Opinion
G060819 G061168
07-16-2024
IN RE the MARRIAGE OF Jill and Grant WIESE. Jill Wiese, Appellant, v. Grant K. Wiese, Appellant.
Complex Appellate Litigation Group, Claudia Ribet, Beverly Hills, Charles Kagay and Robert A. Roth, San Francisco, for Appellant Jill Wiese. Law Offices of Steven E. Briggs, Steven E. Briggs, Newport Beach; Greines, Martin, Stein & Richland, Robert Olson and Jeffrey E. Raskin, Los Angeles, for Appellant Grant Wiese.
Appeals from judgments of the Superior Court of Orange County, Nancy Wieben Stock, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed in part, reversed in part, and remanded. Requests for judicial notice denied. (Super. Ct. No. 14D010350)
Complex Appellate Litigation Group, Claudia Ribet, Beverly Hills, Charles Kagay and Robert A. Roth, San Francisco, for Appellant Jill Wiese.
Law Offices of Steven E. Briggs, Steven E. Briggs, Newport Beach; Greines, Martin, Stein & Richland, Robert Olson and Jeffrey E. Raskin, Los Angeles, for Appellant Grant Wiese.
OPINION
O’LEARY, P. J.
Family Code section 1101, subdivision (d)(2) provides that "[a]n action may be commenced under this section … in conjunction with an action for … dissolution of marriage." This provision exempts claims for breach of fiduciary duty involving community property from an otherwise applicable statute of limitations. This marriage-dissolution case requires us to decide whether this exemption also extends to claims involving a spouse’s separate property. We hold that it does not.
Undesignated statutory references are to the Family Code.
Jill and Grant Wiese were married and worked together for almost 30 years before dissolving their marriage in 2016. When they married, Grant already possessed substantial real estate wealth, whereas Jill had relatively minimal assets. Shortly before the marriage, the parties executed a premarital agreement (PMA), which among other things, provided for near-total separation of the couple’s assets and earnings. The PMA also required Grant to provide for the parties’ reasonable support.
Because the parties share a last name, we refer to them by their first names.
During most of the marriage, Jill worked as an independent agent for Grant’s real estate brokerage, under an agreement that entitled her to 100 percent of her commissions, after deductions for business expenses and income taxes. As Jill earned her commissions, Grant would deduct amounts for business expenses and estimated taxes, as well as for amounts he believed Jill owed him for personal expenses exceeding his reasonable-support obligations. However, the amounts Grant deducted for taxes did not correspond with the amounts he ultimately paid based on the parties’ joint tax returns. And even when the total tax Grant paid on their combined incomes was lower than what he had deducted from Jill’s commissions, he provided her no refund.
In these dissolution proceedings, and after an unsuccessful attempt to invalidate the PMA, Jill brought various claims against Grant. As particularly relevant here, she claimed that his deductions from her commissions constituted breaches of his spousal fiduciary duty and impaired her separate-property interests. Grant countered, inter alia, that Jill’s claims for decades of allegedly improper deductions were time-barred. He also contended the claims were meritless, and as to her taxwithholding claims, he asserted he actually deducted too little from her commissions.
The trial court concluded that Jill’s fiduciary duty claims were timely based on section 1101, subdivision (d)(2). The court proceeded to find that Grant breached his fiduciary duty by withholding excessive amounts for taxes from her commissions throughout the marriage. It awarded Jill over $1.3 million for these claims. Both parties appealed, challenging various aspects of these and other rulings by the court.
In the published portion of this opinion, we rely on the structure and text of section 1101, its location in the Family Code, the relevant legislative history, and applicable precedents to conclude that this section encompasses only breaches involving community property. Subdivision (d)(2)’s exemption from an otherwise applicable statute of limitation therefore does not extend to Jill’s separate-property claims. Thus, most of Jill’s fiduciary duty claims are barred by the applicable four-year statute of limitations.
In the unpublished portion of this opinion, we address the parties’ remaining contentions and conclude: (1) as relevant to Jill’s surviving claims, the trial court did not err by determining that Grant breached his fiduciary duty by deducting excessive amounts for taxes from Jill’s commissions; (2) the court must fashion a new damages award for these claims; (3) the court must reconsider Jill’s claims concerning Grant’s deductions for her personal expenses; (4) the PMA did not require Grant to provide Jill additional support for her future retirement needs, nor was the court required to consider Grant’s separate-property investments in determining the marital standard of living; (5) under the PMA, a mortgage loan on a lot the parties jointly owned was Grant’s sole obligation; (6) under the PMA, the court erred by ordering Jill to reimburse Grant for exclusively occupying the marital home while they were separated but still married; (7) the court must reconsider its determination that Grant was the prevailing party on the PMA in light of its new judgment on remand; and (8) the court did not err by limiting Jill’s attorney fees and costs under section 2030 based on its view that she had engaged in overlitigation. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.
FACTS
I. The Marriage and the PMA
The parties married in 1987 and separated for the final time in late December 2015. The marriage produced two daughters, who are now adults. The marriage was dissolved in early August 2016 by a judgment on marriage-status only.
At the time of the parties’ marriage, Grant already had substantial wealth, consisting primarily of interests in real estate assets, with a total value of over $2.5 million. Jill’s assets were relatively minimal. Shortly before they married, the parties executed the PMA. The PMA provided that any property belonging to one of the parties at the time of marriage and any property earned or acquired by that party during the marriage would remain that party’s separate property. It directed that either party’s transfer of property to the other must be in writing, and it provided that filing joint income tax returns would not be deemed a transmutation of separate property to community property.
