Opinion
G052459 c/w G052616
05-24-2017
In re Marriage of MICHAEL and SALLY FARAH. MICHAEL FARAH, Appellant, v. SALLY FARAH, Respondent.
Krieger, Sullivan, Troung, Spagnola & Klausner, Siobhan Marie Bishop and Richard P. Sullivan for Appellant. Stephen Temko 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 09D010311) OPINION Appeal from postjudgment orders of the Superior Court of Orange County, Nathan R. Scott, Judge. Affirmed. Krieger, Sullivan, Troung, Spagnola & Klausner, Siobhan Marie Bishop and Richard P. Sullivan for Appellant. Stephen Temko for Respondent.
* * *
Appellant Michael Farah appeals from two orders finding the majority of an arbitration award he obtained against his former employer was community property, and Michael breached his fiduciary duties to respondent Sally Farah by failing to disclose the award and pay Sally her community property share. The court found the award was community property because it compensated Michael for income or earnings he lost during the marriage based on his employer's misconduct. The court ordered Michael to pay Sally 50 percent of the community property portion of the award, and to pay Sally her attorney fees.
To avoid confusion, we refer to the parties by their first names. No disrespect is intended.
Michael contends the evidence shows the entire award was his separate property because it compensated him for the damage his employer caused to the book of business Michael developed as an investment broker before the marriage. Michael, however, forfeited his challenge to the sufficiency of the evidence because he failed to summarize the evidence supporting the court's orders and provided no explanation why that evidence was insufficient. Moreover, we conclude substantial evidence supports the court's findings that the employer's conduct did not injure Michael until after he married Sally, and therefore both his claim against the employer and the damages he recovered are community property. Indeed, Michael's own expert in the arbitration hearing based his assessment of Michael's damages on the income he lost after he married Sally, and Michael did not argue his book of business theory in the arbitration.
Michael also argues Family Code section 2603 required the trial court to allocate the entire arbitration award to him, but that section only applies to damages for personal injuries, and Michael failed to show the lost income he suffered was a personal injury within the meaning of the statute. Alternatively, Michael argues the court made several errors in determining which portions of the award were community property, but as we explain below his assertions lack merit. Michael's only challenge to the court's finding that he breached his fiduciary duties is based on the assumption the award was his separate property, and therefore he had no duty to disclose it. We reject this contention because substantial evidence supports the court's finding the award was community property.
All statutory references are to the Family Code unless otherwise stated.
Finally, Michael contends the trial court abused its discretion in awarding Sally nearly all of the attorney fees she sought because the court failed to evaluate the reasonableness of the fees. But Michael failed to cite any evidence in the record to support his claim or explain how the fees were unreasonable. Our examination of the record reveals the court reviewed the billing records and did not abuse its discretion in awarding Sally her fees. We therefore affirm both the trial court's orders.
I
FACTS AND PROCEDURAL HISTORY
Michael started his successful career as an investment broker in 1975. In 1995, he went to work for Wedbush Securities, Inc. (Wedbush), where he continued to grow his substantial client list, or book of business, on which he earned his commissions. In early 1999, Wedbush encouraged Michael and its other brokers to recommend their clients invest in collateralized mortgage obligations (CMOs). Wedbush informed Michael its research showed the CMOs were investment grade, adequately collateralized by home equity, and supported by bank issued letters of credit. Based on this information, Michael sold his clients approximately $10 million in CMOs between 1999 and 2002. He even purchased $100,000 in CMOs for his own account.
During 2002, Michael and his clients noticed the value of the CMOs steadily declined. Michael repeatedly asked Wedbush about the CMOs, and it assured him the CMO investments were safe. The value continued to decline, however, and as it did, some of Michael's clients transferred their investment portfolios to other brokers at different brokerages.
On September 21, 2002, Michael married Sally. At the time of their marriage, Michael had more than $100 million in assets under his management and he was Wedbush's top producing broker. The value of the assets under Michael's management, however, declined as his customers continued to transfer their portfolios to other brokers because of the losses on the CMO investments. In 2004, these losses prompted some of Michael's clients to sue him and Wedbush.
