Marriage of Jacobs, In re

• Decision Date: 28 January 1982
• Citation: 180 Cal.Rptr. 234,128 Cal.App.3d 273
• Court: California Court of Appeals Court of Appeals
• Parties: In re the MARRIAGE OF Kathryn L. and Douglas C. JACOBS. Kathryn L. JACOBS, Appellant, v. Douglas C. JACOBS, Appellant. Civ. 25381.

Page 234

180 Cal.Rptr. 234

128 Cal.App.3d 273

In re the MARRIAGE OF Kathryn L. and Douglas C. JACOBS Kathryn L. JACOBS, Appellant, v. Douglas C. JACOBS, Appellant.

Civ. 25381.

Court of Appeal, Fourth District, Division 2, California.

Jan. 28, 1982.

Hearing Denied April 14, 1982.

[128 Cal.App.3d 277] Farrell & Miller and Linda Lancet Miller, Newport Beach, for appellant wife.

Wenke, Taylor, Evans & Ikola and Richard A. Derevan, Newport Beach, for appellant husband.

OPINION

TAMURA, Associate Justice. ^*

The superior court granted wife's motion to set aside a stipulated interlocutory judgment and final judgment of dissolution. Husband appeals from the order contending that wife's motion was untimely and that she failed to prove sufficient grounds to set the judgment aside. Wife appeals from the portion of the order denying recovery of attorney fees.

FACTS

The parties were married for over 13 years. There are two children of the marriage, ages 12 and 8. The younger of the two boys is deaf as a result of a bout of meningitis. The husband is an accountant and a partner in a well-known accounting firm.

During their marriage, the parties lived for a time in Ohio. When they moved to California in June of 1978, they sold their Ohio residence for approximately $340,000, realizing $250,000 cash. In June or July of 1978, the parties used $130,000 of the proceeds from the sale of the Ohio house as a down payment on a new house in Santa Ana. The balance of the funds was used to purchase time certificates of deposit in the names of the two children.

In November of 1978, husband drew up and signed a handwritten note, back dated to July 1, 1978, promising to pay $130,000 to the children. At husband's request, wife also signed the note. At that time (November 1978) husband also prepared what purported to be federal gift tax returns and asked wife to sign one of the returns as donor. Each return purported to be for a gift of $125,000. The return signed by husband listed husband and wife as donees of the gift. The return signed by wife did not list any donees. Another handwritten note, dated April 23, 1979, promised to pay $16,000 to the children; the note was signed by the husband, but not by the wife.

In the face of an impending divorce and because husband refused to give up their home, wife sought another residence. When wife found a condominium she wanted to purchase, husband insisted that wife execute a note to the children for the $60,000 from the proceeds of the sale of the Ohio house she used for the down payment.

The record shows that husband used his financial expertise as an accountant to manipulate the parties' money. It was his custom to place the parties' extra money or savings in accounts in the children's names to avoid taxes. However, the parties always treated the money as their own. Before November of 1978, the parties had never executed any notes or gift tax returns relative to their use of the "children's money." At that time, however, husband told wife it was necessary to execute the $130,000 note and the gift tax returns in order to avoid $12,000 in taxes. He told wife that, as always, the parties would have full use of the funds, even though the money was in the children's names.

In August of 1979, wife filed for dissolution of marriage. An order to show cause for temporary support was scheduled for November 5, 1979. As a result of negotiations conducted in the hallway outside the courtroom, the parties entered into an oral stipulation in open court resolving all the issues in the dissolution. The trial court entered a minute order on November 5, 1979, granting an interlocutory judgment of dissolution based on the oral stipulation but the terms of the stipulation were not set out in the minute order.

On January 23, 1980, an interlocutory judgment was filed in accordance with the terms of the oral stipulation. The judgment ordered, inter alia: "12. The parties shall serve as joint trustees for the property of the minor children consisting of approximately $250,000 in notes and/or cash, with Respondent having the sole right to manage and control the investment of funds but with the parties having equal control over the disbursement of funds for the benefit of the children." The final judgment of dissolution was entered on April 17, 1980.

On July 22, 1980, wife filed a motion to set aside the interlocutory and final judgments, except as to the status of the marriage. The motion was based on Code of Civil Procedure section 473 and upon the equitable powers of the court and was supported by an extensive factual declaration. Husband's response to the motion did not include any factual counterdeclarations. The court granted wife's motion and set aside the judgments and the stipulation but denied her motion for attorney fees.

