Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. MD019308. Mark A. Juhas, Judge.
Law Office of Chris Ford and Chris Ford for Appellant.
Davida M. Rosenthal for Respondent.
EPSTEIN, P. J.
Dianne Hand appeals from the entry of judgment on reserved issues in the action dissolving her marriage to Thomas Hand. She claims the judgment should be reversed because Thomas failed to provide the full and accurate disclosure of assets and debts required under Family Code sections 2100, subdivision (c) and 2102, subdivision (a)(1). She claims Thomas should be ordered to transfer assets to her and pay her attorney fees and court costs based on this breach of his fiduciary duty imposed under section 2102, subdivision (a). Dianne also claims the judgment should be reversed based on Thomas’s fraud, perjury, duress, and undue influence. We conclude Thomas failed to comply with his disclosure obligations with regard to a loan he had made to his company, and remand for further proceedings regarding the allocation of that asset. In all other regards, we affirm the judgment.
All statutory references are to the Family Code unless otherwise indicated.
FACTUAL AND PROCEDURAL SUMMARY
Thomas and Dianne were married in October 1987 and separated in July 1998. They have three children, all of whom were minors when Thomas filed for dissolution of marriage in May 1999. Judgment of dissolution as to status only was entered in March 2001. Jurisdiction was reserved as to the remaining issues of child custody and visitation, child and spousal support, and division of property. These issues were vigorously contested for the next four years.
In October 2004, three months before the scheduled trial date, Dianne’s attorney moved to be relieved as counsel. According to counsel’s declaration, it had become increasingly difficult to represent Dianne and provide her with legal advice. Counsel stated she was unable to exercise any control over Dianne, and that Dianne’s current bill for legal services exceeded $80,000, which Dianne was paying off at $60 per month. In addition, telephone conversations had become strained, and “[c]lient’s posture has become antithetical to settlement.” The court granted the motion, and Dianne proceeded toward trial without counsel.
On January 19, 2005, the date set for trial, Dianne requested a continuance because litigation was pending with a third party regarding her interest in the family residence. The parties agreed to bifurcate issues of custody and visitation from the property issues. The court was unable to hear the matter due to court congestion, and set it for the following Monday, January 24. At this and all other pertinent court proceedings, the children were represented by counsel. As we shall explain, payment of his fees is one of the issues presented on appeal.
The parties discussed settlement over the weekend, and on January 24, advised the court that they had reached agreement on several issues, which were placed on the record. Thomas was awarded sole legal and physical custody of the two older children, and Dianne was to have visitation at the children’s discretion. Thomas agreed not to pursue his claim that Dianne had misappropriated the children’s acting funds, and Dianne was to be removed from those accounts. Custody and visitation as to the youngest child remained an issue. Just as trial was to begin, Dianne decided she would accept the proposed agreement on custody and visitation. At the parties’ request, the matter was continued to the following afternoon so that the agreement could be formalized. The court agreed, and urged the parties to attempt to resolve the property issues.
On January 25, 2005, the parties informed the court they had reached a settlement on all remaining issues. The terms of the agreement were placed on the record. Thomas would have sole legal and physical custody of the youngest child; Dianne was to have unmonitored visitation after participating in four individual counseling sessions, on condition that she not speak to the child about the case or make disparaging remarks about Thomas in front of the child. She was to remain in counseling for an additional eight weeks, and was not to make derogatory remarks about Thomas in the child’s hearing; if she violated this portion of the agreement, visitation would be monitored. Visitation arrangements were set out in detail.
As to financial and property matters, in consideration of Thomas’s waiver of any claims for reimbursements and credits or reallocation of costs and child support, Dianne waived all right, title and interest in the family residence and in Thomas’s business, B&H Custom Window & Door, Inc. (B&H), and accepted the following financial settlement: Thomas would pay off the balance on Dianne’s car, in the amount of approximately $7,800, and would pay $2,000 for Dianne’s car insurance. He agreed to pay Dianne spousal support of $513 per month ($113 for medical and $400 for spousal support) for a period of two years. This spousal support agreement was expressly “un-modifiable” and upon final payment, the court’s jurisdiction would terminate. No child support was ordered; the court reserved jurisdiction over the issue. The fees owed the children’s attorney were determined to be approximately $12,000, and they were to be paid 2/3 by Thomas and 1/3 by Dianne. Thomas’s attorney was to prepare the judgment and submit it to the court.
