Filed 9/28/18 Marriage of Sweeney and Smith CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

After 16 years of marriage, Catherine Sweeney and Lee Smith separated, and a year later she filed a petition for dissolution. Though Smith was served with process, he failed to respond, and months later Sweeney sought the entry of default and a default judgment. The default judgment resolved issues of support (it awarded none) and divided certain community assets, but reserved jurisdiction to divide the family home, which Smith had continued to occupy. Smith was served with those papers, too, but again took no action.

Fast forward three years, when Sweeney, having tried to persuade Smith to buy her interest to no avail, filed a request for an order to sell the family home. This got Smith’s attention, and he finally retained counsel and appeared in the case for the first time. He contested and sought to delay either buying out Sweeney’s interest in the house or putting the house on the market so the proceeds could be divided. That issue, having been reserved, was now ripe and he was within his rights to contest it. However, he also now for the first time sought relief from the default judgment—relief he could have sought at any time within the preceding three years. And the grounds on which he sought to challenge it were grounds he could easily have raised as soon as he was served with that judgment. Without any explanation of why he had failed to appreciate these issues before and any showing that he had acted diligently, he asked the trial court to essentially excuse his failure to move within the six-month deadline set forth in Code of Civil Procedure section 473 by exercising its inherent power to grant him equitable relief.

The trial judge was not impressed and denied Smith’s request for equitable relief from default. Finding the request frivolous, the court awarded attorney fees to Sweeney in the amount she was forced to spend for her counsel to respond to that motion. Regarding the division of the house, however, Smith fared better. The court ordered him to purchase Sweeney’s interest after granting him repeated requests for more time to come up with the funds to do so. The court also indulged Smith’s request for additional time to refinance the debt on the home so Sweeney would no longer be responsible for the mortgage, giving him a full year to accomplish that. It did so over Sweeney’s objection but ruled that if Smith defaulted on the loan in the meanwhile (as he had done repeatedly during the preceding six years while he alone occupied the house) or if he failed to refinance within the year, the house would be sold. And if it were sold, the court also ruled, Sweeney would receive from the proceeds an additional amount, on top of her equal community share, compensating her for either a part of the rental value of the home or the increased debt the parties incurred when Smith, while living at the home, caused the loan balance to increase by failing to pay the mortgage and property taxes. Smith did not object to this arrangement at the time, preferring apparently to take advantage of the extra year the court had given him to obtain refinancing and get Sweeney off the mortgage.

Smith now asserts the trial court erred in ruling that if he failed to refinance within that year, the home would be sold and Sweeney would receive additional compensation from the proceeds. He contends that ruling, as well as the trial court’s award of attorney fee sanctions, were barred because Sweeney did not specifically seek such relief in her petition for dissolution. He also contends her failure to do so denied him due process. And he argues the trial court erred in denying him relief from default, asserting he was never served with process, a commissioner improperly issued the default judgment when he had not stipulated to a commissioner, and the judgment improperly terminated the court’s jurisdiction over support.

We lack jurisdiction over Smith’s appeal from the order denying relief from the default judgment because he did not timely file his notice of appeal after the order denying such relief was entered. None of Smith’s challenges to the trial court’s other post-judgment orders has merit. We therefore dismiss the appeal in part and otherwise affirm.

I.

BACKGROUND

On June 27, 2012, respondent Catherine Sweeney filed a pro per petition for dissolution of her marriage with appellant Lee Smith on grounds of irreconcilable differences. In the petition, she set forth the dates of marriage and separation, attested that there were no minor children of the marriage and listed six items of community property. She checked boxes requesting that property rights be determined and that the court terminate jurisdiction to award spousal support to Smith. A summons was issued by the court, and on July 3, 2012, Sweeney filed a proof of service signed by Hayden Rausch declaring he personally served the summons, petition and other documents on Smith on June 28, 2012.