Under the heading, "Support During Marriage," the PMA imposed two obligations on Grant alone. (Underscoring omitted.) First, it stated, "Grant will provide for the reasonable support of the parties during their marriage[,] and it shall not be necessary for Jill to use any of her property for such purpose." Second, the PMA instructed, "Grant shall indemnify Jill from and against any and all debts incurred during the marriage by him or by her with his express advance consent." The PMA provided that if it became necessary to enforce the agreement in court, the prevailing party would be awarded costs and reasonable attorney fees.
II. The Parties’ Financial Relationship During the Marriage
During most of the marriage (until they separated), the parties resided together in a house Grant owned. They never shared a common bank account or credit card, but they filed joint tax returns. The parties jointly owned a vacant lot adjacent to the family residence, purchased with a mortgage they both undertook.
As part of his reasonable-support obligations under the PMA, Grant paid for the household’s major expenses, such as the costs of family vehicles, medical expenses, and the children’s private education. He also provided Jill an allowance for use on other household expenses that fell under his reasonable-support obligations. In the later years of the marriage, this allowance amounted to about $6,000 to $7,000 per month. Grant also allowed Jill to use his credit card for certain household purchases. As discussed more fully below, when he believed certain charges exceeded his reasonable-support obligations, he sought to recover those amounts from Jill.
Early in the marriage, the parties also developed a business relationship. Grant held a real estate broker’s license, which he later transferred to one S corporation he wholly owned and then to another. By 1988, Jill began working for Grant as a real estate agent under a commission agreement. Under the commission agreement, Jill was an independent contractor and was to receive, "after expenses and income tax[,] 100% of commissions." (Capitalization omitted.) The agreement provided that it could be amended only in writing.
Because the parties do not contend the corporate structure affects the analysis of the issues in this appeal, we refer only to Grant for ease of reference.
The parties initially operated under an oral agreement but later executed a written one. We refer to the terms of the written agreement, as the parties do not contend there was a meaningful variance between the two.
It is undisputed that this commission arrangement was unusual, as agents typically receive only 50 to 80 percent of commissions received by the broker, depending on the circumstances.
As Jill earned her commissions, Grant would deduct amounts for business expenses and estimated taxes. He would also deduct amounts he concluded Jill owed him for personal expenses he believed exceeded his reasonable-support obligations. Jill often disagreed with Grant’s deductions. Regarding the deductions for taxes, she later testified she and Grant "had dis- cussions or arguments almost every month because [she] always felt like [the withholdings] were way higher than they should have been." She recounted that Grant would tell her he was acting on his accountant’s instructions and asked her to speak with the accountant. She did not do so because she "didn’t think [she] was going to get anywhere with that." We discuss Grant’s deductions from Jill’s commissions in greater detail in the appropriate sections below.
III. Jill’s Dissolution Petition and Challenge to the PMA’s Validity
In November 2014, before the parties’ final separation, Jill filed a petition to dissolve the marriage. In her petition, she asked that her "[p]roperty rights be determined" and requested that assets "to be determined" be confirmed as her separate property. (Capitalization omitted.) She also sought a determination that the PMA was "void, invalid, and unenforceable." The matter was bifurcated for a trial on the validity of the PMA. Following the trial, the court (Judge Clay M. Smith) concluded that the PMA was valid and enforceable, rejecting several challenges by Jill. Jill does not challenge these determinations on appeal.
For reasons not pertinent to this appeal, the trial court determined that the parties did not finally separate until more than a year after Jill filed her dissolution petition.
Among other things, the trial court rejected Jill’s testimony that she did not read the PMA before signing it, finding that she herself had corrected a typographical error in the agreement and signed her initials next to the correction. It also rejected Jill’s contention that the PMA was unconscionable. The court found there was no substantive unconscionability, observing that the agreement imposed the same obligations on both parties, with the exception that it placed on Grant the duty to provide Jill with reasonable support during the marriage. It similarly identified no procedural unconscionability, finding that Jill had been advised by independent counsel before signing the PMA, made no attempt to negotiate its terms, and followed the agreement without objection for almost 30 years.
IV. The Parties’ Substantive Claims
After the trial court held that the PMA was valid and enforceable, the parties proceeded to litigate various claims. In her August 20, 2018, trial brief, Jill asserted, inter alia, that Grant had breached his fiduciary duties to her by wrongfully deducting or over-deducting funds from her real estate commissions, under the categories of taxes and recouping Jill’s personal expenses. She claimed Grant was required to account for all her earnings and asked the court to award her the total amount of her past earnings plus appreciation based on the growth in the value of Grant’s real estate portfolio, which had grown considerably during the marriage. She also contended she was entitled to an award of attorney fees under section 1101, subdivision (g).
As discussed more fully below, section 1101, subdivision (g) provides in relevant part: "Remedies for breach of the fiduciary duty by one spouse … shall include … an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs."
Jill additionally claimed Grant had failed to comply with his reasonable-support obligations under the PMA. In a later filing, she asserted that under these obligations, Grant was required to provide her money for savings and investments. As for the division of property, Jill asked the trial court to assign the mortgage on their jointly owned lot to Grant alone. Finally, she sought an award of permanent spousal support. In his filings, Grant opposed Jill’s positions. Among other things, he contended that Jill’s claims concerning her commissions, which he characterized as breach of contract claims, were barred by the statute of limitations and the equitable doctrine of laches. Grant also contended that his deductions for taxes saved Jill money. And he demanded that Jill reimburse him for her sole use of the marital residence from the date of their separation.
