Opinion
B220967
01-04-2012
DENNIS NEEDLEMAN, Plaintiff and Respondent, v. EDEN NEEDLEMAN, Defendant and Appellant.
Raymond N. Haynes for Defendant and Appellant. Law Offices of J. Sheldon Capeloto, J. Sheldon Capeloto and Cristopher Rahtz for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BD393615)
APPEAL from orders of the Superior Court of Los Angeles County, Elizabeth Feffer, Judge. Reversed in part, affirmed in part, and remanded.
Raymond N. Haynes for Defendant and Appellant.
Law Offices of J. Sheldon Capeloto, J. Sheldon Capeloto and Cristopher Rahtz for Plaintiff and Respondent.
These are Eden Needleman's consolidated appeals from two orders of the family court. In the first, the court found that the parties' November 7, 2006 stipulated judgment provided spousal support for Eden only until November 9, 2007. In the second, the court denied Eden's motion to set aside the November 7, 2006 stipulated judgment, as well as the stipulated orders filed on April 30, 2008 and September 11, 2008, for fraud and duress. In both orders, the court also awarded sanctions against Eden.
Since the parties share the same last name, we refer to them by their first names for the sake of clarity.
We reverse the court's finding in the November 5, 2009 order that spousal support terminated on November 9, 2007, as the 2006 stipulated judgment provides for spousal support until the close of escrow on the parties' marital home. We affirm the September 17, 2010 order denying Eden's motion to set aside the stipulated judgment and orders. The fraud claims are untimely, and substantial evidence supports the court's finding that the stipulations were not a product of duress. We do not reach the merits of the sanctions awards since Eden's claim appears to be moot as to one award and unripe as to the other. Thus, we affirm in part, reverse in part, and remand the case for further proceedings consistent with this opinion.
FACTUAL AND PROCEDURAL SUMMARY
Eden and Dennis Needleman married in 1995 and separated in 2003. Dennis filed for divorce. In December 2003, Eden was granted exclusive use of the couple's marital home, and Dennis was ordered to pay her temporary spousal support of $7,600 a month from November 1, 2003 until either party's death, Eden's remarriage, or further court order. Dennis was additionally charged with paying all the bills for the home and for Eden's rented Porsche. At the time, the parties were expected to refinance the home. In 2005, they agreed to list it for sale at $8,950,000.
On November 7, 2006, the parties filed a stipulated judgment on reserved issues that purported to finally settle their rights. Section 2.1 of this judgment provided for spousal support. It required Dennis to pay the bills for the family home and Eden's rental car until the close of escrow on the home; pay Eden $7,600 a month from November 1, 2003 until the close of escrow, either party's death, Eden's remarriage, or further court order; and upon the close of escrow, pay Eden $18,500 a month until either party's death, Eden's remarriage or November 9, 2007. Spousal support was not modifiable, and no court could extend it "beyond the first to occur of a terminating event in Section 2.1."
Section 5 provided that the family home, which was listed for sale at $7.9 million until July 9, 2006 and thereafter for $6,995,000, would remain in Eden's exclusive possession until sold and Dennis would "make all payments set forth in Section 2 as a portion of his spousal support obligation to [Eden] pending the sale." The section provided that one party could make required payments on the home if the other failed to do so and recover them from the sale proceeds, as well as apply for a court order to enforce the performance of the parties' obligations.
The judgment also divided the parties' property, awarding Dennis as his separate property several shopping centers and business entities, as well as a separate property reimbursement from the sale of the family home. Eden's most significant award was her community interest in the family home.
In September 2007, Dennis informed Eden that spousal support would end on November 9, 2007. At the time the family home was listed for $5,695,000. Estimating the net proceeds of the sale at $3,800,000, Dennis offered to buy Eden's share in the home for $1,000,000 (later raised to $1,250,000). Eden counter-offered to refinance the home herself and buy Dennis out. On April 22, 2008, she filed an order to show cause (OSC) for contempt based on Dennis's failure to pay spousal support after November 9, 2007. The OSC was continued twice and eventually taken off calendar.
