Marriage of Monson and Netterville

Filed 6/21/07 Marriage of Monson and Netterville 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

Appeal from an order of the Superior Court of Orange County, Richard G. Vogl, Temporary Judge. (Pursuant to Cal. Const., art. VI, 21.) Affirmed in part; reversed in part.

Law Offices of Jeffrey W. Doeringer and Jeffrey W. Doeringer for Appellant.

Law Offices of Marjorie G. Fuller, Marjorie G. Fuller and Shara Beral Witkin for Respondent.

* * *

I. Background

Catherine Monson and James Netterville, IV, were married in 1991 and divorced in 2005.[1] Their divorce was embodied in a stipulated judgment. Both represented themselves, though there is evidence in the record that they had access to legal help in preparing the paperwork. (Netterville was in contact with a legal assistant/law clerk at a law firm in the Irvine area, while Monson had access (in the words of Nettervilles legal assistant) to her company lawyer.) Netterville had been employed in the video industry, mostly in sales work but sometimes in management, through most of the marriage. Judging by the W-2 forms in the record, he earned a respectable upper-middle income (generally near six figures in the 1990s) working for Disney, Paramount, and finally Toon Boom Technologies during that time. He lost regular employment in early 2004, though he continued to obtain income as an independent contractor with Toon Boom until November of that year. After that, he stayed home and worked on various home improvement projects. Monson worked as an executive for a printing company throughout the marriage.

There were no children of the marriage. The divorce settlement gave Netterville the $1.6 million house in Nellie Gail ranch, with a net equity of (in 2005) $800,000, but he had to keep up the payments of about $4,300 a month. Netterville also received a cash payment of $280,000 from Monson. While the money for the cash payment was to be obtained by borrowing on the equity of the house, Monson was responsible for repaying that loan. Netterville also got the dog, the tools, the white Tundra, half the exercise equipment, and the big downstairs television.

For her part, Monson received a release from Netterville of any claim for spousal support, plus she received the money in the couples savings accounts (about $90,000 total), the horse, the art and perfume bottles, the BMW X5, and the portable BBQ. Both parties got to keep their pensions, confirmed as separate property.

The settlement also had some unusual provisions to protect Monsons credit rating in the event Netterville defaulted on the house or property tax payments. Specifically, the settlement agreement provided that Monson could step in and make house payments that Netterville did not make. If she made two consecutive payments, or a total of three payments non-consecutive, the house would be listed for sale. Monson would be reimbursed off the top of the proceeds of the sale all the payments made, and she would receive 10 percent equity for every payment made.[2] A similar structure applied to any missed property tax payments.[3]

The agreement was made a judgment of the court in May 2005. Despite having $280,000 on hand (a fact with which the opening brief never quite comes to grips), Netterville missed the November mortgage and December tax payment. It appears at this point that the importance of the equity-shifting provisions of the settlement agreement impressed themselves upon Nettervilles consciousness.[4] In January 2006 Netterville filed, still in pro per, a motion to set aside the judgment and settlement agreement, pursuant to (and only pursuant to) section 473, subdivision (b) of the Code of Civil Procedure.[5]

The essence of the motion was essentially that Netterville did not understand what he was signing when he signed the agreement. Perhaps the most remarkable part of the moving papers was a confession of functional illiteracy. To quote from his moving declaration: I have been afflicted with a severe learning disability for as long as I can remember. I am unable to read and to comprehend. In fact, I have never actually read a book. During school, I was able to fake my way through the system. Sales jobs did not require much reading, and I excelled in my sales career. But when I was promoted at Paramount to management level positions, the jobs required much more administrative work and I was unable to continue faking my way through daily life. As such, Paramount failed to renew my contract.

The motion was denied. Netterville, now represented by counsel, has timely filed this appeal from the order of denial. For the reasons stated below, we affirm, except for a $2,000 attorney fee order.

II. The Disclosure Issue

The disclosure declaration issue is Nettervilles assertion that he did not receive a schedule of assets or an income or expense declaration. That issue may be dealt with summarily: As Nettervilles opening brief recognizes, there is conflicting evidence in the record. Given a substantial evidence standard of review for discretionary set aside motions pursuant to section 473 (e.g., Estate of Carter (2003) 111 Cal.App.4th 1139, 1154) the conflict must be resolved in favor of the trial court decision. It is not enough to say that perjury and misrepresentation should not be tolerated by the judicial system, and rely on ones own contrary declarations. The trial court has already impliedly found that there was no perjury or misrepresentation.

