Opinion
A160727
09-27-2021
In re the Marriage of REENA and DEEPAK CHOPRA. v. REENA CHOPRA, Appellant. DEEPAK CHOPRA, Respondent,
NOT TO BE PUBLISHED
Marin County Super. Ct. No. FL 14874
STREETER, J.
Appellant Reena Chopra appeals from a court order denying her motion to set aside a judgment of dissolution of marriage to her former husband, respondent Deepak Chopra. Reena's motion, brought under Family Code section 2120 et seq., alleged that Deepak misrepresented material facts concerning community property at trial, therefore invalidating the July 10, 2000 judgment due to extrinsic fraud and entitling Reena to equitable relief.
We will use the first names of the parties for purposes of clarity. No disrespect is intended.
All further undesignated statutory references are to the Family Code.
Reena later filed an addendum alleging the nondisclosure of certain assets, arguing that the trial court had continuing jurisdiction under Civil Code section 4353 (now Fam. Code, § 2556) to award community property not previously adjudicated. The court rejected Reena's continuing jurisdiction analysis, and Reena has not challenged that aspect of the order denying her motion. Her sole argument on appeal is that the court abused its discretion by failing to examine her evidence of alleged fraud and by failing to consider section 2120 et seq.
We need not address her abuse of discretion challenges. We see no reasonable probability that a “fraud” of the nature Reena alleges here, even assuming it amounts to “nondisclosure or other misconduct” within the meaning of section 2120, subdivision (b), would have affected the judgment, and in any event, Reena was late in filing her motion-some two decades late. Accordingly, on both grounds we shall affirm.
I. BACKGROUND
The parties married on December 14, 1996. One year and eight months later, on September 4, 1998, they separated. The parties share no children.
On July 10, 2000, following a multi-day trial, the trial court entered judgment dissolving the marriage between the parties. As a part of the judgment, the court ordered, “1. The Eckhart Corporation and/or [Deepak's] other corporate endeavors relating thereto are his separate property and that there is no community property interest therein. [¶] 2. 150 Chamberlain Avenue, Novato, California is the separate property of [Deepak] and there is no community property interest therein. [¶]... [¶] 5. The personal property acquired by [Deepak] before marriage and after the date of separation... is confirmed to him as his sole and separate property.”
The statement of decision provided further context for the court's judgment: “The unimproved real property identified as 150 Chamberlain Avenue, Novato, California was purchased during the marriage, however all monies used to purchase the property and to pay for improvements came from Petitioner's separate property businesses. [¶]... [¶] [T]he total separate property debts and reimbursements for post separation payments... are far in excess of the value of the property. Therefore, there is no community property interest therein. [¶]... [¶] Character and value of 7110 Redwood Boulevard, Novato, office building[:]... The building is an asset of Eckhart Corporation. As indicated above, the shares of Eckhart Corporation are the separate property of Petitioner.... The individual assets of Eckhart Corporation are not marital property....” (Boldface omitted.)
On February 7, 2020, Reena filed a Request for Order (RFO) alleging the judgment of dissolution should be set aside pursuant to section 2120 et seq. based on newly discovered evidence of extrinsic fraud committed by Deepak during the original proceedings. Relying on public documents from both the New York Department of State and the California Secretary of State, Reena argued that Deepak misrepresented and failed to disclose material facts about the Eckhart Corporation and other corporate entities that resulted in erroneous community property findings.
A previous RFO alleging fraud, filed on July 12, 2019, was dismissed without prejudice for failure to properly serve.
The documents show that the original Eckhart Corporation, founded by Deepak in 1989 and incorporated in New York, merged with Chopra Holdings, Inc., an entity formed by Deepak on July 19, 1996, in the state of California. The effective date of the merger was November 26, 1996. By the terms of the merger agreement, on the effective date, “Eckhart shall be merged with and into Chopra in accordance with the laws of the states of California and New York. The separate corporate existence of Eckhart shall thereupon cease and Chopra shall be the surviving corporation. [¶]... The name the surviving corporation shall have following the merger shall be Eckhart Corporation.” All of these events took place before the parties were married on December 14, 1996.
Reena also argued, partly in an addendum to her motion filed on July 9, 2020, that Deepak created a new business entity, Mahaveer LLC, on November 9, 1998, and transferred the 7110 Redwood Boulevard property from Eckhart to Mahaveer on January 22, 1999. These events and transactions, all of which took place after the date of separation on September 4, 1998, were not considered by the trial court.
