Opinion
G060658
04-06-2023
In re Marriage of JEFFREY and MARTA MORRISON. v. MARTA MORRISON, Respondent. JEFFREY MORRISON, Appellant,
Law Offices of Saylin &Swisher, Brian G. Saylin and Lindsay L. Swisher for Respondent. Law Offices of Lisa R. McCall, Lisa R. McCall and Erica M. Baca for Appellant.
NOT TO BE PUBLISHED
Appeal from orders of the Superior Court of Orange County, Super. Ct. No. 99D002468, Lee L. Gabriel, Judge. Affirmed.
Law Offices of Saylin &Swisher, Brian G. Saylin and Lindsay L. Swisher for Respondent.
Law Offices of Lisa R. McCall, Lisa R. McCall and Erica M. Baca for Appellant.
OPINION
MOORE, J.
In 1999, Jeffrey Morrison petitioned for divorce from his wife, Marta Morrison. He subsequently asked the trial court to enter Marta's default, representing that he and Marta had agreed they could proceed pursuant to a marital settlement agreement (MSA), and in 2000, judgment was entered. One provision of the judgment awarded Jeffrey one-third of Marta's pension through the State Teacher's Retirement System (CalSTRS). In 2019, Jeffrey attempted to collect from CalSTRS. Marta then moved to set aside the judgment, the request to enter default, and the MSA based on actual fraud. The court ultimately granted Marta's motion and awarded Marta sanctions of $32,000. Further, the court denied Jeffrey's subsequent motion to vacate those orders.
Due to their common surname, we refer to the parties by their first names. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 475-476, fn. 1.)
On appeal, Jeffrey argues the court lacked jurisdiction to set aside the default, that Marta did not make the required showing of diligence in seeking relief, the court erred in awarding sanctions, and should have granted his motion to vacate. We find the court's orders did not constitute error, and we therefore affirm.
I
FACTS
Jeffrey and Marta married in June 1981 and separated in January 1999. Marta was a schoolteacher, and at the time of their separation, she earned between $52,000 and $54,000 per year. At the time of their separation, they had two minor children, ages 11 and 15.
In March 1999, Jeffrey filed a petition for dissolution. In February 2000, he filed a request to enter default, checking the box that indicated the issues before the court were the subject of a written agreement. Jeffrey's attached declaration indicated the same. It further represented that his gross monthly income before taxes was $5,000, and Marta's income was $3,000. Jeffrey's proposed judgment attached the MSA.
We roughly sketch the provisions of the MSA, and shall add further detail as necessary in our discussion. The MSA included a waiver of spousal support and a stipulation to proceed as an uncontested matter. Jeffrey was awarded certain items as his share of community property, including a "1/3 interest in Wife's State Teacher's Retirement System pursuant to filed Stipulation and Order." Marta was also awarded certain items, including the family residence and a two-thirds interest in the CalSTRS pension. The MSA also included a detailed parenting plan, which awarded Marta primary physical custody and $500 a month in child support. The MSA further provided for reservation of jurisdiction for the court and stated that each party had the right to seek advice of counsel. The MSA also stated that each party had made "a full and honest disclosure to the other of all current finances and assets." The MSA was signed on February 1, 2000. The judgment was entered and notice of entry was served by the clerk in April 2000.
Marta retired from teaching in May 2018. On February 22, 2019, Jeffrey filed a request for joinder in Marta's CalSTRS plan. CalSTRS informed Jeffrey that the language of the judgment was not specific enough for them to implement division of the account, and Marta would not sign a stipulation to divide the pension. He subsequently moved to enforce the provision in the judgment awarding him a one-third interest in the CalSTRS pension. Jeffrey asserted that he gave up his interest in the family residence in exchange for "1/3 interest in Marta's CalSTRS pension" and that he had relied on receiving this income, which CalSTRS had informed him was $1,523 per month.