Smith failed to respond to the petition, and ten months later, Sweeney filed a request for entry of default and provided the court with a stamped envelope addressed to Smith for mailing. The court clerk mailed the request for entry of default to Smith the same day. With the request, Sweeney filed a community and quasi-community property declaration and an income and expense declaration, with a proof of service by mail on Smith. In these documents and the proposed judgment, she requested allocation of certain retirement accounts and vehicles to herself and to Smith and indicated the proposed division of real estate on Coco Palm Drive in Fremont, was “Reserved.” The default was entered by the clerk and mailed to Smith the same day.

On July 11, 2013, Sweeney filed a declaration for default or uncontested dissolution. In it, she relinquished forever any right to receive spousal support, and asked the court to terminate forever spousal support for herself or Smith. This Judicial Council form, stipulated that “This declaration may be reviewed by a commissioner sitting as a temporary judge, who may determine whether to grant this request or require my appearance under Family Code section 2336.” A court commissioner entered the default judgment on the same date, dividing the community assets other than the house in the manner Sweeney had requested, terminating spousal support as to both parties and reserving jurisdiction “to divide family residence located [on] Coco Palm Drive, Fremont, CA 94538.” The clerk served notice of entry of the judgment by mail on Smith at that house, where he was still living.

For about three years after the default judgment was entered, the case was quiescent. It sprang to back to life in April 2016, when Sweeney requested an order requiring sale of the parties’ Fremont home. According to Sweeney’s sworn statement, she wished to be removed from the mortgage loan and to receive her community property share of the home, and Smith had refused to list the house for sale or to buy her share. She requested an accounting of what was paid for the loan and the amount then due on it, and of the fair rental value of the residence while Smith was in possession and control of it.

On June 1, 2016, Judge Don Franchi held a hearing on the request, at which Sweeney, Smith and their counsel were present. Smith, who was still living at the house, sought a continuance to obtain financing so he could buy Sweeney’s equity in the house. Over Sweeney’s objection the court gave Smith six weeks to obtain a loan to purchase Sweeney’s interest, failing which the house would be sold.

Later in June 2016, Smith filed a request for an order setting aside the default judgment, continuing the case and awarding him spousal support and attorney fees. Smith claimed the judgment was void because it was signed by a commissioner without the parties having agreed to that, that the court had been obligated to reserve rather than terminate jurisdiction regarding spousal support, that he did not recall having been served with the summons and petition, and the service document was therefore “inaccurate and false.”[1] Smith also filed an opposition to Sweeney’s motion for an order to sell the home, claiming she had not proven that a sale would not cause him hardship or that she was meeting her spousal support obligations.

In reply to Smith’s opposition, Sweeney proffered the declaration of Hayden Rausch, which again attested to his personal service of the summons and petition on Smith at the parties’ home in Fremont on June 28, 2012, and her own declaration attesting that she accompanied Rausch and observed him serve Smith with the petition and summons, after which she remained to discuss the dissolution process with Smith and picked up some of her personal belongings. Sweeney also filed an opposition to Smith’s motion to set aside the judgment claiming it was untimely and that equitable relief was not permissible because the judgment was not void on its face. She requested an award of attorney fees against Smith as sanctions, claiming Smith’s actions in the litigation, including moving to set aside the judgment, were frivolous and undertaken for purposes of delay.

On July 20, 2016, the court heard the continued request of Sweeney for an order requiring sale of the home, and Smith again sought more time to obtain financing and alluded to having filed a motion to set aside the default judgment. The court stated the parties were each responsible for half the mortgage but that Sweeney should receive a credit for the fair rental value, Smith having had enjoyed sole use and control of the property since the parties’ separation. The court required the parties to obtain a fair market valuation of the property, ordered them to put the property on the market, gave Smith until August 22, 2016, to obtain the funds and buy out Sweeney’s interest, ordered that if he failed to do so the house would be sold and gave Smith one year to refinance and remove Sweeney from the loan. The court further ordered that if Smith defaulted on the loan while Sweeney was still on the mortgage or failed to get her off the loan within a year, she would receive an additional $36,000 from the ultimate sale of the property as a credit for the rental value of the home.

