Opinion
G060561 G060981
12-05-2022
In re Marriage of JENNIFER and GARY DAY. v. GARY DAY, Respondent. JENNIFER DAY, Appellant,
Sullivan Law & Associates, Richard P. Sullivan and Steve Ra for Appellant. Law Offices of Marjorie G. Fuller, Marjorie G. Fuller; Law Offices of Teresa McNamara and Teresa McNamara for Respondent.
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 18D009880 Sandy N. Leal, Judge. Affirmed.
Sullivan Law & Associates, Richard P. Sullivan and Steve Ra for Appellant.
Law Offices of Marjorie G. Fuller, Marjorie G. Fuller; Law Offices of Teresa McNamara and Teresa McNamara for Respondent.
OPINION
MOTOIKE, J.
During proceedings for the dissolution of their marriage, Jennifer Day and Gary Day entered a binding, written settlement agreement regarding the terms of the dissolution, which included provisions for child custody, family support, and property division. Pursuant to the terms of the settlement agreement, Gary filed a motion under Code of Civil Procedure section 664.6 (section 664.6) for entry of judgment based on the settlement agreement. The trial court granted the motion and entered judgment.
As is customary in family law matters, we will henceforth refer to the parties by their first names to avoid confusion.
Jennifer appeals from the judgment contending (1) the parties did not serve final declarations of disclosure before executing the settlement agreement, (2) the trial court failed to make findings under Family Code section 4320, and (3) the trial court improperly placed on her the burden of proof. We reject Jennifer's arguments and affirm.
STATEMENT OF FACTS AND PROCEDURAL HISTORY
Jennifer and Gary married in May 2008, and separated sometime in 2018. They have three minor children. In November 2018, Jennifer filed for dissolution of the marriage. Jennifer and Gary filed preliminary declarations of disclosure and income and expense declarations in June 2019 and June 2020, respectively.
On August 11, 2020, after a voluntary settlement conference at which the parties, their attorneys, and their forensic accounting experts were present, Jennifer and Gary both signed a "Deal Memorandum Pursuant to 664" (the settlement agreement). The settlement agreement provides, in relevant part: "The terms of this Deal Memorandum shall be a binding agreement by [Jennifer] and [Gary] . . . and shall be subject to enforcement pursuant to the provisions of Code of Civil Procedure § 664.6. In the even[t] that either Party fails to execute the Stipulated Judgment of Dissolution of Marriage (Stipulated Judgment), the other Party shall be entitled to request the Court sign a Judgment based upon the terms of this Deal Memorandum . . . ." The settlement agreement addresses child custody, family support, and property division, among other matters. The parties had not filed or exchanged final declarations of disclosure when the settlement agreement was executed.
In December 2020, after Jennifer refused to execute the proposed stipulated judgment prepared by Gary's counsel, Gary filed a motion to enforce the settlement and enter judgment pursuant to section 664.6. After briefing, service of a final declaration of disclosure by Gary (and Gary's waiver of receipt of a final declaration of disclosure by Jennifer), and several hearings, in June 2021 the court entered judgment of dissolution of marriage based on the terms of the settlement agreement. Jennifer timely filed a notice of appeal from the judgment.
In November 2021, the trial court entered findings on Gary's section 664.6 motion. Jennifer filed a notice of appeal from the findings. On Jennifer's motion, this court consolidated the two appeals for purposes of briefing, argument, and decision.
DISCUSSION
I.
Standard of Review
The trial court's ruling on a motion under section 664.6 to enforce the parties' settlement agreement is reviewed for substantial evidence. (In re Marriage of Assemi (1994) 7 Cal.4th 896, 911.) Whether the trial court erred in entering judgment without final declarations of disclosure and without making findings under Family Code section 4320 are issues involving the interpretation of statutes, and therefore are reviewed de novo. (Kavanaugh v. West Sonoma County Union High School Dist. (2003) 29 Cal.4th 911, 916.)
II.
