Marriage of Doliva

Filed 10/18/06 Marriage of Doliva CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from an order of the Superior Court of Orange County, Claudia Silbar, Judge. Affirmed.

Law Office of Elizabeth Nigro and Elizabeth Nigro for Apellant.

Law Office of Kari M. Myron and Kari M. Myron for Respondent.

Marcy A. Doliva (Marcy) appeals from an order denying her request under Family Code sections 271 and 2030[1] for attorney fees and costs she incurred opposing the motion of her former husband, Mark J. Doliva (Mark),[2] to modify a 2002 qualified domestic relations order (QDRO). Marcy contends the trial court either failed to exercise or abused its discretion in denying her request.[3] We disagree.

Marcy, whose marriage to Mark was dissolved more than five years ago, spared no expense in a contest over allocation of Mark’s retirement benefits after a disability issue arose. The court noted the goal of Mark’s motion was to obtain the tax savings of disability benefits for himself, which was accomplished, without affecting the bottom-line payout to Marcy, which was also accomplished. Unfortunately, the parties incurred a staggering combined total of over $60,000 in attorney fees and costs on their way to a stipulated result that the court observed they could have accomplished in about three noncombative hours by “sitting down with the person that runs this benefit plan, both lawyers, and getting their position in writing of how to do this without changing [Marcy’s] benefits.”

Marcy’s counsel insists the order denying fees indicates the court’s annoyance with her for tenacious lawyering. But the record gives rise to a different inference, i.e., the court rationally concluded fees were unreasonable in any amount, given the nature of the problem and the ease with which it could and should have been resolved. Under the circumstances, we cannot say the court’s order that each party pick up its own tab was beyond the bounds of discretion.

FACTS

Marcy and Mark married in June 1990 and separated in August 2000. Their judgment of dissolution became final in 2001, when Mark was still actively employed as a Los Angeles County Fire Department battalion chief.

In 2002, the court issued a QDRO dividing the community interest in Mark’s service longevity benefits with the Los Angeles County Retirement Association (LACERA) according to a formula entitling Marcy to 50 percent of the benefits acquired during the marital period. (In re Marriage of Brown (1976) 15 Cal.3d 838 [vested or not, to the extent pension rights derive from employment during coverture, they comprise a community asset subject to division in dissolution].

In 2003, Mark was removed from active duty and placed on a disability leave of absence. In 2004, LACERA granted his application for a service-connected disability retirement. Thereafter, Mark filed an order to show cause to modify the QDRO, noting benefits were initially predicated upon a longevity pension, but now should reflect Mark’s decision to seek a tax free disability pension and allocate any tax savings to him as his separate property. (In re Marriage of Higinbotham (1988) 203 Cal.App.3d 322, 332 [tax savings resulting from the tax-exempt nature of a disability pension are the separate property of the pensioner].) Under the 2002 QDRO, there were no provisions expressly addressing the consequences of a disability pension.

We digress from our recitation of background facts to place the controversy in the context of controlling law. As noted, ante, retirement benefits are community property to the extent the pensioner’s right was earned during the marital period. (In re Marriage of Mueller (1977) 70 Cal.App.3d 66, 70.) However, “[w]hen a spouse elects to take a disability pension in lieu of community property retirement benefits, future tax consequences are considered in determining the amount of the benefits that may properly be characterized as ‘true disability’ and hence the pensioner’s separate property: The amount of future taxes saved by receiving a tax-free disability pension (rather than a retirement pension which is not tax-free) is the pensioner’s separate property.” (Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2005) 10:325.5, p. 10-113.) “If a spouse elects to receive a disability pension when he or she is qualified for a retirement benefit based on longevity of service, the pension is a community asset except for (1) that portion which is attributable to service before marriage, and (2) that portion which, by virtue of its disability status, exceeds the amount of the longevity benefit.” (In re Marriage of Higinbotham, supra, 203 Cal.App.3d 322, 332, citing In re Marriage of Stenquist (1978) 21 Cal.3d 779, 788.)

