Opinion
D081068
11-30-2023
KEVIN KINSELLA, Appellant, v. TAMARA KINSELLA, Respondent.
Dennis Geis Temko for Appellant. Caldarelli Hejmanowski Page & Leer, Lee E. Hejmanowski and Marisa Janine-Page for Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County, No. D540396, Euketa L. Oliver, Judge. Affirmed.
Dennis Geis Temko for Appellant.
Caldarelli Hejmanowski Page & Leer, Lee E. Hejmanowski and Marisa Janine-Page for Respondent.
O'ROURKE, ACTING P.J.
Appellant Kevin Kinsella appeals an order in favor of respondent Tamara Kinsella in which the family court ruled that three retirement accounts were community property. Kevin contends: (1) a different family court judge, Judge Lisa Rodriguez, previously ruled that those retirement accounts were his separate property and thus the doctrines of res judicata and collateral estoppel barred relitigation of the nature of those accounts; (2) the parties' marital settlement agreement (MSA) provision dealing with retirement accounts was void as against public policy; and, alternatively, (3) the MSA "did not create community property," (emphasis and some capitalization omitted) and an accountant's tracing established that the retirement accounts were his separate property. We affirm.
Kevin states in his notice of appeal that he is appealing from three rulings or orders dated July 14, 2022, September 7, 2022, and September 8, 2022. Tamara points out in her brief that no order is dated July 14, 2022, and that Kevin meant to refer to July 1, 2022, when the trial court issued the challenged order. She also states Kevin challenges only that order in his opening brief. Kevin concedes the points. We liberally construe the notice of appeal in favor of a right to appeal (Ellis v. Ellis (2015) 235 Cal.App.4th 837, 846), and deem it as an appeal from only the July 1, 2022 order.
We refer to the parties by their first names to avoid confusion, and intend no disrespect.
FACTUAL AND PROCEDURAL SUMMARY
Kevin and Tamara married in April 1997, and separated in May 2012. In December 2012, Tamara filed a petition for dissolution.
In April 2013, Kevin filed his schedule of assets and debts and did not list the three disputed retirement accounts as his separate property.
In April 2018, the parties' marriage was dissolved. The family court bifurcated the proceedings and reserved jurisdiction on issues related to the distribution and allocation of personal and community property. It ordered "[e]ach retirement or pension plan of the parties . . . joined as a party to the proceeding for dissolution." The court further ordered: "To preserve the claims of each party in all retirement plan benefits on entry of judgment granting a dissolution of the status of the marriage . . . [t]his order provisionally awards to each party a one-half interest in all retirement benefits attributable to employment during the marriage[.]" The status judgment identified the three retirement plans subject to that provisional order. The court issued an order to preserve Kevin's ability to defer distribution of certain individual retirement accounts. It also ruled that all temporary orders not in conflict would remain in effect until the time of trial or further court order.
Judge Rodriguez's Order
Judge Rodriguez presided over a limited hearing on the parties' assets and her April 2021 statement of decision identified the only two issues she adjudicated: "This trial was to characterize the marital residence known as the 'Castellana Property' and to characterize the investment in Jersey Boys Broadway [Jersey Boys] [a musical production]." She ruled the Castellana property was community property, refuting Kevin's argument that he did not intend to enter into a transmutation. She pointed out Kevin was a "sophisticated businessman" who was represented by counsel in the transaction.
Judge Rodriguez stated in full: "This is, frankly, unbelievable. Kevin utilized his estate attorney . . . to draw up the grant deed to transfer title and conduct this transaction. With his own legal representation, this sophisticated businessman was clearly armed with information. Kevin is an experienced business person, who founded and managed a multitude of companies and invested in a host of high-tech and bio tech industries. He was careful enough about his separate property to ensure it was placed in a trust and zealously kept his separate property separate. It defies belief that he blindly changed the title to the Castellana residence without careful consideration of the impact of doing so."
Judge Rodriguez further ruled Kevin had invested his separate property in Jersey Boys. She relied on Kevin's expert accountant, Marie Ebersbacher, who "conducted a thorough tracing of all available financial documents, including deposits, expenditures and reimbursements to properly trace the funding source of the Jersey Boys . . . investments. [The accountant] noted that all W-2 income earned during the marriage was community property, that separate property remained separate property and that all family living expenses were paid first from community property."
Judge Rodriguez stated the assumptions that guided the accountant's tracing: "[The accountant] assumed that Kevin's brokerage accounts were separate property and were not commingled with community funds, before or during the period of direct tracing." Judge Rodriguez concluded, "Kevin [ ] has met his burden of establishing that no community funds were utilized for the Jersey Boys . . . investment under both a direct tracing and a family expense tracing."
