Opinion
Alameda County Super. Ct. No. CH-204042-8
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Haerle, J.
I. Introduction
Wensen Tang Sarchet (Wensen) appeals from an order after hearing awarding Wensen’s former husband, Mervin Mark Sarchet (Mark), attorneys fees pursuant to Family Code section 271, damages for breach of fiduciary duty, and a modification of child support for the parties’ four minor children. We affirm the awards of damages and attorney fees, but reverse the order modifying child support and remand this case so that the trial court can recalculate Wensen’s child support obligation.
All further statutory references are to the Family Code unless otherwise indicated.
II. Statement of Facts
A. Background
Wensen and Mark married in 1991, and separated in 1998. A judgment of dissolution was entered on December 14, 1999. The superior court reserved jurisdiction to resolve all other issues between the parties which has proven to be a very time consuming process.
When the parties separated, Mark was employed as a consultant with KPMG. On April 21, 2001, Mark was laid off from his job and was unemployed until July 15, 2002, when he began working as a “1099 independent contractor.” On December 4, 2002, Mark filed a voluntary petition for relief under chapter 7, title 11, of the United States Bankruptcy Code. On May 15, 2003, Mark secured employment at KPMG as a financial analyst.
Shortly after the parties separated, Wensen left her employment as a sales clerk at a Nordstrom department store and appears to have remained unemployed throughout these proceedings. Wensen’s family has significant assets abroad. According to Mark, Wensen is an heir to a “vast estate which has supplied her with approximately $2,500,000, over the past 12 years.” Although Wensen has frequently denied that she has any current income, she maintains that she was the “main financial provider during the marriage due to her family funds” and, therefore, has claimed significant separate property interests in the property of the marriage.
The parties share legal custody of their four minor children with Mark having primary physical custody. After the separation, Mark and the children remained in the former family home located on Cloverleaf Court in Fremont (the Cloverleaf Court residence). In August 2000, the Cloverleaf Court residence was listed for sale for $2,700,000. In June 2001, the listing price was reduced to $2,300,000. In September 2002, Wensen took possession of the residence after Mark failed to make the mortgage payment and Wensen cured the default. By that time, the listing price had been reduced to $1,999,000. In January 2005, the Cloverleaf Court residence was finally sold by the bankruptcy trustee in Mark’s chapter 7 case for $1,803,000.
B. Resolution of Property Claims
As noted above, Mark filed a bankruptcy petition in December 2002. On March 10, 2003, the bankruptcy court granted Wensen limited relief from the automatic bankruptcy stay so that the state family law court could conduct proceedings pertaining to the marriage dissolution in order to determine (1) what property of the marriage was community property and what property was personal property; (2) the extent of each parties’ interest in specific items of marital property; (3) the value of specific items of community property; (4) credit, offset and reimbursement rights of the parties; (5) support rights; and (6) custody and visitation issues.
On June 14, through June 16, 2004, a trial was conducted in state court before the Honorable Harry R. Sheppard to resolve the property issues identified in the bankruptcy court’s March 10, 2003, order. The court filed its statement of decision on July 27, 2004. It found that Wensen was entitled to the following reimbursements from Mark and/or the community: (1) $750,000 for separate property contribution to the purchase of the Cloverleaf Court residence; (2) $147,981.34 for separate property contributions to improvements to the Cloverleaf Court residence; (3) $67,141.02 (plus interest) for mortgage payments made with separate property funds; (4) $6,102 (plus interest) representing her share of income tax refunds; (5) $78,409.29 (plus interest) representing her share of joint stock and brokerage accounts; (6) one-half the net liquidated value of three additional accounts that Mark depleted after the parties’ separation; and (7) $4,510.50, representing one-half a tuition reimbursement Mark received from his employer for a degree earned during the marriage. A judgment regarding these reimbursement issues was filed on September 8, 2004 (the September 2004 family court judgment).
C. Proceedings in the Bankruptcy Court
On January 12, 2005, the bankruptcy court issued an order approving the sale of the Cloverleaf Court residence for $1,803,000 and authorizing the trustee to pay Wensen $745,000, from the proceeds of the sale. The close of escrow was delayed because Wensen failed to vacate the residence which resulted in a damages claim from the buyers and also required the trustee to obtain a writ of possession. After Wensen finally did vacate the residence, the trustee incurred additional liability for missing items and damage caused to the residence.
On February 18, 2005, the trustee sent Wensen a check in the amount of $644,931.00 as payment for her separate property interest in the Cloverleaf Court residence. The trustee withheld $80,069 pending a hearing on the trustee’s motion to surcharge Wensen for damages caused by her delay in vacating the property and by the damage to the property itself. In March 2005, Wensen and the trustee entered into an agreement settling the trustee’s surcharge claim.
On June 28, 2005, an adversary proceeding was conducted in the bankruptcy court to resolve Wensen’s complaint seeking to except 11 claims from Mark’s chapter 7 discharge. The bankruptcy court issued a memorandum of decision after trial on July 1, 2005 (the July 2005 order). To the extent Wensen’s claims corresponded to the property claims addressed in the September 2004 family court judgment, the bankruptcy court treated that prior judgment as binding on Mark. Ultimately, that court determined that six of Wensen’s 11 claims were proven and excepted them from the bankruptcy discharge.