Marta opposed Jeffrey's motion, claiming that Jeffrey's request for one-third of her entire pension was "completely contrary to what he told me at our dissolution judgment and in 2004 when we met again regarding our assets from our dissolution." She acknowledged that the judgment stated Jeffrey was entitled to one-third of her retirement account pursuant to a "'filed Stipulation and Order'" but no such stipulation and order was drafted. She claimed that Jeffrey, who "was handling everything for us," represented to her that the judgment was required to divide her pension for the court to agree to the judgment, but he had stated that "he would never go after my retirement." She believed him. According to Marta, the residence, which Jeffrey claimed he had given up in exchange for the interest in her pension, netted her approximately $80,000 when sold. She asserted she gave up any claim to spousal support knowing he would not get her pension.
Marta's declaration also stated that she met with Jeffrey four years later, in 2004. At that meeting, Jeffrey insisted she give up an annuity from Western National Life that she had been awarded in the divorce. In return, Jeffrey promised that he would continue to pay child support and would not go after her pension. She agreed and signed over the annuity. She stated: "I relied on his statement (now stated to me twice) all of these years that he would not go after my retirement account which is why I signed over the annuity and why I had waived spousal support in the judgment."
The value of the annuity was not stated in Marta's declaration.
Marta further stated: "At the time of our dissolution I did not realize how binding the paperwork I was signing was. I trusted my husband of 17 years. He verbally told me this would be sufficient for the court to give us our divorce but he would never actually take 1/3 of my retirement but this division language was necessary for the judgment to be entered. I was not familiar with the process. He presented me with the paperwork and told me to sign. He said we did not need attorneys and should not waste our money on attorneys. He told me if I hired an attorney I would lose our children. I did not know how I could afford an attorney and did not realize I should speak with one. I am now told by my attorney many required things were not filed such as no disclosures were done or proper waiver of spousal support or an analysis of Family Code Section 4320 factors were not done." She claimed that in addition to a lack of proper disclosures, Jeffrey lied to her in numerous respects and failed to share material facts: "Petitioner had told me I was not allowed to have spousal support because I had a job. I believe[d] him and signed the paperwork. Petitioner did not serve me with disclosures. No disclosures were completed in the case. I was completely in the dark when it came to our assets -Petitioner did not put his paycheck in our joint bank account when we were married and I have no idea where it went. He took control over our finances during the marriage. I never saw other asset statement[s] such as his retirement accounts during marriage either."
Marta also argued that at the least, Jeffrey was asking for more than he was entitled to under the judgment, because he was attempting to claim one-third of her entire pension, rather than one-third of the community property value at the time of the separation. She worked for 19 years after their separation, and therefore calculated he was at most entitled to half the community property value, or approximately 14 percent.
In addition to opposing Jeffrey's motion, on October 21, 2019, Marta also filed a motion to set aside the default, the MSA, and the judgment, and sought an order allowing her to file her response to the petition for divorce. Her grounds were actual fraud (Fam. Code, § 2122, subd. (a)), and failure to comply with mandatory disclosures (§ 2122, subd. (f)). She stated that she "only learned a few months ago of the fraud and the lack of mandatory property disclosures, reasons why the court should set aside this judgment." As she had argued in her opposition to Jeffrey's motion, she asserted Jeffrey "kept me completely in the dark during the [divorce] process and I was unaware of what I was signing. I learned this year there are many issues in regards to our judgment, which I believe are a basis to set aside the judgment so a fair and accurate judgment can be entered."
Subsequent statutory references are to the Family Code.
Jeffrey opposed Marta's motion. He argued Marta's motion was untimely and that he had reasonably relied on the judgment for 19 years. He further contended the motion was "simply in retaliation" for his efforts to enforce the judgment. Arguing that failure to comply with mandatory disclosure requirements should not result in the setting aside of the judgment, he claimed the statement and waiver in the MSA that disclosures had been exchanged was sufficient and failure to comply was harmless error. Attached were two documents he represented were schedules of debts and assets and a property division he allegedly produced in 2000. These documents were on plain paper, not Judicial Council forms, and were unsigned and undated. He admitted no declaration regarding service of disclosures was filed.
