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In Re the Marriage of Jill L. Davenport and Kenneth L. v. Kenneth L. Davenport

May 4, 2011


(Sonoma County Super. Ct. No. SFL-32741) Trial Court: Sonoma County Superior Court Trial Judge: Hon. Cerena Wong

The opinion of the court was delivered by: Richman, J.


Appellant Jill Davenport and respondent Ken Davenport were married in 1948, a marriage that would produce three daughters and a vast estate. Jill*fn1 and Ken separated in 1990, and in 2006 Jill filed a petition for dissolution. The petition was filed by a long-established Sonoma county law firm, signed by an experienced lawyer there. Early on, a young and inexperienced attorney at that firm became Jill's primary attorney, and interacted with Ken's attorneys for the next two years, interactions that would generate a 35-page register of actions and 19 volumes of court files.

In May 2008 Jill filed a motion under Family Code section 271*fn2 seeking $600,861 in attorney fees and $332,933 in costs. Ken responded with a section 271 request of his own, and the cross-motions were heard over a five-day period by the Honorable Cerena Wong, an experienced family law judge who had been handling the matter for well over a year. Following extensive post hearing submissions, Judge Wong issued a 31-page decision that denied Jill's request and granted Ken's, awarding him $100,000 in sanctions and $304,387 in attorney's fees.

Jill appeals, asserting procedural and substantive arguments, the former essentially contending that Judge Wong ignored the law, including the law of evidence, and the latter essentially contending there is no substantial evidence supporting the award. We conclude that none of Jill's arguments has merit, and we affirm.


The Community and the Dissolution

As noted, Jill and Ken were married in 1948. As Jill's attorney would describe it, she "supported Ken during the marriage by raising their three daughters and managing the household. Jill supported Ken in the business ventures. Among other notable achievements, Ken became the youngest Ford dealer in the nation at age 23."

Sometime around late 1969 or early 1970 Ken began to develop an industrial park in Santa Rosa known as Industry West, which came to include some 500,000 square feet of factory and warehouse space. In addition to Industry West, Jill and Ken acquired numerous other properties, including a large ranch in Montana, land in Idaho, and various properties in and around Santa Rosa. While the final accounting has not yet been completed, according to correspondence from the parties the value of the community estate is in the range of $57 million.

Jill and Ken separated in 1990, and remained in that state until March 2006, when a petition for dissolution was filed. During the separation, Ken apparently continued to manage the couple's financial affairs. While the relationship between Jill and Ken during this period is not germane to the issue before us, we do note there was evidence of agreement and cooperation, including their participation in joint estate planning favorable to Jill, and agreement to sell off many of the Industry West properties.

There is, by contrast, also evidence of incompatibility, at least toward the end of the separation period, as illustrated by a letter from Jill dated February 3, 2006, which begins as follows:

"Dear Ken:

"I received your letter of 1/10/06.

"I am disappointed that you are not able to grasp what the problem is here, and disappointed too that you will not allow me to talk to you about it.

"I must tell you that I was really frightened by your manic raging at me at your house. It felt just like the old days. I felt so threatened. I will never allow you to do that to me again.

"As for your letter, you really missed the mark. To mention just one thing in your letter: Why would I stand around and wait for your house to sell? Why should that be my problem? This is my concern at this time: As I have told you, you have stepped over the line. You have lied to me, you have not been honest with me, and you have lost my respect. You made these choices. I am concerned that you are being taken advantage of in your current situation. You are vulnerable. I have noticed a dramatic change in your behavior and your spending habits over the last two or three months which concerns me for your welfare as well as our assets."

Jill's letter goes on to make certain requests, including for increased monthly payments from Ken and copies of financial records. And the letter ends with this:

"Once I have had the opportunity to review our financial records (which I have never done for the duration of our marriage) in addition to the $20,000 per month, I would like to agree to a specified lump sum of money to provide me with a liquid sum to give me protection in the event that I need more than my monthly income, for whatever purpose. By lump sum, I mean a substantial sum to be determined after my review of our financial records. I do not want to worry about my ability to enjoy the fruits of our labor over all of these years, nor do I want to worry in case of catastrophic events over which neither of us have control.