The bankruptcy court also addressed an “offset” claim which Mark asserted as an affirmative defense in his answer to Wensen’s complaint. Mark sought an offset for “damage incurred as a result of Wensen’s delay in agreeing to a sale of the [Cloverleaf Court] house.” The bankruptcy court made the following ruling with respect to this claim:
“Both Mark and Wensen presented evidence in this regard. Based on the evidence presented, the [c]ourt was persuaded that, but for Wensen’s improper conduct, motivated by anger at Mark, the [Cloverleaf Court residence] would have sold for $2.7 million, approximately $900,000 more than the ultimate sale price. Mark contended that, if this had not occurred, he would not have been required to file for bankruptcy. This argument has merit. [¶] The procedural problem presented is that the claim belongs at present to the bankruptcy estate. The trustee has the right to assert this claim as an offset to any claim Wensen might assert against the bankruptcy estate. If Wensen has not filed proof of claim or to the extent the offset is not exhausted with respect to that claim, it may be abandoned to Mark after notice and hearing. However, at present, Mark may not assert it as an offset to Wensen’s claim. For this reason, the [c]ourt will delay issuing a judgment in this adversary proceeding until the trustee has fully administered the estate. The parties are directed to request issuance of an appropriate judgment at that time.”
After the bankruptcy court issued its July 2005 order, the trustee filed an objection to Wensen’s proof of claim in Mark’s bankruptcy case, asserting that Wensen’s remaining claims (after the payment from the proceeds of the sale of the Cloverleaf Court residence) were offset by the trustee’s offset right of $900,000 as recognized by the bankruptcy court in its July 2005 order. On September 21, 2005, the bankruptcy court sustained the trustee’s objection to Wensen’s proof of claim.
In an order issued December 9, 2005 (the December 2005 order), the bankruptcy court ordered the trustee to abandon any remaining claims of the estate against Wensen to Mark. The December 2005 order further states that the “Alameda County Superior Court is free to determine whether the [t]rustee has released or exhausted all of its claims against Wensen Sarchet, and thus whether any claims of value are, in fact, abandoned to the Debtor by the Trustee.”
D. The Present Action
The appeal before us is from a 28-page order entitled “Findings and Order after Hearing” which was filed on April 25, 2006 (the April 2006 order), after a protracted trial before the Honorable Jacob Blea.
1. Procedural Background
The issues were framed by three motions filed by Mark: a December 23, 2004, motion for damages for breach of fiduciary duty and January 24, 2005, motions to modify child support and for attorney fees. Mark’s fiduciary duty claim mirrored his claim for an offset in the bankruptcy proceeding. He maintained that Wensen breached her duty to protect the community by repeatedly refusing to place the Cloverleaf Court residence on the market in early 2000, when it would have sold quickly and at a premium for the market, and that she refused to sell the property for any price in 2001, because she did not want Mark to benefit from any appreciation in the value of the property. Mark also sought attorney fees pursuant to section 271, on the ground that Wensen had failed to act in good faith to reduce the cost of litigation in this case. With respect to child support, Mark sought an order imputing income of at least $10,000 per month to Wensen for purposes of determining her child support obligation.
Trial on the attorney fees claim commenced on June 21, 2005. Mark and Wensen both appeared in pro per. Mark’s former attorney, Edward Miller, testified regarding Wensen’s conduct during settlement negotiations. Mark relied on Miller’s testimony as well as extensive documentary evidence to support his claim for attorney fees. The trial court continued the attorneys fees matter until September 2, 2005. Pursuant to a written order, the court sought additional briefing on this issue and further stated that “[t]he issue is also before the [b]ankruptcy court, and this court wishes to wait until after the trial in the [b]ankruptcy court before deciding the issue of [a]ttorney’s fees.”
On September 2, 2005, both parties again appeared in pro per. After opening statements, Mark stated that the trial on Wensen’s complaint in the bankruptcy court was concluded but that his case was not yet closed. Therefore, he sought to proceed with his motion for child support and to postpone trial of his breach of fiduciary duty and attorneys fees claims until his bankruptcy case was concluded. The court responded that there would only be time to address the support issue anyway. Then, the following exchange occurred:
“[WENSEN]: Your Honor, I would like to go on trial breach of fiduciary duty, because when I went on trial on federal court, I didn’t have two piece of paper very important with me. That’s why the judge, how that—the limitation, whatever, it came that way. [¶] Today I do have that two piece of paper. That was the paper my previous attorney, Bob Dimino, read to you in front of the judge. And every single one, he denied every single offer. It wasn’t my fault. It was him turning all down.
“THE COURT: I’m not sure we’re going to have to have two trials on the breach of fiduciary duty. That issue was tried in the [b]ankruptcy [c]ourt.
“[MARK]: That’s correct.
