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In re Marriage of James

California Court of Appeals, Second District, Sixth Division
Sep 15, 2008
2d Civil B195073 (Cal. Ct. App. Sep. 15, 2008)

Opinion

NOT TO BE PUBLISHED

Superior Court County No. D294142 of Ventura, Henry J. Walsh, Judge

Stephen C. James, in pro. per.; Law Offices of Gary K. Olsen, Gary K. Olsen and James L. Keane for Appellant Stephen C. James.

Ferguson Case Orr Paterson and Gregory W. Herring and Sandra M. Robertson for Appellant Elizabeth James.


COFFEE, J.

Stephen James appeals from the judgment after a court trial in this dissolution proceeding. He contends that the trial court abused its discretion when it awarded $75,000 in attorneys' fees to Elizabeth James pursuant to Family Code section 271. He also contends that a separate property reimbursement award of $24,228 to Elizabeth for contributions to community real property pursuant to section 2640 was not supported by sufficient evidence. Elizabeth appeals contending that the court should have ordered an unequal division of Stephen's pension to ensure that the amounts awarded to her would be paid. We conclude that the $24,228 separate property reimbursement award must be reduced by $8,228 and otherwise affirm.

All statutory references are to the Family Code unless otherwise stated.

We use the parties' first names for clarity, meaning no disrespect.

FACTUAL AND PROCEDURAL BACKGROUND

Stephen and Elizabeth were married in 1993 and separated in August of 2002. There are two daughters of the marriage, born in 1995 and 1997.

During the marriage, Stephen was employed as an anesthesiologist, earning between $260,000 and $320,000 per year. Elizabeth was not employed outside the home. Prior to the marriage, she had been employed as a registered nurse.

In 2002, Elizabeth filed for dissolution, seeking sole legal and physical custody of the children, determination of property rights and attorneys' fees. She filed under seal a declaration alleging child abuse. The declaration is not included in the record on appeal. Stephen requested joint legal and physical custody.

The parties participated in a private mediation with a licensed clinical social worker. Pending her recommendation, they stipulated to temporary restraining orders pursuant to which Stephen was to stay away from Elizabeth and the residence, but was allowed to visit with the children for two hours on Saturdays and Sundays. In May of 2003, the trial court entered an order upon a stipulation of the parties adopting the mediator's recommendation that the court award joint legal and physical custody, allowing Stephen to have six hours of visitation per weekend, increasing over time to include weekend overnights and then a mid-week evening, subject to approval of the children's therapist. The court ordered Stephen to pay temporary monthly child support in the amount of $3,764 and spousal support of $4,661. At the request of the parties, the court also sealed two declarations concerning the abuse allegations. The court did not make any finding of an overriding interest overcoming the right of public access to the declarations. (Cal. Rules of Court, rule 2.550(d).)

The mediator's report included a statement that Stephen had been subjected to several personality evaluations, none of which indicated any personality disorder. She wrote that in her opinion, "Stephen is an abuse survivor, and not a threat to his children. . . . [T]here is no obvious reason for him to not have regular, routine custodial time with his children." On May 24, 2003, Stephen wrote to the Medical Board of California informing them that he had developed a new awareness of repressed memories of child sexual abuse by his father and had begun to suffer from post traumatic stress disorder. He informed the board that Elizabeth had made allegations against him which "if true, directly impact my ability to practice medicine." He encouraged the board to investigate his ability to continue to practice medicine.

In June of 2003, Elizabeth filed a motion requesting leave to move to her hometown in Michigan with the children for the coming school year. While that request was pending, the parties stipulated to an interim order allowing Elizabeth to take the children to Michigan for a week in July of 2003. In August of 2003, the parties agreed to the appointment of a psychological evaluator, Dr. Patrick C. Barker, to make findings and recommendations regarding the proposed move. Elizabeth and the children remained in California for over a year while Dr. Barker's report was pending.

In December of 2003, Elizabeth's counsel wrote to Stephen's counsel stating that he was prepared to recommend a settlement if Stephen would agree to the move-away in exchange for visitation in Michigan. The family residence would be sold with proceeds to be placed in a blocked trust account for later equitable division and Elizabeth would drop her pending demand for a psychological evaluation. Stephen's counsel did not respond to the December 2003 letter.

Visitation periods increased as recommended by the mediator and the parties stipulated to an order allowing Elizabeth to take the children to Michigan for a week of vacation in July of 2004. In June of 2004, Stephen was hospitalized for three days at Aurora Vista Del Mar Hospital, a mental health care facility. After that hospitalization, the parties stipulated to temporarily suspend Stephen's overnight visits with the children.

Dr. Barker's report was issued in November of 2004. It is not included in the record. Within a month of the report, Stephen and Elizabeth stipulated to an order that allowed Elizabeth to move to Michigan with the children and granted Stephen visitation in Michigan.

