Marriage of Rosen-Sherman and Sherman

Filed 3/15/07 Marriage of Rosen-Sherman and Sherman CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(Sacramento)

----

Nearly two years after the judgment dividing the parties community property, Robert Morris Sherman sought to modify a portion of that judgment to increase the sum he would receive for his interest in the former family home. The trial court granted his motion, increasing Roberts share from $80,000 (less half the cost of necessary repairs) to $120,000.^[1]

Roberts ex-wife, Diana Rosen-Sherman, appeals. She asserts the court erred in granting Roberts motion because (1) Robert failed to satisfy the statutory prerequisites for setting aside a portion of the judgment (Fam. Code, 2120 et seq.), and (2) the courts order is not supported by substantial evidence.

The first contention has merit. We shall modify the courts order that Diana promptly pay [a] $120,000 equalizing payment to Robert by requiring Diana to pay him $50,000.

BACKGROUND

Robert and Diana were married in or about 1991. Diana initiated these proceedings for legal separation in or about 2002.

On August 8, 2003, Diana and Robert stipulated to entry of judgment in this action. An addendum attached to the judgment states that the parties entered into a marital settlement agreement, to which the court referred as follows: [Diana] stated on record that parties have agreed, based on [her] pretrial statement, that same is accurate and parties agree to a marital settlement agreement that incorporates those agreed to aspects;^[[2]] including spousal support . . . . Parties agree to separate property characterization on 5B is accurate. . . . Parties agree 7B is now immaterial because they have agreed regarding the sale of home . . . . After repairs on home are done, (parties to share costs of needed repairs 50/50) then [Diana] shall pay $80,000 to [Robert] for his community property share of home, and home shall be transferred to [Diana] who will seek separate financing.

The August 8, 2003, judgment also states that the above-described agreement shall be incorporated into a final marital settlement agreement, and the parties shall return for a further hearing on reserved issues, including Roberts military benefits and apportionment of the parties credit card debt.^[3] At the subsequent hearing on reserved issues, the parties legal separation was made retroactive nunc pro tunc to August 8.

Nearly two years later, in May 2005, Robert brought this motion, seeking to modify the August 3 [sic], 2003, judgment so as to require Diana to [r]epair home w/in 90 days and list for sale. Net 56% [Robert] and 44% [Diana]. According to Robert, [t]wo years have passed since parties agreed to (and were ordered to) repair and sell the home. To date, repairs are not made. Appreciation in property value is so significant since 2003 that distribution to [Robert] per order ($80,000) would work substantial injustice. [Robert] is 79 yrs old, and both parties need sale to be completed to provide living expenses. [] [Robert] requests order requiring repairs within 90 days, followed by immediate listing for sale by [Diana], who has taken title outright.

In his supporting memorandum of points and authorities, Robert argued that the August 2003 stipulated judgment did not represent a fair or even distribution of assets; the parties stipulation was based on their understanding then that the home would as soon as possible be sold; he never envisioned that the needed repairs would still not have been commenced two years later; and that when it specified the dollar amount which [he] was to receive from the sale of the property, the Court could not have predicted the runaway escalation of real property values that would take place during that same time period.

In Roberts view, Dianas lack of diligence in causing the necessary repairs to be performed and marketing the property as agreed has now allowed changed circumstances to work a severe hardship on him. He asserted that the average market price for similar homes was approximately $150,000 to 165,000 in August 2003; because a realtors market value assessment conducted in April 2005 (and attached to his memorandum of points and authorities) estimated the homes value at between $299,000 and $355,000, limiting him to the $80,000 share specified in the 2003 judgment would result in a substantial injustice to [him] and an enormous windfall to [Diana].

In opposition, Diana submitted a sworn statement denying the parties ever agreed to sell the property, only that she would buy out Roberts interest for $80,000 minus half the cost of needed repairs. Repairs had been delayed, Diana explained, because Robert had refused to reimburse her for half the repair costs incurred to date, and she had had to borrow thousands of dollars for projects, including reroofing at a cost of $12,000. Additional repairs were still needed, and Diana filed a declaration with attached estimates from five different contractors indicating an average cost of $59,265 for the remaining repairs.