Judge Rodriguez explained that family expense tracing "presumes that available community property funds are used for family expenses before separate property funds are used for that purpose." She found: "From 1997 to 2012, the community expenses far outpaced the community income. [The accountant] opined that the last time the community had a positive balance before the Jersey Boys investment was September of 2002. Through this family expense tracing, Kevin also established that the community did not have the funds to invest, as they operated at a deficit, not only during the pertinent years, but throughout the marriage."
In June 2021, Judge Rodriguez entered judgment on her ruling on the two properties. She ruled that "[t]here are no community property debts." She also ruled Kevin was responsible for preparing and filing a qualified domestic relations order (QDRO) to divide the joined retirement accounts. The fees for preparing the QDRO's were to be shared equally. This judgment incorporated a form FL- 345 property order attachment and judgment, and form FL-348, a pension benefits attachment, which in turn incorporated the parties' MSA. Neither party appealed this judgment.
The MSA
Kevin and Tamara agreed the purpose of their June 2021 MSA "is to settle the parties' rights and obligations pertaining to . . . [i]dentification of their separate assets and division of community assets and division of community or co-owned and community or joint obligations." To that end, they detailed their respective separate properties in numbered paragraphs titled, inter alia, "Jersey Boys," "Jersey Boys Memorabilia Collection," "Kinsella Library," Kinsella Estates Winery," "Art Collection," "Winery Collection," and "Castellana Residence." But Kevin's retirement accounts were not listed as his separate property. Instead, paragraph No. 27 of the MSA provides: "The community portion of the parties' retirement accounts and pensions shall be equally divided via QDRO if necessary. The parties shall share equally in the cost of the QDRO preparation and shall cooperate fully in the preparation of a QDRO or QDRO's." That paragraph specifies which attorneys the parties would retain to prepare any QDRO.
Tamara's Motion to Adjudicate the Retirement Accounts
In September 2021, Tamara moved the court for an order seeking, among other things, a division of the parties' equal community property interest in the retirement accounts. She claimed Kevin had violated the MSA, and he challenged whether any community property existed in the retirement accounts. She added that attempts "to resolve the dispute were unsuccessful and the parties have since reached an impasse in proceeding with the QDRO process." Tamara requested the court "enforce the judgment terms to which the parties' [sic] agreed and confirm that the parties' jointly-engaged QDRO preparer . . . should proceed to compute the community property portion of the balances in the retirement accounts."
In opposing the motion, Kevin argued: "At trial, Judge Rodriguez found, '[T]hrough this family expense tracing, Kevin also established that the community did not have funds to invest, as they operated at a deficit, not only during the pertinent years, but throughout the marriage.' . . . [Tamara] here is attempting to have [Judge Oliver] reconsider Judge Rodriguez's finding on this point."
Kevin submitted a declaration stating that in December 2005, "while a partner at Avalon Ventures, I established a 401(k) pension plan for myself. It was entirely self-funded." He added, "All contributions came from pre-tax deductions from my annual salary draws." Kevin also stated, "During the entire course of my 15-year marriage . . . no community earnings ever survived the prodigious community expenses of the marriage." He claimed that fact rendered paragraph No. 27 of the MSA moot. Kevin stated that although he and Tamara had complied with the MSA by paying equally to retain an attorney to prepare the QDRO, he subsequently "did not authorize any work by this attorney since it would be a waste of time and money for her to prepare a QDRO when there are no community property portions of the retirement accounts to divide."
Kevin submitted a declaration by accountant Ebersbacher, who stated: "[Kevin's counsel] requested that I prepare this declaration to summarize for the Court my conclusions related to specific assets within the tracings that we prepared for this matter. This includes 401(k) accounts, a Roth IRA, and a traditional IRA. Based on the tracing performed and previously accepted by [Judge Rodriguez], these are [Kevin's] separate property." The accountant also stated the assumptions underlying her tracing of Kevin's investment in Jersey Boys: "a. Community income quantified excluded 401(k) contributions, considering them separate property. As community expenses exceeded community income by a wide margin in each year, the 401(k) investments were treated as separate property. [¶] b. Contributions to the Roth IRA were not included as community expenses, also treating them as separate property. [¶] c. There were no contributions to the Traditional IRA, therefore the account remained separate property."
The parties' joint federal tax returns for 2010-2012 show that a portion of Kevin's earnings were deposited into the joined retirement accounts.
