Marriage of Kirwan
Filed 11/12/13 Marriage of Kirwan CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE
DISTRICT
DIVISION THREE
In re Marriage of DEBRA G. and THOMAS P. KIRWAN.
DEBRA G. KIRWAN,
Respondent,
v.
THOMAS P. KIRWAN,
Appellant.
G047460
(Super. Ct.
No. 11D004572)
ORDER MODIFYING OPINION; NO CHANGE
IN JUDGMENT
It is ordered that the
opinion filed herein on October 15,
2013, be modified in the
following particulars:
1. On page 14, after the first complete sentence
of the disposition, insert the following sentence: “This court’s previous stay of the sale of the
townhouse is lifted, and the petition for writ of supersedeas is dismissed as
moot.â€
This modification does
not effect a change in the judgment.
BEDSWORTH,
J.
WE CONCUR:
O’LEARY, P. J.
ARONSON, J.
Filed 10/15/13 (unmodified version)
NOT TO BE PUBLISHED IN OFFICIAL
REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
In re Marriage of
DEBRA G. and THOMAS P. KIRWAN.
DEBRA G. KIRWAN,
Respondent,
v.
THOMAS P. KIRWAN,
Appellant.
G047460
(Super. Ct. No. 11D004572)
O P I N I O N
Appeal
from a judgment of the Superior
Court of Orange County, James L. Waltz, Judge. Affirmed.
Law
Offices of Berna Warner Fredman and Berna Lynn Warner, for Appellant.
Hughes
and Hughes and Lisa Hughes, for Respondent.
INTRODUCTION
entered in his divorce from his wife of 10 years, Debra Kirwan.
Thomas has objected to several features of the judgment, some of which
are ready for appellate review and some of which are not.
Most
of the disagreements Thomas has with the judgment are matters for the exercise
of the trial court’s discretion, and, as Thomas has failed to show any abuse of
that discretion, we affirm the judgment.
To the extent that Thomas wants us to reformulate the wording of the
judgment to his satisfaction, we decline to do so. As for those portions of the case over which
the trial court reserved jurisdiction, there is no final judgment as to them,
and we have no basis on which to review them until they are final.
FACTS
2000; they separated in May 2011. They
have two young children. At the time of
separation, Thomas worked for United Bank of Switzerland (UBS) as a financial
advisor. He had previously worked for
Goldman Sachs and had moved to UBS in 2010.
As
part of his incentive to move to UBS, the bank offered Thomas a series of
“loans†totaling nearly $1 million.
These loans were to be “paid back†over nine years, provided Thomas
continued to work for UBS. If he quit,
or was fired, or died, the loans were immediately due and payable. UBS undertook to forgive a portion of the
loans each year, reducing the balance owing until, after nine years (in 2019),
the loans would be completely canceled.
This
method of spreading an extra million dollars in upfront compensation over an
extended period had and has tax consequences.
The amount forgiven each year would be taxed as income, even though
Thomas did not receive an equivalent amount of money during that year. This “phantom†income, as counsel and the
court referred to it, became a problem both for valuing and dividing the
marital estate and for computing support.
The
other sticky wicket was a townhouse in Corona del Mar in which Debra and the
children were living at the time of trial.
Thomas bought this property before he and Debra married. He quitclaimed the property to a trust in
both their names jointly in 2003.
parties stipulated as to its value at trial, which was less than the debt on it
by about $25,000. The marital balance
sheet submitted at trial by Thomas’ expert listed the value of his separate
property interest in the townhouse at $263,250.
The
case was tried over five days in March and June 2012. The court entered a judgment in August 2012
which provided, as pertinent to this appeal, as follows:
1. The townhouse was to be sold.
2. Thomas was to pay Debra $7,500 per month in
temporary child and spousal support until further order of the court. The court would determine the level of
permanent support after the sale of the townhouse.
3. The court reserved jurisdiction to determine
the division of the UBS debt.
DISCUSSION
Thomas
has identified seven issues on appeal, which can be grouped into two main
categories: those relating to the
townhouse and those relating to the UBS loan.
As to the townhouse, Thomas asserts that the court should not have
ordered it to be sold, because, under Family Code section 3801, Thomas had the
financial wherewithal to pay the taxes, the mortgages, and other related
expenses. Instead, the court should have
awarded the property to Thomas. In
addition, the court ignored both Thomas’ separate property reimbursement right
under Family Code section 2640 for the townhouse’s value at the time it became
community property and his separate property reimbursement right for payments
made on the townhouse’s expenses after judgment. The trial court also erred by postponing its
determination of permanent spousal support until the property was sold. As to the UBS loan, the court did not divide
the debt equally between Thomas and Debra, and the judgment did not explicitly
state that his phantom income would not be considered when it came time to
calculate permanent support.