Dianne was served with the judgment, but refused to sign it. Instead, she moved to have it set aside, claiming fraud and perjury by Thomas, and asserting she agreed to the settlement under duress and undue influence during unreasonably long negotiations. She claimed she was told that if she did not agree to the settlement, her visitation with their youngest child would be impaired and her oldest child would not be able to attend college. She also claimed Thomas failed to disclose a $109,000 loan which was being repaid to him, with interest, and that he misrepresented the true amount of his monthly income. Thomas moved to have the judgment entered.
During hearing on the motions, Dianne argued she had not been served with Thomas’s final declaration of disclosure and current income and expense declaration, as required under section 2105, subdivision (a). Thomas’s counsel asserted the documents had been served. Counsel also noted Dianne had failed to file and serve her final declaration of disclosure, but that the defect would be waived. The court ordered Thomas to provide proof of service of the required declaration of disclosure.
The court considered the grounds raised in Dianne’s motion and found no basis to set aside the judgment. The court addressed the fees Dianne owed to the children’s attorney. Noting that Dianne already had paid $3,000 of the obligations Thomas had agreed to pay on her behalf for her car and car insurance, the court ordered Thomas to pay that amount to the children’s attorney to reduce Dianne’s $7,000 obligation. The remaining $4,000 bill was to be submitted to the County of Los Angeles for payment, based on Dianne’s indigency. The court also addressed custody and visitation issues raised by Dianne.
Judgment was entered on October 27, 2005. Dianne filed a timely appeal.
DISCUSSION
I
Dianne claims the court should have set aside the judgment because she entered into the settlement agreement under duress or undue influence. (See § 2122 [grounds for relief from judgment].) We find no error.
The evidence does not support Dianne’s claim that she was threatened with being deprived of visitation with her youngest child if she did not agree to the settlement. At the time of the negotiations, monitored visitation was a real possibility, given Dianne’s problematic history of discussing the case with the child, despite directions and orders not to do so. While she may have been concerned about whether she could afford to pay a monitor, she had the ability to comply with directions and avoid the need for a monitor. Duress was not established.
The fact that Dianne entered into the settlement without an attorney also does not establish duress or undue influence. Nor has she shown that she was under such mental or emotional disability that she was unable to enter into an agreement knowingly and voluntarily. When the settlement was read in open court, Dianne demonstrated her understanding of its contents, was capable of clarifying provisions, and expressly acknowledged that she was compromising on some matters in order to achieve other goals. Substantial evidence supports the trial court’s decision that the agreement was not entered into under duress or undue influence.
II
Dianne also claims the judgment should be reversed because Thomas failed to provide the complete and accurate disclosure required under section 2102 et seq. Section 2102 describes the continuing fiduciary duty each spouse has to the other to disclose “all assets and liabilities in which the party has or may have an interest or obligation and all current earnings, accumulations, and expenses, including an immediate, full, and accurate update or augmentation to the extent there have been any material changes.” (§ 2102, subd. (a)(1).) That obligation is implemented by section 2103, which requires the parties to serve on each other a preliminary declaration of disclosure and a final declaration of disclosure, and to file proof of service of each with the court.
“The preliminary declaration of disclosure shall set forth with sufficient particularity, that a person of reasonable and ordinary intelligence can ascertain, . . . [¶] (1) The 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).)
Thomas acknowledges on appeal that he loaned his business $109,000 in 1996. On June 2, 1999, Thomas filed and presumably served a schedule of assets and debts. Nowhere on that schedule is there reference to the loan. Thomas claims “This transaction was memorialized in his 1999 Income and Expense Declaration labeled ‘1996 Backpay, $18,300.’ [¶] Thomas concedes that these words tend to mischaracterize what should have been called ‘loan repayment’ in his Schedule of Assets and Debts.” We agree. The listing of back pay, in an amount different from the loan, does not sufficiently identify the loan repayment as an asset, as required under section 2104.
