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In Re the Marriage of Simmons. v. Buford Keith Simmons

April 18, 2013


APPEAL from a judgment of the Superior Court of San Diego County, Christine K. Goldsmith, Judge. (Super. Ct. No. D516363)

The opinion of the court was delivered by: Haller, Acting P. J.


Reversed with directions.

Keith Simmons appeals from a judgment in which the court ordered him to pay substantial sanctions to his former wife, Tracy Hoogenberg, for his conduct during the litigation of Tracy's dissolution petition. On appeal, Keith asserts the court erred by ordering sanctions against him under Family Code sections 2107, 271, and 1101.*fn2 He also contends the court erred by denying his request for need-based attorney fees from Tracy, and failing to grant a continuance and conducting the second day of trial in his absence.

In the published portion of this opinion, we hold the sanction awarded under section 1101, subdivision (h) is statutorily unauthorized. As we shall explain, this statutory remedy applies only to the nondisclosure of a community property asset, and it does not apply to the nondisclosure of a separate property asset, as is the case here. Accordingly, we reverse the portion of the judgment awarding the section 1101 sanction. We remand for the trial court to determine whether to alter the total sanctions awarded under sections 2107 and 271.

In the unpublished portion of this opinion, we reject Keith's other contentions.


The parties were married in May 2008 and separated one year later in May 2009. They have one child (Child) born in March 2009. On June 3, 2009, Tracy filed a petition for dissolution of their marriage. She requested that the court determine the parties' property rights and award custody of Child to her with visitation to Keith, and that the parties pay their own attorney fees.

What followed was an astoundingly lengthy, circuitous, and expensive course of litigation, particularly given that both parties had substantial financial assets and were married for a very brief time. Tracy had significant investment assets acquired after the death of her first husband. Keith owned a wetsuit business in La Jolla with two partners, and he had an ownership interest in a building in La Jolla.

For purposes of the current appeal, the case was finally resolved in July 2011, by which time Tracy had incurred more than $800,000 in attorney fees and costs. In its final decision, the trial court found the protracted litigation was due in large part to Keith's "questionable legal tactics" (including his request to declare the marriage a nullity and failure to respond to discovery) and his hiring and firing of numerous attorneys. To support its sanctions award, the court concluded that Keith had failed to comply with "even the most basic" financial disclosures; filed misleading and delayed disclosures; failed to fully disclose his assets; misused Tracy's computer hard-drive to disseminate her emails to third parties; failed to respond to discovery requests; failed to appear at his own deposition and trial; and acted intentionally and in bad faith. Based on these findings, the court ordered $150,000 in sanctions against Keith under section 2107 for breach of his fiduciary duties of disclosure, and $250,000 in sanctions under section 271 for his uncooperative conduct. Applying the remedy in section 1101, subdivision (h) for the fraudulent failure to disclose, the court also awarded Tracy the $245,850.24 value of Keith's separate property savings account.

On appeal, Keith does not present any developed argument to refute the evidentiary support for the court's findings that he repeatedly breached his fiduciary duties to his former spouse and frustrated a reasonable resolution of the case. His appellate arguments are premised on claims that (1) the sections 2107 and 271 sanctions were inappropriate, excessive, and beyond his ability to pay; (2) the court erred in failing to award him need-based attorney fees under section 2030; (3) the court had no authority to apply the section 1101, subdivision (h) remedy to the nondisclosure of separate property; and (4) the trial court erred in failing to continue the second trial date.

A. Parties' Preliminary Pleadings

In June 2009, in response to Tracy's dissolution petition, Keith filed pleadings requesting a nullity of their marriage based on fraud; a paternity determination; custody of Child to him with visitation to Tracy; spousal and child support; and need-based attorney fees and costs. He claimed that Tracy (a Canadian citizen) had married him only to advance her plans to become a United States citizen; she had sexual affairs during their marriage; she acts emotionally erratic and lies; and she abuses drugs and alcohol. Tracy denied these accusations and asserted that Keith became emotionally and verbally abusive during their marriage. She denied any alcohol abuse, drug usage, or extramarital affairs and was certain Keith was Child's father, but she agreed to paternity and drug testing, and requested a psychological evaluation of Keith and supervised visitations due to her concerns about Keith's mental stability.

In August 2009 interim rulings, the court ordered that Child's primary residence be with Tracy with visitation to Keith; their exchanges be professionally supervised; Keith submit to a paternity test; Tracy submit to drug testing; and the parties participate in a custody evaluation. By December 2009, paternity testing showed that Keith was Child's father, and Tracy's drug test was negative.

In her initial pleadings, Tracy stated that both parties had sizable financial assets and should pay their own attorney fees; neither party should receive spousal support; and child support should be set at guideline amounts. Tracy informed the court that she was trained as a certified public accountant (CPA) but was currently unemployed, and after her first husband's death she had received a large inheritance. In her income and expense declarations submitted during the course of the proceedings, she provided the court with the details of the money she had received and expected to receive (totaling about $10 million), how the money was invested, and the amount of income she could access from principal and interest.