Judge Oliver's Ruling on the Individual Retirement Accounts
In June 2022, following a hearing and argument of counsel, Judge Oliver granted Tamara's request for equitable division of the three retirement accounts as community property. She ruled from the bench that the accountant's tracing contained "numerous assumptions that were made as related to retirement accounts." Judge Oliver concluded that Judge Rodriguez's analysis of the issues before her was constrained by the assumptions undergirding the accountant's tracing, which related specifically to Jersey Boys.
In full, Judge Oliver stated: "[I] also noted that in the [accountant's] declaration . . . there were numerous assumptions that were made as related to retirement accounts. And if those retirement accounts were not considered in the tracing, which again specifically dealt with the Jersey Boys' accounts, so when [I review] the statement of decision from Judge Rodriguez[, I view] it in that lens what information was available for [Judge Rodriguez] to make a determination as related to that particular item, specifically the Jersey Boys, not the retirement investment."
Judge Oliver found the retirement accounts "were funded with [Kevin's] annual earnings during the marriage and are community property, as evidenced by: statements in paragraph [No.] 3 of [Kevin's] . . . declaration; the parties' tax returns during marriage; the terms of the parties' [MSA]; the exclusion of the retirement accounts from the Jersey Boys' tracings; and the terms of [Judge Rodriguez's] judgment, including [that Kevin] promised to prepare a QDRO to divide the retirement accounts."
In July 2022, Judge Oliver denied Kevin's ex-parte application for an order other than announced, and in September 2022 denied his motion for reconsideration.
Kevin appealed Judge Oliver's July 1, 2022 decision.
DISCUSSION
I. Res Judicata and Collateral Estoppel
Kevin contends that, as a matter of law, the doctrines of res judicata and collateral estoppel "prohibited Tamara from relitigating [the] community retirement accounts' existence when [Judge Rodriguez] previously determined no community property existed and the parties never remarried to permit the subsequent creation of community property." (Capitalization omitted.) He specifically argues: "The April 2021 family court proceedings and the current proceedings concerned the same facts: whether [Kevin's] earnings during the marriage were community property.... [Judge Rodriguez] determined Kevin's exhaustion tracing established no community earnings existed." He adds, "In accordance with [the accountant's] tracing, Judge Rodriguez found the community was completely exhausted by community expenses.... The issue was litigated and, at the time the parties entered into their MSA, no community existed."
A. Applicable Law
The California Supreme Court, in discussing res judicata and collateral estoppel doctrines, has stated: "Claim preclusion [or res judicata] '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 (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.) This aspect of the doctrine promotes judicial economy by preventing claim splitting. It requires all claims based on the same cause of action, which were or could have been raised, to be decided in a single suit. (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 92-93.)
"Issue preclusion [or collateral estoppel] 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." (DKN Holdings, supra, 61 Cal.4th at p. 824.)
In the family law context," 'The doctrine of res judicata precludes parties or their privies from relitigating a cause of action that has been finally determined by a court of competent jurisdiction. Any issue necessarily decided in such litigation is conclusively determined as to the parties or their privies if it is involved in a subsequent lawsuit on a different cause of action.' [Citation.] The same rule applies to final adjudications rendered in the course of a divorce proceeding over which a court may have continuing jurisdiction and which may require several orders for its ultimate disposition." (Wodicka v. Wodicka (1976) 17 Cal.3d 181, 188.)
B. Analysis
Under the principles set forth above, the doctrines of res judicata and collateral estoppel are inapplicable here because an important component of the doctrines-that there be a prior litigation of the claim or issue-is missing. No prior litigation adjudicated any claim or issue regarding the retirement accounts. Contrary to Kevin's claims, Judge Rodriguez did not decide this matter. As stated, she adjudicated only the nature and division of the Castellana property and the Jersey Boys investment. Further, Judge Rodriguez stated that the accountant's tracing related to Jersey Boys and not any other property. The accountant also excluded the investment retirement accounts from the tracing, as she assumed them to be separate property. Judge Rodriguez did not have cause or occasion to challenge that assumption in light of the trial's limited scope.
Kevin supports his contention that Judge Rodriguez had adjudicated the nature of the investment retirement accounts by relying on her statements that "the community's expenses far outpaced the community income," and that "Kevin also established that the community did not have the funds to invest, as they operated at a deficit, not only during the pertinent years, but throughout the marriage." Kevin thus seeks to expand the scope of Judge Rodriguez's findings to encompass his argument that the retirement accounts were his separate property by claiming no community funds were available to invest in them.
