Opinion
E064045
12-07-2017
In re the Marriage of GARY and CHERYL SOMERVILLE. GARY SOMERVILLE, Respondent, v. CHERYL SOMERVILLE, Appellant.
Law Offices of Valerie Ross, Valerie Ross; Law Offices of Kerrie C. Justice, Inc. and Kerrie C. Justice for Appellant. Zeutzius & LaBran and Ronald M. LaBran 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. FAMVS900343) OPINION APPEAL from the Superior Court of San Bernardino County. Alexander R. Martinez, Judge. Affirmed in part; reversed in part with directions. Law Offices of Valerie Ross, Valerie Ross; Law Offices of Kerrie C. Justice, Inc. and Kerrie C. Justice for Appellant. Zeutzius & LaBran and Ronald M. LaBran for Respondent.
Cheryl Somerville (Cheryl) appeals a postjudgment order reducing and then terminating her monthly spousal support award. Her former husband, Gary Somerville (Gary), asked the superior court to modify or terminate the award because his income decreased and Cheryl's income increased when he took early retirement and both began receiving benefits from his retirement account under the terms of their property division agreement. (Fam. Code, §§ 2550, 2601, 4320, 4330.)
As is customary where divorced spouses share a surname, we use first names to make the opinion easier to understand.
After a trial, the court denied the motion. However, Gary moved for reconsideration, though without pointing to new facts or law to justify revisiting the decision. Instead, he complained, among other things, the court improperly attributed his new girlfriend's income to him in deciding whether he could afford to continue making support payments to Cheryl. The trial court granted Gary's motion on that basis. However, the court did not merely reconsider its ruling; instead, it set a new trial, complete with new evidence on Gary's ongoing earning capacity and, ultimately, on all issues tried in the first trial. Thereafter, the court reversed itself, reducing Cheryl's monthly spousal support award from $900 to $350 and terminating the award as of August 1, 2018.
Cheryl appeals on the ground the court did not provide an adequate basis for reconsidering its original decision or ordering a new trial. We conclude the trial court did not abuse its discretion by treating Gary's motion as a motion for a new trial and did not abuse its discretion by granting the motion. On the merits of the court's order modifying and terminating support, Cheryl appeals on only one ground—that the trial court erred by treating as income the funds she receives from Gary's retirement account for determining whether to terminate support. Because we find no error on that point, we will affirm the order modifying and terminating the award.
The parties addressed whether the court properly ordered a new trial after we requested supplemental briefing.
Cheryl also appeals the order denying her request to divide Gary's accrued leave time as a community asset omitted from the property division. The asset does not appear in the settlement agreement adopted as the stipulated judgment, and Cheryl says she did not recognize it as an asset when the parties were negotiating the agreement. The trial court denied Cheryl's motion because Gary disclosed the leave time. We reverse the trial court because the statutes and case law make clear a party may obtain division of an asset that was not adjudicated in a property division even if she knew about the asset at the time.
I
FACTUAL BACKGROUND
A. The Stipulated Judgment of Support
Cheryl and Gary Somerville separated on September 6, 2008. On November 9, 2011, the San Bernardino County Superior Court entered a judgment dissolving their marriage of 24 years 2 months. The judgment adopted the parties' agreement regarding the division of assets, debts, and property. It also adopted their agreement that Gary would pay Cheryl $900 a month in spousal support.
When the judgment issued, Gary worked as an officer for the San Bernardino Sheriff's Department and earned approximately $7,800 a month in taxable income. Cheryl also worked for the sheriff's department—as she still does—as a custody assistant, where she earned approximately $3,500 a month in taxable income. During the marriage, Cheryl and Gary owned a house valued at $171,000, which they sold before the judgment. Cheryl later testified each party received approximately $7,300 cash from the sale after paying off debts. In addition, each had accumulated interest in retirement accounts with the San Bernardino County Employees' Retirement Association (SBCERA).
Adopting the stipulated judgment, the court awarded each spouse one half of the community property interest in each other's SBCERA retirement plan (the retirement plans). The court later modified (in accord with a stipulation) the award of interest in the retirement accounts. Cheryl maintained 100 percent of the community property interest in her (much smaller) retirement plan. As an offset, Cheryl's interest in Gary's retirement plan fell to 48.45 percent of the community property.
The stipulated judgment contains no provisions regarding the award or division of the parties' accrued leave time, nor does it have a provision indicating the agreement covered all community assets.
B. Gary's Request to Modify Spousal Support
On March 23, 2013, Gary retired early at age 50. He moved to Arizona and purchased a new home with a nonmarital cohabitant, Diane. Gary decided not to work and he and Diane both live off his retirement account and Diane's income.
