Filed 11/25/19 Marriage of Dahmani CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(El Dorado)

—-

In re the Marriage of DAHMANE and ZINA DAHMANI. C084252

DAHMANE DAHMANI,

Appellant,

v.

ZINA DAHMANI,

Respondent.

(Super. Ct. No. PFL20140179)

Appellant Dahmane Dahmani (husband) appeals from a judgment characterizing and dividing real and personal property pursuant to a divorce proceeding. Husband contends the trial court erred in characterizing as community property the down payment made on real property in South Lake Tahoe (Tahoe property), loan repayments made on the property, and funds in a brokerage account. Husband also claims abuse of discretion in the trial court’s fee award and that Zina Dahmani (wife) failed to timely disclose documents, which he also argues as an abuse of discretion claim. We affirm.

I. BACKGROUND

A. Intel Stock Options
B.
Husband and wife were married on March 4, 1993, and they separated on March 11, 2014. Husband worked for Intel from 1981 to 1984 and from 1987 to 2006. As part of his compensation, Intel awarded him stock options, and it opened a brokerage account with Bidwell (the brokerage account) on his behalf in 1981. On October 21, 1997, husband and wife purchased the Tahoe property for $311,000 and took joint title. The parties put $211,000 down on the property with a remaining loan balance of $100,000. At trial, husband alleged that he paid the down payment on the Tahoe property and repaid the outstanding loan on the property by selling separate property shares of Intel stock he acquired through his employment at Intel.

Husband possessed 1,000 unexercised stock options in 1985. According to husband’s expert witness, forensic accountant Karen Kaseno, those shares split into 1,500 shares in 1987 due to a three-for-two stock split. Husband testified that he typically exercised the options when they vested. Once he exercised the stock options, he could either keep or sell the shares, and the shares he kept were held in the brokerage account. When he exercised the options, he received fewer than the number of options awarded because approximately three quarters of the shares were sold to pay for the options and associated taxes. Kaseno testified that for every 300 stock options exercised, 82 shares would appear in husband’s account.

The stock options did not vest immediately upon being granted, and the vesting schedule was subject to conflicting testimony. Documentary evidence submitted by husband suggests the stock options typically vested four or five years after they were granted, provided husband continued to work for Intel, at which time husband could exercise his option to purchase the shares. Husband first testified consistently with the documents that the options vested after five years, at which point he could exercise his option. For example, stock options granted in 1993 would not appear in his portfolio until at least 1998. But husband later testified that one-quarter of the awarded options vested each year. And then husband testified that the first quarter of the shares would vest five years after they were awarded, in which case, presumably, an additional quarter of the shares would be available each year after they came available.

In 1988 husband exercised options to buy 600 shares, leaving him with 900 unexercised stock options. One-third of those options vested in each of 1989, 1990, and 1991. In April 1988 husband was awarded 400 stock options, 200 of which vested in 1992, and 200 of which vested in 1993. In 1989 Intel awarded husband 200 stock options that vested in 1994. In 1991 Intel awarded husband 150 stock options that vested in 1996. In 1992 Intel awarded husband 250 stock options, 50 of which vested in 1996, and 200 of which vested in 1997. In 1993 husband was awarded 225 stock options that vested in 1998. Due to two-for-one stock splits in 1993, 1995, and 1997, husband’s awarded stock options doubled in number with each split. For example, the 200 stock options awarded in 1992 that were scheduled to vest in 1997 became 1,600 stock options by the time they vested. Additional stock splits in 1999 and 2000 resulted in 3,400 options becoming exercisable in 1999 and 6,800 in 2000.

Kaseno testified that the 1,500 unexercised stock options husband possessed in 1987 resulted in 410 separate property shares held in husband’s account that vested and were exercised before marriage. And of the 400 stock options awarded in 1988, Kaseno determined that 54 shares were received into the brokerage account before marriage, and 54 were received less than a month after marriage. Due to stock splits, Kaseno concluded that husband had 4,144 separate property shares in the brokerage account as of July 13, 1997.

Kaseno testified without the benefit of brokerage account statements, which husband discovered after the third day of trial. The earliest admitted brokerage account statement, from February 24, 1995, indicated that the brokerage account received 1,317 shares of Intel. Husband testified that this statement represented the first statement from Brown and Company, which took over the management of his account from Bidwell.

B. Employee Stock Participation Plan

In addition to receiving stock options, husband participated in the Employee Stock Participation Plan (ESPP), a program through which he could spend up to 10 percent of his income to purchase Intel shares at a 15 percent discount. Shares purchased through ESPP were available to be sold immediately. Husband testified without supporting documents that he typically sold shares from ESPP right away, a day or week later, or several months later to fund his family’s lavish lifestyle.

Husband and Kaseno testified that ESPP shares were received into the brokerage account. Husband then testified that he did not hold ESPP shares in the brokerage account in 1995, but he “may have” done so in other years, although he asserted “it was sold right away.” Later he testified that he did not recall holding ESPP shares in the brokerage account.

C. Margin Account Trading

In addition to his salary from Intel, the stock options, and the proceeds from ESPP, husband traded shares of stock that he purchased by leveraging the value of his Intel shares in the brokerage account. Account statements from the brokerage account in the record on appeal show that husband actively traded stocks in 1995, 1996, 1998, 1999, and 2000, including additional Intel shares. Husband testified that he never used anything but leverage from his Intel shares to purchase shares of other companies. And he testified that he never deposited his salary into the brokerage account and never used ESPP shares to purchase other stock.

