Direct Capital Corporation v. Brooks

Filed 9/22/17 (unmodified opinion attached)
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(San Joaquin)
----
DIRECT CAPITAL CORPORATION, C081349
Plaintiff and Respondent, (Super. Ct. Nos. STK-CV-
UBC-2014-0006707, 39-2014-
v. 00313250-CU-BC-STK)
GRANT BROOKS, MODIFICATION OF
OPINION
Defendant and Appellant.
[NO CHANGE IN
JUDGMENT]
THE COURT:
It is ordered that the opinion filed herein on August 30, 2017, be modified as
follows:
* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified
for publication with the exception of part II.
1
1. On page 9 in footnote 6, the last sentence of the footnote should be deleted
and replaced with a sentence reading: “However, counsel should supply correct citations
to LEXIS or Westlaw, unless they are not available in those or similar databases, in
which case they should be presented by way of judicial notice.” The footnote shall now
read:
6.
Grant cites to Arevalo as “U.S.A. v. Arevalo (2007) C-99-01143M-EDL.” The
limitations on citing unpublished California cases (see Cal. Rules of Court, rule 8.1115)
do not apply to unpublished federal cases (Farm Raised Salmon Cases (2008) 42 Cal.4th
1077, 1096, fn. 18). However, counsel should supply correct citations to LEXIS or
Westlaw, unless they are not available in those or similar databases, in which case they
should be presented by way of judicial notice.
2. On page 9, the citation to the Arevalo case in the first sentence of the first
paragraph should be deleted and replaced with the citation “U.S. v. Arevalo (N.D.Cal.,
Aug. 1, 2007, C-99-01143M EDL) 2007 U.S. Dist. LEXIS 58724.” The sentence shall
now read:
Grant cites an unpublished federal court case, U.S. v. Arevalo (N.D.Cal., Aug. 1,
2007, C-99-01143M EDL) 2007 U.S. Dist. LEXIS 58724 to support his contention about
the meaning of the phrase “necessaries of life.”
2
This modification does not change the judgment.
FOR THE COURT:
/s/
Blease, Acting P. J.
/s/
Nicholson, J.
/s/
Duarte, J.
3
Filed 8/30/17 (unmodified version)
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(San Joaquin)
----
DIRECT CAPITAL CORPORATION, C081349
Plaintiff and Respondent, (Super. Ct. Nos. STK-CV-
UBC-2014-0006707, 39-2014-
v. 00313250-CU-BC-STK)
GRANT BROOKS,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of San Joaquin County, Linda L.
Lofthus, Judge. Affirmed.
Law Offices of Douglas S. Srulowtiz and Douglas S. Srulowitz for Defendant and
Appellant.
Ferns Adams & Associates and Amanda N. Ferns for Plaintiff and Respondent.
* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified
for publication with the exception of part II.
1
Disregarding procedural asides raised by the parties, this appeal turns on the
distinction between “necessaries of life” and “common necessaries of life” as those
phrases are used in different parts of Family Code section 914,1 and which of the two
governs when a person is or is not liable for a debt incurred by a spouse. Here, the trial
court found that a debt incurred by an attorney-spouse for office computer equipment was
for the necessaries of life for that particular marriage, in part because that spouse’s law
practice generated community property income. We shall uphold this finding.
In the published portion of this opinion, we discuss the distinction between
necessaries of life, and common necessaries of life. Although long extant, the distinction
has not been recently discussed, and--as evidenced by the briefing in this case--can be
confusing. (See Rules of Court, rule 8.1105(c)(3) & (8).) In the unpublished portion of
this opinion, we consider and reject the non-debtor spouse’s claim that we should
interpret and apply the terms of a divorce judgment entered after the notice of appeal was
filed, because issues arising from that judgment are more properly considered by the trial
court in the first instance.
Accordingly, we shall affirm the order from which this appeal was taken.
BACKGROUND
In 2013, plaintiff Direct Capital Corporation (DCC) leased computer equipment to
a since-disbarred Kansas attorney (Mary Brooks, with many aliases, hereafter Mary) who
practiced immigration law in Stockton.2 After Mary did not pay, DCC sued her and
obtained a judgment for nearly $40,000. DCC later moved to garnish the wages of her
husband, attorney Grant Brooks (Grant). DCC alleged that when the debt was incurred,
1 Undesignated statutory references are to the Family Code.
2 Because Mary and Grant share the same surname, we refer to both by their first names
in order to avoid confusion.
2
the marriage was intact, and the judgment thereon (grown to over $43,000 with interest)
was a community obligation.