V. The Trial and Judgments
After a trial lasting several days, the trial court (Judge Nancy Wieben Stock (Ret.)) issued its statement of decision. Among other things, the court concluded that Grant had breached his fiduciary duty to Jill by withholding excessive amounts for taxes from her commissions throughout the marriage. In so doing, the court rejected Grant’s statute of limitations defense, holding that section 1101, subdivision (d)(2) enabled Jill to bring her claims. It did not address Grant’s assertion of laches. The court awarded Jill over $1.3 million on the tax-withholding claims based on its calculation of wrongly withheld commissions, plus a 50 percent "penalty" under section 1101, subdivision (g), which it imposed sua sponte, believing it was "mandatory."
The trial court additionally ruled: (1) Grant had not breached his fiduciary duty by deducting personal expenses from Jill’s commissions; (2) Grant had not breached the PMA’s reasonable-support requirement; (3) under the PMA, the mortgage loan on the parties’ jointly owned lot was Grant’s sole obligation; (4) Jill was obligated to reimburse Grant for exclusively occupying the marital home from the date of separation; and (5) Grant was to pay Jill $15,000 per month in spousal support and maintain a life insurance policy as security for support. The court entered judgment according to these rulings, and both parties appealed.
The trial court later issued a statement of decision on several remaining issues, including attorney fees. As relevant here, the court ruled that Grant was the prevailing party on the PMA and Jill was therefore required to pay him over $261,000 in fees. However, the court also ordered Grant to pay Jill $890,000 for attorney fees and costs under section 2030, though she requested at least $1.5 million. It declined to award Jill attorney fees under section 1101, subdivision (g). The court entered another judgment consistent with these additional rulings, and both parties appealed. We consolidated the appeals of these two judgments.
As discussed further below, section 2030 affords the trial court discretion to order one party to pay the other "reasonably necessary" attorney fees and costs based in part on the parties’ financial circumstances. (§ 2030, subd. (a)(1)-(2).)
See footnote *, ante.
I. Jill’s Breach of Fiduciary Duty Claims
Both parties challenge aspects of the trial court’s liability determinations on Jill’s claims for breach of fiduciary duty. Grant contends that the court erred by concluding these claims were timely and that, among them, the tax-withholding claims were meritorious. Both parties argue the court erred in calculating its damages award for the tax-withholding claims. Jill additionally asserts the court erred by rejecting her claims regarding Grant’s deduction of personal expenses from her commissions.
As discussed below, we conclude that most of Jill’s fiduciary duty claims were barred by the statute of limitations. As to her surviving claims, we conclude: (1) the trial court correctly determined that Grant had breached his fiduciary duty by deducting excessive amounts for taxes; (2) the court must fashion a new damages award in light of the guidance we provide; and (3) and the court must reconsider Jill’s claims concerning Grant’s deduction of personal expenses.
A. Statute of Limitations
Grant argues the trial court erred by concluding that Jill’s fiduciary duty claims were all timely based on section 1101, subdivision (d)(2). As explained below, we agree. Section 1101, subdivision (d)(2) exempts claims under that section from an otherwise applicable statute of limitations. Jill maintains she qualified for this exemption because her claims arose under section 1101, subdivisions (g) and (h), which provide remedies for certain breaches of spousal fiduciary duties. But based on section 1101’s location in the Family Code, the structure and text of its subdivisions, the relevant legislative history, and applicable precedents, we hold that those provisions encompass only breaches relating to community property. Because Jill’s claims pertained to her separate property, she could not avail herself of subdivision (d)(2)’s exemption.
1. Jill's Preliminary Arguments
[1] Jill asserts Grant may not invoke the statute of limitations for two procedural reasons. First, she claims he should be equitably estopped from invoking the defense because "when Jill raised [her] concerns [about over-deduction of taxes], he took advantage of the fact that Jill trusted him, allaying her suspicions and lulling her into not suing him by insisting that the deductions he was taking were legitimate." Her own testimony refutes this contention. Jill testified she and Grant "had discussions or arguments almost every month because [she] always felt like [the withholdings] were way higher than they should have been." According to her, Grant would respond that he was acting on his accountant’s instructions and even asked her to speak with the accountant. Thus, rather than insist the withholding amounts were proper and lulling Jill into inaction, Grant disclaimed knowledge and even invited Jill to investigate further. She chose not to do so because she "didn’t think [she] was going to get anywhere with that."
Under these circumstances, no reasonable factfinder would conclude that Grant reasonably induced Jill to refrain from suing him. (See Doe v. Marten (2020) 49 Cal.App.5th 1022, 1028 [equitable estoppel may bar assertion of statute of limitations where defendant’s conduct "actually and reasonably induced the plaintiff to refrain from filing a timely suit"]; id. at p. 1029 ["whether a plaintiff reasonably relied on a nondisclosure of a material fact is a question of fact for the trial court ‘unless reasonable minds could reach only one conclusion based on the evidence’ "].)
[2] Second, Jill contends Grant forfeited his argument because in the trial court, he confined his statute of limitations argument to contractual claims. But regardless of the precise focus of Grant’s argument below, the court rejected his statute of limitations defense by concluding that section 1101, subdivision (d)(2) rendered her claims for breach of fiduciary duty timely. The issue is therefore properly before us. Accordingly, we proceed to address Grant’s statute of limitations argument.