Husband testified he spent minimal time trading stocks. He asserted that the time he spent trading stocks varied from two minutes to half an hour or an hour. While he researched companies, most of the research was “[i]n [his] head.” When the court pressed husband for a “clearer answer” on how much time he spent trading, he responded, “It could be half an hour, one hour” “[m]aybe every week, or maybe a month.” He then acknowledged that he did not recall. Wife testified husband took classes on how to trade stocks and that he was a very good stock trader. He was “very successful” and told his wife he was more successful than the many friends he had in the “same type of the same job.”

D. Tahoe Property Payments and Leftover Shares

Husband testified that he sold Intel shares to make the $211,000 down payment on the Tahoe property and to repay the outstanding loan on the property. Husband’s brokerage account statements show that he sold 1,200 Intel shares between October 1995 and September 1996 for $101,700, and 1,000 shares on August 20, 1997, for $99,977.66.

Husband submitted checks demonstrating withdrawals of $240,000 from the brokerage account between September 8, 1997, and October 10, 1997. Husband testified that he sold the shares that had been awarded between 1988 and 1992 for the down payment on the Tahoe property and to make $30,000 in upgrades to the house.

Husband also submitted three checks withdrawn from the brokerage account between August and November 1996 totaling $126,000 that he asserted he withdrew to pay the outstanding $100,000 loan and for family expenses. Husband then located additional checks totaling $305,000 corresponding to withdrawals from the brokerage account in 1998 and 1999. Husband testified he withdrew those checks to pay off the loan on the Tahoe property and to fund “all the big buys,” including putting money aside for a house in San Diego.

According to Kaseno, “there were separate property shares available to be used” for the Tahoe property down payment, and Kaseno did not have evidence suggesting community funds could have been used to fund the down payment. Kaseno testified that husband had 2,100 shares of his separate property available to fund the down payment, leaving him with 2,000 shares with which to pay down the outstanding $100,000 loan. She determined that on January 1, 1999, husband could have sold 844 shares to pay off the loan, leaving 1,200 shares left over in the account.

But Kaseno conceded that the stock options were not necessarily used to fund the down payment or the loan repayment, only that “there were stock options available to have done that, and [husband] is clear to me that he used those stock options to fund that.” Kaseno also conceded that she did not know many details about the parties’ financial standing at the time of the down payment. And she conceded that she did not “have specific documents showing when [the exercised stock options] were sold and the trail of that into the down payment.” Finally, Kaseno did not testify about the stock option awards husband received in 1989, 1990, 1991, and 1992 that would all have vested after marriage but before the Tahoe property purchase.

Kaseno also testified that the ESPP shares husband purchased were sufficient to fund the down payment: “These shares were purchased by Mr. Dahmani. They’re community—they would be assumed to be community property in my mind, and so there were stocks—stocks that would have been available to have funded the down payment. But according to Mr. Dahmani, that’s not what happened.” Although husband told Kaseno he did not use ESPP shares for that purpose, Kaseno was unable to confirm husband’s assertions because she only had access to brokerage statements starting in 2010 and the parties’ tax returns starting in 2004.

Kaseno testified that husband purchased, what became through stock splits, 23,168 shares through ESPP before marriage, and another 10,692 shares during marriage. Kaseno estimated that 69 percent of ESPP shares were husband’s separate property, which she testified could be used as a way to divide the remaining shares between separate and community property.

In June 2016 husband still had 6,000 Intel shares in the brokerage account. According to Kaseno, the 6,000 shares included the 1,200 separate property shares remaining in husband’s account after he made the down payment and paid off the loan, which, following stock splits in 1999 and 2000, had quadrupled to 4,800 shares. Kaseno testified that, assuming the down payment for the Tahoe property and the loan repayment were paid from husband’s separate property, husband had acquired sufficient separate property shares that the 6,000 shares remaining in the E-Trade account in 2016 could still all be husband’s separate property.

E. Trial Court Ruling

In 2016 the parties conducted a trial before a Code of Civil Procedure section 638 referee regarding the division of real and personal property and ongoing child care obligations. The court issued a written ruling, which was later attached to the Judgment of Dissolution. As relevant here, the trial court found that during marriage husband deposited ESPP shares, which were community shares because they were earned during marriage, into the brokerage account. The court also found that a portion of the stock options that were granted prior to marriage had vested during the marriage but prior to the purchase of the Tahoe property and that those shares of stock also had a community property component. As a result, the court found that the funds contained in the brokerage account that were used to purchase the Tahoe property were commingled and had both separate property and community property components.

The court observed that comingling separate and community property does not alter the status of the respective property interest provided that the components of the comingled property can be traced to their separate versus community sources. (Hicks v. Hicks (1962) 211 Cal.App.2d 144, 157.) But the court noted that husband bears the burden of tracing separate funds to the purchase of the Tahoe property. And the court found that husband failed to meet his burden of keeping adequate records to un-comingle the funds in the brokerage account. The court observed, “There is no way to segregate the Intel stock that was derived from options that vested prior to marriage and were exercised, options that vested after marriage, and stock derived from the Intel Stock Participation Plan.” While husband asserted that he quickly sold shares he obtained through ESPP to fund the family’s lifestyle, he did not support that assertion with documentation. The court noted the absence of the Tahoe property closing documents “that would show the source of the down payment.” Importantly, the court found that there were no records of deposits in the brokerage account that would differentiate between the separate and community property shares.