At the hearing on DCC’s motion held on November 13, 2015, Grant’s attorney
specially appeared and represented to the court that Grant had filed for divorce the day
before, and claimed this deprived the trial court of “jurisdiction” to garnish Grant’s
wages. The court continued the matter and directed Grant to file an opposition to DCC’s
motion. Instead, Grant’s attorney purported to make a special appearance to dismiss the
matter “for lack of jurisdiction,” again alleging Grant had filed for divorce on November
12, 2015. Grant also argued that because computers were not necessaries of life as used
in section 914, his separate property wages were not subject to garnishment therefor. The
court treated the dismissal request as an opposition to DCC’s motion, and DCC filed a
reply, in part claiming the divorce was a sham to defraud creditors.
After a hearing, the trial court found the debt was a community property
obligation, and “there is evidence that the Computers were for necessities of life as it
went to the wage earnings for the community.” The court denied the motion to dismiss,
and issued a garnishment order. The court then stayed that order, pending this appeal.
Grant timely appealed from the garnishment order.
Later, a divorce judgment was entered, and at Grant’s request we took judicial
notice of the relevant documents showing the terms thereof.
DISCUSSION
I
Grant’s Liability for the Computers
We disregard the irregularities in Grant’s briefing, and the various ways in which
DCC argues Grant has forfeited his contentions, and address the central merits of Grant’s
appeal. His first claim is that the trial court erred in finding him liable for the debt based
on the computers leased by Mary. As we explain, we find no error.
3
Generally, a spouse’s separate property is not liable for debts incurred by the other
spouse during marriage. (§ 913, subd. (b)(1).) But section 914, subdivision (a) provides:
“Notwithstanding Section 913, a married person is personally liable for the
following debts incurred by the person’s spouse during marriage:
“(1) A debt incurred for necessaries of life of the person’s spouse before the
date of separation of the spouses.
“(2) Except as provided in Section 4302, a debt incurred for common
necessaries of life of the person’s spouse after the date of separation of the
spouses.” (Italics added.)
Thus, “[s]ection 914 is an exception to the general rule that a married person’s
separate property is not liable for debts incurred by his or her spouse during marriage.”
(Collection Bureau of San Jose v. Rumsey (2000) 24 Cal.4th 301, 309 (Rumsey).) It does
not hinge on the separate or community nature of the non-debtor spouse’s property, but
instead ascribes liability to “a married person” for specified debts incurred by the debtor-
spouse, with different language for debts incurred pre- and postseparation.3
It is not disputed that the debt was incurred while Mary and Grant were married
and before they separated, therefore section 914, subdivision (a)(1) provides that Grant is
liable for the debt if it was for necessaries of life, as the trial court found it was.
Because section 914 uses the phrases “necessaries of life” and “common
necessaries of life” respecting different time periods (before or after the date of
separation), respondent correctly contends that a different meaning is intended by the two
phrases. (See 11 Witkin, Summary of Cal. Law (10th ed. 2005) Community Property,
§ 180, pp. 759-760; Cal. Community Property with Tax Analysis (LEXIS, 2017)
3 “Technically, there is no such thing as a ‘community debt.’ The question is whether
community property [or separate property] is liable for enforcement of the debt.”
(Matthew Bender Practice Guide: Cal. Debt Collection and Enforcement Judgment
(2016) § 1.42[5][a], p. 1-38; see Ahart, Cal. Pract. Guide: Enforcing Judgments and
Debts (The Rutter Group 2016) ¶ 3:21, p. 3-12.)
4
Liabilities for Debt, § 4.03[3][a], p. 4-9.) In construing a different former statutory
scheme involving exemptions from collection, also using the term “common
necessaries,” one court explained the difference between these two phrases as follows:
“Briefly, appellant argues that an automobile is a common necessary of life,
as a matter of law, because it is the means of transportation normally used by
people to earn a living and to purchase groceries and other items substantially
necessary to sustain life. He also argues that even if an automobile is not a
common necessary of life, as a matter of law, it becomes one if it is actually used
by the owner to go to and from work or to shop for groceries.
“The term ‘necessaries’ as applied to the requisites of life is a relative term.
It is not, in short, confined to what is absolutely essential to support life, but when
used in the broad sense encompasses many of the conveniences of a refined
society [citation]. However, in excepting debts incurred for the requisites of life
from the exemption accorded to a debtor’s earnings, [former Code Civ. Proc.]
section 690.11 does not refer to ‘necessaries’ in the broad sense. On the contrary,
the phrase ‘necessaries of life’ is preceded by the word ‘common’ and this in turn
connotates such things as are ordinarily required for the sustenance of all men.