On July 23, 2013, Gary filed a request for an order reducing or terminating spousal support based on changed circumstances. He said since his retirement, "Cheryl has been receiving direct payment of $2,945.44 per month from the San Bernardino County Employees' Retirement Association . . . [and] [a]s of July of 2008, her monthly gross salary was in excess of $2,972.00." In his request for order, Gary said his new home was valued at $220,000 and encumbered by a mortgage for $185,000. He said his only other assets were household and personal possessions worth $50,000.
Where the terms "petitioner" and "respondent" appear in quoted documents or transcripts, we substitute the person's first name or the appropriate pronoun to make the opinion easier to follow.
In an income and expense declaration, he said he had a retirement income of $5,972.70 a month and $4,893.50 in average monthly expenses, including his house payment but not his support payment, and $100 monthly payments on a $17,500 loan. He said he shared household expenses with Diane, who had a gross monthly income of $4,200.
Gary requested "spousal support be modified to Guideline, taking into consideration his drop in income since his retirement and Cheryl's additional income from monthly payments of one-half Gary's retirement benefits to her."
Cheryl received substantially less than half of Gary's overall retirement benefits.
C. The First Trial and Ruling
On November 5 and 6, 2013, the court held a trial and received evidence related to the factors under Family Code section 4320 to determine whether there had been a material change in circumstance warranting a reduction or termination of support. The appellate record does not include a transcript of the trial or copies of exhibits. At a hearing on November 22, 2013, the court issued its ruling, denying Gary's request. The record does contain a transcript of the court's ruling, which includes a discussion of the trial evidence that served as the basis of the ruling.
According to the court, at the time of the spousal support order, Gary's monthly income was $7,814. When he retired, his monthly income dropped $1,842 to $5,972. Excluding spousal support, Gary had monthly expenses of $4,893, which he shared with Diane. The court made slightly inconsistent findings about Diane's contribution to the expenses. First, the court found she paid 40 to 45 percent of the expenses. Later, the court found half the expenses attributable to Gary and concluded—subtracting half the claimed expenses from his retirement income—he would have $3,526 in savings each month. During this discussion, the court mistakenly identified Diane as Gary's new wife. However, Gary later corrected him, and the court indicated their marital status made no difference to its analysis regarding Gary's share of the household expenses.
The court then made findings about Cheryl's postdivorce financial circumstances. The court relied on Cheryl's income and expense declaration, which is not in the appellate record. According to the court, Cheryl earned approximately $3,534 a month at the time of the trial, about the same amount she earned at the time of the support order. She also received $900 a month in support payments and, when Gary retired, she began receiving $2,625 a month in payments from his retirement account. The court concluded the "total monthly approximate income from these three sources is $7,059." Cheryl's monthly expenses were approximately $2,895, leaving her $4,164 a month in savings. Without the support payment, her monthly savings would be $3,264.
Regarding the parties' obligations and assets (Fam. Code, § 4320, subd. (e)), the court found Cheryl "has negligible assets and $20,000 in debt to New York Life and does not currently own a home." Gary, by contrast, "owns a home with his new wife [sic] in Arizona, has over $58,000 in real and personal property listed on his income and expense declaration, and owes $17,500 to New York Life."
The court found the parties had enjoyed an upper class lifestyle during their marriage. It noted together they earned about $11,345 a month against about $6,877 in expenses, leaving $4,468 in monthly savings. It also relied on their owning a $171,000 house and five automobiles, taking two vacations a year, and having a combined $111,000 in retirement and deferred compensation savings.
Based on the comparison of "their marital income and monthly expenses and . . . their present income and monthly expenses," the court found "each party's relative proportion between income and expenses was about the same or somewhat less than during marriage." It found "Gary's income capacity plus his share of marital assets is sufficient to maintain the marital standard of living," but "Cheryl's present earning capacity and her share of marital assets is somewhat below the marital standard of living." (§ 4320, subd. (d).)
Unlabeled statutory citations refer to the Family Code.
The court also considered Gary's ability to pay spousal support, considering his income, assets, and standard of living. (§ 4320, subd. (c).) The court found he could pay spousal support because he owns a home with Diane and the household realizes substantial monthly savings. "[B]ased on his July 23rd income and expense declaration, he receives $5,972 per month in retirement, plus an additional $4,200 a month that comes into the household with expenses of $4,893. The total combined income is over $10,000 with those monthly expenses with a leftover of $5,279."
The court discussed Gary's ongoing earning capacity in the context of considering whether he could maintain the marital standard of living. (§ 4320, subd. (d).) "Evidence showed that petitioner's income capacity plus his share of marital assets is sufficient to maintain the marital standard of living." The court did not impute a specific earning capacity to Gary. In another context, the court found Gary retired voluntarily and chose not to work, "despite evidence that there are law enforcement jobs that are potentially available to him in Arizona near his area." The court commented it did not "place any fault in petitioner retiring and taking voluntary retirement, it's simply indicating that it was a voluntary as opposed to involuntary retirement."