“THE COURT: There’s going to be eventually—we don’t have that yet. There’s going to be Findings and Order
“[MARK]: I will write the order, your Honor.
“THE COURT: —from the [b]ankruptcy [c]ourt.
“[MARK]: That’s right.
“THE COURT: But I will need to have that before I do anything here. We may have to have another trial. I don’t know. But I’m not going to do it today because I need the final, whatever happens in the bankruptcy
“[MARK]: That’s understood.
“THE COURT: —formal orders
“[MARK]: Yes.
“THE COURT: —and then I can decide whether or not I have any authority. [¶] Let’s say that you’re right, ma’am. I don’t know that I’ll have any authority to overrule that order. And it may be that you need— I’m not giving you advice, ma’am, but you may need to be taking up the issue of reconsideration with the [b]ankruptcy [c]ourt, because they made a ruling. And like in our court, if you believe that there was evidence that wasn’t presented, you can bring a motion to reconsider.
“I’m not in the [f]ederal [c]ourt, so I don’t know what their rules might be. But there’s a motion to reconsider, as I understand it, in the [f]ederal [c]ourt. Again, I’m not telling you to do that. I’m not telling you it’s appropriate. I’m not telling you more than it appears right now your remedy should be there. We’re making no rulings on the fiduciary issue here. [¶] We will proceed with the motion for child support and then we’ll also be trailing the issue of attorney’s fees.”
After this discussion, Mark called Wensen as a witness and spent the remainder of the hearing day examining her. At the conclusion of Mark’s examination, the court indicated it would find a date to continue the trial. When Wensen asked if the case was “not over yet, ” the court responded: “We’re not finished with this. You still get your chance to present your side of the story, ma’am.” Shortly thereafter, proceedings were adjourned.
On September 29, 2005, Mark filed a motion for joinder, seeking to join Wensen’s brother Chien-Hsiung Tang (Tang), as a party to the proceedings. Mark alleged that Tang was a necessary party because he held the title to Wensen’s current home but that Wensen was the equitable owner of that property. Mark sought an order that the property was available to satisfy Wensen’s obligation to pay child support. A hearing on the joinder motion was held on December 14, 2005. Neither Wensen nor Tang appeared. That same day, the court filed an order joining Tang as a party to the proceedings.
The trial continued on January 12, 2006. Tang did not appear, Wensen appeared in pro per, and Mark was represented by attorney Edward Miller. Wensen requested a continuance so she could find an attorney who was willing to take her case. The trial court denied Wensen’s request. The court explained that the trial had commenced back in June of the prior year, had been continued to September and again to January, and that during that entire period, Wensen had not made any formal request for a continuance. The court stated that if Wensen had made a motion or filed an ex parte application at an earlier date, it might have granted the continuance, even over Mark’s objection, but that, “at this late date, I do not believe that that would equitable, and so I am going to deny the motion for a continuance.” After addressing other preliminary matters, the following exchange occurred:
“THE COURT: Your statement today that you need counsel, I can’t disagree with you. However, that is almost a year’s time for you to obtain [c]ounsel, and for me to postpone this hearing again to allow you to maybe obtain counsel is, as I said before, in balancing the equities of that request, I cannot find that they balance in your favor. I think that they— it requires that the matter proceed today. [¶] If there are remedies down the road, then that’s subject to another hearing at another date. But we have to proceed today, ma’am. [¶] If you are going to present evidence on your behalf, I need to ask you to do that now.
“[WENSEN]: Your Honor, obvious, I have nothing with me, and this case got continued not by me. I did not continue it. This is the first time I ask for a continuance. And I did interview two or three attorney. They said my case so complicated that they just don’t have enough time to devote my case. That’s why I got a fourth interview coming next week. I do my best to hire attorney to represent me.
“THE COURT: Well, as I’ve said, the request for continuance is denied. The matter will proceed. If you’re not going to present any evidence, ma’am, then the matter can be deemed submitted. . . .”
Wensen did not present any evidence. The court permitted Mark to reopen his case and present additional testimony. At the end of the day, the court stated that so much evidence had been submitted over an extended period that it was not comfortable with an oral closing argument. Instead, the court set a briefing schedule so that the parties could submit written closing arguments and proposed statements of decision.
2. The April 2006 Order
As Wensen points out, significant portions of the court’s 28-page order have been copied verbatim from Mark’s written closing argument. As a result, the order is not an exemplary piece of writing. Nevertheless, we discern from that order the following findings and conclusions.
a. Judicial Notice
The court took judicial notice of (1) the July 2005 order in which the bankruptcy court found that Wensen breached her fiduciary duty to Mark by improperly delaying the sale of the Cloverleaf Court residence, and (2) the December 2005 order in which the bankruptcy court ordered the trustee to abandon remaining estate claims against Wensen to Mark.
b. Breach of Fiduciary Duty
Relying primarily on the bankruptcy court orders, the trial court found that Wensen breached her fiduciary duty to the community by intentionally and maliciously delaying the sale of the Cloverleaf Court residence. The trial court also utilized the bankruptcy court orders to determine that the damages caused by Wensen’s breach were $897,000. The bankruptcy court had found that, because of Wensen’s conduct, the house did not sell for $2,700,000, but instead sold for $1,803,000. Therefore, the difference between these two amounts, $897,000, constituted the damages caused by Wensen’s breach.
