Opinion
G053394
07-18-2018
In re Marriage of KIMBERLY and FLETCHER JONES, JR. KIMBERLY M. JONES, Appellant, v. FLETCHER JONES, JR., Respondent.
Kolodny Law Group, Stephen A. Kolodny and Heidi L. Madzar; Snell & Wilmer, Richard A. Derevan and Todd E. Lundell for Appellant. Seastrom Seastrom & Tuttle, Philip G. Seastrom and Emily J. Nickles; Wasser Cooperman & Mandles and Burce Evan Cooperman; Greines, Martin, Stein & Richland, Robert A. Olsen and Marc J. Poster for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 12D000041) OPINION Appeal from a judgment of the Superior Court of Orange County, James L. Waltz, Judge. Affirmed in part, conditionally reversed and remanded in part with directions. Kolodny Law Group, Stephen A. Kolodny and Heidi L. Madzar; Snell & Wilmer, Richard A. Derevan and Todd E. Lundell for Appellant. Seastrom Seastrom & Tuttle, Philip G. Seastrom and Emily J. Nickles; Wasser Cooperman & Mandles and Burce Evan Cooperman; Greines, Martin, Stein & Richland, Robert A. Olsen and Marc J. Poster for Respondent.
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In 2012, Kimberly M. Jones filed for a divorce from Fletcher (Ted) Jones, Jr., an extraordinarily wealthy businessman. Since then, both parties have filed several related claims; some of the legal proceedings have taken place in California and some in Nevada. This is the third time this court has filed an opinion in the matter.
As is customary in family law matters, we will refer to the parties by their first names. (In re Marriage of Greenway (2013) 217 Cal.App.4th 628, 653, fn. 1.) "Ted" appears to be a nickname, but because the parties use that name, we will likewise do so.
This is an appeal by Kimberly following a 23-day trial. The court ordered Ted to pay Kimberly $120,000 per month in child support (for three children), $245,000 per month in spousal support, and $5.8 million in attorney fees. The attorney fee award was only for the California portion of the litigation; the court did not order Ted to reimburse Kimberly for any of her attorney fees traceable to the Nevada litigation.
Kimberly argues that the trial court ordered insufficient child and spousal support, improperly excluded evidence, and awarded insufficient attorney fees for the California litigation. We disagree and find that the court did not abuse its discretion. Kimberly further argues that the court improperly ruled it was legally precluded from awarding her any attorney fees for the Nevada litigation. We agree.
Thus, we conditionally reverse and remand with directions only as to the Nevada attorney fee award. In all other respects, the judgment is affirmed.
I
FACTS AND PROCEDURAL BACKGROUND
Shortly after signing a prenuptial agreement, Kimberly and Ted married in 1998. About seven years later, the parties separated and signed a marital settlement agreement. The parties later reconciled and signed a postmarital agreement. These three agreements designated Nevada courts as the proper venue for contesting their enforcement and validity. Over the course of their 13-year marriage, the parties had two boys and a girl (in that order); their eldest son has severe autism.
In 2012, Kimberly filed in California for a dissolution of the marriage. Ted filed a response agreeing there were irreconcilable differences. Ted later filed a motion to bifurcate the marital status issue. The court granted the motion, terminated the marriage, and reserved jurisdiction over remaining issues. Kimberly appealed. This court affirmed the judgment in an unpublished opinion. (In re Marriage of Jones (Jan. 10, 2014, G047724) [nonpub. opn.] (Jones I).)
While the California case proceeded, Ted filed for declaratory relief in Nevada concerning the three marriage agreements (Kimberly had refused to admit during discovery in California that the three agreements were valid and enforceable). Kimberly later filed a motion in California seeking attorney fees to pay for the Nevada litigation. The trial court awarded Kimberly $375,000 in attorney fees pendente lite. Ted appealed. This court affirmed the judgment in an unpublished opinion. (In re Marriage of Jones (May 13, 2015, G049640) [nonpub. opn.] (Jones II).)
In Nevada, after a 31-day trial, the court found the three agreements to be valid and enforceable. The Nevada court ordered Kimberly to reimburse Ted $4 million for his attorney fees and costs.
Further details regarding the Nevada litigation and related matters will be reviewed in the discussion section of this opinion concerning the Nevada attorney fees.