Reena's addendum also included argument that the trial court failed to adjudicate undisclosed payments to various individuals and entities and amounts owed for a jointly owned vehicle. She argued that the trial court had continuing jurisdiction to award community property or debts that had not been previously adjudicated under Civil Code section 4353 (now Fam. Code, § 2556).
Reena stated in her motion that she discovered this evidence of alleged fraud on May 20, 2019, “when [she] went to the office of Secretary of State at Sacramento to look into paperwork for her nonprofit and showed her ID. The Clerk pulled out some papers which said Chopra Holdings Inc. and on further inquiry and investigation... discovered [the evidence]....”
On July 30, 2020, the court denied Reena's motion with prejudice. The court determined that all questions related to the Eckhart Corporation were adjudicated in the original proceedings, and that it therefore did not have continuing jurisdiction over those questions. The court further held that the passage of 20 years since the original proceedings rendered further litigation on other allegedly unadjudicated issues futile. The court did not make any determinations as to the sufficiency of the arguments or evidence Reena presented under section 2120 et seq.
Reena timely appealed.
II. DISCUSSION
A. Governing Legal Standards
Section 2120, subdivision (b) provides: “It occasionally happens that the division of property or the award of support, whether made as a result of agreement or trial, is inequitable when made due to the nondisclosure or other misconduct of one of the parties.” “The public policy of assuring finality of judgments must be balanced against the public interest in ensuring proper division of marital property.” (§ 2120, subd. (c).)
Section 2121, subdivision (a) grants courts the authority to provide relief from otherwise final judgments “on any terms that may be just... based on the grounds, and within the time limits, provided in this chapter.” Before granting relief, “the court shall find that the facts alleged as the grounds for relief materially affected the original outcome and that the moving party would materially benefit from the granting of the relief.” (§ 2121, subd. (b).)
Finally, section 2122 provides, in relevant part: “The grounds and time limits for a motion to set aside a judgment, or any part or parts thereof, are governed by this section and shall be one of the following: [¶] (a) Actual fraud where the defrauded party was kept in ignorance or in some other manner was fraudulently prevented from fully participating in the proceeding. An action or motion based on fraud shall be brought within one year after the date on which the complaining party either did discover, or should have discovered, the fraud. [¶] (b) Perjury. An action or motion based on perjury in the preliminary or final declaration of disclosure, the waiver of the final declaration or disclosure, or in the current income and expense statement shall be brought within one year after the date on which the complaining party either did discover, or should have discovered, the perjury.” (§ 2122, subds. (a), (b); italics added.)
“The statutory scheme creates an exception to res judicata.” (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1144.) “The doctrine of res judicata, whether applied as a total bar to further litigation or as collateral estoppel, ‘rests upon the sound policy of limiting litigation by preventing a party who has had one fair adversary hearing on an issue from again drawing it into controversy and subjecting the other party to further expense in its reexamination.' ” (Vella v. Hudgins (1977) 20 Cal.3d 251, 257.) “Thus, a spouse who conceals the existence of community assets, thereby depriving the other spouse of the opportunity fully to present his or her case in a dissolution proceeding, cannot claim that the judgment of dissolution bars a subsequent tort action based on that failure.” (Dale v. Dale (1998) 66 Cal.App.4th 1172, 1183.) The section 2122 exceptions to res judicata reflect the idea “that concealment and nondisclosure of community property by a husband at the time of divorce proceedings is a violation of his fiduciary duties as manager of the community assets, and that such a violation is the type of extrinsic fraud which warrants equitable relief against a judgment based at least in part upon such fraud.” (Baker v. Baker (1968) 260 Cal.App.2d 583, 585-586.)
B. There Is No Reasonable Probability That a “Fraud” of the Kind Reena Alleges Would Have Affected the Judgment
Reena's section 2120 motion turned on her claim that the Eckhart Corporation of 1989 was not in existence during the marital period and “never came up for adjudication” at trial. She contends that the lower court should have granted her motion to set aside the judgment because the alleged fraud in failing to disclose the existence of the original Eckhart Corporation materially affected the proceedings. We do not agree.
First of all, we see no reasonable probability that the trial court would have granted relief even if it had examined Reena's evidence under the applicable statutes. To prevail, Reena bore the burden of showing that Deepak concealed or failed to disclose community assets or community property. (Baker v. Baker, supra, 260 Cal.App.2d at pp. 585-587.) Her evidence, though, pointed only to the concealment of certain transactions, rather than the concealment of community assets. That did not supply the basis for an argument that Deepak's actions constituted “nondisclosure or other misconduct” within the meaning of section 2120, subdivision (b).
