Filed 10/15/18 Lami v. Lami CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

Former husband and wife Raymond Jerome Lami (Jerry) and Janice Lami (Janice) both appealed after the trial court divided marital property and issued a judgment of dissolution. Jerry argues that the trial court erred in dividing assets and obligations by relying on an order issued in a previous dissolution-of-marriage proceeding between the parties. Janice argues that the trial court incorrectly determined the parties’ date of separation, but she acknowledges that we need not reach the issue if we reject Jerry’s arguments. Because we reject Jerry’s arguments, we affirm the judgment and do not resolve Janice’s claim.

I.
Factual and Procedural
Background

Janice purchased a home in Redwood City with friends in 1985. After a series of quit-claim transfers, Janice and Jerry became the sole owners of the property and held it as joint tenants. The parties were married in October 1990. In this appeal, the parties do not contest that the home is a community asset.

What the parties contest, however, is how the trial court allocated the parties’ obligations with respect to various loans that were taken out on the house. The first loan was taken out in the late 1990s or early 2000s, when Jerry took out a line of credit worth about $150,000 on the house for the operation of Jerry’s business, a pub in Redwood City. In July 2003 Jerry obtained two other loans totaling around $150,000 using the home as collateral. Janice claimed that she had initially signed the documents for these loans before realizing the home would be used as collateral. She stated that when she realized during the signing process that the home was to be used to secure the loan, she refused to continue to initial the documents and was told by Jerry that he would not take out the loan, but he did so anyway and without her permission. Both parties agree that Jerry placed Janice’s initials on the document, but Jerry claimed he did so because Janice had agreed to the loan but had simply inadvertently failed to initial the documents.

At first, Jerry’s business made the monthly payments on the loan. Jerry tried to refinance the line of credit on the house in 2004, but the bank did not correctly process the new loan and there was “an unexpected default.” Janice paid around $11,500 in August 2004 to bring the loan current. After that payment, Janice made all monthly payments, which as of May 2005 totaled approximately $20,500. Around that same time, Janice learned a notice of foreclosure had been filed against the home because payments on the loans had not been made. Janice paid about $17,000 to bring the loans current, and the notice was rescinded. Jerry promised to reimburse Janice for the payments, but he did not do so. Janice wanted to refinance all the loans but could not do so with Jerry because of his poor credit. Janice asked Jerry to sign a quitclaim deed so she could refinance in order to avoid foreclosure, but Jerry refused.

Janice filed a petition for legal separation in April 2005 (Case No. FAM 084468, hereafter “the 2005 proceeding”). In that proceeding, Janice sought an order to help her prevent losing the house to foreclosure. Following a hearing, in what we shall refer to as “the 2005 order,” the court ordered Jerry to reimburse Janice for “one-half of all the payments that she has made on behalf of the community for the line of credit and house payments,” which amounted to $5,750 for the line of credit and $11,400 for monthly house payments. The court further ordered Jerry to reimburse Janice “for 100% of the amounts” she paid to stop foreclosure ($17,000), plus $8,000 for a payment due at the end of June 2005. The court also ordered Jerry to sign a quitclaim deed for his interest in the home. The court’s order stated that Jerry “shall reimburse [Janice] for all monies she expends in protecting and preserving the family residence, including but not limited to monies she expends to stop the current foreclosure, payment of mortgage payments, insurance payments, property tax, etc.” Jerry did not appeal from the 2005 order, and he acknowledges in his appellate briefing that the order was valid and within the trial court’s discretion, and that any appeal of the order would have been meritless.

No further action was taken in the separation proceeding, and Janice and Jerry continued to live together in the home. Janice contended, however, that their relationship showed “a complete and final break” at this point, and they were effectively living separate and apart after the initiation of the 2005 proceeding. Janice continued to pay the loans that were secured by the home.

Janice initiated these proceedings in August 2014 after she sent Jerry a settlement offer and Jerry did not respond. She asked that the family home be awarded to her, subject to an equalization payment to Jerry. She also sought to be reimbursed for half of the money she had paid for various home expenses since the 2005 order, including repairs, property taxes, insurance, homeowners association dues, and utilities.