In this instance, Marcy, fearing Mark’s election of a disability pension was an attempt to deprive her of her share of community property by transmuting it into his own separate disability property (see, e.g., In re Marriage of Stenquist, supra, 21 Cal.3d 779), opposed any modification of the 2002 QDRO “impacting the amount of the benefit I am to receive.” In support of her opposition, she stated, “I spent more than six years during our marriage working in customer service for a pension company, and at the time of entry of judgment I was familiar with the difference between disability and longevity pensions. [Mark] and I had discussed that difference during our marriage, as [Mark] had previously had the opportunity to take a disability pension but elected not to. When we negotiated the original QDRO, it was agreed it didn’t matter what type of pension he took, my benefit would be the same. . . . [Mark] is trying to reduce my community property share despite the fact we agreed the type of pension he took wouldn’t change my share of his benefits.”

There was some confusion at LACERA regarding Mark’s final average monthly compensation. Due to the agency’s several reestimates, which were beyond Mark’s control, Mark twice had to file amended proposed QDROs. In the second amended proposed modification, it appeared there could be a reduction in the community property portion of the benefits, with a corresponding $200 per month drop in Marcy’s gross monthly allowance. For the next several months, Marcy focused her challenge on Mark’s entitlement to the disability pension, questioning whether he was actually injured, whether his injuries were job-related, whether he had sought the disability retirement based on his injuries, whether LACERA had required Mark to prove the extent of his disability, whether LACERA had really granted Mark’s request for a service-connected disability retirement, and whether the payments were taxable or nontaxable. Marcy filed hearsay and lack-of-foundation objections to Mark’s LACERA evidence, arguing, inter alia, that he had failed to carry the burden of proving (1) that all or part of his retirement benefits were tax exempt, (2) that the amount of tax exemption was certain, or (3) that LACERA’s calculations were correct.

As time passed, Marcy and Mark remained polarized and attorney fees escalated. Hearing of the matter was continued repeatedly to accommodate meet-and-confer sessions so the parties could attempt to draft a stipulation and order. Meanwhile, both sides moved for attorney fees as sanctions under section 271 (opposing party’s conduct frustrates settlement or increases costs of litigation). In his section 271 request, Mark observed that rather than taking an oppositional “prove-it” posture, Marcy, as “an alternative payee” under the existing QDRO, “could have inexpensively answered the majority of [her] questions by placing a call to LACERA and asking them for the answers.” The court essentially concurred that such an approach would have worked well. Unfortunately, however, in the court’s opinion, the tone of Marcy’s counsel’s approach to the situation, as indicated in her letters to opposing counsel, indicated her suspicion there was a conspiracy afoot to cheat Marcy.

The record demonstrates the court’s assessment was on firm ground. Throughout the proceedings, and even at the very end, when attorney fees were at issue, Marcy’s counsel continued to dispute LACERA’s finding that Mark was entitled to disability benefits, arguing, for instance, that he had a big sailboat and could handle it pretty well, so he might not be disabled to the extent determined by the agency. The court noted counsel had wasted a lot of time questioning whether Mark was really disabled, and deliberating, “Are they right that he gets a tax benefit or are they wrong that he gets a tax benefit, and I don’t think they are right.” The court ultimately attempted once more to put counsel on track by pointing out that “[i]t really makes no difference whether he’s 50 or 80 percent [disabled], whether he has a sailboat or not[.] The bottom line, he’s not a fireman anymore and they won’t let him be a fireman anymore.” “Therefore, we will take advantage of those tax consequences that result from that.” When the hearing commenced on May 9, 2005, the issue of the respective requests for attorney fees was bifurcated, and the court listened to extensive arguments regarding the modified QDRO. Marcy’s counsel opined Mark’s counsel had been “running up fees” by attempting to confuse rather than clarify the issues for the court. The court disagreed, saying, “I don’t think it’s that[.] I think it’s a matter of difference of legal interpretation. I don’t think it’s an attempt at deception.” When the court and the attorneys all indicated they were “still . . . having difficulty understanding” how to find a solution that would satisfy Mark’s and Marcy’s needs, the court suggested, as it had done time and again on prior occasions, that appointment of an expert might help. Mark’s counsel agreed, but Marcy’s counsel was opposed, and the court, perceiving the parties remained at loggerheads, stated it would reread the law and the trial briefs, reevaluate the arguments, and come to a decision about whether an expert was needed. The matter was scheduled for a telephonic conference.

