Opinion
G054017
10-11-2018
In re Marriage of ANNA FRANKMAN and DONALD FRANKMAN. ANNA FRANKMAN, Appellant, v. DONALD FRANKMAN, Respondent.
Elizabeth Nigro & Associates, Elizabeth Nigro and Paul M. Frazier for Appellant. Dawn E. Wardlaw 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 06D000302) OPINION Appeal from an order of the Superior Court of Orange County, John L. Flynn III, Judge. Affirmed. Motion to augment the record. Denied. Elizabeth Nigro & Associates, Elizabeth Nigro and Paul M. Frazier for Appellant. Dawn E. Wardlaw for Respondent.
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Anna Frankman appeals from an order denying her motion to set aside the judgment resolving property and support issues in this marital dissolution action. Anna and her former husband, Donald, entered into a mediated marital settlement agreement (MSA), which Anna regretted almost immediately and attempted to withdraw from. However, over Anna's opposition, the trial court granted Donald's motion to enter judgment based on the MSA.
As the parties share the same last name, we refer to them by their first names for the sake of clarity. No disrespect is intended.
After the judgment became final, Anna moved to set it aside, renewing the arguments she had made in opposition to Donald's motion to enter the judgment. The trial court denied Anna's motion, finding that while the motion was timely, it amounted to nothing more than a request for reconsideration of the order entering judgment, which was final. The court also noted Anna had failed to establish any of the elements of extrinsic fraud.
We affirm the order. Although Anna presented some new evidence relating to Donald's income in support of her motion to set aside the judgment, she failed to demonstrate—either in the trial court or on appeal—why that additional evidence should have had any material effect on the challenged judgment. The trial court had already heard and considered her challenges to the parties' MSA before entering the judgment enforcing it, and it concluded Anna had sufficient information regarding Donald's finances when she agreed to it. The additional evidence Anna obtained in the wake of the judgment did nothing to undermine that conclusion, nor did it significantly add to the financial picture she had already presented to the court in opposition to Donald's motion. Therefore, even assuming the trial court may have employed an incorrect legal standard in ruling on the issue, we find no abuse of discretion in the trial court's refusal to set aside the judgment.
FACTS
This marital dissolution action was commenced in 2006, but thereafter languished, apparently due to the parties' short-lived reconciliation. In May 2012, Donald served Anna with a financial disclosure, which he marked as both a "preliminary" and a "final" disclosure. In his disclosure, Donald claimed a gross salary of $10,000 per month, plus "commissions or bonuses" averaging $12,000 per month.
A status only judgment of dissolution was entered on December 10, 2012, effective on June 24, 2013. The court reserved jurisdiction on all other issues. While the case was pending, Donald was obligated to pay spousal support to Anna, in an amount that included "35% of any gross income [he earns] in excess of $20,000 per month."
In May 2015, the parties' attorneys appeared in court for a scheduled mandatory settlement conference. They informed the court the parties had stipulated to send the matter "to mediation with Judge Murphy," and Donald's counsel requested that the court set a "back-up trial date." The court did so, setting a trial date of December 15, 2015, and continued the mandatory settlement conference to November 17.
Four months later, in September 2015, the parties participated in an all-day mediation session. Although they did not exchange final declarations of financial disclosures, either before or at the time of the mediation, Donald's counsel declared that his office had provided Anna's counsel with an updated income and expense declaration at the mediation. At the conclusion of the mediation, the parties entered into a handwritten MSA.
The MSA covered all reserved financial issues, including a division of marital property, the sale of the family residence, an award of spousal support to Anna, and an agreement that each party would waive any claim for attorney fees against the other. The MSA included findings that Donald's income was $175,000, plus bonus income, and that Anna was unemployed.
The day after the mediation, Anna decided she had made a mistake by entering into the MSA. She claimed she had been ill-prepared for the mediation by her counsel and had been unable to "communicate assertively for myself" due to the effects of medication she was taking. Anna explained that on the day after the mediation, she "had time to think and read the paperwork" and decided to withdraw her consent. Her counsel then withdrew from representing her and she retained new counsel.