In California, there was a 23-day trial concerning child support, spousal support, and attorney fees. The court filed a 37-page final statement of decision, in which it summarized Ted and Kimberly's marital standard of living (MSL): "The parties enjoyed a lavish marital standard of living or lifestyle. The parties lived in a large, custom, bayside home on the Newport Beach Peninsula, its value [is] hard to determine, but its [fair market value] is estimated to be approximately $16.5 million. The parties also owned a vacation home in Cabo, Mexico . . . valued at $6 million. Within either home, Kimberly had an unlimited budget to purchase and maintain high-end luxurious household furnishings. Kimberly did not work outside the home environment and was assisted by domestic help, including a full-time chef and caregivers (nannies) that assisted with the three children [ages 13, 12, and seven at the time of trial] and, in particular, attended to [the eldest son's] special needs. The children attended private schools. The parties had access to a revolving fleet of new or near-new luxury vehicles. The parties enjoyed frequent and exotic vacations that sometimes included chartering a huge private yacht and traveled to exotic places, renting large villas or suites within a super high-end resort. All their frequent air travel was via a large 2003 Gulfstream GIV jet, owned and operated by Ted's management group headquartered in Nevada."
After purchasing the Newport Beach home for $15 million, Kimberly spent more than $11 million upgrading the property. According to Ted's trial testimony, Kimberly "had an unlimited budget that she exceeded."
The trial court ordered Ted to pay Kimberly $365,000 per month in nontaxable family support ($120,000 child support and $245,000 spousal support). The court also ordered Ted to pay Kimberly $5.8 million in attorney fees related to the California litigation. The court ruled that: "Either as a matter of law or under the totality of all the circumstances, Kimberly is not entitled to any additional reimbursement of fees traceable to the Nevada action." Kimberly appeals.
II
DISCUSSION
Kimberly contends that the trial court ordered an insufficient amount of child and spousal support, improperly excluded evidence at trial, and improperly awarded attorney fees. We shall address each contention in turn. A. Child Support
Kimberly argues that the trial court abused its discretion by ordering Ted to pay Kimberly $120,000 a month in child support, which was a downward departure from the guideline amount ($395,970) under Family Code section 4055. We disagree.
Further undesignated statutory references will be to the Family Code.
"California has a strong public policy in favor of adequate child support." (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 283.) As to the amount, the statewide uniform guideline formula is presumed to be correct. (§ 4057, subd. (a).) The presumption may be rebutted with evidence showing application of the formula would be unjust or inappropriate because one or more factors is found to be applicable. (§ 4057, subd. (b).) A court may order child support lower than the guideline amount when the parent paying the support "has an extraordinarily high income and the amount determined under the formula would exceed the needs of the children." (§ 4057, subd. (b)(3).)
When a court deviates from the rebuttable presumption it must state in writing or on the record "[t]he amount of support that would have been ordered under the guideline formula"; "[t]he reasons the amount of support ordered differs from the guideline formula amount"; and "[t]he reasons the amount of support ordered is consistent with the best interests of the children." (§ 4056, subd. (a) (1), (2) & (3).)
1. The trial court did not abuse its discretion by making a downward departure from the guideline amount.
The trial court found that "Ted is indisputably an extraordinarily 'high income' earner within the meaning of [§ 4057, subd. (b)(3)]." The court determined that Ted's income after taxes was $21,073,293 annually, or $1,756,108 per month. Based on that income, the court calculated the guideline child support amount at $395,970 per month. The court found that the guideline amount was "unjust and not appropriate in this case because [it] is approximately 300% over the historic and reasonable needs of the children[,]" and "vastly" exceeded their needs. The court found that the guideline amount would "only enrich Kimberly, and is tantamount to a shifting of wealth" in violation of legislative intent. (See § 772 ["After entry of a judgment of legal separation . . . the earnings or accumulations of each party are the separate property of the party acquiring the earnings or accumulations"].)
The trial court set the amount of child support at $120,000 per month (tax free), which it determined would "allow the children to live at Ted's lifestyle level." The court found the deviation from the guideline amount to be "consistent with the best interest of the children." The court determined that Ted presented "persuasive evidence as to the children's historical expenses per a reasonable allocation method and also quantified their prospective needs commensurate with the MSL and Ted's current lifestyle."
The court found that: "$120,000 per month will provide adequate funds to support travel and vacation expenses commensurate with historical patterns of travel and includes all air travel with their mother by private jet." The court noted that Ted is also obligated, by stipulation, "to pay an array of expenses on behalf of the children, including, without limitation, the children's medical insurance and uncovered medical; dental and other health related expenses . . . ; all of the children's tuition, tutors, and other school related expenses; expenses of [the oldest son's] medical travel, including air and ground expenses; and more."