Before
we address these issues, however, we must deal with a preliminary one, our role
on appeal. In family law, judges are
afforded wide discretion to fashion appropriate solutions to problems of
support and equal property division. (
(2013) 214 Cal.App.4th 768, 773 [temporary spousal support];
Cal.App.4th 1565, 1572 [division of community property].) We review these solutions for abuse of
discretion, and if substantial evidence supports them, we affirm. (In re
Marriage of Duncan (2001) 90 Cal.App.4th 617, 632.) As we do in other kinds of appeals, we review
questions of law de novo. (
Cal.App.4th 373, 384.)
Ordinarily,
the judgment of a lower court is presumed correct, and a reviewing court
indulges all intendments and presumptions in favor of its correctness. A party can avoid application of these
inferences by following the procedure set forth in Code of Civil Procedure
sections 632 and 634, that is, by requesting a statement of decision and, if
dissatisfied with the statement, objecting to it in the ways provided in Code
of Civil Procedure section 634. (
Cal.3d 1130, 1133.)
Thomas
claims he filed a request for a statement of decision, and he refers us to an
attachment to his response to Debra’s petition for dissolution, filed June 9,
2011: “Pursuant to Code of Civil
Procedure Section 632 and California Rules of Court, Rule 3.1590, Respondent
hereby requests a Statement of Decision with respect to any contested issue
submitted to the Court for determination in the within proceeding. Respondent respectfully requests that, with
respect to any issue submitted to the Court for determination, the Court
include in the Statement of Decision, any and all calculations upon which the
determination of any issue was made, including but not limited to, issues of
spousal support, child support, property valuation, property division, tax
consequences and attorneys’ fees.â€
Code of
Civil Procedure section 632 provides in pertinent part: “The court shall issue a statement of
decision explaining the factual and legal basis for its decision as to each of
the principal controverted issues at trial upon the request of any party
appearing at the trial. The request must
be made within 10 days after the court announces a tentative decision unless
the trial is concluded within one calendar day or in less than eight hours over
more than one day in which event the request must be made prior to the
submission of the matter for decision.
The request for a statement of decision shall specify those controverted
issues as to which the party is requesting a statement of decision. After a party has requested the statement,
any party may make proposals as to the content of the statement of decision.†(See also Cal. Rules of Court, rule
3.1590(d).)
Thomas’
request for a statement of decision did not conform to the requirements of Code
of Civil Procedure section 632. A
“statement of decision calls on the trial court to act. Such a request cannot reasonably be deemed
accomplished until the court knows what is requested.†(Staten
v. Heale (1997) 57 Cal.App.4th 1084, 1091; see also In re Marriage of Arceneaux, supra, 51 Cal.3d at p. 1134, [“[F]irst, a party must request a statement
of decision as to specific issues to obtain an explanation of the trial court’s
tentative decision.â€].)
Thomas
did not request a statement of decision within 10 days after the trial court
announced its tentative decision. Nor
did his generic request, attached to the end of his response (filed long before
trial even commenced) specify the controverted issues that the statement of
decision was supposed to address.
Moreover, although he moved for a new trial, the new trial motion did
not bring any omission or ambiguity in a statement of decision to the trial
court’s attention, as required by Code of Civil Procedure section 634; there
was no statement of decision because none had been properly requested. We therefore indulge all intendments and
presumptions in favor of the trial court’s judgment. (See In
re Marriage of Arceneaux, supra, 51 Cal.3d at p. 1133.)
Thomas
objects to the portion of the judgment ordering the sale of the Corona del Mar
townhouse. Both parties stipulated to
the fair market value of the property – $1,210,000 – and they stipulated to the
total amount of debt on the townhouse – $1,234, 961.
property is thus under water by approximately $25,000.
There
can be no question as to a trial court’s authority to order the sale of
community property assets in order to effect the equal division of the
community estate mandated by Family Code section 2550.
Cal.App.4th 81, 89 [decided under Civ. Code § 4800]; In re Marriage of Davis (1977) 68 Cal.App.3d 294, 306-307 [same];
Cal.App.3d 869, 873 [same].) Substantial
evidence supported this decision, including the substantially different values
the real estate appraiser assigned to the property.
Thomas
argues that the townhouse should have been awarded to him, because otherwise
the parties would have to absorb a loss, borrowing money or cashing out
retirement plans to pay off the debt after the property is sold. He also claims he could refinance the
townhouse and giving it to him would relieve Debra of her obligations on the
mortgage and the line of credit.
Finally, he faults the trial court for considering the effect on the
children of having one parent installed in a familiar environment while the
other is living in a newly acquired apartment.