The court also found Cheryl and Gary had a long-term marriage (§ 4320, subd. (f)), Gary was 50 and healthy, Cheryl was 53 and healthy (§ 4320, subd. (h)), the financial hardship of divorce was more severe for Cheryl (§ 4320, subd. (k)), and Gary had paid off a substantial amount of community debt under the settlement (§ 4320, subd. (n)).
The court denied Gary's request to modify spousal support. "Based on all of these factors and based on the long duration of the marriage and also based on the fact that the judgment of marriage specifically stated $900 in spousal support plus the retirement, . . . the Court has determined that it is going to order that spousal support shall continue to be paid by petitioner in the amount of $900 per month." The court also ordered Gary to make delinquent spousal support payments within 120 days.
D. Gary's Motion to Reconsider
Five days later, Gary filed a request to reconsider the ruling, relying on Code of Civil Procedure section 1008. He claimed the court based the ruling "on incorrect facts and calculations, and did not take into consideration the [parties'] change in circumstances" and "suppl[ied] an incorrect or erroneous legal basis for the decision that is not consistent with or supported by the facts."
Gary identified five specific problems with the order, saying the court (i) used inaccurate income information for Cheryl because she did not disclose her income from his retirement account on the correct page, (ii) did not take into consideration changes in the parties' income, (iii) accepted Cheryl's claim Gary retired for the purpose of escaping his spousal support obligations, (iv) stated Gary was remarried, and (v) included the ostensible new wife's income in calculating Gary's income.
Gary claims Cheryl "hid" this information by placing it in a part of the income and expense declaration form set aside for additional information about child support income. We need not take up much space to dispense with this accusation. Cheryl included her net retirement payments in a space at the end of the form set aside for "[o]ther information I want the court to know concerning support in my case." We conclude Cheryl did not hide the information. Moreover, as we discussed in part I.C., the trial court not only noticed the income disclosure, but explicitly factored it in when calculating Cheryl's total monthly income.
Gary acknowledged he was required to establish "new or different facts, circumstances, or law" to seek reconsideration under section 1008. He argued the new facts, circumstances, or law justifying reconsideration in his case were: "(1) the fact that Gary's Income and Expense Declaration clearly contradicts the Court's finding that Gary is married; and (2) the new circumstances brought about by Cheryl misstating Gary's intentions in entering into retirement."
In the alternative, Gary urged the trial court to reconsider its order on its own motion, pointing to the California Supreme Court's decision in Le Francois v. Goel (2005) 35 Cal.4th 1094. Le Francois held on separation of powers grounds the statutory conditions on reconsideration limit the parties' right to move for reconsideration, but not the courts' power to change erroneous orders on their own motion. As a result, Gary argued, the court was free to change its ruling even if it determined the problems he identified did not constitute "new or different facts, circumstances, or law."
E. The Court's Treatment of Gary's Motion to Reconsider
On January 21, 2014, the court heard argument and determined it should revisit its prior ruling. The court said it "will grant the motion to reconsider," but did not actually alter the prior ruling. Instead, it set a date to take new evidence.
The court justified its decision based on a legal error. The court expressed concern its decision appeared to use Diane's income to calculate Gary's household income in deciding Gary could afford to continue making support payments. The court said, the ruling "does not specifically state I'm considering his wife or girlfriend's income and because of that his standard of living is the same as before or words to that effect. However, the Court may have phrased it in some such a way that Gary may have perceived that the Court was considering his wife or girlfriend's income, which clearly, counsel, I agree with you that new spouse income should almost never be considered. That's correct. That's absolutely correct. [¶] So based upon that, based upon the perception that perhaps the Court—the Court recalls perhaps mentioning words to the effect that it may have considered that, the Court is inclined to [reconsider], again, the issues on permanent spousal support."
However, the court did not limit itself to reconsidering the law and evidence presented at the November trial without considering Diane's income. Instead, it set a new trial date and informed the parties it expected them to present new evidence. The court said its decision to grant the motion "doesn't mean that the ruling ultimately is going to be one way or the other, whether it's going to be set the same or modified. It's simply that I will reconsider further information." Concerned with the evidence supporting the determination that Gary could afford to pay spousal support despite his early retirement, the court directed the parties to present "further evidence as to whether or not Gary's preretirement income should or should not be continued to be attributed to him now based upon . . . the uncontradicted testimony that there was a voluntary decision to retire and that there appeared to be available work available at this point in time for whatever reason your client is choosing not to take." The court ordered the parties to prepare a vocational evaluation and invited "any kind of further briefing as to Gary's income, what his income level, if he should continue to be attributed to his preretirement wage based upon what appears to be a voluntary cessation of work."
F. Cheryl's Motion to Divide the Value of Gary's Accrued Leave Time
On March 28, 2014, Cheryl filed a motion under section 2556 to determine her share of the community interest in Gary's accrued leave time. Cheryl claimed the assets were not part of the settlement and therefore constituted an omitted asset the court should divide equally.