Here, based on Ted's extraordinarily high income, a downward departure from the guideline child support amount was undoubtedly within the scope of the trial court's discretion. As determined by the court, the lower amount is consistent with the children's historical needs. The court's child support order essentially allows the children to continue to enjoy the same lifestyle they were accustomed to prior to their parents' divorce. Thus, we find no abuse of the court's discretion.
2. Substantial evidence supports the trial court's factual determinations.
Kimberly argues that "the trial court's determination of the children's needs was not supported by the evidence." We disagree.
"Our review is limited to determining whether the court's factual determinations are supported by substantial evidence and whether the court acted reasonably in exercising its discretion." (In re Marriage of De Guigne (2002) 97 Cal.App.4th 1353, 1360, italics added.) "Substantial evidence" is evidence that is reasonable, credible, and of solid value. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) The opinion of an expert witness generally constitutes substantial evidence when supported by other evidence in the record. (Pacific Gas & Electric Co. v. Zuckerman (1987) 189 Cal.App.3d 1113, 1135.)
Here, in order to determine the amount of support that would adequately meet the children's needs, the trial court primarily relied on the testimony and reports prepared by Ted's forensic accounting expert, David Swan. The court contrasted Swan's testimony with that of Kimberly's forensic accounting expert, Jason Wegis. "After listening to both and reviewing their methods, assumptions, and analysis, . . . the court easily found Mr. Swan to be more credible and convincing."
In its statement of decision, the trial court found that child support at $120,000 per month "is based on convincing evidence that (a) actual expenditures for the two-year period prior to the date of separation was $111,300 per month (Trial Exhibit 645 . . . ); (b) current expenditures, as adjusted, for the nineteen-month period ended January 31, 2015 were $119,328 per month (Trial Exhibit 780 . . .); and (c) expenditures, adjusted to current cost, for the two-year period ended October 31, 2011 were $121,373 per month. (Trial Exhibit 791 . . . .)"
The exhibits referenced by the trial court are contained in the record. Forensic accounting testimony is the type of evidence routinely relied upon by courts when deciding these matters. The court found Swan to be a highly credible witness. Thus, we find substantial evidence to support the court's factual findings.
Kimberly argues that the trial court improperly determined the children's financial needs, advancing a number of grounds. Kimberly argues that $120,000 per month "deprives the children of their right to share in [Ted's] unusual wealth[,]" and "artificially deflate[s] the children's needs." Kimberly further takes issue with Swan's analysis on a number of fronts, including that he improperly valued private jet travel, improperly valued the costs of chartering a yacht versus staying at a hotel, and improperly excluded business travel expenses. But all of these issues were within the purview of the trial court to consider and weigh.
It appears that Kimberly misapprehends our role as an appellate court. We are not going to reweigh these numerous factual issues; they were all thoroughly considered by the trial court. Nor are we going to second guess the court's rulings. Our task is narrow. Having found substantial evidence to support the court's underlying findings of fact, we find that the court acted reasonably in setting Ted's child support obligation in the amount of $120,000 per month.
3. There is no indication that the trial court improperly prejudged issues.
Kimberly argues that "[t]he child support judgment must be reversed because the trial court prejudged the case to be one where departure from the guideline was appropriate."
Kimberly cites a Supreme Court opinion for the proposition that "where the trial court makes statements indicating that it has prejudged a support issue before evidence is presented, the resulting judgment may not be allowed to stand even if the court allows evidence on the subject." (See Webber v. Webber (1948) 33 Cal.2d 153, 161 (Webber).) In Webber, the plaintiff (wife) sought a divorce on the grounds of extreme cruelty. (Id. at p. 155.) At trial, defendant's counsel offered to withdraw a cross- complaint if the plaintiff withdrew her request for alimony. The judge responded: "They do not need to waive alimony. The Court will waive it for them." The plaintiff's counsel countered: "This woman has been married 37 years. I think she is entitled to be supported." The judge responded: "Go ahead and wash your dirty linen. I won't stop you." (Id. at p. 156.) At the conclusion of the trial, the court denied alimony; the Supreme Court reversed: "Although after the trial judge's untimely comment on the alimony issue plaintiff was allowed to present evidence thereon, the record shows that he considered it 'time wasted,' and that his predetermined state of mind continued to exist. Thus, at the end of the trial, he stubbornly declared to plaintiff's counsel: 'I have told you that I am not going to award any support. I have told you that several times.'" (Id. at p. 160.)