"This is something we can do very simply and with no legal fees or time involved. If we have to hire attorneys, we will spend what would probably amount to a lot of legal fees and charges. I look forward to hearing from you as soon as possible.

"Please respond on or before February 10, 2006."

(s/ Jill)

"[V]ery simply and with no legal fees," Jill implored. It was not to be.

Ken responded on February 7, 2006, indicating he would do his best to comply, but that he would "need to discuss the large cash payment you would like. This will require some time." The next thing in the record is Jill's petition for dissolution of marriage, filed days later, on March 1, 2006. Jill was 75 years old at the time, Ken 78.

The Attorneys

The petition for dissolution was filed by the firm of O'Brien Watters and Davis, LLP, with Michael G. Watters, CSB no. 63140, listed as the individual attorney. From all indications, Michael Watters played a rather limited role thereafter, as very early on--and at least by May 16, 2006--Andrew G. Watters, CSB no. 237990, entered the picture as counsel. Andrew Watters had become a member of the State Bar only months earlier, in November 2005, and began working at the firm on February 24, 2006. He met Jill three days later, and from that point on, he said, he met with her on more than 100 occasions over the next two years. And as he described it under oath, he "personally handled or [was] personally involved in each and every transaction between the parties since the petition was filed, as well as each and every discovery request, discovery event, court proceeding, and other substantive matter." In short, Andrew Watters became the lead lawyer for Jill in what would necessarily be a complex family law litigation. And as will be seen, his conduct in the representation of Jill would become a significant issue at the hearing.*fn3

Ken was represented over time by three attorneys. The first was Michael Merrill, CSB No. 40963, of Merrill, Arnone & Jones. In January 2007, James Benoit, CSB no. 41741--described by Andrew Watters at one point as the "dean of the local Family Law Bar"--substituted in. Mr. Benoit represented Ken until March 2008, when he was replaced by John E. Johnson, CSB no. 114902, of Perry, Johnson, Anderson, Miller & Moskowitz. Mr. Johnson was Ken's attorney in the proceeding below, and his firm represents Ken on appeal.

The Judge

The first few matters in the dissolution proceeding were held before the Honorable Gary Nadler, and his involvement is not pertinent here save in one respect: his ruling and admonition in an early (July 20, 2006) motion filed by Jill seeking to compel further responses to form interrogatories. Granting the motion but denying sanctions, Judge Nadler noted as follows:

"1. Counsel for Petitioner/Wife made an unreasonable attempt to meet and confer before filing Petitioner/Wife's Motion to Compel further responses to her Form Interrogatories (Family Law Set One) on 7/20/06. Specifically, counsel wrote a single meet and confer letter dated 5/18/06 and failed to respond to Respondent/Husband's reply letter dated 5/25/06. In fact, counsel for Petitioner/Wife failed to discuss the matter further with counsel for Respondent/Husband in any manner at any time thereafter. [¶] . . . [¶] "5. Sanctions were requested by both parties. Based on the mutuality of conduct of the parties, each party's request for sanctions is DENIED. See Townsend v. Superior Court (1998) 61 Cal.App.4th 1431.

"6. Counsel for both parties are admonished to change their meet and confer practices so that meeting and conferring is meaningful and not just a token gesture."

Sadly, it would turn out, Judge Nadler's admonition was not heeded.

By early 2007 the Honorable Cerena Wong had become involved, and handled all matters thereafter, including the hearing that led to the order from which Jill appeals. Judge Wong is an experienced jurist, having been appointed to the court in 1985. More significantly, she presided over a family law department for eight years,*fn4 an experience that, as will be seen, was manifest throughout the lengthy proceeding below.