Within a few days of being retained, Anna's new counsel sent a letter to Donald's counsel, notifying him Anna had withdrawn her consent to the MSA, and also complaining of Donald's failure to serve a final declaration of disclosure in connection with the mediation. In her letter, Anna's new counsel explained that it was her own review of the court docket which revealed the lack of a final disclosure, and she asserted that its omission was grounds to set aside any judgment. Anna's counsel followed that letter with a motion to continue the trial and reopen discovery, which was denied.
In October 2015, the parties exchanged final declarations of disclosure. Donald's final disclosure reflected his income was $14,583 per month, plus commission—the same salary reflected in the MSA. He identified his employer as Red Capital Group, LLC, and stated he had been employed there since May 2015. Like the MSA, Donald's disclosure form reflected he was paid commissions in addition to his base salary, but did not specify an amount of commissions nor the manner in which they were to be calculated.
As Anna acknowledges, "[t]he terms 'commission' and 'bonus' are used interchangeably" to refer to the income Donald earned in excess of this base salary.
As specified on the disclosure form, Donald also attached paystubs documenting his income. While the disclosure form states that only two months of paystubs must be attached, Donald included paystubs spanning four months, from July 1 through October 15, 2015. In addition to his base salary, those paystubs reflected Donald had received $50,000 as a "Signing Bonus" from his new employer, plus a "Special Bonus" of $7,300 in the time he had been employed by Red Capital Group. Donald's final disclosure form also reflected that his current wife, Nina, earned a monthly income of $10,813.
Anna complained Donald's disclosure form was deficient because it did not include sufficient documentation to substantiate the information included, so Donald followed up by providing Anna with additional documents, including his 2014 tax return, within days of serving his final disclosure. Anna claimed the disclosure was still deficient in that it omitted documents pertaining to Donald's life insurance policy, pension and IRA statements, as well as stock statements.
In November 2015, Donald filed a motion to enforce the MSA, pursuant to Code of Civil Procedure section 664.6. Anna opposed the motion, and once again sought to continue the trial date and to compel Donald to further augment his final disclosure form. Anna contended the MSA should not be enforced because (1) she had received less than 48 hours' notice of the mediation date from her then-counsel, (2) she was impaired by medication at the time of the mediation, and (3) she had not received a full financial disclosure from Donald in connection with the mediation. Anna also served subpoenas on Donald's current and former employers, seeking documentation of his 2015 income.
In December 2015, the trial court granted Donald's motion. The court was unpersuaded by Anna's assertion she was entitled to additional financial information, noting there had been "extensive discovery in this case with competent Certified Family Law Specialists on both sides," and that Anna had filed no motions to compel further discovery during the course of the lengthy case. The court rejected Anna's claim of impairment or incapacity on the date of the mediation, finding "no credible evidence" to support it.
Additionally, the court made a finding that the financial information exchanged by the parties in connection with the mediation "was sufficient and all requirements were met." The court rejected Anna's claim that her willingness to settle was attributable to a lack of information about Donald's finances, pointing out that Anna "had the same information and documents the day she entered [into] the agreement as she did the next day when she wanted to back out of the agreement."
The court entered judgment on December 11, 2015, and notice of entry of that judgment was served on Anna that same date.
In March 2016, nearly three months later, Anna filed a motion to set aside the judgment, claiming she had executed the MSA due to "inadvertence, surprise and excusable neglect" and had been "materially affected by the lack of information provided by her former attorney." She asserted that the attorney who had represented her in negotiating the MSA was negligent in failing to explain the law to her, that he had "abandoned" her when she tried to withdraw from the MSA, and that a more complete understanding of Donald's financial status "would have been considered by the Court in [a] spousal support order." Anna also argued Donald had engaged in "actual fraud" by failing to "fully disclose all assets and income" in connection with the mediated settlement, and that he had "committed perjury" in his final declaration of disclosure "by failing to disclose all of his gross income, specifically his 2015 income from [his prior employer] and bonus income." She claimed Donald's perjury "affected [her] ability . . . to determine what was an equitable spousal support award."