In a reply declaration, Marta stated the required disclosures were never exchanged, and she did not recall seeing, much less recall preparing, the documents Jeffrey attached to his opposition. "I was defaulted and did not prepare any financial disclosures as [Jeffrey] alleges. [Jeffrey] did not prepare and present any disclosures to me." In a subsequent declaration, Marta stated she "received information regarding his true income from his Social Security Administration statement. Petitioner lied to this court in February 2000 stating his gross monthly income as $5,000.00 in 1999 when his taxed Medicare earnings was $10,270.00 a month," or $123,251 per year. She also requested sanctions.
Jeffrey later testified that the disparity between the disclosure and the Social Security statement for 1999 was due to liquidating part of his savings plan and his daughter's college funds to fight a lawsuit. He stated his income and the rest of the disclosures were correct at the time he provided them. He did consult with an attorney at the time of his divorce.
The court's tentative ruling was to vacate the MSA and judgment. Jeffrey requested an evidentiary hearing. The court held that hearing in March 2021, ultimately setting aside the MSA, the default, and the judgment. Jeffrey's request for an order enforcing the pension division was denied. With respect to Marta's sanctions request, the court later awarded her $32,000 in sanctions. We shall discuss the court's findings as pertinent below.
Jeffrey subsequently filed a motion to vacate, which Marta opposed. The court denied the motion "for lack of evidence." Jeffrey now appeals.
II
DISCUSSION
Standard of Review
Issues of law, such as the applicable statute of limitations, are reviewed de novo by this court. (Gilkyson v. Disney Enterprises, Inc. (2016) 244 Cal.App.4th 1336, 1340.) The court's factual findings are reviewed for substantial evidence. (In re Marriage of Rossi (2001) 90 Cal.App.4th 34, 40.)
An order setting aside a judgment under section 2122 is reviewed for abuse of discretion (In re Marriage of Binette (2018) 24 Cal.App.5th 1119, 1125), as are orders setting aside a judgment on equitable grounds (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981), denying a motion to vacate (Machado v. Myers (2019) 39 Cal.App.5th 779, 799; Berset v. Berset (1954) 126 Cal.App.2d 684, 687), and orders imposing sanctions under sections 271 and 2107, subdivision (c) (In re Marriage of Pearson (2018) 21 Cal.App.5th 218, 233; In re Marriage of Feldman (2007) 153 Cal.App.4th 1470, 1478).
Statutory Framework
The dispute in this case is centered around the requirements set forth in the Family Code regarding complete and accurate disclosure of each spouse's finances prior to a dissolution of marriage. The code requires "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).)
This duty is fiduciary in nature. (§ 2102.) The fiduciary 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." (§ 721, subd. (b).) "'The formulation of a marital settlement agreement is not an ordinary business transaction, resulting from an arm's-length negotiation between adversaries. Rather, it is the result of negotiations between fiduciaries required to openly share information.'" (In re Marriage of Georgiou & Leslie (2013) 218 Cal.App.4th 561, 570.)
Generally, each spouse is required to provide both a preliminary and final disclosure. (§ 2103.) The preliminary disclosure must set forth, at a minimum, "[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" and "[t]he declarant's percentage of ownership in each asset and percentage of obligation for each liability when property is not solely owned by one or both of the parties." The preliminary disclosure must also include two years of tax returns. Proof of service of the preliminary declaration must be filed with the court. (§ 2104, subds. (c)(1)-(2), (d).)
Absent a waiver, the final declaration, along with an income and expense declaration, must be served on each party prior to entering into any settlement agreement. (§ 2105, subd. (a).) The final declaration must include specified information, and perjury on this form "may be grounds for setting aside the judgment." (§ 2105, subd. (a) .)
