. *30-33.) We vacated the trial court's order and directed the trial court to "enter a new sanctions order following a hearing to determine the appropriate amount consistent with section 271 or any other applicable authorities." (Id. at p. *33.)
In Henley, we returned two additional issues to the trial court, which the parties did not dispute at the hearing on remand, and which are not at issue in this appeal.
2. Reimbursement Claims
The trial court held a hearing in March 2019, at which Araceli was the only witness who testified, and each party presented documentary evidence, which the court admitted; Gregory appeared at the hearing through counsel, but did not personally attend the hearing or testify. Regarding Araceli's reimbursement requests, the court admitted into evidence a list summarizing her requests, as well as supporting documentation divided into 20 categories of reimbursement: mortgage; son's dentist; AT&T; daughter's doctor; car insurance; PG&E; Scotts Valley Water; property taxes; daughter's medical; son's medical; homeowner's insurance; daughter's psychologist; eyeglasses; son's cognitive services; daughter's dentist; daughter's oral surgery; son's tutoring; kitchen repairs; son's books; and dishwasher. At the hearing, Araceli "testified that her requested reimbursements from her separate property, from June 2012, the date of separation, to October 2014 totaled $31,691, half of the claimed $63,382." Gregory introduced evidence of stock sales and fund transfers purporting to show that Araceli paid the expenses from community funds.
It is not clear from the record how Araceli calculated this amount. The enumerated claims in these categories, as set forth in the list she provided the trial court, total over $98,000. At the hearing, Araceli seemingly limited her reimbursement request to expenses incurred from the date of separation through October 2014. The list she provided includes just under $13,000 in expenses dated after October 2014, leaving a balance of over $85,000 in claimed expenses from June 2012 through October 2014. Because this opinion will limit the amount owed by Gregory to only certain categories, we will not make any further attempt to recreate Araceli's calculations.
The trial court considered Gregory's "indirect (circumstantial) evidence of these account transfers," but, noting that Gregory was not present to rebut Araceli's direct testimony that she paid the expenses with separate funds, the court found Araceli's evidence and testimony to be more persuasive. The trial court also found Gregory did not "sufficiently show[] that individual expenditures set forth in [Araceli's list] should be excluded from the reimbursements under Epstein, supra., and its progeny," stating, "The lack of any rebuttal testimony from [Gregory] on the individual expenditures certainly did not assist [Gregory's] position." The court found that Araceli "has proven factually, that all of the expenses set out in her [list] were 'community obligations.' " In a judgment of the court after retrial issued in April 2019 (the April 2019 judgment), the court ordered Gregory to reimburse Araceli $31,691.
On appeal, Gregory contends the trial court failed to follow the dictates of Epstein and the directions of this court in ordering him to reimburse Araceli. We agree. We previously ruled that expenditures for living expenses, such as utilities, medical, and insurance, are not the kind of community obligations addressed under the rubric of Epstein and its progeny. (Henley, supra, at p. *17.) These are expenses that could have been addressed through child and spousal support orders, which were not requested by Wife. (Id. at pp. *17-19.)
Our opinion in Henley includes a detailed analysis of Epstein and related legal authority which will not be repeated here.
Under the doctrine of "law of the case," our opinion in Henley, stating a rule of law necessary to the decision of the case, conclusively establishes that rule as it pertains to the subsequent hearing and this appeal. (Leider v. Lewis (2017) 2 Cal.5th 1121, 1127 (Leider); Morohoshi v. Pacific Home (2004) 34 Cal.4th 482, 491.) The doctrine extends to issues of law that were not expressly decided in the previous opinion, but " 'implicitly decided because they were essential to the decision on the prior appeal.' [Citation.]" (Leider, at p. 1127.) We generally review an order regarding Epstein credits for abuse of discretion, affirming the decision if the trial court exercised its discretion along legal lines. (In re Marriage of Oliverez (2019) 33 Cal.App.5th 298, 318-319 (Oliverez).) However, the scope of the trial court's discretion rests on the legal principles governing the action; where the court oversteps the limits of the applicable principles of law, it abuses its discretion. (See Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773.) Here, the trial court ordered reimbursements that in Henley this court expressly found to be outside of the legal principles espoused in Epstein and related authority—namely the children's medical and educational expenses, utilities, and car insurance. Doing so was an abuse of its discretion based on the law of the case.
