Call for a Free Telephone consult through July 15, 2019

4675 MacArthur Court, Suite 700, Newport Beach, CA 92660, US

(949) 760-8888

Aggressive Divorce Lawyers in Newport Beach

DIVORCE A to z

Spousal Support- What is Marital Standard of Living

image106

  

Question Presented: How should the parties’ marital standard of living be calculated for purposes of spousal support?

Brief Answer: The Forensic accountant can prepare an appropriate average gross controllable cash flow for the client, averaging the last three-to-five years of income prior to date of separation, and/or use the parties’ income tax returns for the last three-to-five years of marriage to determine an average yearly income.

Applicable Law: The California Family Code requires courts to exercise their discretion in awarding spousal support based on the standard of living established during the marriage [Fam.C. §4330(a)]. In addition, several of the §4320 specifically-enumerated factors are tied to the parties' standard of living: (1) §4320(a) - the extent to which the parties' respective earning capacities enable them to maintain the standard of living established during the marriage; (2) §4320(c) - the supporting party's ability to pay spousal support, taking into account (among other factors) his or her standard of living; and (3) §4320(d) - the parties' respective needs based on the standard of living established during the marriage. Further, the court is required to make specific factual findings with respect to the standard of living during the marriage (whether or not such findings are requested). [Fam.C.§4332]

These statutory provisions effectively incorporate the case law consensus that the marital standard of living should be used as a point of reference in the court's weighing process; i.e., spousal support awards, in terms of both amount and duration, should reflect the parties' accustomedstandard of living during marriage. [Marriage of Smith (1990) 225 CalApp 3d 469, 484; Marriage of Kerr (1999) 77 CalApp 4th 87, 94; see also Marriage of Williamson (2014) 226 CalApp 4th 1303, 1316; Marriage of Ficke (2013) 217 CalApp 4th 10, 24 – marital standard of living is used as "baseline" for establishing each party's needs].

Broadly, the payor spouse should not be required to underwrite the other spouse for purposes of providing him or her a better lifestyle than established during marriage; nor should a support award impinge on the obligor spouse's ability to attain a better postdivorce lifestyle. By the same token, support should be awarded (and jurisdiction retained) if, after weighing the totality of the circumstances, the supported spouse cannot maintain the marital standard of living without assistance from the other spouse who has the ability to pay. [See generally, Marriage of Hoffmeister (1987) 191CalApp 3d 351, 362-363; Marriage of Smith, supra, 225 CA3d at 488; and Marriage of Kerr, supra]

In most cases, dissolution means neither party will be able to maintain the marital standard of living – i.e., because it costs more to maintain two households than one, each spouse typically will have to take a "step down" for some time. [Marriage of McTiernan & Dubrow (2005) 133 CA4th 1090, 1107; see also Marriage of Ficke, 217 CalApp 4th at 24 – Legislature "has not expressed any preference that the 'standard of living established during the marriage' be maintained for its own sake"; Marriage of Khera & Sameer (2012) 206 CalApp 4th 1467, 1483 – legislature never specified support must always meet supported spouse's needs as measured by marital standard of living]

California Family Code§4330 does not, by requiring courts to consider the marital standard of living, set dollar boundaries on the amount of support but, again, simply furnishes a point of reference to be used in weighing all of the parties' circumstances. [Marriage of Smith, supra, 225 CalApp 3d at 484; see also Marriage of Khera & Sameer, supra, 206 CalApp 4th

at 1483 – "a general reference point'; Marriage of Nelson (2006) 139 CalApp 4th 1546, 1560, - “neither a floor nor a ceiling”

The California Family Code offers no guidelines for measuring the "marital standard of living," thus leaving the bench and bar to speculate on what the Legislature intended. Case law closes that loophole: 'We hold that the marital standard of living is intended by the Legislature to mean the general station in life (enjoyed by the parties during their marriage. The Legislature did not intend it to be a precise mathematical calculation. . ." [Marriage of Smith (1990) 225 CalApp 3d 469, 475 (emphasis added); see Marriage of Kerr(1999) 77 CalApp 4th 87, 94; Marriage of Nelson, supra, 139 CalApp 4th at 1560,]

Business Valuation- Separate Property

image107

  

Business Valuation – Generally (Separate)


Question Presented: How should a  pre-marital business be valued? 

Brief Answer: Where a business is a separate property asset,  the court is authorized to adopt a “blended approach” in determining the community interest in a separate property business operated during the marriage. Specifically, in Marriage of Brandes (2015) 239 CA4th 1461, the court found no error in applying hybrid Pereira/Van Camp approach where “substantial justice” is achieved.

Applicable Law: The market value of a going business reflects a myriad of factors (e.g., fixed assets, liabilities, accounts receivable, goodwill, etc.), typically varying with the nature of the business. Each asset and liability must be valued as of the accepted valuation date and the net worth computed on a pro forma balance sheet based thereon.

Generally, there are two methods commonly used by appraisers to determine a business' worth: “asset valuation” (which focuses on the business' total assets, including goodwill, minus its total liabilities); and “excess earnings valuation” (or “capitalized earnings valuation,” which focuses on the "earning power" of the business to determine what "rate of return" the predicted earnings will yield in light of the risks involved to attain them). [See Marriage of Rosen (2002) 105 CalApp 4th 808, 818]

The worth of a closely-held corporation cannot be determined by employing the same formula used to value public corporations. E.g., the court cannot apply the "price earnings ratio" of a publicly-traded corporation to a closely-held corporation, and this is true even if both entities are engaged in the same business. [Marriage of Lotz (1981) 120 CA3d 379, 384; Marriage of Hewitson(1983) 142 CA3d 874, 885-886]

On the other hand, there is no mandatory appraisal method for valuing interests in a closely-held corporation. One approach, in the absence of other influencing or determining factors, is to ascertain the net market value of the property which the shares in question represent and assign to each share its proportionate worth. [Estate of Rowell (1955) 132 CA2d 421, 427; Marriage of Lotz, supra, 120 CA3d at 384; compare Marriage of Hewitson, supra, 142 (CA3d at 887 – worth can be assessed on basis of investment value]

However, whatever the method employed, the court must consider each factor peculiar to the case that might have a bearing on the value of the shares. [Marriage of Hewitson, supra, 142 CA3d at 888; Marriage of Micalizio (1988) 199 CA3d 662, 674; see also Marriage of Honer (2015) 236 CA4th 687, 697-698 (community property grocery stores held by parties' S Corporation)- no error in using "marital value" (i.e., economic value of business to spouse who retains and continues to operate business in future) even though approach did not contain minority interest/marketability discount (analysis was appropriate under circumstances and did not produce significantly different result from FMV appraisal)]

Unless there is some statutory or decisional limitation against their use, trial courts should draw on the relevant IRS valuation guidelines (Rev.Rul. 59-60). [Marriage of Hewitson, supra, 142 CA3d at 888; Marriage of Micalizio, supra, 199 CA3d at 674] These factors include:

(1) The nature of the business and its history;

(2) The general economic outlook and the condition and outlook of the specific industry;

(3) The book value of the stock and financial condition of the business;

(4) The company's earning capacity;

(5) The dividend-paying capacity;

(6) Whether the enterprise has good will or other intangible value; 

(7) Sales of stock and the size of the block of stock to be valued (i.e. controlling vs. minority interest); and 

(8) The market price of stocks of public corporations engaged in the same or a similar line of business. [See Rev.Rul. 59-60 (1959)-1

To the extent a business has acquired recognized goodwill (expectation of continued patronage, see Bus. & Prof.C. §14100), the goodwill generally is an asset to be included in the valuation of the business. The goodwill component is itself property. [Bus. & Prof.C. § 141 02; Marriage of Greaux & Mermin (2014) 223 CA4th 1242, 1251; Marriage of McTiernan & Dubrow (2005) 133 CA4th 1090, 1096; see also Marriage of Finby (2013) 222 CA4th 977, 985-986]

