Opinion
E033010.
11-20-2003
In re the Marriage of SANDRA and STEVEN P. GORMAN. SANDRA L. GORMAN, Respondent, v. STEVEN P. GORMAN, Appellant.
Law Offices of Basil Chapman, Basil T. Chapman, and Carolyn H. Martino for Appellant. No appearance for Respondent.
Steven Gorman, M.D., (Husband) appeals from the trial courts order granting the application of Sandra Gorman (Wife) for the distribution of proceeds from the sale of the marital residence in this proceeding for dissolution of marriage. We reverse the order.
Wife has not filed a brief on appeal.
I
FACTUAL AND PROCEDURAL BACKGROUND
The parties were married in July 1989. They had four children during the marriage.
The parties separated in March 1998. Wife petitioned for dissolution of the marriage in January 1999.
In October 1999, the parties entered into a stipulated agreement and order giving them joint legal custody of their four children, with Wife to have primary physical custody. The order provided that Wife could not move the children outside of the seven southernmost California counties without Husbands consent. Wife was awarded the exclusive possession of the former marital residence in La Quinta.
In August 2000, the parties were granted a status-only judgment of dissolution. Wife remarried in August 2001 and had two additional children from that marriage.
In October 2002, Wife advised Husband that she was thinking of moving to a new residence. The parties agreed to sell the La Quinta residence, in which Wife was still living with the children. According to Husband, Wife did not indicate at that time that she planned to move the children from the Coachella Valley.
The La Quinta residence sold for $292,500, yielding net proceeds of about $120,000. Escrow was to close on December 19, 2002. In a letter to the escrow company of November 22, 2002, Husband stated he did not agree to any distribution of funds from the sale of the residence. He requested the escrow company hold the funds until further notice.
Wife and her new husband purchased a residence in Yucaipa, contingent on the sale of the La Quinta residence, with escrow to close the same date as the La Quinta sale, December 19, 2002. According to Husband, in late November 2002, Wife informed him she was going to move to Yucaipa and intended to remove the children from school as of December 19, 2002.
On November 25, 2002, Husband filed an application for an order to show cause seeking an order prohibiting Wife from moving the children out of the Coachella Valley. On December 6, 2002, he filed an ex parte application seeking the same relief in the form of a temporary restraining order. Husband also sought primary custody of all four children.
On the same day that Husband filed his application for a temporary restraining order, Wife filed her own ex parte application seeking distribution of the net proceeds from the La Quinta sale. Wife stated she needed about $30,000 from the sale proceeds to make the down payment on the Yucaipa residence she had purchased with her new husband. She stated that if she did not receive the money, she would be in breach of the agreement to purchase the Yucaipa residence, and she and her children would have no place to live.
The court declined to grant ex parte relief to either party and instead set both parties applications for hearing after notice. Subsequently, the court heard the applications based on the evidence set forth in the moving papers and the argument of counsel. It denied Husbands application to prevent Wife from moving the children. As to Wifes request for distribution of the sale proceeds, the court ruled: "This request is granted as follows. Each party shall receive the sum of $35,000.00 from the net sale proceeds. The balance of the net sale proceeds shall be placed in an interest bearing trust account (for the benefit of both parties) by counsel for Respondent. Said proceeds shall remain in that account until further order of court or written agreement of the parties."
Husband has not included a copy of the order in the record on appeal, but has instead attached a copy to his brief. This is improper, as rule 14(d) of the California Rules of Court permits attachments to briefs only of "exhibits or other materials in the appellate record." However, as Wife has not objected to the attachment or disputed its accuracy, we will regard it as an accurate rendering of the order.
II
DISCUSSION
A. Appealability
Wife has not raised the question whether the order appealed from is appealable, but we are obliged to do so on our own motion. (Olson v. Cory (1983) 35 Cal.3d 390, 398.) In marital dissolution proceedings, it has been held that a "collateral" interlocutory order directing payment of money or performance of an act is appealable: "When a court renders an interlocutory order collateral to the main issue, dispositive of the rights of the parties in relation to the collateral matter, and directing payment of money or performance of an act, direct appeal may be taken. [Citations.] This constitutes a necessary exception to the one final judgment rule. Such a determination is substantially the same as a final judgment in an independent proceeding. [Citations.]" (In re Marriage of Skelley (1976) 18 Cal.3d 365, 368.)
"We look `to the substance of an order pendente lite rather than to chronology or to form to determine whether the order is directly appealable. [Citations.]" (In re Marriage of Weiss (1996) 42 Cal.App.4th 106, 119.) The order in this case was collateral to the main issues in the case, as it did not involve the status of the marriage, child custody or visitation, or the division of property. The order also directed the payment of money and the performance of an act, in the form of the distribution of the escrowed funds. Therefore, it met the requirements for an appealable interlocutory order.
B. Distribution of Sale Proceeds
Husband argues the order for distribution of the sale proceeds was invalid because the court lacked authority to disburse funds from the sale of a disputed asset without a trial to determine the parties respective rights to the funds.
The parties respective entitlements to the sale proceeds were, at the least, the subject of dispute. Wife stated that she and Husband held title to the La Quinta residence as joint tenants, but she had paid the monthly expenses on the residence while living there since the separation, including the monthly note payments of $1,500. She also claimed Husband had orally agreed that she would receive the residence as her separate property, and he would receive his medical practice as his separate property.
