Opinion
A143686
11-23-2016
In re the Marriage of GREG A. LEVY and MII ASHELL CUNNINGHAM LEVY. GREG A. LEVY, Appellant, v. MII ASHELL CUNNINGHAM LEVY, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Sonoma County Super. Ct. No. SFL-45806)
Greg A. Levy appeals from the judgment dissolving his marriage to Mii Ashell Cunningham Levy. He makes the following arguments: (1) the trial court erred by classifying the couple's family home as community property instead of Greg's separate property; (2) if the trial court properly classified the home as community property, it failed to fully reimburse Greg for his separate property contributions; (3) the trial court erroneously characterized a home equity line of credit as Greg's separate debt; (4) if the line of credit was Greg's separate debt, the court failed to properly account for the line of credit when calculating reimbursement for Greg's post-separation loan payments; (5) the trial court erred in reimbursing the community for contributions it made to Greg's separate property; and (6) the trial court erred in awarding Ashell spousal support.
We conclude: The trial court did not err in classifying the family home as community property, but did err in not considering a discrete claim for reimbursement made by Greg. The trial court did not err in classifying the line of credit as Greg's separate debt, but did not properly account for the line of credit when calculating reimbursement for Greg's post-separation loan payments. The court did not err by reimbursing the community for contributions to Greg's separate property, and there was no error in awarding spousal support.
Ashell cross-appeals from the trial court's denial of her request for need-based attorneys' fees and sanctions. The trial court did not abuse its discretion in declining to order fees or sanctions.
I. BACKGROUND
Greg and Ashell married in June 2000 and separated in March 2009. They had no children together. Greg petitioned for dissolution in April 2009. Ashell responded and also requested dissolution.
We refer to the parties by their first names, as is customary in family law matters. We mean no disrespect by this practice. (See In re Marriage of Witherspoon (2007) 155 Cal.App.4th 963, 967, fn. 2.)
The following background is drawn from the evidence presented during a 12-day contested trial.
The Porter Creek Property
Greg, who developed and managed real property for a living, listed several pieces of real estate as his separate property in his petition for dissolution. One of those properties was the couple's family home on Porter Creek Road in Santa Rosa (Porter Creek), which is at the center of this dispute on appeal.
Porter Creek was purchased for $301,000 in May 2002, two years after Greg and Ashell were married. When they purchased it, Porter Creek consisted of vacant land and a barn. Greg and Ashell found Porter Creek together and determined it was a good property for them to develop and later sell at a profit.
The grant deed for Porter Creek reflects title in "Gregory A. Levy, a married man, as his sole and separate property." Greg made the down payment with his separate funds. The remainder of the purchase was financed with a $690,000 new home construction loan. A portion of the loan was used to complete the purchase, and the remainder of the loan was to fund improvements to the property. Greg was listed as the only borrower on the loan application, and the credit report used by the lender was based solely on Greg's credit history. The front page of the deed of trust listed Greg as the only trustor. However, the final page contained signature blocks for both Greg and Ashell as trustors, and both of them signed the document.
Ashell also executed an "Interspousal Transfer Deed" that was included in a stack of papers the couple went through with the title company during the closing process. The interspousal transfer deed states, in pertinent part: "FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Mii Ashell Cunningham Levy, a married woman, wife of the grantee herein, hereby GRANT(S) to Gregory A. Levy, a married man as his sole and separate property the [Porter Creek property]." The top of the document bears the handwritten notation, "Creates Separate Property," though it is not clear who wrote these words. Ashell signed the interspousal transfer deed, and it was notarized and recorded in Sonoma County.
Greg believed that the interspousal transfer deed "basically created separate property" for him in Porter Creek, though he also believed that there was never a community property interest in it to begin with. Greg never explained to Ashell that she was giving up any community interest she might have in the property by executing the interspousal transfer deed. She read the interspousal transfer deed before signing it and understood the meaning of the words on the document. Ashell signed the interspousal transfer deed voluntarily "in order for us to just be happy and move on, it was easier for me to sign whatever Greg needed me to sign and that's what I did."
After the close of escrow, Greg and Ashell began building a home on the Porter Creek property. They chose an architect that Ashell had previously worked with to design the home. Most of the construction was done by contractors, but Greg and Ashell worked together in deciding the type of work they wanted done. In July 2003, construction of the home was substantially complete.
From the time that Porter Creek was purchased, Greg made monthly payments on the loan from an interest reserve account. In September 2003, Greg paid off the loan using a new loan of $322,700 and $130,212 from sale proceeds on Leighann Place, his separate property. In 2005, Greg refinanced the $322,700 Porter Creek loan into a $750,000 loan. That same year, Greg took out a $150,000 home equity line of credit (LOC) against Porter Creek. Then in 2007, Greg refinanced the LOC and increased it to $200,000. At the time, Greg was paying approximately $4,200 per month on the Porter Creek loans, $800 of which was applied to the LOC.
