Opinion
E066624
11-09-2017
In re the Marriage of CHRISTA and MICHAEL LARRY L. AUBRY. CHRISTA M. AUBRY, Respondent, v. MICHAEL LARRY L. AUBRY, Appellant.
La Quinta Law Group and Timothy L. Ewanyshyn for Appellant. Law Offices of Anastacio De La Cruz and Anastacio De La Cruz for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. IND1301750) OPINION APPEAL from the Superior Court of Riverside County. Mickie Elaine Reed, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Reversed. La Quinta Law Group and Timothy L. Ewanyshyn for Appellant. Law Offices of Anastacio De La Cruz and Anastacio De La Cruz for Respondent.
In this marriage dissolution proceeding, respondent Christa M. Aubry (Wife) filed a request for order for attorney fees and investigator's fees to be paid by appellant Michael Aubry (Husband). The trial court granted Wife $10,000 in attorney fees to be paid from rental payments on properties controlled by Husband. Husband claims on appeal that the trial court abused its discretion under Family Code section 2030 by awarding Wife $10,000 in attorney fees because it failed to consider the flat fee retainer agreement she had negotiated with her counsel.
All further statutory references are to the Family Code unless otherwise indicated.
FACTUAL AND PROCEDURAL HISTORY
The dissolution of marriage was filed on October 4, 2013, after 14 years of marriage.
Wife refers to a restraining order issued against Husband. Such information is not included in the record and will not be considered by this court.
A. FIRST REQUEST FOR ORDER
On September 8, 2014, Wife filed a request for order for attorney fees and costs in the amount of $2,500, modification of spousal support and a financial audit of Husband's income from his business and rental income from properties in his control. Wife sought a listing of all properties owned by Husband that were purchased during the marriage.
No previous order for attorney fees had been ordered. Wife declared, "[Husband]'s income from self-employment and rental income which is in excess of $7,500 per month. Further, [Husband] had access to community funds which I do not have access to. He has already accessed some of these funds for that purpose." Wife declared that Husband had numerous properties, which could be sold to pay legal expenses. He had already used community funds for his own legal expenses. He had at least nine properties that were purchased during the marriage.
Wife, who was a teacher, submitted an income and expense declaration. She made $5,270 per month in gross income; she alleged Husband made $7,500. Her monthly expenses were $4,095. She paid $300 a month in attorney fees. She had already paid $5,120 in attorney fees and owed $880.
On September 23, 2014, Wife filed a request for business valuation to be paid for by Husband. Wife declared that during the marriage Husband had managed all of their money and assets. Community assets were used to improve properties or make payments. His income far exceeded her income.
Husband submitted an income and expense declaration on September 30, 2014. His profession was realtor/property manager and his gross monthly income was $4,664. He estimated property assets totaling $268,042. He was the owner of Iron 8 Properties dba Desert Valley Realty Solutions. His total monthly expenses were $5,726. He had paid his own attorney's fees and costs in the amount of $12,500. He and Wife had three children and they shared custody. He also provided a profit and loss statement for Desert Valley Realty Solutions.
Husband filed opposition to the request for the order for spousal support, attorney fees and financial audit. Husband alleged that Wife had previously requested attorney fees in the amount of $2,500 and that request was denied. She had not incurred any further fees since she was charged a flat amount.
Husband declared wife's monthly income was actually $6,695. Her expenses were only $2,700 per month. He was barely able to pay his expenses and support their three children. He also was paying his own attorney fees. Liquidating any of the properties would reduce the income received on those properties in rent. He insisted he made $4,200 each month and not $7,500. At that point, he had paid $20,000 in attorney fees. Husband had liquidated his retirement fund to pay for his attorney. Husband had already provided a detailed accounting of his assets so there was no need for a professional audit.
On October 7, 2014, Wife submitted an updated income and expense declaration. Her monthly income was $5,839.57. Her expenses were $4,505. Wife also filed a reply to Husband's response to the request for order. She submitted a pay stub. Her monthly expenses left her with no money at the end of the month. Wife provided evidence that Husband had withdrawn $2,015 from casino ATMs. He had spent $1,012 on fine dining in the year. Further, Husband had provided two different versions of profit and loss statements for his business. They did not match public records. A financial audit was required. In this pleading, Wife withdrew her request for attorney fees.
On October 15, 2014, Husband filed a responsive declaration to the request for order. He contended that Wife should pay for a financial audit if required but it was not necessary because Wife was well aware of their finances.