None
of these arguments gives sufficient grounds for finding an abuse of
discretion. It is impossible to know
what price the townhouse would command, so Thomas’ contention that the parties
would have to make up a shortfall is speculation, as is the source of the money
to make it up if there was one. Thomas
presented no evidence at trial that he could refinance the property, and the
trial court remarked in passing only that he might be able to do so, not that he definitely could.
it is gallant of Thomas to wish to relieve Debra of her obligations on the
debt, awarding the townhouse to him would also relieve her of her share of an
asset in a real estate market that is, in some areas at least, recovering. And although the trial court was clearly concerned
about non-economic aspects of awarding the townhouse to one or the other
parent, Thomas has not presented us with any authority suggesting that such
considerations are improper or an abuse of discretion.
The
stipulation into which the parties entered as to the value of the townhouse
applied to the division of marital assets.
In the context of selling the property, however, the stipulation is
irrelevant. The parties could not
stipulate as to what the buyer of the townhouse would pay for it. After the townhouse sells and the debts are
paid off, the court can determine, first, whether there is anything left to
divide and then who gets what. The court
was clearly well within the bounds of its discretion when it adopted this
procedure.
Thomas
contends the court should have awarded him the house because he met the
“feasibility standard†of Family Code section 3801 and Debra did not.
Family Code section 3801 deals with an order deferring the sale of a
home. No such order was entered in this
case. Family Code section 3801 does not
apply.
Reimbursement
Thomas
makes two contentions with respect to separate property reimbursement. First, he should be reimbursed for the value
of the townhouse at the time it became community property if there is anything
left over after the property is sold.
Second, he should be reimbursed for the postjudgment payments he has
made on the property’s debt, insurance, and taxes.
address each contention in turn.
Family Code section 2640, subdivision (b), provides: “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.
The amount reimbursed shall be without interest or adjustment for change
in monetary values and may not exceed the net value of the property at the time
of the division.†Separate property
contributions are reimbursed before dividing up the community’s assets. (In re
Marriage of Walrath (1998) 17 Cal.4th 907, 913.) The value of the separate property at the
time of its contribution determines the amount of the reimbursement. (In re
Marriage of Weaver (2005) 127 Cal.App.4th 858, 866.) With respect to his
reimbursement for the value of the property when it was converted, the amount
of this reimbursement would await the sale of the property. If the parties managed to sell it for more
than the debt, Thomas would theoretically be entitled to take his reimbursement
“off the top,†up to the net value of the property at the time of division.
There is,
however, a problem with computing the value of Thomas’ separate property
contribution. He presented no evidence
of this amount at trial. Thomas’ expert
put a number on the marital balance sheet he submitted to the court on Thomas’
behalf, but the source of the number is a mystery.
expert was not engaged to do a real estate valuation, and Thomas himself did
not testify about the value of the property in 2003.
Accordingly,
Thomas did not carry his burden at trial of establishing the amount of his
separate property contribution. (See
Cal.App.4th 1278, 1287-1288.) There is,
therefore, no evidence to establish Thomas’ right to reimbursement for his
separate property contribution of the townhouse. (See In
re Marriage of Braud (1996) 45 Cal.App.4th 797, 824-825 [evidence
inadequate to support separate property source of funds; award reversed]; see
also In re Marriage of Nicholson &
Sparks (2002) 104 Cal.App.4th 289, 296, fn. 11 [inconsistent testimony and
failure to produce supporting documents].)
The court did not “ignore†Thomas’ separate property contribution to the
townhouse. Indulging all intendments and
presumptions in favor of the judgment supports the trial court’s implied ruling
that Thomas did not present adequate evidence regarding the amount of his
contribution.
name="_ftnref10" title="">[10]
Postjudgment Separate Property Reimbursement
The
judgment ordered Thomas and Debra to each pay half of the debt, taxes, and
insurance on the townhouse, pursuant to the parties’ stipulation.
was to live there with the children until it was sold. The court reserved jurisdiction to make any
further orders necessary with respect to the property.
Thomas now
argues that this aspect of the judgment does not preserve his right to
reimbursement for using separate property income to pay a community property
obligation. He cites
Cal.3d 76, superseded by statute on other grounds) (Epstein), to support his argument that he is entitled to be
reimbursed for postseparation separate property payments on a community
debt. (See id. at pp. 84-86.)
So far as
we can tell, the court has not resolved the issue of Thomas’
support pending the sale of the townhouse and reserved the issue of permanent
support for after the sale. We find
nothing in the judgment dealing with Thomas’ reimbursement for paying part of
the townhouse’s expenses, one way or the other.
After the property is sold and the court determines permanent support,
the parties and the court can settle up Thomas’ Epstein credits, if any.
this aspect of the judgment, there is nothing for us to review.
as a matter of law, to order permanent spousal support and that ordering
temporary spousal support instead was error as a matter of law.
review a question of law de novo. (
Cal.App.4th at p. 384.)