In Henley, we confirmed that Epstein allows for reimbursements of community debts in addition to expenses for the maintenance and improvement of the family home, although we noted that reimbursements for home improvements could be limited where the payments do not increase the value of the home. (Henley, supra, at p. *15, citing In re Marriage of Reilley (1987) 196 Cal.App.3d 1119, 1123.) Araceli's claims for reimbursement of mortgage payments, property taxes, homeowner's insurance, kitchen repairs and appliances could arguably fall within the parameters we set forth in Henley. We apply the general abuse of discretion standard to the court's determination that these expenses are subject to reimbursement.
In a provision of the December 2015 judgment that was not altered by our opinion in Henley, the trial court ordered Gregory to reimburse Araceli for her reduction of the principal balance on the mortgage from the date of separation to the date of trial. We acknowledged this in the opinion, noting that the mortgage payments were not at issue in the appeal. (Henley, supra, at p. *14, fn. 3.) Thus, it was an abuse of discretion for the trial court, on remand, to include Araceli's mortgage payments in its determination of the Epstein credits, as the court accounted for those claims elsewhere.
Property taxes are an allowable expense under Epstein. Although Araceli seeks reimbursement for taxes paid after separation, the community incurred the obligation to pay taxes on the property prior to the date of separation. The record indicates Araceli paid $9,476.26 in property taxes from the date of separation through October 2014, such that the amount Gregory owes for reimbursement would be $4,738.13. Homeowner's insurance is also a necessary expense for the maintenance of the home. Like property taxes, it is an obligation incurred prior to the date of separation. Araceli paid $3,884.65 for homeowner's insurance from June 2012 through October 2014, such that Gregory would owe her $1,942.33. The home repairs Araceli identified in the list provided to the trial court all took place after October 2014. As her testimony at trial limited her reimbursement claims to expenses incurred prior to October 2014, we presume the trial court did not include those amounts in ordering reimbursement. All told, assuming appropriate proof that Araceli paid the expenses with separate property, Gregory would owe her $6,680.46.
The trial court determined Araceli met her burden to prove that she made the payments for which she was seeking reimbursements from her separate property funds. In doing so, the trial court accepted Araceli's direct testimony over the circumstantial evidence offered by Gregory, finding Araceli's evidence and testimony to be "far more persuasive. . . ." " 'The trial court sits as trier of fact and it is called upon to determine that a witness is to be believed or not believed. This is the nature of fact finding. "The trier of fact is the sole judge of the credibility and weight of the evidence . . . ." [Citation.]' [Citation.] 'In that role, the judge may reject any evidence as unworthy of credence, even uncontradicted testimony. [Citation.]' [Citation.] 'We do not judge credibility on appeal. An adverse factual finding is a poor platform upon which to predicate reversible error.' [Citation.]" (Oliverez, supra, 33 Cal.App.5th at p. 319.) It was well within the trial court's purview to adjudge Araceli's evidence to be more credible than Gregory's on this issue. We will not disturb that adjudication on appeal. Thus, the amount Gregory owes Araceli for reimbursement of Epstein credits will be reduced from $31,691 to $6,680.46.
3. Attorney Fees and Costs
In the April 2019 judgment, the trial court determined Gregory owes Araceli $13,481.41 in attorney fees and costs under section 271, based on the trial court's previous determination that Gregory engaged in sanctionable conduct regarding a property in Washington. Gregory argues the trial court's order goes beyond the scope of the remand, based on the fact Araceli presented billing records from various attorneys for work completed on dates both before and after the original attorney fees order, issued in June 2016. In remanding the matter to the trial court, this court expressly authorized the court to ascertain the amount of "anticipated attorney fees" that had previously been awarded in the estimated amount of $3,000, based on further evidence to be presented to the trial court. (Henley, supra, at p. *33.) Thus, it was appropriate for the trial court to consider new evidence to determine the actual amount of attorney fees and costs Araceli incurred after the 2016 hearing.
In Henley, we remanded the issue of sanctions solely for the trial court to determine the proper amount; the trial court did not consider anew whether Gregory engaged in sanctionable conduct. (Henley, supra, at p. *33.)
Gregory contends Araceli did not present this new evidence until the day of the hearing on remand, depriving him of due process. The parties each filed trial briefs approximately a week before the hearing. Araceli did not specify the amount of attorney fees she expected the court to order Gregory to pay. Gregory acknowledged in his brief that this court returned the matter to the trial court "for purposes of [Araceli] providing proof of any claimed expenditure of attorney fees related to sanctionable conduct on the part of [Gregory]." He did not raise any objections in the trial brief regarding the fact that Araceli had not yet provided such proof to him. The settled statement prepared by the trial court does not reflect any specific objection Gregory raised to this evidence. When stating that the reason for remand was the appropriateness of the amount of sanctions, rather than the underlying basis of the sanctions order, the court noted, "The issue of adequate notice to [Gregory] was mooted by the January 2, 2019 setting of the March 25, 2019 hearing." There is no evidence in the record on appeal as to what took place at the January 2019 hearing setting the March 2019 hearing. Moreover, upon Gregory's motion, this court augmented the record to include the proposed settled statement Gregory presented to the trial court. Gregory indicated that he objected to the evidence to the extent it included billing statements dated after March 2016; he did not state that he objected on the grounds he did not see the billing statements prior to trial. There is no reference in his proposed settled statement to an objection raised on due process grounds.
