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On Behalf of | Jan 17, 2019 | Firm News

Michelle appealed from a $90,000 award in attorney fees and costs in favor of her ex-spouse Jeffery. The parties were initially engaged in a marital proceeding, which they resolved by entering into a stipulated judgment. That judgment included a release, continued family law court enforcement jurisdiction, and attorney fees to the prevailing party who was “forced to seek” court intervention to enforce the stipulated judgment. Specifically, by the stipulated judgment, Michelle released her claims against Jeffery, and the parties agreed that the Los Angeles family law court would retain jurisdiction to enforce the stipulated judgment’s terms. Within the paragraph containing the release, Jeffery made representations about their community property including that none was given to his new wife, Shantal, or the business entity Hand Air, LLC and that neither he nor the community had any interest in Hand Air, LLC.

The stipulated judgment also authorized an award of attorney fees and costs to the prevailing party “incurred in connection therewith” a party’s effort “to seek Court intervention to enforce any provision of this Stipulated Further Judgment.” Subsequently, Michelle filed a civil lawsuit in Orange County alleging that Jeffery siphoned some of the community assets that were subject to the stipulated judgment. Jeffery successfully demurred and obtained a judgment of dismissal against Michelle’s civil lawsuit in Orange County.

In the family law court, Jeffery then moved under the stipulated judgment’s attorney fees provision for recovery of $89,560.50 in attorney fees and $670.61 in costs he incurred in connection with the civil action in Orange County. Ultimately, the family law court awarded Jeffery $90,000 in attorney fees and costs, having rounded down from the amount Jeffery requested. On appeal, the Court concluded that the attorney fees provision in the stipulated judgment encompasses these fees and costs because of its broad language, particularly, the phrase “in connection therewith.” The Court also concluded that the family law court did not abuse its discretion in deeming Jeffery the prevailing party because he obtained a judgment of dismissal against Michelle’s civil lawsuit thereby achieving his litigation objectives, which is the applicable standard.

About four years after their stipulated judgment of marital dissolution, on February 9, 2016, Michelle filed a civil lawsuit against Jeffery, Shantal, and Hand Air Express, LLC in the Orange County Superior Court. Michelle asserted causes of action for actual intent to defraud and constructive fraudulent transfer against all three defendants, and breach of A.P. Express, LLC’s operating agreement against Jeffery. Michelle alleged, “In an effort to reduce the assets of the AP companies in anticipation of reaching a final divorce based on a Marital Settlement Agreement, defendant Jeff Pont with the assistance of defendant Shantal Pont began transferring AP assets, money and customer accounts to Shantal Pont as the CEO for Hand Air Express, LLC.”

In response to Michelle’s civil lawsuit, Jeffery, Shantal, and Hand Air Express, LLC engaged Rutan & Tucker, LLP (Rutan), which filed a demurrer on June 9, 2016 on their behalf in the Orange County civil law court. Jeffery, Shantal, and Hand Air Express, LLC argued that the civil law court lacked jurisdiction because the family law court’s jurisdiction had already been invoked and, further, Michelle waived the claims she asserted in her civil complaint by agreeing to paragraph 10.1(15) of the stipulated judgment.

On September 14, 2016, the civil law court sustained the demurrer without leave to amend on the ground that it lacked jurisdiction over the family law matters asserted in the civil lawsuit with no possibility of successful amendment, citing Neal v. Superior Court (2001) 90 Cal.App.4th 22 (Neal),  Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1146, and Kuehn v. Kuehn (2000) 85 Cal.App.4th 824, 834. The Orange County court’s ruling did not provide an explanation of those cases, but we note that they state that “family law cases should not be allowed to spill over into civil law” (Neal, supra, 90 Cal.App.4th at p. 25), and that where a family law judgment is procured by fraud, a tort remedy is unavailable (Rubenstein, supra, 81 Cal.App.4th at p. 1146; Kuehn, supra, 85 Cal.App.4th at p. 834). On October 13, 2016, the Orange County civil court entered judgment against Michelle dismissing her complaint and awarding $1,412.70 in costs to Jeffery, Shantal, and Hand Air Express, LLC pursuant to their memorandum of costs for their civil law counsel’s work.