Jerry argued in his pre-trial brief that Janice could not be reimbursed for matters beyond the scope of the 2005 order. He further argued that the 2005 order had no further legal effect in any event, and that the 2005 proceeding should be dismissed under Code of Civil Procedure section 583.360, subdivision (a),[1] which provides that the court shall dismiss an action if the action is not brought to trial within five years (§ 583.310). Janice countered that the 2005 order remained in effect whether or not the 2005 proceeding was dismissed.

The parties also disputed the date of separation. Janice claimed that it occurred on April 29, 2005 (around the time she initiated the 2005 proceeding), and Jerry claimed that it occurred more recently, on September 4, 2014. The issue was considered first and, following a hearing, the trial court concluded that the date of trial (May 26, 2016) was the date of separation and terminated the marriage effective that date.

At a continued trial, the court considered the division of assets. The trial court received into evidence a spreadsheet prepared by Janice showing all the loan payments she had made from June 2005 through May 2016 totaling $373,576.46. The court also admitted into evidence a spreadsheet listing expenses Janice had paid for the home: principal, interest, homeowners’ association fees, property taxes, and insurance. According to Janice, she had paid a total of around $206,500 for household expenses between August 2012 and April 2016. The mortgage on the home as of June 2016 was $343,851. Janice further sought $87,300 in reimbursement for funds to prevent foreclosure, a figure that included $36,000 in attorney fees and costs. The house was appraised at $1.6 million.

Janice further offered testimony[2] that since she first initiated the 2005 proceeding, she had come across “a variety of account statements” throughout the family home in Jerry’s name that were not included in Jerry’s schedule of assets and debts that totaled more than $31,000, including (1) an Ameritrade IRA account with a current value of $3,255.74, (2) a PIA savings-and-retirement plan with a vested balance as of December 31, 1996, of $1,249.38, (3) a Fiserv account with a value of $3,139.95 as of June 30, 2006, (4) a Spar Group 401(k) profit-sharing plan with a balance of $3,595.90 as of June 30, 2013, (5) two trades from a Morgan Stanley account, one reflecting a net amount of $2,663.78 and the other in the amount of $2,536.50, with the account reflecting a total account valuation of $4,529.91 at the end of July 2016, and (6) a Conseco annuity with an accumulated value of $4,818.26 as of December 31, 2004, that might have been cashed in around 2011. Janice was “not aware one way or the other what happened to the funds in these accounts or if they exist[ed]” as of the day of trial, because Jerry did not include them in his disclosures. Janice was asked on cross-examination whether she had “any evidence whatsoever that any of those accounts are still open in existence or have any balance on deposit,” and Janice responded, “No idea.”

Jerry, by contrast, offered testimony that “to the best of his knowledge, none of those accounts are still open. [Jerry] does not remember them all but remembers that he closed the Morgan Stanley account and used the money for expenses, and he believes he cashed in and withdrew all the various accounts during the years he had financial problems because he needed the money. [¶] He . . . has not seen any statements come from any of those accounts for many years and does not believe that any of them are open and that that is the reason none of them were listed on his disclosure documents.” He clarified, though, that “I may have one account open [an Ameritrade account] with about $3,000 in it. I think I saw some mail that came through this last week, and all the stuff that comes in, I think there may be one that’s still open.” Jerry testified he had “no idea” when the account was opened, he did not recall until the week of trial that it even existed, and that “[a] lot of my mail doesn’t seem to make it to me.” When asked on cross-examination whether it was possible that any of the other accounts also were in existence, Jerry responded, “Not likely.” Jerry had “no idea” when he closed his PIA savings-and-retirement plan, but that it was “[y]ears and years ago.” He acknowledged that his Fiserv account was open as of June 2006 but said it was “closed out because I haven’t seen any statement of that in years.” As for his Spar retirement account, Jerry testified that “I got to be honest with you, I don’t even remember having that account, so I don’t know when I closed it. But when I was unemployed and looking for funds, I’m sure that’s when I—sometime between 2006 and 2010 I probably closed it.” However, after he was shown a statement dated April 1 to June 30, 2013, showing a balance of $3,595.90, Jerry acknowledged that he had no reason to believe the statement was incorrect. Jerry further acknowledged that he was “not so great at recordkeeping.”