On May 12, 2005, the court announced its tentative intention to appoint an expert to do the math, i.e., “[d]etermine the net amount after taxes by which the disability payment exceeded the net amount after taxes that would have been received by virtue of retirement payments.” (See In re Marriage of Higinbotham, supra, 21 Cal.3d at p. 332.) At that point, Mark’s counsel indicated he had recently been advised by an expert that there really was no dilemma to be resolved because there were sufficient funds in each benefits category to give Mark his tax savings and keep Marcy’s allowance unchanged: Pursuant to that advice, counsel suggested the parties simply have LACERA rewrite the QDRO to accomplish the purpose. Showing a real flair for understatement, Mark offered “to go back to LACERA and say, ‘Look it, we have spent a fortune on the legalities and the numbers, and I think we have gotten lost of . . . the reality . . . of what we are trying to do.’” Further explaining his plan, he stated, “[I]f we go back to LACERA and say, ‘Let us rewrite the QDRO so that . . . the $1,500 that [Marcy] was anticipated to receive [under the 2002 QDRO] continues and we don’t change that at all, but we do indicate in the QDRO that the moneys being paid to wife will be taxable and that [Mark] will receive the nontaxable portion as his to claim on his tax returns. That way [Marcy] doesn’t lose a dime but [it] would give [Mark] the benefits of Higinbotham, the tax benefits. . . . So rather than do numbers we can keep it conceptually rather simple and I think it gives both parties what they want. It gives [Mark] the tax benefits arising out of the disability by saying it’s all his. We give [Marcy] exactly what she had bargained for [in the 2002 QDRO]. And that [is] 17 percent of $9,000, it’s just . . . as she had bargained for originally, [it was] taxable then, it’s taxable now.”

The court, undoubtedly breathing a sigh of relief, promptly latched onto counsel’s suggested resolution, expressing enthusiasm that both parties would get what they wanted without the need for compromise by anyone. Marcy’s counsel concurred, commenting, “So that sounds like the right conclusion that . . . we have been asking for all along.” Mark’s counsel conceded he had perhaps been “partly [at] fault” in failing earlier to come to grips with “the rationale of what we are trying to do here.” The court concluded, “I think [counsel’s] suggestion is an excellent one. And in the end, if I was asked to make orders, I would attempt to make orders to that extent anyway. In other words, I would attempt to benefit [Mark] as a result of his disability, but at the same time I would attempt to keep [Marcy’s] bargained-for $1,500, if possible.”

Turning to the issue of attorney fees, the court announced its tentative decision, stating, “I don’t see any [section] 271 conduct on behalf of either party,” adding that while the parties could present further argument if they insisted, “I don’t see really necessarily that either side has attempted to stonewall the other or frustrate the policy of settlement” “or [that] either counsel is attempting to be obstreperous. . . . It’s a complicated issue.” Another hearing was scheduled to give the parties time to contact LACERA to achieve the desired solution, which they managed to do forthwith.

There was one more brief telephonic hearing clarifying the modification issue. The resulting modified QDRO, as stipulated, ensured that with Mark’s award of a service-connected disability, all associated tax-savings benefits would flow solely to him, and all of Marcy’s allowances would be taxable events to her. The stipulation adopted by the court as its order, provides, in pertinent part: “A. The community property interest in [Mark’s LACERA] Fund shall be divided equally between the parties subject to the following: 1. Should [Mark] apply for and receive[] a service connected disability retirement allowance, [Marcy] as the non-member spouse, shall receive her one-half (1/2) community property interest as follows: a. [Marcy’s] portion shall be paid from [Mark’s] taxable portion of his monthly service allowance only, unless there are insufficient taxable service allowance benefits available to satisfy the full award to [Marcy], i.e. her one-half (1/2) of the community property interest in said monthly service allowance. In that event, [Marcy’s] award shall first be paid from [Mark’s] taxable service allowance, thereafter only the amount insufficient to satisfy the full award to [Marcy] shall be paid from [Mark’s] non-taxable service allowance benefits.”[4]

After the court heard testimony and argument on attorney fees and costs,[5] it denied all fee requests under sections 271 and 2030, ordering each party to bear his/her own attorney fees. Inter alia, noting the parties had presented fee statements exceeding $60,000, it observed, “I see full-blown divorces resolved under $20,000. Full-blown, high-economic matters that cost about $20,000 [to] resolve the entire matter, custody and everything else. This is absurd.” The court recalled, “[W]e have had multiple, multiple, multiple chambers conferences wherein the court stated and we had in court queried, I said to the parties, ‘Can’t we work this out?’ . . . And my understanding was the goal was [to] get the tax benefit to [Mark] without affecting the ultimate payout to [Marcy].”