2. Governing Principles and Legal Background
a. Standard of Review and Statutory Interpretation
Statutory interpretation raises questions of law subject to de novo review. (In re Marriage of Fong (2011) 193 Cal.App.4th 278, 288.) "As in any case involving statutory interpretation, our fundamental task here is to determine the Legislature’s intent so as to effectuate the law’s purpose. [Citation.] We begin by examining the statute’s words, giving them a plain and commonsense meaning. [Citation.] We do not, however, consider the statutory language ‘in isolation.’ [Citation.] Rather, we look to ‘the entire substance of the statute … in order to determine the scope and purpose of the provision …. [Citation.]’ [Citation.] That is, we construe the words in question ‘ "in context, keeping in mind the nature and obvious purpose of the statute …." [Citation.]’ [Citation.] We must harmonize ‘the various parts of a statutory enactment … by considering the particular clause or section in the context of the statutory framework as a whole.’ [Citations.]" (People v. Murphy (2001) 25 Cal.4th 136, 142.) "We must also avoid a construction that would produce absurd consequences, which we presume the Legislature did not intend. [Citations.]" (People v. Mendoza (2000) 23 Cal.4th 896, 908.)
b. Family Code Provisions Concerning Spousal Fiduciary Duties Generally
[3, 4] "Section 721 … creates a broad fiduciary relationship between spouses in their transactions with each other. This 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.’ [Citation.] It also subjects the relationship to the same rights and duties applied to nonmarital partners under the Corporations Code." (In re Marriage of Simmons (2013) 215 Cal.App.4th 584, 590 (Simmons).)
Among other things, section 721 requires a spouse to (1) provide the other spouse access to any books kept regarding a transaction, (2) upon request, render full information of anything "affecting any transaction that concerns the community property," and (3) account and hold as a trustee any benefit from a transaction by one spouse without the consent of the other that concerns the community property. (§ 721, subd. (b).) Section 2100, another provision setting forth disclosure obligations, requires parties to a marriage dissolution proceeding to fully disclose all assets and liabilities, "regardless of the characterization as community or separate." (§ 2100, subd. (c).)
c. Division 4, Part 4 of the Family Code and Section 1101
Division 4, part 4 of the Family Code contains sections 1100 through 1103. It is undisputed that sections 1100, 1102, and 1103 concern only community property. Section 1100 contains specific rules governing a spouse’s management of "community personal property." (§ 1100, subds. (a)-(d).) It also references the section 721 fiduciary relationship and declares it applicable to the parties’ management of "community assets and liabilities." (§ 1100, subd. (e).) Section 1102 governs "community real property." (§ 1102, subds. (a), (c), (e).) And section 1103 governs control of community property when a spouse has a conservator or lacks legal capacity.
Section 1101 deals with breaches of fiduciary duties between spouses. Its subdivision (a) provides that a spouse has a claim for breach of the fiduciary duty that results in impairment of the "undivided one-half interest in the community estate, including [through] a single transaction or a pattern or series of transactions." Other, subdivisions of section 1101 also expressly involve community property. Subdivision (b) allows the court to order an accounting of the parties’ property and determine their rights in "community property" and the classification of all their property. Subdivision (c) permits the court to add the name of a spouse to community property or otherwise reform the title of the community property. And subdivision (e) allows the court to permit a transaction in community property without one spouse’s consent, under certain conditions.
Subdivision (d) of section 1101 provides the statute of limitations that governs claims under that section. Under subdivision (d)(1), "[e]xcept as provided in paragraph (2), any action under subdivision (a) shall be commenced within three years of the date a petitioning spouse had actual knowledge that the transaction or event for which the remedy is being sought occurred." In turn, subdivision (d)(2) instructs: "An action may be commenced under this section upon the death of a spouse or in conjunction with an action for legal separation, dissolution of marriage, or nullity without regard to the time limitations set forth in paragraph (1)."
Given our conclusion that section 1101, subdivision (d)(2) applies only to community property, we do not address Grant’s contention that it is merely an exception to the rule stated in subdivision (a).
Subdivisions (g) and (h) of section 1101 "provide remedies for claims brought under [that section]." (In re Marriage of Schleich (2017) 8 Cal.App.5th 267, 280 (Schleich).) Subdivision (g) states, as relevant here, "Remedies for breach of the fiduciary duty by one spouse, including those set out in Sections 721 and 1100, shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs." (§ 1101, subd. (g).) And under subdivision (h), where the breach falls within the scope of Civil Code section 3294—meaning it involves oppression, fraud, or malice—"[r]emedies for the breach of the fiduciary duty by one spouse, as set forth in Sections 721 and 1100 … shall include … an award to the other spouse of 100 percent, or an amount equal to 100 percent, of any asset undisclosed or transferred in breach of the fiduciary duty." (§ 1101, subd. (h).)
d. The Courts’ Construction of Section 1101
Reviewing section 1101’s structure and placement in the Family Code, two Courts of Appeal have held that its remedy provisions, subdivisions (g) and (h), apply only to breaches of fiduciary duty involving community property. (Schleich, supra, 8 Cal.App.5th at p. 279; Simmons, supra, 215 Cal.App.4th at p. 593.) In Simmons, the trial court awarded the entire value of the husband’s separate-property savings account to the wife, under section 1101, subdivision (h), for fraudulently failing to disclose the account. (Simmons, at pp. 588-589.) The Court of Appeal reversed, holding that although section 1101, subdivision (h) referred to " ‘any asset,’ " its remedy applied only to the nondisclosure of community property, not to the nondisclosure of separate property. (Simmons, at pp. 593, 595.)