Meanwhile, on April 30, 2008, the parties filed a stipulated order providing that Eden would refinance the home and pay Dennis $2,750,875 by May 7, 2008, or the home would be relisted at a lower price. On September 11, 2008, the parties filed another stipulated order giving Eden until September 22, 2008 to refinance the home and pay Dennis $1.5 million. An additional $1,060,000 was to be due 110 days later. If Dennis was not paid on time, the stipulated order provided that a grant deed would be recorded giving him full ownership of the family home; he would list the home for sale, and Eden would immediately vacate it. The order provided that "[u]pon close of the first escrow, no additional spousal support shall be due [Eden] and no spousal support arrears owed by [Dennis]." The order provided further that Eden would take the OSC for contempt off calendar, sign a general release of all claims against Dennis, and "effective immediately, there will be no payment by [Dennis] for any moneys due regarding spousal support, house related expenses or attorneys fees" with a few exceptions. Specifically, Dennis agreed to give Eden $10,000 that would be treated as spousal support. He also agreed to pay a set amount to Eden's attorney.
On October 3, 2008, Dennis filed an OSC for contempt, stating that Eden had violated the September 11, 2008 stipulated order by not making the required payment and by not vacating and deeding the home over to him. On the same date, Eden filed the first of three successive bankruptcy petitions. On December 9, 2008, after the first bankruptcy petition had been dismissed, the family court ordered Eden to comply with the September 11, 2008 stipulated order by leaving the family home and deeding it over to Dennis.
Eden, who had been represented by the same attorney between 2006 and 2008, changed counsel, and in late December 2008 her new attorney began prosecuting a new contempt OSC against Dennis for nonpayment of spousal support. Trial was held in May 2009, but the contempt proceedings apparently were discontinued before a complete adjudication. Separately, on May 15, 2009, Eden obtained a writ of execution based on the 2006 judgment and started enforcement proceedings against Dennis's assets. Dennis responded by seeking an OSC that no arrears were due under that judgment. In its November 5, 2009 order, the family court found that spousal support terminated on November 9, 2007, and no arrears were due under the judgment. The court quashed the writ of execution and vacated all other orders issued based upon it. The court awarded Dennis $75,000 in sanctions against Eden, to be paid from her share in the sale proceeds of the family home, for significantly delaying the matter and for requiring substantial efforts to gain her compliance. Eden timely appealed from that order in case No. B228108.
The family home, from which Eden had been evicted in March 2009, was sold in December 2009, as part of Eden's third bankruptcy.
On April 26, 2010, Eden filed a motion to set aside the 2006 stipulated judgment and the April and September 2008 stipulated orders for fraud and duress. In its September 17, 2010 order, the family court found that the fraud-based claims were untimely, and that there was no evidence of duress. The court also found that Dennis was entitled to his costs and fees incurred in response to Eden's motion and directed Dennis to submit proof of such costs and fees. Eden timely appealed from this order in case No. B220967. The two appeals were later consolidated.
We have read and considered Eden's late-filed reply brief.
DISCUSSION
I
The family court found that the obligation to pay spousal support under the November 7, 2006 stipulated judgment ended on November 9, 2007. The court concluded that it did not need to consider parol evidence offered by Dennis. Nor did the court reach Dennis's arguments that, if his spousal support obligation continued past November 9, 2007, Eden was estopped from obtaining relief because she obstructed the sale of the family home, and Dennis was entitled to various credits against the arrears. On appeal, the parties limit their arguments to the propriety of the court's interpretation of the stipulated judgment.
