Opinion
A161470
08-10-2022
In re the Marriage of RON STORN and ALLISON STORN. v. ALLISON STORN, Respondent. RON STORN, Appellant,
NOT TO BE PUBLISHED
Contra Costa County Super. Ct. No. D17-02336
WISS, J. [*]Ron Storn appeals the family court's order granting his former spouse Allison Storn's motion to enforce a stipulated judgment (Judgment) requiring him to transfer to her a specified number of Lyft, Inc. (Lyft) stock shares as her portion of the community property. The number of shares allocated to Allison is set forth in an exhibit attached to the Judgment and was based on information that Lyft supplied to Ron when he terminated his employment with the company. Following the entry of the Judgment, Lyft determined that not all of Ron's available shares had vested upon his separation and reduced the number of shares awarded. Ron subsequently transmitted funds to Allison based on the reduced number of shares. Allison filed a request for an order compelling Ron to transfer the remaining share balance in accordance with the Judgment. The court granted the request and Ron appeals. We affirm.
We refer to the parties by their first names for clarity. No disrespect is intended.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
The parties were married in June 2000 and had two children, a son, born in June 2001, and a daughter, born in August 2004. They separated in March 2017. In May 2017, Allison filed a petition for dissolution of marriage.
While the dissolution petition was pending, Ron left his position as an executive at Lyft. Upon his departure, he signed a Confidential Separation Agreement and General Release (Separation Agreement). The Separation Agreement stated that Ron had been "granted options to purchase an aggregate of 240,230 shares" of Lyft common stock, referred to as the "Options." It further indicated that Ron had already exercised 89,000 of these options, and would "be vested in an additional 151,230 of the shares that are subject to the Options and remain exercisable as of the Separation Date."
On December 14, 2018, the family court filed the Judgment, which dissolved the marriage and resolved support and property issues. As part of the Judgment, Allison waived spousal support "in consideration of the property division as set forth in this Judgment . . . and a lump sum payment by [Ron] to [Allison] in the amount of $125,000." The Judgment indicated that "the parties [had] carefully bargained for the absence of spousal support as provided herein...."
As to the division of community property, the Judgment stated that Ron had received benefits during his employment with Lyft that were community property. The Judgment provided that "[t]he parties shall equally divide the community interest [i]n all Lyft stock . . . as set forth in Exhibit 'D.'" Exhibit D is a spreadsheet that identified the incentive and non-qualified stock options granted to Ron and characterized these shares as either separate or community property. The spreadsheet set forth how many shares each party would receive upon exercise, based on Ron receiving 100 percent of his separate property shares and the parties splitting the community property shares equally. The total number of community property shares was listed as 151,230, which is the same as the number of vested options stated in Ron's Separation Agreement. Allison's portion of the community property was calculated as 73,782 shares. The Judgment also stated that "[i]n the event [Ron] is unable to transfer the shares as set forth herein to [Allison], the court shall reserve jurisdiction to issue further orders necessary to effectuate the terms of this Agreement."
Exhibit D also sets forth a number of restricted stock units (RSUs) granted to Ron. The division of these stock options was not contested below and is not at issue in this appeal.
It is uncontested that the parties' accounting experts consulted each other frequently during their work, and both sides agreed to the calculations set forth in Exhibit D.
In March 2019, the family court filed a stipulation and order regarding the Lyft stock options. The order indicated that Ron had been unable to transfer Allison's interest in the Lyft shares to her directly due to certain legal restrictions. The parties agreed that he would hold the "stock benefits" in trust for her until the restrictions were lifted. The order incorporated the same spreadsheet that had been attached to the Judgment as Exhibit D, thus reaffirming that Allison was to receive 73,782 shares as her portion of the community property interest in Ron's Lyft stock options. Later that same month, Lyft filed its initial public offering (IPO). Following the IPO, stock for certain executives like Ron was "locked-up," meaning it could not be sold. The lock-up period for Ron's stock was scheduled to end on August 19, 2019.
On August 14, 2019, Ron received a disclosure from Lyft stating that he had only 138,794 options available for exercise, representing 12,436 fewer shares than the 151,230 vested options provided for in the Separation Agreement. Five days later, Ron exercised the 138,794 Lyft options and sold the stock. Resulting proceeds of $7.3 million were transferred to his bank account.