In May 2005, Michael filed a claim against Wedbush with the New York Stock Exchange alleging fraud, negligent misrepresentation, and interference with business and contractual relationships based on Wedbush's recommendation regarding the CMOs. Michael sought more than $1.5 million for the income he lost when some of his clients transferred their assets to other brokers. He later filed an amended claim seeking indemnification for the attorney fees and costs he incurred to defend against the lawsuits some of his clients filed based on Wedbush's misrepresentations. Michael and Wedbush agreed to stay the proceedings on Michael's claims until Michael resolved all of the pending lawsuits by his clients. In 2005, Michael left Wedbush and started his own brokerage firm.
Sally and Michael separated in October 2009, while his claim against Wedbush still was pending. Michael filed for dissolution of their marriage the next month. Neither the Preliminary Declaration of Disclosure nor any other disclosure or declaration Michael filed in the dissolution proceedings identified his claim against Wedbush as a potential asset, community or otherwise. In August 2011, Sally deposed Michael in the dissolution proceeding. She asked if Michael was involved in any lawsuits, and he responded he had sued Wedbush for the income he lost based on its misrepresentations about the CMOs. During his deposition, Michael refused to calculate or estimate the amount of income he lost, but he testified it "[p]retty much" was all from 2003. Michael also testified that he would not keep Sally apprised of his claim's status, and his attorney told Sally and her attorney, "You can sit there and whistle Dixie about this one" because Sally has no right to any of the money Michael sought from Wedbush.
In September 2011, Sally and Michael entered into a settlement agreement dividing their property, and the agreement said nothing about Michael's claim against Wedbush. In February 2012, the trial court entered judgment dissolving the couple's marriage and dividing their property based on their settlement agreement. The judgment also made no mention of Michael's claim against Wedbush.
Michael arbitrated his claim against Wedbush before a Financial Industry Regulatory Authority (FINRA) arbitration panel during August and September 2013. His damages expert, Henry John Kahrs, testified Wedbush's misrepresentations about the CMOs caused Michael to lose income starting in 2003 and running through the first half of 2013. Over that 10 and a half year period, Kahrs testified Michael lost a total of nearly $1.9 million in income.
The arbitration panel returned a decision in Michael's favor, awarding him more than $1.3 million in lost income, $1.4 million in punitive damages, $260,000 in attorney fees for his claim against Wedbush, $1.2 million in additional attorney fees Michael incurred in defending other claims, $18,500 in expert witness fees, $21,000 in court reporter fees, and $600 in filing fees, for a total of nearly $4.3 million. The arbitration panel did not specify how it calculated the amount of lost income or punitive damages.
Michael did not disclose the award to Sally. Instead, she discovered it through an industry news article. In October 2013, Sally filed this request for an order adjudicating an omitted asset and imposing sanctions against Michael for breaching his fiduciary duty to her. She alleged the claim and arbitration award constituted an omitted community property asset because they were based on earnings Michael lost during the marriage. She further alleged Michael breached his fiduciary duties to her by failing to disclose the claim before entry of the judgment dissolving their marriage, and by failing to keep her updated about the claim's status, including the arbitration award. Sally sought an order awarding her (1) 50 percent of the award as her community property share, (2) the other 50 percent as a sanction for Michael's breach of fiduciary duty, and (3) her attorney fees.
Michael opposed Sally's request, arguing the claim and the award were his separate property because they were based on injuries Wedbush caused Michael before the marriage. Michael also argued the arbitration award compensated him for lost value in his book of business, not any lost earnings, and his book of business was his separate property because he developed it before the marriage. Finally, Michael argued he had no duty to disclose the claim and award because they were his separate property.
