Flaherty v. Carasi CA2/6

Filed 1/12/23 Flaherty v. Carasi CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
KENNETH FLAHERTY, 2d Civ. No. B315777
(Super. Ct. No. FL01-0685)
Plaintiff and Appellant, (San Luis Obispo County)
v.
JODY ANN CARASI,
Defendant and Respondent.
Kenneth Flaherty and Jody Ann Carasi (formerly Flaherty)
were married. When they separated, they entered into a marital
settlement agreement (MSA) that was incorporated into a final
judgment of dissolution in 2001. The MSA purported to divide
one community asset, Flaherty military retirement pension,
which had not yet vested. The MSA also established payments
Flaherty was obligated to make as child support.
Flaherty stopped making some of the child support
payments in 2002 and he retired and began receiving his military
pension in 2008 without informing Carasi.
When Carasi discovered Flaherty had retired she filed a
request for orders to apportion the pension and recover arrears
and later filed a request for orders to enforce the child support
payments.
The trial court found Carasi was entitled to both her one-
half share of the community interest in the pension, including
arrears, and past due and unpaid child support. The court also
found Flaherty breached his fiduciary duty by keeping Carasi’s
portion of the pension.
Flaherty appeals. We affirm the trial court in all respects.
I. FACTUAL AND PROCEDURAL HISTORY
Carasi and Flaherty married on October 8, 1988. They
have one child, Amanda, born in 1990. They separated after
twelve years of marriage on October 1, 2000.
Flaherty enlisted in the military in June 1988. During
their marriage, the parties anticipated and discussed numerous
times that Flaherty had aspirations to stay in the military until
he achieved the rank of Admiral which was expected to take more
than 20 years. He would not be entitled to receive his pension
unless he remained with the military for a minimum of 20 years.
After separating, the parties entered into the MSA drafted
by a paralegal. Neither party had an attorney. The MSA was
incorporated into the final judgment of dissolution on October 4,
2001.
In the MSA the parties stipulated to above-guideline child
support where Flaherty was obligated to pay the following
amounts: “[A]s for child support, Husband shall pay to Wife a
total of $700.00 per month . . . . In addition to support, Husband
agrees to finish paying for Child’s ‘GET’ college tuition program
which is $183.00 a month and child’s educational IRA at $41.66 a
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month. Total child support obligation shall be $925 per month.
Support shall continue for child until said child dies, marries,
becomes self-supporting, reaches 19, or reaches 18 and is not a
full-time high school student, whichever occurs first. If child is
enrolled in college, support in the amount of $700 will continue
until child reaches the age of 22.”
With respect to Flaherty’s military pension, the MSA
stated: “If/when Husband retires from military services spouse
will be entitled to retirement pay benefits. The entitlement, of
wife shall be calculated from October 8, 1988 to October 1, 2000.”
The MSA also contained the following clause: “The parties
acknowledge that the court shall have jurisdiction to make
whatever orders may be necessary or desirable to carry out this
agreement and to divide equally between the parties any
community assets or liabilities omitted from division under this
agreement.”
Flaherty stopped funding the GET college tuition fund in
2002. The account was closed and the money was sent to
Flaherty. He kept the money. Flaherty also stopped making
payments to the IRA in 2002 and stopped paying $700 child
support when Amanda turned 18.
In 2008, when she was 18 years old, Amanda married. She
enrolled in college in the Fall of 2008. Carasi has known since
2005 that Flaherty stopped paying into the GET and educational
IRA accounts.
Flaherty retired from the military on July 1, 2008. He
began receiving all the retirement benefits, including Carasi’s
portion. Although he knew he was receiving Carasi’s portion, he
did not notify Carasi or anyone else of this fact.
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Carasi, as the non-military spouse, had an affirmative duty
under the applicable federal military requirements to complete
all paperwork necessary to partition the military retirement
pension account (MRA). Carasi has never, until now, submitted
the necessary paperwork to begin receiving her portion of the
pension.
Until these proceedings began, Carasi and Flaherty had not
had any contact since 2005. Carasi discovered Flaherty had
retired when she and Amanda conducted an internet search in
2019.
