Marriage of Sharma

Filed 6/8/06 Marriage of Sharma CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

Husband Ashok Sharma appeals a judgment dividing the community property of his marriage to Renee Sharma, pursuant to Family Code section 1101, subdivision (h)[1] ["Remedies for Breach of Fiduciary Duty between Spouses"].) We affirm.

FACTS AND PROCEDURAL HISTORY

Husband and Wife married on December 14, 1991, and separated on October 27, 2000. During the marriage, Husband was employed by the State of California as an engineer.

For approximately five years of the marriage, Husband practiced "day-trading" in the stock market. His losses from day-trading amounted to $269,000, and included his separate property funds, earnings as a state employee, and funds borrowed from friends and relatives. Despite entreaties from Wife to cease day-trading, Husband persisted, and "rode the market all the way down."

In January 2002, the family law court dissolved the marriage and divided the community property. In 2001 and 2002, Husband secretly withdrew the entirety (approximately $100,000) of his deferred compensation account held by his employer. He did this in violation of family law court orders. In December 2002, Wife contacted Husband's employer, who informed her that Husband made four withdrawals over an 18-month period. The employer stated that Husband "scratched out" the name and telephone number of Wife's attorney from a copy of the judgment.

The family law court found Husband in contempt for breaching his fiduciary duty to Wife. On October 13, 2003, it vacated the January 2002 judgment. (§§ 2121, subd. (a) & 2122, subd. (a).) Husband did not appeal either the order finding him in contempt, or the order vacating the judgment.

On February 17, 2005, the family law court determined the division of marital property, the allocation of community debts, and the remedies for Husband's breach of fiduciary duty pursuant to section 1101, subdivision (h). Husband testified that Wife was "fully involved" in his day-trading. He stated that he borrowed money during the marriage to pay their household expenses. Wife testified that she frequently urged Husband to cease trading, but that he continued to trade. She testified that Husband stated that he borrowed money to obtain "a better edge" in the stock market.

The family law court found that Husband secretly withdrew and concealed $50,628 of community funds from his deferred compensation account in violation of his fiduciary duties to Wife. (§ 1100, subd. (e).) It then awarded Wife 100 percent of these funds and increased her share of Husband's retirement pension as a source for payment. The family law court also ordered Husband to pay certain debts of the marriage, without offset. These debts were incurred to cover the family's living expenses after Husband "reckless[ly] speculat[ed] in the financial markets. (§§ 1100, subd. (e) & 1101, subd. (h).)

Husband appeals and challenges the marital property division and sanctions imposed pursuant to section 1101, subdivision (h).

DISCUSSION

Husband argues that the January 2002 judgment dividing the martial property is res judicata, and the family law court may not redistribute the deferred compensation plan and the retirement pension. He contends that Wife may not relitigate matters of property division or allocation of community debts because the 2002 judgment is conclusive.

Husband also disputes that he violated his fiduciary duty to Wife by day-trading. He points to his testimony that Wife participated in and supported the day-trading activities and had access to the trading records.

Finally, Husband asserts that the section 1101, subdivision (h), sanctions are excessive.

For several reasons, we reject Husband's contentions. First, sections 2121 and 2122 permit the family law court to set aside a judgment or any part thereof where one party has been defrauded by the other. In 2003, Wife successfully set aside the judgment upon grounds that Husband withdrew his deferred compensation account in violation of a temporary restraining order. Husband did not appeal the order and it has long been final.

Second, the family law court received testimony from Husband and Wife concerning the day-trading. Although Husband testified that Wife participated in the day-trading, Wife denied participation and testified that she repeatedly urged Husband to cease the trading. The family law court determined the credibility of the witnesses and drew reasonable inferences from the evidence. (In re Marriage of Mix (1975) 14 Cal.3d 604, 614 [testimony of a single witness may be sufficient evidence].) We must view the evidence and all reasonable inferences therefrom in favor of Wife. (Ibid.)

Third, section 721, subdivision (b), provides that a husband and wife are subject to the general rules regarding fiduciary relationships "which control the actions of persons occupying confidential relations with each other." The section further provides: "This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other." Section 1101, subdivision (h), permits an award for breach of fiduciary duty "as set forth in Sections 721 and 1100 . . . of 100 percent, or an amount equal to 100 percent, of any asset . . . transferred in breach of the fiduciary duty."

Here the family law court awarded Wife 100 percent of the community property interest in the deferred compensation account. The court then properly awarded Wife an increased amount of the retirement pension because the deferred compensation account was entirely withdrawn and its funds spent.

The judgment is affirmed. Appellant shall bear costs on appeal.

NOT TO BE PUBLISHED.

GILBERT, P.J.

We concur:

YEGAN, J.

COFFEE, J.

E. Jeffrey Burke, Judge

Superior Court County of San Luis Obispo

______________________________

Ash Sharma, in pro. per., for Appellant.

Ernest A. Casacca for Respondent.

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[1] All statutory references are to the Family Code unless otherwise stated.