On appeal, Gregory bears the burden to show prejudicial error, which necessarily includes the burden to designate adequate an record for this court to determine the issues on appeal. (Oliverez, supra, 33 Cal.App.5th at pp. 311-312.) Where Gregory could have brought a procedural error to the trial court's attention, but failed to do so, we ordinarily will not consider such error on appeal, unless it concerns the application of undisputed facts to a question of law. (Id. at pp. 315-316.) The record on appeal does not provide information as to what notice Gregory received concerning the March 2019 hearing, aside from a note that any issues of inadequate notice were mooted by the January 2019 setting of the hearing. There is nothing in the record suggesting that Gregory objected to the billing statements Araceli introduced into evidence on the grounds that he did not have proper notice. Whether the notice Gregory received satisfied due process requirements is not a question of law based on undisputed facts. As such, Gregory forfeited the argument on appeal. (See id. at p. 316.)
We review the trial court's award of fees under section 271 for abuse of discretion, and will uphold the order unless we determine, after viewing all of the evidence-and indulging all reasonable inferences-in support of the order, that no judge could reasonably make the order. (Sagonowsky, supra, 6 Cal.App.5th at p. 1152.) While Sagonowsky requires that the trial court tether an award of sanctions under section 271 to the attorney fees incurred as a result of the party's sanctionable conduct, "the party seeking sanctions pursuant to section 271 need not establish with great precision an amount directly caused by the improper conduct. [Citation.] In part, this flexibility exists because the misconduct may increase attorney fees in ways that are indirect and difficult to prove." (Id. at pp. 1155-1156.) At the March 2019 hearing, Araceli introduced documentary evidence and testimony regarding the attorney fees and costs she incurred based on Gregory's sanctionable conduct. Aside from his contention that the award goes beyond the scope of remand, which it does not, and that he was denied due process rights, an argument he has forfeited on appeal, Gregory does not identify any additional error in the trial court's award of $13,481.41 under section 271. Thus, we will affirm the award.
4. Araceli's Request for Sanctions
After this appeal was fully briefed, Araceli filed a motion seeking sanctions against Gregory and his attorney, pursuant to Code of Civil Procedure section 907 and California Rules of Court, rule 8.276(a)(1) and (4). We deferred ruling on the motion for consideration with the appeal. Code of Civil Procedure section 907 provides, "When it appears to the reviewing court that the appeal was frivolous or taken solely for delay, it may add to the costs on appeal such damages as may be just." Rule 8.276(a)(1) and (4) allow this court to impose sanctions for "[t]aking a frivolous appeal or appealing solely to cause delay," or for "[c]omitting any other unreasonable violation of these rules."
Undesignated references to rules of court are to the California Rules of Court. --------
Araceli argues this appeal was both frivolous and filed solely to cause delay, based on: the fact Gregory refused a "walk-away agreement" prior to the remand hearing; Araceli's belief that Gregory's appeal was without merit; and, Araceli's belief that Gregory misrepresented the record on appeal and inappropriately asked this court to reweigh the trial court's factual findings and credibility determinations. Clearly, we do not find Gregory's appeal to be without merit, given our holding regarding the trial court's reimbursement order, ante. Nor do we find any alleged misstatements of the record to be material to the issues on appeal. Araceli's arguments regarding Gregory's refusal to accept a settlement offer made prior to the remand hearing go to the propriety of his conduct related to that hearing, not to his conduct on appeal. We find no basis to award sanctions.
DISPOSITION
Section IV.3. of the trial court's April 3, 2019 judgment of the court after retrial on matters remanded by the Court of Appeal is modified to read, "Respondent shall reimburse Petitioner $6,680.46 for his share owing for the community's obligations that were paid by Petitioner. . . ." The judgment is affirmed as modified. Araceli's motion for sanctions on appeal is denied.
/s/_________
Greenwood, P.J. WE CONCUR: /s/_________
Bamattre-Manoukian, J. /s/_________
Grover, J.