Between March 2014 and June 2015, the trial court held several evidentiary hearings on Sally's request and the parties submitted numerous, lengthy briefs arguing the issues and the evidence. The court ultimately granted Sally's request, finding Michael's claim against Wedbush was community property because it was for income he lost during the marriage. Specifically, the court found that $2.9 million of the $4.3 million arbitration award was community property. The court calculated this amount by adding the amount the arbitration panel awarded as lost income and punitive damages plus nearly $164,000 in attorney fees, representing the amount of fees Michael spent pursuing the claim during the marriage. The court also found Michael "breached his fiduciary duty to [Sally] by failing to disclos[e] his claim against Wedbush, failing to disclose the FINRA arbitration award, and failing to distribute her share of the community interest in that award to her." Under Family Code section 1101, subdivision (g), the court ordered Michael to pay Sally 50 percent of the amount found to be community property, or nearly $1.5 million. In a separate order, the court ordered Michael to pay Sally $118,500 in attorney fees under the same subdivision. Michael separately appealed from these two orders, and we consolidated the appeals based on the parties' stipulation.
II
DISCUSSION
A. Legal Background Regarding Omitted Assets and Interspousal Fiduciary Duties
Sally brought her request for an adjudication regarding the FINRA arbitration award under section 2556. That section grants trial courts "continuing jurisdiction to award community estate assets or community estate liabilities to the parties that have not been previously adjudicated by a judgment in the proceeding. . . . In these cases, the court shall equally divide the omitted or unadjudicated community estate asset or liability, unless the court finds upon good cause shown that the interests of justice require an unequal division of the asset or liability."
"If the allegedly omitted asset is the separate property of one of the parties, it is not subject to division under section 2556." (In re Marriage of Klug (2005) 130 Cal.App.4th 1389, 1396 (Klug).) The characterization of the allegedly omitted asset therefore is the central issue in these proceedings. An asset is an omitted asset if the judgment fails to adjudicate the asset's character and each spouse's interest in it, even though the judgment refers to the asset or each spouse otherwise was aware of the asset. "'[T]he crucial question is whether the [asset was] actually litigated and divided in the previous proceeding.'" (In re Marriage of Thorne & Raccina (2012) 203 Cal.App.4th 492, 501.) Accordingly, it is irrelevant that Sally generally was aware of Michael's claim against Wedbush when the trial court entered judgment because it is undisputed the judgment did not adjudicate Michael's and Sally's interests in the claim.
Sally's request also sought sanctions against Michael for breach of fiduciary duty based on his failure to disclose his claim against Wedbush and the arbitration award based on that claim. The Family Code imposes affirmative and wide-ranging fiduciary duties on spouses concerning the disclosure and management of assets. (In re Marriage of Prentis-Margulis & Margulis (2011) 198 Cal.App.4th 1252, 1270-1271 (Margulis); In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 347 (Fossum).)
"Section 721 . . . creates a broad fiduciary relationship between spouses in their transactions with each other. This 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.' [Citation.] It also subjects the relationship to the same rights and duties applied to nonmarital partners under the Corporations Code." (In re Marriage of Simmons (2013) 215 Cal.App.4th 584, 590 (Simmons).)
"Section 1100 . . . delineates rules governing a spouse's management of marital property. . . . It references the section 721 fiduciary relationship and declares it to be operative with respect to the management and control of community property, 'until such time as the assets and liabilities have been divided by the parties or by a court.' [Citation.] The section further specifies that the fiduciary duty 'includes the obligation to make full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest . . . .'" (Simmons, supra, 215 Cal.App.4th at p. 590.)
Section 2100 makes clear that these fiduciary duties continue until the final distribution of all assets, and they require a spouse to disclose all assets regardless of whether he or she contends they are community or separate property: "[A] a full and accurate disclosure of all assets and liabilities in which one or both parties have or may have an interest must be made in the early stages of a proceeding for dissolution of marriage or legal separation of the parties, regardless of the characterization as community or separate, together with a disclosure of all income and expenses of the parties. Moreover, each party has a continuing duty to immediately, fully, and accurately update and augment that disclosure to the extent there have been any material changes so that at the time the parties enter into an agreement for the resolution of any of these issues, or at the time of trial on these issues, each party will have a full and complete knowledge of the relevant underlying facts." (§ 2100, subd. (c).)
