Family Law

Recent Family Law Cases

FAMILY LAW (Through 7/20/2024)

By:  Andrew Botros, CFLS, CALS

The precise holdings in a given case are bolded. Author’s note is italicized.

Dickson v. Mann

Dickson v. Mann
7/16/2024 CA 4/1: D081851 – J. Irion
https://www.courts.ca.gov/opinions/documents/D081851.PDF

In this case, the Court of Appeal, through its interpretation of the Rules of Professional Conduct, affirmed a trial court’s denial of a law firm’s third-party claim held in its attorney-client trust account.

Higgs, Fletcher & Mack LLP (“HFM”) had received a sum of $585,000 from their client, Jack Mann, under a flat fee agreement for future legal representation. The engagement agreement provided that when Mann deposited this flat fee into its operating account, the fee was deemed earned by HFM. These funds were in HFM’s client trust account when Mann’s judgment creditor, Nickolas Dickson, served a notice of levy.

In response, HFM filed a third-party claim with the San Diego County Sheriff’s Department, disputing Dickson’s right to the funds and asserting their ownership based on the engagement agreement.

The trial court ruled that the funds belonged to Mann, reasoning that HFM had not performed any legal services to earn the flat fee before the notice of levy. The court cited Rule 1.15(a) of the State Bar Rules of Professional Conduct, which dictates that money in a client trust account belongs to the client. Consequently, the court ordered HFM to turn over the $585,000 to Dickson.

HFM filed a motion for reconsideration, introducing a prior agreement from 2021 and claiming fees of $53,457.95 based on legal services provided under that agreement. The trial court denied this motion, stating that HFM should have presented this evidence earlier and that a reasonably diligent party would have pursued both theories of entitlement from the outset.

The Court of Appeal rejected Dickson’s first argument that the $585,000 necessarily belonged to Mann because it was in HFM’s client trust account. Dickson claimed that “[m]oney in trust belongs to the client,” so that, “by definition, this means the funds belonged to Mann, not [HFM].” The Court of Appeal disagreed, holding “[o]n its face, rule 1.15(a) addresses only where a lawyer or law firm should place funds held for the benefit of a client. The rule does not categorically state that a law firm may never hold its own funds in a client trust account.” Further, rule 1.15(c) describes two other circumstances where a law firm may have its own funds in a client trust account:

“(1) funds reasonably sufficient to pay bank charges; and

“(2) funds belonging in part to a client or other person and in part presently or potentially to the lawyer or the law firm, in which case the portion belonging to the lawyer or law firm must be withdrawn at the earliest reasonable time after the lawyer or law firm’s interest in that portion becomes fixed. However, if a client or other person disputes the lawyer or law firm’s right to receive a portion of trust funds, the disputed portion shall not be withdrawn until the dispute is finally resolved.”

The Court of Appeal however, affirmed on another ground. It held that HFM had not earned the $585,000 at the time of the levy. According to Rule 1.5(e) of the Rules of Professional Conduct, flat fee agreements are permitted but must comply with specific requirements, including that fees are not considered earned until the services are actually provided or unless the fee is paid as a true retainer “paid solely for the purpose of ensuring the availability of the lawyer for the matter.” HFM had conceded they had not “performed any services under the engagement agreement prior to the service of the notice of levy.” Further, it was not even argued that this was a true retainer.   Therefore, despite the engagement agreement between HFM and Mann providing that the fees were earned immediately, the Court of Appeal held that they could not have been earned until services were rendered. Thus, HFM had no right to the $585,000 at the time of the levy.

The trial court did not abuse its discretion in denying HFM’s motion for reconsideration

The Court of Appeal also concluded that the trial court acted within its discretion in denying HFM’s motion for reconsideration. It agreed with the trial court’s reasoning that HFM had ample opportunity to present evidence related to fees it did incur in 2021 during the initial motion but failed to do so. The Court of Appeal concluded that HFM provided no satisfactory explanation for why it did not identify these prior fees as an alternative ground for its claim from the beginning. The Court of Appeal emphasized that HFM’s lack of diligence in presenting all relevant evidence at the appropriate time justified the trial court’s decision to deny the motion for reconsideration.