Rejecting Marcy’s counsel’s extended explanation that the fees were necessitated by Mark’s intransigence and obfuscation, the court stated, “From an objective bystander, which is what this court is, this was a three-hour matter, sitting down with the person that runs this [LACERA] benefit plan, both lawyers, and getting their position in writing of how to do this without changing [Marcy’s] benefits. It was a three-hour matter.” Aptly noting the parties had never been “on the same page,” the court added, “I said three or four hours, sitting down with the expert that is in charge of this plan could have resulted in this entire thing resolving itself, if even that much. Generally we just send QDRO’s to the third party and walk away and let the third party prepare them. . . . So it’s just -- it’s beyond the court’s understanding as to how we have reached -- how the parties have reached fees to this amount, and I’m forced to determine who is acting reasonably and who wasn’t, in addition to, of course, the [section] 2030 . . . economic issues.”

Expressly “start[ing] with the premise that the fees are not reasonable, they have cost way too much to finish this matter,” the court stated it needed to ask what had caused the excess, and it would take the matter under submission “and think about it.” In its minute order of October 4, 2005, it ruled, “Although the income of the parties is disparate the court also considered the reasonableness of the need for the extensive litigation. The court therefore orders each party to bear his or her own attorney’s fees.” The following month, it denied Marcy’s request to be determined the prevailing party, finding “neither party prevailed in this matter in that the end result did not substantially differ from the pre-modification orders other than the tax consequences for [Mark].”

DISCUSSION

Marcy seeks to reverse the trial court’s denial of her motion for attorney fees. Our standard of review is established. The motion “‘is addressed to the sound discretion of the trial court, and in the absence of a clear showing of abuse, its determination will not be disturbed on appeal. [Citations.] The discretion invoked is that of the trial court, not the reviewing court, and the trial court’s order will be overturned only if, considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order made.’” (In re Marriage of Keech (1999) 75 Cal.App.4th 860, 866.) The appellate bar is set high, and Marcy cannot hurdle it.

Denial of Need-based Fees

Marcy contends she was entitled to the attorney fees she requested because of the disparity of income and assets between her and Mark. She is correct that section 2030 authorizes the court to make a need-based award of attorney fees and costs in marital proceedings; she is not correct, however, in asserting she has an automatic right to fees.

Our Supreme Court has stated, “The purpose of the award is to provide one of the parties, if necessary, with an amount adequate to properly litigate the controversy.” (In re Marriage of Sullivan (1984) 37 Cal.3d 762, 768.) In relevant part, section 2030, subdivision (a)(1) provides, “In a proceeding for dissolution of marriage, . . . the court shall ensure that each party has access to legal representation to preserve each party’s rights by ordering, if necessary based on the income and needs assessments, one party . . . to pay to the other party, or to the other party’s attorney, whatever amount is reasonable necessary for attorney’s fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding.” Section 2030, subdivision (a)(2) states, “Whether one party shall be ordered to pay attorney’s fees and costs for another party, and what amount shall be paid, shall be determined based upon, (A) the respective incomes and needs of the parties, and (B) any factors affecting the parties’ respective abilities to pay.”

Under 2032, the amount of the award must be “just and reasonable under the relative circumstances of the respective parties.” (§ 2032, subd. (a).) However, “[f]inancial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances.” (§ 2032, subd. (b), italics added.) Case law has developed other factors for fixing the amount of a reasonable need-based fee award, including: “the nature of the litigation; its difficulty; the amount in controversy; the skill required and employed in handling the litigation; the attention given; the success of the attorney’s efforts; the attorney’s learning and experience in the particular type of work demanded; the intricacies and importance of the litigation; the labor and the necessity for skilled legal training and ability in trying the cause, and the time consumed.” (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 827, fn. 30.) The court may rely on its own experience and knowledge in determining the reasonable value of such efforts since “[t]he exercise of sound discretion by the trial court in the matter of attorney’s fees includes also judicial evaluation of whether counsel’s skill and effort were wisely devoted to the expeditious disposition of the case. Certainly a desirable objective of domestic litigation is prompt and equitable resolution of marital difficulties rather than their bitter prolongation. Conscientious and successful efforts by counsel to resolve as many areas of disagreement as possible without judicial intervention is entitled to serious consideration in awarding attorney’s fees.” (In re Marriage of Lopez (1974) 38 Cal.App.3d 93, 113, disapproved on another ground in In Re Marriage of Morrison (1978) 20 Cal.3d 437, 453.)