Thus, [Los Angeles Finance Co. v. Flores (1952) 110 Cal.App.2d Supp. 850] held
that the decision as to whether an article is a common necessary of life under
[former Code Civ. Proc.] section 690.11 ‘involves a determination of whether or
not it is such an article that in the hands of anyone it is to be regarded universally
or substantially so, as necessary to sustain life.’ The court also rejected the
concept that something which is not of itself a common necessary of life becomes
one if it is used to earn a living. At page 856 of the opinion the court stated: ‘A
tuxedo may be necessary wearing apparel to a waiter at a top-notch cafe, but not to
a laborer who has never attended a type of dinner or other gathering where tuxedos
are customarily worn; and under no circumstances could it be called a “common
necessary of life.” ’
“We are constrained to follow the rationale of the Flores case. The well-
reasoned decision soundly applies basic rules of statutory construction and
correctly interprets the legislative intent. Because of the availability of public
transportation, home delivery service and neighborhood shopping centers, to the
great majority of Americans the automobile, albeit a great convenience, is not
necessary to sustain life and cannot be viewed as a ‘common necessary of life’
within the contemplation of [former] section 690.11 of the Code of Civil
Procedure.]” (Ratzlaff v. Portillo (1971) 14 Cal.App.3d 1013, 1015-1016, some
italics added.)
5
The distinction between necessaries and common necessaries as discussed in
Ratzlaff was cited by the Law Revision Commission when it recommended that the
Legislature adopt the predecessor to section 914.4 (See Recommendation Relating to
Liability of Marital Property for Debts (Jan. 1983) 17 Cal. Law Revision Com. Rep.
(1983) pp. 20-21 & fn. 49.) Therefore we presume the Legislature intended that that
distinction between necessaries and common necessaries should persist. (See Estate of
Joseph (1998) 17 Cal.4th 203, 210-211, fn. 1 [relying on Law Revision Commission
report to show legislative intent]; Kaufman & Broad Communities, Inc. v. Performance
Plastering, Inc. (2005) 133 Cal.App.4th 26, 36 [such reports are cognizable].)
Thus, while common necessaries are those that all families need (e.g., food,
clothing, & shelter), what constitutes necessaries depends on the circumstances of the
particular marriage. The “station in life” test applies if the debt was incurred pre-
separation. (See Recommendation Relating to Liability of Marital Property for Debts ,
supra, 17 Cal. Law Revision Com. Rep. (1983) p. 35 [“Subdivision (a)(2) [applicable
postseparation] abolishes the ‘station in life’ test of cases such as Wisnom v. McCarthy
[(1920)] 48 Cal.App. 697”; by implication, retaining that test for pre-separation debts].)5
4 The predecessor was former Civil Code section 5120.140, enacted in 1984. (Stats.
1984, ch. 1671, § 9, p. 6020; see Rumsey, supra, 24 Cal.4th at p. 311.) Long before that,
former Civil Code section 174 provided: “If the husband neglects to make adequate
provision for the support of his wife, any other person may, in good faith, supply her with
articles necessary for her support, and recover the reasonable value of thereof from the
husband.” (1 Ann. Civ. Code, § 174 (1st ed. 1872, Haymond & Burch, commrs.,
annotators) p. 59.) The meaning of “necessary” or “necessaries” in California was
discussed in many California cases predating the 1984 statutory revision, and we presume
the Legislature was aware of those decisions. (See Estate of McDill (1975) 14 Cal.3d
831, 839.)
5 This debt was incurred when the lease was signed in 2013. (§ 903; see In re Marriage
of Feldner (1995) 40 Cal.App.4th 617, 619, 622-624.) Grant was not yet separated at that
time.
6
The station in life test looks to the marital standard and mode of living. Thus, in
Wisnom, the court explained: “The plaintiff pleaded and proved that the services were
necessaries of life for persons in the economic and social position of the defendants; that
they were partly rendered while the husband and wife were living together, and partly
after he had deserted her without cause and was not furnishing such necessaries for her.
Under such facts the husband would be liable for the expenses of his household.”
(Wisnom v. McCarthy (1920) 48 Cal.App. 697, 700, italics added; see In re Marriage of
Higgason (1973) 10 Cal.3d 476, 488 [“to the extent that the husband’s obligations were
incurred during the time the parties were living together and were reasonably necessary
for his support according to the parties’ station in life [citations], the wife owes a duty to
provide such support,” italics added], disapproved on another ground in In re Marriage of
Dawley (1976) 17 Cal.3d 342, 346, 352; Shebley v. Peters (1921) 53 Cal.App. 288, 293
[wrongful death damages “suitable to [decedent’s] station in life”]; Bassett, Cal.