Therefore, incident to the valuation of a going business, the court must determine whether goodwill exists; if it does exist, the goodwill must be assigned a value and factored into the asset division. [Marriage of Greaux & Mermin, supra, 223 CA4th at 1252; Marriage of Nichols (1994) 27 CA4th 661, 673; Marriage of Watts (1985) 171 CA3d 366, 370-372; but see also Marriage of lredale & Cates (2004) 121 CA4th 321, 329-330 - law firm goodwill properly excluded from community property interest valuation where spouse had no entitlement to claim portion of firm's goodwill under firm partnership agreement]

The experts and the courts commonly use the "capitalization of excess earnings" approach to value goodwill in a professional practice, typically because there is no other reliable valuation method in such cases (there being no reliable, comparable transaction data available for a professional practice). Like any valuation approach, however, application of this formula to a professional practice must be tailored to the facts or it could yield inaccurate results. [Marriage of Rosen, supra, 105 CA4th at 818-819; Marriage of Ackerman, supra, 146 CA4th at 200; see also Marriage of McTiernan & Dubrow (2005) 133 CA4th 1090, 1095]

Notwithstanding the foregoing, with respect to the valuation of separate property businesses operated during the marriage, court’s typically apply Pereira, Van Camp, or, as detailed herein, both, where appropriate.

Under Pereira, a fair return on the value of the equity in the separate property business is allocated to the separate property spouse and the excess is allocated to the community. [Marriage of Hargrave, supra; Marriage of Imperato, supra]

With respect to the issue of defining what constitutes a “fair return,” there is no predetermined fair rate of return. Generally, however, absent expert testimony supporting a different rate of return, a “fair return” on the separate property investment will be calculated by the legal interest rate. [Weinberg v. Weinberg (1967) 67 Cal.2d 557, 565; see Marriage of Dekker, supra, 17 Cal.App. 4th at 854 – 10% annual return applied]


No precise standards govern the trial court's decision in choosing between Pereira or Van Camp (or any other equitable apportionment method). Generally speaking, the court should adopt whatever formula will achieve substantial justice between the parties, depending on whether the capital investment or the spouse's personal activity, ability and capacity was the chief contributing factor in the realization of income and profits. [Beam v. Bank of America, supra, 6 C3d at 18; Marriage of Dekker, supra, 17 CA4th at 853; see also Marriage of Brandes (2015) 239 CA4th 1461, 1473 – no error in applying hybrid Pereira/Van Campapproach where "substantial justice" achieved.]

There is even authority upholding apportionment of interests on a myriad of conflicting expert opinions without applying any "discernible" apportionment formula. [See Marriage of Zaentz (1990) 218 Cal.App. 3d 154, 166-167 – in awarding Wife community property interest in postseparation value of Husband's production company stock, plus film earnings and profits, trial court applied no particular apportionment formula but instead relied on overall “financial picture” (upheld on appeal on basis of "extensive though conflicting evidentiary record")]

Notwithstanding the foregoing, Pereira is typically applied where profits on a spouse's separate property are principally attributed to community efforts, as that formula will usually yield the greatest amount for the community. [See Marriage of Dekker, supra, 17 CA4th at 853, 21 CR2d at 649] Conversely, Van Camp is usually applied where community effort is more than minimally involved in managing a separate property asset, yet the profits are attributable primarily to natural enhancement of the underlying separate asset . . . because that formula will usually yield the greatest amount to the separate property estate. [See Marriage of Dekker, supra]

In Brandes, the court found Husband’s business to be Husband’s separate property. The court used a hybrid approach in allocating the increased value of said separate property business between Husband and the community. 

The parties in Brandes were married August 1986 and separated June 2004. The court determined that between August 1986 and 1991, Husband's personal efforts were the primary factor in the growth, and thus the Pereira approach applied for that period. The evidence showed that between 1986 and 1989, Husband was the sole manager of the business; he established the businesses investing philosophy; he was the central figure in business marketing; his track record attracted investors; and he hired employees, trained them, and directed their activities. 

In 1987, the business managed $107 million in assets. The businesses growth slowed somewhat between 1987 and 1990, and at the close of 1991 its managed assets were $213 million.

Between 1992 and June 2004, assets managed by the business grew to approximately $85 billion. The court determined that during this period, the growth was chiefly attributable to factors other than Husband’s personal efforts, and thus allocation under the Van Campapproach was proper. 

Analysis: At time of trial, the value of the businesses at the date of separation will be relevant, along with the value of the businesses as near as practicable to time of trial. In other words, Mr. Danenhauer will need to prepare a business valuation as of August 2002 and as near as practicable to time of trial. Additionally, a blended approach (i.e. Brandes) approach is suggested as most credible; however, an analysis of value under both Pereira and Van Camp for the entire marriage is recommended, with consultation between counsel to occur thereafter.

Separate Property Tracing and Reimbursement

image108

  Tracing separate property contribution


a. Generally

i. Tracing to a separate property source is the sole method by which a party can establish a right of reimbursement for separate property "contributions" to community property. Section 2640 does not recognize reimbursement pursuant to agreement of the parties

ii. Marriage of Braud (1996) 45 CA4th 797, 822-825 – insufficient tracing evidence to support finding of $10,000 SP contribution toward remodeling CP residence where no proof of amounts spent on labor or materials, no proof of balance in commingled joint bank account where the $10,000 had been deposited before remodeling began or of total CP income on deposit or amounts withdrawn from joint account to cover family living expenses during remodeling

b. Specific Issues

i. When there is a dispute whether a party's contribution was derived from a separate property source, use of the traditional “direct” or “family expense” tracing methods ordinarily will be appropriate. [Marriage of Walrath, supra, 17 Cal. 4th at 920, 72 CR2d at 864, fn. 5 (dictum)]

ii. Tracing to subsequently acquired CP (refinancing)

1. If the original property to which the separate property contribution was made is refinanced, and the proceeds applied toward other community property, tracing becomes more complex.

2. Here, the ''tracing" involved is ascertaining what portion of the amount contributed was transferred to the new asset and/or remains in the original asset. [Marriage of Walrath] 

a. "[T]he trial court must ascertain what percentage of the loan proceeds traceable to each asset is based on each party's separate property contributions. Thus here, the trial court would calculate the ratio of [H's] separate property contribution to the [original property's] total equity at the time of refinancing to ascertain what portion of the loan proceeds represented [H's] separate property contribution traceable to the [original property and the properties thereafter acquired with the refinancing proceeds

iii. Example: 

1. When H's separate property residence ("Lucerne") was converted to joint tenancy with W (presumptively CP), it had a $146,000 equity value; the parties refinanced the property for $180,000 a year later. The loan proceeds were then used to (i) pay down the existing loan on Lucerne, (ii) pay off the mortgage on another property ("Nevada"), and (iii) acquire and improve another property ("Utah'). 

2. H was entitled to trace 81% of the loan proceeds ($146,000/$180,000) spent on Lucerne, Nevada and Utah. W had contributed $20,000 separate property to reduce the mortgage on Lucerne. Thus, she was entitled to trace 11% of the loan proceeds ($20,000/$180,000) spent on Lucerne, Utah and Nevada. 