"'Marital settlement agreements incorporated into a dissolution judgment are construed under the statutory rules governing the interpretations of contracts generally.' [Citation.] 'The basic goal of contract interpretation is to give effect to the parties' mutual intent at the time of contracting. [Citations.] When a contract is reduced to writing, the parties' intention is determined from the writing alone, if possible. [Citation.]' . . . [Citation.]" (In re Marriage of Simundza (2004) 121 Cal.App.4th 1513, 1518.) When a dispute arises over the meaning of a contract, the court must determine whether its language is "reasonably susceptible" to the party's interpretation. (Oceanside 84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1448.) The determination can be made either from the language of the contract itself or from extrinsic evidence of the parties' intent. (Ibid.) When the determination is not dependent on extrinsic evidence, we review de novo the trial court's interpretation of the contract. (Lucas v. Elliot (1992) 3 Cal.App.4th 888, 892.)
In the family court, Dennis offered his own declaration that spousal support was intended to end on November 9, 2007. He claimed that Eden recognized that spousal support was ending, and after he sent her the final support check, she asked him for a loan to tide her over until the marital home was sold. The court did not rely on this evidence, and in any event the evidence did not indicate that the parties had discussed, much less agreed, whether all spousal support should terminate by a date certain before the home was sold. Because the family court's interpretation of the parties' agreement is not dependent on extrinsic evidence, we review it de novo.
Monetary spousal support to Eden is the subject of two separate provisions in the stipulated judgment. The first, under the heading "2.1.2 Spousal Support Payments Made Directly to Respondent Until Close of Escrow of Family Residence," provides: "Petitioner shall pay Respondent the cash sum of $7,600 per month on the first day of each month commencing November 1, 2003 and continuing until the first to occur of (1) the close of escrow of the Family Residence, (2) the death of either party, (3) the remarriage of Respondent, or (4) further order of court." The second, under the heading "2.1.3 Spousal Support Payments Upon Close of Escrow," provides: "Upon the first day of the month following the close of escrow, Petitioner shall pay Respondent for her support and maintenance the sum of $18,500 per month payable one-half on the first and one-half on the fifteenth day of each consecutive month. The spousal support payment required by this Section 2.1.3 shall cease to be due on the earliest of (1) the death of Petitioner, (2) the death of Respondent, (3) the remarriage of Respondent, and (4) November 9, 2007. Support paid pursuant to this section shall be taxed as provided herein."
Section 17 provides the parties' agreed-upon rules of interpretation: "This Judgment shall be construed as a whole, according to its fair meaning, and not in favor or against any Party. For example, no provision shall be construed in favor of the Party receiving benefit nor against the Party responsible for any particular language. Section headings are used for reference purposes only and should be ignored in the interpretation of the Judgment." Relying on section 17, the family court concluded that it could not use section headings in interpreting when spousal support was to end. But it applied this rule too broadly, effectively deleting language included not only in section headings, but in the actual text of the relevant sections. Thus, section 2.1.2 specifically lists the close of escrow among the conditions that could trigger the end of the payment of $7,600 in spousal support. Similarly, by its own terms, section 2.1.3 is triggered after the close of escrow, and only the increased payment of spousal support provided for in that section is to end on November 9, 2007. Contractual language must be interpreted to give "force and effect to every provision," and not to render clauses "nugatory, inoperative or meaningless." (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 473.) The family court's interpretation ran afoul of this well-established rule of contractual interpretation because the court read the condition of the close of escrow out of the agreement regarding monetary spousal support.
The only reasonable interpretation of the parties' agreement is that the increased spousal support obligation was never triggered because escrow did not close before November 2007. The parties did not condition the termination of Dennis's obligation to pay $7,600 per month in spousal support on anything other than the close of escrow, either party's death, Eden's remarriage, or further court order. The termination of his obligation to pay the mortgage, insurance, taxes, and bills for the home, as well as car insurance and monthly car payments for Eden's car, was conditioned solely on the close of escrow. The family court incorrectly concluded that Dennis was required to make these additional payments only while Eden was in possession of the home.