The Trial Court's Entry of Judgment Did Not Prejudice Jennifer, Even Though Final Declarations of Disclosure Had Not Been Exchanged Before Jennifer and Gary Executed the Settlement Agreement
Jennifer argues the parties' failure to serve final declarations of disclosure before they executed the settlement agreement negates the agreement and requires reversal of the judgment. "Except by court order for good cause, before or at the time the parties enter into an agreement for the resolution of property or support issues other than pendente lite support, . . . 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, unless the parties mutually waive the final declaration of disclosure." (Fam. Code, § 2105, subd. (a).)
"[J]udgment shall not be entered with respect to the parties' property rights without each party, or the attorney for that party in this matter, having executed and served a copy of the final declaration of disclosure and current income and expense declaration. Each party, or the party's attorney, shall execute and file with the court a declaration signed under penalty of perjury stating that service of the final declaration of disclosure and current income and expense declaration was made on the other party or that service of the final declaration of disclosure has been waived." (Fam. Code, § 2106.) Gary did not serve his final declaration of disclosure before the parties entered into the settlement agreement, and the parties did not waive service of final declarations of disclosure.
When the parties voluntarily resolve their disputes before trial, however, full compliance with the disclosure statutes is not necessary. The public policies furthered by the disclosure statutes are (1) marshalling and preserving community assets, (2) ensuring fair and sufficient family support, (3) ensuring community assets are divided in accord with California law, and (4) reducing the adversarial nature and costs of marital dissolution proceedings. (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 746-747.) If the parties can resolve their dispute fairly and cooperatively, the disclosures need not be made.
In Elden v. Superior Court (1997) 53 Cal.App.4th 1497, 1507-1509 (Elden), the parties to a dissolution action submitted their dispute to nonjudicial arbitration, and therefore removed the action from procedures applicable to trials, including the disclosure requirements of Family Code sections 2104 and 2105. "Although we recognize the public policy reasons for the disclosure sections set forth within the Family Code, we conclude that the parties to a dissolution who have agreed to engage in private arbitration of their property issues are entitled to adopt other, more summary procedures for financial disclosure. Here, for example, according to the arbitrator, the parties assured him that they had made the necessary disclosures. Under these circumstances, and because parties to private arbitrations waive a number of rights just as important as those set forth in the disclosure provisions at issue here, we conclude that the trial court erred in holding that Husband and Wife were required-prior to the arbitration-to submit the disclosure statement required by section 2105. If parties to a marital dissolution enter an agreement to settle their property or support issues by private or nonjudicial arbitration, they may do so without complying with section 2104 or section 2105." (Elden, 53 Cal.App.4th at pp. 1508-1509.)
In In re Marriage of Woolsey (2013) 220 Cal.App.4th 881, 887 (Woolsey), the parties engaged in a nonjudicial mediation resulting in a marital settlement agreement addressing property division, spousal support, and custody. The trial court entered judgment based on the marital settlement agreement after the wife filed a motion under section 664.6. (Woolsey, supra, at p. 887.) The husband appealed from the judgment arguing, in part, the marital settlement agreement was unenforceable for lack of timely financial disclosures under Family Code sections 2104 and 2105. (Woolsey, supra, at p. 887.) The appellate court affirmed the judgment, concluding in relevant part "parties who agree to settle their disputes by private mediation may also agree to make financial disclosures that do not meet the technical procedural requirements of sections 2104 and 2105." (Id. at p. 888.)
Although Jennifer contends the rule of Elden and Woolsey is limited to "cases where alternative dispute resolution mechanisms are utilized, such as in private mediation or arbitration," there is no reason to apply a different rule when the matter is resolved via a voluntary settlement conference. Nothing in Elden or Woolsey supports an inference that some procedure in a nonjudicial arbitration or mediation would require disclosures similar to those required by Family Code sections 2104 and 2105. Moreover, as explained post, the uncontroverted evidence on appeal establishes Gary voluntarily shared with Jennifer far more regarding his finances at the settlement conference than he would have shared through the court-approved declaration of disclosure forms.