(2) Improvement Specific Issue

a. Marriage of Fabian (1984) 41 C3d 440, 451

i. Alleged "improvements" without any corresponding increase in market value were really nonreimbursable repairs for maintenance

b. Marriage of Nicholson & Sparks 

(3) CP Presumption if Tracing Insufficient

a. Where separate and community property have been commingled in such a manner that the respective contributions cannot be traced and identified, the entire fund or property -including property acquired in exchange therefore - will be treated as community property (Fam.C. §760; Marriage of Mix (1975) 14 C3d 604, 611: Marriage of Braud, supra, 45 CA4th at 823)

ATRO's or Automatic Temporary Restraining Orders

image109

  Automatically upon commencement of dissolution, legal separation, or a nullity action, four standard mutual restraining orders take effect.  If you are the Petitioner in your case, these take effect upon filing the Petitioner and issuance of the Summons. If you are the Respondent in your case, these take effect upon personal service of the petition and summons or your waiver of service.

The following is a list of the Automatic Restraining Orders (ATROS) that are issued automatically by the Court. Therefore, once a Petition is filed (if you are the Petitioner) or once you are served with a Petition (if you are Respondent), you are restrained and should not do the following:

1. Child Move-Aways: Removing the minor child or children of the parties, if any, from the state without the prior written consent of the other party or an order of the court.

2. Property Transfers & Extraordinary Expenditures:  Transferring, encumbering, hypothecating, concealing, or in any way disposing of, any property, real or personal, whether community, quasi- community, or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life.

3. Insurance Coverage:Cashing, borrowing against, canceling, transferring, disposing of, or changing the beneficiaries of any insurance or other coverage, including life, health, automobile and disability, held for the benefit of the parties and their child or children for whom support may be ordered.

4.  Creation/Modification of Non Probate Transfers:  Creating a non-probate transfer or modifying a non-probate transfer in a manner that affects the disposition of property subject to the transfer without the other party’s written consent or a court order.

THE FOLLOWING ARE GENERALLY NOT CONSIDERED VIOLATIONS:

1.  Attorney's Fees: The party using community funds must account for the use of said funds to the other and, in the case of a Family Law Attorney Real Property Lien, provide notice to the other party.

2.  Wills: Parties are not restrained from creating, modifying, or revoking a will; creating an unfunded trust; executing and filing a disclaimer of testamentary and other interests, or revoking a non- probate transfer (including a revocable trust), as long as notice of the change is filed and served on the other party before it takes effect.

Challenging Judgments and Orders

image110

  

(1) MOTION FOR NEW TRIAL [CCP §§656, 657]

· Brought by any party to the JUT asking court to reexamine an issue of fact and render a modified or different decision.

· Grounds are statutory. Diamond v. Super.Ct. (1922) 189 C 732; Marriage of Herr (2009) 174 CA4th 1463, 1471.

· The following grounds are applicable to family law proceedings under CCP §657:

o Irregularity in the proceedings of the court or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial. See also Webber v. Webber (1948) 33 c2d 153.

o Action or Surprise, which ordinary prudence could not have guarded against.

o Newly discovered evidence, material to the moving party, which could not, with reasonable diligence, have been discovered and produced at trial. See also People v. Norman (1960) 177 CA2d 59

o Insufficiency of the evidence to justify the court’s decision, or the decision is against the law. See also Don v. Cruz (1982) 131 CA3d 695.

o Error in law occurring at the trial and excepted to by the moving party.

· Procedure:

o CCP § 659: Notice of Intent to file specifying applicable grounds for new trial and whether motion will be made on affidavits, court minutes, or both. 

o Supporting Declaration

i. Must be served and filed within 10 days of filing notice of intent; any other party then has 10 days to serve/file counteraffidavits. Can be extended up to 20 days for good cause.

o MPA

i. Same 10 day time period as declaration

o  

· Jurisdictional Deadline:

o Must be filed and served no later than the earlier of:

i. 15 days after clerk’s mailing of notice of entry of JUT per CCP §664.5, or 

· Trigger of 15 day deadline by “Notice of Entry”

o File-stamped copy of JUT as notice of entry (if county no longer enters JUTs in “JUT book” then a party’s service of a FILE STAMPED copy of the JUT constitutes service of notice of entry of JUT, commencing 15 day deadline. 

ii. 15 days after a party’s service on the moving party of written notice of entry of JUT, or 

· “Clerk’s Notice of Entry”

o Clerk’s mailing of notice of entry triggers the 15 day deadline only if done per CCP §664.5; meaning the notice must affirmatively state it is given “upon order of the court” or “under section 664.5.” 

o Otherwise, deadline for filing new motion runs from the earlier of party service or the entry of JUT. 

iii. 180 days after entry of JUT.

· The court must have entered a signed JUT (not tentative decision) before motion for new trial is filed. See also Marriage of Hafferkamp (1998) 61 CA4th 789

o Statutory time limit is jurisdictional and not extended by mailing under CCP 1013 and cannot be waived or extended by the parties.

(2) MOTION TO VACATE AND ENTER DIFFERENT JUT [CCP §663]

o Grounds:

§ JUT based on decision by the court may be set aside by the same court and another JUT entered on the ground of incorrect or erroneous legal basis for the decision not consistent with or not supported by the facts, provided such inconsistency materially affects the moving party’s substantial rights, entitling a different JUT. 

o Procedure:

§ Must provide notice of intent specifying grounds and particulars for legal basis.

(3) MOTION TO SET ASIDE [CCP §473b]

§ Grounds

o Empowers trial court upon “any terms as may be just,” to relieve a party from a “JUT, dismissal, order, or other proceeding taken against him or her through his or her MISTAKE, INADVERTENCE, SURPRISE, OR EXCUSABLE NEGLECT.

o Grounds must be based on party, not court error.

o Mistake:

§ Mistake can be one of fact (facts understood to be other than they really are) or law (misunderstanding as to legal consequences of known facts.)

o Surprise, inadvertence or excusable neglect

§ Must be such as could not have been avoided through the exercise of reasonable care and prudence

§ Six month time limit

o Must be made within a reasonable time, in no case exceeding six months after JUT, dismissal, order, or proceeding was taken.

§ Procedure:

o Must be made by notice of motion specifying grounds upon which relief is sought

o Application shall be accompanied by a copy of the answer or other pleading proposed to be filed in the action

§ Supporting Declaration

§ Attorney affidavit (if applicable)

§ Relief subject to sanctions

o Whenever 473b relief is granted on the basis of attorney affidavit of fault, the attorney is subject to mandatory compensatory sanctions. 

(4) MOTION FOR RECONSIDERATION [CCP §1008]

§ May be made by any party affected by the order, or upon a determination that there has been a change of law warranting reconsideration of its prior order

§ Grounds/Procedure

o Must be based on new or different facts, circumstances or law.

o Requires notice of motion

§ Supporting declaration 

o Must be heard by same judge or court that made the order for which reconsideration is sought.

o 10 day time limit

§ Motion must be made within 10 days after service 

What is a Lis Pendens?

image111

  

Lis pendens (optional): If the action affects title to, or the right to possession of, specific real property, petitioner may, at the time of filing the petition, record in the office of the county recorder of the county (or counties) where the real property is located a "notice of pendency of action" ("lis pendens"). 

Purpose and effect: Ordinarily, anyone with actual notice of pendency of the proceeding who acquires an interest in real property affected thereby takes subject to the ultimate judgment. Recording a lis pendens has the same effect:

A duly recorded and properly indexed lis pendens gives constructive notice ''to the world" that an action has been filed affecting title to or right to possession of the real property described in the notice and with regard to those parties designated in the pleadings. As a result, anyone who acquires an interest in the property (subsequent purchasers, encumbrancers and other transferees) after the lis pendens is properly recorded takes subject to and will be bound by a judgment in the action affecting that property. 