Any waiver of these disclosure provisions must include certain representations. Among these are representations that both parties have complied with section 2104's requirements for preliminary disclosures, that the parties have exchanged current income and expense declarations, and "have fully complied with Section 2102 and have fully augmented the preliminary declarations of disclosure, including disclosure of all material facts and information regarding the characterization of all assets and liabilities, the valuation of all assets that are contended to be community property or in which it is contended the community has an interest, and the amounts of all obligations that are contended to be community obligations or for which it is contended the community has liability." (§ 2105, subd. (d)(3).) The waiver must include a representation that the waiver itself is knowing and voluntary, and finally, a statement that "[e]ach party understands that this waiver does not limit the legal disclosure obligations of the parties, but rather is a statement under penalty of perjury that those obligations have been fulfilled. Each party further understands that noncompliance with those obligations will result in the court setting aside the judgment." (§ 2105, subd. (d)(5) .)
Statute of Limitations
The Family Code includes specific provisions for setting aside a judgment of dissolution. Section 2107, subdivision (d), states, as relevant here: "Except as otherwise provided in this subdivision, 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." Section 2122 permits setting aside a judgment based on actual fraud, perjury, and unilateral or mutual mistake.
Section 2107 also includes language stating: "The failure to comply with the disclosure requirements does not constitute harmless error." Courts, however, have found this language contradicts the Article VI, section 13 of the California Constitution: "No judgment shall be set aside . . . for any error as to any matter of procedure, unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice." (In re Marriage of Steiner & Hosseini (2004) 117 Cal.App.4th 519, 526 (Steiner).) Accordingly, the moving party is required to demonstrate prejudice.
Here, the court found that no preliminary declarations of service of disclosure was ever filed with the court. Filing these declarations is a mandatory requirement for entry of judgment. (§ 2104, subd. (b) ["the parties shall file proof of service of the preliminary declaration of disclosure with the court"].) The court found the documents Jeffrey filed with his opposition, three undated, unsigned pages purporting to list the couple's assets, were insufficient. The assets did not include the values of the property and therefore did not comply with section 2104's mandatory disclosure requirements. The court found this was not harmless error. The court further noted that section 2107, subdivision (d), did not provide a time limit for setting aside the judgment, but mandated the court do so if disclosure requirements had not been met. Jeffrey sets forth multiple arguments as to why the court's ruling was an abuse of discretion.
First, Jeffrey claims Marta's motion "exceeded the applicable statute of limitations." The statute of limitations is set forth in section 2122, subdivision (f), which states motions based on failure to comply with disclosure requirements "'shall be brought within one year after the date on which the complaining party either did discovered, or should have discovered, the failure to comply.'" (See Georgiou, supra, 218 Cal.App.4th at pp. 571-572.) The same limitations period applies to fraud or perjury. (§ 2122, subds. (a), (b).)
The only question on this subject is when Marta discovered, or should have discovered, the failure to comply with the disclosure requirements and Jeffrey's alleged fraud. Jeffrey asserts that Marta "should have discovered" his failure to comply "at the time she signed a provision in the judgment stating she had been provided adequate disclosures and waived further disclosures." He does not cite any case law supporting such a hard and fast rule, rather, he relies on limited facts, loosely interpreted in his favor, to support this assertion. He states that Marta's "concerns" about the pension provision in 2004 should trigger the limitations period.
What Jeffrey leaves out of this version of the facts is any details regarding what Marta said actually occurred, which was that Jeffrey made misrepresentations to her. For example, Jeffrey told Marta she could not get child support because she had a job. She believed him "because he wrote . . . the whole divorce decree out. He was the one that went to the lawyer. He discouraged me not to go the lawyer. He said he would be truthful and honest and we would do this the way he wanted it to be done. He would be fair, and I believed him." Jeffrey told her she "should not get a lawyer because it would damage our children and we will be arguing about everything . . . that is inside the house, and that I may lose custody of the children." After he told her that, she was "too scared" to seek legal advice. Not losing custody was the "foremost thing" on her mind.