"To implement the disclosure obligation, the Family Code requires the service of a preliminary and final declaration of disclosure '[i]n order to provide full and accurate disclosure of all assets and liabilities in which one or both parties may have an interest . . . .' (§ 2103.) Specifically, 'the preliminary declaration of disclosure shall set forth with sufficient particularity,' to the extent that 'a person of reasonable and ordinary intelligence can ascertain [them],' '[t]he identity of all assets in which the declarant has or may have an interest and all liabilities for which the declarant is or may be liable, regardless of the characterization of the asset or liability as community, quasi-community, or separate.' (§ 2104, subd. (c)(1).)" (In re Marriage of Feldman (2007) 153 Cal.App.4th 1470, 1476-1477.)
The Family Code also provides a statutory cause of action and remedies for a spouse's breach of these fiduciary duties. (§ 1101.) Section 1101, subdivision (g), provides that the remedies for breach of these duties "shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney's fees and court costs." Section 1101, subdivision (h), authorizes an award of 100 percent of any undisclosed or transferred asset "when the breach falls within the ambit of Section 3294 of the Civil Code," which is the statutory provision authorizing punitive damages when clear and convincing evidence shows a party acted with oppression, fraud or malice. B. Substantial Evidence Supports the Trial Court's Characterization of the FINRA Award as Community Property
Michael contends the trial court erred in characterizing the FINRA arbitration award as community property because Sally failed to present any evidence showing the award compensated Michael for income he lost during the marriage. According to Michael, the evidence showed the award compensated him for damage to the book of business he developed before the marriage, and therefore it was his separate property. We disagree.
"Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property." (§ 760; see In re Marriage of Nassimi (2016) 3 Cal.App.5th 667, 684-685.) Under this definition, all income a spouse earns during marriage is community property. (In re Marriage of Bonds (2000) 24 Cal.4th 1, 12; In re Marriage of Lehman (1998) 18 Cal.4th 169, 183 (Lehman) ["'the community owns all [such] rights attributable to employment during the marriage' before separation"].) In contrast, separate property includes all property a spouse owned before marriage and the "rents, issues, and profits" from that property. (§ 770.) As these definitions suggest, "'the most basic characterization factor is the time when property is acquired in relation to the parties' marital status.'" (In re Marriage of Finby (2013) 222 Cal.App.4th 977, 984 (Finby).)
We review the factual findings underlying a trial court's characterization of property for substantial evidence. (Finby, supra, 222 Cal.App.4th at p. 984; Klug, supra, 130 Cal.App.4th at p. 1398 ["'"The finding of a trial court that property is either separate or community in character is binding and conclusive on the appellate court if it is supported by sufficient evidence, or if it is based on conflicting evidence or upon evidence that is subject to different inferences"'"].)
Under the substantial evidence standard, an appellate court's authority "'"begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination."'" (Rupf v. Yan (2000) 85 Cal.App.4th 411, 429-430, fn. 5.) When substantial evidence supports the trial court's decision, the appellate court must affirm even if substantial evidence also would support a different conclusion; the appellate court may not substitute its factual determinations for the trial court's. (Ibid.) Based on the deferential nature of this standard, "[a]n appellant challenging the sufficiency of the evidence to support the judgment must cite the evidence in the record supporting the judgment and explain why such evidence is insufficient as a matter of law. [Citations.] An appellant who fails to cite and discuss the evidence supporting the judgment cannot demonstrate that such evidence is insufficient. . . . An appellant . . . who cites and discusses only evidence in her favor fails to demonstrate any error and waives the contention that the evidence is insufficient to support the judgment." (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408 (Rayii); Arechiga v. Dolores Press, Inc. (2011) 192 Cal.App.4th 567, 572 (Arechiga), overturned by statute on other grounds, Stats. 2012, ch. 820, § 1, p. 6511.)
Here, Michael challenges the trial court's factual determination that the award compensated him for income or earnings he lost during the marriage, rather than for a decrease in the value of his book of business. In support, he points to evidence he presented in the trial court about his book of business, but he flatly ignores the evidence from the arbitration regarding the basis for the arbitration award and the findings the court made based on that evidence. Indeed, not only does Michael fail to summarize the evidence the court specifically cited as the basis for its characterization of the award, he also fails to provide any explanation why that evidence is not substantial evidence supporting the court's characterization. Michael therefore forfeited this challenge to the sufficiency of the evidence. (Rayii, supra, 218 Cal.App.4th at p. 1408; Arechiga, supra, 192 Cal.App.4th at p. 572.)
