Williamson v. Williamson (In re Williamson)

• Decision Date: 01 January 2014
• Docket Number: 2d Civil No. B238067
• Court: California Court of Appeals Court of Appeals
• Parties: IN RE MARRIAGE OF Frederick W. and Mary Kate WILLIAMSON. Frederick W. Williamson II, Respondent, v. Mary Kate Williamson, Appellant.

226 Cal.App.4th 1303

172 Cal.Rptr.3d 699

IN RE MARRIAGE OF Frederick W. and Mary Kate WILLIAMSON.Frederick W. Williamson II, Respondent,

v.Mary Kate Williamson, Appellant.

2d Civil No. B238067

Court of Appeal, Second District, Division 6, California.

Filed 6/12/2014

See 10 Witkin, Summary of Cal. Law (10th ed. 2005) Parent and Child, § 396.

James W. Brown, Judge, Superior Court County of Santa Barbara (Super. Ct. No. 1306622) (Santa Barbara County)

Law Offices of Marjorie G. Fuller, Marjorie G. Fuller, Fullerton, for Appellant.

Hollister & Brace, Paul Adam Roberts, Kevin Nimmons; Honey Kessler Amado, Beverly Hills, for Respondent.

PERREN, J.

Frederick W. Williamson II is the son of a wealthy Los Angeles patrician family. Through his parents' generosity, Frederick and his wife, Mary Kate Williamson, enjoyed a lavish, high society lifestyle during their 20–year marriage.¹ When the parties separated, their monthly expenses averaged $45,000, yet they had no employment income. Based on Frederick's post-separation annual income of $99,000, the trial court ordered him to pay monthly permanent spousal support of $2,000 and child support of $1,235.

The principal issue before us is whether the trial court abused its discretion by declining to treat historical cash advances from Frederick's parents as income in calculating child and spousal support. The trial court determined they were loans and therefore excludable as income under the child support statutes. Because the advances are to be deducted from Frederick's expected inheritance, we conclude they were gifts in lieu of a devise or inheritance, rather than loans. This distinction is immaterial, however, because the advances ceased before trial and there was no evidence they would resume. Recognizing it could not order Frederick's parents to make further cash advances, the court reasonably concluded it could not base an enforceable child or spousal support order on them.

Mary Kate also contends the trial court erred by retroactively modifying Frederick's temporary support obligation, by failing to correct its statement of decision, by preventing certain discovery, by declining to impose sanctions for breaches of fiduciary duty and by limiting her attorney fees to $10,000. We agree the court exceeded its jurisdiction by charging temporary support payments to the community, rather than to Frederick. We reverse and modify the judgment to correct this error, and affirm in all other respects.

FACTS AND PROCEDURAL BACKGROUND

Frederick and Mary Kate were married in 1989 and have three children. They separated in 2009. Frederick petitioned for dissolution. At the time of trial, only their youngest child, Hughes, was a minor. Hughes will turn 18 in July 2014.

Pre–Separation Income and Lifestyle

Before marriage, Mary Kate worked as a salesperson at an Ann Taylor store. She did not complete college. After they married, the parties agreed Mary Kate would stay home and care for their children. With a few exceptions, the marital income came from three sources: Frederick's employment income, his trust income and gifts or cash advances from his parents, Norman and Victoria Williamson.

Frederick's paternal grandmother, Ruth Chandler von Platen, was the daughter of Harry Chandler, a real estate magnate and former publisher-owner of the Los Angeles Times. Frederick worked for that newspaper between 1990 and 2005, earning approximately $120,000 per year. He also received annual distributions of approximately $12,000 to $13,000 from the Ruth Chandler von Platen Trust No. 2 (von Platen Trust), his grandmother's testamentary trust.

Frederick's parents made annual tax-free gifts of $26,000 to Frederick, Mary Kate and each of their children, for a total of $130,000 per year. They also paid the children's private school tuition. After selling one of their properties in 2000, they gifted Frederick and each of his siblings $900,000. Frederick and Mary Kate used that money, in part, to purchase stock, art and antiques.

Frederick's parents also advanced money to purchase and remodel the parties' homes. In 1991, Norman advanced them $395,000 to purchase a home on Old Mill Road in Pasadena. He forgave that “loan” because it was their first home. A few years later, Frederick and Mary Kate sold that property and purchased a “fixer” home on Huntington Circle in Pasadena for $899,000. Known as “Harton Hall,” the historically significant, 7,000 square-foot residence was on the grounds of the Ritz Carlton Huntington Hotel, providing the family with access to the hotel's tennis courts, swimming pool, gym, spa facilities and room service. Norman advanced the parties approximately $1,205,600 to purchase and renovate the property.

