Effner v. Effner (In re Marriage of Effner)
| Decision Date | 18 May 2020 |
| Docket Number | D074478 |
| Court | California Court of Appeals Court of Appeals |
| Parties | In re the Marriage of WILLIAM H. EFFNER, JR. and CHRISTINE S. EFFNER. WILLIAM H. EFFNER, JR., Plaintiff and Appellant, v. CHRISTINE S. EFFNER, Defendant and Appellant, STEVE YUN, Claimant and Appellant. |
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
APPEALS from a judgment of the Superior Court of San Diego County, David B. Oberholtzer, Judge. Affirmed in part; reversed in part with directions.
Fair Cadora and Kevin L. Cadora for Plaintiff and Appellant.
Jenkins, Erik C. Jenkins, and Tanya C. Sanscartier for Defendant and Appellant.
Contreras Law Firm, Dolores Contreras, Anna Encinias, and Andrew Stilwell for Claimant and Appellant.
Three parties appeal the judgment in this marital dissolution proceeding: husband William H. Effner, Jr. (William), wife Christine S. Effner (Christine), and third party Steve Yun (Yun), who is Christine's brother. William and Yun challenge aspects of the trial court's judgment purporting to divide the community property interests related to a bar jointly owned by the parties. Christine challenges the court's award of reimbursement to William under Family Code section 2640,1 as well as attorney fee awards under sections 271 and 1101.
The judgment awarded William substantial damages against Yun based on breach of contract and breach of fiduciary duty. We conclude this portion of the judgment violated Yun's due process right to actual notice of the claims against him. Prior to trial in this matter, no party requested such relief against Yun. The court appears to have crafted relief that, while arguably warranted by the evidence, was not within the reasonable contemplation of Yun during the proceedings. It must therefore be reversed. This reversal moots William's appeal, which covers a related matter. Christine's separate contentions are unpersuasive. We therefore reverse the judgment in part and remand with directions. We affirm the judgment in all other respects.
"Following established principles of appellate review, the facts are recited here in the light most favorable to the judgment." (In re Marriage of Hokanson (1998) 68 Cal.App.4th 987, 990, fn. 1.) Additional facts will be discussed where relevant in the following section.
William and Christine married in 1997. They eventually had three children. Prior to their marriage, they entered into a prenuptial (or premarital) agreement. It stated, "The purpose of this agreement is to ensure that both parties['] wishes are carried out and that any property owned prior to marriage by either party shall no longer be considered the separate property of the party but marital property of the parties with both parties having 50% interest in such property." At the time of marriage, William owned a house in El Cajon, California in his name only. In the agreement, William agreed "that all property that would be considered his sole separate property or mixed with a separate property interest shall be considered community property after the date of marriage and shall be divided equally with [Christine]."
During their marriage, William and Christine went into business with Yun. As relevant here, they formed a corporation, BSC Enterprises, Inc. (BSC), to own and operate a bar in Glendora, California. Yun owned 50% of the business, and William and Christine owned the remaining 50% together. To avoid liquor license complications, Yun was BSC's sole shareholder and director.
William and Christine loaned BSC money to acquire the bar. William and Christine also loaned money to Yun personally. Yun made regular payments on theseloans to William. Yun and William spoke regularly about the bar's operations, and William received cash distributions.
In February 2013, as Christine was contemplating divorce from William, she directed Yun to stop communicating with William and to make all further payments on the loans to her. Yun agreed. He also began hoarding cash from the bar's operations. Seven months later, Yun had amassed approximately $73,000. In an email to Christine, he wrote, " 'we do not have access to the above business money until we funnel it into my personal account which will take another 6 months to fully funnel it all slowly 1 week at a time.' " Around the same time, without informing William, Yun sold the bar. The buyer agreed to pay $21,500 at the time of purchase and around $3,600 monthly for 60 months.
In July 2014, Christine moved from New Jersey, where the family had been living, to El Cajon. At that time, the remaining balance on the business loan to BSC was approximately $41,000. The remaining balance on the personal loan to Yun was approximately $8,000. Several months later, William moved to El Cajon as well. He filed for divorce in April 2015. His petition generally requested that the court determine the parties' rights to community property.
During the dissolution proceedings, Yun produced two agreements purporting to memorialize loans and other financial arrangements between him and Christine. In the first agreement, Yun agreed to settle the outstanding balance of the loan to BSC for approximately $40,000. Yun also agreed to loan Christine approximately $49,000. If Christine failed to repay the loan within 15 months, the balance would grow to $100,000and Yun would be able to force the sale of the El Cajon house to secure repayment. Christine also gave up her interest in the bar or any proceeds from its sale. In the second agreement, Yun agreed to loan Christine approximately $14,000. Christine again pledged the El Cajon house as collateral. Christine did not repay the loans.
William filed a request to join Yun and BSC in the dissolution proceedings. In a declaration supporting the request, William wrote, "I respectfully request the Court join [Yun] an[d] [BSC] as parties to this action because, among other reasons, [Yun] claims to have an ownership interest in our two major marital assets subject to disposition in this case: a bar business operated by [BSC] and the marital residence." William stated, "[Yun] has material information and documents that are essential to the presentation of my claims in this matter, as well as the Court's ability to render a full and enforceable judgment in this matter." William asserted,
In response, Yun and BSC agreed to be joined. The parties stipulated that Yun and BSC "are indispensable parties to the determination of various property and reimbursement issues in this matter and the enforcement of a judgment re the same." Yun and BSC "waive[d] their respective rights to a hearing on whether they should be joined as parties to the proceeding."
The court (Judge Epley) held a first phase trial limited to the validity of the premarital agreement. As relevant here, the court found the agreement valid. It noted, however, that "the agreement did not include an express waiver by [William] as to his right of reimbursement under Family Code section 2640, subdivision (b)" as to the El Cajon house.
In advance of trial on the remaining issues, the parties submitted trial briefs. Christine's brief contended the community's loans to Yun and BSC were fully repaid before the date of separation. To the extent they were repaid after separation, Christine used the funds to benefit the community. The community had no further interest in the bar or its proceeds, as a result of Christine's loan agreements with Yun.
William's trial brief agreed that the personal loan to Yun had been fully repaid with funds to Christine. He contended, however, that he was entitled to a credit from Christine for half the balance remaining on the loan at the date of separation. William believed Christine had also received approximately $24,000 for repayment of the BSC loan after the date of separation. He proposed that the loan receivable be assigned to Christine in full, with a credit of half the balance remaining on the loan at separation to William. William further believed Christine had received over $100,000 from the sale of the bar and other proceeds. He proposed that the community's interest in these proceeds be assigned to Christine, with a credit of half to William. William argued that any future proceeds from the sale of the bar should be awarded to him as sanctions for Christine's breaches of fiduciary duty related to the bar. William requested attorney fees from Christine and Yun.
Yun, in his trial brief, contended that BSC had been dissolved and there were no further proceeds from the bar to divide. He requested reimbursement of approximately $65,000 loaned to Christine.
In advance of trial, Yun filed a request for an order dismissing him as a joined party. He claimed that he no longer owned the bar, he had no communication with the buyer, and he had not received a payment in nine months. He argued that any dispute over the proceeds should be addressed in a civil case. He maintained that he had an interest in the El Cajon home based on his loan agreements with Christine, but he was not requesting enforcement of the agreements at this time. In Yun's view, there was no basis to continue his joinder as a party because discovery had been completed and he was not in possession of any community property. In its ruling, the court noted that Yun's arguments...
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