Nonetheless, on the merits, we conclude substantial evidence supports the trial court's characterization of the award as community property. Michael's damages expert testified at the arbitration hearing that he calculated Michael's damages based on the income or earnings he lost between 2003 and 2013. At his deposition in the dissolution proceedings, Michael testified the damages he sought from Wedbush represented the income he lost for "pretty much" just one year, 2003. At the arbitration hearing, Michael did not argue or present any evidence regarding the value of his book of business as the basis for the damage award. Indeed, as the trial court found, the phrase book of business was not even uttered during the arbitration hearing and the arbitration award specifically stated it was awarding compensation for Michael's lost income. This evidence supports the conclusion the arbitration award represented income Michael lost during the marriage, and therefore constituted community property. (See Lehman, supra, 18 Cal.4th at p. 183 [all rights to receive compensation that an employee spouse accrues during marriage are community property].)
Michael argues any statements the arbitration panel made about the nature of the damages it awarded are irrelevant because the characterization of the award as community or separate property was not an issue in the arbitration, and any determination the arbitration panel made is not binding in these proceedings. Michael misses the point. The evidence from the arbitration and the arbitration panel's findings are relevant because they show the underlying basis for the damages the arbitration panel awarded. He is correct the characterization of the award as community or separate property was not at issue in the arbitration, but that does not make the arbitration proceedings any less relevant in determining the nature of the award.
In a related argument, Michael contends the arbitration award is his separate property because the underlying claim against Wedbush accrued before Michael's marriage to Sally. This argument also lacks merit because substantial evidence supports the trial court's finding the award compensated Michael for income he lost during the marriage.
"'[A] cause of action to recover money in damages, as well as money recovered in damages, is a chose in action and therefore a form of personal property.'" (Barnett v. First National Ins. Co. of America (2010) 184 Cal.App.4th 1454, 1460; see Vick v. DaCorse (2003) 110 Cal.App.4th 206, 212.) But "[the cause of action] does not come into existence or arise until all the elements have been established. Moreover, a cause of action is not property and cannot be characterized until it exists. As a practical matter, a cause of action generally arises for the first time when the injury is suffered. [Citation.] Once injury occurs, the injured party has a property interest which can be valued and characterized as separate or community property." (Klug, supra, 130 Cal.App.4th at p. 1398, fn. omitted.) "This is true whether the cause of action is for injury to real property or financial interests or for personal injuries." (Barnett, at p. 1460.) If the cause of action arises during the marriage, it is community property; if it arises before the marriage or after separation, it is separate property. (Klug, at pp. 1396, 1399, 1401.)
As explained above, substantial evidence supports the trial court's finding the arbitration award compensated Michael for income or earnings he lost during the marriage. Although Wedbush's misrepresentations giving rise to the cause of action occurred before the marriage, Michael did not suffer any injury until after he married Sally, and therefore the cause of action arose during the marriage and it is community property. (See Klug, supra, 130 Cal.App.4th at pp. 1401 [although two of three elements occurred during marriage, cause of action was separate property because final element did not occur until after separation].)
To avoid this result, Michael argues federal law concerning the accrual of a cause of action for securities fraud governs because his claim against Wedbush is for the violation of federal securities law. According to Michael, a cause of action accrues under federal securities law on "the date of violation . . . not the date of discovery of damages," and therefore his claim accrued when Wedbush made its misrepresentations. (See 28 U.S.C. § 2462; Trawinski v. United Technologies (11th Cir. 2002) 313 F.3d 1295, 1298; Johnson v. Securities Exchange Com. (D.C. Cir. 1996) 87 F.3d 484 (Johnson).) Michael is mistaken.
First, he fails to establish the federal statute of limitations applied to his claim against Wedbush. The statute he cites applies to actions "for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise." (28 U.S.C. § 2462.) Michael's claims against Wedbush were for fraud and interference with contractual and business relationships, not for enforcement of a penalty or forfeiture. He cites Johnson as establishing that statute "applies to FINRA proceedings, like the one at issue here," but Johnson establishes no such rule. Rather, it concluded "a Securities and Exchange Commission [administrative] proceeding resulting in a censure and a six-month disciplinary suspension of a securities industry supervisor was a proceeding 'for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise,' within the meaning of [28 U.S.C.] § 2462." (Johnson, supra, 87 F.3d at p. 485.) No claims similar to Michael's were at issue in Johnson.