On July 22, 2016, Sweeney filed with the court and served on Smith a declaration stating that Smith had failed to pay any mortgage payments for 2012, 2013 and 2014, and stated that due to missed mortgage payments, the parties obtained a loan modification capitalizing delinquent interest, deferred interest and unpaid property taxes totaling $35,905. The declaration further stated her estimate of the rental value of the home, and after subtracting real property taxes and dividing by two, calculated the amount Smith owed her for living in the family home to be $48,038.

On July 27, 2016, the court heard and denied Smith’s motion to set aside the default judgment. It also heard and denied Sweeney’s request for fees without prejudice to filing a new motion under Family Code sections 270. In August 2016, Sweeney filed a new motion for fees, which Smith opposed. On September 14, 2016, the court heard and continued the motion for attorney fees making plain it would not award fees for the time spent litigating Sweeney’s motion to divide the property but might award them for responding to Smith’s motion to set aside the default. After further briefing and declarations, the court again heard and this time granted Sweeney’s request for fees under section 271 in the amount of $4,000 payable at $500 per month for the work incurred by Sweeney’s counsel responding to Smith’s motion to set aside the default judgment, which the court had found to be “without merit” and “not within the bounds of reasonable pleadings.” The written order, issued on December 12, 2016, indicated such fees were reasonable and necessary and the court was awarding them as sanctions under section 271.

On January 12, 2017, the court entered an order finalizing its July 20, 2016 order regarding the sale of the house. The order stated the property would be immediately listed for sale at $699,900; Smith would have the opportunity to buy Sweeney’s share for $107,000 if paid by August 22, 2016, and if he did so the listing would be rescinded; he would be required to remove her name from any liability for the property within 12 months of July 20, 2016; if he defaulted while Sweeney was still on the mortgage loan, the court would authorize immediate sale of the property and Sweeney would receive an additional $36,000 from the sale reflecting “her share of the fair rental value”; if Smith failed to have Sweeney’s name removed from liability on the property within 12 months of July 20, 2016, Sweeney would petition the court for an order that the property be listed and sold and receive an additional $36,000 from the sale; and in the meanwhile, Smith was responsible for all mortgage payments and property taxes and would indemnify Sweeney for 100 percent of those items.

On March 10, 2017, Smith filed a notice of appeal purporting to appeal from the default judgment, the July 27, 2016 minute order denying his request to set aside the default, the December 12, 2016 order awarding Sweeney fees as a sanction and the January 12, 2017 order regarding division of the community home.

II.

DISCUSSION

A. Smith’s Challenge to the Default Judgment

Smith raises four issues. First, he challenges the denial of his motion to set aside the default judgment, contending the judgment improperly terminated spousal support because the marriage was one of long duration and under Marriage of Morrison (1978) 20 Cal.3d 437, the court was required to reserve jurisdiction over support. He concedes the “normal time to challenge the judgment ha[d] expired” but argues the courts have “equitable powers . . . to set aside judgments based on fraud, mistake, deception or accident.”

Second and relatedly, he contends Sweeney’s listing of “1 year and 5 months” on the petition for dissolution constitutes a “mistake” and the entry of the default judgment by the commissioner without a stipulation of the parties that the case could be heard by a commissioner renders the judgment void, allowing it to be set aside at any time.

Third, Smith argues the court erred in failing to set aside the default judgment because the judgment was signed by a commissioner without a stipulation or court authority. As a result, Smith contends, the judgment was void and should have been set aside.

Fourth, Smith further contends he was never served with the petition and summons, and this provides a further basis for setting aside the judgment.

Recognizing that his motion was filed beyond the six-month limitation period of Code of Civil Procedure section 473, subdivision (b), Smith contends there is no deadline for seeking to set aside a void judgment or a judgment challenged on equitable grounds.