The trial court determined that Porter Creek was community property. It noted that Ashell signed the deed of trust securing the original Porter Creek loan, and that "[o]ne would not expect a formerly licensed real estate agent and sales person to sign such a document without some expectation of ownership interest in the property secured, and it would be unreasonable for someone to think they would." In addition, the court found that "the evidence shows that [Ashell] had an expectation of ownership in the Porter Creek property by a tacit understanding between the parties that if she contributed her proceeds to household expenses, it was to support her husband in his endeavors, and their marital partnership in developing the Porter Creek property to be their community residence. [¶] Both spouses put time, skill and effort into the acquisition of and improvement of Porter Creek. It was clear by the testimony at trial that after construction Porter Creek was to be the family home."
Ashell testified that she had obtained a real estate license prior to her marriage to Greg but the license expired in 1998, four years before Porter Creek was purchased.
The trial court concluded the interspousal transfer deed was unenforceable. The court explained: "[A] reasonable inference can be drawn from all the testimony in this case that Husband took advantage of Wife and unduly influenced her to sign the Porter Creek interspousal transfer deed. Although Wife had some background in real estate law, it is clear she does not have background in family law and did not understand the consequences of signing the document in a divorce proceeding. She testified she trusted Husband, and did not fully understand the purpose of the deed, albeit, she may have understood that it resulted in Husband solely on title."
After characterizing Porter Creek as community property, the court addressed whether Greg was entitled to reimbursements for any separate property contributions to Porter Creek. The court determined that Greg was entitled to be reimbursed $70,000 for the down payment, $50,000 for improvements, and $130,212 for the payment on the Porter Creek loan made from his Leighann Place property. The trial court also awarded Greg $27,888 in Epstein credits for payments he made on the Porter Creek loans. Specifically, the court found that Greg had made $82,288 worth of payments, but it subtracted from that amount $54,400 for payments Greg made on the LOC ($800 per month for 68 months) because the LOC was Greg's separate debt. This left a difference of $27,888. When combined with the other reimbursements, the court concluded that Greg was entitled to $278,100.
Epstein credits refer to reimbursement to a spouse for separate property payments on community obligations made after separation. (See In re Marriage of Epstein (1979) 24 Cal.3d 76, 84-85.)
The court's final statement of decision does not expressly refer to the $27,888 reimbursement as Epstein credits. However, the parties classified this amount as Epstein credits in the trial, and do not dispute they should be classified as Epstein credits on appeal.
Finally, the trial court calculated the community equity in Porter Creek. It determined that the property was worth $1,175,000 and that the community debt against the property was $750,633, leaving $424,367 in net equity. From the $424,367 net equity, the court subtracted Greg's $278,100 separate property reimbursements to reach $146,267 in remaining community equity. The court awarded Porter Creek, subject to its encumbered debt, to Greg and ordered that he pay $73,133 to Ashell for her one-half share of the community equity.
The College/Clover Property
Greg also claimed a piece of real property located on College Avenue and Clover Drive in Santa Rosa (College/Clover) as his separate property. Greg purchased College/Clover in April 2000, before he married Ashell. The trial court determined that College/Clover was Greg's separate property and valued the property at $350,000. But it also determined the community earned a $64,097.99 interest in College/Clover for which it was entitled to reimbursement. The court awarded College/Clover to Greg, but ordered him to pay Ashell $32,048.99 for one-half of the community interest in the property.
Spousal Support and Attorneys' Fees
Ashell sought $2,000 per month for spousal support from Greg for 52 months. The trial court granted her request, though it awarded $1,000 per month. The basis for the reduction and award was that Ashell was earning $1,000 per week in a "start-up business in the landscape construction and maintenance field" and was no longer living at the same middle-class standard that she enjoyed during marriage. Greg, on the other hand, had a yearly income of $90,210, owned additional assets (including his real property), had a "readily available" source of money from a joint bank account that he held with his mother, had a higher future earning capacity than Ashell, and continued to maintain a similar lifestyle to that he enjoyed during marriage.
Ashell also sought need-based attorneys' fees pursuant to Family Code section 2030 and sanctions pursuant to Family Code sections 2107 and 271. The trial court denied her request.
All further unspecified statutory references are to the Family Code.
The trial court's final statement of decision was incorporated into the judgment. Greg timely appealed from the judgment, and Ashell filed a timely cross-appeal.
II. DISCUSSION
A. Characterization of Porter Creek
Greg contends that because he purchased Porter Creek with his separate property funds, the trial court erred by characterizing it as community property.
"In a marital dissolution proceeding, a court's characterization of the parties' property—as community property or separate property—determines the division of the property between the spouses." (In re Marriage of Valli (2014) 58 Cal.4th 1396, 1399.) "[T]here is a general presumption that property acquired during marriage by either spouse other than by gift or inheritance is community property unless traceable to a separate property source. [Citation.] This is a rebuttable presumption affecting the burden of proof; hence it can be overcome by the party contesting community property status. [Citation.] Since this general community property presumption is not a title presumption, virtually any credible evidence may be used to overcome it, including tracing the asset to a separate property source, showing an agreement or clear understanding between parties regarding ownership status and presenting evidence the item was acquired as a gift." (In re Marriage of Haines (1995) 33 Cal.App.4th 277, 289-290.)
