Marriage of Childs CA4/1 ( 2016 )

Filed 2/16/16 Marriage of Childs CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
In re the Marriage of MANDY and
MATTHEW CHILDS.
D066960
MANDY CHILDS,
Respondent, (Super. Ct. No. D534396)
v.
MATTHEW J. CHILDS,
Appellant.
APPEAL from a judgment of the Superior Court of San Diego County, Christine
K. Goldsmith, Judge. Affirmed.
Mazur & Mazur and Janice R. Mazur; The LaCroix Law Group and Robert E.
LaCroix, for Appellant.
Stephen Temko and Dennis Temko for Respondent.
Matthew J. Childs appeals from an amended judgment entered after the family
court denied his request to enforce a marital settlement agreement (MSA) under Code of
Civil Procedure section 664.6. (Undesignated statutory references are to the Code of
Civil Procedure.) He asserts the family court erred in: (1) finding bonuses from his
employer were not community property debts or obligations; (2) failing to reimburse him
for excess spousal support paid to ex-wife, Mandy; and (3) ordering him to pay Mandy's
attorney's fees. We reject Matthew's arguments.
FACTUAL AND PROCEDURAL BACKGROUND
Matthew and Mandy married in 2003 and had a son about a year later. Mandy
also had a two-year-old daughter from a prior marriage. The parties separated in 2012.
The family court entered custody and visitation orders in February 2014.
Matthew worked as a financial advisor. In 2010, Matthew changed employers and
moved his book of business to a different financial institution. As part of this transition,
Matthew's new employer agreed to pay him two lump sum bonuses totaling about $1
million. Matthew's employer referred to the bonuses as "bonus loans" and had Matthew
execute promissory notes to evidence the transaction. The community received the
money from the two bonuses to purchase real property, pay other living expenses and
make purchases.
Under the bonus agreement with his employer, Matthew was entitled to annual
bonuses (subject to conditions), which were equal to the amount of the required loan
installment payment plus interest. The annual bonuses were guaranteed subject to,
among other things, being employed and in good standing with his employer. The annual
bonuses were subject to state and federal tax withholding and the net bonus was to be
applied to the installment payments due on the "loan." Matthew was required to
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supplement his annual bonus to pay the installment in full. His incentive compensation
checks were subject to mandatory attachment until he paid the full installment.
In January 2014, the parties appeared in court and Mandy's counsel announced
that the parties had reached a "complete settlement" and read the settlement into the
record. The oral settlement agreement did not reference the two bonuses received by the
community during the marriage and subject to repayment over the next several years.
Both parties agreed on the record with the stated terms. Mandy's counsel prepared and
submitted to Matthew's counsel a proposed written MSA. In a paragraph entitled
"Obligations," the parties were to list on an exhibit all separate, community or joint
liabilities. Mandy's counsel did not list the bonuses on the exhibit.
Matthew's counsel requested several modifications to the proposed MSA,
including that the two bonuses acquired during the marriage be listed on the exhibit as a
community obligation being assumed by Matthew. Mandy refused to include this
obligation on the exhibit asserting Matthew and his counsel never mentioned the bonuses
when her counsel read the settlement into the record. Mandy claimed Matthew could not
assert the bonuses were forgotten as the parties spent three hours negotiating the oral
settlement based on the fact that the bonuses were not a community obligation or debt
under In re Marriage of Finby (2013) 222 Cal.App.4th 977 (Finby).
After the parties unsuccessfully tried to resolve the issue, Matthew filed an ex
parte application to clarify and enforce the settlement agreement under section 664.6,
specifically seeking an order requiring the two bonuses acquired by the community
during the marriage be listed as a community obligation in the MSA. Matthew also
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requested an order requiring Mandy to reimburse excess spousal support she had received
under a prior wage garnishment order after she had been paid $90,000 in exchange for
her express waiver of all future spousal support. Mandy opposed Matthew's request,
incorporated her own motion under section 664.6, requested sanctions and an award of
attorney's fees.
In a document titled a statement of decision, the family court denied Matthew's
application, finding that under Finby, the loan bonuses were "community assets subject to
division, not debt" and that the parties did not agree to treat the bonuses in this manner in
their settlement agreement. The court did not address Matthew's request for
reimbursement of the overpayment of spousal support. The court granted Mandy's
request for $7,000 in attorney's fees she incurred for having to respond to the motion,
finding the motion to be "spurious." The family court then entered an amended judgment
incorporating the terms of the settlement as described on the record and the court's
finding that repayment of the bonuses were not a community debt. Matthew timely
appealed from the amended judgment.