Both parties cite In re Marriage of Fell (1997) 55 Cal.App.4th 1058 (Fell) to support their arguments on this point. Generally speaking, if the parties have not exchanged final declarations of disclosure as required by the statutes, the trial court has the authority to set aside the judgment. In Fell, the parties executed a marital settlement agreement. (Id. at p. 1060.) Thirteen days later, they filed a waiver of the requirements of preliminary and final declarations of disclosure. (Id. at pp. 1060-1061.) Judgment was entered based on the marital settlement agreement. (Id. at p. 1061.) The wife's later motion to set aside the judgment and the marital settlement agreement was granted, and the appellate court affirmed. (Ibid.) "Where, as here, neither party complied with the mandatory disclosure requirements of section 2105, the court is expressly authorized to decide whether the judgment should be set aside. [Citations.]" (Id. at p. 1066, italics added.) Based on the italicized language, Gary argues Fell gave the trial court the discretion to decide whether the judgment should be set aside, but did not make a set aside mandatory. Jennifer argues Fell requires reversal of the judgment in this case.
Jennifer also relies on Family Code section 2107, subdivision (d), which purports to make a set aside mandatory and to presume prejudice when declarations of disclosure have not been exchanged. The courts, however, have determined that provision to be in conflict with the California Constitution. Despite the seeming mandatory nature of Family Code section 2107, another panel of this court held that when required disclosures are not made before the parties reach an agreement on which a judgment is based, the judgment should not be reversed if no prejudice is shown. (In re Marriage of Steiner & Hosseini (2004) 117 Cal.App.4th 519, 523-524 (Steiner).) In Steiner, a bench trial was held in the parties' dissolution proceeding. The parties had not filed final declarations of disclosure as required before trial, but neither party objected. (Id. at p. 523.) The issue before the appellate court was limited to "whether the failure to exchange final declarations of disclosure is enough, by itself, to compel the granting of a new trial or the reversal of a judgment on appeal?" (Id. at p. 525.) The court held the "not 'harmless error'" language of Family Code section 2107, subdivision (d) was inconsistent with Article VI, section 13 of the California Constitution. Therefore, the court concluded that because the wife "has not attempted to identify any part of the judgment where she has suffered loss because of the non-exchange of final disclosure statements," the judgment and the postjudgment order denying a motion for a new trial must be affirmed. (Steiner, supra, 117 Cal.App.4th at p. 528, fn. omitted; see In re Marriage of Jones (1998) 60 Cal.App.4th 685, 694-695 [judgment of dissolution entered when parties had not exchanged final declarations of disclosure could not be set aside because former wife failed to show she had been prejudiced]; see also Gutierrez v. G & M Oil Co., Inc. (2010) 184 Cal.App.4th 551, 566 [Steiner holding does not apply when prejudice is shown in motion to set aside judgment].)
"[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. . . ." (Fam. Code, § 2107, subd. (d).) "No judgment shall be set aside, or new trial granted, in any cause, on the ground of misdirection of the jury, or of the improper admission or rejection of evidence, or for any error as to any matter of pleading, or for any error as to any matter of procedure, unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice." (Cal. Const., art. VI, § 13.)
Has Jennifer shown the judgment was materially affected by the failure to file final declarations of disclosure before the settlement agreement was executed? There is no significant difference between the income, expenses, and assets Gary reported in the initial disclosure and in the final disclosure.
Gary offered evidence (unrebutted by Jennifer) that before the voluntary settlement conference, Jennifer propounded deposition subpoenas on numerous entities, and Gary provided interrogatory responses and produced documents in response to Jennifer's requests. Additionally, Gary's accounting expert prepared and provided to Jennifer's attorney and accounting expert reports regarding assets, liabilities, income, and expenses, along with more than 50,000 pages of supporting documentation. These voluntary disclosures provided more information to Jennifer, her attorney, and her expert witness than the Judicial Council form.