A spouse's claim that property acquired during marriage is separate property must be proven by a preponderance of the evidence. (Marriage of Valli, supra, 58 Cal.4th at p. 1400.) "In general, '[a]ppellate review of a trial court's finding that a particular item is separate or community property is limited to a determination of whether any substantial evidence supports the finding. [Citations.]' " (In re Marriage of Bonvino (2015) 241 Cal.App.4th 1411, 1421.) Loan proceeds acquired during marriage and used to purchase property are presumptively community property; however, "this presumption may be overcome by showing the lender intended to rely solely upon a spouse's separate property and did in fact do so. Without satisfactory evidence of the lender's intent, the general presumption prevails." (In re Marriage of Grinius (1985) 166 Cal.App.3d 1179, 1187.)
Here, the trial court's determination that Porter Creek was community property when it was purchased is supported by substantial evidence. The loan that funded most of the purchase belonged to the community. Both parties signed the deed of trust, indicating that the lender was not relying solely on Greg's assets when it issued the loan. In addition to the loan, other evidence showed that the parties treated Porter Creek as a community asset. The couple used their joint efforts to locate the property and plan for the property's development, and Ashell worked to find an architect to help with the design.
Greg argues that even if Porter Creek was community property when it was purchased, the trial court erred in so classifying it because Ashell executed the interspousal transfer deed.
In property-related transactions with one another, "spouses are subject to the general rules governing fiduciary relationships that control the actions of persons occupying confidential relations with each other. This confidential 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).) Thus, " '[i]f one spouse secures an advantage from the transaction, a statutory presumption arises under section 721 that the advantaged spouse exercised undue influence and the transaction will be set aside.' " (In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 344.) A spouse obtains an advantage when the "spouse's position is improved, he or she obtains a favorable opportunity, or otherwise gains, benefits, or profits. [Citation.]" (In re Marriage of Mathews (2005) 133 Cal.App.4th 624, 629 (Mathews).) "When a presumption of undue influence applies to a transaction, the spouse who was advantaged by the transaction must establish that the disadvantaged spouse's action 'was freely and voluntarily made, with full knowledge of all the facts, and with a complete understanding of the effect of the transaction. [Citations.]" (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 738-739.)
Greg contends that the presumption of undue influence that applies to interspousal transactions is inapplicable here because he gained no unfair advantage when Ashell executed the interspousal transfer deed. Instead, argues Greg, the purchase of Porter Creek was a "risky venture" because of potential problems such as construction defects or risk in the housing market, and the interspousal transfer deed afforded Ashell a means to avoid these risks.
We are not persuaded. Greg and Ashell located Porter Creek together and planned to develop it together so they could sell it at a profit. By having Ashell sign the interspousal transfer deed, Greg stood to receive all future profits from its sale without providing Ashell anything in return. (See Marriage of Burkle, supra, 139 Cal.App.4th at p. 730 [unfair advantage occurs when one spouse receives property without providing consideration to the other].) Greg's assertion that the purchase of Porter Creek was risky is not material and is belied by the fact that Porter Creek grew in value to $1,175,000, almost $1 million dollars above its purchase price. The fact that there was risk in purchasing and developing Porter Creek does not mean the presumption of undue influence is inapplicable. The risks identified by Greg associated with owning Porter Creek are common in real estate transactions. Section 721 and the presumption of undue influence arising from interspousal transactions would have little meaning if such common undertakings were sufficient to nullify the fiduciary characteristics of an interspousal transaction.
Greg argues that even if the presumption of undue influence applies, the evidence at trial shows that he rebutted it because Ashell admitted she signed the interspousal transfer deed voluntarily, read the deed, and understood its effect. But there is substantial evidence of Greg's undue influence. Ashell trusted Greg to manage the couple's finances, and she signed the interspousal transfer deed because it was best to "keep the peace." Greg had complete control of the couple's finances during the marriage because Greg was a real estate broker and well educated in financial matters. Although Ashell relied on Greg's financial acumen, he never explained to Ashell the effect of the interspousal transfer deed before she signed it. Instead, the deed was included in a stack of documents signed during closing. It was not until the couple separated that Greg told Ashell of the interspousal transfer deed's significance. Viewed in a light most favorable to Ashell, these circumstances indicate that she did not have "full knowledge of all the facts" and a " 'complete understanding of the effect of the transaction.' " (Marriage of Burkle, supra, 139 Cal.App.4th at p. 739; see In re Marriage of Delaney (2003) 111 Cal.App.4th 991, 1000 [affirming finding that wife exerted undue influence over husband when she had extensive legal and financial expertise and husband entrusted her to manage legal and financial matters].)
This case is distinguishable from In re Marriage of Lund (2009) 174 Cal.App.4th 40 (Lund) on which Greg relies. In Lund, the court reversed a trial court finding that an agreement transmuting the husband's separate property into community property was the product of undue influence. (Id. at p. 56.) The husband signed the agreement and attested that " 'I have carefully read and understand all of the provisions of the foregoing Agreement and approve of and agree to all of the terms hereof.' " (Ibid.) In concluding that the trial court's finding lacked substantial evidence, the Lund court wrote that the husband's "attestation to his understanding of the agreement served to rebut the presumption that he did not understand the legal import of the agreement" where there was "no other evidence in the record to weigh, as none of the testimony goes to [the husband's] understanding of the legal effect of the agreement." (Ibid.) Here, there was other evidence regarding Ashell's lack of understanding about the interspousal transfer deed, namely Greg's failure to explain its significance to Ashell until after the couple separated despite the fact that Ashell relied on him to handle all of the parties' financial matters.