At the conclusion of the hearing, Janice’s attorney asked that Janice be permitted to buy Jerry’s interest in the home. But instead of paying the entire amount Janice owed Jerry, counsel asked that the court consider offsets, including the $333,457 she had paid on the 2003 loan that was taken out without her permission. Counsel also requested that the equalization payment be reduced by $31,096, the amount of assets Janice believed had not been disclosed.

The trial court sided with Janice, stating that “I am going to affirm the 2005 order. My findings are that the case has not been dismissed. Although it is eligible for that purpose, it was not dismissed. I don’t believe that voids the order, and the order is affirmed in the amount of $333,457,” meaning Jerry owed the community that amount (entitling Janice to half). The court clarified this meant “we’re reducing the equity by the [$]333,000, not that [Jerry] owes [Janice] [$]333,000.” The court also concluded that Jerry did not disclose assets totaling $31,096 and ruled that Janice was awarded the community interest in that amount. The court further ordered Jerry to pay $87,300 “in principal and interest pursuant to the June 2005 order.” The court made a number of other findings that are not relevant to the issues on appeal.

The court entered a judgment of dissolution on July 27, 2016, and Jerry appealed (A149502). Janice, meanwhile, filed a motion for reconsideration and request for a new trial on the issue of the date of the parties’ separation. The trial court denied the motion, and Janice appealed (A149762). This court consolidated the parties’ appeals on their request.

II.
Discussion

1. The Trial Court Did Not Err in Relying on the 2005 Order.

1. The 2005 Order Is Valid and Effective.

Jerry first contends that the trial court erred in ruling that the 2005 order continued to be valid and enforceable in this case, but his argument is misplaced. He argues at length that the trial court was required to dismiss the 2005 proceeding because it was not brought to trial within five years. (§§ 583.310, 583.360.) We question whether the trial court had the ability to dismiss a different case, where no motion had been filed in those separate proceedings. But even if the 2005 proceeding should have been dismissed and the trial court here had the power to dismiss it, any such dismissal would not have affected the validity of the 2005 order.

Jerry relies on Moore v. Superior Court (1970) 8 Cal.App.3d 804, an appeal in a dissolution action that is on point and unfavorable to Jerry’s position. In Moore, the trial court entered a pendente lite order in a maintenance action regarding child custody, monthly support, and other community interests, and three years later the husband was held in contempt in the parties’ dissolution action for failure to comply. (Id. at pp. 807-808.) The appellate court agreed that the trial court’s duty to dismiss the parties’ separate maintenance action was mandatory, but concluded that such a dismissal did not affect the validity of the pendente lite order. (Id. at p. 809.) “Neither dismissal of the main action, nor judgment on the merits in favor of the party against whom the order is made, vacates the temporary order or makes it ineffective as to accrued payments which remain unpaid.” (Ibid.) The court stressed that “dismissal of the main action does not deprive the court of jurisdiction to enforce an uncomplied with pendente lite order” and that the husband’s “motion to dismiss the separate maintenance action was irrelevant to, and independent from, his alleged contempt for failure to pay the attorneys’ fees and court costs required by the pendente lite order.” (Id. at p. 811, italics added.) Jerry acknowledges that amounts “already accrued and due and payable” before dismissal of the 2005 order “might still be due and payable,” but then argues the non sequitur that the 2005 order was not a final judgment. Again, that is beside the point. Under Moore, the order was valid and enforceable, regardless of whether the 2005 proceedings should have been dismissed.

