IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Yolo)
February 22, 2011
IN RE THE MARRIAGE OF GEORGIANNE BLACK STANZLER AND PETER M. STANZLER. GEORGIANNE BLACK STANZLER, RESPONDENT,
PETER M. STANZLER, APPELLANT.
(Super. Ct. No. FL06455)
The opinion of the court was delivered by: Butz ,j.
Marriage of Stanzler CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 this marital property appeal, appellant Peter M. Stanzler (Peter)*fn1 contends the trial court erroneously denied his motion to set aside the oral settlement agreement on which the judgment was based. Peter claims that his former wife, Georgianne Black Stanzler (Georgianne), inadequately disclosed, under the marital property disclosure requirements (Fam. Code, § 2100 et seq.),*fn2 that she had paid Peter a community property advance with community property, thereby shortchanging him $45,000. Finding no abuse of discretion on the trial court's part, we shall affirm the judgment.
Peter and Georgianne married in 1989 and separated in early 2006. They have one daughter, born in 1992.
After they separated in 2006, Georgianne paid Peter $100,000 as a community property advance, and Peter moved out of the family home in Davis. This advance was the subject of a July 2006 letter from Georgianne's former attorney to Peter's attorney, which stated that "Georgiann[e] is utilizing the credit line on the home for much of the money that she is paying Peter, and will bear the increased mortgage cost, and any liability solely as her own." This advance was also the subject of an August 2006 written stipulation between the parties and accompanying order filed with the court, which stated in part: "It is agreed and understood that this $100,000 payment is an advance payment from [Georgianne] to [Peter] for [Peter's] portion of the community estate, which includes, but is not limited to the family residence."
Georgianne had substantial separate property assets, but she obtained a home equity loan on the family residence from Wells Fargo Bank to pay $90,000 of the $100,000 advance. Peter and Georgianne already had another home equity loan on the family residence from Wells Fargo Bank, with a balance of around $160,000.
In two "Income and Expense Declaration" forms sent to Peter, as required under the marital property disclosure laws (§§ 2100, subd. (c), 2104, subd. (e), 2105, subd. (b)(4)), one dated September 2006 and the other January 2007, Georgianne described these two home equity loans as follows:
"[Item No.] 14. Installment payments and debts not listed above[:]
"Wells Fargo Bank Equity[ ]line . . . $159,933.49 [balance][;]
"Wells Fargo Bank SmartFit loan . . . $90,000 [balance]."
In July 2007, the parties were proposing settlements. In a letter dated July 24, 2007, Georgianne's attorney wrote to Peter's attorney, stating: "The parties have agreed to sell the [family] home for $650,000. . . . [Peter] will receive one-half of the community share [from this sale] less the $100,000 that he received as an early payment from his community share of the property." Peter's attorney responded with a letter of his own on July 24, 2007, stating: "[I]n this case, [Georgianne] took $90,000 of the equity from the home after separation (without [Peter's] consent or knowledge). [Peter] has yet to be provided with a mortgage statement on this item."
On November 15, 2007, at a judicial settlement conference, Peter and Georgianne reached an oral settlement agreement concerning property division, support and custody. Under this agreement, Peter received $75,000 from the sale proceeds of the family home. This $75,000 constituted $40,000 for Peter's balance of his community share from the family home, plus a $35,000 lump-sum payment for spousal support to him.
In February 2008, Peter moved unsuccessfully to set aside the oral settlement agreement or, alternatively, to adjudicate an omitted asset (the judgment, which was entered in August 2008, was based on this agreement, which had been reduced to writing by then). In his set-aside motion, which is the subject of this appeal, Peter claimed that Georgianne either inadequately disclosed or failed to disclose, under the marital property disclosure requirements (§ 2100 et seq.), that she had paid $90,000 of his $100,000 community property advance from community property funds: i.e., the $90,000 home equity loan on the family home. In a declaration in support of this motion, Peter's counsel stated that neither he nor Peter were aware of the $90,000 home equity loan at the time the oral settlement agreement was negotiated. Peter argued that Georgianne's failure to adequately disclose these facts deprived him of $45,000.
Georgianne's counsel submitted a declaration in opposition to Peter's set-aside motion, stating that the $90,000 had been properly accounted for in the oral settlement agreement because that sum had been added back to the family home equity amount before the community share of that amount was divided equally between Peter and Georgianne.