Mathews, supra, 133 Cal.App.4th 624 is also distinguishable. In Mathews, the court concluded there was substantial evidence that a wife's execution of a quitclaim deed transferring her interest in a residence to her husband was not a product of undue influence. (Id. at pp. 627, 632.) In concluding that substantial evidence showed the wife understood the effect of the quitclaim deed, the court noted that the wife had a strong financial acumen; the husband entrusted almost all financial matters to her, she managed her own investment accounts, she controlled both her income and the husband's income, and that she paid all of the household bills. (Id. at p. 632.) Here it is practically the opposite. Ashell relied extensively on Greg's business judgment and deferred to him on financial matters.
In sum, the determinations that Porter Creek was community property at the time it was purchased and that the interspousal transfer deed was ineffective because it was a product of undue influence are supported by substantial evidence. The trial court did not err in classifying Porter Creek as community property.
B. Reimbursements for Greg's separate property contributions to Porter Creek
In the absence of a written waiver, a spouse who contributes separate property to a community property acquisition is reimbursed upon dissolution of the marriage. (Fam. Code, § 2640, subd. (b); In re Marriage of Walrath (1998) 17 Cal.4th 907, 910-911.) "Whether the spouse claiming a separate property interest has adequately traced an asset to a separate property source is a question of fact for the trial court, and its finding must be upheld if supported by substantial evidence." (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 823.) Greg argues that if Porter Creek is a community asset, he is entitled to more in separate property reimbursements than awarded by the trial court.
Greg asserts there are two separate property contributions he made to Porter Creek for which the trial court failed to reimburse him. First, Greg argues he should be reimbursed $90,080.68 for the down payment instead of the $70,000.00 awarded by the court. This argument is forfeited or this error was invited. In its tentative statement of decision, the trial court did not address whether Greg should be reimbursed for the down payment on Porter Creek. Greg objected to the tentative decision and said the court should find that he made a $70,000 down payment on Porter Creek from funds he obtained after refinancing the College/Clover property. The trial court agreed, and ruled in its statement of decision that Greg "has proved to the court that he is entitled to reimbursement . . . consisting of the down payment of $70,000 from the College/Clover loan refinance." Although Greg filed further objections, he did not object to the court's finding that he provided a $70,000 down payment.
The trial court then ruled in its final statement of decision that Greg was entitled to a $70,000 reimbursement for his down payment. By asserting his claim for a $70,000 reimbursement for the Porter Creek down payment, and not objecting to the court's finding that he was entitled to such a reimbursement, Greg has forfeited his right to argue on appeal that the reimbursement for the Porter Creek down payment was improper. (See In re Marriage of Cohn (1998) 65 Cal.App.4th 923, 928 [party waives ability to challenge finding in statement of decision on appeal if issue not brought to trial court's attention]; see also Hogoboom et al., Cal. Practice Guide: Family Law (The Rutter Group 2015) ¶ 15:116.)
Second, Greg argues the trial court should have made a finding that he was entitled to an additional $124,287.99 separate property reimbursement for a payment he made in that amount on the Porter Creek loan in 2002. Our review of the record reveals that Greg indeed requested to be reimbursed $124,287.99 for paying down the Porter Creek loan, but the trial court never made a finding or addressed this issue. A trial court's statement of decision is "inadequate as a matter of law" if the court fails to make findings on material issues that are timely brought to the trial court's attention. (In re Marriage of Hardin (1995) 38 Cal.App.4th 448, 453; see also Hogoboom et al., Cal. Practice Guide: Family Law, supra, ¶ 15:98.) We will remand to the trial court to issue a new statement of decision addressing this request for reimbursement. C. Assignment of the LOC and Epstein Credits
Greg contends that the trial court erred by assigning him the LOC secured by Porter Creek as his separate debt. He also argues that even if the LOC is his separate debt, the trial court erred in calculating Epstein credits for payments he made on the Porter Creek loan after separation.
Expanding on what we briefly discussed earlier, Greg encumbered Porter Creek with a $150,000 LOC in 2005 over and above the loan that was used to purchase the property. Greg used funds from the LOC to pay for improvements of a separate property apartment complex owned by Greg on Flower Avenue in Santa Rosa. In November 2006, Greg paid the entire balance of the LOC using proceeds from the sale of two units at Flower Avenue, which had been converted to condominiums.
The trial court did not specifically address whether Flower Avenue was community property or Greg's separate property for purposes of property division at dissolution, presumably because Greg sold the property before trial. However, in its final statement of decision, the trial court described Flower Avenue as Greg's separate property, and neither party argues that Flower Avenue should be classified otherwise.