The court determined that $360,547.72 of the community’s offset right had been used by the trustee to deny Wensen’s bankruptcy claims and that the remaining $536,452.28 was abandoned by the estate to Mark. Notwithstanding that this offset right was a community asset, the trial court awarded the entire amount to Mark pursuant to section 1101, subdivision (h). To support this award, the court relied on the findings of the bankruptcy court that Wensen’s conduct in delaying the sale of the Cloverleaf Court residence was malicious in that it was intended to cause Mark injury and was oppressive in that it was intended to force Mark into bankruptcy. In light of these findings, the court found, the 50 percent recovery standard set forth in section 1101, subdivision (g), did not apply.
c. The Sawleaf Street Residence
The trial court ruled that Wensen is the equitable owner of her current residence located on Sawleaf Street in Fremont (the Sawleaf Street residence), that Wensen’s brother, Chien-Hsiung Tang, holds title to that property as a constructive trustee for Wensen, and that the real property is available for execution in these proceedings so that Mark can collect his damages award for Wensen’s breach of fiduciary duty.
The trial court found that Wensen used the distribution she received from the bankruptcy trustee for her share of the proceeds of the sale of the Cloverleaf Court residence to purchase the Sawleaf Street residence. Three documents relating to the purchase of the Sawleaf Street residence were admitted at trial, a purchase agreement indicating that Wensen and her mother were the buyers of this property, an addendum removing Wensen as a buyer, and an addendum substituting Chien-Hsiung Tang as a buyer of the property. Wensen testified that her mother signed all three documents. However, Nancy Cole, a forensic document examiner, testified that the signatures of Wensen’s mother on all three documents had been simulated by Wensen. Wensen subsequently admitted that she had signed her mother’s signature, but testified she had her mother’s permission to do so.
The court found that, less than one month after Wensen received her distribution from the bankruptcy trustee, a deposit for the purchase of the Sawleaf Street property was made with a $20,250.00 check drawn from a Bank of America account held in the name of Wensen’s mother. Wensen signed her mother’s name on the check. The balance of the purchase price was paid with an official check from Washington Mutual Bank in the amount of $655,009.00. Although Wensen initially testified she had nothing to do with that transaction, she later admitted that she obtained the cashiers’ check from Washington Mutual, where she has an account. Wensen produced no evidence that her brother or any other family member wired her money so she could obtain that cashiers’ check.
The trial court rejected Wensen’s claim that she had used her share of the proceeds of the sale of the Cloverleaf Court residence to repay loans to her family in Taiwan. It found instead that Wensen used her family in Taiwan to “funnel these monies” into the purchase of the Sawleaf Street residence. The court also found that Wensen colluded with her brother to use the money she received from the bankruptcy trustee to purchase the Sawleaf Street residence and put it in Tang’s name in order to mislead the court as to the nature and extent of her real property assets.
d. Child Support
The trial court ordered Wensen to pay child support in the amount of $741.00 per month and made this order retroactive to January 24, 2005, the date Mark filed his motion. The calculation was based in part on the imputation of income to Wensen from three sources: (1) $2,000 per month, representing earning capacity from employment, (2) monthly rental income from Wensen’s live-in boyfriend in the amount of $1,000 per month, and (3) interest income of $3,325 per month from February 18, 2005, to the present. The imputed interest income represented the amount the court found that Wensen could have earned had she invested the proceeds of the sale of the Cloverleaf Court residence in an income producing asset.
The trial court rejected Wensen’s claim that she had “minimal income, ” and concluded instead that the evidence supported Mark’s contention that Wensen had access to significant assets in a Bank of America checking account held in the name of Wensen’s mother. In this regard, the court credited testimony by Nancy Cole, a forensic document examiner, that Wensen had written all of the checks against this account by simulating (or forging) her mother’s name. The evidence presented showed that, between January 2004 and August 2005, $207,817 had been deposited into this account by Wensen’s mother and that Wensen had withdrawn all of the funds for her personal use. The court found that Wensen had “gone to great lengths to hide her true standard of living from this [c]ourt in an effort to continue to avoid her legal obligation to provide support to her children.”