DISCUSSION
I. Bonuses
A. General Legal Principles
Section 664.6 provides a summary procedure allowing a court to specifically
enforce an agreement settling pending litigation without requiring the filing of a second
lawsuit. (Kirby v. Southern Cal. Edison Co. (2000) 78 Cal.App.4th 840, 843.) The
statute expressly authorizes trial courts to determine whether a settlement has occurred
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and implicitly authorizes the trial court to interpret the terms and conditions of the
settlement. (Skulnick v. Roberts Express, Inc. (1992) 2 Cal.App.4th 884, 889.) When
ruling on a section 664.6 motion, the trial court acts as a trier of fact (Fiore v. Alvord
(1985) 182 Cal.App.3d 561, 565), and may determine the motion upon declarations alone
(Corkland v. Boscoe (1984) 156 Cal.App.3d 989, 994). Accordingly, the trial court's
factual findings are subject to limited appellate review and will not be disturbed if
supported by substantial evidence. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355,
1360.)
"A settlement agreement is a contract, and the legal principles which apply to
contracts generally apply to settlement contracts." (Weddington Productions, Inc. v.
Flick (1998) 60 Cal.App.4th 793, 810.) "[T]he trial court is under a duty to render a
judgment that is in exact conformity with an agreement or stipulation of the parties. 'If
interpretation of a stipulation is in order the rules applied are those applied to the
interpretation of contracts. [Citations.] It is not the province of the court to add to the
provisions thereof [citations]; to insert a term not found therein [citations]; or to make a
new stipulation for the parties.' " (Jones v. World Life Research Institute (1976) 60
Cal.App.3d 836, 840.)
B. Analysis
Matthew does not dispute that the parties settled their litigation; rather, he
contends the parties did not intend the oral settlement agreement to be "a full and
complete recitation of every aspect of the parties' agreement" as the parties contemplated
executing a written MSA and that the oral settlement "omitted" reference to how the
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bonuses would be characterized. He contends the obligation to repay the bonuses is a
community debt which must be allocated and that the family court erred as a matter of
law when it denied his motion. Our review of the record convinces us that the family
court did not err.
Before reading the parties' settlement into the record, Mandy's trial counsel
represented that the parties intended the oral settlement to completely resolve all reserved
issues and that a written settlement agreement would be prepared to reflect the terms
recited on the record. As relevant here, the parties agreed Mandy would "be waiving her
Smith-Osler percentage with respect to [Matthew's] bonus income. We had a reservation
of jurisdiction over that issue. She is waiving as to the spousal support component."
Additionally, starting in 2015, the parties would be recalculating child support annually
based on the W-2 income of each party.
After Mandy's counsel read the settlement terms into the record, Matthew's
counsel represented that he had "[n]o corrections or modifications." Counsel then
inquired of their respective clients whether they understood the settlement and agreed to
be bound by it. Both parties responded affirmatively. In their sworn declarations, Mandy
and her trial counsel provided additional insight into the events that transpired before the
settlement terms were read into the record.
Mandy stated that the parties started negotiating their settlement the day before her
counsel read the settlement into the record and that the parties resolved all issues before
her counsel placed the settlement on the record. She represented that Matthew and his
counsel were "well aware of the 'bonus/loan' argument" presented in Matthew's section
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664.6 request and they negotiated the settlement based on the fact that, under Finby,
Matthew's bonuses were not loans, but tax deferred bonuses, and the Finby case "formed
the basis of the settlement." Mandy's trial counsel stated that she presented Matthew's
counsel with a copy of Finby upon its publication in December 2013 and provided her
analysis of the case and how it applied to the parties' dispute. Thus, "[t]o the extent
[Matthew's counsel] had any concerns or questions regarding how future
bonuses/forgivable loans would be treated for purposes of child support, he was well
aware of such issues prior to the settlement being read into the record."