In addition, Diana averred, Robert had agreed to her proceeding with a low-interest federal rehabilitation loan and she had to wait for the funds to be released. Moreover, the $80,000 buy-out price for Roberts interest in the house was an amount he suggested, to which she had agreed as one of many negotiated components of their community property division. Since judgment was entered, Robert had refused her settlement offers of $70,000 (the $80,000 agreed-upon buyout, minus his estimated share of the cost of completed repairs) for fear that his bankruptcy creditors [would take] the money. Diana also complained that Robert had failed to make prompt support payments and had failed to make certain insurance payments as agreed.

In reply, Robert asserted that although the parties settlement requires him to share equally the costs of required repairs . . . the Order does not preclude his reimbursement of those costs from escrow if he is otherwise unable to pay them, and in fact, he may only be able to pay the costs from the homes resale profit. Moreover, he argued, Diana has to this date never presented any receipt or other evidence of payment to contractors, nor requested reimbursement for any repair costs; he has no knowledge of any reroofing; the repairs for which Diana seeks reimbursement are chiefly improvements and upgrades; and the cost of truly necessary repairs is only $13,501, of which his half-share is $6,256.

Robert also reiterated his argument that strict adherence to the August 2002 [sic] Order would be extremely prejudicial if, by her inaction and refusal to timely deliver up his property interests, Diana reaps a windfall.

Following a hearing, the court granted Roberts motion as follows: [] [Diana] shall promptly pay [a] $120,000 equalizing payment to [Robert]. (Present Fair Market Value of home at $300,000; $150,000 -- one half of $60,000 repair costs = $120,000).^[4]

DISCUSSION

I

We consider first Dianas contention that, to the extent Roberts motion to modify the terms of the judgment reflected the parties property settlement agreement, it constituted a belated effort to set aside the judgment, which the court had no power to grant. She is correct.

Family Code sections 2120 through 2129, the chapter entitled Relief From Judgment, authorize a court to relieve a spouse from a judgment, or any part or parts thereof, adjudicating support or division of property . . . . (Fam. Code, 2121, subd. (a).)^[5]

In order to prevail on a motion to set aside a judgment, or any part or parts thereof (Fam. Code, 2122) based on a marital settlement agreement, the moving party must establish four elements. First, he or she must establish inequity -- an essential premise to a successful motion to set aside, but one that is not sufficient in and of itself to warrant setting aside a judgment. (Fam. Code, 2123; In re Marriage of Brewer & Federici (2001) 93 Cal.App.4th 1334, 1344-1345 (Brewer); In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 684-685 & fn. 11 (Rosevear).) Second, the party must establish one or more statutory grounds for setting aside the judgment, such as fraud, mistake, or failure to comply with statutory disclosure requirements. (See Fam. Code, 2122, subds. (a), (e), (f).) Third, the party must show that the statutory ground materially affected the original outcome. (Fam. Code, 2121, subd. (b); In re Marriage of Steiner & Hosseini (2004) 117 Cal.App.4th 519, 527; Rosevear, supra, 65 Cal.App.4th at p. 685, fn. 11; Brewer, supra, 93 Cal.App.4th at p. 1345; In re Marriage of Varner (1997) 55 Cal.App.4th 128, 137 (Varner).) Fourth, the moving party must demonstrate that he or she would materially benefit if the judgment were set aside. (Fam. Code, 2121, subd. (b); Brewer, supra, 93 Cal.App.4th at p. 1345.) As the moving party, Robert has the burden of proof on each of these issues. (See Evid. Code, 115, 500.)

The second requirement -- establishment of one or more statutory grounds for setting aside the judgment -- is governed by section 2122, which sets out the exclusive grounds and time limits for an action or motion to set aside a marital dissolution judgment. (Rosevear, supra, 65 Cal.App.4th at p. 684; italics added.) That section reads: The grounds and time limits for a motion to set aside a judgment, or any part or parts thereof, are governed by this section and shall be one of the following:

(a) Actual fraud where the defrauded party was kept in ignorance or in some other manner was fraudulently prevented from fully participating in the proceeding. An action or motion based on fraud shall be brought within one year after the date on which the complaining party either did discover, or should have discovered, the fraud.