In support of her claims of fraud and perjury, Anna relied on documents produced by Donald's current and former employers in response to her subpoenas. She contended those documents established Donald had earned in excess of $300,000 in 2015, more than he had disclosed in connection with either the mediation or in his final declaration of disclosure.
Anna also claimed that the spousal support award she had agreed to in the MSA was "far below the marital standard of living." In support of that claim, Anna declared, based on her knowledge of the couple's joint tax returns, that Donald's income had been in the range of $270,000 per year during the last years of their marriage, with a high of $347,000 in 2012. She asserted that if she had a more accurate understanding of Donald's income in 2015, when she entered into the MSA, she "would have been in a position to make knowledgeable decisions."
The trial court denied Anna's motion to set aside the judgment, finding it reiterated the same arguments made in opposition to Donald's motion to enter judgment, which had already been ruled upon, and that Anna failed to establish any of the elements of extrinsic fraud.
We deny as moot Anna's motion to augment the record with a copy of the trial court's statement of decision supporting its denial of the motion to set aside the judgment, since we previously granted Donald's motion to augment the record with that very document. It is therefore already contained in the record.
DISCUSSION
1. Background Law and Standard of Review
Anna based her motion to set aside the judgment on both Code of Civil Procedure section 473, subdivision (b) (section 473(b)), and Family Code section 2122 (section 2122). (See In re Marriage of Heggie (2002) 99 Cal.App.4th 28, 32 ["Section 473 and the Relief From Judgment chapter (specifically Family Code section 2122) now coexist, operating as alternative bases for relief"].)
Section 473(b) authorizes the court, "upon any terms as may be just," to "relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect."
Section 2122 applies only to marital dissolution cases, and authorizes a judgment to be set aside on grounds of "[a]ctual fraud where the defrauded party was kept in ignorance or in some other manner was fraudulently prevented from fully participating in the proceeding," on grounds of "perjury in the preliminary or final declaration of disclosure," or on grounds of "duress" or "mental incapacity." (Fam. Code, § 2122, subds. (a) through (d).) It also authorizes the set aside of a martial dissolution judgment in cases of "mutual or unilateral" mistake as to a stipulated or uncontested judgment, or a case in which a party "[f]ail[ed] to comply with the disclosure requirements." (Fam. Code, § 2122, subds. (e) through (f).)
The type of "fraud" described in section 2122 is extrinsic fraud, a traditional equitable basis for setting aside a judgment. (Kuehn v. Kuehn (2000) 85 Cal.App.4th 824, 832-833 ["Extrinsic fraud occurs where a party is deprived of the opportunity to present her claim or defense to the court, or in some manner fraudulently prevented from fully participating in the proceeding"].) However, by including "perjury in the preliminary or final declaration of disclosure," "mistake" and "failure to comply with the disclosure requirements" as additional grounds for relief, section 2122 also allows a marital dissolution judgment to be set aside based on intrinsic fraud. (See Kachig v. Boothe (1971) 22 Cal.App.3d 626, 634 ["in a litigated case the concealment or suppression of material evidence is held to constitute intrinsic fraud"]; Kuehn v. Kuehn, supra, 85 Cal.App.4th at p. 833, [explaining the traditional rule which distinguished extrinsic fraud from "intrinsic fraud, such as perjury, which was not a valid ground for relief"].)
But even in cases where the moving party has established that grounds exist to set aside a judgment under section 2122—e.g., fraud, perjury, or incomplete financial disclosures—the trial court cannot grant that relief unless it also finds "that the facts alleged as the grounds for relief materially affected the original outcome and that the moving party would materially benefit from the granting of the relief." (Fam. Code, § 2121, sub. (b), italics added.) The trial court has no authority to set aside a judgment solely because it appears to be unfair or inequitable to a party, either at the time it was entered, or due to subsequent circumstances. (Fam. Code, § 2123.)