Similarly, the court found that husband failed to meet his burden regarding the $100,000 note on the Tahoe property. While husband testified the note was paid off in 1997 or 1998, the parties’ taxes showed the parties were still paying off the loan in 2000.

The court also observed that a portion of the funds in the brokerage account were derived from husband’s purchase of stocks on a margin account during marriage. The court found that husband used community efforts to determine which shares of stock to purchase and that there was no testimony as to what values to attribute to that effort.

The court found that husband utilized the Tahoe property post-separation and that he utilized the property consistently with the numbers alleged by wife. The court also awarded $25,000 in attorney’s fees to wife based on husband’s ability to pay and wife’s need.

Additional facts will be set out in the Discussion as necessary.

Husband timely appeals from the court’s judgment.

II. DISCUSSION

A. Husband’s Separate Property

Husband contends the trial court abused its discretion when it determined that the $211,000 down payment and $100,000 loan repayment on the Tahoe property and shares remaining in husband’s E-Trade account were entirely community property and refusing to award husband reimbursements under Family Code section 2640. ,

Husband argues the undisputed facts show that he sufficiently traced funds used for the Tahoe property down payment and loan repayment to proceeds from stock options that he acquired before marriage. And he contends that he sufficiently traced shares remaining in the E-Trade account back to his separate property. In the alternative, husband argues that even if the stock options used for the down payment and the loan repayment and the funds remaining in the E-Trade account had a community property component, the trial court abused its discretion by failing to apply a formula to apportion the separate and community components of those funds.

As we explain, some of these claims are forfeited. As to the claims we reach, the trial court’s findings are supported by substantial evidence and we see no abuse of discretion.

1. Legal Background

“[T]he court has broad discretion to determine the manner in which community property is divided and the responsibility to fix the value of assets and liabilities in order to accomplish an equal division.” (In re Marriage of Duncan (2001) 90 Cal.App.4th 617, 631-632.) We review the trial court’s determination as to whether certain property is separate or community for substantial evidence. (In re Marriage of Dekker (1993) 17 Cal.App.4th 842, 849.) Substantial evidence “must have ponderable legal significance and ‘ “must be reasonable in nature, credible, and of solid value; it must actually be ‘substantial’ proof of the essentials which the law requires in a particular case.” ’ ” (In re Marriage of Grinius (1985) 166 Cal.App.3d 1179, 1185.) It is not the reviewing court’s function “to decide questions of fact or credibility.” (In re E.M. (2014) 228 Cal.App.4th 828, 851.) The reviewing court defers to the trial court’s assessment of credibility and resolves factual conflicts to support the court’s findings. (In re Marriage of Scherr (1986) 177 Cal.App.3d 314, 320.) “ ‘[I]f two or more different inferences can reasonably be drawn from the evidence this court is without power to substitute its own inferences or deductions for those of the trier of fact.’ ” (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266.) Husband “bears the burden of establishing error.” (In re Marriage of Cochran (2001) 87 Cal.App.4th 1050, 1056.)

“ ‘Property acquired by purchase during marriage is presumed to be community property, and the burden is on the spouse asserting its separate character to overcome the presumption. [Citations.] The presumption applies when a husband purchases property during the marriage with funds from . . . an account . . . in which he has commingled his separate funds with community funds.’ ” (In re Marriage of Marsden (1982) 130 Cal.App.3d 426, 441 (Marsden).) Stock options awarded during marriage and that vest after separation have a community property component. (In re Marriage of Nelson (1986) 177 Cal.App.3d 150, 153-154 (Nelson).)

“[I]f separate property is commingled with community property in a bank account, then the owner of the separate property has the burden of keeping records establishing community funds were exhausted when the purchase was made.” (In re Marriage of McLain (2017) 7 Cal.App.5th 262, 273.) “A burden of recordkeeping logically arises out of the very act of commingling funds during marriage so the general community property presumption is not thwarted.” (In re Marriage of Ficke (2013) 217 Cal.App.4th 10, 25.)

Separate property may be traced from “specific community property to which the separate property was originally contributed” to “any other community property that is subsequently acquired from the proceeds of the initial property, and to which the separate property contribution can be traced.” (In re Marriage of Walrath (1998) 17 Cal.4th 907, 918.) Either “direct tracing” or “family living expense tracing” may be used. (In re Marriage of Braud (1996) 45 Cal.App.4th 797, 823 (Braud).)

“Under the ‘direct tracing’ method, the disputed asset . . . is traced to the withdrawal of separate property funds from the commingled account.” (Braud, supra, 45 Cal.App.4th at p. 823.) The direct tracing method “requires specific records reconstructing each separate and community property deposit, and each separate and community property payment as it occurs.” (Ibid.) “[O]ral testimony of intent” or “records that simply total up all separate property funds available during the relevant period and all the separate expenditures during that period” are inadequate to establish separate property status. (Ibid.)