Here, given Ted's extraordinary wealth, the trial court commented before and during the trial on "the diminished importance of calculating Ted's income with great precision." These comments were logical and do not indicate bias. However, based on the court's general comments to this effect, Kimberly asserts in her opening brief that: "In the court's mind . . . the [child support] presumption was rebutted without [Ted] putting on any evidence whatsoever merely by the undisputed fact that [Ted] was an extraordinarily high earner." (Italics added.)
Kimberly's notion as to what was in the trial court's mind and its purported effect on the trial is unfounded. Unlike Webber, supra, 33 Cal.2d 153, the court in this case made no statements—none—indicating that it had improperly prejudged any issue. Quite the opposite. Prior to trial, the court stated to both parties: "While I'm well-informed about, in general, this case, I am not predisposed to find in your favor a material fact that's disputed, make any ruling in your favor or not in your favor, or come to any order or to some global order in this case. I'm not predisposed at all."
We take the court at its word. There is no indication of any impropriety. B. Spousal Support
Kimberly argues "that the trial court abused its discretion in awarding spousal support by artificially deflating Kimberly's needs and marital lifestyle and by ignoring other components of support." We disagree.
Unlike child support, the purpose of spousal support varies from case to case, depending on the circumstances. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 480-481.) However, the Legislature has set forth various factors courts must consider. (§ 4320.) Those factors include "[t]he ability of the supporting party to pay spousal support, taking into account the supporting party's earning capacity, earned and unearned income, assets, and standard of living"; "[t]he needs of each party based on the standard of living established during the marriage"; and "[a]ny other factors the court determines are just and equitable." (§ 4320, subds. (c), (d) & (n).)
A trial court has broad discretion to determine the appropriate weight to accord each factor. (In re Marriage of Cheriton, supra, 92 Cal.App.4th at p. 302.) "In awarding spousal support, the court must consider the mandatory guidelines of section 4320. Once the court does so, the ultimate decision as to amount and duration of spousal support rests within its broad discretion and will not be reversed on appeal absent an abuse of that discretion. [Citation.] 'Because trial courts have such broad discretion, appellate courts must act with cautious judicial restraint in reviewing these orders.'" (In re Marriage of Kerr (1999) 77 Cal.App.4th 87, 93, fn. omitted.)
Here, in its statement of decision, the trial court reviewed each of the various factors it was required to consider in ordering spousal support. The court went on to note that: "This case is atypical in several ways. First, the prospective payor spouse (Ted) agreed to the establishment of [permanent] support - Ted agreed Kimberly has a need for support. Second, the payor's ability to pay any amount was never disputed. Ted agreed he is an extraordinarily high earner and admitted he can pay (ability) whatever reasonable support this court establishes. Two of the very recurring (and vexing) fact-based issues, need and ability were off the table."
What was primarily at issue was the valuation of the marital standard of living (MSL). The trial court noted that it "listened to the parties and their dueling experts, in particular CPA Wegis (for Kimberly) and CPA Swan (for Ted), as and for quantifying the MSL." After considering "both experts, the court accepts the testimony and analysis from Mr. Swan over the testimony and analysis of Mr. Wegis . . . ." Ultimately, the court concluded that: "Considering Kimberly alone, permanent spousal support at $245,000 per month will allow Kimberly to live at the MSL. . . . The support orders above are just, fair, and reasonable to both parties under the circumstances. Ordering Ted to pay more to Kimberly exceeds the MSL and is tantamount to a transfer of Ted's separate property and would be a shifting of wealth not contemplated (nor allowed) under California's child and spousal support laws and schemes."
It is readily apparent that the trial court was well aware of the mandatory spousal support guidelines of section 4320. The court considered and weighed those guidelines. Once the court did so, the court then exercised its discretion and came to its ultimate decision that $245,000 a month (tax free) in permanent spousal support was a just and equitable amount. We cannot say that the court's order exceeded the bounds of reason. Thus, we find that the court did not abuse its discretion.
Kimberly argues that the spousal support order was inadequate for a multitude of reasons, each of them essentially seeking to challenge the trial court's factual determination concerning the value of the MSL: the valuation and exclusion of certain travel expenses; the exclusion of certain "milestone" events such as lavish birthday parties; the exclusion of certain jewelry purchases and expenses related to raising horses; and the valuation of certain savings and investments. The consistent thread that runs through each of these arguments is that court relied on Swan's analysis (Ted's expert) rather than Wegis' analysis (Kimberly's expert).