The decision to set aside a judgment, under either section 473(b) or section 2122, is committed to the sound discretion of the trial court. (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 257 [motion for relief under section 473(b)]; In re Marriage of Varner (1997) 55 Cal.App.4th 128, 138 [motion to set aside under section 2122].) Thus, it "'shall not be disturbed on appeal absent a clear showing of abuse.'" (Zamora, supra, 28 Cal.4th at p. 257.) Moreover, in reviewing the order, we apply the normal rules: "'A judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.'" (Denham v. Superior Court (1970) 2 Cal.3d. 557, 564.)
2. Res Judicata and Statement of Decision
Anna claims the trial court committed legal error when it refused to reconsider the same evidence and contentions she had made in opposition to Donald's motion to enter the judgment, as the justification for setting aside that judgment. She also claims the court erred when it failed to make specific factual findings pertaining to those renewed contentions in its statement of decision. We disagree.
The trial court made clear in its statement of decision that it viewed Anna's set aside motion as essentially a reassertion of her opposition to Donald's motion, and noted it had already disposed of her claims about the sufficiency of Donald's disclosure documents, as well as her other justifications for overturning the MSA, when it ruled on that motion. The court pointed out that Anna had not pursued any motion for reconsideration of its order granting Donald's motion to enter judgment, and it consequently declined to reconsider her contentions as a basis for setting aside the judgment.
Anna misconstrues the court's refusal to reconsider its prior ruling as an improper application of res judicata, claiming the doctrine does not apply to marital dissolution judgments in light of section 2122. She cites Rubenstein v. Rubenstein (2000) 81 Cal.App.4th, 1131, 1144, for the proposition that section 2122 creates "an exception to res judicata, based on the recognition that 'the public policy of assuring finality of judgments must be balanced against the public interest in ensuring proper division of marital property, in ensuring sufficient support awards, and in deterring misconduct.'"
But as Anna's counsel acknowledged during oral argument, the trial court did not rely on a formal res judicata theory in denying her motion. Rather, after noting that it had heard and considered similar arguments in a prior motion, the court focused on another issue. Section 2122 does not require the court to pretend the challenged judgment—or any rulings supporting it—were never made. Instead, it authorizes the court to set aside the judgment on the grounds specified, but only if it also concludes that the facts supporting the set aside motion "materially affected the original outcome." (Fam. Code, § 2121, subd. (b).) In other words, the moving party must persuade the court that if the facts urged in support of the motion to set aside had been known before the judgment was entered, that judgment would have been materially different.
In this case, that required Anna to demonstrate that her evidence, if known by the court before it granted Donald's motion to enforce the MSA, would have convinced the court to rule differently—i.e., not to enforce it. That burden could not be met if Anna was relying on the same evidence and arguments she had previously presented to the court.
That is exactly what the trial court concluded Anna did in this case. The only way Anna could prevail on her motion was by offering the court different evidence than it had already considered in making its challenged ruling. Consequently, we find no error in either the trial court's refusal to reconsider its prior ruling, or its failure to make factual findings pertaining to the merits of that ruling.
3. Insufficiency of New Evidence Offered in Support of Set Aside Motion
Although Anna did offer some newly obtained evidence to the trial court in support of her set aside motion, she made no effort—and makes none on appeal—to distinguish that new evidence from the evidence she had already presented to the court in opposing entry of the challenged judgment. Nor does Anna attempt to explain how that new evidence would have supported a material change in the judgment if the court had also been aware of such evidence before the judgment was entered. She has consequently waived that claim. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1247 [appellant waives issue by failing to develop it or support it with appropriate citations to the record].)
Instead, Anna combines all of the evidence, both old and new, and represents it as the "uncontroverted facts constituting [Donald's] fraud or perjury relative to division of marital property, spousal support, and attorney fees." She contends the totality of those facts proves that grounds existed to set aside the judgment under section 2122. --------
But even if the claim were not waived, we would not conclude the trial court abused its discretion by rejecting it. The new evidence Anna relied upon in support of her motion was largely comprised of details about Donald's 2015 income. She claimed that Donald had not promptly disclosed bonuses he earned in 2015, and that documents later produced by his 2015 employers revealed his overall earnings for the year had averaged $26,632 per month—an amount she contends is substantially higher than the "$175,000 base plus bonus" he disclosed as his income in the MSA.