Smith filed his notice of appeal on March 10, 2017, which was more than three years after the default judgment was entered on July 11, 2013 and 226 days after the court denied his request for an order vacating the default judgment on July 27, 2016.

While neither party raised the issue of our jurisdiction, we requested supplemental briefing from the parties addressing whether we have jurisdiction over Smith’s appeal from, among other things,[2] the order denying his request that the trial court vacate the default judgment on equitable and other grounds. (See Olson v. Cory (1983) 35 Cal.3d 390, 398.)

In his supplemental brief, Smith wisely does not argue that this court has jurisdiction to review the default judgment directly, and though he cited that judgment among the rulings from which he appeals in his notice of appeal, we do not understand his briefs to directly challenge that judgment. Rather, his challenge is to the trial court’s ruling denying relief from the default judgment. In his supplemental brief he contends that denial was an appealable order but contends the time for appealing from it was never “triggered” because “there is no filed or entered order.” Smith is incorrect.

Under rule 8.104 of the California Rules of Court, unless provided otherwise by a statute or certain rules that are not relevant here, a notice of appeal must be filed at the earliest of 60 days after the superior court clerk or a party serves a “notice of entry” of judgment or file-endorsed copy of the judgment, or—as relevant here—180 days after entry of judgment. (Cal. Rules of Court, rule 8.104 (a)(1).) “The entry date of an appealable order that is entered in the minutes is the date it is entered in the permanent minutes,” unless “the minute order directs that a written order be prepared,” in which case the entry date is the date the signed order is filed. (Id., rule 8.104 (c)(2).) In this case, the minutes containing the order denying the motion to set aside the default judgment are dated July 27, 2016. There is nothing in them directing the parties or the clerk to prepare a written order. Accordingly, his time to appeal began to run from the date of the minute orders, i.e., July 26, 2017. Since he filed his notice of appeal well beyond the maximum 180-day deadline, it was untimely. (See Faunce v. Cate (2013) 222 Cal.App.4th 166, 170.)

Smith also contends Sweeney’s counsel’s submission of a proposed order, which Smith’s counsel did not approve as to form and the trial court did not sign, prevented the “appealability deadline” from being “triggered.” Again he is incorrect. Even had the court signed it (it didn’t), the subsequent order would have been irrelevant for purposes of the appeal deadline because the court didn’t direct that it be prepared. (See Cal. Rules of Court, rule 8.104 (c)(2) [“a written order prepared under rule 3.1312 or similar local rule” does not affect entry date of appealable order]; Cuenllas v. VRL Intern., Ltd. (2001) 92 Cal.App.4th 1050, 1053 [“ ‘even though preparation of a written order is now contemplated in the ordinary course of events, the date of entry remains the date the order is entered in the permanent minutes unless the minute order expressly directs the preparation of a written order’ ”].)

Under the plain meaning of the Rules of Court, Smith’s notice of appeal, filed 226 days after the entry of the trial court’s order denying his request to set aside the default judgment, is untimely, and we therefore lack jurisdiction over, and therefore dismiss, his appeal from that ruling.

B. Smith’s Challenge to the Court’s Division of the Family Home

Smith challenges the order regarding division of the Coco Palm house. As we have discussed, in the community and quasi-community property declaration Sweeney submitted with her request for entry of default, she indicated that division of the parties’ home on Coco Palm Drive in Fremont should be reserved. Accordingly, in granting the default judgment in 2013, the trial court expressly reserved jurisdiction to divide the family residence on Coco Palm Drive. Three years later, when Sweeney filed a request for order requiring sale of the home, she expressed her desire to be removed from the loan on the property and “receive my community property share in the property.” She further stated that Smith had refused to list the house for sale or to buy her share and requested “an accounting of what was paid towards the loan and the amount now due versus the fair rental value of the residence while Respondent was in possession and control” and asked that a broker be retained and the proceeds of the sale be kept in escrow until an accounting could be determined.