Furthermore, Netterville has not identified any assets that might have been disclosed by an exchange of declarations, but werent, and so corrupted his evaluation of the settlement agreement. (See In re Marriage of Steiner & Hosseini (2004) 117 Cal.App.4th 519 [under California Constitution, failure to exchange declarations not enough, by itself, to justify setting aside family law judgment].)

III. An Important Issue

Only Alluded To

Both the opening and reply briefs contain passing allusions to the trial courts citation of Article VI, section 13 of the California Constitution in its statement of decision. However, there are six substantive points raised under separate headings or subheadings in the opening brief, and the trial courts using a wrong standard to evaluate the section 473 motion is not one of them. Hence the argument from a wrong standard has been waived. (Cal. Rules of Court, rule 8.204(a)(1)(B); Heavenly Valley Ski Resort v. El Dorado County Bd. of Equalization (2000) 84 Cal.App.4th 1323, 1345 fn. 17, 101 Cal.Rptr.2d 591 [refusing to address argument appearing under subheading inappropriate to that argument]; Opdyk v. California Horse Racing Bd. (1995) 34 Cal.App.4th 1826, 1830-1831, fn. 4, 41 Cal.Rptr.2d 263 [rejecting contention made in petition for rehearing that due process claim had been properly raised because it was not mentioned in separate heading and "The failure to head an argument as required by California Rules of Court ... constitutes a waiver."].)

IV. The Basic Lack of a

Threshold Showing of Mistake,

Inadvertence, Surprise or Excusable Neglect

Which brings us to Nettervilles main argument. In essence, the argument is that his case was so compelling the court had no choice but to grant it.

This argument, however, readily fails in light of the substantial evidence that Netterville is not the hapless illiterate with adult attention deficit disorder that his own declaration would make him out to be, but a professional and formerly highly paid salesperson with much experience in the video industry (Disney, Paramount) whose divorce happened when he was between jobs. Evidence presented by Monson in response to Nettervilles moving papers included:

(1) A series of emails between the parties during their marriage, sometimes touching, sometimes touchy, that showed an excellent command of English on Nettervilles part. If any one of us, struggling to learn a foreign language, wrote those emails in that language, we would be justified in considering ourselves genuinely proficient in that language.

(2) Declarations from both a neighbor and from Nettervilles former administrative assistant that Netterville was often seen reading trade and entertainment industry magazines during the marriage. The neighbor also averred that Netterville was seen reading from a veterinary book when his dog was sick.

(3) The fact that it was Netterville who had primary contact with the couples tax preparer and was able to discuss complex tax issues with the preparer. (4) Most tellingly, a declaration of notary reporting that Monson asked Netterville in the notarys presence if he had read the agreement and was prepared to sign it and Mr. Netterville replied that he had read it and was ready to sign it.

On top of the evidence of literacy, competence, and the admission that Netterville had read the agreement and was prepared to sign it, two other items supporting the trial courts decision are so obvious they cannot be ignored: One was the extremely plain nature of the equity-shifting clauses in the agreement. Those clauses gave hypothetical, worst or almost worst-case examples of what might happen if Netterville failed to make mortgage or tax payments. (It is noted that if Jim were to be late on two tax payments or if Catherine were to make two tax payments, Catherine would gain 20% of the equity in the house. If Jim were to default on three mortgage payments and two tax payments, Catherine would gain a total of 50% of the equity in the house.) Most contract drafting attorneys would do well to emulate those clauses; they are superb examples of how to draft a contract so as to make the other side fully aware of the deal it is making. (Alas, many attorneys dont put in exemplars, perhaps out of a hope that the other party wont figure out the possibilities inherent in a clause.) Given the implied finding that Netterville was literate, he had no excuse for not knowing the nature of the agreement he was signing.

The other item is invisible in plain sight. It is the high quality of Nettervilles command of English as expressed in his moving papers, in which he said he was representing himself in pro per.