Frederick and Mary Kate drove luxury automobiles and had a full-time housekeeper. They belonged to several exclusive private clubs, including The California Club, The Valley Hunt Club and The Pasadena Athletic Club. They travelled frequently, both internationally and domestically, sometimes by private jet. During ski season, the family spent most weekends at Mammoth Mountain. Mary Kate shopped at high-end stores, purchasing designer jewelry, clothes, handbags and shoes. Frederick collected fine wine.

The parties regularly visited the family's luxury beachfront home in Carpinteria, known as “Sandyland.” Frederick inherited a 1/11th interest in the property, which is co-owned by his siblings and cousins. The interest was deeded to Frederick from Ruth Chandler von Platen's estate, along with a 1/12th interest in an adjacent empty lot. The various owners, including Frederick, coordinate use of Sandyland, which is never rented and does not generate income. Frederick's father and uncle pay the property's expenses.

When they decided to relocate to Santa Barbara, Frederick and Mary Kate sold Harton Hall for $3,430,000. They used the equity from that property, along with a $340,000 advance from Norman, to purchase a home on Featherhill Road in Montecito (Featherhill) for $2,750,000. They also purchased a vacation home in Mammoth for $575,000.

Featherhill had a main residence, guest house, pool and pool house, garage and studio, but required extensive repairs. The parties planned to tear down the structures and rebuild. When that proved infeasible, they embarked on a complicated renovation. As spending on the project spiraled, Frederick liquidated $470,000 in stock inherited from his maternal grandmother. He also quit his job at the Los Angeles Times to focus on the renovation.

During the final two years of the marriage, Frederick obtained large sums of money from his parents to help pay for the renovation. The parties' monthly expenses ranged between $40,000 and $50,000. Frederick and his father had “many heated conversations about whether they would continue to lend [the couple] money.” Norman maintained a spreadsheet on which he kept track of the cash advances made to Frederick and his siblings. The advances to Frederick and Mary Kate totaled approximately $2,168,055, including interest. Mary Kate always thought the advances were gifts. She never heard them referred to as “loans” or “advancement[s] on inheritance” until the divorce. She said, “Everybody in the family just gets money when they need it.”

No portion of the cash advances has been repaid. Two weeks before trial, Norman and Victoria made a revocable amendment to their 1992 trust. According to Norman, it “was a clarification of [their] intent” that any loan balances and accrued interest due and owing by Frederick or his siblings at the time of distribution will be subtracted from that child's portion of the inheritance.

Post–Separation Income and Lifestyle

After the parties separated, Mary Kate and the children continued living at Featherhill. Frederick rented a one-bedroom, basement apartment for $1,800 per month. He stayed there for approximately 18 months. When Norman refused to help with the rent, Frederick moved into his parents' home in Montecito. He planned to live there until escrow closed on Featherhill.

For a period after separation, Norman voluntarily paid Mary Kate $8,600 a month. When he terminated those payments, Mary Kate moved for a temporary spousal and child support award. Pending a final hearing on her request, the court ordered Frederick to pay monthly spousal support of $5,000 and child support of $5,000.

In the meantime, the parties sold Featherhill and placed the $1,378,067 in sale proceeds in a blocked account. Claiming his parents were no longer advancing him money, Frederick requested leave to pay support from the blocked account. The parties agreed to deduct the September and October 2010 support payments from that account and to charge them to Frederick as an early distribution of his share of community assets. Subsequently, the trial court set temporary spousal support at $13,450 per month and child support at $7,950 per month, retroactive to July 2010. The order specified the payments for support “shall be paid from the parties' blocked account ... until that account is exhausted.”

In October 2010, Frederick began working as the manager of the Santa Barbara News Press classified advertising department. His annual salary was $45,000 plus $15,000 in commissions. He continued to receive $13,000 per year from his grandmother's trust and another $26,000 from his parents, for total annual income of $99,000.

Trial and Decision

Following a seven-day trial, the trial court determined Featherhill was a community asset. It found that “[a]lthough it is likely that the vast majority, if not all, of the funds used to acquire and improve Featherhill were Fred's separate property there is insufficient evidence to trace the funds....” With respect to support, the court observed: “The suspicions that the family would make its wealth available to Fred to pay spousal support before allowing Fred to go to jail for contempt or that Kate is using her one weapon of alienating the children to extort some...