Extent of protection-community vs. separate property: The lis pendens incorporates ("republishes'') the pleadings. Therefore, the description of specific property in the pleadings as community or separate property determines the extent to which the property is protected against the claims of subsequent purchasers and creditors. [Gale v. Super. Ct. (Gale), supra, 122 CA4th at 1396, 19 CR3d at 559 (citing text); Head v. Crawford (1984) 156 CA3d 11, 16, 202 CR 534, 537] 

Community property: If the property is acknowledged in the petition to be community property, the lis pendens only protects the filing spouse's one-half interest, a subsequent creditor of the other spouse can still reach the other half. And, even if the property is ultimately awarded entirely to the nondebtor spouse (who filed the lis pendens), he or she takes subject to the subsequent creditor's right to reach one-half of the property. [Head v. Crawford, supra, 156 CA3d at 16-19, 202 CR at 537-538]

Comment: The above rule (lis pendens only protects recording party's one-half CP interest) is suspect. Head came to that conclusion in reliance upon prior decisions holding a spouse's unilateral conveyance of community real property is voidable during marriage only as to the nonconsenting spouse's one-half interest. However, the Cal. Supreme Court has since

overruled that line of authority, making clear that when relief is sought against the

transferee during marriage, while the community is still in existence (i.e., prior to dissolution of marriage by judgment or death), the nonconsenting spouse is entitled to invalidate the transaction in its entirety (a 100% set-aside). [See Droeger v. Friedman, Sloan & Ross (1991) 54 C3d 26, 46-47, 283 CR 584, 597; and further discussion at ~8:682 ff.]

Separate property: On the other hand, if a separate property interest is alleged

in the pleadings, the lis pendens protects that entire separate property interest.

Procedure for Issuing Lis Pendens

Issuance: Before it may be recorded, a lis pendens must be properly issued-i.e., it must be signed by the party’s attorney of record of (if the party in in pro per) approved by a judge of the court where the action is pending and then signed by the party.

Contents: The notice must identify all parties to the action and describe the real property.

Prerecordation service: Before recordation, a copy of the notice must be sent (by registered or certified mail, return receipt requested) to all known addresses of the parties to whom the real property claim is adverse (e.g., respondent) and all record owners of the property affected by the claim as shown by the latest county assessment roll. (Any later joined parties must "immediately" be served in similar fashion.) 

Service is excused as to a party or owner whose address is unknown; but in such event, a declaration under penalty of perjury indicating no known address for service must be recorded in lieu of proof of service (below). [CCP §405.22] 

Proof of service: Proof of service (per CCP §1013a) in compliance with §405.22, above, must be recorded along with the lis pendens. [CCP §405.23]

Defective service or proof Invalidates notice: The lis pendens is 'void and invalid' as to any adverse party or record owner for whom the service and proof of service requirements were not met. [CCP §405.23; but see Biddle v. Super. Ct. (Paulson) ( 1985) 170 CA3d 135, 137-138, 215 CR 848, 849-abuse of discretion to order expungement for technical defect in service, where property owners had actual notice of lis pendens and waited over a year to raise the defect]

Constructive notice dependent upon proper indexing: A duly recorded lis pendens (like any recorded document) does not effectively impart constructive notice unless and until it is properly indexed in the recorder's office and hence locatable by a diligent title search. Constructive notice is not given simply by delivering the instrument to the recorder's office. [Dyerv. Martinez(2007) 147 CA4th 1240, 1242, 1246-1247, 54 CR3d 907, 908, 911-912]

Filing: A copy of the lis pendens must be filed with the court where the action is pending "immediately following'' recordation. [CCP §405.22]

Compare-expunging or withdrawing lis pendens: Intervening purchasers or encumbrancers are deemed to take subject to any interest claimed in the disputed property only while the lis pendens is on file. If the notice is expunged or withdrawn and a certificate thereof recorded, the property is again freely transferable, despite the pending litigation; i.e., interim nonparty purchasers are deemed to have no knowledge of the litigation or adverse claims to the property, and therefore take the property free of such claims. [CCP

§§405.60, 405.61]

Motion to expunge: After recordation, any party (or a nonparty who has obtained leave to intervene) may move to expunge the lis pendens. [CCP §405.30]

Grounds: The court "shall order" expungement in the following circumstances:

No "real property claim": The pleading on which the lis pendens is based does not contain a "real property claim"---i.e., a claim that, if meritorious, would affect title to or the right to possession of specific real property (in which event, no undertaking may be ordered as a condition of expunging the lis pendens). [CCP §§405.4, 405.31; see Gale v. Super.Ct. (Gale) (2004) 122 CA4th 1388, 1390, 19 CR3d 554, 555—court erred in failing to expunge W's lis pendens where her dissolution petition did not allege interest in specific real property and thus did not state a "real property claim"]

Comment: The lis pendens statutes require a pleading that affects title to specific real property (CCP §§405.4, 405.20). References in the petition (or response) to unspecified property will not support a lis pendens; and that deficiency is not cured by a specific description of the subject real property in a declaration of disclosure, which is not filed in the action and, indeed, is not a pleading. [See Gale v. Super. Ct. (Gale), supra, 122 CA4th at 1390-1391, 19 CR3d at 555]

 Insufficient proof of "probable validity" of claim: The claimant (party who filed the lis pendens) has not established by a preponderance of the evidence that it is more likely than not the claimant will obtain a judgment on the real property claim (in which event, an undertaking may not be ordered as a condition of expunging the notice). [CCP §§405.3, 405.32] 

Adequate relief by undertaking: If the court finds the real property claim has "probable validity'' but adequate relief can be secured to the claimant by the giving of an undertaking (in which event, expungement will be conditioned on the giving of the undertaking). 

Subsequent rerecordation only with leave of court: Once a lis pendens is expunged, a new lis pendens as to the affected property may be filed by the same party only with leave of court. [CCP §405.36; see also CCP §405.35--- expungement order not effective until writ period has expired or, if writ timely filed, until final adjudication of writ petition; and Ranchito Ownership Co. v. Super. Ct. (Krom) (1982) 130 CA3d 764, 771, 182 CR 54, 57]

Withdrawal: The party who recorded the lis pendens (or his or her successor in interest) may also nullify its effect by recording in the same county recorder's office(s) a "notice of withdrawal." [CCP §405.50]

divorce a-z

Serving Divorce Papers- Problems and Solutions

image112

  Ruszovan v. Ruszovan

224 Cal.App.3d 1033 (1990) 274 Cal.Rptr. 226

Judgment was entered between spouses in September 1964. Husband sought modification of the Judgment and attempted to serve Wife at work (her husband/attorney’s office). Wife was not present in office and her new husband/attorney accepted service. After accepting service the following occurred:

1. Counsel stipulated to continue hearing from the originally set date appearing on RFO

2. Counsel appeared at the continued hearing (but not the parties); a hearing was held

3. Wife’s attorney had continued to represent her after the final judgment 

A hearing was held and the court modified custody provisions. Wife appeals on grounds of ineffective service. 

Court found that personal service on the party was waived in post JUT matter and stated the following (noting that the fact that the attorney (who accepted service) was also the husband/employer of the party was irrelevant):

- “Page 906: “a stipulation for a continuance of the hearing required by the order to show cause, knowing service is defective, is an explicit representation by the attorney that the strict legal requirements of service were waived by his client and himself and that he had been authorized by his client to appear and defend”

- Page 906-907: the reason for the rule requiring personal service on a party post Jut is because there is a lack of certainty that the attorney of record continues to represent his client after Jut entered. However, when “the attorney of record is directly contacted and he represents by works or action that he is still the attorney of record, the intent of the amended status has been complied with”.

- Page 907: Attorney signed a stipulation for continued and “led the attorney for the other side and the court to believe and each had the right to assume, that the attorney [Mr. Hirsch] would not purpose to act for appellant if he had not been authorized to do so”

- Page 907: “there is no statute or provision of law which prevents a party from voluntarily appearing in an action. In fact, the law provides contrary” CCP 416- the voluntary appearance of a Defendant is equivalent to personal service.

Actual Notice: May be exception but some negative treatment in subsequent cases.