“Under the ‘family living expense’ or ‘recapitulation’ method, it is assumed that family living expenses are paid out of community property funds.” (Braud, supra, 45 Cal.App.4th at p. 823.) “Payments may be traced to a separate property source by showing community income at the time of the payments or purchase was exhausted by family expense, so that the payments or purchase necessarily must have been made with separate property funds.” (Ibid.) “The recapitulation must be sufficiently exhaustive to establish not only that separate property funds were available to make payments, but that they were actually used.” (Id. at pp. 823-824.) “As with direct tracing, the record must demonstrate that community income was depleted at the time the particular asset was acquired.” (Id. at p. 824.)

“ ‘[I]f separate and community property or funds are commingled in such a manner that it is impossible to trace the source of the property or funds, the whole will be treated as community property . . . .’ ” (In re Marriage of Mix (1975) 14 Cal.3d 604, 611 (Mix).)

2. Direct Tracing Argument

Husband raises both direct tracing method and recapitulation method arguments in support of his assertion that the funds used for the down payment and loan repayment must have been derived from his separate property. He contends that any stock he was awarded in April 1993, after marriage, would not have been in his account until April 1998 because stock options did not “fully vest until five years after receipt.” Therefore, he contends, the shares he sold in 1997 to fund the down payment must have been awarded before the 1993 marriage.

But that argument ignores important facts about the composition of the brokerage account in 1997. First, the evidence shows that husband was awarded stock options in 1990, 1991, and 1992 that totaled 8,000 options by 1997 when adjusted for stock splits in 1993, 1995, and 1997. Assuming that 82 shares were received into the brokerage account for every 300 options exercised, husband’s account would have received over 2,100 shares resulting from those 8,000 options. Each one of those shares would have a community property component (In re Marriage of Hug (1984) 154 Cal.App.3d 780, 792; Nelson, supra, 177 Cal.App.3d at pp. 154-155), and the sale of those shares alone could have funded the down payment.

At the time of the down payment and loan repayments, the brokerage account contained some Intel shares that were entirely separate property and some shares that had a community property component. The available documentation did not indicate the source of the funds, the sale of the 1,000 shares ostensibly used to fund the down payment did not expressly state that the shares sold were husband’s separate property, and the checks that withdrew funds from the account did not provide any indication that the funds were husband’s separate property.

Additionally, husband’s expert (Kaseno) did not testify that husband necessarily used his separate property shares to fund the down payment. Rather, she testified only that “there were separate property shares available to be used” for the Tahoe property down payment. (Italics added.) While she also asserted that husband was “clear to [her] that he used those stock options to fund that,” the mere fact that separate property was available to fund the down payment is not sufficient proof (Marsden, supra, 130 Cal.App.3d at p. 442), and records simply totaling up the separate property funds available at the time of purchase are inadequate to establish separate property status (Braud, supra, 45 Cal.App.4th at p. 823).

Moreover, shares obtained via exercised stock options were not the only shares held in the brokerage account. Husband presented conflicting testimony about whether he deposited shares purchased through ESPP into the brokerage account, and he provided no documentation demonstrating his purported custom of selling ESPP shares immediately after purchase. Without documentation distinguishing between shares obtained through stock options and shares obtained through ESPP, it is not possible to distinguish between the separate and community property in the account.

Further adding to the difficulty of tracing the shares in the account is husband’s practice of trading shares of non-Intel stock using his Intel shares as leverage. As the trial court accurately found, there was little evidence regarding the value of the community effort put forth to research, buy, and sell stock. While husband now claims that he put in no more than minimal effort, wife testified that he spent considerable time in the evenings after work learning about stocks and researching his trades. We also observe that, in addition to the community effort used in trading stocks, any profits husband earned through that endeavor were earned by leveraging what were partially community property shares of Intel.

Because the documentation available was insufficient to reconstruct each separate and community property deposit and payment, there is substantial evidence that the commingled funds in the account were not sufficiently traced to husband’s separate property using the direct tracing method.

3. Family Living Expense Tracing Argument

Husband also advances a family living expense argument, that the funds used for the down payment and loan repayment must have been his separate property because the community lacked resources to fund the payments. Husband contends that wife was unemployed and that the community “spent all of [his] earnings and then some,” listing various expenses — new cars, private education for their child, and various vacations. Husband asserts that he “was constantly exercising his ESPP stock” to fund the family’s lifestyle, and he points to Kaseno’s testimony that it “seemed improbable” based on husband’s earnings that the community had sufficient funds to make the down payment and that Kaseno “could see there were limited community funds.”

But as we have discussed, the documentary evidence does not conclusively show that community funds were exhausted at the time of the down payment. Husband failed to present documents showing that he sold ESPP shares immediately such that they were not held in the brokerage account. The brokerage account also contained numerous Intel shares with a community property component. And husband was using community resources to trade stocks using partially community property shares as leverage; a portion of those funds were also community property. Finally, while husband presented examples of the family’s expenses, he did not provide sufficient evidence to establish that the community property funds in the brokerage account were insufficient to cover both the family’s expenses and the Tahoe property down payment. Therefore, there is sufficient evidence that husband failed to satisfy his burden of tracing the funds for the down payment or the loan repayment to his separate property through the family living expense method.