On December 2, 2014, a hearing was conducted about appointing a forensic accountant to value Husband's business and assets. The parties agreed that Les Kornblatt would be appointed and that the parties would pay for his retainer in the amount of $6,500 out of their tax return. The issues of spousal support and attorney fees was continued.
B2. SECOND REQUEST FOR ORDER AND SANCTIONS
On April 25, 2016, Wife filed a request for order as follows: "[Husband] to pay [Wife]'s Attorneys Fees and Costs to depose witnesses, 271 Sanctions against [Husband] for not cooperating with Forensic Accountant, and cost of Forensic Accountant or in the alternative, order sale of community property to pay [Wife]'s Attorneys Fees and Costs to depose witnesses, 271 Sanctions against [Husband] for not cooperating with Forensic Accountant, and cost of Forensic Accountant." In addition, "[Husband] to provide all requested documents so that Forensic Accountant can complete tracing issues and find out community interest in business and properties."
Wife made a request for an award of $5,000 in attorney fees. She sought fees to move the case forward and to depose witnesses. A forensic audit, paid for by Husband, was needed because the valuation of the properties and business was complicated. Community property funds were used for the properties. She was entitled to an interest in his businesses.
Husband was not cooperating with Kornblatt and an audit was necessary. Moreover, Wife alleged Husband had transferred money to his mother that belonged to the community. Wife had no access to money to pay the forensic accountant.
Wife's counsel also submitted a declaration that the trial court had appointed Kornblatt to evaluate Husband's businesses and other available income. Wife's counsel had confirmed that Husband had attempted to hide assets by giving an inaccurate report regarding his realtor listings. He had incurred $50,000 in attorney fees and they had been paid from the community assets.
Kornblatt submitted a declaration and memorandum with the request for order. Kornblatt needed additional time to review documents and to conduct depositions. In particular, as to Husband's involvement with a business called TAF. Kornblatt had prepared a preliminary memorandum regarding valuation of the businesses belonging to Husband. Iron 8 Properties, which was owned by Husband, was valued at $128,000. TAF was valued at $475,000. Husband claimed to have no interest in TAF but in February 2014, he listed it as an asset. However, a 2013 income tax return did not show Husband as an owner. Kornblatt was unsure of Husband's interest in TAF.
In order to uncover any undisclosed assets or unreported income, further investigation was required, which may exceed $25,000. Kornblatt also was unsure of the ownership of six rental properties. Kornblatt was also unclear as to Husband's accounting of gifts and inheritances. Kornblatt had stopped the investigation because he had exhausted the retainer amount. Further, Husband's counsel had informed Kornblatt that items requested that did not relate to the valuation of Husband's business and income would not be provided due to the items being beyond the scope of the investigation for which Kornblatt was appointed.
Wife submitted another income and expense declaration dated May 3, 2016. She was paid $7,363 gross. She was 40 years old. She estimated Husband's gross income was $8,000. Her monthly expenses were $5,522. She had paid to date $6,000 in attorney fees and her counsel's rate was $250 per hour.
Husband filed a responsive declaration in response to the request for order and sanctions. Husband did not agree to pay Kornblatt $25,000. Kornblatt had already been paid $9,000. Further, Wife's counsel was on a flat fee retainer agreement. There was no indication who was going to be deposed to justify the $5,000 for additional costs. Husband also declared that he had submitted the necessary documentation for Kornblatt to complete his work. No sanctions were warranted. He submitted the transcript from the December 2, 2014, hearing that Wife's counsel asked that Kornblatt be appointed to do some "tracing matters, figure out more Epstein credits. And the other would be to do a business valuation." He also submitted evidence that Kornblatt admitted receiving $9,625.50 in payments from the parties.
Also attached was the retainer agreement between Wife and her counsel. It included language, "THIS RETAINER IS SPECIFICALLY FOR PREPARATION AND REPRESENTATION IN THE DISSOLUTION OF MARRIAGE OF AUBRY V. AUBRY. THIS MATTER IS BEING CHARGED AT A FLAT FEE RATE OF $6,000. OF THIS AMOUNT, $3,000 IS NONREFUNDABLE SHOULD ATTORNEY CLIENT RELATIONSHIP BE TERMINATED BEFORE THE HEARING." Wife was also responsible for costs related to the matter. Costs included deposition costs, investigation costs, and travel expenses.
Husband submitted an income and expense declaration on June 2, 2016. His monthly gross income was $6,000. He had monthly expenses of $6,880. He owed $10,800 in attorney fees. He also submitted profit and loss statements for Desert Valley Realty Solutions for 2015 and 2016. His monthly pay stubs from Iron 8 Properties were only $2,683.50.