Dictum in the case Gortner v Gortner (1976) 60 Cal. App. 3d 996, 1001, suggests that failure to serve the opposing party personally may be excused if the party had actual notice of the proceeding.  However, in subsequent case law, Gortnerhas been called into question because the court in Gortner did not suggest the content of “actual notice” nor did it specify what type of failure to comply with Section 215 is so “”technical” as not to invalidate the subsequent order. See Marriage of Roden (1987) 193 Cal. App. 3d 939,944; Marriage of Kreiss (1990) 224 Cal. App. 3d 1033, 1039; Marriage of Seagondollar (2006) 139 Cal. App. 4th 1116, 1130. 

Pursuant to Roden and Kreiss, actual notice, excusing compliance with Section 215 would not suffice unless the evidence shows opposing party was aware of the date, time, and place of the hearing sufficiently in advance to appear or otherwise protect his or her interest.

Default Judgments

image113

  Re concerns about entering default Judgment on property division:

The question is, What is the extent of the relief (division of property) that can be obtained via default judgment? Must distinguish between the type of relief requested and the specific property to be divided.

In the Petition it was requested that separate property be confirmed but not yet ascertained; and community rights be determined but as yet not ascertained.

CCP §580 relief by default judgment cannot exceed the relief requested in the the complaint.

RUTTER:

The Supreme Court has noted that CCP § 580 "does not distinguish

between the type and amount of relief sought." [Becker v. S.P.V.

Const. Co., Inc. (1980) 27 C3d 489, 493, 165 CR 825, 827]

(a) [5:238] Marital dissolution actions: In Marriage of Lippel

(1990)51 Cal.3d 1160, 11169-1170 the Supreme Court stated

(dictum) that checking or not checking boxes on the standard form marriage dissolution petition "informs and puts the respondent on notice of what specific relief the petitioner is, or is not, seeking."

We have met this burden as the Petitioner puts him on notice that she is requesting a division of the property.

See however, Marriage of Eustice (2015) 242 Cal.App.4th 1291

default judgment not void for lack of notice where marital

dissolution petition requested court to determine property rights but did not list any property since prior to striking husband's answer, both parties served preliminary declarations listing all assets and debts subject to disposition before default was taken.

Also Marriage of Andresen (1994) 28 Cal.App.4th 873, 879-880,Wife in a marriage dissolution action checked the box "Property rights to be determined," indicating she was seeking division of community property and Wife attached a declaration listing the community assets and liabilities.

Marriage of Kahn (2013) 215 Cal.App.4th 1113, 1119 addressed the lack of values: the court is required to divide the community estate equally. Due process is satisfied if the petition identifies the community assets to be divided and requests that

the court divide them.

Thus, the rule is if you must check the box re dividing the community and put the respondent on notice as to the property that is to be divided by either:

a. identifying the property in the petition,

b. attaching a property declaration to the petition or,

c. serving, before taking the default, a Preliminary Declaration of Disclosure (PDD).

O

Business Valuations

image114

  Re:  Marriage of Duncan (2001) 90 Cal App 4th 617


Brief Holding: Good cause exists to value a business as of the date of separation where post-separation increase is largely due to spouse’s post-separation efforts.

Facts: Husband and Wife separated September 1994. During marriage, the parties became majority owners in a business (Duncan-Hurst), an investment advisory business managed by Husband. At bifurcated trial, the court applied California Family Code §2552(b) and valued the business as of the parties’ date of separation. Wife appealed.

Analysis: In its analysis, the appellate court noted the trial court’s finding that Husband was “the ‘key’ to Duncan-Hurst’s success and the company’s value increased after the parties separated as a result of [Husband’s] reputation, investing skill and guidance.”

When a spouse operates a community property business after separation, there is an inherent tension between the general rule that the business must be valued as of the date of trial (former Civ. Code§4800(a), now §2552(a)) and the rule that a spouse's earnings after separation are his or her separate property. (Former Civ. Code §5118, now § 771(a)).

Family Code §2552 give the trial court “…considerable discretion to divide community property in order to assure an equitable settlement is reached.” Marriage of Connolly (1979) 23 Cal.3d 590, 603.

The Duncan court restated prior case law that established that good cause generally exists for a professional practice to be valued as of the date of separation. (In re Marriage of Kilbourne (1991) 232 Cal.App.3d 1518, 1524 [valuation of law practice]; In re Marriage of Green, 213 Cal.App.3d at p. 20 [valuation of law practice].) This exception to trial date valuation applies because the value of such businesses, “…including goodwill, is primarily a reflection of the practitioner's services (accounts receivable and work in progress) and not capital assets such as desks, chairs, law books and computers. Because the earnings and accumulations following separation are the spouse's separate property, it follows the community interest should be valued as of the date of separation — the cutoff date for the acquisition of community assets.” (In re Marriage of Stevenson (1993) 20 Cal.App.4th 250, 253-254.)

The appellate court in Duncan thereafter discussed the “general rule” as being not limited to small law practices, but as applicable to other “…small businesses which rely on the skill and reputation of the spouse who operates them.”

In Duncan, the evidence showed Duncan-Hurst has all the attributes of a professional practice, including (1) performing services for a fee, (2) offering specialized knowledge and experience, (3) being licensed and regulated and (4) having assets that consist largely of office equipment, accounts receivable and work in progress. Duncan-Hurst's value and success depend almost exclusively on William's skill, industry, guidance and reputation.

Husband was found to be “…Duncan-Hurst's most significant asset. Without him, ‘there is no value to the firm.’”

Regarding Duncan-Hurst’s increased post-separation value, the appellate court stated that “…nothing in section 2552, subdivision (b), case law or logic requires the court to find the entire postseparation change in value was due exclusively to the personal efforts of the operating spouse in order to apply an alternative valuation date.



Motion for Alternate Valuation of Business

image115

  Marriage of Reuling (1994) 23 CA4th 1428


Brief Summary of Appellate Court's Ruling: 

 Where a postseparation, pretrial change in value has nothing to do with either party's efforts or conduct, the purpose for using an alternate valuation date (remedying inequities) is nonexistent.

Facts: Parties married January 1962. In 1986, during the marriage, Husband acquired shares of ADAC stock and stock options. The parties separated October1987.

In December 1987, ADAC shares averaged $5.67. In February 1990, the SC brought a class action suit against ADAC, alleged trading violations; these alleged violations did not involve Husband. As a result, ADAC’s shares thereafter averaged $2.87.

Trial occurred between April and October 1990. Wife sought to have ADAC’s shares valued at a date between June 1989 and December 1989, arguing that Husband was responsible for managing and controlling the stock since the parties’ date of separation, that he had “insider” knowledge of its soon-to-be-devaluation, and that his refusal to divide the stock consistent with prior agreement was in bad faith.

The trial court denied Wife’s request, finding, in part, that Husband was unaware of any potential drop in the value of ADAC stock until early January 1990. Wife appealed.

Analysis: The appellate court addressed former Civil Code § 4800 (a) (now Family Code §2552(a)), which provided that, absent a written agreement of the parties or their oral stipulation in open court, the court shall divide the community estate of the parties equally at the time of judgment, or at a later time if it expressly reserves jurisdiction to do so, and that for purposes of making the division it shall value the assets and liabilities as near as practicable to the time of trial. 

An exception to this rule is allowed if one party shows good cause for valuing any portion of the community assets at a date after separation and prior to trial, in order to accomplish an equal division of the community estate in an equitable manner. 