4. Other Apportionment Arguments

In the alternative to his argument that he is entitled to reimbursement for the entire down payment and loan repayment on the Tahoe property, husband argues he is entitled to at least the amount he can definitively show was his separate property. He raises three variations of the argument. First, he contends he is entitled to at least $99,977.88 of the down payment because that portion came from husband’s sale of 1,000 shares of Intel stock. Second, he claims the trial court erred in not awarding him 81.62 percent of the down payment. This claim is based on his estimate of the number of shares in the brokerage account and the corresponding determination of the percentage thereof that are his separate property. And third, husband argues the trial court should have applied a formula to calculate his separate property share. We are not persuaded.

Regarding husband’s argument that he is owed at least $99,977.88, as we have discussed, the documentation admitted at trial does not support the assertion that the 1,000 shares husband sold to fund the Tahoe property down payment were entirely his separate property. Rather, the evidence demonstrates that husband was unable to trace the funds in the account to his separate property. Therefore, the whole account must be treated as community property. (Mix, supra, 14 Cal.3d at p. 611.)

Similarly, we disagree with husband’s calculation that he is owed 81.62 percent of the down payment. He reaches that figure by adding all of the ESPP shares he acquired before marriage (5,792, assuming he never sold any and they continued to split), all of the ESPP shares he acquired during marriage but before the down payment (2,238, again assuming he never sold any shares), and the 4,144 separate stock option shares Kaseno testified he was awarded before marriage. He then argues 81.62 percent of those shares were his separate property.

As husband acknowledges, this calculation contradicts his own trial testimony that he routinely sold ESPP shares to fund his family’s lifestyle. And his calculation ignores the fact that there is no documentation to show which ESPP shares he sold and when. Moreover, the calculation does not include the stock options that were granted before marriage but that vested during marriage. In short, the trial court did not err in declining to adopt such a flawed calculation.

Husband next argues in the alternative that the trial court erred in failing to apply a formula to determine the separate and community portions of the account as advocated by In re Marriage of Walker (1989) 216 Cal.App.3d 644, 648-649 and In re Marriage of Steinberger (2001) 91 Cal.App.4th 1449, 1459.

Wife contends that husband’s argument for applying a formula was forfeited because he failed to raise the issue at the trial court. (Newton v. Clemons (2003) 110 Cal.App.4th 1, 11 [“a reviewing court will ordinarily not consider claims made for the first time on appeal which could have been but were not presented to the trial court”].) Husband responds that he did not forfeit the argument because he did not know it was an issue until after the court ruled and because wife also did not present evidence concerning the apportionment of the funds in the account. (See In re Marriage of Sonne (2010) 48 Cal.4th 118, 128.) But in husband’s objections to the court’s ruling and request for a rehearing, he did not raise the argument that the court should have applied a formula to apportion the funds in the account; therefore, husband has forfeited this argument.

5. E-Trade Account

Husband contends that, assuming he used entirely separate property shares to pay the down payment and repay the $100,000 loan on the property, there would still have been a substantial number of separate property shares remaining in the E-Trade account. Husband argues, therefore, that the court erred in ruling that the entire E-Trade account was community property. Husband also contends that the court’s decision that both the Tahoe property and the E-Trade account are entirely community property was an improper application of law to the undisputed facts, requiring de novo review, citing In re Marriage of Rossin (2009) 172 Cal.App.4th 725, 734 (Rossin).)

We disagree with husband that this issue requires de novo review. Rather than “ ‘a critical consideration, in a factual context, of legal principles and their underlying values’ ” (Rossin, supra, 172 Cal.App.4th at p. 734), this issue required the court to engage in a routine determination as to whether an account is commingled such that it must be considered entirely community property. (Mix, supra, 14 Cal.3d at p. 611.) Husband’s inability to present documentary evidence to support his claim to separate property required the court to characterize the entire account as community property. The existence of some number of separate property shares in the account is irrelevant.

6. Summary of Conclusions

The trial court did not abuse its discretion when it found that husband had failed to satisfy his burden to trace the funds used for the down payment on the Tahoe property, the funds used to repay the loan on the Tahoe property, and the funds remaining in the E-Trade account back to his separate property.

B. Wife’s Document Production

Husband next argues that wife failed to timely disclose relevant financial documents and consequently is precluded from asserting that the down payment for the Tahoe property was made with community funds. He adds (in a separate but unheaded argument) that the trial court erred in not requiring wife to produce the documents.

First, husband fails to support the point he makes in the header, forfeiting that argument. (See Ewald v. Nationstar Mortgage, LLC (2017) 13 Cal.App.5th 947, 948 (Ewald).) He posits that wife “should have been given a choice: produce the documents or be precluded from introducing any of her own” and claims “[a]nything less was a manifest miscarriage of justice,” but offers no authority supporting his claim that preclusion was required.

Next, as we have noted, his actual claim of error—that the trial court abused its discretion in not requiring wife to produce the documents—is not headed as such. Points raised in the opening brief must be set forth separately under an appropriate heading, showing the nature of the question to be presented and the point to be made. (Cal. Rules of Court, rule 8.204(a)(1)(B); Opdyk v. California Horse Racing Bd. (1995) 34 Cal.App.4th 1826, 1830, fn. 4.)

Despite these irregularities, we reach the merits of this claim of error.

1. Background

On the second day of trial, husband’s counsel, Moataz Hamza, requested that wife produce husband’s employment records and any brokerage account records. The trial court ruled that wife had no obligation to produce documents absent a request. Hamza said he would file a motion to compel production, but he did not do so.