The trial court found that, throughout the proceedings in the lower court, Wensen had attempted to portray herself as destitute and had attempted to avoid her legal obligation to pay child support. Therefore, the court required Wensen to post reasonable security for the faithful performance of her child support obligation pursuant to section 4012. The court ordered that a lien be placed on the Sawleaf Street residence in the amount of $150,000, an amount equal to Wensen’s total child support obligation during the balance of the minority of the children.
e. Attorney Fees
The trial court ordered Wensen to pay $100,000.00 to Mark for attorney fees incurred in this litigation. The fees were awarded as a sanction against Wensen pursuant to section 271. The court found that Wensen “frustrated 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 court relied primarily on the testimony of attorney Miller who testified that Wensen refused to negotiate in good faith with respect to numerous issues between the parties, that she repeatedly rejected fair and reasonable global settlement proposals made by Mark, that she thwarted or outright refused to obey court orders, and that she harassed and intimidated Mark and his counsel. Miller also testified that Mark incurred significantly more attorney fees and costs because of Wensen’s conduct. The trial court found that, if not for Wensen’s efforts to frustrate settlement of this case and force Mark into bankruptcy, Mark would not have “incurred an additional $115,396.00 in attorney’s fees” for Miller’s services.
Although Miller’s testimony and fees are the focus of the April 2006 order, the order reflects that the court took into account fees that Mark paid two other attorneys as well. According to the order, $77,500 of the $100,000 award was for fees paid to Miller and the remaining $22,500 was for fees paid to the other attorneys
III. Discussion
A. Breach of Fiduciary Duty
Wensen contends the trial court committed reversible error by invoking the collateral estoppel doctrine to preclude her from attempting to show that she did not breach her fiduciary duty to the community. According to Wensen, the bankruptcy court’s July 2005 order was not a final order and had no collateral estoppel effect at the trial in this case.
Wensen also spends considerable time attacking the July 2005 order itself. That bankruptcy court order is not, however, subject to review by this court.
“The doctrine of collateral estoppel precludes relitigation of an issue previously adjudicated if: (1) the issue necessarily decided in the previous suit is identical to the issue sought to be relitigated; (2) there was a final judgment on the merits of the previous suit; and (3) the party against whom the plea is asserted was a party, or in privity with a party, to the previous suit.” (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 910.) Wensen contends that the second requirement of this test was not satisfied.
In its July 2005 order, the bankruptcy court stated that it would “delay issuing a judgment in this adversary proceeding until the trustee has fully administered the estate” and it directed the parties to “ request issuance of an appropriate judgment at that time.” According to Wensen, a judgment was entered in the bankruptcy case on August 15, 2006, and she filed a timely appeal of that judgment. We have granted Wensen’s request to take judicial notice of pleadings filed in the Federal District Court for the Northern District of California which supports her contention that the bankruptcy court judgment was entered in August 2006 and that Wensen has filed an appeal pursuant to which she has specifically challenged the finding that she breached her fiduciary duty. This evidence establishes that the July 2005 order was not a final judgment at the time of trial in this case.
Mark contends that Wensen takes “a much too restrictive view” of the finality requirement. He contends that the finality requirement is more relaxed in cases applying issue preclusion than in cases applying claim preclusion, and that, in the former context, the rule applies so long as the decision in the prior action is sufficiently firm to satisfy a court that it is entitled to conclusive effect.
The rule Mark seeks to invoke appears in the Second Restatement of Judgments, which states that “ ‘for purposes of issue preclusion (as distinguished from merger and bar), “final judgment” includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.’ ” (7 Witkin, Cal. Procedure (4th ed. 1997), Judgment, § 312, pp. 862-863, italics omitted.) This rule has been recognized by California courts. (Sandoval v. Superior Court (1983) 140 Cal.App.3d 932.) Thus, for example, “settlement of a prior adjudication during the pendency of an appeal may render the judgment sufficiently final to support the doctrine of collateral estoppel, provided other factors of certainty and finality are satisfied.” (Producers Dairy Delivery Co. v. Sentry Ins. Co., supra, 41 Cal.3d at p. 911, citing Sandoval, at pp. 936-940.)
Clearly, there was no settlement of Wensen’s claims in the bankruptcy court prior to the trial in this case. Nor do we find any other factor of certainty or finality with respect to the July 2005 order. Rather, the only evidence before us is that a judgment was entered in the bankruptcy case after completion of the trial in this case and that Wensen appealed from the bankruptcy judgment. “[A]ccording to California law, a judgment is not final for purposes of collateral estoppel while open to direct attack, e.g., by appeal.” (Abelson v. National Union Fire Ins. Co. (1994) 28 Cal.App.4th 776, 787.) “A decision will not be given collateral estoppel effect if such appeal has been taken or if the time for such appeal has not lapsed.” (Long Beach Unified Sch. Dist. v. State of California (1990) 225 Cal.App.3d 155, 169.)
We grant Mark’s May 29, 2007, request for judicial notice of a May 24, 2007, order by the United States District Court Northern District of California affirming an August 15, 2006, order dismissing Wensen’s adversary proceeding against Mark. This order further affirms that the July 2005 bankruptcy court order was not a final judgment at the time of the trial in this case.
Therefore, we agree with Wensen that the July 2005 order did not constitute a final determination that she breached her fiduciary duty and it did not collaterally estop her from attempting to show that she committed no such breach. However, the record does not support Wensen’s contention that the trial court precluded her from presenting evidence or otherwise disputing that she breached her fiduciary duty to the community. Rather, as reflected in our factual statement above, Wensen elected to appear at trial without counsel and, when offered an opportunity to present her case, had no evidence to present and called no witnesses.