Tracy also informed the court that Keith was the chief executive officer of a wetsuit business which he owned with two partners. In 2008, he told her that his ownership interest in the wetsuit business was valued at about $2 million; he had other business interests valued at over $1 million; and the value of his assets should be increasing substantially in the near future.

In his initial income and expense declarations and discovery responses, Keith did not disclose that he had any business ownership interests, but referred only to his salaried position with the wetsuit company. In an August 2009 income and expense declaration, Keith stated he was employed by La Jolla Wetsuits, Inc. (La Jolla Wetsuits); his monthly gross pay was $4,166 and would be increasing to $5,833; and he had $14,332 in his bank accounts. Likewise, in an October 2009 response to interrogatories, Keith stated his only income as of August 1, 2009, was his $70,000 salary, and at a November 2009 deposition he confirmed that this was his annual income. In a March 2010 income and expense declaration he stated that he had $3,136 in his bank accounts.

B. Keith's Failure To Disclose and Failure To Comply with Discovery

For the next two years, Tracy engaged in an arduous discovery battle seeking to obtain full and accurate information from Keith about his financial assets. She filed numerous motions to compel and for monetary and other sanctions based on Keith's inadequate responses to interrogatories and failure to produce documents. The trial court (Judge Christine Goldsmith) initially handled the discovery matters, but then ordered the appointment of a discovery referee (Retired Judge Thomas Murphy) to manage the discovery problems. The judges held numerous hearings and repeatedly issued sanction orders against Keith based on his failure to comply with discovery.

For example, in April 2010, Judge Goldsmith granted Tracy's motion to compel and ordered $7,000 sanctions against Keith, finding that Tracy had made "typical" discovery requests for financial documents; Keith had not responded satisfactorily either in writing or orally at his deposition; and he had deliberately attempted to delay the proceedings by providing vague responses and failing to produce documents.

Keith finally disclosed his business ownership interests in an income and expense declaration filed in June 2010, acknowledging that he earned both a salary and distributions from his one-third ownership of La Jolla Wetsuits. He stated that in 2009, he earned a salary ($60,000) and received business ownership income ($215,870) from the company. Also, he stated that in 2010 he received $350,000 in "extraordinary distributions" from the company to enable him to pay income tax on his 2009 and 2010 "phantom income" from the business. He stated he had $321,649.94 in a Wells Fargo checking account. He also disclosed that he had an ownership interest in a building in La Jolla through La Jolla Palace, LLC.

After his initial disclosure of his business interests in June 2010, Keith continued to fail to make full disclosures or to adequately respond to discovery concerning his assets. In an August 4, 2010 income and expense declaration, Keith stated he had $44,530 in his bank accounts (without specifying the accounts). However, his August 2010 Wells Fargo bank statement (which Tracy later obtained) showed that he had over $200,000 in his Wells Fargo savings account on August 3, 2010.

In September 2010, Judge Murphy found that Keith had not responded to Tracy's interrogatories in a clear and meaningful manner and had not complied with Judge Goldsmith's April 2010 order to produce documents, and ordered that he pay $11,500 in sanctions. In January 2011, Judge Murphy found that Keith had intentionally failed to fully or timely comply with discovery requests, and imposed sanctions of $6,475, $3,200, $3,000, and $1,600. In March 2011, Judge Murphy found that Keith had failed to respond to discovery without substantial justification and issued sanction orders for $1,580 and $2,362. In May 2011, Judge Murphy again found that Keith had failed to respond without justification and imposed $1,780 in sanctions.

By the time of the May 2011 hearing before Judge Murphy, Tracy was requesting issue, evidence, termination, and $250,000 monetary sanctions. Responding to these requests, Judge Murphy stated his view that "Keith has in the past, and continues at this time to refuse to provide full and complete information and documentation pertaining to his finances which are directly related to his requests for spousal support, child support, attorney fees and costs." However, Judge Murphy declined to rule on Tracy's sanction requests, stating that it was a "major decision" that should be made by the trial court. But Judge Murphy made a recommendation that Keith be precluded from introducing any evidence about his finances in support of his claims for spousal support, past child support, or attorney fees and costs; that his request for attorney fees and costs be stricken as an issue; and that he be sanctioned an additional $7,500. In a pretrial order on June 9, 2011, Judge Goldsmith adopted Judge Murphy's recommendations, including an order that Keith's request for attorney fees was stricken as an issue.

C. Other Conduct by Keith in the Case and in Related Litigation

In addition to his failure to cooperate with disclosure and discovery, Keith engaged in other conduct that generated a significant amount of unnecessary litigation over matters that did not advance the resolution of the parties' dissolution.

At the commencement of the litigation, Tracy requested a restraining order from the court because Keith had copied her computer's external hard drive and distributed to third parties her emails which contained confidential and "highly embarrassing" information. The court granted Tracy's application for a temporary restraining order, and in August 2009 the parties reached a stipulation in which Keith agreed to refrain from distributing her emails. However, Keith retained a copy of Tracy's hard drive, and in August 2010 Tracy filed a motion to compel the return of all copies of the hard drive. On September 20, 2010, Keith was ordered to turn over the hard drive copies to Judge Murphy "forthwith." Keith turned over a copy in October 2010, but in November 2010 admitted he still had a copy, and he was ordered to turn it over the following day.