On the third day of trial, wife testified that she thought husband took all documents stored in the marital residence, where wife resided at the time of trial. Wife then testified that she found two or three boxes during trial, one of which contained documents referring to the purchase date of the Tahoe property.

Hamza asserted that wife concealed records that would show husband purchased the Tahoe property with his separate property. Wife’s counsel, Jill Barr, responded that husband did not assert a separate property interest in the Tahoe property until immediately before trial. Hamza produced a notice to appear and produce documents dated June 30, 2016, and he asserted that he mailed the notice to Barr. Barr responded she never received the notice, and Hamza acknowledged that Barr told him before trial she had not received it.

Wife then testified the documents she found did not show the source of the funds for the Tahoe property and that she gave the documents to Barr. The court again ruled that wife did not have to produce documents absent a motion to compel or a timely request under Code of Civil Procedure section 1987.

At the end of the third day of trial, Hamza renewed his request for documents pursuant to Code of Civil Procedure section 1987. The court observed that the documents requested in the notice contained no specific dates and that the request was an open-ended discovery request made beyond the close of discovery. The court then denied the request pursuant to the notice, but it permitted husband to serve a request for specific documents with specific dates within seven days for production at the subsequent trial date, scheduled over a month later. Husband did not request documents.

2. Law and Analysis

“ ‘ “Management of discovery generally lies within the sound discretion of the trial court.” [Citation.] “Where there is a basis for the trial court’s ruling and it is supported by the evidence, a reviewing court will not substitute its opinion for that of the trial court. [Citation.] The trial court’s determination will be set aside only when it has been demonstrated that there was ‘no legal justification’ for the order granting or denying the discovery in question.” ’ ” (Lickter v. Lickter (2010) 189 Cal.App.4th 712, 740.)

Husband contends wife had an “absolute obligation under the law” to provide the documents related to the Tahoe property purchase to husband. Husband, in his opening brief, cites without explanation sections 2122 and 2105, subdivisions (a) and (b). On reply he contends that he intended to cite sections 2102 and 2105, subdivisions (a) and (b).

Section 2102, subdivision (a) provides in part: “From the date of separation to the date of the distribution of the community or quasi-community asset or liability in question, each party is subject to the standards provided in Section 721, as to all activities that affect the assets and liabilities of the other party, including, but not limited to, the following activities: [¶] (1) The accurate and complete disclosure of all assets and liabilities in which the party has or may have an interest or obligation and all current earnings, accumulations, and expenses, including an immediate, full, and accurate update or augmentation to the extent there have been any material changes.”

Section 2105, subdivision (a) requires in part, “no later than 45 days before the first assigned trial date, 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.” Subdivision (b) requires that the final declaration of disclosure includes: “(1) All material facts and information regarding the characterization of all assets and liabilities[;] [¶] (2) All material facts and information regarding the valuation of all assets that are contended to be community property or in which it is contended the community has an interest[;] [¶] (3) All material facts and information regarding the amounts of all obligations that are contended to be community obligations or for which it is contended the community has liability[;] [¶] (4) All material facts and information regarding the earnings, accumulations, and expenses of each party that have been set forth in the income and expense declaration.”

The duty of disclosure “includes the obligation to make full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest . . . .” (§ 1100, subd. (e).) The duty of disclosure also includes the continuing duty to update and augment information. (In re Marriage of Brewer & Federici (2001) 93 Cal.App.4th 1334, 1348; §§ 1100, subd. (e), 2100, subd. (c).) “It reasonably follows that a spouse who is in a superior position to obtain records or information from which an asset can be valued and can reasonably do so must acquire and disclose such information to the other spouse.” (In re Marriage of Brewer & Federici, supra, at p. 1348.)

Here, wife had a duty to disclose material information regarding the characterization of all assets in which the community may have an interest, which includes information regarding the Tahoe property. As such, wife had a duty to disclose the documents she had regarding the purchase of the property if those documents consisted of “material facts and information regarding the . . . characterization” of the Tahoe property. (§ 1100, subd. (e).)

But husband failed to follow the proper procedures for requesting disclosure of the documents. Where a party fails to provide the information required under section 2105, the other party “may, within a reasonable time, request preparation of the appropriate declaration of disclosure or further particularity.” (§ 2107, subd. (a).) If the noncomplying party fails to comply with the request for documents under subdivision (a), the complying party may file a motion to compel further response, file a motion for an order preventing the noncomplying party from producing evidence that would have been covered in the declaration of disclosure, or file a motion showing good cause for the court to grant the complying party’s voluntary waiver of receipt of the disclosures under sections 2104 and 2105. (§ 2107, subd. (b).)

Husband waited until the third day of trial to request that wife produce documents, and when he did so, he did not argue that her final declaration of disclosure was deficient. Rather, he made his request pursuant to his notice to appear and produce documents, which we discuss infra. Then, after failing to request an appropriate declaration of disclosure or further particularity, he failed to file a motion to compel as he indicated he would. After failing to move to compel production of documents or request other relief as set out in section 2107, subdivision (b), husband also failed to move to set aside the judgment. (§§ 2107, subd. (d), 2122.)

