Leininger v. Leininger (In re Leininger)
| Docket Number | A159386 |
| Decision Date | 19 January 2022 |
| Parties | In re the Marriage of CAROL and PAUL LEININGER. v. PAUL LEININGER, Respondent. CAROL LEININGER, Appellant, |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
San Mateo County Super. Ct. No. FAM0119724
In this marital dissolution action, Carol Leininger appeals from a judgment in which the trial court awarded Paul Leininger reimbursement (Fam. Code, [1] section 2640) for his separate property contributions to the community. Carol[2] disputes the Watts[3] charges the court imposed for her exclusive use of the community residence following the parties' separation. She also appeals the court's finding she breached her fiduciary duty and the attendant award to Paul. Finally, she claims the trial court did not rule, and should have granted her request pursuant to a December 2015 order, that Paul's business pay Carol amounts equal to distributions made to Paul. We affirm.
The parties married in July 1992. Prior to the marriage, Paul started a business known as Challenge Electronics in 1980 which later became known as Absolute Technology. Four years after the marriage, Paul incorporated the business as a subchapter S corporation known as ABX Engineering, Inc. (ABX).
In 1997, to accommodate ABX's need for office space, the parties bought 880 Hinckley Road, Burlingame (880 Hinckley Road). To address ABX's continued expansion, in 2003 the parties purchased 839 Hinckley Road, Burlingame (839 Hinckley Road) and, in 2010, 875 Stanton Road, Burlingame (875 Stanton Road). They also owned income-producing residential property (rental property) and unimproved land.
They lived in the community residence at 405 Chapin Lane, Hillsborough (community residence or Chapin Lane) until August 2013, when Paul moved out. Carol lived there until its sale in November 2018.
Carol and Paul separated in November 2012. Following separation and prior to the 2019 trial, the parties reached several stipulations. By court order dated August 5, 2013 (August 2013 order), the parties stipulated that Carol, who was a certified public accountant, would manage the parties' miscellaneous income, including rents, and payments of any kind (excluding Paul's ABX salary). They anticipated that any balance above the requisite reserves would be divided equally between the parties and that "each party" would receive "$20, 000 per month in passive income."
The August 2013 order required Carol to open a community bank account and to deposit rental income from the community's properties into that account, with monthly accountings provided to Paul. Carol opened the community account, but-without Paul's approval-she deposited a substantial portion of the community rental income into an account in her name alone (personal account). Without Paul's consent, Carol used community rental income for personal, postseparation purposes at Chapin Lane, including the mortgage, taxes, maintenance, gardening, and pool expenses. After separation, Carol deposited over $1.6 million into her personal account.
By order dated December 4, 2015 (December 2015 order), the parties stipulated that, as of June 2015, if Paul received distributions from ABX above his base salary, Carol would receive a matching amount.
In October 2018, the parties negotiated an equitable apportionment of the community and separate interests in ABX. Pursuant to the October 26, 2018 stipulated order (October 2018 order), ABX was confirmed as Paul's separate property, for which he paid Carol $875, 000 for her share of the community's interest in ABX.
In 2019, the court conducted a 14-day bench trial on the remaining issues of support, reimbursement, property division, and property misappropriation.
The trial court issued a tentative decision and proposed statement of decision on May 7, 2019 (proposed SOD). The proposed SOD determined Paul's reimbursements for his separate property contributions to community assets, the rent Carol owed for living in the community residence after separation, and Paul's entitlement to damages for Carol's breach of fiduciary duty.
The trial court considered Carol's objections to the proposed SOD and the parties' arguments at the October 31, 2019, hearing and issued its statement of decision, which, among other things, awarded Paul more than $4 million for his separate property contributions to various community assets; $252, 541 for Carol's use of the community residence; and damages for Carol's breach of fiduciary duty of $726, 450.
Carol appealed, disputing $2, 298, 000 of the separate property reimbursements, $36, 400 of the breach of fiduciary duty damages and the Watts charges imposed against her. She also claims the trial court erred in failing to rule on Paul's purported noncompliance with the December 2015 order requiring that Carol receive distributions from ABX equal to those paid to Paul. We discuss in greater detail below additional facts as they relate to the issues raised on appeal.
Carol claims the trial court erred as a matter of law by reimbursing Paul under section 2640 for distributions that were made by ABX for the benefit of the community. She further claims, for the first time on appeal, that contributions made after separation and expenses for maintenance and repair that did not increase the value of the commercial properties are not reimbursable under section 2640, and that the court erred in failing to calculate the community and separate property components of ABX's contributions to the community property.
The evidence established, and in the statement of decision the trial court found, "[t]here is no dispute that ABX is a subchapter S Corporation of which Paul was, and continues to be, the sole shareholder," and ABX has been confirmed as Paul's "sole and separate property."
From 1998 through 2018, ABX made substantial contributions to improve the community's three commercial properties: more than $608, 000 for 880 Hinckley Road; $345, 000 for 839 Hinckley Road; and approximately $1, 345, 000 at 875 Stanton Road.
Carol's expert opined that the improvements had been "capitalized" for tax purposes by ABX, that ABX owned the improvements and therefore the community derived no benefit from them. In objecting to the proposed SOD, Carol obliquely argued,
In its statement of decision, the trial court found the testimony of Carol's expert "was clearly contradicted by the facts that not only did the parties take the tax benefits for improvements to the commercial properties on their 2012 and 2013 joint income tax returns, but Carol also continued to take such benefits on her personal tax returns after separation."
Section 2640 provides in part: "In the division of the community estate under this division, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party's contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source." (§ 2640, subd. (b).)
" 'Contributions to the acquisition of property' . . . include downpayments . . . [and] payments for improvements . . . ." (§ 2640, subd. (a).)
" " (In re Marriage of Bonvino (2015) 241 Cal.App.4th 1411, 1432, quoting Cal. Law Revision Com. com., 29D West's Ann. Fam. Code (1994 ed.) foll. § 2640, pp. 136-137.)
We review de novo whether the undisputed evidence of ABX's contributions to the community's three commercial properties satisfies section 2640 and conclude that it does. (Valentino v. Franchise Tax Bd. (2001) 87 Cal.App.4th 1284, 1290, fn. 3; Heller v. Franchise Tax Bd. (1994) 21 Cal.App.4th 1730, 1735.) In matters of statutory interpretation, we begin with the statute's language, giving it plain and commonsense meaning. (Hassell v. Bird (2018) 5 Cal.5th 522, 540; see In re Marriage of Walrath (1998) 17 Cal.4th 907, 917 (Walrath).) (First Student Cases (2018) 5 Cal.5th 1026, 1034-1035; see Webb v. City of Riverside (2018) 23 Cal.App.5th 244, 252.) Where the statutory language is clear and a literal interpretation does not result in unintended or absurd consequences, courts must generally follow its plain meaning. (Hassell v. Bird, at p. 540.)
We presume the correctness of the judgment or order below. (People v. JTH Tax, Inc. (2013) 212 Cal.App.4th 1219, 1259.)" 'All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown.'" (Denham v. Superior Court (1970) 2 Cal.3d 557, 564; Lister v. Bowen (20...
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