Other than Marta's own accounts, she did not "know the value of any other accounts listed on the judgment." When she asked Jeffrey about the MSA in 2004, "he told me he would never take my retirement since he took [another retirement account]." She "trusted [her] ex-husband to say that he was not going to take any of my pension." She had not previously seen the unsigned, undated documents Jeffrey submitted to the court with his declaration in the instant matter.
The court found Marta's testimony credible, and it is not our role to second-guess the trial court's credibility determinations. Accordingly, based on the facts Marta set forth, we must determine when she should have discovered the alleged fraud or failure to disclose. "[T]he statute of limitations under section 2122 accrues as of the date the plaintiff either discovered or should have discovered the facts constituting the fraud or perjury, not the date the plaintiff began to suspect the fraud or perjury." (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1149.) Those facts, in this case, relate to when Marta discovered or should have discovered that Jeffrey did not intend to keep his alleged promise not to take part of her pension. Substantial evidence supports the conclusion that date was not in 2000 or 2004, as Jeffrey claims, but on or about February 22, 2019, when Jeffrey filed a request for joinder in Marta's CalSTRS plan. She filed her motion to set aside the judgment and MSA less than one year later, in October 2019. We therefore conclude that Marta's motion was not time-barred under section 2122.
Failure to Disclose Not Harmless
Jeffrey correctly points out that the failure to disclose alone is not sufficient to set aside the judgment, but that prejudice must be established. He cites Steiner, supra, 117 Cal.App.4th at page 522, for the proposition that a failure to disclose alone is not sufficient. That is certainly true, but the evidence here demonstrated far more than a simple failure to fill out a form.
The evidence credited by the court showed that Marta was not aware of the value of the community assets. The MSA lists what the assets are, but not their value, a key piece of the puzzle when it comes to the division of marital assets. Marta "was completely in the dark" when it came to the couple's assets and she relied on what Jeffrey told her about her pension.
Any argument that the parties waived the disclosures required by section 2105 is without merit because the purported waiver of final disclosures in the MSA was inadequate. The relevant provision of the MSA stated: "Each party has made a full and honest disclosure to the other of all current finances and assets, and each enters into this agreement in reliance thereon. Each warrants to the other and declares under penalty of perjury that the assets and liabilities divided in this agreement constitute all of their community assets and liabilities. Each waives service of the Final Declaration of Disclosure in accordance with FC §2105[(d)]."
Section 2105, subdivision (d), requires all of the following representations: "(1) Both parties have complied with Section 2104 and the preliminary declarations of disclosure have been completed and exchanged. [¶] (2) Both parties have completed and exchanged a current income and expense declaration, that includes all material facts and information regarding that party's earnings, accumulations, and expenses. [¶] (3) Both parties have fully complied with Section 2102 and have fully augmented the preliminary declarations of disclosure, including disclosure of all material facts and information regarding the characterization of all assets and liabilities, the valuation of all assets that are contended to be community property or in which it is contended the community has an interest, and the amounts of all obligations that are contended to be community obligations or for which it is contended the community has liability. [¶] (4) The waiver is knowingly, intelligently, and voluntarily entered into by each of the parties. [¶] (5) Each party understands that this waiver does not limit the legal disclosure obligations of the parties, but rather is a statement under penalty of perjury that those obligations have been fulfilled. Each party further understands that noncompliance with those obligations will result in the court setting aside the judgment."
The MSA's waiver provision simply did not comply. Indeed, we question whether it could have complied given the lack of preliminary disclosures and income and expense declarations. It is not enough for an MSA to represent that something was done when it was clearly not.
Further, the cases Jeffrey relies upon to demonstrate a lack of prejudice are distinguishable on the facts. In Steiner, supra, 117 Cal.App.4th at page 525, which Jeffrey discusses over several pages of his opening brief, the parties did exchange preliminary disclosures, but not final disclosures. While Jeffrey claims "the parties exchanged preliminary declarations of disclosure that complied with Family Code section 2104," the only documents he points to are the unsigned, undated, list of accounts that he produced in this case. The court was within its discretion not to accept these documents as compliant or to credit his testimony about them, particularly given the lack of a filed declaration of service, which is mandatory. (§ 2104, subd. (b).)