Section 2105 requires the parties to serve on each other a final declaration of disclosure of current income and expenses before or at the time the parties enter into an agreement for resolution of property or support issues, or no later than 45 days before the first assigned trial date. This declaration is to include all material facts and information regarding the characterization of all assets and liabilities, and the valuation of all assets contended to be community property.
According to the record, Thomas served his final declaration of disclosure and income and expense declaration on March 2001. He makes no claim that the loan was disclosed in either of these declarations. Instead he argues that the 1998 B&H balance sheet, which was made available to Dianne’s forensic accountant “well before” the January 2005 settlement negotiations, lists the transaction as “Loans Payable – TRH $109,533.12.” This notation in a balance sheet is no substitute for the direct disclosure of assets required under sections 2102 through 2105. Thomas failed to meet his obligation to disclose the $109,000 loan with sufficient particularity.
“If a court enters a judgment when the parties have failed to comply with all disclosure requirements of this chapter, the court shall set aside the judgment. The failure to comply with the disclosure requirements does not constitute harmless error.” (§ 2107, subd. (d).) This provision is subject to the limitation of the California Constitution that no judgment shall be set aside for any error as to a matter of procedure unless the court finds the error has resulted in a miscarriage of justice. (In re Marriage of Steiner & Hosseini (2004) 117 Cal.App.4th 519, 528.) If the court concludes a judgment must be set aside for failure to comply with the obligation to serve a final declaration of disclosure, “the court may limit the set aside to those portions of the judgment materially affected by the nondisclosure.” (§ 2105, subd. (c).) Where a party has failed to comply with the disclosure obligations, “the court shall, in addition to any other remedy provided by law, impose money sanctions against the noncomplying party. Sanctions shall be in an amount sufficient to deter repetition of the conduct or comparable conduct, and shall include reasonable attorney’s fees, costs incurred, or both, unless the court finds that the noncomplying party acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (§ 2107, subd. (c).)
Thomas’s failure to disclose the $109,000 loan resulted in a miscarriage of justice, in that Dianne agreed to the division of property without knowledge of this asset. The judgment must be set aside as to that asset. On remand, the court shall determine the community interest in that asset, and order appropriate disposition. The court also must consider whether to impose monetary sanctions against Thomas under section 2107, subdivision (c).
The parties may present evidence regarding any loan repayment already made to the marital community.
We reach a different conclusion as to Dianne’s claim that Thomas failed to provide accurate information about his post-separation income. Dianne argued that Thomas was untruthful when he reported monthly income of $6,500 on his income and expense declarations because in his application for a car loan, he reported monthly income of $8,000. Thomas explained to the court that his loan application reflected income for a five-week month at $1,500 per week, plus approximately $450 in expense reimbursement. The trial court was satisfied by this explanation, and we find no abuse of discretion in that determination.
Nor do we find an abuse of discretion in the court’s refusal to set aside the judgment based on Dianne’s claim that Thomas failed to provide information related to his business. The record shows that as of January 20, 2005 (just days before trial was scheduled to start), Dianne’s forensic accountant had been provided with access to the financial records of B&H, from 2003 through the first six months of 2004. Based on this information, and his projections for the remainder of 2004, he concluded “that the business has no value based on either a book of business sale approach or a[n] excess earnings approach.” There is no showing that information about the business was withheld.
Dianne also argues that Thomas did not provide an updated valuation for the residence. Dianne could have obtained an appraisal to determine any appreciation in the property between 1999 and 2005. She was not prejudiced by Thomas’s failure to provide a more current valuation of the residence.
At the time of the settlement, litigation was pending between Dianne and a third party regarding ownership interest in the house. Dianne has not shown that this litigation was resolved in her favor.
DISPOSITION
The judgment is reversed as to the parties’ respective interests in the loan payable by B&H, and the cause is remanded for determination of these interests, and for consideration of imposition of sanctions against Thomas for failure to disclose this asset. In all other respects, the judgment is affirmed. The parties are to bear their own costs on appeal.
We concur: WILLHITE, J., SUZUKAWA, J.