Dennis suggests that, without a specific date for the close of escrow, the obligation to pay spousal support would become indefinite and would thus be inconsistent with the temporary nature of the support intended in this case. That is incorrect. Although the stipulated judgment does not provide a specific date by which escrow should close, it states that the home is to remain listed for sale until sold. Eden is required to maintain the home "in a clean and presentable condition" and to permit showings on a four-hour notice every day of the week. "The [p]arties are [o]rdered to cooperate in expediting the sale," and may apply to the court for additional orders needed for the performance of their obligations. In addition to these express covenants, California law implies in every contract a covenant of good faith and fair dealing "to prevent a contracting party from engaging in conduct that frustrates the other party's rights to the benefits of the agreement." (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36.)
If the parties intended that the home sell before November 2007, they had the option of applying to the court for additional orders to enforce performance of their obligations. In addition, Dennis was free to argue that Eden breached the express and implied covenants of the agreement by obstructing the sale. Indeed, this appears to be the basis for his argument to the trial court that Eden should be estopped to claim spousal support after November 2007 because of her own conduct delaying the sale of the home. The family court did not reach this argument, and neither party raises it on appeal. The only issue before us is whether the family court correctly interpreted the stipulated judgment. Since we conclude that it did not, we reverse the November 5, 2009 order to the extent it is based on the court's incorrect interpretation. We remand the matter to the family court to determine the amount of spousal support arrears due under the 2006 judgment between November 9, 2007 and the close of escrow on the marital home. Any issues of breach, setoff, or reimbursement in relation to arrears should be presented at that time.
II
Eden brought her motion to set aside the 2006 stipulated judgment and the April and September 2008 stipulated orders on the basis of fraud and duress under Chapter 10 of the Family Code (§ 2120 et seq.). Section 2121, subdivision (a) provides: "In proceedings for dissolution of marriage, . . . the court may, on terms that may be just, relieve a spouse from a judgment, or any part or parts thereof, adjudicating support or division of property, after the six-month time limit of Section 473 of the Code of Civil Procedure has run, based on the grounds, and within the time limits, provided in this chapter." The parties and the family court proceeded on the assumption that Chapter 10 applies not only to the 2006 judgment but also to the 2008 post-judgment orders in this case. As neither party on appeal argues otherwise, we will follow this assumption.
All statutory citations are to the Family Code unless otherwise indicated.
The family court believed that in April 2009 it already had denied a previous motion to set aside the 2008 orders. There was some confusion at the April 6, 2009 hearing as to whether Eden had actually moved to set aside these orders, and the court did not consider the merits of any such motion on the record. But whether the court had denied a previous motion to set aside is not dispositive since in the September 17, 2010 order, the court denied Eden's April 26, 2010 motion to set aside on the merits.
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Section 2122 provides that a motion to set aside a judgment may be brought for: "(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. . . .
(c) Duress. An action or motion based upon duress shall be brought within two years after the date of entry of judgment." The order denying a motion to set aside a judgment is reviewed for abuse of discretion. (In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 682-683.)
The court found that Eden's 2010 motion to set aside the 2006 judgment and 2008 orders for fraud was time-barred by the one-year statute of limitations in section 2122, subdivision (a). Eden argues that she was deprived of her entire interest in the marital estate when the couple's home was finally sold in December 2009 and the claim of fraud accrued only then. The two cases she relies on for this proposition are inapposite. In Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131 (Rubenstein), the husband denied owning an interest in a musician's property within the dissolution proceedings, but years later claimed such an interest in a federal proceeding against the musician's estate. (Id. at p. 1137.) The court held that the wife's suspicion of this interest did not constitute discovery of the husband's fraud for purposes of the statute of limitations in section 2122. (Id. at p. 1148-1149.) Rubenstein is inapposite because Eden does not claim that Dennis fraudulently hid any assets from her.