The other case Jeffrey relies on to support this argument, In re Marriage of McLaughlin (2000) 82 Cal.App.4th 327, 337, merely states the rule that prejudice is required.
The failure to properly disclose the value of the couple's assets and liabilities was prejudicial because if Marta had been provided with this information, including the estimated future value of her pension, she would have been in a better position to decide whether to sign the MSA. Jeffrey does not argue, and we cannot ascertain, whether the asset division was in fact evenhanded and fair. Marta was also prejudiced by the lack of adequate disclosures in light of Jeffrey's discouraging statements to Marta about seeking an attorney and his statements about spousal support. Taken together, there was substantial evidence from which the trial court could find Marta was prejudiced by the lack of proper disclosures, and we find no error in this aspect of the court's ruling.
Actual Fraud
Next, Jeffrey contends the trial court erred by finding his conduct constituted actual fraud. Section 2122, subdivision (a), defines fraud for purposes of setting aside a divorce judgment as circumstances "where the defrauded party was kept in ignorance or in some other manner was fraudulently prevented from fully participating in the proceeding[s]." This is consistent with the commonly used definition of extrinsic fraud, which may serve as the basis for equitably setting aside a judgment, as opposed to intrinsic fraud, which is not. "Fraud is extrinsic where the defrauded party was deprived of the opportunity to present his or her claim or defense to the court, that is, where he or she was kept in ignorance or in some other manner, other than from his or her own conduct, fraudulently prevented from fully participating in the proceeding." (In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051, 1068 (Stevenot).)
"Any fraud is intrinsic if a party has been given notice of the action and has not been prevented from participating therein, that is, if he or she had the opportunity to present his or her case and to protect himself or herself from any mistake or fraud of his or her adversary, but unreasonably neglected to do so." (Stevenot, supra, 154 Cal.App.3d at p. 1069.) The court found extrinsic fraud present in this case. "The following acts do constitute fraud in this court's mind. The court heard credible testimony that the reason [Marta] always had a concern but was told that there would never be judgment against her retirement. [Marta] believed it and she did not do anything about it, until there was actually a claim as to her retirement. The court believes [Marta] when she says the one thing that she did care about was custody. That was the one thing she wanted to make sure was in order."
The court's determination that extrinsic fraud was present is a factual determination that we review for substantial evidence. (In re Marriage of Bonds (2000) 24 Cal.4th 1, 31.) "[U]nder the familiar tenets of the substantial evidence rule, '"In reviewing the evidence on . . . appeal all conflicts must be resolved in favor of the [prevailing party], and all legitimate and reasonable inferences indulged in [order] to uphold the [finding] if possible."'" (Ibid.)
Jeffrey cites Stevenot for the proposition that "Fairness dictates that the managing spouse has no duty to evaluate assets and may take a position favorable to himself or herself as to the character of assets, and this is done without any warranty, either as to valuation or claims of separate property character, because these are issues on which reasonable minds may differ and an inaccurate opinion or a failure to give any opinion cannot be extrinsic fraud." (Stevenot, supra, 154 Cal.App.3d at p. 1069.) But Stevenot was decided before the Legislature made significant changes in the law concerning divorce, and this part of the opinion is no longer good law. (See In re Marriage of Alexander (1989) 212 Cal.App.3d 677, 682.) While Stevenot stated that after separation, spouses "no longer have a fiduciary duty to each other," that is clearly not the case under section 2102, which explicitly states the opposite. Accordingly, while the definition of extrinsic fraud in Stevenot may still be helpful, it is not useful for applying its facts to the current case.
The other case upon which Jeffrey relies, Jorgensen v. Jorgensen (1948) 32 Cal.2d 13, is from an even earlier period where numerous statutes that are highly relevant here did not exist.