At the beginning of 2007, Greg refinanced the LOC and increased it to $200,000. He then drew an additional $115,000 on the LOC from February to April 2007 to purchase and improve his separate property located on Stonefield Lane. He paid off the LOC balance on May 29. Beginning on May 31, he began drawing additional funds from the LOC resulting in a balance by the date of separation in March 2009 of $199,124. Of that amount, $52,500 was used to fund litigation related to the Stonefield Lane property.
In its statement of decision, the trial court found that the LOC obligation "is solely Husband's, and because he used it against community property, to improve separate property, it shall be disregarded in calculating the equity in Porter Creek." The court then calculated community equity in Porter Creek as $424,367. The court determined that Greg was entitled to $278,100 in reimbursements for separate property contributions he made to Porter Creek, and of this amount, $27,888 was an award of Epstein credits for a portion of the mortgage payments Greg made after separation but before dissolution.
Greg first contends the trial court erred in finding the LOC was his separate debt and in excluding it as an encumbrance in the calculation of community equity. He says there was no substantial evidence to show that the entire outstanding balance of the LOC was used for Greg's separate property. We disagree. "The general rule is that debts incurred by either spouse after the date of marriage but prior to separation are to be divided equally . . . ." (In re Marriage of Cairo (1988) 204 Cal.App.3d 1255, 1267; § 2550.) However, debts incurred during marriage and before separation that were not "incurred for the benefit of the community" must be confirmed "without offset" to the spouse who incurred them. (§ 2625; see also Marriage of Cairo, supra, 204 Cal.App.3d at p. 1267; Hogoboom et al., Cal. Practice Guide: Family Law, supra, ¶ 8:1288.) Here, substantial evidence showed that Greg used the LOC to improve his separate properties, namely Flower Avenue and Stonefield Lane. He has cited no evidence showing that the LOC was used in any way to benefit the community. The trial court did not err in assigning the LOC as Greg's separate debt and properly disregarded it when calculating the community equity in Porter Creek.
Alternatively, Greg contends that if the LOC is his separate debt, the trial court erred in calculating the Epstein credits for his payments on the Porter Creek loan. He argues the court reduced the award of Epstein credits more than it should have to account for Greg's payments on the LOC. We agree. The court originally awarded Greg $82,288 in Epstein credits, but reduced this award by $54,400 to arrive at the final award of $27,888. The reduction was based on Greg's payment of $800 per month on the LOC for 68 months. However, only one-half of the payments on the LOC, or $27,200, should have been subtracted from the credit award. So, the final award of Epstein credits should have been $55,088 rather than $27,888. (See In re Marriage of Jeffries (1991) 228 Cal.App.3d 548, 554-555 [because a spouse is reimbursed from the community, an estate in which he has a 50% interest, reimbursement amount from community estate is one-half of contribution].)
Accordingly, we will reverse the portion of the judgment awarding Greg's Epstein credits and remand the issue for the trial court to correct the award of Epstein credits as set forth in this opinion, and recalculate the amount Greg must pay Ashell for her equity in Porter Creek.
D. Reimbursements to the community for contributions to College/Clover
Greg challenges the trial court's determination that the community was entitled to a $64,097.99 reimbursement for contributions it made to Greg's separate property on College/Clover.
In its statement of decision, the trial court determined that College/Clover was Greg's separate property and valued it at $350,000. The court then allocated a 5 percent interest in College/Clover to the community "for the community efforts of both spouses for the repair, improvement, maintenance, acquisition of entitlements, and sweat equity during marriage." Both determinations are unchallenged in this appeal.
The trial court also determined that the community was entitled to a $46,597.99 reimbursement from Greg based on his community property earnings during marriage. The court arrived at Greg's annual earnings of $54,179 by averaging the taxable income he reported from 2000 through 2008. The court subtracted $47,316 from that amount for annual community household expenses, leaving a difference of $6,863. The reduction for expenses was based on a schedule provided by Greg. In relying on Greg's estimates, the court disregarded income tax payments that Greg claimed in years that he did not report any taxable income.
The trial court was likely relying on the presumption that family expenses are paid from community funds. (See In re Marriage of Mix (1975) 14 Cal.3d 604, 612.)
After determining that Greg's community earnings exceeded community expenses by $6,863 annually, the court determined it was "appropriate to split [Greg's] excess earnings of $6,863 annually and apply one-half to each of Porter Creek and College/Clover, or $3,421.50 per year each." The court believed it appropriate to characterize Greg's excess earnings as community contributions to College/Clover and Porter Creek because Greg was so consumed with separate property projects during marriage that "[t]he community benefited less than what it reasonably should have expected from his time, skill, and efforts." The $3,421.50 yearly contribution to College/Clover over the course of the parties' marriage, plus a 10 percent rate of return, resulted in a community reimbursement of $46,597.99. The court added this amount to the community's 5 percent interest in College/Clover valued at $17,500, for a total reimbursement amount of $64,097.99.