Finally, the family law court did not abuse its discretion in awarding $90,000 in attorney fees and costs, and finding that counsel’s hourly rates and number of charged hours were reasonable, particularly where Michelle has not provided any competent evidence or analysis challenging those fees and hours. Finally, the Court did not resolve the parties’ dispute over discovery sanctions to the extent their opening and responding appellate briefs addressed them because Michelle clarifies in her reply that she “has not appealed [them].”

On January 19, 2017, the Orange County civil law court denied Michelle’s motion for leave to file a first amended complaint for the following reasons: “[T]he gravamen of the proposed First Amended Complaint is still the fraudulent conveyance of community property. As ruled in connection with the prior demurrer to the complaint, such matters are for the Family Law Court to decide, and this court has no jurisdiction to hear the matter.”The appellate record does not indicate that Michelle appealed that judgment.

Also in the meantime, in the family law court, the parties engaged in a dispute over Michelle’s failure to appear for a deposition multiple times and a related sanctions request. Judge Richard J. Burdge, imposed a $15,000 sanction against Michelle for discovery abuse. Further, Michelle unsuccessfully moved to disqualify Meyer Olson and was sanctioned $8,500 for doing so under Family Code section 271.

Additionally, Michelle filed for Chapter 13 bankruptcy, which case was eventually dismissed for failing to file the required schedules. Michelle also filed an adversary suit in the bankruptcy court against Meyer Olson, which it moved to dismiss. The record does not disclose the outcome of that motion to dismiss, but, in any event, neither party specifically addresses it with respect to the attorney fees issues raised in this appeal.

On February 8, 2017, the parties returned to the family law court to proceed on Jeffery’s request for an award of fees incurred to Meyer Olson only. At that hearing, the family law court, through Judge Burdge, requested additional briefing on Jeffery’s entitlement to attorney fees under paragraph 18.3 of the stipulated judgment, a breakdown of fees incurred and covered by the stipulated judgment, and whether Jeffery could be deemed a prevailing party in light of what the family law court described as the civil lawsuit’s becoming moot.

At the April 19, 2017 hearing, the family law court, through Judge Burdge, announced its tentative ruling to award Jeffery $90,000 in attorney fees under paragraph 18.3 of the stipulated judgment and Civil Code section 1717. The family law court concluded that the civil action was arguably contrary to the stipulated judgment, and therefore it was reasonable for Jeffery to seek to enforce the stipulated judgment and file the ex parte application at the outset of the civil lawsuit “to try to stop the bleeding before it started.” It further found Jeffery was successful in thwarting what it characterized as Michelle’s “attack on the finality of the [stipulated] judgment.”

The family law court commented that Meyer Olson’s hourly rates were high but “within the range of rates charged by firms of this capacity in this area.” It stated that it had reviewed all the bills and $90,000 did not cover them all. The family law court also noted that although multiple Meyer Olson attorneys were engaged, Jeffery’s fees request ameliorated potential excessive  14 billing by, for example, omitting charges for attorneys attending the same conferences. The family law court further noted that Michelle’s opposition papers included “a lot of ad hominem attacks as to whether [the amount of Jeffery’s request] was appropriate . . . but there was no specific challenge to either any particular activity or any particular billing charged . . . . It was just complained about, the cost of the whole charge.” Michelle’s counsel asked whether the award was being made under Code of Civil Procedure section 128.7; the family law court stated that it was making the order under Civil Code section 1717.

Michelle’s counsel also asked if the award included fees Rutan charged; the court stated that it did not. Michelle’s counsel asked if the award included Meyer Olson’s charges for reviewing the demurrer and attending hearings in the civil lawsuit; the court responded in the affirmative, stating that the charges were reasonable. Finally, Michelle’s counsel referenced Family Code sections 271 and 2030, and Askew v. Askew (1994) 22 Cal.App.4th 942 (Askew) (after the family law court acquires jurisdiction to divide community property in a dissolution action, no other trial court department may make an order adversely affecting that division); the court responded that the award was not being made under Family Code section 271 or 2030. On June 20, 2017, the family law court entered the following order: “Pursuant to Civil Code, §1717, and in accordance with the prevailing party fee provision set forth in the Parties’ Judgment, the Court hereby grants a Judgment for attorney’s fees and costs against Petitioner [Michelle] in favor of Respondent [Jeffery] in the sum of NINETY THOUSAND DOLLARS ($90,000).” (Underscoring and fn. omitted.)

