Georgiou v. Leslie (In re Georgiou)

• Court: California Court of Appeals
• Writing for the Court: McCONNELL
• Citation: Georgiou v. Leslie (In re Georgiou), 218 Cal.App.4th 561, 160 Cal.Rptr.3d 254 (Cal. App. 2013)
• Decision Date: 31 July 2013
• Docket Number: D061200
• Parties: IN RE the MARRIAGE OF Byron GEORGIOU AND Maria LESLIE. Byron Georgiou, Respondent, v. Maria Leslie, Appellant.

218 Cal.App.4th 561

160 Cal.Rptr.3d 254

IN RE the MARRIAGE OF Byron GEORGIOU AND Maria LESLIE.Byron Georgiou, Respondent,

v.Maria Leslie, Appellant.

D061200

Court of Appeal, Fourth District, Division 1, California.

Filed July 31, 2013

See 11 Witkin, Summary of Cal. Law (10th ed. 2005) Community Property, § 134.

APPEAL from an order of the Superior Court of San Diego County, Lorna A. Alksne, Judge. Affirmed. (Super.Ct. No. D478168)

Law Offices of Marjorie G. Fuller, Marjorie G. Fuller, Lisa R. McCall, Fullerton; Law Offices of Fuller Jenkins and Erik C. Jenkins, La Jolla, for Appellant.

Law office of Stephen E. Temko, Stephen E. Temko; Ashworth, Blanchet, Christenson & Kalemkiarian, Sharon L. Kalemkiarian; English & Gloven and Mark M. Gloven, San Diego, for Respondent.

McCONNELL, P.J.

More than three years after entry of judgment, Maria Leslie filed an action under Family Code section 1101,¹ alleging her former husband, Byron Georgiou, breached his fiduciary duty to her during the dissolution proceedings by not disclosing the true value of a community asset divided in the marital settlement agreement (MSA), his prospective referral fee in federal class action securities litigation against Enron Corporation (Enron). The family court granted Georgiou's motion for summary adjudication, determining section 1101 does not authorize a postjudgment action, and alternatively, the action was untimely under the statute's three-year statute of limitations (§ 1011, subd. (d)(1)). Leslie challenges the order, contending both rulings are incorrect.

We conclude section 1101 does not authorize Leslie's action, and thus we are not required to address the alternative ruling. Because the prospective referral fee was not concealed, but rather the parties litigated the issue and the judgment fully adjudicated the asset, Leslie's recourse was an action to set aside the judgment, or a portion thereof, within the one-year limitations period specified in the relevant portion of section 2122, subdivision (f). Because her action was untimely, the court lacked jurisdiction over the matter. We affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

Leslie and Georgiou married in 1985 and separated in 2003. Georgiou filed for dissolution that year, and a bifurcated judgment terminated the marital status in 2005.

Georgiou is an attorney, and in 2000 he entered into an “of counsel” relationship with Milberg Weiss Bershad Hynes & Lerach LLP (Milberg Weiss), ² which entitled him to a referral fee of 10 percent in class action litigation in which Georgiou secured the plaintiff and the firm was designated lead counsel.

In 2002 Milberg Weiss entered into a contingency fee agreement with the Regents of the University of California (the Regents), which was ultimately designated the lead plaintiff in federal class action securities litigation against Enron. On a sliding scale, the agreement authorized attorney fees of between 8 and 10 percent of the recovery.

In February 2007 Leslie and Georgiou entered into an MSA. Before signing it, Leslie knew of Georgiou's referral fee agreement with Milberg Weiss, that the firm had thus far recovered approximately $7.2 billion in settlement funds, the largest recovery to date in a class action, and the firm would be submitting a request for attorney fees in federal district court under its fee agreement with the Regents. It is undisputed that Georgiou did not give Leslie a copy of the fee agreement.

Leslie deposed Darren J. Robbins, a Milberg Weiss partner designated most knowledgeable about Georgiou's relationship with the firm. Her attorney questioned Robbins on whether the firm had a fee agreement with the Regents, but he did not ask Robbins what percentage of fees the Regents had agreed to pay the firm, nor did he ask for a copy of the agreement. In any event, Robbins testified the federal district court must approve a fee award based on a variety of factors, and it is not bound by a fee agreement.

Robbins also testified Georgiou was entitled to a referral fee from Milberg Weiss in the Enron litigation, but there was a dispute as to the amount of the fee. Robbins said, “I would not imagine any scenario under which [Georgiou] would receive less than three percent.” Robbins also said the firm hoped to obtain attorney fees substantially exceeding the largest securities class action fee award to date of $330 million, as that award was based on a much smaller recovery than achieved in the Enron litigation. Robbins estimated Milberg Weiss would obtain fees by the end of 2008.