G. The Second Trial
The parties reconvened on February 5, 2015, over a year after the trial court granted Gary's motion. The delay is unexplained in the appellate record. At the outset, the court indicated it intended to hold a whole new trial on all issues related to Gary's motion to modify. "I'm going to put on the record that I think it's the cleanest to proceed by starting over from scratch as to this 4320 hearing, and we'll have a fresh 4320 hearing today." The court said a new trial was justified because in "its previous ruling the Court had included . . . some findings and some information in its findings that was not specifically permitted under Family Code 4320." The parties presented evidence on all section 4320 factors on February 5, March 18, and March 30, 2015, and included evidence related to Cheryl's new motion in these proceedings.
Cheryl said she and Gary were married for just over 24 years 2 months. They have two grown children and six grandchildren. She took a job closer to home to enable her to provide child care and act as the children's primary caregiver. They owned a home together where they lived for 22 years. They sold the house when the marriage ended and used the proceeds to pay off debt. Each received $7,323 from the remaining proceeds. They usually had two used cars during the marriage. The family took vacations a couple of times a year. Cheryl said she was in generally good health, though she experienced some minor health problems. Gary claimed to be in excellent health in a filing early in the case, but disclaimed that characterization at trial. He said he was still recovering from health problems that occurred at the end of his employment, and was not as healthy as he had been in the early and mid-2000's. He said he leads an active lifestyle. He walks significant distances daily, golfs occasionally, and dances, bowls, and lifts weights weekly.
Gary and Cheryl testified again about their assets, income, and expenses. He said his only income is the $6,032.49 he receives each month from his retirement account before taxes. He said he and his girlfriend, Diane, had bought a house in Arizona valued at approximately $220,000, and each owns half. Upon his retirement he received a payout of approximately $34,550 accrued sick, vacation, and miscellaneous time from his employer, which was deposited into a deferred compensation account that is his separate property. In addition, he had $58,142 in other property.
Gary prepared two income and expense declarations in April 2014 which appear to conflict with this testimony. One says he receives $6,032.70 a month in gross wages, but $5,972.70 a month in gross retirement benefits. The other says he receives $5,972.70 a month in gross retirement benefits and lists no other income.
Gary said he and Diane share many of the household expenses, which makes it difficult to specify his individual expenses. His income and expense declaration identifies his total expenses as $4,855, but says someone else pays $1,100. At trial, Gary explained he and Diane pay $1,100 on their mortgage and Diane typically makes the mortgage payment while he pays the other expenses. Gary said he mistakenly included automobile, home, and health insurance on a line asking for life and accident insurance, and estimated that required reducing his overall monthly expenses by approximately $400.
Cheryl said she still works and earns $3,074.50 a month before taxes. She said her income from work is $500 lower than it was when the support payments began. She said she also receives $3,155 a month in pretax benefits from Gary's retirement account and is entitled to those retirement payments for her whole life. Taken together, and aside from the support award, her monthly pretax income is $6,136.50. She also receives $900 in support payments garnished from Gary's retirement checks, making her total pretax income $7,036.50. She said her monthly expenses are approximately $3,285. Cheryl does not own a home and does not have any other significant assets.
Earlier, she testified the pretax amount was $3,062.55.
Gary skipped payments for five months after retiring and has not made up those missed payments.
Cheryl said she puts approximately $2,000 of the funds she receives from Gary's retirement account directly into a deferred compensation account because her own retirement account will pay her only $366 a month. If she did not put the money from Gary's retirement account into her account, she would receive only $3,521 a month when she retires. However, she agreed with Gary she has the right to use the funds however she wants to use them.
The parties also put on evidence concerning Gary's ability to earn income from work. Gary said he retired early because he was eligible after more than 30 years in law enforcement, he believed it would maximize his retirement income, and he wanted to recover from the stresses of law enforcement work and from recent health problems. After retirement, he moved to Arizona, intending not to work.
Cheryl's attorney introduced a vocational evaluation report prepared under Evidence Code section 730 regarding Gary's continuing ability to work. Though the report is not in the appellate record, the parties testified about its content and the trial court indicated in its ruling that it considered the report in making its findings. The evaluation concluded Gary remained employable and identified law enforcement and private security jobs he could perform in his general geographical area. According to Cheryl's attorney in closing argument, the report concluded Gary could continue receiving his retirement income even if he took a job. The report provided a selection of possible imputed incomes, and Cheryl's counsel requested that the court impute the middle-range amount, $3,813 a month—approximately $45,756 a year.