In reaching this conclusion, the Simmons court noted the placement of section 1101, subdivision (h) "in a portion of the Family Code that exclusively concerns matters associated with community property." (Simmons, at p. 593.) And according to the court, reading subdivision (h) together with subdivision (a), which establishes a claim for a breach impairing a community interest, "strongly suggests that ‘any asset’ [in subdivision (h)] means any community asset." (Simmons, at p. 593.) The Court of Appeal added that the Legislature provided remedies that were expressly applicable to. nondisclosure of separate property. (Simmons, supra, 215 Cal.App.4th at p. 593.) Further, the Simmons court reasoned that section 1101, subdivision (h)’s remedy showed it was designed with only community property in mind. (Ibid.) It observed that with respect to community property, the fiduciary duty is intended, among other things, to preserve each spouse’s one-half interest and explained: "Through the enactment of the section 1101 value-of-the-asset remedy [under subdivision (h)], the Legislature has in effect altered the one-half interest community property formula in the event a spouse violates his or [her] duty to preserve the other spouse’s one-half right to the property, by awarding the [claimant] spouse more than his or her one-half interest. This one-half interest formula does not apply to separate property; i.e., by its nature separate property is not co-owned by, or divided between, the parties. Because separate property assets are not subject to equal ownership and division between the parties, it follows that the Legislature’s alteration of the one-half interest formula was not meant to be applied to nondisclosure of separate property." (Id., at pp. 593-594.)
The Simmons court acknowledged that section 1101, subdivision (h) referenced fiduciary duties under section 721, which are "broad enough to encompass the duty to disclose separate property assets." (Simmons, supra, 215 Cal.App.4th at p. 594.) But considering the statute as a whole, it concluded this reference did not reflect an intent to extend the value-of-the-asset remedy to breaches involving separate property. (Ibid.)
Schleich produced a similar holding for section 1101, subdivision (g). (Schleich, supra, 8 Cal.App.5th at p. 279.) There, the. trial court awarded the wife remedies under section 1101, subdivisions (g) and (h) for the husband’s failure to disclose his separate property during the dissolution proceeding. (Schleich, at p. 287.) The Court of Appeal reversed, agreeing with Simmons’s analysis and stating it necessarily applied to subdivision (g) as well. (Schleich, at pp. 279, 296.) It concluded that section 1101 concerned community property "exclusively." (Schleich, at p. 279.) Rejecting the wife’s argument that the omission of any reference to community assets in section 1101, subdivisions (g) and (h) must have been purposeful, the Schleich court explained: "Subdivisions (g) and (h) provide remedies for claims brought under section 1101. Under subdivision (a), a breach affecting the claimant’s community property interest is required to support that claim, making it unnecessary for the remedy provisions also to characterize the relevant asset as a community interest." (Schleich, at pp. 279-280.)
3. The Statute of Limitations Applicable to Jill’s Claims
Generally, the four-year statute of limitations under Code of Civil Procedure section 343 applies to claims for breach of fiduciary duty. (Thomson v. Canyon (2011) 198 Cal.App.4th 594, 606.) Jill raised her claims in her August 20, 2018, trial brief, leaving the majority of her claims for almost three decades of improper deductions outride that period. The trial court held that all of Jill’s claims were timely under section 1101, subdivision (d)(2). As explained below, we conclude that was error. a. Section 1101, Subdivision (d)(2) Does Not Apply to Claims Involving Separate Property
Jill does not argue that the continuing violation doctrine applied to her claims, and we do not consider that theory. We discuss more fully below the issue of when the statute of limitations ceased running.
[5] Section 1101, subdivision (d)(2)’s exemption from an otherwise applicable statute of limitations applies only to claims under section 1101. As described above, precedent holds that section 1101 deals "exclusively" with community property. (Schleich, supra, 8 Cal.App.5th at p. 279; accord, Simmons, supra, 215 Cal.App.4th at p. 593.) Because Jill’s fiduciary duty claims concerned separate property, this exemption did not apply to her claims.
Jill asserts her claims were brought under section 1101, subdivisions (g) and (h), arguing that those subdivisions encompass breaches involving separate property. She contends subdivision (d)(2)’s reference to actions under "this section" therefore applies to her claims, regardless of their separate-property character. She maintains that Simmons and Schleich—which held that subdivisions (g) and (h) concerned only community property—are distinguishable and, in any case, were wrongly decided.
Jill’s attempts to distinguish Simmons and Schleich are unpersuasive. As Jill notes, both cases involved spouses’ failure to disclose their own separate property during dissolution proceedings, whereas Jill’s claims involved Grant’s misappropriation of her separate property. But both cases resolved the question before them by construing section 1101—based in large part on the statute’s language, structure, and location—and concluding that its subdivisions (g) and (h) applied only to community property. The same analysis applies equally here, even though the nature of the claimed wrongdoing is different.
Viewed in isolation, the language of subdivisions (g) and (h) of section 1101 does not explicitly confine their remedies to breaches involving community property—they refer to "any asset" transferred in breach of the fiduciary duty. Yet the statutory framework as a whole teaches that they are indeed meant to address only breaches involving community property. (See People v. Murphy, supra, 25 Cal.4th at p. 142.)
To begin with, the substance of section 1101, subdivisions (g) and (h) shows they are meant to remedy violations relating to community property. Subdivision (g) provides for an award of 50 percent of an asset that was undisclosed or transferred in breach of the fiduciary duty, or an amount equal to 50 percent. (§ 1101, subd. (g).) This award is not in addition to the return of the claimant spouse’s one-half interest in the property. It merely preserves that one-half interest. (In re Marriage of Gilbert-Valencia & McEachen (2023) 98 Cal.App.5th 520, 526 [amount equivalent to 50 percent under subdivision (g) is " 'an alternative to an award of 50 percent of the asset itself' and ‘must be the same 50 percent interest that would be awarded in the overall division of community assets’ "]; Hogoboom et al., Cal. Practice Guide: Family Law (The Rutter Group 2023) ¶ 8:617, p. 8-241 ["The 50% penalty plus attorney fees and costs constitutes the full remedy available under … § 1101[, subd.](g)"].)