The appellate court noted that the purpose of the forgoing exception is to remedy inequities which may result when one spouse dissipates the community estate after separation, or when the effort and action of one spouse alone and after separation greatly increases the value of the estate. (In re Marriage of Barnert (1978) 85 Cal. App. 3d 413, 423)

The alternative valuation date should not be employed unless it is the only way to accomplish an equitable division of community assets. (See In re Marriage of Koppelman (1984) 159 Cal. App. 3d 627, 635)

In the Reuling case, an alternative valuation date would have resulted in an unequal division of community assets, in violation of former section 4800, subdivision (a). There was no written agreement or in-court stipulation by the parties to divide these assets earlier than trial. Absent such agreement, Husband was under no obligation to transfer any of them to Wife until the court issued its judgment dividing the community estate. Second, Wife made no motion to divide these assets prior to trial, and in fact not only stipulated to mutual restraining orders against disposition of community assets, but opposed Husband's bifurcation motion which would have accomplished a division of the shares and stock options at an earlier date. Third, it was undisputed and the trial court found that no conduct of Husband caused a reduction in value of the ADAC stock.

Conclusion:  Where a post-separation, pretrial change in value has nothing to do with either party's efforts or conduct, the purpose for using an alternate valuation date (remedying inequities) is nonexistent

Who Makes Medical decisions?

image116

  Question Presented: Do you have the right to take your child to an orthodontist consultation despite language of Joint Legal Custody and Family Code Section 3083.

Brief Answer: Yes you may have the right to take your child to consultation.

Facts: After client presented idea of consultation of under bite with an orthodontist to his ex-wife, and mother of the child, the mother denied the request. All communication was via e-mail between client and ex-wife. During a string of e-mails, client communicated in an appropriate timely manner, with clearly stated intentions. The responses from the ex-wife were vulgar and in an untimely manner. 

The child suffers from an under bite, father with joint legal custody would like to take child to an orthodontist for a consultation for child's condition. The father stated his intention to bear all legal costs, as outlined in the dissolution of marriage and custody agreement.

Analysis: Pursuant to California Family Code 3003, both of the parents that share joint legal custody share the right and responsibility to make decisions regarding the child's health, education and welfare. The issue regarding the child's under bite is an issue of the child's health. 

As stated in California Family Code 3020 (a) the best interest of the child shall be the primary concern in decision making. The best interest of the child includes the child's health, education, and welfare. The refusal from the ex-wife to allow the child to partake in the consultation with an orthodontist to evaluate the child's under bite, ignores the child's best interest. As proven in the medical field that an untreated under bite may result complications such as risks of chronic jaw pain, enamel wear, tooth decay, gum disease, speech development issues, teeth alignment, head and ear aches, as well as bacterial infections. The denial of a consultation to evaluate the status of the child's under bite could affect the child's health negatively in the future. 

In accordance with California Family Code 3083, the consent of both parents is not required unless stated by a previous court order. The only stipulations in the client and ex-wife's dissolution of marriage and child custody agreement in regards to health is the financial aspect of the healthcare. 

Conclusion: There is no conflicting,  binding authority to the California family codes 3003, 3020, and 3083, you generally will have the right to take your child to the orthodontist consultation without the consent of the your ex-spouse.  

Business Valuations I

image117

  Marriage of Stevenson (1993) 20 Cal App 4th 250


Brief Holding: Where the value of a business, including goodwill, is primarily a reflection of the practitioner's services (accounts receivable and work in progress) and not capital assets such as desks, chairs, law books and computers, that business should be valued as of the date of separation of the parties. 

Facts: Husband and Wife separated May 6, 1990. Husband filed for dissolution in September 1990. Husband operated two community businesses: (1) a Christmas tree lot; and (2) a construction company.

Wife later filed a motion to establish the date of separation as the date for valuing the community interest in both businesses. Wife argued that Husband had deliberately trashed the value of the construction business. Husband argued that the decline in value of the construction business was due in part to a general decline in the construction industry.

The trial court found for Husband, finding that Wife had failed to carry her burden. Thus, the court denied Wife’s motion to value the community interest in the business as of the date of separation.

Analysis: The appellate court applied California Civil Code §4800 (now California Family Code §2552), which permits court’s to value assets “…at a date after separation and before trial…” The appellate court affirmed the general rule that a professional practice generally should be valued as of the date of separation of the parties. (In re Marriage of Kilbourne (1991) 232 Cal. App. 3d 1518, 1524) 

The appellate court noted that this rule was developed to reconcile the general requirement of valuation at the time of trial with (now current California Family Code §771) which provides that “…[t]he earnings and accumulations of a spouse ... while living separate and apart from the other spouse, are the separate property of the spouse.” This general exception to trial date valuation developed in cases where the community business was a small law practice operated by one of the spouses. The rationale was the value of the business, including goodwill, is primarily a reflection of the practitioner's services (accounts receivable and work in progress) and not capital assets such as desks, chairs, law books and computers. 

Because earnings and accumulations following separation are the spouse's separate property, it follows the community interest should be valued as of the date of separation-the cutoff date for the acquisition of community assets. 

The rationale for the general exception to trial date valuation is not limited to small law practices. It applies with equal logic to other small businesses which rely on the skill and reputation of the spouse who operates them. The appellate court gave the following example: In re Marriage of King (1983) 150 Cal. App. 3d 304, where the issue was the proper method for valuing goodwill of the husband's business. During the marriage, the husband commenced a consulting business of a highly technical nature and became a recognized authority in his field. He had no plant, no commercial location, no employees and did not maintain an office. He worked at home or at his client's facilities. The parties separated in December 1980. The trial court valued the goodwill of the consulting business on the basis of the husband's projected earnings for 1981.

The King court concluded valuation of the goodwill of the husband's consulting business was incorrect because it “…took into consideration the postseparation efforts, earnings and accumulations of the husband and thus constituted an error in law.”

The appellate court found that a small general contracting business such as Husband's also falls within the general exception to trial date valuation. The evidence at the hearing shows the value of a small general contracting business, like that of a small law office or consulting firm, devolves largely from the personal skill, industry and guidance of the operating spouse, as opposed to its capital assets. (See Bing v. Bing(1959) 168 Cal. App. 2d 348, 350 [value of husband's general contracting business dependent on his personal skill and industry].) 

The appellate court further stated that valuing the business as of the date of separation also relieves the concern the operating spouse might deliberately "trash" the business prior to the date of trial, although the trial court found no such conduct in the present case.

Conclusion:  The appellate court reversed the trial court and directed the trial court to order the general contracting business valued as of the date of the parties' separation

“Factors” to Use in Jacobsen

Should Tyson want the businesses to be valued as of the date of separation, the following factors from Stevenson are relevant:

(1) California Family Code §771 – Tyson’s “…earnings and accumulations ... while living separate and apart from the other spouse, are the separate property…” of Tyson. 

(2) The value of the Tyson’s businesses, including goodwill, is primarily a reflection of the Tyson’s services (accounts receivable and work in progress) and not capital assets such as desks, chairs, law books and computers. 

(3) The “general exception” to trial date valuation is not limited to small law practices: it applies with equal logic to other small businesses which rely on the skill and reputation of the spouse who operates them. 

(4) In valuing Tyson’s businesses, it is improper for the court to take “…into consideration [Tyson’s] postseparation efforts…” including his “…earnings and accumulations…”

(5) A small general contracting business, like that of a small law office or consulting firm, devolves largely from the personal skill, industry and guidance of the operating spouse, as opposed to its capital assets

Site Content

Valuation of Small Businesses

image118

   Marriage of Green (1989) 213 Cal App 3d 14


Brief Holding: In determining the community property interest in small businesses (including goodwill) in marital dissolution actions, the proper date of valuation is the date of separation of the parties, not a date as near as practicable to the time of trial.

Facts: Husband and Wife separated March 18, 1985. Trial occurred March/April 1987. Husband was an attorney with a community law practice. The trial court valued Husband’s law practice as of the date of separation. Husband appealed, arguing his practice should be valued at time of trial.