In deciding there was substantial evidence to support the court's order denying a motion to set aside the judgment, this court, in In re Marriage of Heggie (2002) 99 Cal.App.4th 28, 34, noted the "case involves a stipulated judgment after a period of litigation and settlement discussion with each side being represented by counsel, not a default done in a corner." The case before us, however, cannot say as much. Marta had no lawyer, specifically because Jeffrey discouraged her from obtaining one, and he told her that she may lose custody of the children if she sought a lawyer's advice. He told her that her pension "had to be divided in the judgment and [MSA] this way in order for the court to give us our divorce," while at the same time orally representing to her that he would never go after her pension. Jeffrey also told Marta that she "could not be paid spousal support because [she] had a job." Jeffrey was aware that his income was significantly higher than Marta's during their long-duration marriage.
Despite the language in the MSA regarding filing a "Stipulation and Order" regarding the CalSTRS pension account, Jeffrey never filed anything regarding the pension account before he sought to collect.
Jeffrey asserts that these allegations were "intrinsic fraud," at most, because she lacked the care and attention. There was substantial evidence that Marta's failure to participate was not a lack of care or attention on her part, but directly because of the representations Jeffrey made to her. Extrinsic fraud includes, among other things, "Convincing the other party not to obtain counsel because the matter is not going to proceed." (Stevenot, supra, 154 Cal.App.3d at p. 1069.) When combined with the lack of accurate disclosures and false promises, the court had ample reason to find extrinsic fraud on Jeffrey's part.
"To set aside a judgment incorporating a marital settlement agreement on the ground of extrinsic fraud, the moving party must demonstrate that he or she has a meritorious case, [that they have] a satisfactory excuse for not presenting a defense to the original action and that [they] exercised diligence in seeking to set aside the default once the fraud had been discovered. Such a motion must not be granted if the moving party is guilty of laches or inexcusable neglect, and the court must weigh the reasonableness of the conduct of the moving party in light of the extent of the prejudice to the responding party." (Stevenot, supra, 154 Cal.App.3d at p. 1071.)
We have no difficulty finding that the court had substantial evidence of merit. As for a reason for not presenting a defense to the original action, Jeffrey 's representations and lack of disclosures were the reason Marta failed to do so. As to diligence once the fraud had been discovered, as soon as she was notified that Jeffrey had sought to collect her pension, she sought counsel. Laches or inexcusable neglect are not relevant here. As for weighing the reasonableness of the conduct of Marta and potential prejudice to Jeffrey, the court had substantial evidence to find in Marta's favor. Jeffrey was the direct cause of his own problems; had he complied with the law and entered into a fair settlement with Marta, this case would not now be before us. According to his testimony, Jeffrey's taxed Medicare earnings in 2020 was $183,743, and in 2021, he anticipated he would earn approximately $160,000. Any prejudice to him was outweighed by the reasonableness of Marta's conduct in promptly consulting legal advice when she learned he was trying to collect her pension.
Setting Aside Entire Judgment
Jeffrey correctly points out that under section 2121, the court may set aside part, rather than all, of a judgment. Pursuant to section 2125, "the court shall set aside only those provisions materially affected by the circumstances leading to the court's decision to grant relief. However, the court has discretion to set aside the entire judgment, if necessary, for equitable considerations."
Jeffrey offers a one paragraph argument complaining that in closing argument, Marta stated she should be able to revisit the issue of child support, despite the fact that she does not allege she was misled with respect to child support. This, of course, does not mean she will ultimately be awarded child support. Jeffrey offers no authority for the proposition that this constitutes an abuse of discretion, and we do not find such an abuse of the court's equitable powers.
"Fairness"
In a three-paragraph argument, Jeffrey contends the trial court wrongfully "set aside the judgment simply because it believed it to be unfair." This contention is not supported by any record citations and we find no support for it in the record. This argument is rejected.
Jurisdiction to Set Aside the Default
Jeffrey next argues the court exceeded its jurisdiction when it set aside the default (as opposed to the judgment) under section 2122 and allowed Marta to file a response to Jeffrey's petition for dissolution. He argues that there is no provision in the chapter of the Family Code that includes section 2122 that permits a default to be set aside.