Wensen contends that “Judge Blea’s rulings on the record on September 2, 2005, gave Wensen actual notice that she would be precluded from presenting any evidence related to the breach of fiduciary duty claim, that the court was not going to make any orders on the claim, and that she should seek any remedy based on that claim in bankruptcy court.” We reject this mischaracterization of the trial court’s comments.
At the September 2005 hearing, the court agreed to postpone the trial of the fiduciary duty claim because it was told that the bankruptcy court had already heard the claim and would soon issue an order and judgment. The court was careful not to advise Wensen of anything, but it suggested that, if she had a problem with the bankruptcy court’s ruling, she needed to challenge that ruling in the bankruptcy court. The court did not, as Wensen now contends, advise Wensen that she was precluded from presenting evidence on the fiduciary duty claim. Instead, it stated that it would have to wait and see the bankruptcy court order before it could determine how to proceed with respect to the fiduciary duty claim. As best we can determine, Wensen never addressed the fiduciary duty claim again.
The April 2006 order does state that “[t]he principle of collateral estoppel precludes any further litigation of the decided fact that Petitioner breached her fiduciary duty to the Community with regards to the sale of the former Sarchet family residence at 46840 Cloverleaf Ct., Fremont, California.” This statement, which appears to have been lifted verbatim from Mark’s closing argument, is erroneous. However, our role as an appellate court is to review the lower court’s decision, not its reasoning.
As Wensen points out, much of the analysis in the court’s order was taken verbatim from Mark’s written closing argument. Although we are mindful of the trial court’s limited resources, we by no means approve of the practice of “cutting and pasting” portions of a party’s argument into a written order.
Although Wensen does not challenge the sufficiency of the evidence to support the fiduciary duty finding, her counsel intimated at oral argument before this court, that the trial court should not have considered or relied on the July 2005 bankruptcy court order at all. We disagree. The trial court took judicial notice of that bankruptcy court order and also expressly recognized that Mark produced the very same documentary evidence at this trial that he had submitted to support his fiduciary duty claim in the bankruptcy court. Under these circumstances, the trial court’s reliance on the bankruptcy court’s reasoning and analysis does not, as Wensen appears to suggest, undermine our confidence that the trial court made its own independent determination, based on the evidence presented to it, that Wensen breached her fiduciary duty.
While we agree with Wensen that the principle of collateral estoppel does not validate the court’s ruling with respect to the fiduciary duty issue, we also find that the reference to that doctrine in the court’s order is essentially irrelevant in light of the fact that the record clearly demonstrates that (1) substantial evidence supports the breach of fiduciary duty finding and (2) the trial court did not invoke the collateral estoppel doctrine at any point during the trial itself to preclude Wensen from litigating the breach of fiduciary duty claim.
B. Joinder
Wensen argues that her brother, Chien-Hsiung Tang, was not properly joined as a party to these proceedings and, therefore, “all orders within the [April 2006 order] related to that joinder are in error.”
Wensen contends that Tang was not properly joined as a party because the “mandatory” procedure for joinder of a party was not followed. (See §§ 2021, 211; Cal. Rules of Court, rules 5.154-5.158.) Among other things, she complains that the hearing on the joinder motion was not timely held (Cal. Rules of Court, rule 5.156), the trial court failed to issue an order directing that Tang be joined (§ 2021, subd. (a)), and a summons was neither issued nor served on Tang. (Cal. Rules of Court, rule 5.158).
Mark contends that Wensen waived this claim of error because she did not object to the joinder in the trial court or appeal from the December 2005 joinder order. Wensen responds that this “issue is a jurisdictional one, affecting all orders concerning Mr. Tang and his property, and the right to assert those errors on appeal has not been waived.” This line of argument misses the point. Even if Wensen could show the joinder was ineffectual, she does not have standing to assert Tang’s rights as a basis for obtaining a reversal of the April 2006 order.
“Parties have standing to appeal only if legally ‘aggrieved’ by the appealable judgment or order. [CCP § 902] This rule applies even if the appealed judgment or order is void. [Citation.]” (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2004) ¶ 2:282, p. 2-131 (rev. #1, 2004), italics omitted.) A party is aggrieved only if his or her rights or interests are “injuriously affected” by the judgment or order. (County of Alameda v. Carleson (1971) 5 Cal.3d 730, 737, In re L.Y.L. (2002) 101 Cal.App.4th 942, 948.) To satisfy this requirement the injury must be “ ‘ “immediate, pecuniary, and substantial and not nominal or a remote consequence of the judgment.” ’ [Citation.]” (County of Alameda, at p. 737.)
Applying these rules here, Wensen was not injured by the December 2005 joinder order and, therefore, even if that order can be reviewed in the context of an appeal of the April 2006 order, Wensen does not have standing to object.