Jennifer contended in the trial court that credit applications completed by Gary after the settlement agreement was entered show the information Gary provided at the voluntary settlement conference regarding income and assets was inaccurate. But Gary's forensic accountant provided a declaration explaining the income and assets reported in the applications were not accurate. The accounting expert also contradicted Jennifer's claims regarding the alleged inaccuracy of Gary's bank account information.
Jennifer's objections to the proposed stipulated judgment following the settlement agreement did not complain about anything that could have been corrected by a timely exchange of declarations of disclosure. Rather, Jennifer claimed the settlement agreement was vague, details of custody were lacking, and more information was needed about the source of Gary's family support payments. We conclude the parties' failure to exchange final declarations of disclosure before entering the settlement agreement did not prejudice Jennifer, and the trial court did not err by entering judgment based on the settlement agreement.
III.
The Trial Court Did Not Err by Entering Judgment Without Making Findings Under Family Code Section 4320
Jennifer argues the judgment must be reversed because the trial court did not consider any Family Code section 4320 factors, despite the fact the judgment contains family support orders. Family Code section 4320 contains a nonexhaustive list of factors the trial court must consider when ordering spousal support at trial.
Where the parties enter a marital settlement agreement or other agreement to resolve their dissolution matter without trial, which contains the parties' agreement regarding the amount of spousal support to be paid, however, analysis of the Family Code section 4320 factors is not necessary; indeed, it would not be possible for the court to make Family Code section 4320 findings when judgment is entered based on the parties' agreement.
In In re Marriage of Carletti (1975) 53 Cal.App.3d 989, 995 (Carletti), the appellate court, interpreting Civil Code former section 4801, which preceded Family Code section 4320, held: "[Former] section 4801 was intended to apply only to those situations where the parties have not entered into any agreement, either prior to or during the trial, leaving it to the discretion of the court to establish the amount, if any, of the support payments." Civil Code former section 4801 provided a list of factors, similar to those in Family Code section 4320, the trial court must consider in making an award of spousal support. Jennifer contends Carletti is inapposite because it was decided before Family Code section 4320 was enacted. Because Carletti addresses the predecessor statute of Family Code section 4320, which contained a nearly identical list of required factors, it is on point and directly relevant to our analysis. (T.P. v. T.W. (2011) 191 Cal.App.4th 1428, 1436 [case law interpreting predecessor statute is relevant to interpretation of current statute]; Grahm v. Superior Court (2005) 132 Cal.App.4th 1193, 1197 ["judicial interpretation of the same or substantially similar language in a predecessor statute is a useful tool of statutory construction"].)
Family Code section 4320 adds factors regarding a history of domestic abuse, the balance of hardships, the goal that the supported party become self-supporting, and the criminal conviction of an abusive spouse. (Compare Fam. Code, § 4320, subds. (i), (k), (1) & (m) with Civ. Code, former § 4801, subd. (a).)
Family Code section 4320 findings were not required in the judgment entered pursuant to section 664.6 and based on the parties' settlement agreement.
IV. The Trial Court Did Not Err by Granting the Motion to Enter Judgment
Before a judgment can be entered pursuant to section 664.6, there must be a contract formation, meaning a meeting of the minds regarding the contract's material terms, and a writing signed by the parties (or orally before the court). (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 797.) As the party seeking entry of judgment, Gary had the burden of proof on these two requirements, and he met his burden.
Jennifer contends the trial court erred by assigning to her the burden of proof to show the proposed stipulated judgment did not conform with the original settlement agreement, rather than assigning to Gary the burden of proof to show it did. Whether or not the trial court misplaced the burden of proof, there is no prejudicial error. Jennifer contends Gary failed to meet his burden of proof because the judgment entered by the court did not include Family Code section 4320 findings and the parties' final declarations of disclosure had not been served before the settlement agreement was signed. These contentions have been addressed in detail and rejected, ante.
DISPOSITION
The judgment is affirmed. Respondent to recover costs on appeal.
WE CONCUR: GOETHALS, ACTING P. J. DELANEY, J.