The Proceedings in the Dissolution

The numerous proceedings in the dissolution proceeding are not individually germane to the issue before us, and we do not set them out in detail. A few general observations are appropriate, however, beginning with the fact that the proceeding generated 19 volumes of court files which, Judge Wong noted, is "outrageous" for a family law case. The register of actions is 35-pages long and refers to numerous matters that can fairly be said to be unrelated to the substance of the dissolution proceeding, including, for example, no fewer than eight motions related to discovery filed by Jill, many of which were never resolved on the merits. Such matters also include no fewer than three orders to show cause re contempt directed to Ken (and, in one case, his and Jill's daughter), one of which is pertinent here, especially as Judge Wong would comment on the incident underlying it--and unfavorably to Ken. The incident was discussed in Jill's August 4, 2006 order to show cause and affidavit for contempt, the essence of which was that a "4-way" meet and confer had been arranged and ordered by the court, and Ken "refused to meet and confer if attorney Andrew G. Watters was present in the room."

Also of significance is that on March 2, 2007, the parties stipulated that Judge Wong would act as case manager pursuant to section 2450, which provides in pertinent part as follows: "The purpose of family centered case resolution is to benefit the parties by providing judicial assistance and management to the parties in actions for dissolution of marriage for the purpose of expediting the processing of the case, reducing the expense of litigation, and focusing on early resolution by settlement." (§ 2450, subd. (a).) It developed that the case manager function was frequently ignored, defeating the salutary purpose it is designed to serve.

The Section 271 Motion

On May 23, 2008, Jill filed and served two motions.*fn5 The first was for an accounting, asserting that the parties' experts were not in agreement.*fn6 The second was the motion leading to the appeal here, seeking sanctions and attorney's fee in the amount of $933,794. Both motions were filed without any attempt to meet and confer, and without any involvement of Judge Wong in her capacity as case manager. Both motions were noticed to be heard on June 17, 2008, before Judge Wong who, at a specially set hearing on June 3, vacated the June 17 hearing date in favor of a series of dates in July, dates that were subsequently vacated at a June 20 hearing.

Before describing Jill's motion in detail, we digress briefly to discuss the timing of a section 271 motion, as that would become an issue below. The leading family law treatise describes the law this way: "Noticed motion; during or at end of litigation? . . . . [T]here is no statutory requirement that the motion be made, or the sanctions be assessed, at any particular stage of the litigation . . . . [¶] Some courts have stated that §271 sanctions ordinarily should not be awarded until the end of the litigation where the sanctionable conduct occurred. [See Marriage of Freeman (2005) 132 Cal.App.4th 1, 6 . . . --§271 "contemplates that sanctions be assessed at the end of the lawsuit, when the extent and severity of the party's bad conduct can be judged" (internal quotes omitted); Niko v. Foreman (2006) 144 CA4th 344, 369, 50 CR3d 398, 416 (citing text)] [¶] But other authority rejects that standard: The trial court need not wait until the end of the lawsuit to assess §271 attorney fee sanctions. '[S]section 271 is meant to advance the policy of the law to promote settlement and to encourage cooperation . . . As a matter of logic, to promote cooperation a trial court must be able to apply sanctions during the course of the litigation when the uncooperative conduct arises in order to encourage better behavior as the litigation progresses.' [Citations.]" (Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2010) ¶ 14.265a, p. 14-71 (Hogoboom & King).)

Jill's motion was on a family law standard form pleading, and styled "Sanctions under Family Code sec 2107." The supporting affidavits checked on that form were: completed income and expense declaration; points and authorities; and, under "Other," Declaration of Andrew G. Watters, and Declaration of Albert E. Hickey, MAI. In paragraph 5 of the form, "Attorney Fees and Costs," the motion sought fees of $600,861 and costs of $332,933. And in paragraph 9, "Other Relief," it sought "an order under Family Code sec. 271 awarding attorney fees payable by husband to wife. For an order awarding sanctions payable by Husband to Wife under Family Code sec. 2107(c) and the [In re Marriage of] Feldman case."