Gary testified he had contacted some of the jobs identified in the report and gave reasons why they would not work for him. Some, he said, were located too far away. Others had filled when he began looking at the listings. Still others, he questioned whether he would qualify. He also said he would not look at bank security work or work requiring him to sit at a computer. However, at bottom, he said he simply did not want to work any longer. He said he did not apply to any of the positions identified in the report or to other law enforcement jobs he identified on his own. He said, "I am not actively looking for a job," and "I haven't found anything that would be enticing enough for me to work at or worth my time to work at to even apply."
Finally, the parties put on evidence regarding the fact Gary received $34,550 in accrued leave time from his employer upon his retirement. Cheryl sought an order dividing the portion of that money Gary had accrued as of the date of separation as an asset that was improperly omitted from their agreed property division settlement. Cheryl said she is entitled to the community share of 783 hours of leave pay, paid out at a rate of $47.05 per hour. Cheryl admitted the leave balance appeared on Gary's pay stubs, which he disclosed to her when they were negotiating their property division agreement. She said she was not aware the leave balance represented potential income that could be paid out on retirement, but learned this fact later from people at her workplace.
H. The Trial Court's Final Ruling
1. Ruling on Gary's motion to terminate spousal support
The trial court granted Gary's motion to reduce or terminate spousal support. The court discussed all the factors required by section 4320.
The court found both parties "able to maintain a comfortable standard of living at the present time, although neither would be able to maintain the higher standard of living they both shared combined together while married." (§ 4320, subds. (a), (d).) The court found Cheryl's income had increased because she now receives approximately $3,155 gross ($2,656 net) from Gary's retirement account in addition to her salary.
In considering Gary's ability to maintain a comfortable lifestyle, the court focused entirely on his earning capacity after voluntary retirement. The court found Gary retired early voluntarily, but not with the purpose of depriving Cheryl of support, and found he had no intention of finding additional work. Based on the vocational analysis, it found Gary retained the capacity to earn $50,000 annually, slightly less than half of his income before the divorce.
The court found Gary had the ability to pay support considering his income, earning capacity, and standard of living. (§ 4320, subd. (c).) It found he receives $5,763 a month in retirement income. The court also found Gary's expenses were $4,828 a month. Based on its findings and the implicit finding that his income exceeded his expenses by $935 a month, the court determined Gary "does have the ability to pay some spousal support." (Italics added.) The court did not consider Diane's income in determining Gary's ability to pay spousal support. Indeed, it appears the court refused to consider Gary's admission that Diane contributed $1,100 a month to household expenses by making the mortgage payment.
It bears mentioning that the court reached its income figure by subtracting the retirement income Cheryl testified she receives ($3,155) from the base retirement income shown on a direct deposit slip attached to Gary's April 30, 2014 income and expense declaration ($8,918). However, Gary's filing declared, and the direct deposit slip states, he receives approximately $5,972 in retirement benefits each month.
The court refused or failed to consider that Gary admitted he mistakenly included approximately $400 in insurance costs in his expenses.
The court found both parties had the assets and income to lead similar, comfortable lifestyles. (§ 4320, subd. (e).) It found Cheryl does not own a home because she does not want the associated hassles and concluded, based on her income, she could purchase a home if she desired to do so. It found Cheryl owns a car worth $25,000 for which she pays $350 a month and has $19,000 in other debts. It found Gary owns a home worth $220,000 and has $50,000 in other assets, with debts of $15,000.
Finally, the court raised three equitable considerations. (§ 4230, subd. (n).) First, it found Gary paid over $32,000 in community debt under the original property division settlement. Second, it found Cheryl's current and future needs are already met by her salary, her share of Gary's retirement income, and her own pending retirement income. Third, it found Cheryl "has successfully both shown [Gary's] ability and opportunity to work, at least somewhat" and concluded "this Court cannot, based on [its] sympathy [for Gary], simply ignore the California case law that deals with imputation of income upon voluntarily leaving work prior to retirement."
Based on all those factors, the court ordered Gary's support payment reduced from $900 to $350 for the period August 1, 2013 to August 1, 2018, whereupon the support obligation terminates. The court then made ministerial adjustments to the payment schedule to account for arrearages and overpayments not raised on or relevant to this appeal.
2. Ruling on Cheryl's motion to divide omitted assets
The trial court denied Cheryl's section 2556 motion. The court held "there is good cause that the interests of justice require an unequal division of these assets" because Gary's "accrued leave balances were fully known about and disclosed to Cheryl and her attorney prior to the negotiated judgment that was reached between the parties." The court concluded Cheryl's attorney either decided not to pursue division of the accrued leave or negotiated away the right to those funds in making the overall bargain. The court therefore ruled "any such accrued sick or vacation hours are deemed now to be the sole and separate property of each spouse."
The trial court also denied Gary's request for attorney fee sanctions. (§ 271.) Gary did not appeal that order.