Matthew and his counsel provided sworn declarations to the family court with
their original filing and in response to Mandy's filing. In his original declaration,
Matthew's counsel stated that he proposed "several modifications" to the proposed
written MSA, including that the bonus loan debt be listed as a community obligation, that
Mandy's counsel had refused and the parties were at an impasse. Matthew's original
declaration stated that he wanted to adhere to the settlement and explained why his
bonuses should be listed as a community debt. In his reply declaration, Matthew's
counsel again explained why the bonuses should be listed as a community debt, stating
nothing in Finby dictated the opposite. The sur-reply of Matthew and his counsel
provided evidentiary support for Matthew's position. Absent from these declarations,
however, is any rebuttal to the declarations of Mandy and her counsel that Matthew and
his counsel were aware of Finby, that Mandy's counsel provided an analysis of Finby and
that the parties negotiated the settlement based on Finby.
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Based on this evidence, the family court made two findings. It concluded that
counsel and the litigants were aware of Finby and its importance to their case and that
they settled the matter based on Finby. This finding is amply supported by the record.
The family court also found that the parties' settlement constituted a "bargained-for-
exchange of rights and obligations" and did not contemplate treating the bonuses as a
community debt, noting that Mandy waived future spousal support, Matthew received
particular stock and investment accounts and the parties divided their real property. This
finding is similarly supported by the record.
Matthew takes issue with the family court's statement that under Finby the bonuses
were community assets, not debts, and that ongoing bonus payments could be used to
compute child support. We need not opine on the family court's interpretation of Finby
or the parties' differing interpretations to resolve this appeal. The record shows all
counsel and the litigants knew of the Finby case and had sufficient time to analyze how
the case potentially impacted the issues in dispute. With this knowledge, the parties
negotiated a "complete" settlement. In other words, each side compromised to buy their
peace. Given that the bonuses totaled over $1 million, it is inconceivable that counsel
and the litigants, one of whom was a financial advisor, simply forgot about them when
negotiating the settlement. It was not for the family court to change the parties' bargain.
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II. Overpayment of Spousal Support
A. Background
The parties agreed that Mandy waived all future spousal support after January 1,
2014. In his application to the court, Matthew requested that Mandy reimburse him over
$6,000 in spousal support that he paid after that date. In a supplemental declaration,
Mandy stated that $6,140.31 in spousal support paid in February and March 2014 needed
to be returned to Matthew. She also stated that she incurred $6,654.98 in expenses for
their son and requested an offset in this amount against the spousal support that she
needed to repay. At the hearing, Mandy's counsel conceded to the family court that
"there was an overpayment" of spousal support, but claimed an offset for purported
unexpected expenses. In its statement of decision, the family court did not specifically
address Matthew's reimbursement request; rather, the family court stated "[Matthew's]
motion is denied."
B. Analysis
Matthew asserts the family court abused its discretion in refusing to direct Mandy
to reimburse these funds. Mandy contends Matthew forfeited this argument by failing to
obtain a ruling on the matter from the family court. Should we conclude the family court
implicitly ruled on the matter, Mandy asserts the family court impliedly agreed she was
entitled to an offset and simply denied Matthew's reimbursement request. We reject
Mandy's forfeiture argument, but agree the family court impliedly found the amount she
owed and the amount she requested offset each other.
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A trial court is required to issue a statement of decision explaining the factual and
legal basis for its decision "upon the request of any party appearing at the trial." (Code
Civ. Proc., § 632.) Generally, a trial court has no obligation to issue a statement of
decision in connection with consideration of a motion, even where resolution of the
motion involves an extensive evidentiary hearing. (In re Marriage of Fong (2011) 193
Cal.App.4th 278, 294.) Any exceptions to this general rule do not apply. (Id. at pp. 295-
297.) Accordingly, the parties could not request a statement of decision and the court had
no obligation to provide one. The family court's description of the minute order as a
"statement of decision" was erroneous.
Matthew's motion included a request that Mandy reimburse him over $6,000 in
spousal support that he overpaid. In its ruling, the family court denied the motion
without specifically addressing Matthew's reimbursement request. We review denial of
Matthew's reimbursement request for substantial evidence.
We resolve all conflicts in the evidence in favor of the prevailing party (In re
Marriage of Klug (2005) 130 Cal.App.4th 1389, 1398), and the trial court's factual
determinations are binding if supported by substantial evidence (In re Marriage of
Grinius (1985) 166 Cal.App.3d 1179, 1185). "As long as the court exercised its
discretion along legal lines, its decision will be affirmed on appeal if there is substantial
evidence to support it." (In re Marriage of Duncan (2001) 90 Cal.App.4th 617, 625.)