The accompanying papers included a 52-page declaration from Andrew Watters which, according to Jill's opening brief, attached 1250 pages of exhibits. Much of the declaration was inappropriate, asserting hearsay, argument, opinion, and conclusion, and was improper on several bases. An early passage in the declaration illustrates some of this, where Andrew Watters purports to describe Jill's description of Ken's "negotiating tactics, habits, and personality traits," which he labeled "Deal in the pocket," "Poor mouth," and "Artificial crisis," and each of which he claimed to illustrate. With that by way of introduction, Andrew Watters went on to "testify" as follows:

"6. At the time Jill was working on her Declaration, I had not seen these tactics used or been on the receiving end of any of them. I was skeptical at that early stage in this case that someone could really use these tactics effectively outside of a car dealership. (Ken was reportedly the youngest Ford dealer in the county at age 23, with the opening of Davenport Motor Sales, Big Timber, Montana.) However, throughout our dealings with Ken in this matter, I have personally observed Ken use each of the aforementioned tactics. I've seen first hand that Ken can be a very persuasive person, and that Ken seems to use all of his abilities and skill to get the best deals possible for himself. Unfortunately, we've learned that Ken has also used this great skill and ability to take advantage of his wife.

"7. During the pendency of this proceeding, despite all the warning, OSC; re contempt, court orders, motions, depositions, emails, and tens of thousands of dollars in letters back and forth between the attorneys, the 'inconvenient truth' here is that Ken has used his unusually strong business skill and acumen against his spouse despite his fiduciary duties and Family Code sections 1100-1101 and 271. The purpose of this declaration is to provide the Court with sufficient factual support to grant Jill's Motion for attorney fees as sanctions under Family Code section 271."*fn7

The declaration did go on to assert as facts several claimed derelictions or misrepresentations by Ken, including that he: (1) omitted entirely two major assets on his April 4, 2006 schedule of assets and debts (3635 and 3645 Standish Avenue, total estimated value $3,100,000); (2) produced "a chart of net worth signed 4/9/06 and dated retrospectively to November 30, 2005" that shows "total assets of $30.5 million" or "less than half of the net worth stated" in a December, 2005 financial statement given to a loan officer; (3) submitted an April 4, 2006 schedule of assets and debts which did not state the values for almost all items; and (4) engaged in various discovery abuses in 2006 and 2007, such as delaying his deposition for ten months.

The accompanying papers also included a 13-page memorandum of points and authorities, citing only one case: In re Marriage of Feldman (2007) 153 Cal.App.4th 1470 (Feldman). And as to it, the memorandum said this: "Here, the Davenport matter might as well be called In re Marriage of Feldman--The Sequel. If ever a dissolution of marriage action in Sonoma County warranted the imposition of sanctions on a party, this is the case." Or, as Andrew Watters would later describe it, "[T]he course of conduct described in Feldman is virtually identical to the course of conduct involved in this case"--indeed, "this case is worse than what happened in Feldman."

As Feldman would become Jill's short-hand description of all that was claimed to be wrong with Ken's conduct, we digress from the chronology to discuss the facts of that case, which involved a 34-year marriage during which husband created a large number of privately held companies (called by the court the Sunroad entities), devoted to investing in, and developing, real estate and in owning auto dealerships. According to husband, his assets were worth over $50 million, and the characterization of the Sunroad entities as separate or community property was a significant issue in the dissolution proceeding. (Feldman, supra, 153 Cal.App.4th at p. 1474.)

Wife served husband with interrogatories and a request for production of documents, and took depositions of husband and various employees of the Sunroad entities. Dissatisfied with what husband ultimately produced, wife filed an application for an order imposing monetary sanctions against husband for a violation of his fiduciary duty and, as relevant here, requiring husband to pay her attorney fees based in part on section 271, subdivision (a). Following full briefing and a hearing, the trial court ruled that husband breached his fiduciary duty to disclose financial information to wife, and ...

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