Greg claims the trial court erred in three ways in determining this community reimbursement. First, he argues the court erred by calculating a 5 percent community interest in College/Clover and adding to that an amount based on Greg's excess earnings. According to Greg, "[h]aving selected a method of apportionment, the court was not free to use another method in addition." We disagree. The court acted within its discretion and used two different calculations because there were two types of community contributions that justified reimbursement. One contribution was the effort of both spouses in repairing and improving College/Clover during marriage, and the other was for Greg's earnings that the court determined should have been contributed to College/Clover but were not. Greg has cited no authority stating this latter method was improper. The only case cited by Greg in support of this argument, In re Marriage of Dekker (1993) 17 Cal.App.4th 842, 852-853, is one discussing the ways a court may calculate the value of a separate property business enhanced by community effort, which is a different issue. Here, the court considered the community effort contributed to College/Clover, but also determined that an additional portion of Greg's earnings during marriage should have been contributed to College/Clover but were not.
Next, Greg argues that the community was not entitled to reimbursement based on Greg's excess earnings because those earnings did not increase the value of College/Clover. Greg is correct that the community is not entitled to reimbursements for its contributions that do not increase the equity value of property. (See In re Marriage of Nelson (2006) 139 Cal.App.4th 1546, 1555.) Here, Greg's argument misses the point of the trial court's ruling. The court did not rule that the community was entitled to reimbursement for contributions that Greg actually made from his earnings. Instead, the court determined that Greg should have contributed more of his earnings to College/Clover and that if he did, his contributions would have increased its value. This was not an abuse of discretion. (See § 2553 [court has discretion to make whatever orders it "considers necessary" to equally divide community estate].)
Last, Greg contends that the trial court miscalculated the amount by which his earnings exceeded expenses. Essentially, Greg is arguing that even though the schedule of estimated expenses he provided to the trial court overstated the amount of expenses he paid in years when there was no reported income, the schedule also understated the amount of taxes he paid in other years. As such, he argues that because the actual tax payments exceeded Greg's estimate, "the court should not have reduced the estimated expenses by any sum." Greg has forfeited this argument on appeal because it does not appear that he ever informed the trial court that the schedule he provided was erroneous in any way. (See Boyle v. CertainTeed Corp. (2006) 137 Cal.App.4th 645, 649 [reviewing court ordinarily will not consider a challenge to a ruling if an objection could have been but was not made in the trial court].)
E. Spousal Support
Greg contends the court's order that he pay $1,000 in monthly spousal support to Ashell for 4.375 years (approximately 52 months) was an abuse of discretion. Greg advances three basic arguments. He argues the trial court failed to properly consider and apply all of the relevant spousal support factors under section 4320. He also argues the court erred with respect to certain findings related to Ashell's ability to support herself and his ability to pay spousal support.
We review permanent spousal support orders for abuse of discretion. (In re Marriage of McTiernan and Dubrow (2005) 133 Cal.App.4th 1090, 1106.) In exercising its discretion, "the trial court must consider and weigh all of the circumstances enumerated in [section 4320], to the extent they are relevant to the case before it." (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 302, italics omitted (Cheriton).) When a trial court finding is attacked as unsupported, "our power begins and ends with a determination of whether there is any substantial evidence which will support the conclusions reached by the trial court." (In re Marriage of Meegan (1992) 11 Cal.App.4th 156, 161.)
Section 4320 states: "In ordering spousal support under this part, the court shall consider all of the following circumstances: (a) The extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage, taking into account all of the following: [¶] (1) The marketable skills of the supported party; the job market for those skills; the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills; and the possible need for retraining or education to acquire other, more marketable skills or employment. [¶] (2) The extent to which the supported party's present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties. [¶] (b) The extent to which the supported party contributed to the attainment of an education, training, a career position, or a license by the supporting party. [¶] (c) The 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. [¶] (d) The needs of each party based on the standard of living established during the marriage. [¶] (e) The obligations and assets, including the separate property, of each party. [¶] (f) The duration of the marriage. [¶] (g) The ability of the supported party to engage in gainful employment without unduly interfering with the interests of dependent children in the custody of the party. [¶] (h) The age and health of the parties. [¶] (i) Documented evidence, including a plea of nolo contendere, of any history of domestic violence, as defined in Section 6211, between the parties or perpetrated by either party against either party's child, including, but not limited to, consideration of emotional distress resulting from domestic violence perpetrated against the supported party by the supporting party, and consideration of any history of violence against the supporting party by the supported party. [¶] (j) The immediate and specific tax consequences to each party. [¶] (k) The balance of the hardships to each party. [¶] (l) The goal that the supported party shall be self-supporting within a reasonable period of time. Except in the case of a marriage of long duration as described in Section 4336, a 'reasonable period of time' for purposes of this section generally shall be one-half the length of the marriage. However, nothing in this section is intended to limit the court's discretion to order support for a greater or lesser length of time, based on any of the other factors listed in this section, Section 4336, and the circumstances of the parties. [¶] (m) The criminal conviction of an abusive spouse shall be considered in making a reduction or elimination of a spousal support award in accordance with Section 4324.5 or 4325. [¶] (n) Any other factors the court determines are just and equitable."
Greg's first argument is that the trial court failed to properly consider several relevant factors listed in section 4320. Contrary to Greg's argument, the trial court considered and applied the necessary factors. Although Greg claims that the trial court did not analyze the parties' standard of living (§ 4320, subds. (a) & (d)), or their needs based on their standard of living, (§ 4320, subds. (a) & (d)) the trial court found that they had a middle-class standard of living during marriage and that Greg but not Ashell was living at this standard following separation. The trial court's "general description" of the parties' "station in life" was sufficient under section 4320. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 491.)