C. HEARING
The hearing on the additional fees to be paid to Kornblatt and the attorney fees was heard on June 15, 2016. The court summarized that the matter was before it based on Wife seeking fees to depose witnesses; asking for sanctions for Husband failing to cooperate with the forensic accountant; to pay attorney's fees; and, if required, the sale of community property to pay the fees.
The court stated it had reviewed Husband's responsive declaration that Kornblatt had already been paid more than the retainer. Moreover, the court had read Kornblatt's report that it had assigned a value to the Husband's assets but more work had be done.
Wife's counsel argued this was a complex case involving at least five houses and two businesses. Further, Husband was in charge of the all of the properties and businesses. Husband had already spent $50,000 in attorney fees. Wife did not have access to money to defend herself. Sanctions were warranted due to Husband's failure to cooperate with Kornblatt. The original retainer did not cover the amount that was required to investigate the assets. The court asked what property should be sold and Wife's counsel indicated it would have to be in agreement with Husband's counsel.
Husband's counsel stated that all of the properties had tenants and could not easily be sold. Additionally, it did not make sense to sell these income properties. Husband's counsel argued that the forensic accounting had been ordered to determine Husband's monthly income available for support and a valuation of the business; that was completed and no further accounting was required. The original amount to Kornblatt was $6,000; they had paid more totaling $9,000 and Kornblatt wanted $25,000 more. It did not benefit the parties to spend this money. The case should just be resolved.
Further, there was no justification for sanctions. There was a statement by Kornblatt that Husband had failed to respond to requests for documents, but he also had declared he had received a box of records from Husband. Wife's counsel stated the documents were conflicting and this frustrated the discovery process. This was sanctionable conduct. Moreover, in the interests of justice, Husband had spent $50,000 on attorney fees and Wife should be on equal footing.
Husband stated there were five rental properties but two "were foreclosed." Husband stated that based on the rent and the mortgages, they were not making money on the properties.
The court stated it was going to grant $10,000 to Kornblatt to finish the accounting. Further, Wife would be paid $10,000 in attorney fees. Wife was to receive the rent money from the three properties until the $20,000 was paid. The tenants were to be notified to pay Wife the rent.
Husband's counsel stated that without the rent, Husband could not pay the mortgages. The trial court responded, "I understand that, but he's got the businesses, he's got the income from the businesses, so I—I don't know what else to say. There has got to be money to prosecute this case. She doesn't have it, and he has all the assets and the businesses and it's got to come from somewhere."
Husband's counsel stated, "I just need to put one thing on the record. Not in the papers, but the [Wife] is on a flat fee retainer, she doesn't have the need for attorney fees my client has." The trial court responded, "Well, the fees are for depositions, they are for the court reporter, they are for the cost of all that and I don't know what their attorney fee agreement is, it could be a flat rate. I don't know what's included, what's not included with that contractual agreement." Husband's counsel stated the moving papers showed a flat fee retainer of $6,000. Husband had the need for payment of attorney fees.
The trial court concluded, "Except there is a disparity of income and there is a need, and he has the ability, the only ability. He's in charge of all of the assets and the businesses. [¶] So that is my order. [¶] The attorney fees that I've ordered, obviously if you do not have attorney fees in excess of what you've been previously paid, because I don't if they have modification, I don't know what the issue is, I know there is [a] request, I know there is a need. That will be my order."
DISCUSSION
A. ATTORNEY FEES
Husband contends the trial court abused its discretion by awarding Wife $10,000 in attorney fees.
Section 2030, subdivision (a)(1) provides that in a marital dissolution proceeding, the court "shall ensure that each party has access to legal representation . . . to preserve each party's rights by ordering, if necessary based on the income and needs assessments, one party . . . to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding." Subdivision (b) of section 2030 provides that "Attorney's fees and costs within this section may be awarded for legal services rendered or costs incurred before or after the commencement of the proceeding."
Section 2032, subdivision (a) provides: "The court may make an award of attorney's fees and costs under Section 2030 or 2031 where the making of the award, and the amount of the award, are just and reasonable under the relative circumstances of the respective parties." Section 2032, subdivision (b) provides: "In determining what is just and reasonable under the relative circumstances, the court shall take into consideration the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately, taking into consideration, to the extent relevant, the circumstances of the respective parties described in Section 4320. The fact that the party requesting an award of attorney's fees and costs has resources from which the party could pay the party's own attorney's fees and costs is not itself a bar to an order that the other party pay part or all of the fees and costs requested. Financial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances."