As with the child support order, we are not going to retry these factual issues, nor are we going to second guess the trial court's judgement regarding the competing expert testimony. In sum, the court properly weighed the statutory factors in an effort to arrive at an equitable amount of spousal support. C. Exclusion of Evidence
Kimberly argues that the trial court abused its discretion by excluding evidence concerning the fair market value (FMV) of Ted's property. We disagree.
"'Relevant evidence' means evidence . . . having any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action." (Evid. Code, § 210.) "The court in its discretion may exclude evidence if its probative value is substantially outweighed by the probability that its admission will . . . necessitate undue consumption of time . . . ." (Evid. Code, § 352.)
Here, prior to trial, Ted filed a motion to exclude evidence regarding the FMV of his property. Ted argued that "whether these separate property interests are worth $140 million, $300 million or $600 million is simply not relevant to the adjudication of child support, spousal support or attorneys' fees and costs." The trial court granted the motion, stating that Ted "has the present financial ability to pay any reasonable amount of support this court may establish and to pay all reasonable and necessary attorney fees and costs this court may order[], and therefore any evidence regarding the FMV of his substantial separate property is not relevant (Evid. Code § 210) and inadmissible under Evid. Code § 352." The court's evidentiary ruling was sound and undoubtedly within its discretion.
When an extraordinarily high earner stipulates that he or she can pay any reasonable amount of support, detailed evidence regarding the supporting party's net worth is irrelevant. (Estevez v. Superior Court (1994) 22 Cal.App.4th 423, 431 (Estevez).) In Estevez, a noncustodial father agreed to pay $3,500 per month in child support. (Id. at pp. 425-426.) The father stipulated that "he has an annual income of not less than $1.4 million per year, and can pay any reasonable amount of child support." (Id. at p. 429.) The mother later sought modification of the child support order and served discovery requests for the father's bank records, brokerage accounts, and other related financial information. The father challenged the discovery requests on the grounds that they were overly burdensome. (Id. at pp. 427-428.) The Court of Appeal held that any further discovery concerning the father's net worth was unnecessary "because the information sought is irrelevant to the issue of the amount of child support to be paid by an extraordinarily high earner who has stipulated that he can and will pay any reasonable amount of child support." (Id. at p. 431, fn. omitted.)
Here, similar to Estevez, supra, 22 Cal.App.4th 423, it was undisputed that Ted was an extraordinarily high earner capable of paying any reasonable amount of child support, spousal support, or attorney fees. Before trial, Ted had served Kimberly with a schedule showing that his assets had a net book value in excess of $140 million. We agree with the trial court that any further evidence regarding the fair market value of Ted's property (purportedly in excess of $600 million) would not have been particularly relevant or probative given Ted's ability to pay any reasonable amount of support or attorney fees; we agree that such evidence would have been a waste of time.
Kimberly argues that by failing to hear evidence regarding the FMV of Ted's property, the trial court failed in its statutory obligations. We disagree. As to child support, a court "shall adhere to the following principles" including a parent's obligation "to support his or her minor children according to the parent's circumstances and station in life." (§ 4053, subd. (a), italics added.) As to spousal support, a court "shall consider all of the following circumstances," including "[t]he obligations and assets, including the separate property, of each party." (§ 4320, subd (e), italics added.)
In this case, the trial court's child support order does require Ted to support his children according to his "station in life" as previously discussed. Further, the court did, in fact, consider Ted's assets in noting that he would be able to pay any reasonable support amount. In short, the court met its statutory obligations. A court is plainly not required to admit irrelevant evidence at trial concerning a party's net worth. D. Attorney Fees
Kimberly argues that the trial court: 1) abused its discretion by ordering Ted to pay "too little" in attorney fees for the California litigation; and 2) erred as a matter of law in denying Kimberly reimbursement for any of her attorney fees for the Nevada litigation. We find no abuse of discretion, but we agree that the court made a legal error concerning the Nevada litigation.
"When a request for attorney's fees and costs is made, the court shall make findings on whether an award of attorney's fees and costs under this section is appropriate . . . . If the findings demonstrate disparity in access and ability to pay, the court shall make an order awarding attorney's fees and costs." (§ 2030, subd. (a)(2).) "The court may make an award of attorney's fees and costs . . . where the making of the award, and the amount of the award, are just and reasonable under the relative circumstances of the respective parties." (§ 2032, subd (a).)