Reena argues that the Eckhart Corporation of 1989 ceased to exist when it merged with Chopra Holdings, Inc. “ ‘A merger ordinarily is an absorption by one corporation of the properties and franchises of another whose stock it has acquired. The merged corporation ceases to exist, and the merging corporation alone survives.' ” (Heating Equipment Mfg. Co. v. Franchise Tax Board (1964) 228 Cal.App.2d 290, 302.) Reena is correct that the Eckhart Corporation of 1989 ceased to exist when it merged into Chopra Holdings, Inc., forming the new Eckhart Corporation. This fact, though, leaves out important context. Both the original Eckhart Corporation and Chopra Holdings, Inc. were incorporated before Reena and Deepak married. The effective date of the merger, too, was before the parties married.
The trial court's judgment confirmed “[t]he personal property acquired by [Deepak] before marriage and after the date of separation... as his sole and separate property.” This comports with section 771, subdivision (a), which provides that “[t]he earnings and accumulations of a spouse... after the date of separation of the spouses, are the separate property of the spouse.” We do not think it reasonably likely that knowledge of this merger at trial would have affected the determination of whether there was any community property in the Eckhart Corporation. It was simply not material.
The new Eckhart Corporation was the surviving entity following a merger of two entities Deepak incorporated before his marriage with Reena. The new Eckhart Corporation was formed before the parties married, and all of its property, assets, and debts were accumulated by business entities that existed before the marriage. In the judgment of dissolution, the trial court even seems to have contemplated such transactions, when it noted that “[t]he Eckhart Corporation and/or [Deepak's] other corporate endeavors relating thereto are his separate property and that there is no community property interest therein.” We therefore do not find it reasonably probable that Deepak's failure to mention the merger would have affected the judgment.
Related arguments from Reena about Mahaveer LLC and its role in allegedly concealing the fact that the 7110 Redwood Boulevard property was community property rest on similarly flawed logic. Deepak registered Mahaveer LLC after the parties separated; both section 771 and the trial court's judgment mandate that personal property acquired by Deepak after the date of separation is his sole and separate property. Moreover, the trial court's statement of decision specifies: “The [7110 Redwood Boulevard property] is an asset of Eckhart Corporation.... The individual assets of Eckhart Corporation are not marital property.” This transaction, then, is simply the transfer of property from one business entity to another, where both entities are wholly owned by Deepak. Here, too, we think it unlikely that if these transactions were disclosed at the time of trial, it would have materially affected the outcome at trial.
C. Reena Was Tardy in Filing Her Motion
Even if we assume that the alleged fraud did materially affect the outcome and that the trial court would have granted relief if it had conducted the proper analysis, Reena's motion was nonetheless properly dismissed because the motion was not timely filed. The time limits for a motion to set aside a judgment are governed by section 2122, which requires motions brought on the grounds of both fraud and perjury “be brought within one year after the date on which the complaining party either did discover, or should have discovered, the [fraud or perjury].” (§ 2122, subds. (a), (b); italics added.)
Reena filed her motion on February 7, 2020, within the required time after discovering evidence of the alleged fraud on May 20, 2019. But “the statute of limitations under section 2122 accrues as of the date the plaintiff either discovered or should have discovered the facts constituting the fraud or perjury.” (Rubenstein v. Rubenstein, supra, 81 Cal.App.4th at p. 1149; italics omitted.)
“Some statutes of limitations expressly provide for accrual when the plaintiff has actual or inquiry notice of the claim. (See, e.g., Code Civ. Proc., § 340.2 [claim for asbestos-related injury must be at the latest, one year after plaintiff ‘knew, or through the exercise of reasonable diligence should have known, that such disability was caused or contributed to by such exposure']; id., § 340.6 [legal malpractice claim commences the earlier of ‘one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission'].)” (Baxter v. State Teachers' Retirement System (2017) 18 Cal.App.5th 340, 359; italics omitted.) In our view, the reasonable diligence standard also applies to the time limitations in section 2122. The statute of limitations begins accruing either upon discovery of the fraud or perjury, or when, with the exercise of reasonable diligence, the fraud or perjury should have been discovered.
In this case, the evidence that Reena presents to the court now, 20 years after proceedings in her marriage dissolution, did exist at the time of proceedings. Moreover, these documents were public record and freely accessible to whoever asked for them. We think that an exercise of reasonable diligence at the time of trial would have led to the discovery of the evidence forming the basis for the alleged fraud or perjury then. We therefore conclude that Reena filed her motion to set aside the judgment of marriage dissolution 20 years late.
DISPOSITION
The trial court order denying the motion to set aside judgment is affirmed. Respondent shall recover his costs.
WE CONCUR: POLLAK, P. J., BROWN, J.