Husband, for his part, argued all of the sale proceeds should belong to him, based on his payment of community property debts since the date of separation. Husband did not, however, argue that the proceeds should be distributed to him at that point. Rather, he contended, as he does on appeal, that any distribution was premature pending a trial on the property issues.
The trial court did not cite any authority permitting the pretrial distribution of disputed funds, and we are aware of none that would apply in this situation. Family Code section 2108 provides that the court has the authority at any time in a dissolution proceeding to order the liquidation of a community asset to avoid unreasonable market or investment risks. Perhaps the authority to order liquidation of an asset under section 2108 could be interpreted to include the authority to distribute the proceeds prior to trial. (We are aware of no authority addressing that question.) However, there is no indication that the sale of the residence in this case was effected to avoid unreasonable market or investment risks. Rather, it appears Wife wanted to sell the residence so she could move.
All future statutory references are to the Family Code unless otherwise indicated.
Section 2045 permits the court to restrain any person from disposing of any separate or community property during the pendency of a dissolution proceeding, except in the usual course of business or for the necessities of life. Perhaps the authority to prohibit disposition of property prior to final judgment could be interpreted to imply the authority to permit it as well. In Lee v. Superior Court (1976) 63 Cal.App.3d 705 (Lee), however, the Court of Appeal, construing a predecessor statute to section 2045, reached a contrary conclusion.
In Lee, the husband in a dissolution proceeding moved the court to authorize the sale of an apartment building claimed by the wife to be community property, to pay the debts of a business which the husband claimed was his separate property. The wife did not oppose the sale but wanted the proceeds to be held in a joint bank account. The trial court found that the sale of the building was necessary to preserve the business and ordered the sale proceeds distributed to the husbands lawyer to pay the debts of the business. The court did not determine whether the building or the business were community or separate property.
In authorizing the sale of the building to pay the business debts, the trial court in Lee relied on former Civil Code section 4359. Like current Family Code section 2045, former Civil Code section 4359 authorized the court in a dissolution proceeding to restrain any person from disposing of any separate or community property except in the usual course of business or for the necessities of life.
The Court of Appeal in Lee concluded: "Civil Code section 4359 provides no authority for the trial court to order that a disputed asset be sold and the proceeds distributed to one spouse, over the objections of the other spouse. [¶] . . . [¶] The very language of section 4359 makes clear that it is intended to apply only to prevent a transfer — to maintain the status quo — and does not authorize the trial court, ex parte or otherwise, to change the status quo by authorizing the sale of property involved in a dissolution proceeding and the transfer of the proceeds to one of the parties without adequate safeguards for the other." (Lee, supra, 63 Cal.App.3d at pp. 709-710.)
The problem with the trial courts order, the Lee court said, was that although the nature and extent of the community property were in dispute, the trial court effectively settled a part of the parties property rights without a trial. It did so without knowing whether it was, in fact, permitting the husband to pay his separate business debts with money that belonged to the wife, and without assurances that the wife would have an adequate remedy if the money did belong to her. (Lee, supra, 63 Cal.App.3d at pp. 710-711.)
The Lee court stated it would have been permissible for the trial court to conduct a partial trial to determine the community or separate character of the apartment building and the existence of other community assets sufficient to offset any loss the wife might incur from the loss of proceeds from the building. Alternatively, it would have been permissible for the court to order the sale of the building without making any factual determinations beyond the value of the building, provided it required security sufficient to protect the wife. (Lee , supra, 63 Cal.App.3d at p. 711.) The court could not, however, make a de facto determination, on disputed and unresolved facts, that the wife would not be prejudiced by the release of the proceeds to the husband or his creditors. By so doing, the trial court effectively disabled itself from fully performing its statutory duty to determine and divide the community property. (Ibid.)
The situation is similar here. The court never determined the parties respective entitlements to the La Quinta residence or the sale proceeds. Yet it effectively awarded Wife $35,000 of the proceeds, by permitting her to receive that amount out of escrow and use it to purchase another residence in which Husband would acquire no interest. The court did so without requiring any security to protect Husband in case his claim that all of the proceeds should belong to him were ultimately found to be valid. At least as far as the record reflects, the court made no determination that adequate additional community property existed to reimburse Husband for the $35,000 distributed to Wife if his claim were found valid.
The fact the court also ordered distribution of an equivalent sum to Husband did not eliminate the potential for prejudice to him. Without determining the parties respective interests in the sale proceeds, the court could not assure itself that Husbands claim of entitlement to all of the proceeds was not valid. Therefore, the court could not avoid the possibility it was distributing to Wife funds to which Husband was in fact entitled, without assurance that other assets would be available to compensate him. Under Lee, the court should have either conducted a partial trial to determine the parties respective interests in the proceeds, or required Wife to furnish security sufficient to reimburse Husband for the amount distributed to her in the event the distribution were later determined to have been made in error.
Of course, it is also possible the court was prejudicing Wife by distributing $35,000 to Husband, since Wifes claim that Husband agreed to relinquish any interest in the residence in return for receiving all of the interest in his medical practice might ultimately be found valid. The fact the order may have operated unfairly to Wife did not alleviate the potential for prejudice to Husband, nor did it justify making a partial division of an asset without determining the parties respective rights to it.
III
DISPOSITION
The order appealed from is reversed. Appellant shall recover costs on appeal.
We concur: GAUT, J., KING, J.