The trial court denied Peter's set-aside motion after listening to a tape recording of the November 15, 2007 judicial settlement conference at which the oral settlement agreement was memorialized. The trial court explicitly found that the property disclosure requirements did not apply because Peter and Georgianne reached a settlement more than 45 days before their trial date; and that, in any event, Peter's counsel was aware, through the exchange of the three letters noted above (the one in July 2006 and the two on July 24, 2007), that Georgianne had borrowed $90,000 of the $100,000 community property advance to Peter from the equity in the family home.
I. Standard of Review
Peter's motion to set aside the oral settlement agreement (on which the judgment was based) is the functional equivalent of a motion to set aside a judgment. (See § 2122 [the statutory basis for a set-aside motion].) On appeal, a denial of a motion to set aside a judgment is reviewed under the standard of abuse of discretion; accordingly, we will use that standard here. (In re Marriage of Varner (1997) 55 Cal.App.4th 128, 138, superseded by statute on other grounds in Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1144.)
II. Marital Property Disclosure Requirements
As noted, the property disclosure requirements are set forth in section 2100 et seq. (See also §§ 721, subd. (b), 1100, subd. (e); see § 2102.) These requirements have evolved to the point where spouses who have separated and are in the process of dissolving their marriage, like Peter and Georgianne, are deemed fiduciaries of one another--they are held to the highest good faith and fair dealing toward one another. (§§ 721, subd. (b), 1100, subd. (e), 2102.) As such, dissolving spouses must make full and accurate disclosures, under oath to one another, of all assets and liabilities in which one or both spouses have or may have an interest (separate or community), and all income and expenses. (§§ 2100, subd. (c), 2102-2105.) These disclosures take place through a preliminary declaration of disclosure and a final declaration of disclosure. (Ibid.) These disclosures must specify, as relevant, property characterization, valuation, and amounts. (Ibid.; see § 1100, subd. (e); In re Marriage of Brewer & Federici (2001) 93 Cal.App.4th 1334, 1342-1343.)
Here, the trial court found that section 2105 (i.e., the final declaration of disclosure requirement) did not apply because Peter and Georgianne reached a settlement agreement more than 45 days before their trial date. The trial court was mistaken. Section 2105 states as pertinent: "[B]efore or at the time the parties enter into an agreement for the resolution of property or support issues other than pendente lite support, or, if the case goes to trial, no later than 45 days before the first assigned trial date, each party, or the attorney for the party in this matter, shall serve on the other party a final declaration of disclosure and a current income and expense declaration, executed under penalty of perjury on a form prescribed by the Judicial Council . . . ." (§ 2105, subd. (a), italics added; see also § 2100, subd. (c) [full and accurate disclosure is required "so that at the time the parties enter into an agreement . . . , or at the time of trial . . . , each party will have a full and complete knowledge of the relevant underlying facts"].)
With respect to the property item challenged here--the $90,000 home equity loan that Georgianne obtained to pay the great bulk of the $100,000 community property advance to Peter--the record before us shows only the following disclosure declaration: two Income and Expense Declarations from Georgianne, which each stated, "Wells Fargo Bank SmartFit [l]oan . . . $90,000 [balance]."*fn3 Under the rigorous disclosure requirements described above encompassing property characterization, valuation and amount, this cryptic disclosure falls short. (See In re Marriage of Brewer & Federici, supra, 93 Cal.App.4th at pp. 1338, 1346.)
The question then becomes, what is the effect of this inadequate disclosure? Essentially, Peter argues that a strict liability standard applies: The trial court was duty-bound to grant Peter's motion to set aside the oral settlement agreement for this inadequate disclosure, and he (Peter) accordingly is owed an additional community property payment of $45,000. As we shall explain in part III. of the discussion below, Peter is mistaken and the trial court did not abuse its discretion in denying his motion to set aside the oral settlement agreement.
III. Effect of Inadequate Disclosure and Question of Prejudice
We begin with a statute in the disclosure scheme that seems to hold much promise for Peter's argument--section 2107, subdivision (d). That statute states as pertinent: "[I]f a court enters a judgment when the parties have failed to comply with all disclosure requirements of this chapter, the court shall set aside the judgment. The failure to comply with the disclosure requirements does not constitute harmless error."