Contrary to Greg's argument, the trial court also considered the parties' earning capacities (§ 4320, subds. (a)(2) & (c)), their assets and debts (§ 4320, subd. (e)), and Greg's ability to pay support (§ 4320, subd. (c)). Specifically, the court found that Greg had a higher earning capacity than Ashell because he is a "long-time, well-established, continually active, professional real estate broker and mortgage broker." The court found that Greg had several valuable assets, including a Shelby Cobra automobile and several real properties in which he is building equity. And the court found that Greg had the ability to pay support based on the income generated by his rental properties, the equity in his real estate investments, and the "endless credit resource in the form of a joint back account with his mother." In sum, the trial court properly addressed and considered the relevant factors under section 4320.
Greg also argues that the court did not consider factors under section 4320 relating to the parties' age and health (§ 4320, subd. (h)) and Ashell's marketable skills as a business owner (§ 4320, subd. (a)(1)). The trial court was not required to make findings on these factors because neither party requested them. (§ 4332 [other than findings with respect to standard of living, factual findings regarding spousal support are required only upon request of either party]; Hogoboom et al., Cal. Practice Guide: Family Law, supra, ¶ 6:1086.) Moreover, Greg has not argued that these factors are relevant, further supporting our conclusion that the trial court properly analyzed spousal support under section 4320. (See Cheriton, supra, 92 Cal.App.4th 269, 302 [trial court must consider section 4320 factors "to the extent they are relevant to the case before it"].
Greg's second argument is that the court erred with regard to certain findings it made regarding Ashell's ability to support herself. Specifically, Greg argues that the evidence "conclusively established that Ashell had been self-supporting since the March 2009 separation and did not need spousal support." Substantial evidence showed otherwise. Ashell testified that she was able to see a doctor and dentist regularly while married, but that her financial situation did not allow for such routine care after she and Greg separated. During her marriage, Ashell kept a horse at Porter Creek, maintained a garden, and raised chickens but no longer did after she and Greg separated. Ashell also took yearly vacations when she was married, but following her separation had taken no trips out of California except to take her daughter back east for school. Greg further contends that the trial court erred in calculating Ashell's post-separation income because it did not consider Ashell's share of net earnings in the landscape business she partly owned. However, Greg has not pointed to any evidence showing that net earnings were distributed to Ashell as income rather than possibly reinvested in the business.
Third, Greg challenges the trial court's finding regarding his ability to pay spousal support. As we explain, none of Greg's arguments, considered separately or in combination, show the trial court abused its discretion in assessing Greg's ability to pay.
Initially, Greg argues that the trial court "seems to have improperly disregarded" his tax returns, which, beginning in 2007, showed that Greg had negative income. But the trial court took Greg's tax returns into account by averaging negative income years with positive income reported in tax returns from earlier years. The trial court reasoned that averaging Greg's income over several years was a "reasonable indicator of his annual income" because of "the up and down nature of business" in real estate. This was not an abuse of discretion.
Next, Greg contends the trial court erred in computing his rental income from College/Clover because it did not account for loan payments on the property. Contrary to Greg's argument, the trial court did consider Greg's loan payments and found that Greg "receives a tax credit for the debt payment on his business tax returns which reduces his taxable income." Greg has not challenged this finding on appeal. Moreover, the evidence showed that the payments increased the equity in the property, and that the loan would be paid off in 2016, when Greg would still be paying spousal support. This evidence further supports the trial court's decision not to deduct the loan payments when computing Greg's income.
Greg also argues that the trial court had "no legal basis" for finding that Greg's earnings were higher than what he claimed they were in his trial testimony. Greg's argument is essentially a challenge to the methodology the trial court chose for determining Greg's income. He claims his trial testimony showed his income for 2013 was $41,388, much lower than the $90,210 in annual income the trial court used to determine his ability to pay spousal support. But as we have explained, the trial court chose not to rely on a single year's worth of income in determining Greg's ability to pay support, and instead averaged his annual income over several years to reflect "the up and down nature" of Greg's real estate business. The trial court did not abuse its discretion by choosing this method instead of relying solely on Greg's testimony about his income for a single year.
Greg also claims the trial court erred in treating $114,000 in a joint bank account he shared with his mother as an asset instead of loan proceeds that he was required to repay to his mother. Even though Greg's mother testified that she put funds in the joint account as part of a line of credit that Greg could draw from and repay she also said that the money in the account was "Greg's money," and that "[w]hatever he needs, he's able to get." The trial court could easily conclude that the funds should be treated as an asset and not as debt. (Accord In re Marriage of Williamson (2014) 226 Cal.App.4th 1303, 1313 ["Courts are appropriately skeptical of transfers by the parents of one of the parties in a divorce case[,]" particularly when funds "do not bear the typical characteristics of a loan."].)