(b) Perjury. An action or motion based on perjury in the preliminary or final declaration of disclosure, the waiver of the final declaration of disclosure, or in the current income and expense statement shall be brought within one year after the date on which the complaining party either did discover, or should have discovered, the perjury.

(c) Duress. An action or motion based upon duress shall be brought within two years after the date of entry of judgment.

(d) Mental incapacity. An action or motion based on mental incapacity shall be brought within two years after the date of entry of judgment.

(e) As to stipulated or uncontested judgments or that part of a judgment stipulated to by the parties, mistake, either mutual or unilateral, whether mistake of law or mistake of fact. An action or motion based on mistake shall be brought within one year after the date of entry of judgment.

(f) Failure to comply with the disclosure requirements of Chapter 9 (commencing with Section 2100). An action or motion based on failure to comply with the disclosure requirements shall be brought within one year after the date on which the complaining party either discovered, or should have discovered, the failure to comply.

To the extent Robert sought to increase the amount he would realize from his interest in the house by striking the $80,000 payment and substituting a percentage in its place, he was required to bring his motion under sections 2120 through 2129. He did not: nowhere in his motion did Robert attempt to establish one or more statutory grounds for setting aside the judgment, such as fraud, mistake, or failure to comply with statutory disclosure requirements. (Cf. Rosevear, supra, 65 Cal.App.4th at p. 685, fn. 11; 2122, subds. (a), (e).) Rather, Roberts motion to modify the judgment focused nearly exclusively on the perceived inequity of allowing Diana to reap a windfall from delaying the house repairs contemplated by the judgment until the house appreciated in value. But a finding of inequity alone -- even if supported -- will not justify setting aside a judgment. ( 2123 [a judgment may not be set aside simply because the court finds that it was inequitable when made, nor simply because subsequent circumstances caused the division of assets or liabilities to become inequitable . . . .]; In re Marriage of Heggie (2002) 99 Cal.App.4th 28, 34-35 (Heggie) [that stock awarded to one spouse had, after judgment, increased in value does not justify setting aside judgment]; see also Rosevear, supra, 65 Cal.App.4th at p. 684, fn. 11.)

To avoid these statutory requirements and time limits, Robert responds that his motion to modify that portion of the judgment requiring Diana to pay him only $80,000 in loan or sale proceeds from the house did not constitute a motion to set aside the judgment because he did not seek relief from any obligation he had under the prior judgment. It is because public policy prefers finality in judgments that they are enforceable by a Court. [Robert] could not have known prospectively that two and one half years later, he would still be waiting to receive the equalizing payment from [Diana].^[6]

Robert is mistaken if he believes these statutes do not control because he was not seeking relief from an obligation under the judgment. A motion to set aside the judgment by a party who believes he should have received a greater share under the agreement is a motion to relieve a spouse from a judgment as to which the requisite showings of eligibility and timeliness must be made to fall within the equitable scope of sections 2120 through 2129. (E.g., Brewer, supra, 93 Cal.App.4th at pp. 1344-1345.) Robert did not bargain for a percentage of the homes value; by agreeing to accept a specified sum (less half the value of needed repairs), he effectively bargained for the equivalent of a cash buyout. His subsequent attempt to change his community property share of accrued home equity from a negotiated amount no greater than $80,000 to 56 percent of its current value constitutes an effort to set aside . . . any part of the judgment within the meaning of section 2122, to which statutory requirements of proof and time limits apply. He made no attempt to comply with those limits.

Moreover, in addition to the statutory limitations on motions to set aside a family law judgment, courts in this state have long held that an agreement to divide community property, once approved by the court, entered in the judgment, and final by lapse of time for review, is not subject to modification. (11 Witkin, Summary of Cal. Law (10th ed. 2005), Husband & Wife, 355, pp. 459-460, and cases cited therein; see also Esserman v. Esserman (1982) 136 Cal.App.3d 572, 578.)