II
DISCUSSION
A. Revisiting the Order Denying Gary's Motion to Modify Spousal Support
Cheryl appeals the postjudgment order after the second trial. However, the primary focus of her appeal is whether the court abused its discretion by granting Gary's motion to reconsider.
It is important at the outset to determine the nature of the order we are asked to review. Gary brought his motion under Code of Civil Procedure section 1008 as a motion to reconsider, and that is what the trial court called the motion when it agreed to further proceedings. However, we do not look to a motion's label, but to the substance of the motion and the order disposing of it. (In re Marriage of Herr (2009) 174 Cal.App.4th 1463, 1470 (Marriage of Herr).) Where a court "purport[s] to grant 'reconsideration' for the express purpose of conducting a further hearing or trial, at which the parties would be expected to produce new . . . evidence to support their respective positions on the entire range of issues decided at the [previous] trial," the court effectively grants a new trial and must conform to the statutory requirements for granting such a motion. (Ibid.) A new trial is a re-examination of an issue of fact in the same court after a trial and decision by a jury, court, or referee. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 458 [quoting Code Civ. Proc., § 656].)
Here, the trial court determined a legal error required it to re-examine a factual issue after it had issued a decision on all issues following the first trial. Specifically, the trial court determined it needed to revisit the issue of whether Gary could continue paying spousal support after taking early retirement. The problem that triggered the need for a new trial was the trial court's consideration of Diane's monthly income in calculating Gary's monthly household income. The court added Diane's and Gary's incomes and subtracted their joint expenses to conclude their "total combined income is over $10,000 with those monthly expenses with a leftover of $5,279." Gary contends correctly, and Cheryl does not contest, that this was an error of law. (§ 4323, subd. (b) ["The income of a supporting spouse's subsequent spouse or nonmarital partner shall not be considered when determining or modifying spousal support"]; In re Marriage of Romero (2002) 99 Cal.App.4th 1436, 1445.)
Recognizing the error, the trial court ordered a new hearing to revisit the factual issue. The court made clear it wanted to consider additional evidence related to the same issue at the new hearing. Specifically, the court ordered the parties to prepare a vocational report evaluating Gary's continuing ability to earn income from work. The parties did not present such a report at the first trial. In addition, when the day of the new trial arrived, the trial court made plain it expected the parties to retry the entire matter. "I'm going to put on the record that I think it's the cleanest to proceed by starting over from scratch as to this 4320 hearing, and we'll have a fresh 4320 hearing today." Thus, we conclude Cheryl appeals an order granting Gary a new trial, not an order granting reconsideration. (Marriage of Herr, supra, 174 Cal.App.4th at p. 1470; cf. In re Marriage of Barthold (2008) 158 Cal.App.4th 1301, 1314 ["[W]e stress that in order to grant reconsideration on its own motion, the trial court must conclude that its earlier ruling was wrong, and change that ruling based on the evidence originally submitted"], first italics added.)
Ordinarily, we would not have jurisdiction to consider an appeal from an order granting a new trial after the second trial had been completed. (Ricketts v. McCormack (2009) 177 Cal.App.4th 1324, 1337-1338; see also Code Civ. Proc., § 906.) However, this is not an ordinary case. Because the trial court granted a new trial under the guise of granting a motion to reconsider, Cheryl never had the opportunity to appeal the order. Our review includes "the verdict or decision and any intermediate ruling, proceeding, order or decision which involves the merits or necessarily affects the judgment or order appealed from or which substantially affects the rights of a party, including, on any appeal from the judgment, any order on motion for a new trial," so long as it is not a "decision or order from which an appeal might have been taken." (Code Civ. Proc., § 906.) Thus, we may review the trial court's decision to revisit its original order.
An order granting a new trial ordinarily is appealable directly. (Code Civ. Proc., § 904.1, subd. (a)(4) ["An appeal . . . may be taken from . . . an order granting a new trial"]; Cobb v. University of So. California (1995) 32 Cal.App.4th 798, 803 ["section 904.1, subdivision (a)(4) explicitly makes an order granting a new trial appealable"].)
We review the trial court's decision to treat Gary's motion for reconsideration as a motion for new trial for an abuse of discretion. (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 187, 193.) We find no abuse of discretion in the court's decision. The motion was filed within the time constraints for such motions. Gary brought the motion after the trial court's final decision on all issues. (Auto Equity Sales, Inc. v. Superior Court, supra, 57 Cal.2d at p. 460.) Moreover, he brought it within a week of the order. (See Code Civ. Proc., § 659; Sole Energy Co. v. Petrominerals Corp., supra, 128 Cal.App.4th at p. 194.) Finally, Gary sought and the trial court granted the motion based on legal error, which is an allowable basis for granting a new trial under Code of Civil Procedure section 657, subdivision (7).