In August 2009, Keith filed a civil complaint against Tracy alleging fraud, intentional infliction of emotional distress, and other causes of action. In November 2009, the court granted Tracy's Anti-SLAPP motion, dismissed Keith's civil complaint, and awarded Tracy $24,318.25 attorney fees and costs.

Keith's pursuit of his annulment request also caused extra activity related to discovery requests, including his demands to access information from Tracy's computer, the parties' retention of a computer expert to assist with the discovery, and arrangements to take depositions of persons residing in Canada. In May 2010, Tracy applied for a protective order based on Keith's discovery requests. In June 2010, Judge Goldsmith required Tracy to produce some of the requested discovery, but granted a protective order as to other materials. The court ordered Keith to pay $7,000 sanctions based on a finding that he had made discovery requests that were overbroad, abusive, harassing, and in violation of privacy rights. In May 2010, Keith offered to settle the nullity case for $500,000, and in October 2010 he withdrew this cause of action.

Keith was also uncooperative with the deposition process. He attended his first deposition, but refused to attend his second deposition until Tracy obtained a court order. In August 2010, Judge Murphy ruled that Tracy had the right to take Keith's further deposition without limitation. At the time of his deposition scheduled for April 29, 2011, Keith did not appear. The morning of the deposition he faxed a letter stating he could not take off work. In May 2011, Judge Murphy found that Keith was duly noticed to appear at the deposition and his failure to appear was without justification.*fn3

D. Tracy's Request for Sanctions Based on Keith's Overall

Conduct and Breach of Fiduciary Duty

In addition to the sanctions Judges Goldsmith and Murphy issued against Keith as outlined above, Tracy also requested, and was ultimately awarded, sanctions and other remedies based on Keith's overall conduct and breach of fiduciary duty over the course of the litigation. These are the rulings Keith currently challenges in this appeal.

Tracy filed pleadings in August 2010 and in May and June 2011 to support her sanction requests. In her August 2010 pleading, she stated that Keith's pursuit of an annulment rather than dissolution was unfounded and was being used wrongfully to leverage a large settlement demand made by him. Further, she asserted Keith was making duplicative, irrelevant, and overly broad discovery demands, including requests that were directly contrary to the trial court's protective order and for which he had already been sanctioned. She stated that Keith had still not produced basic financial documents (i.e., profit and loss statements or balance sheets) for his business interests. In her May and June 2011 pleadings, Tracy stated that Keith continued to fail to provide critical information about his assets, including financial statements from La Jolla Wetsuits and how he used significant income distributions he received from La Jolla Wetsuits and other entities. Because of his inadequate responses, Tracy had to issue subpoenas to his banks and the companies in which he had ownership interests, and she still was attempting to get information from the various entities.

E. Trial Proceedings and Trial Court's Final Award of Sanctions Against Keith

In January 2011, the court ordered the dissolution of the parties' marriage, and reserved jurisdiction on the outstanding issues, including Tracy's requests for sanctions. Trial on the bifurcated issues was set for April 2011. The day prior to a February 10, 2011 case management conference, Keith communicated to Tracy's counsel in a series of emails. He stated he would not be able to participate either in person or by phone in the case management conference because of obligations at his new job in Boulder, Colorado, and he could not afford an attorney to appear on his behalf. He requested that the legal proceedings be scheduled on Fridays because he generally could take this day off of work. At the case management conference on February 10, the trial court vacated the April 2011 trial date and reset the trial for two Fridays in June 2011 (June 10 and June 17), stating this ruling was made to "accommodate [Keith's] schedule."

Keith appeared on the first day of trial (June 10, 2011) and represented himself. During pretrial motions, the trial court ruled that Keith could testify on his own behalf but could not otherwise call any witnesses due to his failure to exchange a witness list or designate any experts. Although he had not provided an exhibit list, the court stated it would rule on the admissibility of any documents when and if he proffered them.

On the first day of trial, Tracy introduced documentary evidence and presented her own testimony and the testimony of several other witnesses. Just prior to the noon recess, Keith told the court that he would not be able to attend the second day of trial scheduled for the following Friday. He stated his work obligations precluded him from taking off two Fridays in a row, and if he did so he would lose his job. Tracy's counsel suggested the trial date be changed to Tuesday since Keith had told his child visitation supervisor that he could take Tuesday off to have visitation with Child. The court stated it would think about the request. At the conclusion of trial that day, the court stated it would not change the June 17 trial date that "was set months ago" because it had numerous hearings and status conferences set for Tuesday.

On June 17, Keith did not appear. The court continued with the trial in his absence, noting that the trial date had "been set for two consecutive Fridays months and months ago at the request of [Keith] to accommodate his work schedule in Colorado." Tracy provided further testimony, presented Keith's deposition testimony, and submitted additional documentary evidence.

During her testimony, Tracy stated that when she and Keith separated, Keith told her, " 'This isn't going to be peace, you know. Expect this to be a war. My lawyer is going to take you down. ...

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