Husband contends that wife's motion to set aside the interlocutory judgment was untimely and, in any event, that she did not prove sufficient grounds to justify the court in vacating the judgments. He further contends that the court erred in denying his request to present oral testimony at the hearing on the wife's motion. Wife's sole contention on appeal is that the court abused its discretion in denying her request for attorney fees. In the ensuing discussion, we have concluded that the order setting aside the judgments and stipulation should be affirmed but that the order denying wife's request for attorney fees should be reversed.

I TIMELINESS OF WIFE'S MOTION

The wife's motion was brought pursuant to Code of Civil Procedure section 473 and under the equitable jurisdiction and powers of the superior court. ¹ Section 473 requires that a motion for relief brought under that section must be made within a reasonable time, but in no case to exceed six months "after such judgment, order or proceeding was taken...."

In the instant case, wife filed her motion on July 22, 1980, just one day less than six months after the entry of the interlocutory judgment on January 23, 1980. Husband argues that wife's motion was not timely (1) because it was not filed within a reasonable time after entry of the judgment and (2) because it was not filed within six months after the oral stipulation was entered into in open court.

As to "reasonable time," the court specifically found that the motion was timely made. The trial court has discretionary power to decide issues growing out of a motion for relief under section 473 and its determinations will not be disturbed by a reviewing court unless there is a clear showing of abuse of discretion, particularly where the result is to compel a hearing on the merits. (Sanchez v. Sanchez (1969) 273 Cal.App.2d 159, 163, 77 Cal.Rptr. 884; Fidelity Fed. Sav. & Loan Assn. v. Long (1959) 175 Cal.App.2d 149, 152, 345 P.2d 568.) Legal discretion has been defined as an impartial discretion taking into account all relevant facts, together with legal principles essential to an informed and just decision; it is " ' "not a mental discretion, to be exercised ex gratia, but a legal discretion, to be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice." ' " (Emphasis added; Martin v. Alcoholic Bev. etc. Appeals Bd. (1961) 55 Cal.2d 867, 875-876, 13 Cal.Rptr. 513, 362 P.2d 337, quoting Bailey v. Taaffe (1866) 29 Cal. 423, 424; Blake v. State Personnel Board (1972) 25 Cal.App.3d 541, 553, 102 Cal.Rptr. 50.) The test of abuse of discretion is whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered. (In re Marriage of Connolly (1979) 23 Cal.3d 590, 598, 153 Cal.Rptr. 423, 591 P.2d 911.) In the case at bench, it cannot be said that the trial court exceeded the bounds of reason in finding that the motion was timely made. The record shows that in February or March of 1980 wife began to have serious doubts about the validity of the interlocutory judgment and that her attorney notified husband's attorney that investigation and evaluation of wife's position would be made. Wife gave serious thought to going back into court but her then counsel said he would not represent her. Consequently, she began seeking new counsel. Taking into account all of the circumstances including the time reasonably necessary to obtain new counsel, conduct an investigation of the case, and prepare her motion papers, the court did not abuse its discretion in finding that the motion was filed within a reasonable time.

Husband also argues that wife's motion was not timely because it was filed more than six months after the parties entered into the oral stipulation upon which the judgment was based. Husband contends that in order to set aside the stipulation wife must have either brought her motion under section 473 within six months of the date of the stipulation or she must have established facts showing extrinsic fraud or extrinsic mistake. This contention also lacks merit.

In the case of a default judgment, a party must bring a motion for relief under section 473 within six months of the date of the default rather than the date of entry of the judgment. (Weiss v. Blumencranc (1976) 61 Cal.App.3d 536, 541, 131 Cal.Rptr 298.) The rationale for the rule is that if the judgment is set aside but the default remains, the court can only enter a new judgment upon the same terms as the judgment set aside. (Ibid.) Husband argues that by analogy the significant event from which the section 473 six months runs to set aside a stipulated judgment is the date of the stipulation rather than the date of entry of the judgment. Husband reasons that even if the motion to set aside the judgment were successful, if it were brought more than six months after the stipulation, the stipulation would be left intact so that the court would be obligated to enter a new judgment upon the same terms as the judgment just set aside.

A party seeking relief under section 473 must...