Community Property Law (2017 ed.) § 9:29, pp. 970-971 [“what constitutes ‘necessaries’
is often broadly interpreted” and “may be measured by the income and life circumstances
of the family, including vacation, entertainment, etc.”].)
One court that surveyed a number of cases concluded as follows:
“Under the rule prevailing [in California], what is a necessary of life must
depend largely on the circumstances of each case and the position of the family
involved. What is or what is not a necessary, must, to a considerable extent, be
committed to the sound discretion of the trier of fact. Under the facts of this case
and the law as it exists in California we can see no abuse of discretion in the
decision rendered by the trial judge in holding that the various items of expense
involved here were for necessaries of life.” (Sanker v. Humborg (1941) 48
Cal.App.2d 205, 208 [in part upholding “music lessons for the children” as one of
that particular family’s necessaries].)
The trial court found Mary’s former law practice generated community income,
and that computers were necessary to operate her law practice. To the extent that was a
finding about the marital station in life, such finding is reviewed with at least some level
7
of deference. (See Sanker v. Humborg, supra, 48 Cal.App.2d at p. 208 [abuse of
discretion standard applied]; cf. Schwartzman v. Wilshinsky (1996) 50 Cal.App.4th 619,
626 [denial of claim of exemption reviewed for substantial evidence]; see Series AGI
West Linn of Appian Group Investors DE, LLC v. Eves (2013) 217 Cal.App.4th 156, 163
[same].)
A modern law practice entails a lot of paperwork, which commonly includes
computerized forms. Frankly, it is difficult to imagine a reasonable attorney beginning or
maintaining a California law practice without a computer. But it is not our call to make
in the first instance: The trial court judge, who was in the best position to determine the
needs of a law office in her own county, found in this case that Mary’s specific law office
needed computers. We will not disturb that finding. (Cf. PLCM Group, Inc. v. Drexler
(2000) 22 Cal.4th 1084, 1095 [an experienced trial judge is the best judge of the value of
professional services rendered in his or her court].)
Grant argues: “Long before computers were invented, lawyers, doctors, and other
professionals were able to run their practice and support their families without using a
computer. Even at the present date, computers in a law practice are convenient but not
required to stay in business. They are not a necessary of life.” That view both ignores
the thrust of cases emphasizing the distinction between necessaries and common
necessaries as used in the statute, as we have explained, and also gives no deference to
the trial court’s ability to determine what is necessary for a particular marriage. Later,
Grant faults the trial court for reasoning that because the computers aided Mary’s law
firm, they contributed to the marriage’s finances. However, we think that was an
appropriate factor to consider. The marital station in life included the operation of
Mary’s law practice, and as explained, whether that required computers was a matter
within the trial court’s bailiwick to decide in the first instance.
8
Grant cites an unpublished federal court case, U.S. v. Arevalo 2007 U.S. Dist.
LEXIS 58724 1, at pages 5-6 to support his contention about the meaning of the phrase
“necessaries of life.”6 As we shall explain, Arevalo cuts against his position.
Arevalo construed the scope of an exception to exemptions applicable to debts “for
the common necessaries of life furnished to the judgment debtor or the family of the
judgment debtor.” (Former Code Civ. Proc, § 706.051, subd. (c)(1); added by Stats.
1982, ch. 1364, § 2, p. 5176.) The issue was whether higher education expenses for a
child were common necessaries, and in answering no, Arevalo reasoned as follows: “The
‘common necessaries of life’ exception is construed narrowly and ‘does not refer to
“necessaries” in the broad sense.’ [Citing Ratzlaff.] Instead, the exception covers only
expenses ‘required for the sustenance of all men.’ [Citing Ratzlaff.] A common
necessary is ‘an article that in the hands of anyone it is to be regarded universally or
substantially so, as necessary to sustain life.’ [Citing Ratzlaff and Flores.] An education,
particularly the chef’s training at issue here, while useful, is not universally necessary to
sustain life. Accordingly, the ‘common necessaries of life’ exception does not apply.”
(U.S. v. Arevalo, supra, 2007 U.S. Dist. LEXIS 58724 at pp. 5-6.) Thus, contrary to
Grant’s view, Arevalo hews to the Ratlaff-Flores distinction between necessaries and
common necessaries.