Wastexperts, Inc. v. Arakelian Enterprises, Inc.

Wastexperts, Inc. v. Arakelian Enterprises, Inc.
7/11/2024 CA 2/4: B325299 – J. Zukin
https://www.courts.ca.gov/opinions/documents/B325299.PDF

This case was “published[] to draw attention to [the opinion’s] concluding note on civility and persuasive brief writing.”

Author’s note: I reproduce that brief portion of the opinion below without modification:

Having resolved the merits of the appeal, we cannot allow the tone of the briefing to pass without comment.  Appellant’s briefs use inappropriately harsh terms to launch needless and unsubstantiated attacks on the decisions made by the trial judge, as well as against the opposing party and its lawyers.  We recognize WasteXperts may not prosecute its appeal without responding to the trial court’s orders.  But counsel can dispute the merits of a ruling without calling it “transparently erroneous,” “egregious,” or a “truly perverse miscarriage of justice.”  Counsel did no better in proclaiming that “the overreach by the trial court here is nothing short of shocking, effectively blessing Athens’ business threats . . . and immunizing them.”  Appellant can certainly challenge the outcome without such unfounded insinuations that the trial judge had become an advocate for the other side. 

Appellant targets both respondent and its counsel in the same freewheeling, unprofessional manner.  None of these statements were necessary.  None of the vitriol advanced the legal arguments in this case.  To the contrary, this incivility created an unnecessary distraction to both opposing counsel and this court.

Emotional diatribes do nothing to support the arguments made by counsel.  In fact, this verbiage serves the opposite purpose.  It requires the court to spend additional resources filtering out the hyperbole, and requires opposing counsel to bill their client for additional time to compose a response. 

Ad hominem attacks and other invective detract from counsel’s legal arguments, signal inappropriate personal embroilment in the dispute, and indicate an inability to engage in the reasoned analysis the courts need and counsel’s clients deserve.  When counsel resort to name-calling and to unsupported claims of misconduct, they risk obscuring any meritorious arguments they may have.  Appellant’s counsel would be well advised to refrain from incivility in the future.

People v. Wood

People v. Wood

7/11/2024 CA 4/3: G061001 – J. Goethals

https://www.courts.ca.gov/opinions/documents/G061001.PDF

In this case, the Court of Appeal concluded that the trial court abused its discretion by refusing to stay a parallel civil abatement/injunction action pending the outcome of Wood’s criminal case. As a result, the judgment was reversed and remanded with directions for the trial court to reconsider the propriety of the injunction.

Fountain Valley’s (“the City”) complaint, filed in October 2020, alleged that Wood had been residing in a public park since at least February 2020. Wood’s encampment allegedly blocked the general public from using the park for its intended purpose and impeded the City’s ability to maintain the park. The complaint further detailed that Wood was warned by police that she was in violation of the City’s ordinances by staying in the park past the posted closing time. Officers provided her with information and resources on homeless assistance programs and emergency housing. Despite these warnings, Wood was cited in March and April 2020 for being in the park after hours and was arrested in May and June 2020 for the same violations, leading to the seizure of her personal property.

The City’s civil complaint sought a public nuisance abatement and an injunction to prohibit Wood from continuing to maintain a public nuisance in the park. Notably, at the time the City initiated this civil action, it was already prosecuting a criminal case against Wood based on the same conduct—her presence in the park with her personal belongings after the posted closing time.

The Court of Appeal agreed that under the circumstances, a stay of the civil proceeding was necessary. It acknowledged that while there is no absolute obligation to stay a civil case whenever a parallel criminal case is pending, the trial court has the authority and discretion to do so when warranted. It referenced Pacers, Inc. v. Superior Court (1984) 162 Cal.App.3d 686, which held that a trial court abused its discretion by failing to stay a civil case until the expiration of the criminal statute of limitations.