More importantly, "the statute of limitations is irrelevant to the question of when the cause of action arose for purposes of characterization and division." (Klug, supra, 130 Cal.App.4th at p. 1401.) The statute of limitations is a legislative enactment that defines the period within which a plaintiff must bring an action on his or her claim. A claim accrues and the limitations period begins to run when the plaintiff discovers or reasonably should have discovered his or her injury and the other elements of the claim. (Id. at p. 1399.) Under the foregoing authorities, a claim arises and may be characterized as community or separate property once all of the elements have been established, regardless of whether a spouse is aware of the injury or claim. The focus of the two inquiries is different. The same claim may accrue at one point in time for statute of limitations purposes, but arise at a different time for characterization purposes. (Id. at p. 1400.) Contrary to Michael's contention, the California law regarding characterization governs the issue we confront and supports the trial court's ruling.
Finally, Michael contends the trial court erred in characterizing the FINRA award as community property because it improperly placed the burden on him to show the award was his separate property when it was Sally's burden to prove it was community property. Michael again is mistaken. The trial court did not rely on his purported failure to meet his burden of proof as the basis for its characterization of the FINRA award. Rather, the court reviewed all of the evidence and concluded it showed the award was community property because it compensated Michael for income or earnings he lost during the marriage. As explained above, the evidence supports that conclusion. Moreover, as the spouse with all of the information about the arbitration award and the basis for it, Michael bore the burden to show the award was his separate property once Sally presented a copy of the award and showed it was based on income Michael lost during the marriage. (See Margulis, supra, 198 Cal.App.4th at p. 1267 ["once a nonmanaging spouse makes a prima facie showing concerning the existence and value of community assets in the control of the other spouse postseparation, the burden of proof shifts to the managing spouse to rebut the showing or prove the proper disposition or lesser value of these assets"].) C. Section 2603 Did Not Require the Trial Court to Allocate the FINRA Award Entirely to Michael Because the Award is Not for Personal Injury Damages
In the reply, Michael for the first time argues the trial court prevented him from presenting evidence regarding the separate property character of the FINRA award. Michael, however, forfeited this argument by waiting until the reply to raise it. (Larson v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336, 353.) More importantly, the contention is false. The trial court conducted multiple hearings regarding the character of the award and allowed the parties several opportunities to present evidence on that issue. Michael presented the testimony of the attorney who represented him in the arbitration, which offered Michael the opportunity to present evidence regarding the character of the award. Any failure to develop the separate property issue lies with Michael, not the court. Michael suggests a portion of the minute order setting forth the court's ruling regarding the character of the award supports his argument. Not so. In that order, the court set an additional hearing to determine whether Michael acted with oppression, fraud, or malice in failing to disclose the arbitration award. In that context, the court refused to hear any evidence about the nature of the award because it already had ruled on that issue and was seeking evidence regarding a different issue. Michael fails to explain why the court would permit more testimony on an issue put to rest.
Michael contends the damages the arbitration panel awarded are personal injury damages that section 2603 required the trial court to allocate entirely to him. We disagree that section 2603 applied to the FINRA award.
Section 780 defines as community property all money a married person receives in satisfaction of a judgment for damages for personal injuries if the cause of action for the damages arose during the marriage. Section 2603, however, creates an exception to this general rule that requires "[c]ommunity estate personal injury damages" to be allocated to the injured spouse upon dissolution of the marriage. (See In re Marriage of Jackson (1989) 212 Cal.App.3d 479, 483 [applying section 2603's predecessor].)
Specifically, section 2603 provides, "Community estate personal injury damages shall be assigned to the party who suffered the injuries unless the court, after taking into account the economic condition and needs of each party, the time that has elapsed since the recovery of the damages or the accrual of the cause of action, and all other facts of the case, determines that the interests of justice require another disposition. In such a case, the community estate personal injury damages shall be assigned to the respective parties in such proportions as the court determines to be just, except that at least one-half of the damages shall be assigned to the party who suffered the injuries." (§ 2603, subd. (b).)
