Hoogenberg v. Simmons (In re Oftracy)

• Court: California Court of Appeals
• Writing for the Court: HALLER
• Citation: Hoogenberg v. Simmons (In re Oftracy), 215 Cal.App.4th 584, 155 Cal.Rptr.3d 685 (Cal. App. 2013)
• Decision Date: 18 April 2013
• Docket Number: D060557
• Parties: IN RE the MARRIAGE OFTracy and Buford Keith SIMMONS. Tracy Hoogenberg, Respondent, v. Buford Keith Simmons, Appellant.

215 Cal.App.4th 584

155 Cal.Rptr.3d 685

IN RE the MARRIAGE OFTracy and Buford Keith SIMMONS.Tracy Hoogenberg, Respondent,

v.Buford Keith Simmons, Appellant.

D060557

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

Filed April 18, 2013

Certified for Partial Publication.^*

Affirmed in part, reversed and remanded in part.

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

APPEAL from a judgment of the Superior Court of San Diego County, Christine K. Goldsmith, Judge. Reversed with directions. (Super.Ct. No. D516363)

Buford K. Simmons, in pro. per.; and Patrick L. McCrary, La Mesa, for Appellant.

Ashworth, Blanchet, Christenson & Kalemkiarian, San Diego, Sharon Blanchet; and Stephen Temko for Respondent.

HALLER, Acting P.J.

Keith Simmons appeals from a judgment in which the court ordered him to pay substantial sanctions to his former wife, Tracy Hoogenberg, for his conduct during the litigation of Tracy's dissolution petition. On appeal, Keith asserts the court erred by ordering sanctions against him under Family Code sections 2107, 271, and 1101.¹ He also contends the court erred by denying his request for need-based attorney fees from Tracy, and failing to grant a continuance and conducting the second day of trial in his absence.

In the published portion of this opinion, we hold the sanction awarded under section 1101, subdivision (h) is statutorily unauthorized. As we shall explain, this statutory remedy applies only to the nondisclosure of a community property asset, and it does not apply to the nondisclosure of a separate property asset, as is the case here. Accordingly, we reverse the portion of the judgment awarding the section 1101 sanction. We remand for the trial court to determine whether to alter the total sanctions awarded under sections 2107 and 271.

In the unpublished portion of this opinion, we reject Keith's other contentions.

FACTUAL AND PROCEDURAL BACKGROUND

The parties were married in May 2008 and separated one year later in May 2009. They have one child (Child) born in March 2009. On June 3, 2009, Tracy filed a petition for dissolution of their marriage. She requested that the court determine the parties' property rights and award custody of Child to her with visitation to Keith, and that the parties pay their own attorney fees.

What followed was an astoundingly lengthy, circuitous, and expensive course of litigation, particularly given that both parties had substantial financial assets and were married for a very brief time. Tracy had significant investment assets acquired after the death of her first husband. Keith owned a wetsuit business in La Jolla with two partners, and he had an ownership interest in a building in La Jolla.

For purposes of the current appeal, the case was finally resolved in July 2011, by which time Tracy had incurred more than $800,000 in attorney fees and costs. In its final decision, the trial court found the protracted litigation was due in large part to Keith's “questionable legal tactics” (including his request to declare the marriage a nullity and failure to respond to discovery) and his hiring and firing of numerous attorneys. To support its sanctions award, the court concluded that Keith had failed to comply with “even the most basic” financial disclosures; filed misleading and delayed disclosures; failed to fully disclose his assets; misused Tracy's computer hard-drive to disseminate her emails to third parties; failed to respond to discovery requests; failed to appear at his own deposition and trial; and acted intentionally and in bad faith. Based on these findings, the court ordered $150,000 in sanctions against Keith under section 2107 for breach of his fiduciary duties of disclosure, and $250,000 in sanctions under section 271 for his uncooperative conduct. Applying the remedy in section 1101, subdivision (h) for the fraudulent failure to disclose, the court also awarded Tracy the $245,850.24 value of Keith's separate property savings account.

On appeal, Keith does not present any developed argument to refute the evidentiary support for the court's findings that he repeatedly breached his fiduciary duties to his former spouse and frustrated a reasonable resolution of the case. His appellate arguments are premised on claims that (1) the sections 2107 and 271 sanctions were inappropriate, excessive, and beyond his ability to pay; (2) the court erred in failing to award him need-based attorney fees under section 2030; (3) the court had no authority to apply the section 1101, subdivision (h) remedy to the nondisclosure of separate property; and (4) the trial court erred in failing to continue the second trial date.