In December of 2004, Stephen stopped working. He requested and obtained disability leave and benefits on the grounds that his diabetes was interfering with his ability to care safely for his anesthesiology patients. Stephen had suffered from type one diabetes since 1983 but, according to Stephen, his recent symptoms of post traumatic stress disorder had rendered him unable to detect his hypoglycemic reactions, making it impossible for him to control his diabetes and placing his patients at risk.

Stephen entered a residency program at Dartmouth to retrain as a psychiatrist. The parties stipulated that once Stephen entered the residency program spousal support would be based on a stipend between $50,000 to $60,000 per year rather than his previous salary as an anesthesiologist. In January of 2005, the parties agreed to sell the former family residence and to put the proceeds in a blocked trust account for later equitable division.

In March of 2005, a partial judgment was entered on the parties' stipulation. It resolved custody, visitation, support and division of Stephen's pension. The parties were awarded joint legal and physical custody, with the children's primary residence to be with Elizabeth in Michigan and visitation awarded to Stephen during breaks in his psychiatric residency program. Pursuant to stipulation, Stephen was ordered to pay $1,000 per month in child support regardless of his income, and the parties each permanently waived spousal support. Also by stipulation, the parties were ordered to enter into a qualified domestic relations order to divide Stephen's pension. Personal property was to be divided before Elizabeth's move after exchange of inventories and a monitored walk-through. At the walk-through, Stephen conducted himself in an uncooperative manner, but the personal property was eventually divided with the help of the attorneys and a retired Sheriff's deputy.

Entry of the partial judgment left only a few issues for trial: division of the proceeds from the sale of the house, the date of valuation and the value of Stephen's former medical practice, reimbursements and credits, and attorneys' fees and costs. The parties later stipulated to the date of valuation and the value of the medical practice.

Before trial, Stephen replaced his initial counsel with Donna C. Santo. Ms. Santo then moved on his behalf to unseal the sealed records on the grounds that the sealing order was not supported by required findings. In July of 2005 the court granted the motion to unseal over Elizabeth's objection.

Stephen's second deposition session had been scheduled for May 25, 2005, at the request of Ms. Santo. On the eve of that deposition session, Stephen replaced Ms. Santo with a third attorney, Gary K. Olsen, and refused to attend on the ground that the date had not been cleared with Mr. Olsen's schedule. After unsuccessful attempts to reschedule, Elizabeth moved to compel Stephen's attendance and the court granted her motion.

Stephen moved twice to continue the trial on remaining issues to allow his new attorney more time to conduct discovery. The court continued trial, and continued the discovery cut-off date over Elizabeth's objection.

After Stephen replaced Ms. Santo, she filed a Borson motion for attorneys' fees. (In re Marriage of Borson (1974) 37 Cal.App.3d 632.) Elizabeth opposed the motion and Ms. Santo eventually withdrew it.

In September of 2005, Stephen filed a motion for change of custody and visitation. Elizabeth opposed the motion on the ground that the Ventura County Superior Court lacked jurisdiction now that she and the children were living in Michigan and Stephen was in New Hampshire. Elizabeth registered the partial judgment regarding custody and visitation in Michigan on November 5, 2005. Stephen next filed a motion to set aside the stipulated partial judgment on the grounds that it was obtained by duress after Ms. Santo told him he could not win at trial. In response to Stephen's motions, the Ventura trial court entered an order relinquishing its jurisdiction over custody and visitation to the State of Michigan. The trial court also granted Elizabeth's motion to quash Stephen's subpoena for a deposition of Dr. Barker because custody and visitation were no longer disputed issues in the Ventura case. The court denied a motion by Stephen to further extend the discovery cut-off. The court denied a motion by Elizabeth to exclude five of Stephen's experts who were designated to testify concerning his mental health and vocational ability.

Stephen wrote letters to the trial judge, to the law partners of Elizabeth's attorney, to Governor Schwartzenegger and to others about the case. Stephen accused Elizabeth's counsel of lying and abusing children. Stephen wrote that Elizabeth and her counsel had "willfully placed the general public at severe risk by allowing a purported child molester and abuser to go undiscovered," because they had sealed Elizabeth's allegations that Stephen had molested the children.

Before trial, the parties agreed that each was entitled to one-half of the funds in the blocked trust account from the sale of the family residence ($242,286 each), and asked the court to resolve about $78,000 in disputed reimbursement claims made by Elizabeth. Elizabeth also requested $130,000 in attorneys fees pursuant to sections 270 and 271 based on 17 instances of litigation conduct. In return, Stephen requested attorneys fees and $6 million in damages against Elizabeth and her counsel for the loss of his profession as an anesthesiologist which he attributed to stress caused by Elizabeth's allegations of abuse.