The next day, Ron's attorney notified Allison's attorney that Ron had received fewer Lyft shares than identified in the Separation Agreement. Ron's attorney indicated that Ron would be transferring to Allison her "proportionate number of shares" of the 138,794 options that Ron actually received, rather than the 73,782 shares that had been awarded to her under the Judgment. Allison's attorney objected and requested information regarding the discrepancy between the number of stock options Ron had been slated to receive and the number of shares that he actually received. Further inquiry revealed that the shortage occurred because 12,437 of Ron's options "were not fully vested but exercisable as of [his] last date of employment." These options "were cancelled upon termination as they were not vested."
Ron transferred proceeds from the sale of 67,564 Lyft shares to Allison's account on August 29, 2019. The difference between the after-tax value of the 73,782 Lyft shares allocated to Allison by the Judgment and the proceeds Ron that transferred to her is $121,651.69.
B. Allison Files a Request for Order
In February 2020, Allison filed request for order seeking $121,651.69 as compensation for the Lyft shares that she had not received, plus interest. In his response, Ron explained that when the Lyft IPO lock-up ended, he was granted access to the account that held his Lyft options and received notice for the first time that his shares totaled only 138,794, rather than the 151,230 shares that he had anticipated. He characterized the numerical discrepancy as a "scrivener's error." He also stated that he had reached out to a human resources representative and the general counsel at Lyft who both "confirmed the scrivener's error" and told him that he was fully vested in only 138,794 shares as of the date he terminated employment. Allison filed a reply declaration in which she stated that "[a]t the time of the entry of the Judgment, I assumed the [Separation Agreement] to be the product of Lyft accelerating the vesting schedule in order to reach a deal." She further stated that this assumption "was part of my decision to settle the case with [Ron]."
At the hearing on Allison's request for order, Ron's attorney admitted that "[i]n retrospect . . . I should have probably filed a [Code of Civil Procedure section] 473(d) motion, but I didn't--Once the experts--the expert CPA's talked and agreed that the numbers were correct as to what was actually given to [Ron], I thought that this issue was put to rest. [¶] Again, we believe that it's just a clerical error that should be corrected under [Code of Civil Procedure] Section 473(d)."
Code of Civil Procedure section 473, subdivision (d) provides, in relevant part: "The court may, upon motion of the injured party, or its own motion, correct clerical mistakes in its judgments or orders as entered, so as to confirm to the judgment or order directed...."
The family court judge indicated that she understood Ron's position, but explained that "it's the Court's job to enforce the four corners of the agreement, not necessarily [the] spirit, and the agreements specify the number of Lyft shares that would be divided. Neither side did a motion to set aside the judgment, but you're asking the Court to change the terms of the judgment. [¶] If the parties just wanted to divide equally whatever Mr. Storn received from Lyft, then there didn't have to be a specific number of shares included. There was. [¶] And so the Court is going to enforce the judgment, because that was the agreed upon bargain." In arriving at her ruling, the judge also noted that Allison had relinquished her right to spousal support as part of a global agreement that included both a lump sum equalization payment and a specific number of Lyft shares.
On October 14, 2020, the family court entered its order requiring Ron to pay Allison $121,651.69 plus $7,500 in attorney fees. This appeal followed.
II. DISCUSSION
Ron contends that the family court erred in ordering him to pay Allison $121,651.69 based on shares of stock that he did not receive from Lyft. He asserts that the figures used in Exhibit D arose from a mutual mistake of fact, suggesting that the court should instead have "corrected" the Judgment to reflect the "clerical error," rather than ordering him to pay Allison in accordance with Exhibit D. Allison counters that Ron's claims of error are unavailing because he did not timely appeal from the Judgment, did not file a motion to set aside the Judgment, and because his defenses to enforcement of the Judgment lack merit.
The parties do not dispute the facts. Where the facts are not in dispute, the standard of review is de novo. (In re Marriage of Lautsbaugh (1999) 72 Cal.App.4th 1131, 1133 ["Here, the facts are not in dispute and the question on appeal may be addressed as a matter of law."].)