Attorney fee awards are generally reviewed for an abuse of discretion. (In re Marriage of Tharp (2010) 188 Cal.App.4th 1295, 1316 [an arbitrary or capricious decision is an abuse of discretion].) However, legal questions are reviewed de novo. (See In re Marriage of Ettefagh (2007) 150 Cal.App.4th 1578, 1584 ["The trial court's selection of what legal principles to apply is subject to de novo review"].)
1. The trial court did not abuse its discretion in setting the amount of the attorney fees for the California litigation.
We commend the trial court for the thoroughness of its statement of decision. Given this, we are going to quote extensively from its statement.
"The California issues were limited: status, parenting schedules, and support. The leftover trial issue was simple: establish support within a high earner setting. That's it. This judge cannot explain the massive court file, days of pretrial hearings, the 23 days of trial, the huge number of trial exhibits, and then . . . $9.5 million Kimberly presents as her attorney fees and costs. This entire litigation and the very expensive fees seem grossly disproportionate to the California issues, especially since both sides agreed to the establishment of family support payable by Ted and Ted's ability to pay. Ted's high earner status was never in dispute. At trial, the only issue on the table was the amount of monthly support. Instead, what followed was 23 days of trial, a mountain-sized number of trial exhibits, followed by a behemoth volume of written closing arguments and declarations. In fact, from billing records, it appears Kimberly was billed by Kolodny Law Group $600,000 just to recover fees, that large amount being very hard to explain. . . .
"Kimberly now demands Ted reimburse Kimberly for all attorney fees and costs she incurred in the California action - $9 ,493,471 . Notwithstanding Kimberly's wealth, she accepts no responsibility for any of her attorney fees and costs and presents an entitled state of mind, to wit: because Ted is very wealthy, Ted should pay. . . .
"For his part, Ted has paid or advanced . . . $5.4 [million] so far as and for Kimberly's attorney fees and costs in the California action. Today's ruling adds another $400,000 to the total, now $5.8 million. Kimberly wants Ted to pay another $3.7 million.
"The court agrees that Ted should contribute toward Kimberly's fees, and he has complied with orders to do so without objection . . . for the most part. Kimberly wants Ted to pay for it all. That's not fair. What is fair and reasonable is that Ted should contribute to Kimberly's reasonable and necessary fees and expenditures based on a huge disparity of wealth. . . . As things have turned out, Ted has paid a lot, now $5.8 million in the California action, litigation that included only a few issues, custody (resolved by stipulation/order) and support, the leftover trial issue. As regards fees and expenditures characterized as unreasonable and unnecessary, incurred pursuing meritless claims, fees over-litigating the case, fees not wisely incurred toward the expeditious resolution of relevant issues, Kimberly should pay them all."
Here, the trial court approached the issue of the California attorney fees in a meticulous manner. The court considered the disparity in wealth as it was required to do. (§ 2030, subd. (a)(2).) The court then sought a "just and reasonable" award "under the relative circumstances of the respective parties." (§ 2032, subd (a).) The court's order cannot be remotely described as arbitrary or capricious. The court did not abuse its discretion when it ordered Ted to pay Kimberly $5.8 million for her California attorney fees.
Kimberly argues: "The trial court's findings regarding the unreasonableness of Kimberly's attorneys' fees are not supported by the evidence." (Boldface omitted.) Not so. The court cited numerous examples of Kimberly's unreasonable attorney fees in its comprehensive statement of decision (and noted that there were several additional examples it could have cited).
2. The trial court incorrectly determined that it was legally precluded from ordering Ted to reimburse Kimberly for her attorney fees related to the Nevada litigation.
As noted earlier, before they got married Ted and Kimberly signed a prenuptial agreement. The parties later separated and signed a marital settlement agreement. The parties then reconciled and signed a postmarital agreement. All three agreements provided that they were to be litigated in Nevada under Nevada law.
The prenuptial and marital settlement agreements provide that in any action pertaining to the validity of the respective agreements, "the 'prevailing party' shall be awarded reasonable attorney's fees and costs." The postmarital agreement ratified the earlier agreements and provided that if either party thereafter filed for divorce or dissolution of marriage, Ted would pay Kimberly $100,000 "'as a predistribution to be credited against any attorneys' fees, expert fees and any related litigation costs and expenses, which may be awarded to Kimberly by the court and without prejudice to Kimberly seeking additional attorneys' fees, expert fees and related costs and expenses from the court in which the divorce or dissolution action is pending.' (Capitalization omitted, italics added.)"