Analysis: The appellate court noted that the trial court valued Husband’s law practice as of the date of separation, “…including accounts receivable, work in process, hard assets, supplies, library, lease and leasehold improvements, good will, less liabilities…” at $243,612. Husband disputed the trial court's use of the date of separation to value the community interest in his law practice, contending the value should be fixed as of the date of trial. 

The selection of the proper date for valuation of community interests in most law partnerships requires a reconciliation between Civil Code sections 4800, subdivision (a) ("... the court shall value the assets and liabilities as near as practicable to the time of trial ...") (now California Family Code §2552) and 5118 (“...earnings ... of a spouse ... while separate and apart from the other spouse, are the separate property of the spouse.”) (now California Family Code §771).

With “…the enactment of Civil Code section 5118, effective March 4, 1972, any portion of the law practice assets including goodwill which are attributable to the earnings and accumulations of a spouse living separate and apart are the separate property of the spouse earning or accumulating the same.” (In re Marriage of Lopez (1974) 38 Cal. App. 3d 93, 110)

At any given moment the major assets of most law firms are not capital assets, but those related to the direct rendering of professional services, most particularly accounts receivable and work in process. “Many past and present distinguished California lawyers of initial humble and impecunious beginnings will attest to the fact that it is not ordinarily capital investment by a sole legal practitioner which is the chief contributing factor in the realization of income and profits.” (Lopez, 38 Cal.App.3d at pp. 106-107.)

Thus, in Green, the appellate court adopted the general rule that, in determining the community property interest in law partnerships (including goodwill) in marital dissolution actions, the proper date of valuation is the date of separation of the parties, not a date as near as practicable to the time of trial.

The appellate court noted some exceptions to the general rule; namely, exceptions related to situations where the postseparation efforts of the lawyer spouse have minimal impact upon any increase in the value of the law partnership interest. For example, a partnership interest in a large law firm (or shareholder interest in a large professional corporation) may be so relatively small that the lawyer spouse's postseparation efforts cannot be considered a significant factor in any increase in the value of the partnership (or professional corporation) between the date of separation and time of trial. 

Conclusion:  The appellate court affirmed the trial court’s decision to value Husband’s law practice as of the date of the parties' separation.

 

Child Support and Parenting Time

image119

  Courts have discretion in determining the percentage of “primary physical responsibility” to be imputed to each parent. Marriage of Katzberg (2001) 88 CA4th 974, 977

The Time-share Component

One component of the uniform guideline formula is the "H" factor, which represents the "approximate percentage of time that the high earner [here, father] has or will have primary physical responsibility for the children compared to the other parent." (§ 4055, subd. (b)(1)(D).)

The relevant phrase is "primary physical responsibility." In In re Marriage of Drake (1997) 53 Cal. App. 4th 1139, 1160 [62 Cal. Rptr. 2d 466], the Court of Appeal pointed out that this time-share percentage is based on " 'the parents' respective periods of primary physical "responsibility" for the children rather than physical "custody." ' " (In re Marriage of Drake, supra, 53 Cal.App.4th at p. 1160, citing Hogoboom & King, supra, ¶ 6:168, p. 6-64.) As noted in Hogoboom & King, "[u]se of this terminology is purposeful: i.e., to clarify that [section] 4050 et seq. is not intended to alter current child custody law in any manner (no struggle for 'custody' is necessary to apply the statutory formula). [Citations.]" (Hogoboom & King, supra, at ¶ 6:168, p. 6-64.)

Accordingly, the time of a parent's primary physical responsibility has been held to include the time that the child is in child care (In re Marriage of Whealon, supra, 53 Cal.App.4th 132) and may include the time of a grandparent's visitation (§ 3103, subd. (g)(1)), as long as that parent is responsible for the child during that time. Likewise, the time-sharing component can be applied to the parent who has full responsibility for disabled adult children who are not in the custody of either parent. (In re Marriage of Drake, supra, 53 Cal.App.4th at p. 1160; Hogoboom & King, supra, ¶ 6:168.1, pp. 6-64 to 6-65.)

What is an Intervenor?

image120

  INTERVENTION

Upon timely application, any person who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding. Cal.Civ.Proc.Code § 387(a). Under C.C.P§387(a), a court may grant leave to non-parties to join the plaintiff in claiming what is sought by the complaint; to unite with the defendant in resisting the plaintiff’s claims; or to demand anything adverse to both parties. Cal.Civ.Proc.Code §387(a). 

A nonparty has the right to intervene in litigation between others where he or she claims an interest in the real property involved in the litigation and is so situated that any judgment rendered in his or her absence “may as a practical matter impair or impede that person’s ability to protect that interest.” CCP §387(d)(1)(B).

Intervention is also proper where a non party has an interest in the matter in litigation, or in the success of either of the parties. CCP §387(d)(2). Courts have interpreted Section 387 to hold that intervention is proper where: (1) the nonparty has a direct and immediate interest in the litigation; (2) intervention will not enlarge the issues in the case; and (3) the reasons for intervention outweigh any opposition by the existing parties. See Truck Ins. Exch. v. Superior Court, (Transco Syndicate #1) (1997) 60 Cal.App.4th 342, 346 (citing Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (Rutter, rev.# 1, 1996) § 2:414, p. 2–55, emphasis omitted); Reliance Ins. Co. v. Superior Court (Wells), (2000) 84 Cal.App.4th 383, 386. As discussed below, intervention is proper under the present circumstances, and Intervenors should be granted leave to file a Complaint in Intervention in the instant proceeding.

Direct and Immediate Interest means that the intervenor must stand to gain or lose by direct operation of the judgment. Fireman’s Fund Ins. Co. v. Gerlach, (1976) 56 CA3d 299, 303-305. The bottom line is whether the interest is sufficiently “direct” and “substantial” must be decided on the facts of each case. C.C.P §387 is to be construed liberally in favor of intervention. Simpson Redwood Co. V. State of Calif., supra 196 CA3d at 1201, 242 CR at 451 – error to refuse intervention by conservation league in title dispute between timber company and State dealing with park lands which league had donated to state, because its reputation could be adversely affected by outcome; Lindelli v. Town of San Anselmo, supra 139 CA4th at 1504-1505

Intervention is not proper if it would enlarge the issues in the case. Fireman’s Fund Ins. Co v Gerlach However, The equitable-beneficial owner of property may intervene in an action in which the trustee-legal owner refuses to defend his title or claims adversely to the beneficiary. (Coffey v. Greenfield, 55 Cal. 382; Elms v. Elms, 4 Cal.2d 681 [52 P.2d 223, 102 A.L.R. 811].)

Other cases hold that the court has “broad discretion in determining whether to permit intervention,” especially when there is evidence showing that the interests in defending claims would not necessarily be adequately represented by the named defendants. See US Ecology, Inc. v. State of Calif., (2001) 92 Cal.App.4th 113, 139-140; 

Unless our client will present facts that are substantially different then the allegations outlined in the complaint I would expect the court to grant the application for Intervention. 

Procedure: Whether intervention is of right, or only permissive, the party seeking to intervene must make “timely” application to the Court. CCP §387. Timeliness is measured from the point the intervenor knew or reasonably should have known that his rights in the litigation were not being adequately represented. Application may be by ex parte or by noticed motion. 

Attorney Fees Awards and Orders for Related Civil Cases

image121

  Question Presented: 


Can attorney fees be awarded in family court for non-family law matters involving one or both parties? If so, under what basis?

Brief Answer: 

Yes. Attorney fees and costs are awardable in “…any proceeding subsequent to entry of a related judgment…” and may be “…reasonably necessary for the prosecution or defense of the proceeding or any proceeding related thereto…” [California Family Code §2030(a)(1) and (c)]. The family court is therefore authorized to make an award of attorney fees and costs for such fees and costs incurred in independent civil actions.