Last, Greg argues the trial court erred in imputing an additional $1,000 to $1,200 per month in income to Greg as the rental value of Greg's office at College/Clover. Greg asserts this was error because had he rented that space to a third party, he would have used the income to pay rent for his office at another location. But Greg has made no factual showing or cited legal authority stating any additional income imputed to him must necessarily be offset because he would have to find another office at the same cost. We also reject Greg's argument that the trial court had no basis for setting the rental value of his office at $1,000 to $1,200; the trial court based this value on evidence of the rent Greg received for other spaces at College/Clover.
F. Ashell's cross-appeal regarding attorneys' fees
Ashell cross-appeals from the judgment on the ground that the trial court abused its discretion in denying her request that Greg pay her attorneys' fees.
Ashell sought $150,000 in fees. Her request was made on two separate grounds. First, she requested need-based attorneys' fees pursuant to section 2030, which allows a trial court to order attorneys' fees and costs based on the parties' respective incomes and abilities to pay in order to ensure a parity of legal representation. Second, she sought attorneys' fees as sanctions pursuant to sections 2107 and 271.
The trial court denied Ashell's request for attorneys' fees on both of her asserted grounds. It stated: "All litigants have the right to seek redress, or confirmation of their rights in court. It is this Court's opinion that the parties had legitimate legal and factual issues in dispute in this case. This Court finds that neither party acted in bad faith. Both pursued their rightful interests, although at times aggressively or zealously, but not inappropriately. [¶] As to any request for attorney fees as sanctions pursuant to Family Code section 271, the Court denies any and all such requests made by both parties. After review of the parties' relative financial positions, and Family Code section 2032 factors, inclusive of Family Code section 4320 factors, neither party has the ability to pay the attorney fees of the other. Therefore, all attorney fee requests pursuant to Family Code section 2030 by both parties are denied."
Ashell argues that the trial court abused its discretion when it denied her request for need-based attorneys' fees because it failed to make factual findings regarding Greg's ability to pay. "When a request for attorney's fees and costs is made [under section 2032], the court shall make findings on whether an award of attorney's fees and costs under this section is appropriate, whether there is a disparity in access to funds to retain counsel, and whether one party is able to pay for legal representation of both parties." (§ 2030, subd. (a)(2).) "[T]he trial court has broad discretion in ruling on a motion for fees and costs; we will not reverse absent a showing that no judge could reasonably have made the order, considering all of the evidence viewed most favorably in support of the order." (In re Marriage of Falcone and Fyke (2012) 203 Cal.App.4th 964, 975.)
Here, the trial court made the requisite statutory findings. The court provided a detailed analysis of Greg and Ashell's financial positions when analyzing Ashell's request for spousal support. It found that Greg could pay the modest sum of $1,000 per month to Ashell as spousal support, but that he lacked the ability to pay an additional amount for her attorneys' fees. As a result, the court found it inappropriate to award Ashell need-based fees. This was within the court's discretion.
Ashell also contends the trial court abused its discretion by not awarding her attorneys' fees as sanctions against Greg under sections 271 and 2107. Section 271 authorizes the court to award attorneys' fees as sanctions based "on the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys." (§ 271, subd. (a).) Under section 2107, a party who fails to comply with the family code's declaration of disclosure requirements under section 2100 et seq. shall be assessed monetary sanctions "in an amount sufficient to deter repetition of the conduct or comparable conduct," including "reasonable attorney's fees, costs incurred, or both, unless the court finds that the noncomplying party acted with substantial justification or that other circumstances make the imposition of the sanction unjust." (§ 2107, subd. (c).) We review the grant or denial of attorneys' fees under both provisions for abuse of discretion. (In re Marriage of Feldman (2007) 153 Cal.App.4th 1470, 1478.)
The trial court did not abuse its discretion by declining to sanction Greg. Ashell criticizes the accuracy of Greg's disclosures and cites trial testimony in which Greg said he did not disclose certain information about his assets. She also claims that Greg is a "litigious person," citing her own trial testimony describing how Greg hired an attorney to collect back rent from Ashell (which Ashell later paid), and how Greg successfully sued a subcontractor who did foundational work at Porter Creek. The trial court heard this same testimony and determined that Greg never acted inappropriately or in bad faith in this dissolution proceeding. The trial court, not us, was in the best position to assess whether the 12 days of testimony and other evidence it entertained disclosed sanctionable conduct by Greg under section 271 or 2107. The court concluded the evidence did not justify sanctions, and Ashell presents us with no basis for disturbing that determination.
For example, Greg testified that he did not list an old GMC truck on a schedule of assets because he thought Ashell conceded the truck was his separate property. He also said he did not disclose a computer file containing information about checks he wrote because he disclosed bank statements containing the same information, and the computer file was "merely a source to input checks." --------
III. DISPOSITION
We reverse the judgment as it relates to reimbursements and Epstein credits awarded to Greg for contributions to Porter Creek. On remand, the trial court shall issue a new statement of decision addressing whether Greg is entitled to additional reimbursement for a $124,287.99 payment he claims he made on the Porter Creek loan in 2002. The court shall also recalculate Greg's Epstein credits for payments he made on the Porter Creek loan after separation.
In all other respects, the judgment is affirmed. Each party shall bear their own costs.
/s/_________
Siggins, J. We concur: /s/_________
McGuiness, P.J. /s/_________
Jenkins, J.