The order also stated the following findings: Jeffery’s June 10, 2016 ex parte application was a reasonable attempt to enforce the stipulated judgment, the charges for Jeffery’s family law counsel to attend hearings in the civil lawsuit were reasonable, Jeffery was successful and the prevailing party, and Meyer Olson’s hourly rates were reasonable. Michelle timely appealed this order. (P R Burke Corp. v. Victor Valley Wastewater Reclamation Authority (2002) 98 Cal.App.4th 1047, 1053.) [post judgment order awarding attorney fees is separately appealable].)

The Appeal Court affirmed.

There appears to be multiple litigation mistakes by Michelle in this matter.  Did Jeffery’s new wife skew Michelle’s judgment?  One avenue that Michelle seems to have not opted for was an appeal or writ of mandate on the trial court’s sustaining of Jeffrey’s demurrer to a higher court.

A family court may not have exclusive jurisdiction in a family law matter like this  because it cannot issue an award for special or punitive damages.  Additionally, jury trials are unavailable in the family court:

Michelle could have relied on d’Elia v. d’Elia, (1997) 58 Cal.App.4th 415  and Dale v. Dale, (1998)66 Cal.App.4th 1172 . If plaintiff seeks damages in tort and a jury trial, the family law court would not have exclusive and/or subject matter jurisdiction here. Ibid. 1177.

The court in Burkle v. Burkle, (2006) 144 Cal.App.4th 387 commented:

“We do not suggest by our resolution of this case that former spouses are required to bring any disputes with each other to the family court that presided over their dissolution proceeding. As d’Elia pointed out, “if [the husband] had sold [the wife] some worthless stock—the prototypical stock fraud—then their status as spouses would not preclude her from recovering.” (d’Elia, supra, 58 Cal.App.4th at p. 432, 68 Cal.Rptr.2d 324.) The wife in d’Elia however, “want[ed] the special benefits of disclosure which come with being a spouse,” and “want[ed] them in a transaction that would not have taken place except that it was required by the Family Code,” but “does not want the confines of the traditional family law remedy.”(Ibid.)” [Emphasis added].

Michelle could have availed herself of the bankruptcy court; her schedules should have been timely filed to avoid a dismissal and obtain a stay of the civil court judgment.  Some of the attorney’s fees as sanctions could possibly be discharged after 5 years in a chapter 13 according to federal bankruptcy law.

See Pont v Pont.

If you have been defrauded and involved in a post-judgment marital dissolution matter, you need an informed and aggressive attorney to advocate for your damages.  Contact the Law Office of Robert Rodriguez for your civil litigation matter.

Robert Rodriguez has litigated fraud and negligence matters in civil court arising out of marital dissolution judgments.

Robert Rodriguez has litigated well over 100 family law cases and civil litigation matters including personal injury motor vehicle cases, dog bite and slip & fall cases, breach of contract, defamation & invasion of privacy, fraud, unfair business practice, malicious prosecution, wrongful termination, workplace and employment matters including sexual harassment, wage & hour violations, discrimination pursuant to the FEHA, Gov’t Code §§ 12940 et seq., violations of the FMLA & Pregnancy Leave, Civil Rights  discrimination pursuant to 42 U.S.C. § 1983 and Title VII of the 1964 Civil Rights Act in the State of California and California federal district courts.

* Disclaimer – Robert Rodriguez is licensed to practice only in the State of California & this analysis is applied only under State of California law.  Robert D. Rodriguez is also admitted to practice in the U.S. District Courts, Central, Northern & Eastern Districts of California.  Robert Rodriguez has practiced in the State of California Court of Appeal.