A.–E.^**

DISCUSSION

I. Court's Award of Section 2107 and 271 Sanctions and Denial of Need-based Attorney Fees ^**

II. Section 1101, Subdivision (h) Remedy of Value of Undisclosed Asset

Utilizing the remedy set forth in section 1101, subdivision (h) ( “section 1101(h)”), the trial court awarded Tracy the $245,850.24 value of the funds in Keith's Wells Fargo savings account as of August 1, 2010, as a sanction for his failure to disclose this asset. Keith argues (1) the record does not support that he failed to disclose this asset and (2) the statutory remedy set forth in section 1101(h) applies only to community property assets. We reject his first contention, but agree with the second contention.

A. Keith's Failure To Disclose Funds in Wells Fargo Savings Account

In his August 4, 2010 income and expense declaration, Keith stated he had $44,530 in his bank accounts (without specifying the accounts).¹² However, his August 2010 Wells Fargo bank statement (which was later obtained by Tracy) shows that his savings account had a balance of $245,850.24 on August 1; $205,850.24 on August 2; and $200,850.24 on August 3, 2010. Based on this evidence, the record supports the trial court's conclusion that Keith did not disclose the money he had in his Wells Fargo savings account.

Noting that the trial court calculated the $245,850.24 value of the account as of August 1, 2010, Keith argues his lower $44,530 valuation in his August 4, 2010 income and expense declaration could have been based on withdrawals he made between August 1 and August 4. The record belies this claim. His August 2010 Wells Fargo bank statement shows that he had a saving account balance of $200,850.24 on August 3, and the next balance entry is $176,544.74 on August 17. Keith has not cited to anything in the record showing he only had $44,530 in his bank accounts as of August 4.

B. Section 1101(h) Remedy

We now turn to the question of whether the section 1101(h) value-of-the-asset remedy can be applied to the nondisclosure of a separate property asset. ¹³ To place the section 1101(h) remedy in context, we first briefly outline the manner in which the Family Code sets forth spousal duties and remedies for breach of those duties.

1. Overview of Family Code Provisions Concerning Spousal Duties and Remedies for Breach

Section 721 (located in a chapter of the Family Code entitled “Relation of Husband and Wife”) creates a broad fiduciary relationship between spouses in their transactions with each other. This relationship “imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.” (§ 721, subd. (b).) It also subjects the relationship to the same rights and duties applied to nonmarital partners under the Corporations Code.¹⁴

Section 1100 (located in a part of the Family Code entitled “Management and Control of Marital Property ”) delineates rules governing a spouse's management of marital property. (Italics added.) It references the section 721 fiduciary relationship and declares it to be operative with respect to the management and control of community property, “until such time as the assets and liabilities have been divided by the parties or by a court.” (§ 1100, subd. (e).) The section further specifies that the fiduciary duty “includes the obligation to make full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest ....” ( Ibid., italics added.) ¹⁵

Section 1101, which immediately follows section 1100, sets forth remedies for breach of the fiduciary duty between spouses. Section 1101, subdivision (a) provides that a spouse has a claim for breach of the fiduciary duty that results in impairment of the “undivided one-half interest in the community estate ....” (Italics added.) Section 1101, subdivision (f) states that a spouse may pursue the legal remedies set forth in the section in a legal dissolution action, or independently without filing a dissolution action. Section 1101, subdivisions (g) and (h) delineate two remedies applicable when a spouse breaches the fiduciary duty by transferring or failing to disclose an asset: subdivision (g) allows for an award of 50 percent of the value of the asset, and subdivision (h) allows for an award of 100 percent of the value of the asset if the breach falls within the “oppression, fraud, or malice” referenced in Civil Code section 3294. ¹⁶ This part of the Family Code includes two additional sections which set forth rules applicable to the management and control of community property when a spouse conveys or encumbers the community property (§ 1102), and when a spouse has a conservator or lacks legal capacity to manage the community property (§ 1103).

In addition to these remedies, the Family Code includes other provisions that allow for sanctions in contexts outside the management and control of marital property.

Section 2107 (set forth in a division of the code entitled “Nullity, Dissolution, and Legal Separation” and a chapter entitled “Disclosure of Assets and Liabilities”) allows for sanctions for the failure to comply with the duty of disclosure set forth in the...