According to Anna, this new information proved that Donald either affirmatively concealed his income in connection with the negotiation of the MSA, or failed to sufficiently disclose it. We disagree. While it is true that Donald did not expressly state the amount of his anticipated bonuses (or commissions) in the MSA—nor did he detail the manner in which they would be calculated or earned—that does not establish Anna lacked sufficient information about them.
To the contrary, although she may have been unaware of the exact numbers, Anna had for years been actually aware that Donald's total income included his salary, plus substantial bonuses or commissions. For example, in Donald's preliminary declaration of disclosure, served in 2012, he stated his base salary was $10,000 per month, plus "commissions or bonuses" that averaged $12,000 per month. Additionally, the spousal support order applicable prior to the MSA provided for Anna to share in whatever portion of Donald's income exceeded $20,000 per month—suggesting that the parties understood such income was likely. And Anna herself declared that during the latter years of their marriage, the parties' joint tax returns reflected that Donald's total earnings (despite his base income of $120,000) were in the range of $270,000 per year, and that his earnings had hit a high of $347,000 in 2012.
Consequently, when the parties acknowledged in the MSA that Donald's base income had increased from the previously disclosed $120,000 per year to $175,000 per year, and that he continued to earn bonuses/commissions on top of that base, the surrounding evidence suggests Anna would have understood that to mean Donald's total earnings were likely to be over $300,000 per year. Thus, we believe that is the income range Anna was aware of at the time she agreed to the MSA.
When we compare that anticipated income with the new evidence Anna presented in support of her motion to set aside the judgment, it is entirely consistent. Donald's actual 2015 income, as claimed by Anna, equated to roughly $320,000. Because that amount is within the range presumptively known and understood by Anna when she entered into the MSA, its belated revelation does not support an inference that the terms of the MSA—and hence the ensuing judgment—would have been materially different had it been disclosed earlier. Consequently, it is insufficient to support an order setting aside the judgment.
4. Absent Evidence the Judgment Would Have Been Different, the Existence of Statutory Grounds for a Set Aside Order Is Irrelevant
The primary focus of Anna's appeal is Donald's alleged failure to fully comply with the statutory requirement that he serve a final declaration of disclosure before the parties entered into the MSA. (See Fam. Code, § 2105, subd. (a), requiring an exchange of final declarations of disclosure at or before settlement.) She also contends Donald's subsequent service of a final declaration of disclosure, prior to entry of the judgment, was insufficiently detailed to comply with the statutory mandate. (See, Fam. Code, § 2106, requiring the exchange of formal disclosures prior to entry of judgment.) We agree that such omissions could constitute grounds for setting aside the judgment under section 2122, subd. (f).
However, as we have already noted, in the absence of a finding that the omissions resulted in a materially different judgment than the one that would have been entered if Donald had complied with his statutory obligations, the court had no authority to set it aside. Thus, because Anna failed to demonstrate that a materially different judgment would have been entered if Donald had complied with his statutory disclosure requirements, we need not further consider whether Anna established grounds for a set aside order. The burden was on Anna to prove a lack of discovery from Donald. The trial court ruled that she had failed to meet this burden. That ruling did not involve any identifiable abuse of discretion.
5. Alleged Malpractice of Anna's Prior Attorney
Finally, although Anna also suggests she was entitled to have the judgment set aside because her former attorney who negotiated the MSA was negligent, we cannot agree. As explained in In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 686, attorney negligence is not a distinct ground for setting aside a marital dissolution judgment: "even though attorney negligence will not be imputed to a client to bar an order setting aside a judgment, such an order may still only be granted if it is based on one of the five exclusive grounds specifically set forth in section 2122. Attorney negligence is not itself one of these enumerated grounds for setting aside a judgment."
DISPOSITION
The order is affirmed. Donald is to recover his costs on appeal.
GOETHALS, J. WE CONCUR: ARONSON, ACTING P. J. THOMPSON, J.