Marriage of Herr is not to the contrary. In that case, the husband filed a motion for reconsideration or a new trial after the deadlines for filing either kind of motion. (Marriage of Herr, supra, 174 Cal.App.4th at p. 1467.) The trial court nevertheless granted husband's motion, which it identified as a motion for reconsideration. (Ibid.) As here, the court ordered a new hearing and directed the presentation of additional evidence. (Id. at pp. 1467-1468.) The Court of Appeal held the trial court had in fact granted a new trial, but overturned the order because the motion was not timely under the statutory guidelines for new trial motions. (Id. at p. 1470.) No such deficiencies undermine the trial court's ruling in this case, so we conclude the court did not abuse its discretion in treating the motion as a motion for a new trial.
We also review the trial court's decision to grant a motion for a new trial for abuse of discretion. (Sole Energy Co. v. Petrominerals Corp., supra, 128 Cal.App.4th at pp. 194, 197.) The determination of a motion for a new trial lies completely within the trial court's discretion, and we will not disturb its decision unless there is a manifest and unmistakable abuse of discretion. Our deference is particularly important when the court has exercised its discretion in favor of awarding a new trial, because doing so does not finally dispose of the matter. If a reasonable or even fairly debatable justification supports the order, we will not set it aside. (Whitlock v. Foster Wheeler, LLC (2008) 160 Cal.App.4th 149, 159.)
As we have already discussed, the trial court rightly concluded it had committed legal error by considering Gary's new partner's income in deciding whether he could afford to maintain support payments. It was within the court's discretion to grant the motion for a new trial to correct that legal error. (Sole Energy Co. v. Petrominerals Corp., supra, 128 Cal.App.4th at p. 197.)
B. Treating Retirement Benefits as Income to Modify Spousal Support
Cheryl appeals only one aspect of the merits of the trial court spousal support order after the second trial. She contends the court erred by including "the pension benefits this non-retirement age wife received from husband's account as increased income to wife for spousal support purposes."
However, Cheryl concedes she is aware of no statutory or case law support for her position, and makes no argument, either legal or factual, to explain why we should not treat income from Gary's retirement benefits as income that was available to her. She points us to In re Marriage of Beust (1994) 23 Cal.App.4th 24, 27, fn. 1, saying the court "approved husband's concession that wife need not invade retirement assets for current support." But that case is not relevant. It did not involve retirement benefits, but assets specifically set aside in a settlement agreement to provide for the wife's retirement. The court found only that the husband had acquiesced to that interpretation of the settlement agreement. The parties in this case do not contend their settlement agreement governs the issue on appeal.
We do not believe, under the facts in this case, treating the retirement benefits as income constituted error. Cheryl admitted she was free to use the income in any manner she wanted. According to the trial evidence, Cheryl is entitled to the benefits for her whole life, beginning from the date of Gary's retirement. Thus, the fact that she began receiving the benefits earlier than expected does not appear to decrease the income she will receive from retirement later in life. Nor is there evidence to show her monthly payment would have been greater had Gary continued working for a few more years. The only evidence on that point was Gary's testimony that he retired early in part because state fiscal problems convinced him his retirement benefits could decline if he continued working. The evidence suggests Cheryl will have a greater retirement income because Gary retired early. She said she had begun investing approximately $2,000 a month in a deferred compensation account when she started receiving the benefits precisely to increase her retirement income later. Since she said she received more than $2,600 a month in net benefits, by her own testimony the payments have nearly replaced the support payments, while allowing her to increase her retirement fund substantially. Under those circumstances, we cannot find the trial court abused its discretion by treating the retirement funds as income.
C. Leave Time Omitted from Settlement
Cheryl also appeals the trial court order denying her motion to divide Gary's accrued leave time as an omitted community asset under section 2556. She contends her failure to recognize the leave time as an asset "goes to the very essence of Section 2556" and objects to the trial court finding "fault with wife for not recognizing the item as an asset and/or not pursuing its inclusion when husband had disclosed it."
"In a proceeding for dissolution of marriage . . . the court has continuing jurisdiction to award community estate assets or community estate liabilities to the parties that have not been previously adjudicated by a judgment in the proceeding. A party may file a postjudgment motion or order to show cause in the proceeding in order to obtain adjudication of any community estate asset or liability omitted or not adjudicated by the judgment. In these cases, the court shall equally divide the omitted or unadjudicated community estate asset or liability, unless the court finds upon good cause shown that the interests of justice require an unequal division of the asset or liability." (§ 2556.)
A party's delay in seeking postjudgment property adjudication does not bar relief under section 2556. (In re Marriage of Huntley (2017) 10 Cal.App.5th 1053, 1060 (Huntley); Lakkees v. Superior Court (1990) 222 Cal.App.3d 531, 540, fn. 5.) Moreover, "Section 2556 applies even when former spouses were aware of the community property at the time the dissolution judgment was entered." (Huntley, at p. 1060; see also Huddleson v. Huddleson (1986) 187 Cal.App.3d 1564, 1569 (Huddleson).) "Regardless of whether the parties know of, or discuss, the [asset], if the 'court was not called upon to award it, and did not award it, as community property, separate property, or any property at all' [citation], then [it] is a missed asset subject to a postdissolution claim." (Huddleson, at p. 1569.)