A trial court must ensure the fairness of any proceeding conducted before it. As explained in Pacers, there is an inherent unfairness in requiring a party to simultaneously defend civil and criminal cases arising from the same conduct because it compels disclosure of a criminal defendant’s evidence and defenses before trial. The prosecution should not be able to obtain, through civil proceedings, information to which it is not entitled under criminal discovery rules.

The City argued that the civil and criminal cases did not arise from the same conduct, asserting that the criminal prosecution was based on specific incidents of past violations, while the injunction sought to prohibit future violations. The Court of Appeal disagreed, noting that both cases resulted from Wood residing in the park. It rejected the City’s assertion that the civil case was distinguishable based on additional factors like her storage of belongings and reliance on Civil Code section 3479, which prohibits public nuisances.

The Court set forth the appropriate test to determine whether the civil case should be stayed, as established in Keating v. Office of Thrift Supervision (9th Cir. 1995) 45 F.3d 322.  The court should consider “‘the extent to which the defendant’s fifth amendment rights are implicated.’ [Citation.] In addition, the decisionmaker should generally consider the following factors: (1) the interest of the plaintiffs in proceeding expeditiously with this litigation or any particular aspect of it, and the potential prejudice to plaintiffs of a delay; (2) the burden which any particular aspect of the proceedings may impose on defendants; (3) the convenience of the court in the management of its cases, and the efficient use of judicial resources; (4) the interests of persons not parties to the civil litigation; and (5) the interest of the public in the pending civil and criminal litigation.”

The Court of Appeal found that the City failed to support its claim of a significant interest in proceeding expeditiously. The fact that Wood had been living in the Park since 2017 without evidence of disruption or violence, coupled with the court’s delay in issuing the injunction, indicated a lack of urgency.

Furthermore, the burden on Wood was substantial. She had to interact with the prosecuting lawyers for her criminal case, and the COVID-19 protocols prevented her from attending her trial in person. As a homeless individual, she faced difficulties in maintaining reliable remote communications and receiving mailed documents.

The City’s argument regarding the interests of non-parties and the public rested on the claim that residents desired the abatement of the nuisance. However, the trial court’s lengthy delay in issuing the injunction after announcing its decision suggested it did not share the City’s sense of urgency.

Author’s note: If nothing else, this case serves as a reminder that the right to a continuance where there is a parallel or related criminal proceeding is subject to the trial court’s discretion. Given my review of similar cases and that there is “an inherent unfairness in requiring a party to simultaneously defend civil and criminal cases arising from the same conduct,” I would not necessarily call that discretion “broad.”

In re Marriage of Wiese

In re Marriage of Wiese
6/20/2024 CA 4/3: G060819, G061168 – P.J. O’Leary
https://www.courts.ca.gov/opinions/documents/A163185.PDF

When a spouse wishes to bring a breach of fiduciary duty claim relating to separate property, rather than community property, which statute of limitations applies? The four-year statute of limitations in Code of Civil Procedure section 343? Or the much more lenient statute of limitations in Family Code section 1101(d)(2), which provides, “[a]n action may be commenced under this section . . . in conjunction with an action for . . . dissolution of marriage”?  In this case, the Court of Appeal concluded that the four-year statute of limitations in Code of Civil Procedure section 343 applies and that a spouse is not permitted to bring a claim for breach of fiduciary duty related to separate property at the time of dissolution if that four years has run.