To further illustrate this point, Diamond v. Bent (1957) 157 Cal.App.2d Supp. 857,
held that higher education expenses for the debtor’s adult child (age 21)--no longer
legally required to be supported by the parent--did not qualify as one of the necessaries of
life, but that such costs for the debtor’s minor children (then, aged 18 and 20), did so
6 Grant cites to Arevalo as “U.S.A. v. Arevalo (2007) C-99-01143M-EDL.” The
limitations on citing unpublished California cases (see Cal. Rules of Court, rule 8.1115)
do not apply to unpublished federal cases (Farm Raised Salmon Cases (2008) 42 Cal.4th
1077, 1096, fn. 18). However, counsel should supply such obscure authorities by way of
judicial notice or, at minimum, with correct citations to LEXIS or Westlaw.
9
qualify, and remanded for the trial court to adjust the debtor’s withholding exemption
claim accordingly. (Id. at pp. 859-860.) These outcomes highlight the difference
between common necessaries (excluding higher education expenses, as in Arevalo and as
to the adult child in Diamond) and necessaries (including such expenses, if consistent
with the family’s station in life, as was the case for the minor children in the family in
Diamond).7
In short, Grant’s argument conflates common necessaries with necessaries, as does
DCC’s briefing at times. Because Grant does not claim he was separated from Mary at
the time the debt was incurred, DCC only had the burden to show that necessaries were
provided, a much broader--and more fact specific--category than common necessaries, as
we have explained.
Accordingly, because the trial court’s finding that computers were necessary for
the operation of Mary’s law practice (which contributed to the marital fisc) is supported
by the record, the trial court properly granted DCC’s motion to garnish Grant’s wages.
II
The Divorce Judgment
Relying on the divorce judgment entered after the notice of appeal was filed,
Grant claims that because Mary assumed all liability arising from her law practice, he is
not liable therefor, and this in effect trumps the garnishment order. He bases this claim
7 Grant also in part relies on Leasefirst v. Borrelli (1993) 13 Cal.App.4th Supp. 28, but
that case is distinguishable. The marriage was intact, and the non-debtor spouse earned
income to support the family, although the parties had a valid prenuptial agreement that
kept each spouse’s earnings the separate property of that spouse. (Id. at pp. 29-31.) The
court reversed a wage garnishment, explaining: “There is no suggestion that the debt was
incurred for the necessaries of life. Therefore, Nancy Borelli’s separate property is not
liable for this debt of her husband.” (Id. at p. 31, italics added.) Because that case did
not involve alleged necessaries of life, it has no relevance herein. “Cases are not
authority for propositions not considered.” (Siskiyou County Farm Bureau v. Department
of Fish & Wildlife (2015) 237 Cal.App.4th 411, 437, fn. 11.)
10
on section 916, limiting the liability of a non-debtor spouse postdivorce, when a debt has
been assigned to the other spouse. In support, he also cites CMRE Financial
Services, Inc. v. Parton (2010) 184 Cal.App.4th 263 (CMRE Financial), which at first
glance generally supports his view of the law. (Id. at pp. 267-268.)
But although we took judicial notice of the divorce judgment, it does not change
our analysis in Part I, affirming the order from which this appeal was taken. If that
judgment renders Grant’s salary immune from garnishment--a point contested by DCC--
that is a matter Grant can raise in the trial court in the first instance, by a motion to
modify or vacate the order. “Matters occurring after entry of judgment are ordinarily not
reviewable. The appeal reviews the correctness of the judgment or order as of the time of
its rendition, leaving later developments to be handled in subsequent litigation.” (9
Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 337; see In re Zeth S. (2003) 31 Cal.4th
396, 405 [“ ‘an appeal reviews the correctness of a judgment as of the time of its
rendition, upon a record of matters which were before the trial court’ ”].)
Moreover, even if Grant’s interpretation of section 916 were correct, because of
the ruling on necessaries of life, the trial court had no need to address DCC’s claim that
the divorce was a sham to defraud creditors. Section 916 will not protect a non-debtor
spouse where a divorce is structured to defraud creditors. (See Mejia v. Reed (2003) 31
Cal.4th 657, 663-669; CMRE Financial, supra, 184 Cal.App.4th at pp. 268-269.)
Therefore it is not certain that the divorce judgment--even if it ordinarily would carry the
force ascribed to it by Grant--would vitiate the garnishment order. That is a fact-based
issue for the trial court to resolve in the first instance, should Grant move to modify or
vacate the extant order.
11
DISPOSITION
The garnishment order from which this appeal was taken is affirmed, without
prejudice to a motion in the trial court to vacate or modify it. Grant shall pay DCC’s
costs of this appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
/s/
Duarte, J.
We concur:
/s/
Blease, Acting P. J.
/s/
Nicholson, J.
12