Gary argues section 2122 limitations on setting aside a family law judgment is to the contrary. We disagree. Section 2122 governs motions to avoid a judgment. Section 2556 specifically gives trial courts jurisdiction to divide a community asset not previously adjudicated. (In re Marriage of Thorne & Raccina (2012) 203 Cal.App.4th 492, 499-500.)
"In sum, section 2556 applies to community property not actually adjudicated in the previously entered dissolution judgment. 'The mere mention of an asset in the judgment is not controlling. [Citation.] "[T]he crucial question is whether the [community property] benefits were actually litigated and divided in the previous proceeding."'" (Huntley, supra, 10 Cal.App.5th at p. 1061.) In making a division of omitted community assets, the court presumes the asset should be divided equally (§§ 2550, 2556) unless it "finds upon good cause shown that the interests of justice require an unequal division of the asset or liability." (§ 2556.)
We review questions of law, including the effect or legal significance of undisputed facts de novo. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.) Where a marital settlement agreement is clear, we apply the unambiguous contract terms to the undisputed facts as a matter of law. (In re Marriage of Iberti (1997) 55 Cal.App.4th 1434, 1439.) We review a court's determination of good cause to divide the asset unequally for abuse of discretion. (In re Marriage of Leonard (2004) 119 Cal.App.4th 546, 563.)
It was Cheryl's burden to establish the existence of an unadjudicated community asset. (See In re Marriage of Hixson (2003) 111 Cal.App.4th 1116, 1119.) Gary does not contest at least a portion of his accrued leave time was an asset of the community, a concession consistent with the law. (In re Marriage of Moore (2014) 226 Cal.App.4th 92, 102, 106.) Thus, the only question we face is whether the evidence compels the conclusion that the asset was not adjudicated in the property division. The settlement agreement adopted as the stipulated judgment specifically awards several categories of assets, including life insurance policies, retirement accounts, deferred compensation accounts, and tax annuity shelter accounts. It does not, explicitly or implicitly, address either party's accrued leave time, nor does it contain an omnibus provision stating all other assets were adjudicated. And while Cheryl admits Gary's attorney provided pay stubs that disclose the existence of his leave time while the parties were negotiating their settlement, Cheryl said she did not understand the leave time to be a divisible asset until she learned that fact from coworkers, after the settlement had been entered.
Gary argues the settlement did adjudicate the asset because it awarded him all the community property interest in a deferred compensation account, the same account where he later deposited the cashed-out leave time asset. The question is whether the asset was adjudicated at the time of the marital settlement agreement. Gary did not cash out the asset until he retired in 2013. It is therefore irrelevant that he moved those funds into an account the judgment had designated his separate property. --------
The trial court did not address this evidence, but instead focused entirely on the fact that Gary had disclosed the assets to Cheryl by providing pay stubs. The court said, Gary's "accrued leave balances were fully known about and disclosed to Cheryl and her attorney prior to the negotiated judgment that was reached between the parties." Based on this disclosure, the court concluded Cheryl's attorney either decided not to pursue division of the accrued leave or negotiated the right to those funds away in making the overall bargain. It also concluded on the same basis that "there is good cause that the interests of justice require an unequal division of these assets."
By giving importance to the fact that Gary disclosed the asset during settlement negotiations, the trial court committed legal error. As we have discussed, the relevant question is whether the stipulated judgment adjudicated the asset. The plain terms of the settlement agreement show the parties did not do so, which is controlling. (In re Marriage of Iberti, supra, 55 Cal.App.4th at p. 1440 [courts give effect to clear language of marital settlement agreements incorporated into a dissolution judgment].) Cheryl's testimony confirms the document's plain language. The trial court should have attended to the terms of the settlement in making its determination. We cannot salvage the court's order on the ground it is based in the alternative on its discretion to find the disclosure provided "good cause" for awarding the asset to Gary. The statutes and case law direct the courts to divide omitted assets equally despite prior knowledge of the asset. It is an abuse of discretion to use disclosure as an excuse to ignore that directive. We therefore reverse the trial court order refusing to divide the omitted leave time assets.
We will remand to the trial court so that it may determine, in the first instance, how much of the leave time is a community asset and divide that portion equally between Cheryl and Gary.
III
DISPOSITION
We affirm the order modifying and terminating spousal support, reverse the order refusing to divide Gary's accrued leave time as an omitted asset, and remand for the trial court to determine how much of the leave time is community property and divide the community portion equally between the parties.
The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
SLOUGH
J. We concur: McKINSTER
Acting P. J. CODRINGTON
J.