At a trial on these remaining issues, the court heard testimony from Elizabeth and Stephen concerning credits, reimbursements and attorneys' fees. The court issued a minute order granting some of Elizabeth's reimbursement claims, including $24,228 for her separate property contribution to the first family residence. The court also awarded Elizabeth $75,000 in attorneys' fees pursuant to section 271, finding that Stephen had engaged in conduct "whose only practical effect was to keep the pot boiling, and which did nothing to litigate or resolve legitimate legal issues." The court denied Stephen's requests for $6 million in damages as being without evidentiary basis and beyond the court's jurisdiction. The net result of the ruling was that Elizabeth was entitled to $458,260.90 and Stephen was entitled to $26,311.10.

Elizabeth's counsel prepared a proposed judgment. It included a provision that would have required unequal division of Stephen's pension to satisfy Elizabeth's award if the funds from the sale of the residence were not sufficient to do so. Stephen objected to the proposed provision. After the parties engaged in informal efforts to resolve the dispute and submitted briefing on the issue, the court ruled that the pension provision should not be included in the judgment because division of the pension was not an issue at trial, was not part of the court's ruling, and was unavailable post trial pursuant to Code of Civil Procedure section 704.115, which protects qualified pensions from collection.

DISCUSSION

Sanctions

Stephen contends that the award of $75,000 against him imposed an unreasonable financial burden in view of the parties' relative income, assets and liabilities, and that his conduct did not warrant sanctions pursuant to section 271. We disagree.

A trial judge in a dissolution proceeding may base an award of attorneys' fees and costs on "the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys." (§ 271, subd. (a).) In making such an award, the court must consider the parties' income, assets and liabilities, and may not impose a sanction that imposes an unreasonable financial burden. (Ibid.) The party requesting the award need not demonstrate any financial need. (Ibid.) An award of attorneys' fees pursuant to section 271 is reviewed for abuse of discretion and reversed only if it appears, after viewing all evidence most favorably in support of the order, that no judge could reasonably make the order. (In re Marriage of Feldman (2007) 153 Cal.App.4th 1470, 1478.)

The fee award did not impose an unreasonable financial burden upon Stephen. At the time the award was made, Stephen had retrained in psychiatry and had become a resident in that field earning $45,348.33 per year, and his income was expected to increase. Elizabeth was again working as a nurse and earning $50,000 per year, but her income was not expected to increase and she was receiving no spousal support. Stephen's support obligations had been permanently reduced from more than $7,000 per month to only $1,000 per month, irrespective of increasing income. At oral argument, Stephen asserted that his income subsequently decreased. As an appellate court, our review is confined to the evidence that was before the trial court and is contained in the record on appeal. (Kendall v. Baker (1988) 197 Cal.App.3d 619, 625.) Indulging all reasonable inferences to uphold the trial court's order, as we must, we find no abuse of the court's broad discretion. (In re Marriage of Petropoulos (2001) 91 Cal.App.4th 161, 177-178.)

There is substantial evidence in the record to support the trial court's conclusion that Stephen's conduct frustrated the policy of the law to promote settlement and reduce costs of litigation. (§ 271.) The trial court identified the following specific conduct: "the lack of response to the December 8, 2003 settlement letter from petitioner's counsel; the need for court proceedings to resolve a move away issue; unnecessary problems surrounding respondent's retrieval of his personal property from the family residence; respondent's motions to continue trial; the need for a motion to compel respondent's deposition; a failed Borson motion by respondent; the letters respondent sent to Judge Covarrubias and petitioner's counsel; and the needless dispute over [the] confidentiality issue."

Stephen was not required to agree to the move-away terms of the December 2003 settlement letter (In re Marriage of Abrams (2003) 105 Cal.App.4th 979, 992, disapproved on other grounds in In re Marriage of LaMusga (2004) 32 Cal.4th 1072, 1097), but his failure to respond to the letter at all was inconsistent with the policy to promote settlement. Substantial evidence in the record supports the finding that Stephen obstructed Elizabeth's efforts to deliver his personal property to him, leading to unnecessary litigation over return of personal property. Stephen's repeated change of counsel and litigation strategy, and his resulting motions to continue trial and to set aside the stipulated partial judgment, increased litigation costs as did his refusal to attend a deposition session that had been scheduled according to his former attorney's request. Stephen's vexatious letters were also inconsistent with promotion of settlement and reduction of litigation costs. Stephen's request to set aside the sealing order and the failed Borson motion do not support a finding of sanctionable conduct by Stephen, because the sealing order was invalid and Stephen did not authorize the Borson motion. However, Stephen's other conduct was sufficient to support the court's award.