Wensen argues that “[t]he injustice to Mr. Tang causes injury to Wensen because she may be evicted from her residence based on orders made by the family court, which flow from the erroneous order of joinder, before the court properly established the jurisdiction to do so.” According to Wensen, Mark has already utilized the April 2006 order to attempt to force a sale of the Sawleaf Street residence and, if he succeeds in that endeavor, she will “suffer immediate injury by being improperly evicted from her home.”
The potential injury that Wensen foresees does not flow immediately or directly from the fact that Tang was joined in these proceedings, but rather from a possible future order to sell the Sawleaf Street residence. That potentiality is a result of the finding that Wensen is the true owner of that residence, a finding which Wensen does not challenge in this appeal. In other words, Wensen has not shown that she is an aggrieved party with respect to the joinder order. Tang, who may be an aggrieved party, has not appeared to complain.
C. Modification of Support Order
Wensen contends the order modifying her child support obligation must be reversed. As noted in our factual statement above, the trial court was persuaded by Mark that Wensen had been hiding her income and misleading the court about her ability to provide for the four minor children, and it, thus, imputed three types of income to Wensen, earning capacity, rental income and interest income. The only part of this order to which Wensen objects on appeal is the imputation of interest income.
The interest income the court found that Wensen could have been earning relates to the proceeds of the sale of the Cloverleaf Court property. The April 2006 order states: “It is the [c]ourt’s position that [p]etitioner could be currently earning at least a six percent return on the monies she received from the [b]ankruptcy [t]rustee and this [c]ourt shall impute interest income to the [p]etitioner commencing February 18, 2005, in the sum of $3,325.00 per month ($664,931.00 x. 6% per annum).” Wensen contends that this part of the support order cannot be sustained.
The modification of a child support order is reviewed for abuse of discretion. (In re Marriage of Henry (2005) 126 Cal.App.4th 111, 116 (Henry).) When determining each parent’s income for purposes of determining the amount of child support, the trial court is not limited to a consideration of the parent’s actual income. (In re Marriage of Destein (2001) 91 Cal.App.4th 1385, 1391 (Destein).) “The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children.” (§ 4058, subd. (b).) “A trial court’s decision to impute income to a parent for child support purposes based on the parent’s earning capacity is reviewed under the abuse of discretion standard.” (Destein, at p. 1393.)
Despite the trial court’s broad discretion in this area, the circumstances before us do not justify the trial court’s decision to impute interest income to Wensen. We accept, for purposes of our decision, the trial court’s finding that Wensen is the equitable owner of the Sawleaf Street residence. However, the court did not find that Wensen purchased that property as an investment. Indeed, it appears undisputed that the Sawleaf Street residence is Wensen’s home and, therefore, it is also the children’s home. By imputing interest income to Wensen from the money she received from the bankruptcy trustee, the court appears to have penalized Wensen for using that money to purchase a family home rather than investing it in an income-producing asset.
The April 2006 order states that imputing interest income from the money used to purchase the Sawleaf Street residence is “consistent with the holding” of Destein, supra, 91 Cal.App.4th at pages 1393-1396. This statement, which we again trace back to Mark’s written closing argument, is erroneous.
Destein was a marital dissolution action between Joseph and Patricia. (Destein, supra, 91 Cal.App.4th 1385.) In calculating Joseph’s child support obligation, the trial court had imputed income to Joseph “of $145,950 based on an estimated return of 6 percent on Joseph’s combined real estate and securities investment.” (Id. at p. 1390.) Joseph alleged the trial court abused its discretion by imputing income to him from his non-income producing investment assets. (Id. at p. 1390.) The Destein court affirmed the trial court’s order. However, in reaching its decision, the court expressly recognized that the trial court had not imputed any income to Joseph from money invested in his residence. In this regard, the court stated that “Patricia has never sought to impute a rate of return to Joseph’s equity in his home. Thus the question of what circumstances might justify a trial court’s decision to do so is not before us.” (Id. at p. 1390, fn. 3.)
Destein, by express language, does not approve the imputation of interest income from equity in a family home. In that case, income was imputed from assets of a parent that were held for investment purposes, i.e., in order to gain income or future profit. In that context, a trial court may deem it appropriate to impute income even from a non-income producing investment. (See also Cal. Family Law: Practice & Procedure (2d ed. 1994) § 41.07, p. 41-23 [“Earning capacity may even be based on non-income-producing assets, such as real estate investment property acquired for long-term capital growth . . .”].) However, the evidence before us is that, as a consequence of a very bitter divorce, Wensen was forced to sell her home and then used her share of the proceeds from that sale to buy another home. This evidence indicates to us that the Sawleaf Street residence cannot in fairness be treated as a real estate investment.
During oral argument before this court, Mark’s counsel shifted reliance from the Destein case to County of Kern v. Castle (1999) 75 Cal.App.4th 1442 (County of Kern). In County of Kern, the trial court calculated a father’s support obligation without imputing any income from a $240,000, cash inheritance that father spent prior to the support hearing to pay off debt, including the mortgage on his home, and to improve rental properties he had also inherited. The County of Kern court found, among other things, that the trial court could have imputed income from the mortgage payoff which resulted in a reduction in father’s living expenses and an additional monthly sum of approximately $1,150 in disposable income. (County of Kern, at pp. 1451, 1456.)