Although the trial court has considerable discretion in ruling on a motion to set aside the judgment, it must act in a manner that is consistent with fixed legal principles. (Heggie, supra, 99 Cal.App.4th at p. 33; Varner, supra, 55 Cal.App.4th at p. 138.) A trial courts order denying a motion to set aside a judgment pursuant to section 2122 will be reversed on appeal if we find an abuse of discretion (Varner, supra, 55 Cal.App.4th at p. 138), and the trial court abuses its discretion if it fails to follow applicable rules of law when exercising that discretion.

Under the circumstances, we conclude the court abused its discretion in modifying the prior judgment adjudicating Roberts interest in the house, and instead awarding him $120,000.^[7]

II

We pause to consider the remaining aspects of Roberts motion.

Roberts motion to modify the judgment had three components: he sought to require Diana to (1) complete repairs within 90 days, (2) list the house for sale, and (3) pay over to him 56 percent of the net profit of his assessment of the houses current value instead of the $80,000 interest specified in the marital settlement agreement that was incorporated in the judgment. As we have explained, the court was without power to set aside that portion of the judgment that awarded Robert an $80,000 interest in the house.

As noted above, Robert characterizes his motion as one to enforce the judgment rather than set it aside. As to the first two components of his motion, we agree: they represented an attempt by Robert to compel Diana to perform under the judgment by (1) completing the necessary repairs and (2) selling the house so he could receive his share of its value. In that respect, Roberts motion is fairly described as an effort to enforce the judgment. And although the court had no power to increase the sum Robert would realize from the value of the house, it did have power to enforce the judgment against Diana.

When it is made, a marital settlement agreement may be construed and enforced like any other contract (see In re Marriage of Iberti (1997) 55 Cal.App.4th 1434, 1439) by, for example, a motion under Code of Civil Procedure section 664.6 to reduce the agreement to a judgment (Kilpatrick v. Beebe (1990) 219 Cal.App.3d 1527, 1529), a motion for summary judgment, a separate suit in equity to rescind or reform the agreement, or by a request for equitable relief by motion in an existing action (see Nicholson v. Barab (1991) 233 Cal.App.3d 1671, 1681; Gregory v. Hamilton (1978) 77 Cal.App.3d 213, 219).

But marital settlement agreements are typically merged and incorporated into the judgment of dissolution, and when that happens, the agreement ceases to operate as an independent legal instrument, and enforcement remedies lie exclusively from the judgment. (In re Marriage of Umphrey (1990) 218 Cal.App.3d 647, 656; In re Marriage of Lane (1985) 165 Cal.App.3d 1143, 1147; see also Hough v. Hough (1945) 26 Cal.2d 605, 609-610.) Here, the parties agreement regarding the sale of home, which stated that [a]fter repairs on home are done, (parties to share costs of needed repairs 50/50) then [Diana] shall pay $80,000 to [Robert] for his community property share of home, and home shall be transferred to [Diana] who will seek separate financing, was merged and incorporated into the judgment. (See Foust v. Foust (1956) 47 Cal.2d 121, 125 [parties intent to merge agreement into judgment may be found in the fact that judgment expressly approves and physically incorporates the agreement].) And a judgment of legal separation dividing the parties property has the same binding effect as a dissolution judgment. (Krier v. Krier (1946) 28 Cal.2d 841, 843.) As a result, Robert is limited to enforcement remedies applicable to judgments. He cannot reform the agreement; he can only require Diana to abide by its terms.

An agreement merged into the judgment can be enforced by execution, the appointment of a receiver, or contempt, or by any other order as the court in its discretion determines from time to time to be necessary. ( 290; see, generally, 11 Witkin, Summary of Cal. Law (10th ed. 2005), Husband & Wife, 359-362, pp. 464-468; but see Ruisi v. Thieriot (1997) 53 Cal.App.4th 1197, 1208 & fn. 10 [ 290s language allowing court to make orders as are necessary does not permit court to exceed statutory authority].)