In the absence of a court ruling reviewable on appeal, wife testified that she did not think she possessed documents that showed the source of the funds for the Tahoe property. Assessing the credibility of her testimony is not a proper appellate function (People v. Thompson (2010) 49 Cal.4th 79, 125), and therefore we are not able to conclude that the documents were subject to disclosure under sections 2102 and 2105.

We also disagree with husband that he was prejudiced. Despite husband’s failure to follow the proper procedures to request documents under section 2107, the trial court authorized husband to request specific documents for production before the next trial date. Given that husband failed to take advantage of an opportunity to obtain the documents, and without the benefit of factual findings regarding the relevance of the documents at issue, we are unable to conclude that “ ‘ “it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of the error.” (People v. Watson (1956) 46 Cal.2d 818, 836.)’ ” (In re Marriage of McLaughlin (2000) 82 Cal.App.4th 327, 337.)

Husband also asserts that wife was required to produce documents pursuant to his notice to appear and produce documents. Husband claims that there is a rebuttable presumption that the notice was served because his attorney declared under penalty of perjury that he served wife’s attorney. (See Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1442.) But Barr asserted that she never received the notice, and Hamza agreed that Barr had told him before trial that she never received the request. (See People v. McCall (2004) 32 Cal.4th 175, 183 [presumption rebutted where party came forward with some evidence to rebut connection between two facts].)

The trial court did not abuse its discretion when it declined to require wife to disclose documents pursuant to the notice to appear and produce documents.

C. Maintenance in Tahoe
D.
Husband contends the court abused its discretion by awarding wife $45,210 for husband’s exclusive use of the Tahoe property from July 2015 to August 2016. He contends that he was not required to reimburse the community because: (1) he repaired the property while he was there; (2) many of the days he was at the property the management company’s log stated he was there for “owner maintenance”; (3) the trial court found that he performed maintenance while he was at the property, and (4) the court failed to deduct management company commissions from the nightly rate for the property. We disagree.

Reimbursements for exclusive use of community property is an issue of fact for the trial court. (In re Marriage of Watts (1985) 171 Cal.App.3d 366, 374 (Watts).) “Where one spouse has the exclusive use of a community asset during the period between separation and trial, that spouse may be required to compensate the community for the reasonable value of that use.” (In re Marriage of Garcia (1990) 224 Cal.App.3d 885, 890.) “The right to such compensation is commonly known as a ‘Watts charge.’ [Citation.] Where the Watts rule applies, the court is ‘obligated either to order reimbursement to the community or to offer an explanation for not doing so.’ ” (In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 978.)

Husband does not dispute that he had exclusive use of the Tahoe property beginning in September 2015. And he acknowledges that there is no legal support for his assertion that a party does not need to reimburse the community for exclusive use of community property simply because that party is performing maintenance on the property. Thus, his unsupported claim is forfeited. (Ewald, supra, 13 Cal.App.5th at p. 948 [“We repeatedly have held that the failure to provide legal authorities to support arguments forfeits contentions of error”].)

Husband asserts that there is no evidence that he stayed at the property for 19 days from February 29, 2016, to March 18, 2016. But wife asserted that husband used the property on those days in Exhibit 53, which was admitted into evidence without objection. Husband did not cross examine her on that assertion. And while husband objected to the Watts credits on other grounds, he raises this particular argument for the first time on appeal; therefore, the argument is forfeited. (See Perez v. Grajales (2008) 169 Cal.App.4th 580, 591-592 (Perez).)

Husband also asserts that wife failed to inform the court of the property management commissions that would reduce the rental value of the property. While husband argued that the rental value of the property was less than claimed by wife because it was the offseason for renting the property, he did not argue that the court failed to reduce the rental value award to account for property management company commissions. Therefore, the argument is forfeited. (See Perez, supra, 169 Cal.App.4th at pp. 591-592.)

D. Attorney’s Fees

Husband contends the court erred in awarding wife $25,000 in need-based attorney’s fees. Husband argues wife’s request for attorney’s fees was procedurally improper, the record does not reflect wife’s need or husband’s ability to pay, and there was no evidence of or finding that the fees were reasonable. We see no abuse of discretion.

“The family court has broad discretion in ruling on a motion for fees and costs; we will not reverse absent a showing that no judge could reasonably have made the order, considering all of the evidence viewed most favorably in support of the order.” (In re Marriage of Winternitz (2015) 235 Cal.App.4th 644, 657 (Winternitz).)

Husband first argues that wife’s request for attorney’s fees was procedurally improper because Barr’s declaration did not include information as to Barr’s hourly rate, the nature of the litigation, Barr’s experience, and why the requested fees and costs were just, necessary, and reasonable. Wife argues that husband forfeited this argument by failing to raise it at trial. At trial, husband argued against wife’s claim for attorney’s fees on the grounds that wife’s fees were excessive due to block billing, vague billing statements, advancing baseless claims for the purpose of increasing fees, and repetitive billing. But he did not argue the request was procedurally improper. Therefore, we agree that his argument is forfeited. (Perez, supra, 169 Cal.App.4th at pp. 591-592.)

Husband next argues that the trial court did not make specific findings regarding wife’s need or his ability to pay. And he argues that the court’s statements that wife was not receiving adequate child support and that he “has significant separate property assets” are not supported by the record.