The court’s denial of need-based fees withstands scrutiny under these standards. Our lengthy discussion of the record, ante, should suffice to demonstrate that the court was aware of the respective financial positions of the parties (which do not appear to be nearly as disparate as Marcy’s brief indicates), but did not believe the attorney fees requested by Marcy were necessary to provide her “with an amount adequate to properly litigate the controversy.” (In re Marriage of Sullivan, supra, 37 Cal.3d at p. 768.) It did not find the fees had been “reasonably necessary for . . . maintaining or defending the proceeding . . . .” (§ 2030, subd. (a)(1).) It certainly did not find the award was needed “to enable each party, to the extent practical, to have sufficient financial resources to present the party’s case adequately.” (§ 2032, subd. (b).) Quite to the contrary, the court found the fees “absurd,” and opined the whole controversy could have been resolved in a three-hour conversation with LACERA. Keeping in mind that the relative financial positions of the parties constitutes only one factor in the equation (§ 2032, subd. (b)), and considering the other factors enumerated in In re Marriage of Braud, supra, 45 Cal.App.4th at page 827, footnote 30 (i.e., nature of the litigation, degree of difficulty, amount in controversy, the learning, experience, and skill needed and employed, etc.), a fair inference that virtually leaps from the record is that the court relied on its own experience and knowledge in determining the parties could have resolved the whole matter expeditiously and equitably, i.e, in three hours to achieve the result each of them wanted, without prolonged litigation and with de minimis judicial intervention. (In re Marriage of Lopez, supra, 38 Cal.App.3d at pp. 112-113.) On this record, viewed most favorably in support of the order, we cannot say no judge reasonably could have denied Marcy’s request for attorney fees. (In re Marriage of Sullivan, supra, 37 Cal.3d at pp. 768-769.)

Denial of Section 271 Fees

Marcy contends she was entitled to fees as sanctions. “An award of fees under section 271 is authorized where an opposing party’s conduct frustrates the policy of the law in favor of settlement, and increases the cost of litigation. [Citations.] In reviewing such an award, we must indulge all reasonable inferences to uphold the court’s order.” (In re Marriage of Abrams (2003) 105 Cal.App.4th 979, 990-991, disapproved on another ground in In Re Marriage of LaMusga (2004) 32 Cal.4th 1072, 1097.)

We need not engage in a lengthy discussion of the issues. The court expressly found the issue was complicated and neither side “attempted to stonewall the other or frustrate the policy of settlement” or “attempt[ed] to be obstreperous.” Marcy has made no affirmative showing that would undermine the finding.

DISPOSITION

The order is affirmed. Mark shall recover his costs on appeal.

IKOLA, J.

WE CONCUR:

BEDSWORTH, ACTING P. J.

O’LEARY, J.

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

[2] We intend no disrespect in designating appellant and respondent by their given names. The practice accomplishes ease of reference.

[3] Marcy also protests the court had no subject matter jurisdiction to divide pension benefits which already had been adjudicated under the earlier QDRO. We deem the issue waived. It was accorded only the most perfunctory nod below, and Marcy fully litigated the modification issue and stipulated to the terms incorporated in the order for modification of the QDRO. As aptly stated in County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1119, fn. 5: “‘The parties to an action over which the court has general jurisdiction cannot be heard to claim lack of power to try a particular issue after they have consented to a trial thereof and have participated in the same.’”

[4] Ironically, the court observed Marcy’s net allowance remained the same under the modified QDRO as it would have been under the earlier amended versions to which she had objected because in those instances, although the gross allowance was about $200 lower, two-thirds of it would have been nontaxable as deriving from Mark’s disability benefits and the applicable taxable/nontaxable ratio. In other words, Marcy had never been in jeopardy of losing $200 a month.

[5] Mark withdrew his request for fees, arguing “[t]he only equitable order in this case is each party bears their [sic] own fees and costs.”