But Kevin's contention fails because Judge Rodriguez's comments about tracing were restricted to the Jersey Boys investment, and did not apply either expressly or impliedly to the retirement accounts. In fact, the parties, represented by attorneys, drafted paragraph No. 27 of the MSA to address the retirement accounts. The MSA was incorporated by reference into Judge Rodriguez's final judgment. Judge Rodriguez reserved jurisdiction over the division of the investment retirement accounts. If Judge Rodriguez had adjudicated the nature of these accounts, she would have been expected to also dissolve her previous provisional orders granting both parties equal share of those accounts and requiring that they prepare a QDRO. But she did not do so. Therefore, we are not persuaded by Kevin's contention that by the time the parties entered into the MSA, the community was extinguished.
II. MSA Provision Is Not Void as Against Public Policy
Kevin contends paragraph No. 27 of the MSA is void: "The MSA language this Court should find void as a matter of public policy is as follows: [¶] 'The community portion of the parties' retirement accounts and pensions shall be equally divided via QDRO if necessary.'" He proposes this court "should . . . sever it from the rest of the MSA as intended by the parties[,]" who in a different MSA provision agreed that if any section of it is found to be invalid or illegal, it shall be deleted, leaving the remainder of the MSA enforceable. Kevin argues that under Family Code section 760, "the creation of community property outside a marriage is against public policy. Otherwise, the court would be dividing non-community property, for which it lacks jurisdiction to do."
Family Code section 760 states: "Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property."
Kevin recognizes that parties may divide their community estate by mutual agreement, but reiterates that "Judge Rodriguez . . . already extinguished the community.... Thus, the parties' [sic] violated public policy in their MSA's retirement provision in creating community property outside a valid marriage considering the admitted fact the parties were already divorced."
Kevin concedes he did not raise this issue in the trial court, but states "it is cognizable now on appeal." By failing to raise this claim in the trial court, Kevin forfeited it. (See In re Marriage of Nassimi (2016) 3 Cal.App.5th 667, 695 [we generally do not consider theories raised for the first time on appeal which could have been, but were not, presented to the trial court for consideration].)
But this claim also fails because the parties' MSA was incorporated into their judgment of dissolution. "The significance of such incorporation was explained in In re Marriage of Jones (1987) 195 Cal.App.3d 1097, 1104: 'A merged" '. . . agreement is superseded by the decree, and the obligations imposed are not those imposed by contract, but are those imposed by decree, and enforceable as such.'" '" (In re Marriage of Corona (2009) 172 Cal.App.4th 1205, 1220-1221; see Westinghouse Electric Corp. v. Newman &Holtzinger (1995) 39 Cal.App.4th 1194, 1205 ["It has long been the rule in this state that a preexisting agreement between the parties is extinguished upon its incorporation into a court order. Once the agreement is merged into the court's order, neither party any longer has a right of action based on the agreement because the obligations imposed are not imposed by the agreement but by the order and are enforceable as such through contempt and other sanctions available to the court"].)
Under these circumstances, we have no basis to declare the MSA void as against public policy, particularly because, as stated, this claim is premised on Kevin's misunderstanding of Judge Rodriguez's ruling. Further, "[w]hen the language of the judgment incorporating the marital settlement agreement is clear, explicit, and unequivocal, and there is no ambiguity, the court will enforce the express language." (In re Marriage of Iberti (1997) 55 Cal.App.4th 1434, 1440.) We may not void the parties' MSA which is clearly and explicitly stated in the judgment. (Civ. Code, § 1638; Code Civ. Proc., § 1856.) These principles are particularly applicable here because, as Judge Rodriguez observed, Kevin is a sophisticated businessman; moreover, both parties were represented by counsel in negotiating the MSA.
III. Kevin's Claim That the MSA Did Not Create Community Property
Kevin argues in the alternative that, "as a matter of contract interpretation," "the parties' MSA did not create community property." (Emphasis and some capitalization omitted.) He states Judge Oliver "relied upon the following facts in reaching its decision the retirement accounts were community [property]: 1) Kevin's own declaration statements, 2) the parties' taxes during marriage, 3) the MSA's terms, 4) The circumstances of the Jersey Boys' tracing, and [5]) the terms of [form] FL-345." Kevin argues that "only the inferences derived from these facts [that Judge Oliver found] are subject to dispute," and lists the conflicting inferences he draws from them.