The record does demonstrate cooperation from Stephen early in the proceedings. He engaged in mediation and, after some litigation, he entered into stipulations regarding visitation, custody, support and sale of the home. However, once the major contested issues of custody, visitation and support had been resolved and Elizabeth had moved to Michigan with the children, Stephen was unable to put the litigation behind him and he engaged in unreasonable litigation conduct which significantly increased Elizabeth's fees. The trial court did not abuse its discretion when it awarded $75,000 to her pursuant to section 271.

Reimbursement

Stephen contends that community and separate funds were completely commingled making it impossible for Elizabeth to trace a $24,228 separate property contribution to community real property. Elizabeth concedes and we conclude that the evidence of tracing was sufficient to establish only a $16,000 contribution. We reduce the reimbursement award accordingly by $8,228.

Section 2640, subdivision (b) provides a right of reimbursement for separate property used to obtain community property. "Commingling of separate and community property does not alter the status of the separate property interest so long as it can be traced to its separate property source." (In re Marriage of Cochran (2001) 87 Cal.App.4th 1050, 1057.) Whether a party has met their burden of tracing is a question of fact for the trial court. (Id. at pp. 1057–1058.) We uphold its decision if supported by substantial evidence. (Id. at p. 1058) "We need not look at the trial court's reasoning, but only the result reached." (In re Marriage of Tallman (1994) 22 Cal.App.4th 1697, 1699.)

Elizabeth initially claimed that she contributed $24,228 in premarital savings to the family residence, but she reduced that claim to $16,000 in her testimony and in closing argument. Substantial evidence supports the conclusion that she did contribute premarital savings to the family residence in the amount of $16,000.

Elizabeth offered evidence at trial that before marriage she owned a condominium in Chicago and had about $23,000 in checking and savings accounts at First National Bank. When she married Stephen, Elizabeth drew two cashier's checks in the amounts of $10,000 and $11,000 dated October 18, 1993, from her accounts at First National Bank. Copies of these checks were received in evidence. Elizabeth testified that the cashier's checks were deposited into a community joint checking account at First Interstate Bank. She testified that Stephen then transferred $16,000 of her money from the First Interstate joint checking account to a joint savings account at USAA Federal Savings Bank. She produced a copy of the check Stephen used to make the transfer. In his handwritten register for the USAA savings account, Stephen described this $16,000 deposit as "Elizabeth's savings transfer from checking." The deposit increased the joint savings account balance from $172 to $16,172.

Six months later, Stephen and Elizabeth purchased a property in Palm Springs and began construction of a family home. Elizabeth offered copies of checks drawn on the parties' First Interstate joint checking account to a construction company in 1994, totaling $24,228. Although she did not offer records of a $16,000 transfer from the USAA Federal Savings Bank joint savings account back to the First Interstate joint checking account, she did testify that her savings were used to build the house as reflected by the checks to the construction company.

Elizabeth testified that in 1996 she and Stephen sold the Palm Springs house and received net proceeds of $41,024 which they used in 1997 to construct their new home in Ventura where they lived in until separation. She offered a copy of the escrow statement showing $41,024 in net proceeds and copies of checks drawn on a new joint checking account at Santa Barbara Bank and Trust in 1997, including one for $21,684 to a construction company. Although no records showed the deposit of $41,024 into the new Santa Barbara Bank and Trust account, it could reasonably be inferred from Elizabeth's testimony that she and Stephen deposited the $41,024 sale proceeds into their new Santa Barbara Bank and Trust joint checking account when they moved to Ventura.

Pension

Elizabeth contends that the trial court erred when it refused to add a provision to the judgment that would have required unequal division of Stephen's pension if necessary to satisfy Elizabeth's award. We disagree.

Early in the proceedings, upon stipulation of the parties, the trial court ordered division of the pension based on the parties' equal community interests in the value of the pension on the date of separation. Elizabeth did not seek to modify that order and did not seek unequal division of the pension at trial. The court's order after trial did not call for unequal division of the pension. Therefore, there was no basis in law or evidence for Elizabeth to insert into the judgment a provision for unequal division of the pension. Even after the judgment was entered in Elizabeth's favor, Stephen's pension was exempt from enforcement of Elizabeth's monetary judgment. (Code Civ. Proc., § 704.115.)

The judgment is modified to reduce Elizabeth's reimbursement award by $8,228 and is otherwise affirmed. Costs on appeal are awarded to Elizabeth James.

We concur: GILBERT, P.J., PERREN, J.


Summaries of

In re Marriage of James

California Court of Appeals, Second District, Sixth Division
Sep 15, 2008
2d Civil B195073 (Cal. Ct. App. Sep. 15, 2008)
Case details for

In re Marriage of James

Case Details

Full title:In re Marriage of ELIZABETH and STEPHEN C. JAMES. ELIZABETH JAMES…

Court:California Court of Appeals, Second District, Sixth Division

Date published: Sep 15, 2008

Citations

2d Civil B195073 (Cal. Ct. App. Sep. 15, 2008)