We reject Ron's argument that the trial court's order should be reviewed for abuse of discretion based upon In re Marriage of Walker (2012) 203 Cal.App.4th 137. That case held that" 'the trial court's findings of fact are reviewed for substantial evidence, its conclusions of law are reviewed de novo, and its application of the law to the facts is reversible only if arbitrary and capricious." (Id. at p. 147.) Ron asserts that substantial factual matters are disputed. However, the record reflects that there were no factual disputes resolved by the trial court.
A. Interpretation Principles
" 'Marital settlement agreements incorporated into a dissolution judgment are construed under the statutory rules governing the interpretations of contracts generally.'" (In re Marriage of Simundza (2004) 121 Cal.App.4th 1513, 1518 (Simundza).)
"We interpret a contract to give effect to the mutual intention of the parties at the time they formed the contract. [Citations.] We discern the parties' intention based on the written contract alone, if possible, but may also consider the circumstances under which the contract was made and its subject matter. [Citations.] We consider the contract as a whole, and interpret contested provisions in their context, not in isolation, with the aim of giving effect to all provisions, if doing so is reasonably possible. [Citations.] [¶] In interpreting a contract, we give the words their ordinary and popular meaning, unless the parties or usage have given the words a specialized or technical meaning. [Citations.]" (Camacho v. Target Corp. (2018) 24 Cal.App.5th 291, 306; see Simundza, supra, 121 Cal.App.4th at p. 1518.)
"When, as here, no conflicting extrinsic evidence is offered of an interpretation as to which the language of a marital settlement agreement is reasonably susceptible, and the facts are otherwise undisputed, we apply the unambiguous contract terms to the undisputed facts as a matter of law." (In re Marriage of Iberti (1997) 55 Cal.App.4th 1434, 1439; see In re Marriage of Rosenfeld & Gross (2014) 225 Cal.App.4th 478, 488 [“because no extrinsic evidence was considered, we are not bound by the trial court's construction and interpret the terms of the MSA de novo"].) When the language of a contract is "clear, explicit, and unequivocal, and there is no ambiguity, the court will enforce the express language." (In re Marriage of Iberti, supra, 55 Cal.App.4th at p. 1440.)
B. There Is No "Scrivener's Error"
On appeal, Ron maintains that the alleged mistake in the number of vested shares reflected in Exhibit D constitutes a correctable "scrivener's error," also referred to as "clerical error." He argues that the family court erred in enforcing the Judgment, rather than correcting it. We are not persuaded.
It is true that "[w]hen a signed judgment does not reflect the express judicial intention of the court, the signing of the judgment involves clerical rather than judicial error. [Citation.] Counsel who fail to correctly record the terms of a court-ordered judgment commit clerical error, and their error is correctable as such." (In re Marriage of Kaufman (1980) 101 Cal.App.3d 147, 151 (Kaufman).) Clerical errors are correctable at any time: "Regardless of the lapse of time or finality of judgment a court may, upon motion of a party or upon its own motion, correct a clerical mistake in its judgment, whether the mistake was made by the clerk, counsel or the court itself." (In re Marriage of Sheridan (1983) 140 Cal.App.3d 742, 746; accord, Code Civ. Proc., § 473, subd. (d); In re Marriage of Mercado (1977) 75 Cal.App.3d 701, 704 (Mercado) ["A trial court has power to correct mistakes and to annul orders and judgments inadvertently or improvidentially made, i.e., judgments and orders which were not actually the result of the exercise of judgment."].)
Relying on Mercado, Ron asserts that the allocation figures used in Exhibit D constitute merely a "[s]pecie of clerical error which should have been correctable at any time." Mercado is distinguishable.