In that respect, we note the trial court labored under an erroneous belief that section 1101, subdivision (g) provided for a 50 percent penalty in addition to an award of the affected asset.
Where malice, oppression, or fraud are present, subdivision (h) of section 1101 adds the offending spouse’s 50 percent interest in the affected asset to the claimant spouse’s 50 percent share. (In re Marriage of Gilbert-Valencia & McEachen, supra, at pp. 526-527 [" ‘under subdivision (h)[,] the claimant spouse is entitled to 100 percent of an asset—his or her 50 percent share plus the breaching spouse’s one-half interest in the asset’ "].) Subdivisions (g) and (h) were thus tailored to remedy violations involving community property. In the context of claims involving the misappropriation of separate property, this framework would make little sense, as the claimant spouse would be entitled to 100 percent of the affected asset regardless of any malice, oppression, or fraud.
Next, section 1101, subdivisions (g) and (h) must be. read in the context of that section’s other subdivisions. Subdivision (a)’s creation of a "claim" involving an impairment to the claimant’s interest in the "community estate" corresponds with the "remedies" of subdivisions (g) and (h) and restricts their scope (§ 1101, subds. (a), (g), (h); accord, Schleich, supra, 8 Cal. App.5th at pp. 279-280.) Other subdivisions of section 1101—subdivisions (b), (c), (d)(1), and (e)—similarly concern community property, and none expressly refers to separate property breaches.
Finally, as Simmons observed, and Jill does not dispute, every other section within division 4, part 4 of the Family Code concerns only community property. (Simmons, supra, 215 Cal.App.4th at p. 593.) Section 1100 concerns the management of community personal property, section 1102 concerns community real property, and section 1103 concerns community property when a spouse has a conservator or lacks legal capacity.
Jill correctly notes that section 1101’s predecessor before the Legislature created the Family Code (former Civ. Code, § 5125.1) was in a chapter that did not deal exclusively with community property. But the Legislature’s post-reorganization placement of section 1101 in a part of the Family Code dealing with community property reflects its understanding that this section likewise relates to community property. (Cf. Stockton Sav. & Loan Bank v. Massanet (1941) 18 Cal.2d 200, 204 ["[S]ubsequent legislation interpreting the statute" provides "an indication of the legislative intent which may be considered together with other factors in arriving at the true intent existing at the time the legislation was enacted"]; accord, People v. Harvey (1980) 112 Cal.App.3d 132, 138-139.)
Like the Schleich and Simmons courts, we are cognizant that section 1101, subdivisions (g) and (h) reference section 721, which encompasses fiduciary duties concerning separate property in addition to community property. (Schleich, supra, 8 Cal.App.5th at p. 279; Simmons, supra, 215 Cal.App.4th at p. 594.) But like those courts, we conclude the Legislature did not intend those provisions to cover separate property, given the community-property character of their remedies, the focus of section 1101’s other provisions on community property, and that section’s location in a part of the Family Code dealing with community property. (Schleich, at p. 279; Simmons, at p. 594.)
[6] Indeed, section 1101, subdivision (g) included a reference to section 721 when the Legislature enacted the Family Code in 1992. (Former section 1101, subd. (g) ["Remedies for breach of the fiduciary duty by one spouse as set out in Section 721 shall include, but not be limited to, an award to the other spouse of 50 percent …"].) Yet a Senate Committee on the Judiciary report addressing Assembly Bill No. 583 (2001-2002 Reg. Sess.) (Assembly Bill 583), which amended section 1101 to its current form, described "[e]xisting law" under former subdivision (g) as providing that "when a court finds a spouse has breached a fiduciary duty to the other spouse regarding management of community property …, the remedies for the breach shall include, but shall not be limited to, an award to the claimant spouse of 50 percent" of the affected asset. (Sen. Com. on Judiciary, Analysis of Assem. Bill 583, as amended July 16, 2001, p. 3, underscoring omitted and italics added.) Again, the Legislature’s understanding of the scope of section 1101’s subdivisions informs our analysis. (Western Security Bank v. Superior Court (1997) 15 Cal.4th 232, 244 [although not conclusive, "the Legislature’s expressed views on the prior import of its statutes are entitled to due consideration, and we cannot disregard them"].)
Both parties have asked us to take judicial notice of various published legislative history materials. We deny those requests as unnecessary. (Wittenburg v. Beachwalk Homeowners Assn. (2013) 217 Cal.App.4th 654, 665, fn. 4, 158 Cal.Rptr.3d 508 ["A motion for judicial notice of published legislative history … is unnecessary" and " '[c]itation to the material is sufficient’ "].)
Among other changes, Assembly Bill 583 amended section 1101 to expand the category of fiduciary duty breaches involving community property that could be addressed under this section. Subdivision (a) of section 1101 previously referred to "a breach of the fiduciary duty imposed by Section 1100 or 1102" resulting in impairment to the claimant spouse’s interest in the community estate. (Former § 1101, subd. (a), italics added.) Assembly Bill 583 changed this subdivision to refer to "any breach of the fiduciary duty" resulting in such impairment. (§ 1101, subd. (a), italics added.) It similarly amended subdivision (g), which previously referred to breaches "as set out in Section 721" (former § 1101, subd. (g)), changing it to refer to breaches "including those set out in Sections 721 and 1100" (§ 1101, subd. (g)).