On July 5, 2019, Carasi filed a request for orders (RFO) for
approval of a military retirement apportionment order. In that
request Carasi also sought determination and payment of the
arrears on the military pension.
On December 6, 2019, Carasi filed a second RFO to enforce
the provisions of the MSA regarding the GET education account,
the educational IRA contributions and adult child support of $700
per month owed while Amanda attended college between the ages
of 18 and 22.
The trial court took evidence on both RFOs and issued a
proposed and then final statement of decision which included
some of the factual findings mentioned above. The court also
found that although neither Flaherty nor Carasi was entirely
credible, Flaherty was less credible than Carasi.
The court made various additional findings and orders
including the following: 1) the MRA was not an omitted/
unadjudicated asset; 2) Flaherty breached his fiduciary duty by
keeping Carasi’s portion of his retirement; 3) Flaherty owes
arrears for adult child support of $700 per month for the period of
time when Amanda attended college between 18 and 22 years of
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age; and 4) Flaherty owes Carasi for unpaid GET and IRA
contributions due before Amanda married as well as the amounts
that were in these accounts when he stopped payments.
The precise amounts owed for pension arrears, current
pension distribution, adult child support, and GET and IRA
payments, together with interest, remain to be determined.
The trial court found that because Flaherty breached his
fiduciary duty to Carasi, under Family Code section 1101
subdivision (g)1 he was ordered to pay Carasi $10,000 for
attorney’s fees and the apportionment of the MRA would be
based upon Flaherty’s average high three years of income at the
date of retirement.
II. DISCUSSION
A. Standard of Review
A marital settlement agreement incorporated into a
stipulated judgment is interpreted under the general rules
governing the interpretation of contracts. (In re Marriage of Schu
(2014) 231 Cal.App.4th 394, 399.) “Where no extrinsic evidence is
introduced, or the extrinsic evidence is not in conflict, we
independently construe the agreement. [Citation.] Where
competent extrinsic evidence is in conflict, we uphold any
reasonable construction by the lower court.” (Ibid.)
B. The Trial Court Had Jurisdiction to Make
Necessary Orders Regarding the MRA
Flaherty appeals the trial court’s decision regarding the
pension because he claims it did not have jurisdiction to divide
the MRA. He states “the community estate must be divided at
Unless otherwise stated, all statutory references are to
1
the Family Code.
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the time the judgment for dissolution is entered unless the court
expressly reserves jurisdiction to divide an asset at a later time.”
Flaherty contends that the MRA was not “divided” because
“[w]hether by design of the parties or merely oversight” the MSA
did not indicate whether the pension would be divided using the
“in kind” or the “cash out” method. He also contends the trial
court “specifically found that the MRA had not been divided.” We
disagree.
The MSA clearly divided the MRA using the “in kind”
method. With an “in kind” division the trial court retains
jurisdiction to later implement the division as benefits become
payable. (In re Marriage of Gray (2007) 155 Cal.App.4th 504, 518
citing In re Marriage of Brown (1976) 15 Cal.3d 838, 848-849.)
The trial court’s decision to use the “time rule”2 to calculate the
community portion of the MRA reflects that it too found the MSA
used the “in kind” method. (In re Marriage of Bergman (1985)
168 Cal.App.3d 742, 750.) [when a community pension is divided
in kind, courts usually use the time rule to allocate separate and
community interests].)
Flaherty also argues that because the MRA was not
“divided” when the judgment was entered, the general
reservation of jurisdiction in the MRA is ineffective to empower
2 Under the “time rule” the “community property interest in
retirement benefits is the percentage representing the fraction
whose numerator is the employee spouse’s length of service
during marriage before separation, . . . and whose denominator is
the employee spouse’s length of service in total, . . . the separate
property interest is the percentage representing the remainder of
100 percent minus the community property interest percentage.”
(In re Marriage of Lehman (1998) 18 Cal.4th 169, 176, italics
omitted.)