Consider his moving declaration. It was ostensibly prepared by Netterville himself. Reading through it, there are no as told to paragraphs, or other statements of Im not capable of putting this document together, so these are the words of someone else. Even so, it is written in the prose of one facile with modern legal dialect. (Now, of course, Netterville probably did have help in putting together his declaration and other legal papers, but that is beside the point. His emails to his wife -- presumably his own true style -- arent quite as formal, though still quite grammatical and literate.)

The trial court was thus easily entitled to conclude that Netterville had not made the requisite showing of mistake, inadvertence, surprise or excusable neglect.

What we have said here also disposes of a brief fiduciary duty argument raised by Netterville. The couple dealt at arms-length with each other in negotiating the settlement agreement (again, we note that each had access to legal help), and the trial court could readily find that Netterville, who had negotiated contracts in his work, was not under any undue influence from Monson.

V. The Forfeiture Issues

While permutations of the proposition that the details of the agreement regarding the reallocation of equity and the $280,000 payment[6] constitute illegal forfeitures have been vigorously asserted on appeal, it turns out that the forfeiture issues have been waived. As we have noted, Nettervilles set aside motion was unambiguously based only on section 473. While there is an allusion to unenforceable liquidated damages and illusory agreements found in the other relief box and in the introductory paragraph of the memorandum of points and authorities supporting the motion, the actual legal authority supporting the motion was framed strictly in terms of the trial courts discretionary authority under subdivision (b) of section 473. E.g., The Judgment Should Be Set Aside Due to . . . Reasonable Mistake . . . . [] Respondents Inadvertence . . . . Respondents Surprise . . . . [] Respondents Excusable Neglect.

The legal centerpiece of the appeal, Civil Code section 3275, is not mentioned at all. Section 3275, by its terms, has an exception for grossly negligent or willful breaches of duty. By not specifically raising the forfeiture issues at the trial level, Netterville effectively deprived the trial judge of the opportunity to make whatever implied findings might be appropriate (e.g., concerning the failure to make mortgage payments and thereby jeopardizing Monsons credit rating). Since the forfeiture issues are not jurisdictional, and involve questions of fact (e.g., exactly why didnt Netterville make certain payments?), they have been effectively waived. (See Resource Defense Fund v. Local Agency Formation Com. (1987) 191 Cal.App.3d 886, 894.)

VI. Uncertainty

It is not quite clear what Netterville is saying under his argument that the settlement agreement is ambiguous, illusory, confusing and contradictory. The argument seems to be a riff on the theme of general inequity. However, the fact that one party makes a bad deal, or that there are ambiguities in a contract, is, of course, no reason to rescind it.

VII. Attorney Fees

Finally, Netterville challenges a $2,000 attorney fee order, included in the statement of decision. On this point he is correct.

We note at the outset that the order cannot be justified as a sanction under Family Code section 271. Though Nettervilles protestations of illiteracy might (arguably) have provided the basis for such a sanction, subdivision (b) of section 271 requires notice of the possibility of sanctions and an opportunity for the to-be-sanctioned party to be heard. Nothing indicates that Netterville received any such warning, and in point of fact the trial court did not make any reference to a sanction in its order.[7]

For her part, Monson makes no attempt to justify the award on sanction grounds ( 271), but postulates that the award can be justified as a contribution under section 2030. Section 2030 is the equalizing statute by which a family court can make one side pay for the other sides representation to ensure that each party has access to legal representation. ( 2030, subd. (a)(1).)

Considered as a traditional equalizing attorney fee award under section 2030, however, the award is a manifest abuse of discretion. While the issue of Nettervilles literacy and ability to understand the settlement agreement was a disputed issue at the trial level, there was no dispute as to who was employed and who wasnt. Netterville was the unemployed spouse seeking to overturn a settlement agreement with no support order. Monson was the employed professional defending that agreement. Given the way the set aside motion was postured, the attorney fee order evokes the image of a reverse Robin Hood, which is not exactly the intent of section 2030. There has been no attempt by the trial court or by Monson to show that the award could be justified by Monsonsneed for access to legal representation.

VIII. Disposition

The trial courts order is affirmed, except for the attorney fee award, which is reversed. In the interests of justice each side will bear its own costs on appeal.

SILLS, P. J.