After Kimberly filed for divorce in California she would not admit that the Nevada agreements were valid and enforceable. Ted therefore initiated an action for declaratory relief in Nevada. Kimberly filed a motion in California seeking attorney fees related to the Nevada litigation. The court awarded her $375,000 in attorney fees pendente lite.
Ted appealed the pendente lite attorney fee award. (Jones II, supra, G049640.) A court can order one spouse to pay the attorney fees of the other spouse where the "attorney's fees and costs . . . may be reasonably necessary for the prosecution or defense of the [dissolution] proceeding, or any proceeding related thereto." (§ 2030, subd. (c), italics added.) In his appeal, Ted argued that the Nevada litigation was not "related" to the California litigation. This court disagreed: "The Nevada action concerned the division of property owned by the parties to be divided as a result of the dissolution. Given the three agreements litigated in Nevada had to do with the division of property, an issue routinely decided in dissolution cases and one that directly affects the issue of child support . . . the trial court did not err in impliedly finding the Nevada litigation is related to the dissolution action for purposes of section 2030." (Jones II, supra, G049640.)
As the California litigation progressed, the Nevada court entered final judgment in favor of Ted. The court found the agreements to be valid and enforceable, found Ted to be the prevailing party, and ordered Kimberly to reimburse Ted just over $4 million for his attorney fees and costs.
At the instant California trial, the court granted Ted's motion in limine and excluded any evidence or argument relating to Kimberly's request for her attorney fees and costs related to the Nevada litigation. In its statement of decision, the court reaffirmed its pretrial ruling: "The Nevada judgment is res judicata of the issues raised. . . . Kimberly is collaterally estopped from arguing a different result, nor is she entitled to . . . collaterally challenge the Nevada judgment within the California proceedings. . . . Except for the pendente lite fee-shifting order . . . ($375,000) . . . , the undersigned judge reaffirms its pre-trial ruling denying Kimberly's request for any further fee-shifting order or reimbursement related to attorney fees as and for the Nevada action. This judge finds as a matter of law that the Nevada court had exclusive jurisdiction over its proceedings, including attorney fees and costs, and the California Court has no jurisdiction to adjudicate the issues within the Nevada action, including adjudicating any fee-shifting order." (Italics added.)
Under the doctrine of res judicata, a valid final judgment on the merits in a party's favor bars further litigation on the same cause of action. (Takahashi v. Board of Education (1988) 202 Cal.App.3d 1464, 1473-1474.) Collateral estoppel, a secondary aspect of res judicata, bars a party from litigating an issue that was litigated and determined in a prior proceeding. (Ibid.) The bar against further litigation on the same cause of action (res judicata) is referred to as "'claim preclusion'" and the collateral estoppel aspect of res judicata is referred to as "'issue preclusion.'" (Mata v. City of Los Angeles (1993) 20 Cal.App.4th 141, 149, fn. 7.)
"Claim preclusion 'prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them.' [Citation.] Claim preclusion arises if a second suit involves (1) the same cause of action (2) between the same parties [or those in privity with them] (3) after a final judgment on the merits in the first suit. [Citations.] If claim preclusion is established, it operates to bar relitigation of the claim altogether." (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824.) Issue preclusion "prohibits the relitigation of issues argued and decided in a previous case even if the second suit raises different causes of action. [Citation.] Under issue preclusion, the prior judgment conclusively resolves an issue actually litigated and determined in the first action." (Ibid.) The doctrine applies "(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party." (Id. at p. 825.)
Here, claim preclusion does not apply because the first suit involved a different cause of action from the second suit. Ted filed for declaratory relief in Nevada concerning the validity and enforceability of the parties' mutual agreements related to the marriage, whereas the California case involved the dissolution of the marriage itself. Issue preclusion does not apply because the attorney fee issue in Nevada was not identical to the attorney fee issue in California. In Nevada, the attorney fee issue concerned who was the prevailing party, whereas in California the issue was whether attorney fees should be shifted from Ted to Kimberly based on her financial needs, and if so, what amount would be equitable under California code sections 2030 and 2032.
As we held in Jones II: "The attorney fee provision of the postmarital agreement specifically requires [Ted] to contribute toward Kimberly's attorney fees and anticipates a further award of attorney fees to Kimberly by the court hearing the dissolution matter. That being the case, the prenuptial, [marital] settlement, and postmarital agreement[s] did not divest the superior court of its jurisdiction to order [Ted] to contribute to Kimberly's attorney fees." (Jones II, supra, G049640, italics added.)