In Mercado, the husband and wife entered into a marital settlement agreement (MSA) providing that the wife was to pay the husband a fixed sum of money upon the happening of the first of several enumerated events, including "[t]he reaching of majority by both of the minor children of the parties hereto, and the establishment of a separate place of residence or marriage or both of said minor children." (Mercado, supra, 75 Cal.App.3d at p. 703.) The trial court entered judgment pursuant to the terms of the MSA. (Ibid.) Six years later, the husband moved to amend the judgment before a second trial judge, contending the parties had actually agreed that the wife's obligation to pay "would become due upon the reaching of majority of both daughters or the marriage or establishment of a separate residence by both daughters." (Ibid.) The judge modified the judgment by substituting the word "or" for the word "and" in the MSA. (Id. at p. 704)
On appeal, the wife did not contest the husband's version of the facts, instead arguing that the judgment reflected the intention of the original judge who had entered the judgment incorporating the MSA. (Mercado, supra, 75 Cal.App.3d at p. 704 .) The appellate court rejected the wife's argument: "This argument is based on an unrealistically narrow approach to the problem. The second trial judge was entitled to take into account the circumstances surrounding the original judgment. [Citation.] The first trial judge's situation was that the parties presented him with a written agreement how their property was to be divided. The first judge had to rely upon the accuracy of the attorneys in drafting the written agreement to reflect the actual agreement of the parties. [Citation.] In such context, it can reasonably be concluded that what the first trial judge intended was to incorporate into the judgment the actual agreement of the parties, and that the judge assumed that the written property settlement agreement correctly reflected the parties' actual agreement. The doctrine of clerical error permits correction of judgment and orders 'inadvertently made which are not actually the result of the exercise of judgment.'" (Id. at pp. 704-705.)
The alleged error that Ron complains of is different from the clerical error discussed in Mercado. Black's Law Dictionary defines "scrivener's error" as a synonym for "clerical error." (Black's Law Dict. (11th ed. 2019) at p. 1616, col. 1.) In turn, a "clerical error" is defined as "[a]n error resulting from a minor mistake or inadvertence and not from judicial reasoning or determination; esp., a drafter's or typist's technical error that can be rectified without serious doubt about the correct reading. Among the numberless possible examples of clerical errors are omitting an appendix from a document; typing an incorrect number; mistranscribing or omitting an obviously needed word; and failing to log a call." (Id. at p. 683.)
"The test which distinguishes clerical error from possible judicial error is simply whether the challenged portion of the judgment was entered inadvertently (which is clerical error) versus advertently (which might be judicial error, but is not clerical error). [Citation.] Unless the challenged portion of the judgment was entered inadvertently, it cannot be changed post judgment under the guise of correction of clerical error." (Tokio Marine & Fire Ins. Corp. v. Western Pacific Roofing Corp. (1999) 75 Cal.App.4th 110, 117; see Bowden v. Green (1982) 128 Cal.App.3d 65, 71 ["[a] clerical error in a judgment is an inadvertent one made by the court which cannot reasonably be attributed to the exercise of judicial consideration or discretion"].)
There is no dispute that Exhibit D reflects the understanding of the parties at the time and does not contain any inadvertent drafting errors. Ron admits that his and Allison's accounting experts agreed on the figures used in Exhibit D. The figures were intentionally and deliberately calculated based on the information contained in Ron's Separation Agreement. Thus, the alleged error is not a technical or clerical error.
Ron's reliance on Kaufman, supra, 101 Cal.App.3d 147, is also misplaced. In Kaufman, the trial court had approved a stipulation between husband and wife, and expressly made the stipulation an order of the court. (Id. at pp. 149-150.) However, the court inadvertently signed a judgment modifying certain terms of the stipulated agreement. (Ibid.) On a motion two years later by the husband, the court corrected the judgment to conform to the stipulation and order of the court. (Ibid.) The reviewing court upheld these changes, explaining that "[w]hen a signed judgment does not reflect the express judicial intention of the court, the signing of the judgment involves clerical rather than judicial error." (Id. at p. 151.)
Ron argues that the Judgment provides that the community interest in the Lyft shares was to be equally divided, and stresses that the error underlying the figures used in Exhibit D was unknowable by the judge. However, even if the judge could not have known that the expert's calculations were based on erroneous information, at the time the Judgment was entered Exhibit D accurately conveyed the parties' intent. As the family court observed at the hearing on Allison's request for order, if the parties had wanted to provide for an equal division of the community property interest, they could have done so without specifying the actual number of shares. They did specify the actual number of shares, and at the time they did so, they agreed that the numbers stated in Exhibit D were correctly stated. Thus, Kaufman is inapplicable.