Kevin specifies the conflicting inferences he draws from Judge Oliver's factual findings: "[Judge Oliver] relied on Kevin's declaration at paragraph [No. 3] . . . which stated, 'all contributions came from pre-tax deductions from my annual salary draws.' . . . That was true, but his salary was entirely separate based upon [the accountant's] tracing....The second reason Judge Oliver tendered to overcome Kevin's tracing was the parties' taxes. According to [Judge Oliver], tax returns demonstrated IRA contributions derived from Kevin's salary. However, [the accountant] already considered those taxes in her tracing analysis and conclusion the community had been exhausted, and Kevin never disputed the IRA contributions came from his earnings....The tax return was in line with Kevin's declaration. What [Judge Oliver] failed to see were the earnings were not community [property] considering the community's exhaustion. The actual tax returns were not substantial evidence to support a different conclusion....The third reason [Judge Oliver] cited; the Jersey Boys tracing excluded the retirement accounts, Kevin already addressed.... [Judge Oliver] drew the wrong inference from [the accountant's] testimony (testimony both parties asked the court to rely upon). The accounts were not 'excluded' from the tracing because [the accountant] assumed they were community.... Fourth, [Judge Oliver] cited [form] FL-345[, which] merely incorporated the MSA as other orders and Kevin has already addressed the MSA."
Kevin repeats his contention that "No community existed because Judge Rodriguez previously determined the community was entirely exhausted for the entirety of the marriage." He concludes: "A tracing already existed the retirement accounts were separate property [sic], which was why a division was not 'necessary.'" Kevin also argues from grammar that "[b]ecause the MSA term 'if necessary' modified 'equally divided by Quadro [sic]' due to a comma's absence, the parties contemplated there may have been nothing to divide, which was the case due to the prior tracing." (Emphasis and some capitalization omitted.)
It is unclear what Kevin means by his contention that the MSA did not "create community property," as Tamara, in seeking to enforce the MSA did not so contend, and Judge Oliver did not so rule. Rather, the issue before Judge Oliver was a standard one in family law cases: ascertaining the nature and division of certain property; specifically, the retirement accounts.
We interpret Kevin's contention as a challenge to Judge Oliver's conclusion that the retirement accounts were community property subject to equal division. "Courts typically apply a substantial evidence standard of review to the court's characterization of property as separate or community. [Citations.] In that situation, '[o]ur review is limited to a determination whether there is any substantial evidence, contradicted or uncontradicted, that supports the finding. [Citation.] In so reviewing, all conflicts must be resolved in favor of [the prevailing party] and all legitimate and reasonable inferences must be indulged to uphold the finding.'" (In re Marriage of Brandes (2015) 239 Cal.App.4th 1461, 1472.)"' "If this 'substantial' evidence is present, no matter how slight it may appear in comparison with the contradictory evidence, the judgment must be upheld." '" (City of San Buenaventura v. United Water Conservation Dist. (2022) 79 Cal.App.5th 110, 120.)" '[I]t is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion.'" (Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143, italics omitted.) "The substantial evidence standard of review is generally considered the most difficult standard of review to meet . . . because it is not the function of the reviewing court to determine the facts." (In re Michael G. (2012) 203 Cal.App.4th 580, 589.)
As Kevin does not dispute that Judge Oliver's order was supported by facts in the record, the conflicting inferences he draws from those facts are not binding on us. "It is settled that when conflicting inferences may be drawn from undisputed facts, the reviewing court must accept the inference drawn by the trier of fact so long as it is reasonable." (Boling v. Public Employment Relations Board (2018) 5 Cal.5th 898, 913.)
Applying the rule of conflicting inferences by which we must indulge all reasonable inferences in favor of Judge Oliver's ruling, we conclude Kevin did admit in his declaration that in 2005, he set up the 401(k) pension plan, which he funded with pre-tax deductions from his annual salary draws. Further, the joint tax returns showed the individual retirement account contributions derived from Kevin's salary. In light of Kevin's declaration and Family Code section 760's community property mandate, Judge Oliver reasonably concluded the retirement accounts were community property. Judge Oliver's conclusions regarding the accountant's tracing are supported by the accountant's own declaration and her assumptions that the retirement accounts were Kevin's separate property, which she excluded from the tracing. Lastly, Judge Oliver relied on paragraph No. 27 of the MSA regarding the preparation of a QDRO, if necessary, to adjudicate the nature of the retirement accounts. We agree that the MSA evidences the parties' recognition that Judge Rodriguez did not adjudicate the nature of the retirement accounts, but instead reserved it for a future hearing. We conclude Judge Oliver drew reasonable inferences from the evidence to conclude the retirement accounts were community property.
DISPOSITION
The order is affirmed. Tamara Kinsella is awarded her costs on appeal.
WE CONCUR: IRION, J., KELETY, J.