Section 2030, subdivision (a)(1) provides: “In a proceeding for dissolution of marriage . . . the court shall ensure that each party has access to legal representation . . . to preserve each party’s rights by ordering, if necessary based on the income and needs assessments, one party . . . to pay to the other party, or to the other party’s attorney, whatever amount is reasonably necessary for attorney’s fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding.” When a party requests attorney’s fees and costs under section 2030, the family law court “shall make findings on whether an award of attorney’s fees and costs under this section is appropriate, whether there is a disparity in access to funds to retain counsel, and whether one party is able to pay for legal representation of both parties.” (§ 2030, subd. (a)(2).) “If the findings demonstrate disparity in access and ability to pay, the court shall make an order awarding attorney’s fees and costs.” (Ibid.)

The trial court “shall first determine that the party has or is reasonably likely to have the ability to pay.” (§ 270.) “In assessing one party’s relative need and the other party’s ability to pay, the family court may consider all evidence concerning the parties’ current incomes, assets, and abilities, including investments and income-producing properties.” (In re Marriage of Sorge (2012) 202 Cal.App.4th 626, 662.) An award of attorney’s fees and costs may be ordered “from any type of property, whether community or separate, principal or income.” (§ 2032, subd. (c); see Hogoboom & King, Cal. Practice Guide: Family Law (The Rutter Group 2018) ¶ 14:165 [“the parties’ ‘relative circumstances’ must reflect consideration of all available sources from which fees could be paid,” including liquid and illiquid assets; the court may even require a party to borrow money under appropriate circumstances].)

“[A] family court may award attorney fees and costs ‘between the parties based on their relative circumstances in order to ensure parity of legal representation in the action.’ [Citation.] The parties’ circumstances include assets, debts and earning ability of both parties, ability to pay, duration of the marriage, and the age and health of the parties.” (Winternitz, supra, 235 Cal.App.4th at p. 657.)
“The fact that wife was awarded a substantial amount of community property assets . . . does not require a finding that the trial court abused its discretion in awarding her attorney’s fees.” (Marsden, supra, 130 Cal.App.3d at p. 447.)

First, we observe that the court did make findings. It found that wife was not receiving adequate child support and that husband had significant property assets. Based on those findings, the court concluded, “Consequently, she has the much greater need at the present time.”

Second, we disagree with husband’s contention that the record does not support either of the court’s findings. Husband contends he paid a substantial amount in attorney’s fees, that he is no longer working, that he was forced to pay wife $29,458 of the $46,628 he received in restricted stock units and severance pay, and that he was paying for the children’s cell phones and certain of wife’s expenses. But the evidence also showed that husband had substantial funds in various retirement and investment accounts from which to pay attorney’s fees. The trial court ordered that husband pay the attorney’s fees from his share of the sale of the Tahoe property, which the parties stipulated was worth $875,000. The court did not abuse its discretion in finding husband had the ability to pay $25,000 in attorney’s fees.

Similarly, we conclude the court did not abuse its discretion in finding wife was the party in greater need. Wife was supporting their daughters, and the evidence demonstrated that husband cut off wife’s access to bank accounts and credit lines. Moreover, wife is unable to work, and her worker’s compensation benefits have ceased. Husband’s argument regarding wife’s need is that she has already paid $70,000 in attorney’s fees, and there is no evidence she cannot pay more. We are not persuaded.

Husband next argues the trial court abused its discretion in awarding wife attorney’s fees because the court made no finding on the reasonableness of the fees, and there was insufficient evidence on which to make such a finding. We disagree.

The court must decide “ ‘ “what is just and reasonable under the relative circumstances” [citation], taking into consideration “the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party’s case adequately . . . . The fact that the party requesting an award of attorney’s fees and costs has resources . . . is not itself a bar to an order that the other party pay part or all of the fees and costs requested. Financial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances” [citation].’ [Citation.] ‘In assessing the applicant’s relative “need” and the other party’s ability to pay, the court may take into account “all evidence concerning the parties’ current incomes, assets, and abilities, including investment and income-producing properties.” ’ [Citation.] In In re Marriage of Terry [(2000) 80 Cal.App.4th 921, 933], the appellate court held, ‘[i]n light of the fact that [the wife] is by far the wealthier spouse, the trial court did not abuse its discretion in denying her fees.’ [Citation.]” (In re Marriage of Dietz (2009) 176 Cal.App.4th 387, 406.)

“Financial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances.” (§ 2032, subd. (b).) Factors the court may consider are, “the nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in handling the litigation, the attention given, the success of the attorney’s efforts, his learning, his age, and his experience in the particular type of work demanded [citation]; the intricacies and importance of the litigation, the labor and the necessity for skilled legal training and ability in trying the cause, and the time consumed. [Citations.]’ We add that the responsibility undertaken is also an important consideration.” (In re Marriage of Cueva (1978) 86 Cal.App.3d 290, 296.)

Husband argues that Barr’s declaration was insufficient to show reasonableness of the fees. But we observe that the court awarded wife only $25,000, far less

than the attorney’s fees she claimed, which amounted to over $115,000. The awarded fees were less than the $32,500 husband spent in attorney’s fees before hiring his trial counsel. Husband has not demonstrated that the trial court abused its discretion in awarding $25,000 in attorney’s fees to wife.

III. DISPOSITION

The judgment is affirmed.

/S/

RENNER, J.

We concur:

/S/

RAYE, P. J.

/S/

ROBIE, J.