2. The Trial Court Did Not Err in Relying on the Order.

Jerry next argues that the trial court erred in concluding that the 2005 order required him to reimburse the community for $333,457 in expenditures. But his claim is unclear. The 2005 order required Jerry to pay Janice sums certain for money she had spent to prevent foreclosure and also to “reimburse [Janice] for all monies she expends in protecting and preserving the family residence, including but not limited to monies she expends to stop the current foreclosure, payment of mortgage payments, insurance payments, property tax, etc.” Jerry contends that it is “clear” that the 2005 order “was made for a specific emergency purpose,” “contemplated that the action for legal separation would proceed and that the character of the funds used to solve the emergency would be separate,” and “contemplated payments by one spouse from separate funds post-separation for joint obligations, NOT payment of community expenses from community earnings pre-separation.” He argues that “[i]t strains any reasonable interpretation of the intent of that order beyond breaking to hold that a temporary order meant to solve an immediate crisis would apply for over a decade.” We do not agree with Jerry’s interpretation of the 2005 order, much less that his interpretation is “clear.”

What the trial court did was allocate the parties’ obligations with respect to the house, relying on the 2005 order to allocate additional amounts to Jerry that he might not otherwise have owed. Jerry focuses on the fact that most of Janice’s payments were made with community funds, but this is again beside the point.[3] As Janice stresses, the loans were meant to support Jerry’s business, which Jerry considered to be his separate property. Again, Jerry was ordered only to reimburse the community for the loan money, meaning Janice was entitled to half. We cannot conclude that it was an abuse of the trial court’s discretion to order the offset.

Jerry also claims that the trial court erred when it concluded that the 2005 order required him to reimburse Janice for $87,300 she expended to save the parties’ residence from foreclosure, plus attorney fees and interest. The 2005 order stated that Jerry was to reimburse Janice for half of all payments she made on behalf of the community to bring a line of credit current and for monthly house payments, further ordered that Jerry pay Janice “for 100% of the amounts [she] paid to stop the first foreclosure action and another payment due at the end of June 2005,” plus attorney fees. Jerry challenges at length the basis for the original 2005 order, something he cannot do since that order is long since final and was never challenged by Jerry. We reject his improper collateral attack on the 2005 order.

2. The Trial Court Did Not Err in Awarding Amounts of Undisclosed Accounts.

Jerry next argues that the trial court erred “in assigning to Jerry at value old accounts as to which no evidence was presented as to their present value or their existence at the time of trial,” but we disagree. (Unnecessary capitalization and formatting omitted.)

Janice testified that she had seen statements showing that Jerry had accounts that had not been revealed on his schedule of assets. He denied having them, but acknowledged one was recently open and also did not deny the accuracy of a statement he was shown. After ruling on the division of assets, the trial court made the following observation about the parties’ credibility: “And I will say that there were points in the testimony of each of the parties where I found by their body language, their responses, and their conduct on the stand that they were being evasive or possibly less than truthful about the issues to which they were testifying, and that’s the basis for my ruling. I think that what I have determined here is fair and equitable to the community and is the appropriate way under the law to divide the property and assets of the parties.” In other words, the trial court weighed the evidence in light of its credibility determination, to which we must defer on appeal.

Jerry claims that Janice’s testimony showed that the “existence and value of the accounts in question were unknown and unproven” (unnecessary capitalization and formatting omitted), but this is an overstatement. True, she did not provide meticulous records of Jerry’s accounts, but she provided substantial evidence to support the trial court’s ruling, and we decline to set it aside.

3. The Court Need Not Address the Issue of the Date of the Parties’ Separation.

The trial court concluded that the parties’ date of separation was May 26, 2016. The ruling was based on the then-recent Supreme Court’s opinion in In re Marriage of Davis (2015) 61 Cal.4th 846, 849, which held that spouses could not be “living separate and apart” for purposes of former Family Code, section 771, subdivision (a), if they were living in the same house. Janice argued in her motion for new trial that the court should apply then recently enacted Family Code, section 70, which defines “date of separation” and was specifically enacted to abrogate Davis. (Fam. Code, § 70, subd. (c).) Janice renews this argument on appeal. She acknowledges, however, that we need not reach this issue if we affirm the trial court’s decision that Jerry was obligated to reimburse Janice under the 2005 order. Because we have done so, we do not reach the arguments in Janice’s appeal.

III.
Disposition

The judgment is affirmed. Janice Lami shall recover her costs on appeal.

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Humes, P.J.

We concur:

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Margulies, J.

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Banke, J.

Lami v. Lami A149502; A149762