Section 2603 defines "'[c]ommunity estate personal injury damages'" as "all money or other property received or to be received by a person in satisfaction of a judgment for damages for the person's personal injuries or pursuant to an agreement for the settlement or compromise of a claim for the damages, . . . unless the money or other property has been commingled with other assets of the community estate." (§ 2603, subd. (a).) Other than this definition, neither the Family Code nor the case law provide any further guidance on what constitutes personal injury damages under section 2603.
Here, as explained above, Michael received a damages award for the lost income or earnings he suffered during the marriage based on Wedbush's misrepresentations about the CMOs. The award did not compensate him for any injuries to his person, his psyche, or his reputation. Rather, the award compensated Michael for the property he lost based on Wedbush's conduct. Michael cites no authority nor does he provide any explanation how the FINRA award constituted personal injury damages under section 2603. Based on the plain meaning of the term, we conclude the FINRA award did not include any personal injury damages, and therefore section 2603 did not apply. (See http://www.nolo.com/dictionary/personal-injury-term.html (as of May 15, 2017) [defining "personal injury" as "[a]n injury not to property, but to the body, mind, or emotions"]; see also http://legal-dictionary.thefreedictionary.com/personal+injury (as of May 15, 2017) [defining "personal injury" as "[a]ny violation of an individual's right, other than his or her rights in property"].) D. The Trial Court Did Not Err in Determining the Amount of the FINRA Award that Was Community Property
The trial court did not find the entire FINRA award was community property. Rather, it limited the community property interest to lost earnings and punitive damages, plus a portion of the attorney fees Michael incurred in pursuing his claim against Wedbush. The court found nearly $1.35 million of the overall award was Michael's separate property. Nonetheless, he contends the court made several errors in calculating the amount of the award that was community property, and should have awarded him more as his separate property. We are not persuaded by any of Michael's arguments.
First, he contends the trial court erred in characterizing the entire amount the arbitration panel awarded for lost income as community property. According to Michael, approximately three and a half years of the period for which the arbitration panel awarded lost income occurred after the couple's October 2009 separation, and therefore the lost income from that period is his separate property. In support, Michael relies on the testimony of his damages expert at the arbitration hearing. That expert testified Wedbush's misrepresentations caused Michael to lose income over a 10 and a half year period from 2003 to the middle of 2013. The record, however, does not support Michael's contention.
Although Michael's damages expert testified Michael lost nearly $1.9 million in income between 2003 and 2013, the arbitration panel awarded Michael about $500,000 less than he sought without making any findings regarding the period the award covered or explaining how it arrived at the amount it awarded. In characterizing the entire lost income award as community property, the trial court pointed out the lack on any findings by the arbitration panel and also cited Michael's deposition testimony that nearly all of his lost income occurred in 2003. Michael cites no evidence that supports his contention the panel intended to compensate him for the lost income that allegedly occurred after separation, and the foregoing evidence constitutes substantial evidence supporting the court's characterization of the entire lost income award as community property.
Next, Michael contends the trial court erred in failing to grant him an offset for the nearly $1.3 million in community living expenses he paid during the marriage with the separate property proceeds from the sale of his separate property home. The claim fails as a matter of law. A spouse who uses separate property to pay community property expenses has no right to reimbursement unless the couple specifically agreed the spouse would be reimbursed. (In re Marriage of Nicholson & Sparks (2002) 104 Cal.App.4th 289, 294-295.) Here, not only did Michael and Sally have no reimbursement agreement, they agreed there would be no reimbursement. Specifically, their prenuptial agreement stated neither spouse had a right to reimbursement if either one used separate property funds to pay community property expenses.
In a related argument, Michael contends the trial court erred in finding any portion of the attorney fee award was community property. According to Michael, the undisputed evidence showed he used his separate property funds to pay those attorney fees, and therefore the amount he was awarded for those fees was his separate property. Not so. Because the claim for lost income was a community property claim, the attorney fees Michael expended to pursue that claim was a community property expense. As explained above, Michael has no claim to reimbursement for any use of his separate property to pay community property expenses. The attorney fee award reimbursed the community for community property expenses, and therefore the award is community property.