C. Ron's Challenge Based on Mistake of Fact Is Forfeited
Ron contends that the parties' intent was to equally divide the community interest in the Lyft shares and argues that Allison should equally bear the loss from the reduced shares based on the doctrine of mutual mistake of fact. Allison counters that the parties' intent was to allocate the number of Lyft shares as specified under Exhibit D. She further asserts that Ron forfeited the right to contest these calculations by failing to timely appeal or seek to set aside the Judgment. Allison's last contention is persuasive.
Relief from a judgment that is based on a mistake of fact could have been sought based upon either Code of Civil Procedure section 473, subdivision (b) or Family Code sections 2121 and 2122. Ron did neither. Code of Civil Procedure section 473, subdivision (b), provides that motions for relief based on a party's or counsel's mistake must be brought within six months after the judgment was entered. Family Code section 2121 (section 2121) increases the time limit set by Code of Civil Procedure section 473, subdivision (b) in limited circumstances. Family Code section 2122 specifies the allowable grounds and time limits for a motion to set aside a judgment. Section 2122 subdivision (e) provides "(e) As to stipulated or uncontested judgments or that part of a judgment stipulated to by the parties, mistake, either mutual or unilateral, whether mistake of law or mistake of fact. An action or motion based on mistake shall be brought within one year after the date of entry of judgment." (Section 2122, subd. (e); In re Marriage of Varner (1997) 55 Cal.App.4th 128, 137, italics added, fn. omitted.) As Allison correctly observes, Ron did not file a motion to set aside the Judgment under either Code of Civil Procedure section 473, subdivision (b) or Family Code section 2122, subdivision (e).
Allison argues that Ron is estopped from challenging the family court's decision to enforce the share allocation stated in Exhibit D because he failed to bring a timely motion to set aside the Judgment. She maintains only Code of Civil Procedure section 473, subdivision (b) or Family Code section 2122, subdivision (e) apply and therefore Ron was required to file a motion within one year after the entry of the Judgment if he believed Exhibit D was incorrect. We agree.
Of course, this limitation does not affect Ron's asserted theory of clerical error, which is a theory that can be brought at any time. However, as we have already discussed, that theory is inapplicable here. (See, e.g., Bell v. Farmers Ins. Exchange (2006) 135 Cal.App.4th 1138, 1144 ["It is elementary that '[a] court can always correct a clerical, as distinguished from a judicial error which appears on the face of a decree by a nunc pro tunc order. [Citation.] It cannot, however, change an order which has become final even though made in error, if in fact the order made was that intended to be made.' "].)
Code of Civil Procedure section 473 and Family Code section 2122 both allow a court to rectify a party's mistake but only within specified time limits. Here, Ron discovered the alleged mistake in time to have sought relief in the family court but elected not to do so. A litigant must act diligently to protect his or her interests, in compliance with the deadlines and procedural rules that give order to our system of justice. The time limits serve important policies, such as repose and finality. (See Arambula v. Union Carbide Corp. (2005) 128 Cal.App.4th 333, 344-345 [construing Code Civ Proc., § 473].)
We acknowledge that the family court's order results in Allison receiving a greater amount than Ron from what was to have been an equal division of the Lyft shares. However, Family Code section 2123 specifically provides that a "judgment may not be set aside simply because the court finds that it was inequitable when made, nor simply because subsequent circumstances caused the division of assets or liabilities to become inequitable...."
In sum, the family court did not err in granting Allison's request seeking enforcement of the Judgment.
D. Attorney Fees
Ron also challenges the attorney fee order awarding Allison $7,500. Allison asserts that her request for reasonable attorney fees was supported by declarations and statements that she and her counsel submitted. However, Ron does not challenge the award based on her alleged failure to lay a foundation for a fee order. Instead, he asserts that if we agree with his contention that the matter involved "an obvious clerical error that should have been resolved by people of good faith with a phone call" then we should remand the matter for reconsideration of the fees as well. Because we are affirming the court's order, we need not address Ron's challenge to the attorney fee order.
DISPOSITION
The orders are affirmed. Allison is to recover her costs on appeal.
WE CONCUR: HUMES, P. J., BANKE, J.
[*] Judge of the San Francisco Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.