In short, the remedies of section 1101, subdivisions (g) and (h) are tailored for community-property breaches and these provisions are located in a section dealing with community property, in a part of the Family Code concerning community property. Based on this holistic evaluation of the statutory framework, we conclude subdivisions (g) and (h) apply only to community-property claims.
b. Jill’s Arguments Based on Legislative History and Policy Are Unpersuasive
In arguing that section 1101’s remedy provisions encompass separate property claims, Jill directs us to the legislation that first added subdivisions (g) and (h) to former Civil Code section 5125.1, Senate Bill No. 716 (1991-1992 Reg. Sess.) (Senate Bill 716) (Stats. 1991, ch. 1026). Through Senate Bill 716, the Legislature "intend[ed] to clarify the management standards" governing the respective predecessors of Family Code sections 721 and 1100, former Civil Code sections 5103 and 5125. (Stats. 1991, ch. 1026, § 1, p. 4747.) Thus, although existing law already provided that in transactions between themselves, spouses were "subject to the general rules which controlled] the actions of persons occupying confidential relations with each other" (Legis. Counsel’s Dig., Sen. Bill 716), Senate Bill 716 amended former Civil Code section 5103 to provide that this confidential relationship was "a fiduciary relationship subject to the same rights and duties of nonmarital business partners." (Stats. 1991, ch. 1026, § 2, pp. 4747-4748, italics added.)
Senate Bill 716 also amended former Civil Code section 5125.1, subdivision (a). This subdivision already provided a claim for "breach of the duty imposed by [former Civil Code] Section 5125 or 5127 [now Family Code sections 1100 and 1102] that results in impairment to the claimant spouse’s present undivided one-half interest in the community interest" (Stats. 1986, ch. 1091, § 2, p. 3815), but Senate Bill 716 added that this was a "fiduciary" duty and that a breach could be accomplished through "a single transaction or a pattern or series of transactions." (Stats. 1991, ch. 1026, § 4, p. 4750.) Finally, Senate Bill 716 added subdivisions (g) and (h) to former Civil Code section 5125.1. As relevant here, subdivision (g) provided its remedies "for breach of the fiduciary duty by one spouse as set out in [former Civil Code] Section 5103," while subdivision (h) did not reference any statute to define the scope of the relevant fiduciary duty. (Stats. 1991, ch. 1026, § 4, p. 4750.)
Jill makes two arguments based on Senate Bill 716. First, she relies on the text of former Civil Code section 5125.1, subdivisions (g) and (h) under that enactment. She highlights that while that section’s subdivision (a) referred to two statutes (former Civil Code sections 5125 and 5127) to define the scope of the duty, subdivision (g) referred to a different statute (former Civil Code section 5103), and subdivision (h) referenced no statute. She claims this shows the Legislature did not intend subdivisions (g) and (h) to be coextensive with subdivision (a).
Jill’s conclusion does not follow from these different references. Like Family Code section 1100, former Civil Code section 5125 under Senate Bill 716 provided specific rules governing a spouse’s management of "community personal property" (former Civ. Code, § 5125, subds. (a)-(d); Stats. 1991, ch. 1026, § 3, p. 4748), but also referenced the fiduciary duties under former Civil Code section 5103 (section 721’s predecessor) and made it applicable to the parties’ management of community property. (Former Civ. Code, § 5125, subd. (e); Stats. 1991, ch. 1026, § 3, p. 4749.) So when former Civil Code section 5125.1, subdivision (a) referenced fiduciary duties under former Civil Code section 5125, it necessarily included duties under former Civil Code section 5103. Subdivision (g) of former Civil Code section 5125.1 therefore referred to a subset of the communityproperty related claims under that section’s subdivision (a). Subdivision (h) of that statute immediately followed subdivision (g), and we do not read its omission of a statutory source of fiduciary duties to provide for a harsher penalty for the breach of a broader category of duties.
Second, Jill argues the Legislative Counsel’s Digest for Senate Bill 716 supports her position. After noting the bill’s clarification that spouses "are subject to the general rules governing fiduciary relationships" and have the same duties as unmarried business partners, the digest stated: "This bill would, in this connection, (1) revise requirements with respect to the disclosure and notice that must be provided by one spouse to the other spouse, (2) revise provisions related to when a spouse may bring a claim against the other spouse for breach of this fiduciary duty, (3) recast and clarify the circumstances in which a spouse may make a gift or dispose of community personal property without the consent of the other spouse, and (4) provide additional remedies for breach of this fiduciary duty by a spouse to the other spouse." (Legis. Counsel’s Dig., Sen. Bill 716.)
Jill contends the phrase "additional remedies for breach of this fiduciary duty" in the Legislative Counsel’s Digest refers to former Civil Code section 5125.1, subdivisions (g) and (h) and shows that they provided remedies "for the broad range of fiduciary duties to be found in section 721." (Italics omitted.) We agree that subdivisions (g) and (h) were the additional remedies the digest referenced. But we disagree that the digest described them as applicable to any breach of section 721. In context, the phrase "this fiduciary duty" refers to the spousal fiduciary duty generally, a new concept under Senate Bill 716. The digest did not attempt to describe the conditions under which subdivisions (g) and (h) would apply. Jill highlights the statement in the Legislative Counsel’s Digest that Senate Bill 716 would "revise provisions related to when a spouse may bring a claim … for breach of this fiduciary duty" and claims the statement must refer to former Civil Code section 5125.1, subdivision (d) (now Fam. Code, § 1101, subd. (d)), because that is the only provision that dealt with a claim’s timing. She recognizes that Senate Bill 716 did not revise subdivision (d) and argues the digest’s statement meant that the addition of subdivisions (g) and (h) "would cause subdivision (d) to govern when a spouse could bring a claim [under those provisions] for a breach of the fiduciary duty set forth in what is now Family Code section 721." We are unpersuaded.