We also note the trial court did not characterize the entire attorney fee award as community property. Rather, it only characterized the fees Michael incurred during the marriage as community property. The court characterized all fees Michael incurred after the date of separation as Michael's separate property.
Finally, Michael contends the trial court erred in characterizing the FINRA punitive damage award as community property. According to Michael, the arbitration panel awarded punitive damages to punish Wedbush for its wrongful conduct and deter similar conduct in the future, rather than compensate the community for any injury it suffered, and therefore the court should have characterized the punitive damages as Michael's separate property. Michael, however, provides no explanation to support this conclusion. (See Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956 (Cahill) [trial court order presumed correct and appellant must provide reasoned argument and authority establishing error].) Indeed, he fails to explain why the purpose behind punitive damages should make them his separate property instead of community property. The underlying basis for the punitive damages award was Wedbush's wrongful conduct that caused a loss of Michael's community property income. Because the underlying basis for the punitive damages was an injury to the community estate, it was reasonable for the trial court to characterize the punitive damages as community property, and Michael cites no authority to support his contrary conclusion. E. Substantial Evidence Supports the Trial Court's Finding Michael Breached His Fiduciary Duties
Michael contends the trial court erred in finding he breached his fiduciary duty to disclose his claim against Wedbush and keep Sally updated about the status of the claim, including the issuance of the FINRA award. He argues section 1101 provides a right of action for breach of fiduciary duty only where a spouse's conduct impaired or damaged the other spouse's interest in a community asset. According to Michael, Sally had no claim for breach of fiduciary duty against him because the entire FINRA award was his separate property, and therefore Sally had no community property interest in the award that could be impaired or damaged by any alleged failure to disclose the underlying claim or the award. We disagree. As explained above, substantial evidence supports the court's finding the award, or at least a significant portion of it, was community property, and therefore Michael's failure to disclose and keep Sally apprised of the claim breached his fiduciary duty. F. The Trial Court Did Not Abuse Its Discretion in Awarding Sally Attorney Fees
The trial court found Michael breached his fiduciary duty to Sally and it ordered him to pay her 50 percent of the community property portion of the FINRA award under section 1101, subdivision (g). "Once a breach is shown [under that subdivision], the trial court lacks discretion to deny an aggrieved spouse's request for attorney fees." (Fossum, supra, 192 Cal.App.4th at p. 348 [trial court erred by denying request for attorney fees after finding violation under § 1101, subd. (g)].) Other than challenging the trial court's finding he breached his fiduciary duty, Michael does not dispute Sally's right to recover her attorney fees.
Instead, he contends the trial court abused its discretion by awarding Sally nearly all of the attorney fees she sought. According to Michael, the court erred because it failed to inquire into the reasonableness of the fees Sally sought, and "a review of the cumulative billing statements submitted by her counsel indicate they were not reasonable." The record does not support Michael's argument.
After finding Michael breached his fiduciary duties, the court ordered Sally to update her attorney fee declaration and provided Michael an opportunity to review and challenge that declaration. The court took the matter under submission, reviewed the documents, excluded approximately $8,000 in fees, and awarded Sally the remainder of the fees she sought. Michael cites nothing in the record to support his contention the court failed to inquire into the reasonableness of Sally's fees. Moreover, although he asserts the billing statements by Sally's attorneys show the fees were unreasonable, Michael provides no argument or authority to support that conclusion. He therefore forfeited it. (Cahill, supra, 194 Cal.App.4th at p. 956 ["'"When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived"'"]; see Niko v. Foreman (2006) 144 Cal.App.4th 344, 368.) Without any specific explanation how Sally's attorney fees were unreasonable, we defer to the trial court's superior knowledge about the value of legal services rendered in its court.
III
DISPOSITION
The orders are affirmed. Sally shall recover her costs on appeal.
ARONSON, J. WE CONCUR: O'LEARY, P. J. MOORE, J.