Credibility is an issue of fact for the trial court to resolve (Johnson v. Pratt & Whitney
Canada, Inc. (1994) 28 Cal.App.4th 613, 622), and the testimony of a single witness,
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even that of a party, is sufficient to provide substantial evidence to support a trial court's
finding of fact. (In re Marriage of Mix (1975) 14 Cal.3d 604, 614.)
Our review of the record shows substantial evidence supported the family court's
implied denial of Matthew's request. In a sworn declaration, Mandy conceded that
spousal support of about $6,140 needed to be returned to Matthew, but she requested an
offset for about $6,654 in expenses for their son, which she itemized. Mandy's trial
counsel, similarly informed the court during oral argument that Matthew had overpaid
spousal support, but claimed an offset for unexpected expenses. Matthew did not dispute
the authenticity of Mandy's expenses or request that she present additional evidence to
support them. Because the amount Matthew requested was less than the amount of
Mandy's expenses the family court reasonably denied Matthew's reimbursement request.
III. Attorney's Fee Award
A. Background
Mandy declared that she incurred $7,000 in attorney's fees and costs in responding
to Matthew's motion. In a supplemental declaration she requested sanctions in addition
to a fee award. After considering the respective financial condition of the parties and the
nature of the motion, which it "deem[ed] spurious," the family court awarded Mandy
$7,000 for attorney's fees.
B. Analysis
A family court may base an attorney's fees and costs award "on the extent to which
the conduct of each party or attorney furthers or frustrates the policy of the law to
promote settlement of litigation and, where possible, to reduce the cost of litigation by
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encouraging cooperation between the parties and attorneys." (Fam. Code, § 271, subd.
(a).) Thus, this statute "advances the policy of the law 'to promote settlement and to
encourage cooperation which will reduce the cost of litigation.' " (In re Marriage of
Petropoulos (2001) 91 Cal.App.4th 161, 177.) "Family law litigants who flout that
policy by engaging in conduct that increases litigation costs are subject to the imposition
of attorneys' fees and costs as a sanction." (Ibid.) Whether to impose sanctions and the
amount thereof is addressed to the family court's sound discretion. (In re Marriage of
King (2000) 80 Cal.App.4th 92, 122.)
Where there is no indication that an attorney's fee award was ordered as a sanction
under Family Code section 271, it is presumed to be a "need-based" award. (In re
Marriage of Braud (1996) 45 Cal.App.4th 797, 827.) Family Code section 2030 provides
for need-based awards in marriage dissolution proceedings. An award under this statute
requires findings on the propriety of such an award, whether there is a disparity in access
to funds to retain counsel and whether one party is able to pay for legal representation of
both parties. (Fam. Code, § 2030, subd. (a)(2).) A party seeking a need-based award also
must serve and file either a Judicial Council form or a comparable declaration addressing
the reason for the request, the specific amount sought, whether fees or costs have been
previously ordered, financial need, the attorney's billing rates and experience, the nature
of litigation and notice to the responding party. (See In re Marriage of Sharples (2014)
223 Cal.App.4th 160, 165-168.) "[A]lthough the trial court has considerable discretion in
fashioning a need-based fee award [citation], the record must reflect that the trial court
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actually exercised that discretion, and considered the statutory factors in exercising that
discretion." (In re Marriage of Braud, at p. 827, fn. omitted.)
Matthew contends the family court abused its discretion in finding his motion was
"spurious" and awarding fees without specifying a statutory basis for the award. To the
extent the award could be deemed to be a sanction under Family Code section 271, he
asserts that even if we affirm the court's order, its finding that the motion was spurious
was unwarranted based on his good faith interpretation of Finby. Mandy contends the
family court made the award under Family Code section 2030 because it considered her
financial circumstances. In any event, she asserts the family court did not abuse its
discretion as substantial evidence supported the award under either theory.
Mandy did not file the required declarations and the family court did not make the
required findings for a need-based award. Accordingly, we determine whether the family
court abused its discretion in awarding Mandy $7,000 as a sanction under Family Code
section 271. The record supports the family court's finding that Matthew's motion was
spurious. While it is abundantly clear the parties' interpretation of Finby differed, it is
similarly clear they negotiated a complete settlement knowing of these differences. A
section 664.6 motion under these circumstances was not appropriate and we cannot
conclude that the family court abused its discretion in awarding Mandy $7,000 as a
sanction under Family Code section 271.
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DISPOSITION
The judgment is affirmed. Respondent is entitled to her costs on appeal.
McINTYRE, J.
WE CONCUR:
McCONNELL, P. J.
IRION, J.
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