Thomas
argues the court had to make a permanent support order because this was a final
judgment. The short answer is that the
judgment was not final as to several reserved issues – not only support but
also the results of the property sale and the allocation of the UBS debt. Because the court ordered the townhouse sold,
Debra had to find another residence for herself and the children. The court accordingly held off setting the
amount of permanent support until she could show what her new housing expenses
would be. The court had the authority to
make an order for temporary support even after judgment was entered on some
issues. (See See v. Superior Court (1961) 55 Cal.2d 279, 280-281.)
Thomas’
main complaint with respect to the support portion of the judgment appears to
be that, after a five-day trial, he must return to court, because all issues
were not resolved. Thomas, or his
counsel, would have to return to court in any event, if only after the sale of
the townhouse. This was a complex case,
and we’ve been given no reason the court should have valued speed over careful
thought and waiting to see how things played out.
As
of the end of trial, Debra was a 55-year-old woman with minimal education and
two young children. Within a few months,
she would have to find a new place to live and some way of making her own
money. She and Thomas had been living
significantly above their means for at least two years, so there was going to
be a substantial decrease in Debra’s standard of living and in the children’s
as well. The court had the authority to
postpone a permanent support order until the other aspects of the property division
fell into place.
Lastly,
Thomas complains that the trial court did not divide the tax liability for the
UBS loan equally between himself and Debra.
He argues Debra should have been required to pay half of the taxes on
the phantom income for the year 2011.
In the judgment, the trial court specifically
retained jurisdiction to divide most of the debt at a later time.
other words, the court has not yet decided how to apportion the liability for
this debt. The court certainly acted
within its discretion in retaining jurisdiction over this aspect of the marital
estate. When it does reopen this issue,
Thomas can make his case for Debra’s contribution to the 2011 tax payment. At this point, however, the liability for the
loan has not been finally adjudicated, and an appeal from this portion of the
judgment is premature.
Thomas’
other complaint with respect to the UBS loan is, if we have understood it
correctly, that the trial court did not specifically state in the judgment that
the phantom income is not to be considered income for purposes of calculating
support. He wants “appropriate languageâ€
included in the judgment to ward off “the risk that he will be charged with
‘income’ which he does not receive and required to pay support based on
it.†Thomas does not identify the source
of this “risk.†He also acknowledges
that the temporary support ordered by the trial court is based on yearly
earnings that do not include the phantom income.
This
court dealt with a nearly identical set of facts in In re Marriage of Riddle (2005) 125 Cal.App.4th 1075 (
In that case, as in this one, the husband was a financial advisor for a
major investment firm. He too received a
loan from his employer “in order to lure [him] away from his prior employer†(
phantom income on his monthly earning statement equal to the amount of the loan
and interest being
forgiven each month. (Ibid.) As we observed in Riddle, “The reason for this convoluted system of payment is fairly
obvious: It allowed the employer to pay
Husband big bucks up front, but spread out the payment of tax on the payment
over time so as to circumvent the progressivity of the tax codes.†(Ibid.)
Our
holding on this point in Riddle
applies to this case as well, at least as to portion of the payments
attributable to child support: “[I]f the
tax laws say you have income because of forgiveness-of-debt, you have income,
and that forgiveness-of-debt income must go into the calculation of adjusted
gross income under [Family Code] section 4058, subdivision (a), which in turn
is the basis for income under [Family Code] 4059, subdivision (a). Now, there is authority . . . to ameliorate
the harsh effects of assessing ‘phantom’ income as imputed by the tax laws
under the circumstances of a given case . . ., but that doesn’t mean that
so-called ‘phantom’ income as imputed by the tax laws is any less ‘income’ for
purposes of [Family Code] section 4058, subdivision (a).†(Riddle,
supra, 125 Cal.App.4th at p. 1080.)
The
trial court has not yet set an amount for permanent support, and we would
improperly encroach on the trial court’s discretion were we to tell the court
how to frame the final support order. As
of now, Thomas’ support obligation does not take his phantom income into account,
so he is not an aggrieved party. (See
Code Civ. Proc., § 902.) What might
happen in the future can only be dealt with in the future.
DISPOSITION
is affirmed. Respondent is to recover
her costs on appeal.
BEDSWORTH,
J.
WE CONCUR:
O’LEARY, P. J.
ARONSON, J.
title=""> [1]
“Hereafter, we refer to the parties by their first
names, as a convenience to the reader. We do not intend this informality
to reflect a lack of respect. [Citation.]†(In re Marriage of
Balcof (2006) 141 Cal.App.4th 1509, 1513, fn. 2.)
name="_ftn2" title=""> [2] Thomas and Debra rented this
property during their marriage and lived in a house in Newport Coast. Debra and the children moved into the
townhouse in August 2011. The Newport Coast
house went on the market, and Thomas moved into an apartment. The house was sold (at a loss) just before
trial.