WE CONCUR:

RYLAARSDAM, J.

ARONSON, J.

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by San Diego County Property line attorney.

[1] Given the different last names, we may dispense with the homey familiarity of using the parties first names that often characterizes family law opinions.

[2] Here is the exact language, which set up in Monson a right to receive notice of potential defaults and a right to unilaterally make payments to prevent them:

Jim agrees he will always pay the monthly payment on time, prior to incurring any late charges. If ever Jim is going to be late on a payment (defined as WAMU receiving the payment on or after the 15th of the month), Jim must notify Catherine by the 10th of that month, giving her an opportunity to make the payment. For every payment Catherine makes, she gains a 10% share of the equity in the house. If ever two consecutive payments are late or are made by Catherine or a total of three payments (non-consecutive) are late or are made by Catherine, the parties agree to immediately list the house for sale [with a realtor who specializes in Nellie Gail properties] for no more than the appraisal value given at that time by a third party independent appraiser selected by the realtor. Both parties agree that they will allow immediate access to the property by the appraiser. The house will be made available to realtors to show, no appointment necessary, via a lock box on the door. Any bona fide offer for the property within 5% of that appraised value will be accepted. Catherine will be reimbursed from the proceeds of the sale for any payments she has made, prior to the distribution of any equity. It is conceivable that Catherine could end up having 30% of the equity of the house, if Jim is late on or Catherine makes three payments. (Original underscoring.)

[3] Here is the exact clause:

Jim agrees to pay the property taxes on time. If ever Jim is unable to make the property tax payment, Jim will notify Catherine at least ten (10) days prior to the tax being due; Catherine has the choice to make the tax payment. For any tax payment Catherine makes, she gets a 10% share of the equity of the house. If any two tax payments are late or are made by Catherine, the house will immediately be listed for sale as described in paragraph A. above [with the provisions concerning listing at a certain price and accepting any bona fide offer within 5 percent of that price]. It is noted that if Jim were to be late on two tax payments or if Catherine were to make two tax payments, Catherine would gain 20% of the equity in the house. If Jim were to default on three mortgage payments and two tax payments, Catherine would gain a total of 50% of the equity in the house.

[4] The respondents brief states that Netterville also missed the December 2005 mortgage payment, a fact which would have triggered the sale clause of the settlement agreement. The record reference supporting that statement, however, is to a declaration that does not appear to mention anything about any December payment.

However, regardless of whether the provision was triggered at that time, the parties, in early 2007, stipulated to the sale of the house with the proceeds to be placed in an interest-bearing trust account. We grant Nettervilles motion to take judicial notice of that stipulation. Our comments herein are without prejudice to the trial courts ultimate division of the property, i.e., we are not concerned in this appeal with precisely the percentage of equity interest in the house that Monson may have acquired to this point.

[5] There are no references in the moving papers to sections 2120 et seq. of the Family Code. While those statutes are not exclusive for set aside motions within the six month period provided under Code of Civil Procedure section 473 (see Hogoboom et al., Cal. Practice Guide: Family Law (The Rutter Group 2006) 16.103.5, p. 16-28), a litigant cannot change the basis for a set aside motion initially brought under Code of Civil Procedure section 473 to one found in Family Code sections 2120 et seq. on appeal. (In re Marriage of Eben-King & King (2000) 80 Cal.App.4th 92, 110-111).

All further references to section 473 will be to the Code of Civil Procedure. All other undesignated statutory references will be to the Family Code.

[6] Because this appeal attacks an order denying a set aside motion, we have no occasion to opine on any enforcement issues (such as calculating Monsons equity in the house or how the $280,000 should be treated). We do, however, observe without commenting that the parties characterized the $280,000 as part of an equalizing payment.

[7] Here is what the trial court wrote: As and for a contribution towards attorney fees, and as a domestic support obligation pursuant to 11 USC sec. 523, it is ordered that Respondent [Netterville] shall pay to counsel for Petitioner the sum of $2,000 payable at the rate of $200.00 per month commencing July 1, 2006, and with a like payment each month until the entire sum is paid in full. [] No interest shall be added so long as regular installment payments are made on the same day of the month. [] Should any installment payment be five days late from the ordered payment date, then the entire sum shall be due and owing and shall bear interest thereafter.