Applicable Law: 

California Family Code§2030(a)(1) states as follows:

(a) (1) In a proceeding for dissolution of marriage, nullity of marriage, or legal separation of the parties, and in any proceeding subsequent to entry of a related judgment, the court shall ensure that each party has access to legal representation, including access early in the proceedings, to preserve each party’s rights by ordering, if necessary based on the income and needs assessments, one party, except a governmental entity, to pay to the other party, or to the other party’s attorney, whatever amount is reasonably necessary for attorney’s fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding.

Further, California Family Code §2030(c) states as follows:

(c) The court shall augment or modify the original award for attorney’s fees and costs as may be reasonably necessary for the prosecution or defense of the proceeding, or any proceeding related thereto, including after any appeal has been concluded.

Per case law, the trial court is given broad discretion to determine whether an independent civil action is “related,” and they are to be “guided by the well-established mandate to ‘ascertain the intent of the Legislature so as to effectuate the purpose of the law’” (Marriage of Green (1992) 6 Cal App 4th 584 at 590).

Thus, the court's jurisdiction to award §2030 “related” fees in a family law matter depends on whether an award of fees for the nonmarital proceeding would serve the purpose of California Family Code §2030 (Marriage of Seaman & Menjou (1991) 1 Cal App 4th 1489 at 1496-1497).

In Marriage of Green, Husband, an attorney representing himself, appealed an award of attorney fees and costs of $100,024.00, which he was ordered to pay to his Wife. In support of its order, the trial court found Husband had filed six (6) different actions and proceedings against Wife and/or his attorney (including a malicious prosecution lawsuit filed against Wife’s attorney). In affirming the trial court’s award, the appellate court found the trial court’s orders were supported by findings that Husband brought his other actions against Wife “… to gain an unfair advantage over [his] spouse, to deliberately attempt to exhaust his spouse financially and deny her effective counsel, and to dissuade her counsel from pursuing the action.”

Although Marriage of Green involves a litigant instigating related proceeds with an improper motive, there is no requirement for the court to find that an independent action was brought with an “improper motive” prior to making an award of fees for a related proceeding (Askew v. Askew (1994) 22 Cal App 4th 292 at 298. 

Further, there is no prerequisite that a motion to consolidate be either brought or granted in order for the trial court to make a finding that another matter is sufficiently “related thereto” to the family matter and thereby support an award of attorney fees and costs (Askew v. Askew (1994) 22 Cal App 4th292 at 297-298).

The subject matter of the independent civil action may weigh in favor of a “related thereto” finding; however, independent civil actions are not automatically “related” to a family law proceeding simply because there is some link between the subject matters or the parties. Thus, the test for relatedness is not subject matter or party relationship but whether the purpose of California Family Code §2030 would be served by having one of the parties contribute toward the other's legal fees and costs incurred in the independent action (Marriage of Seaman & Menjou (1991) 1 Cal App 4th1489).

As an alternative, the family court may also assess fees and costs as a sanction against a party whose uncooperative conduct frustrates the policy of the law to promote settlement and reduce litigation costs (California Family Code §271). Thus, as an alternative (or in conjunction with) a “related thereto” proceeding under California Family Code §2030, a party may also bring a request for fees and costs as a sanction under California Family Code §271.

Analysis:

In this case, we first need to address dicta in Marriage of Green that suggests a comparable action to this case is not “related.”

Marriage of Green, Footnote 7, states in relevant part as follows:

…Simply because divorcing spouses are parties to another action does not automatically mean it is statutorily "related." For example, a collection action brought against the spouses by an unpaid creditor would normally not be "related" to the dissolution action, even though the obligation is a community obligation. On the other hand, an action filed by one spouse against the other for the purpose of harassment or intimidation is clearly related to the dissolution action within the meaning of section 4370.

In this case, Paul Sienski seeks monies from community entities which he alleges are unpaid. In other words, he is a creditor, seeking to collect within the meaning of the above-referenced dicta.

However, unlike the hypothetical in Marriage of Green, the action by Sienski was brought only against Annette, Old Springs, and TEI; Sienski elected not to file a complaint against Rich.

Thus, in addition to the obvious fact that the forgoing footnote in Marriage of Green is dicta, referring to a hypothetical case not before the court, the case here is a creditor seeking collection against only one party, and not both parties as contemplated by Green.

Assuming this footnote can be overcome, the subject matter of the Sienski action weights in favor of a “related thereto” finding. 

As discussed above, the test for relatedness is not subject matter or party relationship but whether the purpose of California Family Code §2030 would be served by having one of the parties contribute toward the other's legal fees and costs incurred in the independent action (Marriage of Seaman & Menjou (1991) 1 Cal App 4th1489). Further, the court's jurisdiction to award §2030 “related” fees in a family law matter depends on whether an award of fees for the nonmarital proceeding would serve the purpose of California Family Code §2030 (Marriage of Seaman & Menjou (1991) 1 Cal App 4th 1489 at 1496-1497).

The stated purpose of California Family Code §2030 is to provide a party, if necessary, with funds adequate to properly litigate the domestic relations action in light of the parties' respective incomes and relative needs. An award of attorney fees in the family court proceeding for the Sienski proceeding would ensure Annette has sufficient funds to properly litigate her family law matter.

Can I Get Reimbursed for My Separate Property Contributions to our Home?

image122

Relevant Statute and Case Law 


 Following Cal. Fam. Code §852(a), a transmutation of real or personal property is not valid 

unless it is "made in writing by an express declaration that is made, joined in, consented to, or accepted 

by the spouse whose interest in the property is adversely affected." In order to elucidate what 

constituted an express declaration, the California Supreme Court in Estate of MacDonald, 51 Cal. 3d 262, 

looked at the legislative intent and statutory construction. In MacDonald, the Court found that due to the previous standards  in which "easy transmutation" led to extensive litigation, the proof of 

transmutation should be in writing, requires that the creation of a joint tenancy be "expressly declared", 

and the writing signed by the adversely affected party contains language that expressly states that the 

characterization or ownership of the property is being changed. Estate of MacDonald, 51 Cal. 3d 262, 

268-272 (Cal. 1990). The court need not look beyond proffered writing or refer to parol evidence to 

determine whether its writer intended to create a joint tenancy. Id. at 272. 

 Relying on Estate of MacDonald, the Court of Appeal of California in Estate of Bibb, 87 Cal App. 

4th 461 held that a grant deed conveying real property satisfied the express declaration requirement of 

Cal. Fam. Code §852(a) because it contained on its face a clear and unambiguous expression of intent to 

transfer the real property. Estate of Bibb, 87 Cal. App. 4th 461, 463 (Cal. App. 1st Dist. 2001). In Estate of 

Bibb, there was no dispute that the grant deed signed by the conveyor constituted a writing that was 

"made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely 

affected." Id. at 468. A grant deed satisfies the writing requirement under §852(a). In regards to the 

necessitation of language that expressly states that the characterization or ownership of property is 

being changed, since "grant" is the historically operative word for transferring interests in real property, 

there is no doubt that the conveyor's use of the word "grant" to convey the real property into joint 

tenancy further satisfies the §852(a) express declaration requirement. Id. at 468-469. A valid writing 

under the statute need not include the term "transmutation" or any other particular locution. Id. at 467. 

FAQs

image123

We hear many of the same questions from our clients.  Here is a list of questions you may have.  Contact us to discuss your particular situation.  


  1. Will my spouse get ownership in half of my separate property business?
  2. How much is spousal support and for what duration?
  3. How much is child support?
  4. Can my spouse keep our children from seeing me?
  5. What is the cost of a "normal" divorce in Orange County?
  6. How long will this take?
  7. How is property divided?  Can I stay in the family residence?
  8.  Who pays for attorneys fees?  
  9. What monetary sanctions can the court award?


These questions are among the most common questions our clients have.