County of Kern addresses the factors affecting the discretionary determination whether to impute income from a parent’s inheritance. Those factors do not assist us in addressing the very different question presented here, whether a trial court abuses its discretion by imputing interest income from equity in a family home. In particular, the County of Kern court’s theory for imputing income from a mortgage pay-off has no application here. Wensen did not use newly acquired money to pay off an existing mortgage on her home. Rather, she transferred the equity from a family home that she was forced to sell to a new family home.
Wensen takes the position that a parent’s residence can never be treated as an investment asset for purposes of imputing income for child support. Although we can conceive of circumstances justifying an exception, it does appear that, as a general matter, a parent’s home is not an investment asset and should not be used for purposes of imputing investment income. (Henry, supra, 126 Cal.App.4th 111.)
In Henry, the court reversed an order modifying a mother’s obligation to pay child support. (Henry, supra, 126 Cal.App.4th at p. 114.) The court acknowledged both the broad definition of income and the trial court’s wide discretion in this area but, nevertheless, held that the trial court abused its discretion by finding that an increase in the value of the mother’s house constituted income for purposes of calculating her support obligation. (Id. at pp. 118-119.) Like us, the Henry court distinguished Destein, supra, 91 Cal.App.4th 1385, stating: “There, the property was investment property, not the parent’s residence. [Citation.] Further, the income imputed from the real property was the estimated rate of return on the property as an investment. [Citation.] . . . No case cited by Henry or that we have found in our independent research holds the increase in the equity value of a parent’s residence constitutes income or earning capacity for purposes of calculating child support under section 4058.” (Henry, supra, 126 Cal.App.4that p. 118.)
Unlike the parent in Henry, Wensen had funds in her possession which she used to purchase an asset that does not produce income. However, since those funds constituted her equity in the former family home, we find that the Henry court’s analysis applies to the situation presented here. In any event, both Henry and Destein support the proposition that a parent’s home is not properly characterized as a real estate investment for purposes of calculating income, at least absent some compelling circumstance.
Although the trial court was persuaded by Mark’s contention that Wensen has been less then candid about her assets, its April 2006 order suggests that the court may have overlooked the important distinction between a parent’s home and his or her investment assets. Indeed, we have some concern that the court may have relied on Mark’s flawed interpretation of Destein, supra, 91 Cal.App.4th 1385, which does not support the practice of imputing interest income from equity in a family home. Under these circumstances, therefore, we find that the trial court did not properly exercise its discretion with respect to the modification of the child support order and that this case must be remanded so that the court can recalculate Wensen’s support obligation.
D. Attorney Fees
Wensen’s final argument is that Mark was not entitled to an award of attorney fees pursuant to section 271. “[S]ection 271 provides that the court may impose an award of attorney’s fees and costs ‘in the nature of a sanction’ where the conduct of a party or attorney ‘furthers or 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.’ [¶] A sanction order under . . . section 271 is reviewed under the abuse of discretion standard.” (In re Marriage of Burgard (1999) 72 Cal.App.4th 74, 82.) In reviewing the award, “we must indulge all reasonable inferences to uphold the court’s order.” (In re Marriage of Abrams (2003) 105 Cal.App.4th 979, 991.)
Section 271, subdivision (a), states: “Notwithstanding any other provision of this code, the court may base an award of attorney’s fees and costs on the extent to which the conduct of each party or attorney furthers or 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. An award of attorney’s fees and costs pursuant to this section is in the nature of a sanction. In making an award pursuant to this section, the court shall take into consideration all evidence concerning the parties’ incomes, assets, and liabilities. The court shall not impose a sanction pursuant to this section that imposes an unreasonable financial burden on the party against whom the sanction is imposed. In order to obtain an award under this section, the party requesting an award of attorney’s fees and costs is not required to demonstrate any financial need for the award.”
Wensen’s first contention is that the attorney fees order must be reversed and remanded because it is inextricably linked to the court’s determination that Wensen breached her fiduciary duty and must, therefore, be relitigated along with the fiduciary duty claim. This argument fails in light of our finding that Wensen has not demonstrated reversible error with respect to the trial court’s finding she breached her fiduciary duty.
Wensen also challenges the sufficiency of the evidence to support the fee award. The evidence before us regarding Wensen’s conduct during these proceedings, much of which is summarized in the April 2006 order, supports the trial court’s finding that Wensen frustrated the policy of the law to promote settlement of litigation, and that her lack of cooperation increased the costs of litigation. We are not persuaded otherwise by Wensen’s proffered alternative interpretation of the extensive evidence Mark offered at trial, which only reinforces that there is, indeed, substantial evidence to support the award.
IV. Disposition
The part of the April 2006 order modifying the child support order is reversed and the remainder of the order is affirmed. This case is remanded to the trial court so that it can recalculate Wensen’s support obligation.
We concur: Kline, P.J., Richman, J.