Any factual issues arising on a motion to enforce a marital settlement agreement are determined by the trial court in its capacity as trier of fact. On appeal from the judgment, we review the trial courts findings for substantial evidence. (In re Marriage of Assemi (1994) 7 Cal.4th 896, 905, 911; Kohn v. Jaymar-Ruby, Inc. (1994) 23 Cal.App.4th 1530, 1533; Fiore v. Alvord (1985) 182 Cal.App.3d 561, 565; see Code Civ. Proc., 664.6.)

With these principles in mind, we turn again to the trial courts order.

First, Roberts request that the court require Diana to complete repairs within 90 days and list the house for sale was a proper effort to enforce the judgment. ( 290.) And it appears the trial court so construed it: the courts order effectively charging Roberts interest in the house $30,000 for his share of repairs represents the courts resolution of the parties disagreement over what repairs were necessary under the judgment. The court resolved this question in favor of Dianas assertion that approximately $60,000 in repairs was necessary and subject to a 50/50 division within the meaning of the judgment. That factual determination is supported by substantial evidence in the form of competitive contractor bids submitted by Diana. Accordingly, the courts finding that the necessary repairs to the house will cost approximately $60,000 shall remain undisturbed on appeal.

Second, the court denied Roberts request that Diana be required to sell the house. From this we infer that it interpreted the judgment consistent with Dianas assertion that the parties did not intend to require her to sell the house, merely to buy out Roberts interest for $80,000, less half of the cost of necessary repairs. That implied finding is not only supported by Dianas declaration to that effect but is consistent with the judgments provision that the home shall be transferred to [Diana] who will seek separate financing. It, too, remains undisturbed on appeal. Accordingly, Diana is obligated to pay $50,000 ($80,000 less one-half of $60,000 in repair costs).

However, we note in closing that Robert is not utterly without remedy for the delay, if any, that the court may find attributable to Dianas procrastination in completing the necessary repairs to the house. To the extent that a judgment of dissolution is not self-executing in respect of any division of property therein ordered, the court retains jurisdiction to make such further orders as are appropriate to compel obedience to its judgment. (Bonner v. Superior Court (1976) 63 Cal.App.3d 156, 165; 290.) Thus, our opinion is without prejudice to action by Robert to seek recompense for amounts to which he is entitled as a result of Dianas unreasonable delay in completing repairs. (Cf. Heggie, supra, 99 Cal.App.4th at pp. 35-36, fns. 7, 8.) We express no opinion as to the merit of such an action.

DISPOSITION

That portion of the courts order that [Diana] shall promptly pay [a] $120,000 equalizing payment to Robert is modified to require Diana to pay $50,000. In all other respects, the judgment is affirmed. The parties shall share costs on appeal.

RAYE , J.

We concur:

BLEASE , Acting P.J.

BUTZ , J.

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^[1] We follow the preferred practice in family law appeals and refer to the parties by their first names. (See In re Marriage of Schaffer (1999) 69 Cal.App.4th 801, 803, fn. 2.)

^[2] The full text of the marital settlement agreement is not in the record on appeal.

^[3] If there was a final marital settlement agreement prepared following the August 8, 2003, judgment, it is not in the record.

^[4] The Order After Hearing reflects that the court considered the parties respective papers and counsels argument; no reporters transcript of proceedings was prepared.

^[5] All further statutory references are to the Family Code unless otherwise indicated.

^[6] Robert also suggests for the first time on appeal that he was the victim of a false promise of a compromise. If he intends by this assertion to assert he was defrauded within the meaning of section 2122, he is too late. A party who fails to raise an issue in the trial court has therefore waived the right to do so on appeal. (In re Marriage of Hinman (1997) 55 Cal.App.4th 988, 1002; In re Aaron B. (1996) 46 Cal.App.4th 843, 846.)

^[7] In light of this conclusion, we need not consider Dianas contention that insufficient evidence supports the courts decision.