Alas, though, this part of section 2107, subdivision (d), has been found unconstitutional in light of the state Constitution's requirement that no judgment may be set aside unless there has been a miscarriage of justice. (Cal. Const., art. VI, § 13; In re Marriage of Steiner & Hosseini (2004) 117 Cal.App.4th 519, 527-528 ["The California Constitution trumps any conflicting provision of the Family Code."].) Consequently, notwithstanding section 2107, subdivision (d), a party seeking set-aside relief (or reversal on appeal) for noncompliance with the statutory disclosure requirements must show some prejudice as a result of the nondisclosure. (In re Marriage of Steiner & Hosseini, at p. 528.)
Peter replies that such a showing is easy here--Georgianne's inadequate disclosure cost him $45,000. But it is not that simple for three reasons:
First, as the trial court found, Peter's counsel, through the exchange of the three letters in July 2006 and July 2007, was aware that Georgianne's $90,000 payment toward Peter's $100,000 community property advancement had been drawn from a home equity loan on the family home. There is substantial evidence to support this finding.
Second, the trial court, before ruling on Peter's set-aside motion, had listened to the tape recording of the judicial settlement conference of November 15, 2007, at which the challenged oral settlement agreement was memorialized. The trial court did so, it explained, with a focus on whether anything had been overlooked regarding the disputed $90,000.
Third, and finally, Georgianne's counsel, in a declaration opposing Peter's set-aside motion, stated that the challenged $90,000 had been properly accounted for in the oral settlement agreement. That declaration stated:
"7. [P]ursuant to the agreement entered into on November 15, 2007 [i.e., the oral settlement agreement memorialized at the judicial settlement conference, the tape recording of which the trial court listened to prior to ruling on Peter's set-aside motion], [Peter] is to receive $75,000 from the sale proceeds of the family residence. As I set forth in my December 4, 2007 letter to opposing counsel [this letter is not in the record], the sale of the house proceeds were divided as follows:
"$296,843 (the proceeds from the sale of the home)[;]
"[plus] $90,000 (the equity line)[;]
"[equals] $386,843 (total equity in the house)[;]
"[minus] $144,000 ([Georgianne's] separate property reimbursement, which, pursuant to Family Code Section 2640, is reimbursed first to [Georgianne] before the community interest is divided);
"[equals] $242,843. This $242,843 amount is then divided in half, which is $121,421. As [Peter] has already received $100,000, his remaining one-half interest in the home is $21,421.
"8. Pursuant to the November 15, 2007 agreement, [Peter] receives an additional $35,000 as a lump sum to buy out [Georgianne's] spousal support obligation to him. The additional $18,579 [for a total of $75,000] that [Peter] is to receive from the sale proceeds is for his attorney's fees.
"9. As detailed above, both the equity line and the $100,000 [Peter] received as an advance of his portion of the community estate were taken into account when dividing the proceeds from the sale of the family residence. . . ."
Peter's counsel had stated in his initial declaration supporting the set-aside motion that neither he nor Peter were aware of the $90,000 home equity loan at the time the oral settlement agreement was negotiated. Peter's counsel added in this declaration that he and Peter relied on the $296,000 figure as the home equity sale proceeds. But neither Peter nor his counsel ever disputed or rebutted this declaration-based accounting from Georgianne's counsel with a declaration of their own, although Peter filed a reply memorandum in the trial court for his set-aside motion. Furthermore, the notes from Peter's counsel concerning the negotiation of the oral settlement agreement, which Peter contends support his position, actually align with the $75,000 payment to Peter set forth in the oral settlement agreement accounting from Georgianne's counsel ("75K to H": "40K EP[,] [¶] 35K S/S Buy out").
In light of these three reasons, we conclude the trial court did not abuse its discretion in denying Peter's motion to set aside the oral settlement agreement. There is substantial evidence showing that Peter's counsel knew of the community property source for Georgianne's $90,000 payment of Peter's $100,000 community property advance, and that this $90,000 was properly accounted for in the community property division between Georgianne and Peter. Consequently, there is substantial evidence to support the trial court's implied finding that Peter was not prejudiced by any assumed inadequate disclosure on Georgianne's part of this $90,000.*fn4
The judgment is affirmed. Georgianne is awarded her costs on appeal. (Cal. Rules of Court, rule 8.278 (a)(1), (2).)
BLEASE , Acting P.J. ROBIE ,J.