In a settlement conference brief, Leslie gleaned that Georgiou's referral fee may be between $9 and $33 million, presumably based on a potential fee award to Milberg Weiss of $330 million. She acknowledged, however, that the firm intended to seek “far more than $330 million,” and that Georgiou intended to “vigorously argue” he was entitled to a full 10 percent referral fee.

The MSA divided the prospective referral fee unequally. Leslie agreed to accept 10 percent of the fee, in exchange for approximately $7 million in other assets and debt relief. She received the family home, even though it was Georgiou's separate property, eight townhomes that produced net monthly income, a Roth IRA and retirement accounts. He received 90 percent of his referral fee, life insurance policies, loan receivables, business interests, and substantial credit card and other debt. According to Georgiou, Leslie “was taking everything that was certain.”

The MSA was incorporated in a judgment of dissolution entered on December 12, 2007. About a month later, Milberg Weiss submitted its fee application to the federal district court in the Enron case, requesting 9.52 percent of the ultimate recovery of approximately $7.2 billion, pursuant to the terms of its fee agreement with the Regents. In September 2008 the federal district court issued a lengthy order granting the request as reasonable and awarding Milberg Weiss $688 million in fees.

Milberg Weiss then negotiated a 9 percent referral fee with Georgiou. In September 2008 Georgiou paid Leslie $4 million for her 10 percent share of the fee, which caused her to realize his fee exceeded the top range of $33 million she anticipated when she entered into the MSA. In November 2009 she learned she was entitled to an additional $1.560 million.³

Leslie retained a new attorney, and in November 2009 she filed a motion under section 2122, subdivision (d), to set aside the judgment of dissolution based on her mental incapacity. A motion under this provision must be filed within two years after the date of entry of judgment. ( Ibid.) She argued her former attorney insisted that she enter into the MSA so he could get paid, and implied she was under duress because she had not been taking psychotropic medications as prescribed by her physicians. In September 2010 after retaining yet another attorney, Leslie dismissed the motion.

On December 13, 2010, however, Leslie filed this action under section 1101 for Georgiou's breach of his fiduciary duty of disclosure. The gist of the action was that Georgiou deceived her into believing his potential referral fee would be between $9 and $33 million, by not providing her with a copy of the fee agreement between Milberg Weiss and the Regents and inventing or exaggerating a dispute with the firm over the amount of his referral fee. She argued that had she known the terms of the fee agreement, she could have calculated that Milberg Weiss stood to obtain a $688 fee award. Leslie sought either 50 percent or 100 percent of the referral fee pursuant to section 1101, subdivisions (g) and (h).⁴

Georgiou moved for summary adjudication, arguing her action was untimely because she did not file it within three years from the date she had “actual knowledge that the transaction or event for which the remedy is being sought occurred.” (§ 1101, subd. (d)(1).) Leslie argued her action did not accrue until September 2008 when she learned the amount of Georgiou's referral fee and realized he had understated his potential fee in breach of his fiduciary duty.

The court determined, sua sponte, that relief for breach of fiduciary duty under section 1101 “is not legally available in a post-marital dissolution judgment action.” The court interpreted section 1101 to authorize an action in only three instances: (1) during an intact marriage; (2) in conjunction with a dissolution proceeding; or (3) after the death of a spouse.

The court also found that section 2122, subdivision (e), under which a judgment may be set aside for mistake, provided Leslie's sole recourse, but such an action was not viable because the statute's one-year limitations period was long expired. Alternatively, the court determined that even if section 1101 applied, her action was barred by the statute's three-year limitations period since she knew when she signed the MSA that she did not have a copy of Milberg Weiss's fee agreement with the Regents.

DISCUSSION

IStandard of Review

Leslie contends the court erred by granting summary adjudication. She asserts the court misinterpreted section 1101 to authorize an independent action for breach of fiduciary duty only in an intact marriage.

A defendant meets his or her burden in a summary adjudication motion “by negating an essential element of the plaintiff's case, or by establishing a complete defense, or by demonstrating the absence of evidence to support the plaintiff's case.” (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1142, 97 Cal.Rptr.2d 707; Code Civ. Proc., § 437c, subd. (f)(1) [party may move for summary adjudication as to “one or more affirmative defenses”].) “We review questions of law as well as orders granting summary adjudication under the de novo standard of review.” (Lafferty v. Wells Fargo Bank (2013) 213 Cal.App.4th 545, 556, 153 Cal.Rptr.3d 240.) Likewise, the interpretation of a statute presents a legal question we review independently. (Ibid. )

IIApplicable...