Rather, Eden claims that Dennis told her she had no community interest in his businesses, and her attorney did not tell her otherwise. She also claims that Dennis failed to pay her spousal support; harassed her, her lenders, brokers, and escrow agents; and forced her into bankruptcy. She relies on In re Marriage of Baltins (1989) 212 Cal.App.3d 66, 89 (Baltins), where the husband convinced his wife that she had no interest in his medical practice, threatened her, and interfered with her ability to obtain independent counsel. Baltins is distinguishable on several grounds. Since it was decided before the enactment of section 2122, the one-year statute of limitations was not at issue, but the court nevertheless noted that the wife had brought her claim within a year of the final judgment of dissolution. (Id. at p. 92.) The husband in Baltins was charged with constructive fraud, specifically based on the fact that the wife was not represented by counsel. (Ibid.) But section 2122 now expressly limits claims of fraud to actual fraud, and there is no evidence that Dennis interfered with Eden's right to independent counsel. The record indicates that Eden was represented during discovery and the negotiations of the 2006 judgment. Thus, her claim that she was not allowed to participate in the case is not established, and if it were, it would appear to raise an issue about the quality of the legal representation she received, which by itself is not sufficient to establish fraud under section 2122. (In re Marriage of Rosevear, supra, 65 Cal.App.4th at p. 686 ["attorney negligence is not itself one of these enumerated grounds for setting aside a judgment"].) The date when the last remaining asset of the community estate was sold has nothing to do with when Eden discovered or should have discovered any claimed entitlement to a larger portion of the marital estate.
To the extent that Eden's fraud claim is based on Dennis's conduct after the 2006 judgment and 2008 orders were signed, it is most properly characterized as one for promissory fraud. Neither Baltins nor Rubenstein deals with promissory fraud, and Eden cites no other authority for her fraud claim. Since the promissory fraud claim is not properly framed or supported by legal authority, we may deem it forfeited. (See Amato v. Mercury Casualty Co. (1993) 18 Cal.App.4th 1784, 1794 [contentions not supported by authority are forfeited].)
The claim also is time-barred. A promise to do something made without an intent to perform is actionable as promissory fraud. (Locke v. Warner Bros., Inc. (1997) 57 Cal.App.4th 354, 368.) An absolute unwillingness "'even to attempt performance'" may give rise to an inference that the promise was made with fraudulent intent. (Ibid.) Were we to assume that Dennis absolutely refused to perform under any of the parties' three agreements (an assumption that is not supported by the record), his failure to pay spousal support after November 2007 and his occasional failure to keep the mortgage and taxes on the home current were known to Eden long before the home was finally sold, and certainly before the end of 2008. That the home was eventually sold in a bankruptcy proceeding she initiated has nothing to do with the enforceability of the stipulated judgment and orders. All of Eden's fraud-based claims are untimely under section 2122.
Eden's duress claims pertain only to the 2008 orders. While these claims are timely under the two-year statute of limitation in section 2122, subdivision (c), substantial evidence supports the family court's finding that the orders were not the product of duress. "Under the modern rule, '"[d]uress, which includes whatever destroys one's free agency and constrains [her] to do what is against [her] will, may be exercised by threats, importunity or any species of mental coercion [citation]. . . ."' [Citation.] It is shown where a party 'intentionally used threats or pressure to induce action or nonaction to the other party's detriment. [Citation.]' [Citations.] The coercion must induce the assent of the coerced party, who has no reasonable alternative to succumbing. [Citation.]" (Baltins, supra, 212 Cal.App.3d at p. 84, fns. omitted.,) Eden once again relies on Baltins, where the court found that the wife "was effectively deprived of independent counsel; she was in a distraught and weakened condition emotionally and unable to confront [h]usband; he undermined her psychologically by repeatedly telling her she had not contributed as much as he to the marriage and was not an equal partner; he made threats and misrepresentations and pressured her into taking immediate action; she agreed to an unconscionable contract; and she had no reasonable alternative." (Id. at p. 87.)
