Thomas W. Wathen and Kathleen D. Wathen
Case No: 1185911
Hearing Date: Tue Mar 26, 2019 10:30

Nature of Proceedings: Req. for Order: Instructions/Clarification of Amended Judgment

Req. for Order: Instructions/Clarification of Amended Judgment

Attorneys: Maureen A. Grattan for Respondent (“Kathleen”); Paul A. Roberts for Claimant George H. McCrimlisk (“McCrimlisk”)

Ruling: Kathleen’s three (3) requests are DENIED. The Court finds that the arguments of Claimant are very persuasive; they preponderate. McCrimlisk has properly analyzed the underlying documentation. As for her request for attorney fees and costs, for the reasons set out below, the Court denies the request for an attorney fee and cost award.

Background:

Kathleen filed her RFO in 1/2019; she requests an order clarifying and/or interpreting the parties’ Amended Judgment, so that she can better plan for her future. Those issues are:

1. Does the Via Manana property that Kathleen owns qualify as a “Replacement House”?

2. Does a “Replacement House” need to be Kathleen’s primary residence?

3. Does Kathleen have the right to rent out all or a portion of her “Replacement House”?

4. Should Claimant pay her attorneys’ fees of $50,500 and costs of $170?

Kathleen testifies that she is asking the Claimant to pay for her attorney’s fees [$50,500] and costs [$170]; that sum includes fees of $40,500 incurred from the beginning of representation until now and estimated fees and costs of $10,000; supported by a declaration of counsel and reports that the fees and costs can be paid from the Thomas Wathen Trust; contends McCrimlisk has taken unreasonable positions with regard to the issues in this motion, thereby increasing dramatically her legal fees; furthermore, the trust is believed to have significant funds and can pay the fees on both sides. Contends McCrimlisk is the successor in interest to Thomas Wathen, the deceased Petitioner; he has significant funds at his disposal to pay the attorneys’ fees of both sides to this dispute.

Kathleen testifies via declaration that Thomas and she were married February 21, 1999; separated August 1, 2005; marriage was dissolved August 30, 2007, pursuant to a Stipulated Judgment filed August 31, 2007, in this action; copy of the Stipulated Judgment was attached; Thomas died June 20, 2016; McCrimlisk is the Successor Trustee of the Thomas W. Wathen Trust; he was joined to this action in his dual capacity as Successor Trustee and Executor.

She testifies that they purchased the Park Lane Residence and resided there temporarily; she had a financial stake in the home; they moved out; rented the property for approximately 6-7 years; she was awarded the home in the divorce; Thomas and she had an agreement that she would be able to live in the Park Lane Residence, or a successor home of her choice, and have sufficient funds to be able to maintain it and have a comfortable lifestyle for the remainder of her life; Thomas agreed in writing that she would always be able to lease or rent all or a portion of her property if she needed or wanted additional income; attaches a copy of a letter dated 4/15/08 that Thomas wrote to one of his attorneys, John Lyon, memorializing this agreement; he never delivered the letter to Mr. Lyon; Thomas did provide her with a copy.

On or about January 5, 2010, they filed a Second Stipulation to Modify their Judgment; Stipulation specifically addressed her right to rent or lease the Park Lane Residence; on July 20, 2010, she purchased Via Manana; intended to eventually sell the Park Lane Residence; Via Manana her Replacement House; purchased it for $1.3 million; invested approximately $636,939 in renovations to the property; now is valued at over $3million; has no liens on it.

In 2016, she decided to sell the Park Lane Residence; her attorney, Brady Leck, contacted McCrimisk to advise him that she would like to transfer the security for the $1million note from the Park Lane Residence to Via Manana and make Via Manana her Replacement House, as defined in the Note; McCrimisk wrote an email to Mr. Leck, denying her request, claiming that Via Manana did not qualify as a Replacement House, since she purchased it prior to selling the Park Lane Residence. In 2016, she closed escrow on the sale of the Park Lane Residence; McCrimisk released the lien on the Park Lane Residence; $1million of the sales proceeds were placed in a blocked account at American Riviera Bank; Restricted Account Agreement provided that the Thomas’s trust would authorize the release of the $1 million within 10 business days after receiving notice from her that she had acquired a Replacement House; because she could not reach an agreement with McCrimisk regarding the definition of what constitutes a Replacement Account, and because she was concerned that the one deadline was approaching to secure a Replacement House in 3/2017 she bought a home on Trieste Lane, Carpinteria, as a Replacement House and moved into it; McCrimisk then released the $1milllion to her that had been in the blocked account; she continues to want to make Via Manana her Replacement House.

Kathleen testifies that as a result of McCrimisk taking such contrary and unreasonable positions on the issues listed above, she has incurred attorneys’ fees in excess of $40,500 and to the attorney for American Riviera Bank regarding the blocked account in the amount of $1,040; expects to incur at least $10,000 more in fees and costs by the time this matter is adjudicated; Thomas’ estate and trust are probably worth around $100 million, far greater than her assets; he should pay sanctions for taking unreasonable positions that increased the cost of this litigation.

Kathleen’s Income and Expense Declaration

Filed 1/2019; income about $10,000/mo; assets $7.8 million; living expenses $12,000/mo; paid attorney fees of $40,000 (supported by declaration of her attorney).

Ms. Grattan filed a 60 page declaration that includes exhibit “A” [billing statements]; counsel testifies that this matter has been unsuccessfully negotiated since before March 2016; McCrimlisk “is attempting to redefine the terms of the Judgment originally filed on August 31, 2007;” there exists before the Court a dispute between Kathleen and McCrimlisk to clarify if Kathleen may purchase a Replacement House in anticipation of selling her current house or whether she must wait until she sells one house in order to buy a Replacement House; McCrimlisk “is putting form over substance and causing both sides to incur significant attorneys’ fees to address this issue;” McCrimlisk has been joined as a necessary party.