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the court to divide it now. We agree a court cannot modify a final
judgment dividing a community asset unless it expressly reserves
jurisdiction to do so (In re Marriage of Curtis (1989) 208
Cal.App.3d 387, 391) but the trial court’s orders did not modify
the MSA. The MSA divided the MRA “in kind,” and the MSA
expressly authorized the court to “make whatever orders may be
necessary or desirable to carry out this agreement.” The court’s
orders merely carried out the division of the MRA as the parties
intended. (See In re Marriage of Bergman, supra, 168 Cal.App.3d
at p. 755, fn. 10 [judgment can reserve jurisdiction to supervise
future payments when benefits are received].)
C. The Trial Court Properly Enforced the $700 per month
adult child support
The trial court found the MSA required Flaherty to pay
adult child support of $700 per month for every month Amanda
attended college between the ages of 18 and 22.
Flaherty argues Carasi should not recover these arrears
because she failed to declare what was owed pursuant to section
5230.5 which states “Any obligee alleging arrearages in child
support shall specify the amount thereof under penalty of
perjury.”3 Flaherty cites no authority for his contention that
failure to specify an amount precludes recovery and we can
discern no basis for doing so.
Flaherty also argues the $700 payable after Amanda
turned 18 was not child support but a contractual obligation and
3 Carasi contends Flaherty waived this argument by failing
to raise it in the trial court. However, Flaherty did raise this
issue in his supplemental trial brief.
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thus subject to the defense of laches.4 Flaherty does not cite any
authority for the proposition that an agreement to pay child
support incorporated into a judgment remains enforceable only as
a contract. Parties can stipulate to a court order to pay adult
child support and once the agreement becomes a court order it is
subject to the rules governing child support, generally.
(Armstrong v. Armstrong (1976) 15 Cal.3d 942, 947 [child support
agreement incorporated order deemed court-imposed rather than
contractual]; § 3587.) The trial court properly found $700
payable after Amanda reached 18 until she turned 22 was child
support. The defense of laches is not available for unpaid child
support not owed to the government under section 291,
subdivision (d). (In re Marriage of Boswell (2014) 225
Cal.App.4th 1172, 1177.)
Finally, Flaherty argues the adult child support terminated
by operation of law when Amanda married. He cites generally
sections 3900 and 3901 but he ignores both section 3901,
subdivision (b) which expressly does not limit a parent’s ability to
agree to pay additional child support and section 3587 which
expressly authorizes parents to agree to pay adult child support.
D. GET and IRA Were Additional Child Support
The trial court found the GET and educational IRA
payments were child support “add-ons” and ordered Flaherty to
pay Carasi the arrears and the amounts he withdrew from the
accounts.
Flaherty argues the GET and IRA payments are not child
support because they are “incomplete.” He objects because the
4Flaherty argues because the adult child support was a
contractual obligation “Family Code § 215 should not apply.” We
presume he means section 291.
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MSA language where he “agrees to finish paying for Child’s ‘GET’
college tuition program . . . and child’s education IRA . . .” cannot
be enforced because there is no beginning or end date, and no
explanation what “finish” means.
The MSA terms are vague, as the trial court noted, but the
trial court reasonably interpreted them. (In re Marriage of Schu,
supra, 231 Cal.App.4th at p. 399 [“Where competent extrinsic
evidence is in conflict, we uphold any reasonable construction by
the lower court”].)
Flaherty testified the GET and IRA accounts were
established “way before our divorce and way before our
separation.” The MSA stated the Flaherty agreed to “finish
paying” the GET and IRA payments and that the “[t]otal child
support obligation shall be $925 per month” which is $700 per
month plus the GET and IRA payments. The MSA states
“Support shall continue . . . until [Amanda] dies, marries,
becomes self-supporting, reaches 19, or reaches 18 and is not a
full-time high school student, whichever occurs first.”
The trial court reasonably interpreted the language to
mean payments of $925, which included the GET and IRA
payments, continued until Amanda emancipated – in this case
when she married. The trial court also properly determined that
the GET and IRA payments were intended to be additional child
support. The parties could and did agree to non-guideline
additional child support. (§ 3901, subd. (b).)