Thus, the trial court erred in determining that it was precluded "as a matter of law" from ordering Ted to reimburse Kimberly for her attorney fees and costs traceable to the Nevada litigation. However, that does not end our inquiry on the matter.
3. We are not certain if Kimberly was prejudiced by the legal error; therefore, we are remanding the matter so the trial court can exercise its discretion.
On appeal, the trial court's judgments or orders are presumed correct. (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408.) In addition to establishing error, an appellant must also demonstrate that any error is prejudicial. (In re Marriage of McLaughlin (2000) 82 Cal.App.4th 327, 337.) "'The burden is on the appellant in every case to show that the claimed error is prejudicial; i.e., that it has resulted in a miscarriage of justice.' [Citation.] Injury is not presumed from error, but injury must appear affirmatively upon the court's examination of the entire record." (Ibid.)
"An error is prejudicial and results in a miscarriage of justice only if the reviewing court concludes, based on its review of the entire record, that it is reasonably probable that the trial court would have reached a result more favorable to the appellant absent the error." (Jones v. Farmers Ins. Exchange (2013) 221 Cal.App.4th 986, 999.) If the lower court's decision is correct on any theory of law, the judgment or order will be affirmed regardless of the basis on which the trial court reached its conclusion. (Perlin v. Fountain View Management, Inc. (2008) 163 Cal.App.4th 657, 663-664.)
A trial court may take judicial notice of an out-of-state court's legal action, but a trial court may generally not use the judgment to prove the truth of the facts found and recited. (Evid. Code, § 452, subd. (e); see Stewart v. Rolling Stone LLC (2010) 181 Cal.App.4th 664, 689-690, fn. 22; see also Hawkins v. SunTrust Bank (2016) 246 Cal.App.4th 1387, 1393 [a factual finding "'may be a proper subject of judicial notice if it has a res judicata or collateral estoppel effect in a subsequent action'"].)
Here, in its statement of decision, in addition to its erroneous legal ruling regarding preclusion, the trial court stated: "Let's assume for the moment the Nevada judgment does not end the discussion. Should this court grant a fee-shifting order under [sections 2030 or 2032] as and for her Nevada fees? The short answer is No." Based on this part of the statement of decision—standing alone—we would find that Kimberly was not prejudiced by the erroneous legal ruling concerning the Nevada attorney fees. That is, it appears the court properly exercised its discretion under sections 2030 and 2032 and separately determined that Kimberly was not entitled to any further attorney fees for the Nevada litigation based on the equities.
However, the trial court also noted that it had "taken judicial notice of the Nevada judgment. Within the Nevada judgment, the Nevada judge made toxic findings of fact characterizing Kimberly's Nevada-based litigation behavior." (Italics added.) The court then quoted the Nevada court's findings, including that Kimberly had abused the legal process (e.g., filed frivolous allegations, cited bad law, committed perjury, etc.). "With the above findings in mind, and notwithstanding a huge disparity of income, Kimberly is not entitled to any reimbursement for attorney fees and costs for litigating the Nevada action." (Italics added.)
Having found that the Nevada judgment has no res judicata or collateral estoppel effect, we find the trial court improperly took judicial notice of the underlying factual findings of the Nevada court. Further, we are not certain as to what effect this improperly admitted evidence may have had on the court's ruling.
Thus, we conditionally reverse as to the Nevada attorney fee award and remand the matter for a hearing. The hearing is strictly limited to Kimberly's request for attorney fees and costs related to the Nevada litigation. Both parties may introduce relevant evidence. The court may then exercise its discretion to award Kimberly any additional attorney fees and costs for the Nevada litigation, consistent with the equitable concerns under sections 2030 and 2032. On the other hand, the court may decline to order any additional attorney fees and costs for the Nevada litigation, in which case its prior judgment will be reinstated in full.
III
DISPOSITION
The judgment regarding the Nevada attorney fee award is conditionally reversed. On remand, the trial court is directed to conduct a hearing regarding the Nevada attorney fees and costs and make any further orders that may be necessary consistent with this opinion. In all other respects, the judgment is affirmed. Respondent is entitled to his costs on appeal.
MOORE, J. WE CONCUR: BEDSWORTH, ACTING P. J. ARONSON, J.