"The parties' circumstances described in section 4320 ' "include assets, debts and earning ability of both parties, ability to pay, duration of the marriage, and the age and health of the parties." ' " (People v. Rosen (2002) 105 Cal.App.4th 808, 829.) "In assessing one party's relative need and the other party's ability to pay, the family court may consider all evidence concerning the parties' current incomes, assets, and abilities, including investment and income-producing properties." (In re Marriage of Sorge (2012) 202 Cal.App.4th 626, 662.)
" '[T]he family court has considerable latitude in fashioning or denying an attorney fees award . . . .' [Citation.] However, the court's 'decision must reflect an exercise of discretion and a consideration of the appropriate factors as set forth in code sections 2030 and 2032.' " (In re Marriage of Sharples (2014) 223 Cal.App.4th 160, 165.) The record must reflect that the trial court exercised its discretion and considered pertinent statutory authority. (In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 975.)
"On appeal, we review an attorney fee award under section 2030 for an abuse of discretion." (In re Marriage of Sorge, supra, 202 Cal.App.4th at p. 662.) " '[T]he trial court's order will be overturned only if, considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order made.' " (In re Marriage of Keech (1999) 75 Cal.App.4th 860, 866 (Keech).)
An abuse of the trial court's discretion was demonstrated in Keech, supra, 75 Cal.App.4th 860. In that case, the trial court awarded to the wife attorney fees in the amount of $25,000 to be paid in monthly installments. The husband contended that with the combined amount owed for spousal and child support, he did not have enough income on which to live. (Id. at p. 865.) The appellate court first noted, "'[W]hile the court has considerable latitude in fashioning or denying a pendente lite fee award its decision must reflect an exercise of discretion and a consideration of the appropriate factors. [Citations.]' [Citation.] The trial court's discretion in this area is thus limited by the statutes which enable the exercise of that discretion." (Id. at p. 866.)
The Keech court reviewed the factors in section 2030. (Keech, supra, 75 Cal.app.4th at pp. 866-867.) It found, "The trial court's decision here does not reflect consideration of husband's ability to pay wife's professional fees at the rate of $1,000 per month (or indeed at $500 per month), does not reflect consideration of the respective litigation needs of the parties, and does not reflect consideration of whether the fees allegedly incurred were reasonably necessary. According we conclude the [trial] court abused its discretion with respect to the fee award." (Id. at p. 867) The appellate court also noted the trial court did not consider that husband would be left with no monthly income once the fees, spousal support and child support was paid. It also did not consider if the fees were reasonably necessary based on the case not being complex. (Id. at pp. 868-870.)
Here, although we review the trial court's order of attorney fees deferentially, we must conclude that it abused its discretion. There is no indication that the trial court considered the factors in section 2030. The trial court admitted it was unaware of the fee arrangement between counsel and Wife. Moreover, although Wife sought $5,000 in attorney fees in her request for order, she was awarded $10,000 in attorney fees and the trial court gave no explanation except for vague references to court reporters and depositions.
Additionally, Kornblatt had provided an initial valuation of the businesses—Iron 8 Properties and TAF—but admitted it was unsure if Husband owned any interest in TAF and needed to further investigate Husband's assets. Kornblatt was unsure of Husband's interest in six rental properties. Husband stated at the hearing that two of the properties owned by Husband "were foreclosed" and that the rent was needed for the remaining three rental properties to pay their mortgages. Husband's counsel represented that there was no profit from the properties.
It is unclear if the trial court considered this information, and if it did, determined that Husband was receiving income from the businesses and properties. The trial court specified that Husband had the money from the "businesses" but the record is unclear as to Husband's interest in TAF. Moreover, there is nothing in the record that the trial court considered Wife's monthly income; it just concluded she did not have money for attorney's fees. The trial court did not appear to consider that Wife had already paid $6,000. While wife's ability to pay is not dispositive, it is one factor to be considered in awarding attorney fees. (§ 2032, subd. (b).)
Based on the foregoing, the record does not support that the trial court considered the factors in section 2030. As such, remand is required in order for the trial court to properly exercise its discretion considering the factors in section 2030.
DISPOSITION
The order which directs payment of $10,000 for Wife's attorney fees is reversed and remanded to the trial court for the determinations required under Family Code sections 2030 and 2032. Appellant is awarded his costs on appeal. In all other respects, the order is affirmed.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MILLER
Acting P. J. We concur: CODRINGTON
J. FIELDS
J.