In re Marriage of Ditomaso

• Decision Date: 26 October 2022
• Docket Number: 2d Civil B309236
• Parties: In re Marriage of LINDA and DAVID J. DITOMASO. v. DAVID J. DITOMASO, Appellant. LINDA DITOMASO, Appellant,
• Court: California Court of Appeals Court of Appeals

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In re Marriage of LINDA and DAVID J. DITOMASO.

LINDA DITOMASO, Appellant, v. DAVID J. DITOMASO, Appellant.

2d Civil No. B309236

California Court of Appeals, Second District, Sixth Division

October 26, 2022

NOT TO BE PUBLISHED

Order Filed Date 11/21/22

Superior Court County of Ventura, No. D355825, John W Ouderkirk, Temporary Judge (Pursuant to Cal. Const. art. VI § 21.)

Ferguson Case Orr Paterson, Wendy C. Lascher and John A. Hribar for Appellant David J. DiTomaso.

Law Offices of James L. Keane and James L. Keane for Appellant Linda DiTomaso.

ORDER MODIFYING OPINION AND DENYING REHEARING

THE COURT:

It is ordered the opinion filed herein on October 26, 2022, be modified as follows:

1. On page 14, the first sentence of the second full paragraph, after the heading "Subway Russia distributions," is modified to read as follows:

Linda contends the trial court erred when it denied her request for 50 percent of the Subway Russia distributions David retained from October 2013 through the final judgment on November 9, 2020, after deducting his payments for support, taxes, and community expenses.

2. The following two sentences commencing at the bottom of page 15 and ending at the top of page 16 are deleted, including footnote 4:

Linda may not receive agreed-upon spousal support based on the Subway Russia income and then receive half of that income as community property.⁴ As the trial court stated, "She has received the benefit of her request."

3. At the bottom of page 15, after the sentence ending, "of the gross income actually received by David," the following is inserted as footnote 4:

⁴ Because we determine that the trial court properly interpreted the stipulation for temporary spousal support, it is unnecessary to discuss the alternate theories that Linda was barred by laches and judicial estoppel.

There is no change in the judgment.

Appellants' petitions for rehearing are denied.

BALTODANO, J.

David J. DiTomaso and Linda DiTomaso each appeal from a judgment dividing their property after the dissolution of their marriage.^[1] David contends the trial court erred when it: (1) made him individually responsible for certain investment losses, (2) miscalculated Linda's tax savings from those investment losses, (3) rejected financial evidence he offered, (4) attributed all credit card charges paid from community property to him, (5) denied him Epstein credits^[2] for community expenses he paid with separate funds, (6) miscalculated Linda's share of his postseparation salary, (7) equally divided compensation he received between the date of separation and the spousal support order, (8) miscalculated prejudgment interest on unpaid spousal support, and (9) omitted a credit he received. In her cross-appeal, Linda contends the trial court erred when it: (10) treated a stipulation for temporary support as a division of community property income, and (11) denied prejudgment interest for several awards.

We vacate the portion of the judgment dividing David's compensation received between the date of the parties' separation and the spousal support order, and the portion calculating prejudgment interest on unpaid spousal support, and we remand for recalculation of those amounts. We also order the judgment be modified to include the omitted credit. In all other respects, we affirm.

FACTUAL AND PROCEDURAL HISTORY

Linda and David married in 1980. Linda worked as a teacher and took care of their children and household. David managed businesses in which the community had invested (primarily Subway restaurant franchises in Ventura County and Russia). The Ventura County Subway franchises were owned by and operated through 3H Network Inc., which David and Linda owned jointly. The community invested $131,000 to purchase a 24 percent stake in Subway Russia, LLC, which sold Subway restaurant franchises in Russia, eventually growing to over 700 locations.

During the marriage, David invested $1.4 million of community funds in a motorcycle parts business, 50's Boys, LLC, without informing Linda of the amount. The business failed after about four years. Part of the investment was funded by a $400,000 loan David received from Richard Graniere.^[3] David repaid the loan, with interest, using community funds.

David and Linda separated on November 14, 2012. Their marriage was dissolved in 2017. Three years later, the court entered judgment, dividing the parties' assets and ordering that David pay spousal support.