He cites authority that a traditional equitable basis to set aside a judgment was preempted by section 2120, but he admits the court had the equitable power to set aside the default. The court found extrinsic fraud, which is a traditional equitable basis for setting aside a default. (Mechling v. Asbestos Defendants (2018) 29 Cal.App.5th 1241, 1245.) He claims that Marta's request for relief under section 2120 et seq., precluded such a decision, but he offers no authority for this assertion. The motion to vacate he filed below stated the "only" grounds to set aside the default was Code of Civil Procedure Code section 473, subdivision (b), an argument he has abandoned here. We find the argument about jurisdiction without merit, and find no legal error in the court 's decision to apply equitable principles to vacate the default.
Substantial Evidence of Exceptional Circumstances and Diligence
Jeffrey next argues, citing a civil rather than a family law case, that equitable relief from a default judgment is reserved for exceptional circumstances. (Kramer v. Traditional Escrow, Inc. (2020) 56 Cal.App.5th 13.) Assuming this is the proper standard for a family law case, the same standard applies for both setting aside the default and the judgment. As we discussed above, that requires "the moving party [to] demonstrate that he or she has a meritorious case, that [they have] a satisfactory excuse for not presenting a defense to the original action and that [they] exercised diligence in seeking to set aside the default once the fraud had been discovered." (Stevenot, supra, 154 Cal.App.3d at p.1071; Kramer v. Traditional Escrow, Inc., supra, 56 Cal.App.5th at pp. 37-38.) As we discussed above, Marta made the required showing.
Further, we would be lax to ignore the differences between this case and the facts in Kramer. In that case, the facts involved the procedural failures of the defendants to timely involve themselves in that case by a party at arms-length. Here, the case involves a fiduciary actively discouraging the defaulting party from participating, and threatening not merely the loss of money, but the loss of custody of her children if she sought legal advice. The facts could not be more different, and Kramer is therefore entirely distinguishable on the facts.
Sanctions Award
The court awarded $32,000 in sanctions to Marta under section 271. In an argument of less than one page, Jeffrey contends the court erroneously awarded sanctions to Marta because his litigation position was "legally correct." He did not include either Marta's amended motion seeking sanctions, his response, or any exhibits in the record on appeal. We disagree that his position was "legally correct" and therefore find no grounds for reversing the sanctions award.
Jeffrey's Motion to Vacate the Court's Order
Finally, Jeffrey argues his motion to vacate should have been granted because the court was, to put it simply, wrong. As we have set forth above, we disagree. Accordingly, it was not error to deny the motion to vacate. Jeffrey claims the sanctions were based on his "allegedly taking an unreasonable litigation position when he refused to stipulate to set aside the judgment." What the court actually said was that "the sanctionable conduct is unnecessarily increasing the cost of litigation. We've got the seven times that the parties tried to or at least [Marta's counsel] reaching out to try and resolve this matter. We have tentative that the court had made, and the parties again requested an evidentiary hearing an hour that took I believe in excess of three hours. [¶] [The] court also found fraud in this case and that all goes into the court's analysis of why a [section] 271 sanction would be appropriate in this case, and this is where the court comes with reasonable attorneys fees of $32,000."
"Refus[ing] to stipulate" is not the same as "unnecessarily increasing the cost of litigation." Jeffrey offers no argument that substantial evidence does not support the court's factual findings as to his actions that unreasonably increased the cost of litigation, so we need not consider the point further.
As to his complaint that the court considered Jeffrey's failure to redact Marta's social security number, this was, at most, an afterthought, and any lack of evidence directly connecting his failure to redact to attorney fees Marta incurred does not constitute reversible error. Jeffrey offered no objection on this point in the trial court. Although he raised the sanctions award in his motion to vacate, he did not address this point. We find no reversible error.
III
DISPOSITION
The court's orders are affirmed. Marta is entitled to her costs on appeal.
WE CONCUR: O'LEARY, P. J., DELANEY, J.