Kathleen’s Points and Authorities

Filed 1/14/19; 77 pages long; includes as Exhibit A the Judgment; Exhibit B the Dear John letter; Exhibit C the Stipulation; Exhibit D second modification; Exhibit E the 4/2016 email; Exhibit F the Restricted Account Agreement; Exhibit G the 9/2018 email; Exhibit H the Kevin Nimmons response to the foregoing email; have read it all.

The root of the dispute with regard to Via Manana is whether Kathleen may purchase a Replacement House in anticipation of selling her then-current house, (Kathleen’s position) or whether she must wait until she sells one house in order to buy a Replacement House (McCrimlisk’s position); Kathleen contends that so long as she has acquired a Replacement House with at least $1 million of equity and is able to secure the $1 million note with a first priority deed of trust, she has met the spirit of the Stipulated Judgment, i.e. that she has not delayed in replacing one residence with another, such that Thomas (or his estate/trust) is prejudiced. Kathleen would like the Via Manana property to be her “Replacement House;” McCrimlisk refuses to agree; he takes “the pedantic view” that solely because she acquired the house prior to selling Park Lane, it cannot be a Replacement House; asks the rhetorical question “why should it matter when the Replacement House was purchased, so long as it has equity of at least $1million and so long as the Deed of Trust securing the Promissory Note is in first position?” Contends that the whole purpose of awarding her a luxury home in the divorce was to ensure that she would have a “suitable principal residence” of her own choosing; contends that “at the time that the original stipulated judgment was signed, the parties contemplated that Kathleen could well have a succession of Replacement Houses.”

Response to the RFO filed 2/27/19

It is 107 pages long; will summarize here; includes Points and Authorities, Declaration of George McCrimlisk, Declaration of John Lyon, Declaration of Paul A. Roberts, and Exhibits thereto [1 through 8]; contends that the law governing contract interpretation applies to stipulated Marital Settlements; that there is no evidence that a “Replacement House” may be anything other than Kathleen’s primary residence – her home; there is no evidence whatsoever of either parties’ intent that Kathleen may lease a Replacement House; neither can a “Replacement House” be a property that Kathleen already owns before the sale or casualty of Park Lane or a Replacement House. The attached declarations support the contentions made in the Points and authorities.

As to the attorney fee request, Claimant objects contending that: Kathleen is wrong about the meaning of the Stipulated Judgment as modified; Thomas’ conduct is not sanctionable under any authority; Kathleen has $3.5 million in assets she could easily sell and an estimated $4.3 million in real and personal property; the fees requested are inflated and unreasonable.

McCrimlisk’s Income and Expense Declaration filed 2/28/19

Net worth about $6 million; monthly income $7,000.

Reply filed 3/18

It is 11 pages; have read it; summarize here; Kathleen contends that Claimant argues that the original intent in loaning $1 million was limited to the acquisition of a principal residence; there is no such language in the judgment; nor can it be inferred; in fact, the Judgment specifically contemplates Kathleen renting/leasing out all or part of the Park Lane Residence; entire divorce settlement was designed to ensure that she could live the rest of her life at the extremely-high marital standard of living; that Claimant contends that when she purchased the Trieste property, she conceded that Via Manana could not be her Replacement House – that is incorrect – she was approaching the one-year deadline set forth in the Stipulated Judgment, and since Claimant would not approve Via Manana as her Replacement House, she opted at that time not to pursue a judicial remedy, but instead to buy a different property and designate it as her then-current Replacement House; that the “Replacement House” does not have to be her primary residence; that Kathleen may rent out or lease all or a part of her Replacement House; that the timing of the purchase of a Replacement House is immaterial.

As for attorney fees and costs, the contention is that they should be awarded under Family Code section 270 [“If a court orders a party to pay attorney’s fees or costs under this code, the court shall first determine that the party has or is reasonably likely to have the ability to pay.”]; contends Claimant is incorrect when he claims that attorneys’ fees were not requested until the filing of this Request for Order and, therefore, Kathleen should be entitled to nothing more than fees related to the pending Request for Order; fees under Family Code section 270 can be requested at any time; she did request attorneys’ fees in her Complaint for Joinder; she did not waive the right to claim fees when she bought the Trieste property as a Replacement House; Petitioner’s trust, which is managed by Claimant, has plenty of assets to pay all of Kathleen’s fees, even when one considers the “Amended Income & Expense Declaration filed by Claimant.”

The Court’s Conclusions

The Court has considered all the claims made and finds the contentions and arguments of the Claimant persuasive and compelling; Kathleen’s three requests must be denied. The declarations filed in support of Claimant’s case were significant in making this determination. The Court does not find that he takes a “pedantic view” or that this is a “form over substance” argument. The documentation and declarations do not lend themselves to such contentions.

As for her “need-based” and/or her “sanction-based” attorney fee request, the request is denied. The standard of proof regarding need-based fees is that the Court shall first make findings of whether fees and costs are appropriate; whether there is a disparity in access to funds, and whether one party is able to pay for both parties’ legal representation; that only if the Court makes a finding demonstrating disparity in access and ability to pay should the Court award fees. (Family Code section 2030.) The Court cannot comfortably make such findings here. There is no significant disparity between the parties’ respective incomes and assets that is real. The standard of proof regarding sanction-based fees is that the Court shall first make findings of whether sanctions are appropriate; if so the Court should then make findings as to what amount of money is reasonable as sanctions. The Court finds nothing in the record that justifies such fees.