DISCUSSION

Investment losses from 50's Boys

David contends the trial court erred when it found he breached his fiduciary duty to Linda by failing to disclose the $1.4 million in community funds invested in 50's Boys and attributed the entire investment loss to him. We disagree.

A spouse has a fiduciary duty "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 and debts for which the community is or may be liable." (Fam. Code, § 1100, subd. (e).) Spouses have the same fiduciary duty toward each other as nonmarital business partners. (Fam. Code, § 721, subd. (b).) Each partner must thus furnish the other "[w]ithout demand, any information concerning the partnership's business and affairs reasonably required for the proper exercise of the partner's rights and duties under the partnership agreement." (Corp. Code, § 16403, subd. (c)(1).) This includes "'the spouse's rights and duties in the management and control of community property.'" (In re Marriage of Kamgar (2017) 18 Cal.App.5th 136, 146 (Kamgar).)

"The existence and scope of a fiduciary duty is a question of law that we review de novo." (Kamgar, supra, 18 Cal.App.5th at p. 144.) But "to the extent the court's decision below 'turned on the resolution of conflicts in the evidence or on factual inferences to be drawn from the evidence, we consider the evidence in the light most favorable to the trial court's ruling and review [its] factual determinations under the substantial evidence standard. [Citation.]' . . . We review the trier of fact's finding a breach occurred for substantial evidence, resolving all conflicts and drawing all reasonable inferences in favor of the decision." (Ibid.)

David testified that early in their marriage he tried to inform Linda about their "various business activities." Linda responded that she was "not too worried about it" because if something happened to David, his brother, cousin, and office manager would "take care of everything." David also testified that Linda "chose not to be involved in the Subway business." He "tried to" discuss "the Subway business" with Linda in case anything happened to him, but "[s]he had no interest." He did not tell Linda about loans he obtained during the marriage because "she didn't have any interest on the business side of what went on."

Linda testified that David "tried to tell [her] about business activities" at times but she "kind of glazed over after a while." "[H]e would ramble on and on" about business, but she did not want to know "that much detail." However, she told him that she did want to know about "the big sales" and "the really important stuff." She knew they were investing money in 50's Boys, but David did not tell her the amount he invested, that he borrowed money from Graniere, or the amount lost.

The trial court weighed the conflicting evidence and concluded that Linda did not waive David's fiduciary obligations to her regarding 50's Boys. The court found: "David had a sua sponte duty to disclose the amount of the investment in [50's] Boys . . . . David's almost unfettered ability to manage the parties' business affairs under their implicit partnership agreement was limited to the Subway businesses. . . . [T]he $1.4 million investment in [50's] Boys was not envisioned by the implicit agreement between Linda and David regarding the operation of the Subway businesses." (Italics omitted.) The court held David responsible for the entire $1.4 million dollar loss (less tax savings), plus $186,251 in interest he paid Graniere for the loan.

The court's finding is consistent with Kamgar, supra, 18 Cal.App.5th 136. The wife there agreed her husband could risk $2.5 million of community funds in options trading, and she "ceded management and control" up to that amount. (Id. at pp. 140, 149.) But the husband breached his fiduciary duty as to an additional $8 million he invested without her knowledge or consent. (Id. at pp. 147-148.) Similarly, here, Linda waived disclosure about investments related to the Subway businesses but did not waive disclosure with respect to the 50's Boys investment.

David contends there was no evidence Linda would have objected to the investment, and thus no proof the failure to disclose caused the loss. But "[a] spouse has a claim against the other spouse for any breach of the fiduciary duty that results in impairment to the claimant spouse's present undivided one-half interest in the community estate," including a transaction that "cause[d] a detrimental impact to the claimant spouse's undivided one-half interest in the community estate." (Fam. Code, § 1101, subd. (a).) "Remedies for breach of the fiduciary duty by one spouse . . . include . . . an award to the other spouse of 50 percent . . . of any asset undisclosed or transferred in breach of the fiduciary duty." (Fam. Code, § 1101, subd. (g).) By failing to disclose the extent of the 50's Boys investment and the Graniere loan, David impaired Linda's "equal right of management and control over those funds." (Kamgar, supra, 18 Cal.App.5th at p. 148.)

In re Schleich (2017) 8 Cal.App.5th 267, upon which David relies, is inapposite. There,...