Like the adult child support he agreed to pay, Flaherty
cannot rely upon laches as a defense for non-payment of the GET
and IRA additional child support payments. (§ 291, subd. (d).)
We have considered Flaherty’s other objections to the trial
court’s decision regarding the GET and IRA payments and are
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not persuaded the trial court erred. The payments are not
governed by sections 4061 and 4062 which concern the trial
court’s authority to order mandatory and discretionary additional
child support. Parties can agree to a non-guideline amount of
child support (§ 4065, subd. (a)) which in this case is what
Flaherty and Carasi did – they agreed to include in the total child
support amount the GET and IRA payments.
E Section 1101, Subdivision (g) Remedies Were Proper
Flaherty objects to the trial court’s ordering him to pay
$10,000 for attorney’s fees to Carasi as a remedy for his breach of
fiduciary duty pursuant to section 1101, subdivision (g). The
court found Flaherty breached his fiduciary duty when he began
to receive Carasi’s portion of the MRA without telling her,
without taking any action to inform the pension payor, and he did
not set the funds aside for Carasi.
A former spouse owes a fiduciary duty to his former spouse
until the community asset is finally distributed (§§ 2101, subd.
(a) & 2102, subd. (b)). “This confidential relationship imposes a
duty of the highest good faith and fair dealing on each spouse,
and neither shall take any unfair advantage of the other.” (§ 721,
subd. (b).)
Flaherty argues he did not breach his fiduciary duty
because there was no evidence he transferred any community
asset. Section 721 does not delineate all the ways in which a
spouse may breach his duty. (§ 721, subd. (b), italics added [“This
confidential relationship is a fiduciary relationship subject to the
same rights and duties of nonmarital business partners, as
provided in Sections 16403, 16404, and 16503 of the Corporations
Code, including, but not limited to, the following . . .”].)
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Flaherty knew he was receiving Carasi’s share of the
pension. He took no action whatsoever to protect her interest in
those funds and instead kept her portion. Substantial evidence
supports the trial court’s finding that Flaherty breached his
fiduciary duty and the court was well within it discretion to
award Carasi $10,000 in attorney’s fees and in establishing the
highest value of each separate pension distribution at the time of
receipt per section 1101, subdivision (g).5
Finally, Flaherty contends because Carasi failed to plead
he breached his fiduciary duty in her RFOs, the court erred in
making that determination. We find nothing in the language of
sections 1100 or 1101, nor in any authority cited by Flaherty,
that so limits the trial court’s discretion. But even if the trial
court’s discretion were so narrowly circumscribed, Flaherty has
not shown or even attempted to show prejudice. It is true Carasi’s
RFOs did not specifically allege Flaherty breached his fiduciary
duty, but she did allege the underlying facts relied upon by the
court to make that determination. Flaherty had an opportunity
in the trial court to address the claim, which he did in his
supplemental trial brief, his closing argument brief, and his
objections to the proposed statement of decision. Having made no
attempt to demonstrate prejudicial error, Flaherty has forfeited
the issue as a basis for appellate relief. (Vought Construction Inc.
v. Stock (2022) 84 Cal.App.5th 622, 630, fn. 7; Molinaro v.
Molinaro (2019) 33 Cal.App.5th 824, 829, fn. 4.)
5 In calculating a remedy for a breach of the fiduciary duty
the value of the community asset shall be determined to be either
its highest value at the date of the breach of the fiduciary duty,
the date of the sale or disposition of the asset, or the date of the
award by the court. (§ 1101, subd. (g).)
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III. DISPOSITION
The judgment is affirmed. Respondent shall recover her
costs on appeal.
NOT TO BE PUBLISHED
CODY, J.*
We concur:
GILBERT, P. J.
YEGAN, J.
*Judge of the Ventura Superior Court assigned by the
Chief Justice pursuant to article VI, section 6 of the California
constitution.
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Erin Childs, Commissioner
Superior Court County of San Luis Obispo
______________________________
Gillett Law, Gregory F. Gillett, for Plaintiff and Appellant.
Paul Kujawsky, for Defendant and Respondent.
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