Unlike the wife in Baltins, Eden was represented by independent counsel at all relevant times. Nor is it shown that she was in such a weakened emotional state that she was unable to confront Dennis. She countered his offer to buy her interest in the home with her own offer to refinance the home and buy him out. Together, the April and September 2008 orders effectively gave her five months to obtain a loan, so her claim that each order imposed an unreasonably short time to do so is not well taken. Whether or not Dennis improperly contacted the lenders, brokers, and other agents involved in the refinancing is beside the point because Eden has no evidence that she lost any loans solely due to his alleged "harassment." Her attorney filed a declaration stating that her loan did not fund on September 22, 2008, due to the financial crisis on Wall Street. He did not attribute the failure to fund to Dennis's conduct. Similarly, in December 2008, the escrow agent informed Eden that her refinancing difficulties were due to a combination of the recession, the type of loan she sought, her lack of independent income and reserves, and Dennis's occasional failure to keep the mortgage and taxes on the home current. The escrow agent explained that Dennis kept in constant contact with her, and they had reached a level of trust. The escrow agent's vague claim that "Dennis's behavior towards the lenders made it very difficult to close the loans," made in a declaration in support of Eden's motion to set aside, does not establish duress since Dennis's unspecified contacts with others do not establish that Eden had no choice but to sign the two 2008 stipulated orders.
Eden opted to refinance the home without having an independent income and without securing Dennis's promise to keep payments on the home current and pay her spousal support arrears as a condition of her refinancing. His only commitment in the September 2008 order was for a one-time spousal support payment of $10,000. Eden could, and in April 2008 did, bring an OSC re contempt for Dennis's failure to pay spousal support. According to Eden, unbeknownst to her, her attorney failed to prosecute the OSC. But the attorney's alleged negligence, of which she should have been aware, does not establish duress. (In re Marriage of Rosevear, supra, 65 Cal.App.4th at p. 686.) Nor does Eden's financial situation excuse her failure to make sure her attorney of over two years was more proactive, especially in light of the aggressive stand her next attorney took in the matter.
We conclude that the family court did not abuse its discretion in denying the motion to set aside the stipulated judgment and orders.
III
Section 271, subdivision (a) provides for an award of attorney's fees and costs in the nature of a sanction for the conduct of a party or attorney that "frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys." The award is not based on the requesting party's financial need, but the court is prohibited from imposing "an unreasonable financial burden" on the sanctioned party. (Ibid.) The order of sanctions under section 271 is reviewed for abuse of discretion and will be reversed "'only if, considering all of the evidence viewed more favorably in its support, and indulging all reasonable inferences in its favor, no judge could reasonably make the order.' [Citations.]" (In re Marriage of Davenport (2011) 194 Cal.App.4th 1507, 1524.)
Dennis requested $197,000 in sanctions, including $97,000 in attorney fees incurred after December 2008. In its November 5, 2009 order, the family court awarded $75,000 in attorney fees to be paid from Eden's share in the sale proceeds of the family home for causing "a significant delay" and requiring Dennis to "expend substantial efforts" to gain her compliance. Eden argues that the sanctions were unjustified as she had entered into the three stipulations. But the last stipulated order was filed in September 2008. In December 2008, the court ordered Eden to comply with the September stipulated order by vacating and deeding the family home over to Dennis, so it could be relisted for sale. Eden ignores her various attempts to avoid enforcement of the September 2008 stipulated order. Additionally, the sanctions were expressly tied to Eden's share in the sale proceeds of the family home. Since, according to both parties' counsel, the bankruptcy court awarded all proceeds from the sale of the home to Dennis, this sanction is moot.
In its September 17, 2010 order, the family court ruled that Dennis was entitled to his costs and fees incurred in response to Eden's motion to set aside the stipulated judgment and orders and directed Dennis to submit proof of such costs and fees. The exchange at the hearing indicated that the court reserved the determination of such costs and fees for the future. Since the amount of the actual award and the source of payment is yet to be determined, Eden's claim that it imposes an unreasonable burden on her is premature.
DISPOSITION
We reverse the finding in the November 5, 2009 order that spousal support under the 2006 judgment terminated on November 9, 2007. The September 17, 2010 order is affirmed. The matter is remanded to the family court for a determination of the amount of spousal support arrears due under the 2006 judgment. The parties are to bear their own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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EPSTEIN, P. J.
We concur:
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WILLHITE, J.
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MANELLA, J.