The trial court held that in allocating the proceeds of the house sale, Smith would be credited with the $24,800 difference in value between the other community property that had been allocated to him and to Sweeney in the default judgment. Sweeney’s counsel did not object to that, but did object to a 50-50 allocation of the remaining equity in the home on the ground that while living at the property, Smith had been unable to make the mortgage payments at some point and as a result the loan had been modified to “roll” $36,000 “back into the loan.” The court stated that each of the parties was responsible for half the mortgage, but that Sweeney was entitled to credit for the fair rental value of the home. The court stated it was “not sure if the 36[,000] would be fully [Smith’s] responsibility because I don’t know what the payments versus the equity value or what his payments are versus what the fair rental value was during that period of time.” The court ordered that the buyout price for Smith to purchase Sweeney’s interest was $107,000, that the funds would be put in escrow and they would then “figure out all this.” The $107,000 took into account the difference in value of the other community property.

When the parties returned to court later that morning, Sweeney’s counsel informed the court that Smith did not believe he was required to remove Sweeney from the loan, and Smith’s counsel argued that the current mortgage had a favorable interest rate and the mortgage amount would increase if he refinanced. Smith requested more time to refinance, while Sweeney urged that the property just be sold. Smith requested that he pay only $107,000 and indemnify Sweeney for the mortgage while leaving her on the loan, but the court pointed out that his agreement that he would pay the mortgage would not preclude the bank from going after her or prevent others from denying her credit.

In the end, the court gave Smith one year to refinance and remove Sweeney from the loan, ordered that Smith would be responsible for all mortgage payments and property taxes and would indemnify Sweeney for those, provided that if Smith either defaulted on the payments or failed to refinance within that year the house would be sold and Sweeney would be entitled to “the additional $36,000 that she is requesting here for the rental value.” While Smith had requested that he pay only $107,000 and indemnify Sweeney for the mortgage, he did not object to the trial court’s resolution of the issue at that hearing.[3]

Smith now contends, first, that the trial court violated Code of Civil Procedure section 580 by granting relief to Sweeney that was not requested in her petition. That section provides in relevant part, “[t]he relief granted to the plaintiff, if there is no answer, cannot exceed that demanded in the complaint, in the statement required by Section 425.11, or in the statement provided for by Section 425.115; but in any other case, the court may grant the plaintiff any relief consistent with the case made by the complaint and embraced within the issue.” (Code Civ. Proc., § 580, subd. (a).) But the flaw in his logic is that the default judgment did not adjudicate any of the parties’ rights in the marital home. As Sweeney points out, “a dissolution judgment does not affect the disposition of community property as to which the judgment is silent.” (In re Marriage of Brown (1976) 15 Cal.3d 838, 850–851.) When the court issued the default judgment, it reserved jurisdiction over division of the family home, as expressly contemplated by statute. (See Fam. Code, § 2556.) The rulings Smith now challenges were entered post-judgment, pursuant to the court’s continuing, reserved jurisdiction over all matters concerning division of the family home, including whether and when to sell and how to divide proceeds from any sale. This was proper. (See In re Marriage of Huntley (2017) 10 Cal.App.5th 1053, 1059 [Family Code section 2556 confers on courts “continuing jurisdiction to award community estate assets or community estate liabilities to the parties that have not been previously adjudicated by a judgment in the proceeding,” when a party requests such relief in a post judgment motion].) Smith cites no authority that Code of Civil Procedure section 580 applies to post-judgment rulings on reserved issues. Moreover, the post-judgment rulings were entered after Smith had appeared in the case with counsel and defended himself. The policy underlying Code of Civil Procedure section 580—“to ensure that a defendant who declines to contest an action does not thereby subject himself to open-ended liability” (Greenup v. Rodman (1986) 42 Cal.3d 822, 826)—is not implicated by these proceedings.