Background

The parties had a premarital agreement “which among other things, provided for near-total separation of the couple’s assets and earnings.”  Wife worked as an agent for Husband’s real estate brokerage that entitled her to “100 percent of her commissions, after deductions for business expenses and income taxes.” As Wife earned her commissions, Husband “would deduct amounts for business expenses and estimated taxes, as well as for amounts he believed [Wife] owed him for personal expenses exceeding his reasonable-support obligations.”  However, “the amounts Grant deducted for taxes did not correspond with the amounts he ultimately paid based on the parties’ joint tax returns.  And even when the total tax Grant paid on their combined incomes was lower than what he had deducted from Jill’s commissions, he provided her no refund. “

In the dissolution proceedings, Wife claimed that Husband’s “deductions from her commissions constituted breaches of his spousal fiduciary duty and impaired her separate-property interests.”  Husband argued these claims were time-barred. The trial court concluded that Wife’s “fiduciary duty claims were timely based on section 1101, subdivision (d)(2)” and awarded her over $1.3 million for these claims. 

Equitable Estoppel of Statute of Limitations

First, Wife claimed that Husband should be “equitably estopped from invoking the statute of limitation defense.  The Court of Appeal disagreed, concluding that since Husband did not actually and reasonably induce Wife to refrain from filing a lawsuit, there was no plausible equitable estoppel claim.

Forfeiture

Next, Wife claimed that Husband “forfeited his argument because in the trial court, he confined his statute of limitations argument to contractual claims,” not breach of fiduciary duty claims. The Court of Appeal disagreed, holding that “regardless of the precise focus of [Husband’s] argument below, the court rejected his statute of limitations defense by concluding that section 1101, subdivision (d)(2) rendered her claims for breach of fiduciary duty timely.” 

Wife could not avail herself of the statute of limitations provision allowing for “[a]n action may be commenced under this section . . . in conjunction with an action for . . . dissolution of marriage” because this was a breach related to separate property.

The Court of Appeal discussed two prior court cases that held portions of Family Code section 1101 only applied to community property: Schleich and Simmons.

The Simmons court noted “the placement of section 1101, subdivision (h) ‘in a portion of the Family Code that exclusively concerns matters associated with community property.’”  It added that “the Legislature provided remedies that were expressly applicable to nondisclosure of separate property.”

However, Simmons did acknowledge that section 1101 referenced fiduciary duties under section 721, “which are ‘broad enough to encompass the duty to disclose separate property assets.’” Nevertheless, Simmons concluded that the statute as a whole did not intend to extend the remedy to breaches involving separate property.

Schleich produced a similar holding for section 1101, subdivision (g) and “concluded that section 1101 concerned community property ‘exclusively.’”

In Wiese, the Court of Appeal agreed with Simmons and Schleich. It concluded that, despite the reference to Family Code section 721, Family Code section 1101 deals exclusively with community property.  The “statutory framework as a whole teaches that [claims under Family Code section 1101] are indeed meant to address only breaches involving community property.” Further, “every other section within division 4, part 4 of the Family Code concerns only community property.”

The Court of Appeal responded to Wife’s claim that it did not make sense to “to think the Legislature would want to provide harsher remedies for misappropriation of community property.” The Court of Appeal disagreed, concluding that “it is not senseless for the Legislature to be particularly concerned about violations involving community property. The Legislature may have believed it was more common for one spouse to manage—and be in a position to misuse—community assets than for one spouse to manage the other spouse’s separate property.  It may also have believed that even under the latter scenario, a spouse would be more likely to closely monitor the management of his or her separate property by the other spouse.”  

The Court did limit their holding in one way. Wife did “not argue that the continuing-violation doctrine applied to her claims,” so that theory was not considered.  The continuing violation doctrine allows a plaintiff to “recover for unlawful acts occurring outside the limitations period if they continued into that period…The continuing violation doctrine requires proof that (1) the defendant’s actions inside and outside the limitations period are sufficiently similar in kind; (2) those actions occurred with sufficient frequency; and (3) those actions have not acquired a degree of permanence.” (Wassmann v. South Orange County Community College District (2018) 24 Cal.App.5th 825, 850–851.)

Author’s note: This is an awful result that may very well be compelled by the statutory scheme. The extended limitations period for community property exists because spouses rarely sue each other while married. There is no compelling justification why this reasoning should not extend to separate property claims. If the California Supreme Court does not grant review or depublish the case, I hope for swift legislative action.


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