The digest’s reference to "when" a claim may be brought simply related to Senate Bill 716’s amendment of former Civil Code section 5125.1, subdivision (a), which dealt with the conditions for a claim. (Legis. Counsel’s Dig., Sen. Bill 716.) If the reference to "provisions related to when" a claim may be brought were meant as an oblique reference to subdivisions (g) and (h), we would expect it to have adjoined the digest’s note that Senate Bill 716 would provide additional remedies. (Legis. Counsel’s Dig., Sen. Bill 716.) Yet an unrelated comment about unilateral disposition of community property separates the two.
Jill additionally claims it "makes no sense" to think the Legislature would want to provide harsher remedies for misappropriation of community property. But it is not senseless for the Legislature to be particularly concerned about violations involving community property. The Legislature may have believed it was more common for one spouse to manage—and be in a position to misuse—community assets than for one spouse to manage the other spouse’s separate property. It may also have believed that even under the latter scenario, a spouse would be more likely to closely monitor the management of his or her separate property by the other spouse.
In sum, we conclude section 1101, subdivisions (g) and (h) encompass only breaches relating to community-property based on section 1101’s text and structure, its location in the Family Code, the relevant legislative history, and applicable precedents. Likewise, section 1101, subdivision (d)(2), which applies only to claims under that section, covers only community-property claims. Accordingly, Jill’s fiduciary duty claims are subject to Code of Civil Procedure section 343’s statute of limitations.
4. When the Statute of Limitations Ceased to Run
As noted, Jill raised her fiduciary duty claims for the first time in her August 20, 2018, trial brief. Thus, the four-year statute of limitations under Code of Civil Procedure section 343 barred claims that accrued before August 20, 2014. We leave to the trial court the precise determination of which of Jill’s claims were timely.
[7] Jill contends the filing of her November 2014 dissolution petition—not her August 2018 trial brief—stopped the running of the statute of limitations. We disagree. Jill’s petition asked only that her "[p]roperty rights be determined" and that assets "to be determined" be confirmed as her separate property. (Capitalization omitted.) These requests gave Grant no notice of the facts underlying Jill’s subsequent fiduciary duty claims based on wrongful deductions from her commissions. They therefore could not have stopped the running of the statute of limitations for those claims. (See Hutcheson v. Superior Court (2022) 74 Cal.App.5th 932, 940 [" ' "The policy behind statutes of limitations is to put defendants on notice of the need to defend against a claim in time to prepare a fair defense on the merits" ’ "]; Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 416 ["a plaintiff who files a complaint containing no operative facts at all cannot subsequently amend the pleading to allege facts and a theory of recovery for the first time and claim the amended complaint should be deemed filed as of the date of the original"].)
[8–11] Grant argues, without elaborating, that only claims relating to commissions paid in 2015 were timely under the four-year statute of limitations. But as noted, the four-year period encompasses claims accruing in and after August 2014. We question whether claims for over-withholding taxes from Jill’s 2014 commissions could have accrued before the parties filed their taxes and Grant paid a lower tax on her income than he had withheld, presumably sometime in 2015. Had Grant paid the same amount he withheld from Jill, there would have been nothing objectionable about his withholding of taxes pursuant to the parties’ commission agreement. Nevertheless, we do not decide the issue and do not constrain the trial court’s determination of the timeliness of Jill’s claims, consistent with our conclusions on the applicable statute of limitations and when it stopped running.
Grant argues Jill’s claims are all barred by laches. This defense requires a showing that the claimant unreasonably delayed in asserting his or her rights, causing prejudice to the adverse party. (In re Marriage of Powers (1990) 218 Cal.App.3d 626, 642-643, 267 Cal Rptr. 350.) Whether laches applies is subject to a trial court’s discretion. (Id. at p. 643, 267 Cal.Rptr. 350.)
The court impliedly rejected Grant’s assertion of laches, and he fails to show this was an abuse of discretion. Grant’s contention that Jill unreasonably delayed in asserting her claims assumes she delayed for "decades." He offers no meaningful argument that Jill unreasonably delayed in bringing those claims that survive the statute of limitations. This failure is particularly relevant because "[i]n determining the reasonableness of a delay in filing an action, the courts are guided by the applicable statute of limitations. [Citation.]" (David Welch Co. v. Erskine & Tulley (1988) 203 Cal.App.3d 884, 893, 250 Cal.Rptr. 339, disapproved on another ground by Lee v Hanley (2015) 61 Cal.4th 1225, 1239, 191 Cal.Rptr.3d 536, 354 P.3d 334; see also Pease v. Zapf (2018) 26 Cal.App.5th 293, 301, 236 Cal.Rptr.3d 808 [contestant of election results complied with limitation period, "under-cutting] [opponent’s claim of unreasonable delay"].)
B. Jill’s Surviving Fiduciary Duty Claims
See footnote *, ante.
See footnote *, ante.
DISPOSITION
The trial court’s judgments are affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. On remand, the court shall, in addition to any other task it deems appropriate: (1) determine which of Jill’s taxwithholding claims were timely under Code of Civil Procedure section 343; (2) calculate her damages for the timely claims and consider whether it should award prejudgment interest; (3) determine whether Jill has proved her claims concerning Grant’s deductions for her personal expenses by showing that he made unilateral deductions in this category within the limitations period; (4) modify the judgment to reflect that Jill was not required to reimburse Grant for occupying the marital home during the separation period; and (5) reconsider its determination that Grant was the prevailing party on the PMA in light of changes to the judgment and the guidance provided in this opinion. The parties shall bear their own costs on appeal. WE CONCUR:
GOETHALS, J.
GOODING, J.