Next, Smith argues that he was denied due process because he wasn’t afforded notice and an opportunity to be heard regarding the contingent $36,000 amount. The argument borders on frivolous. On April 14, 2016, Sweeney served discovery on Smith seeking documents relating to the value of the property, the mortgage, the payment by Smith of the mortgage, property taxes and insurance, and income received from the residence. The next day, Sweeney served her request for an order on Smith (which, indeed, led to his first appearance in the case), stating she was requesting, among other things, “an accounting of what was paid towards the loan and the amount now due versus the fair rental value of the residence while Respondent was in possession and control.” Then, the day before the scheduled hearing on that request, Smith filed a substitution of attorney form indicating he was represented by counsel. His counsel then appeared at the June 1, 2016 hearing and immediately requested more time, specifically four to six weeks, to enable Smith to determine whether he was able to purchase Sweeney’s interest in the house. At that hearing, there was a thorough discussion of the value of the house, the mortgage, delinquencies and various credits the parties asserted they would be entitled to in connection with its valuation and division.[4] These issues were raised again at the continued hearing on July 20, 2016, with both counsel present, and Sweeney’s counsel argued that $36,000 of the mortgage debt should be Smith’s responsibility. The court ordered that Smith could buy out Sweeney if he was able by August 22, 2016, and if the property had to be sold “we will figure out all this.” Eventually, after a recess and further argument by counsel, the court proposed that if Smith defaulted on his obligations to pay the mortgage and to refinance, and the house therefore had to be sold, Sweeney would get “the additional $36,000 that she is requesting here for the rental value.” Sweeney’s counsel argued against this, but Smith’s did not, presumably because a contingent liability for this amount was preferable to the court requiring Smith to pay it outright. In short, not only did Smith receive notice and an opportunity to be heard, he was in fact heard. And, he acceded to the court’s order as a means of obtaining the year he sought to obtain refinancing and in the meanwhile to enjoy the very low interest rate on the extant mortgage.

C. The Award of Attorney Fees and Costs as a Sanction

Finally, Smith challenges the court’s award of attorney fees and costs on the same grounds. Again, he claims the court lacked jurisdiction to address the attorney fee motion because Sweeney did not seek attorney fees in her petition, and that he was denied notice and an opportunity to be heard because the petition itself did not seek fees. These arguments also lack merit and for similar reasons.

The fee award ultimately granted by the court was under section 271 of the Family Code, which provides for an award of fees and costs as a sanction based on the conduct of a party or counsel that “furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys.” We review such an award for abuse of discretion and overturn it only if, “ ‘ “considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order.” ’ ” (In re Marriage of Burgard (1999) 72 Cal.App.4th 74, 82.)

There was no such abuse here. The trial court stated it was awarding a portion of the fees Sweeney requested as a sanction for the time Sweeney’s counsel was required to spend to respond to Smith’s meritless motion for relief from default. It awarded $4,000, less than half of what Sweeney requested. Contrary to Smith’s argument, such fees imposed as a sanction for the unmeritorious litigation he initiated three years after the default judgment were not required to be sought in Sweeney’s petition. (See Code Civ. Proc., § 580, subd. (a) [“in any other case, the court may grant the plaintiff any relief consistent with the case made by the complaint and embraced within the issue”].) Smith has not shown that the court did not consider his ability to pay, as required by the statute. The trial court awarded only half of the requested fees and provided the $4,000 could be paid in four installments. Finally, Smith received ample notice of the fee motions and had multiple opportunities to respond to them, and his counsel did respond. There is no due process violation.

DISPOSITION

The appeal from the default judgment and denial of the request for relief from default judgment are dismissed. The other orders from which Smith has appealed are affirmed. Sweeney shall recover her appellate costs.

STEWART, J.

We concur.

KLINE, P.J.

RICHMAN, J.

Sweeney v. Smith (A150776)