Opinion
A159669 A159670
08-20-2021
In re the Marriage of DANIEL and KAREN RABE. DANIEL CAREY RABE, Respondent, v. KAREN ZAKLAMA RABE, Appellant.
NOT TO BE PUBLISHED
San Mateo County Super. Ct. No. 18FAM01494
JACKSON, J.
This is a marital dissolution matter in which appellant Karen Zaklama Rabe appeals from the denial of her motion to set aside a default (set-aside motion) and the resulting judgment entered in favor of her former husband, respondent Daniel Carey Rabe. Karen contends the trial court's rulings were inconsistent with principles of due process, minimum standards of equity, and the evidentiary record. We affirm.
We hereby consolidate the two appeals filed by appellant Karen Zaklama Rabe in this matter, Nos. A159669 and A159670.
For ease of reference, we respectfully refer to the parties by their first names.
FACTUAL AND PROCEDURAL BACKGROUND
Karen and Daniel were married on October 8, 2004, and have one minor son. The couple separated 14 years 3 months later, on January 11, 2018.
On June 22, 2018, Daniel filed a petition in the Superior Court of San Mateo County to dissolve the marriage and several accompanying documents. Daniel requested that Karen provide her own financial information so that they could work out a marital settlement agreement (MSA).
On November 5, 2018, Daniel e-mailed Karen a draft MSA and asked for her proposed modifications in hopes of reaching a final agreement. This did not happen, and on May 10, 2019, after Karen continued to disregard Daniel's requests for information and cooperation on an MSA, Daniel filed an amended petition for dissolution of marriage (amended petition). In this amended petition, which is the operative petition, Daniel sought joint physical and legal custody of their son and proposed a shared holiday/vacation schedule. He also sought a court order for his payment of $510 per month for child support and $711 per month for spousal support, to be paid to Karen after deducting the sum of $10,000 as reimbursement for her share of the costs he incurred to prepare their home for sale. These support figures were based on a gross monthly income of $13,370, which amounted to $160,440 annually and represented Daniel's average salary and bonus for the five-year period leading up to the couple's January 2018 separation.
Also in the amended petition, Daniel asked the court to confirm as community property: (1) his Apple Inc. restricted stock unit (RSU) grants until the date of separation; and (2) his Apple RSU dividends earned until the date of separation. He asked the court to confirm as his separate property: (1) 401(k) accounts from CGI Inc. and Apple; (2) 2006 white Jeep; (3) Associated Bank checking account ending 7995; (4) Wells Fargo savings account ending 1603; (5) American Express rewards account ending 5195; (6) Visa account ending 2009; (7) Prudential life insurance accounts ending 9102 and 9101; and (8) a house in Scottsdale, Arizona. Last, he asked the court to confirm as Karen's separate property: (1) her BlackRock, Inc. 401(k) account; (2) 2008 blue Jeep; (3) Karen's family jewelry; (4) her American Express rewards account; (5) her savings and checking accounts; and (6) her property in Egypt.
After the amended petition was filed and served on May 10, 2019, Karen informed Daniel that she had an upcoming trip to Egypt and requested 10 additional days to respond. Daniel agreed.
On May 15, 2019, Karen was served with a copy of Daniel's declaration regarding service of declaration of disclosure and income and expense declaration (Judicial Council Forms, form FL-141).
Ultimately, Karen did not respond to the amended petition, and Daniel obtained a default judgment against her. However, on August 1, 2019, Karen moved the court pursuant to Code of Civil Procedure section 437, subdivision (b) for an order setting aside the default on grounds of mistake, surprise, inadvertence, and/or excusable neglect in failing to timely answer. Karen also filed a declaration attesting that she had only “a vague memory” of being served with Daniel's original divorce petition because she was suffering from multiple serious health problems, including depression, anxiety, chronic neck and back pain, Clostridium difficile (a bacterial infection of the colon), and migraines, for which she was taking several prescription drugs. Further, Karen attested that, around the time that she was served with the amended petition, she traveled to Egypt in order “to feel better” from her depression, to seek medical treatment for the colon infection and to attend to personal legal matters. According to Karen: “Due to the medical conditions, effects of medication, and travel for medical reasons described above, I was unable to understand or appreciate the effects of the legal papers on me, or that I had to answer within 30 days. I also was physically unable to answer the papers during much of this period of time due to hospital treatment, the inability to function properly, and other problems. Finally, Petitioner had assured me that we would cooperate or collaborate on the divorce, and I was surprised when he did not uphold this promise.”
All further statutory citations herein are to the Code of Civil Procedure.
Karen's declaration also accused Daniel of significantly understating his income in the amended petition and attached a copy of their jointly filed, amended 2018 federal income tax return on which his reported total taxable income was $325,834. Based on this information as well as her recent medical situation, Karen asked the court to set aside the default and to allow her to answer the amended petition.
A hearing on Karen's set-aside motion was held on September 27, 2019. On October 31, 2019, the trial court issued its findings and order denying the motion for failure to show excusable neglect or other statutory grounds for setting aside a default under section 473.
The declaration for default judgment and final judgment of dissolution were filed December 19, 2019. The property order attached to the final judgment incorporated the proposed division of assets and debts in the amended petition. The spousal support order, in turn, adopted Daniel's proposal to pay Karen $711 per month, after deducting the $10,000 that she owed him from the sale of their home, and limited the payment term to seven years, ending on September 25, 2025. Karen's timely appeal followed.
DISCUSSION
Section 473, subdivision (b) provides that a court has discretion to relieve a party “from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” “A trial court's ruling on a motion for discretionary relief under section 473 will not be disturbed unless there is a clear showing that the trial court abused its discretion. [Citation.] ‘ “The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason.”' (Ibid.)” (Grados v. Shiau (2021) 63 Cal.App.5th 1042, 1049.)
Karen contends the default judgment was entered in violation of her rights to due process and minimum standards of equity because serious health issues prevented her from participating in the proceedings. She further contends that, aside from her health issues, the trial court abused its discretion when denying her set-aside motion because: (1) evidence proved that Daniel underrepresented his income; (2) there was no evidence that Daniel's Apple 401(k) was his separate property, or of the value of his 401(k) or the Apple RSU's; and (4) the award of $711 per month in spousal support for seven years was woefully inadequate given their long-term marriage and her ongoing disabilities.
I. Karen is not entitled to equitable relief from default.
Karen first relies on broad equitable principles in seeking reversal of the default judgment, arguing that as “ ‘a court of equity and fairness' ” the court had a duty, which it failed, to ensure a default was not obtained in violation of her due process rights or minimum standards of fairness. (See In re Marriage of Boswell (2014) 225 Cal.App.4th 1172, 1174; see also Mackie v. Mackie (1960) 186 Cal.App.2d 825, 831.) We disagree, based on the following principles.
Apart from section 473 or other statute, “courts have the inherent authority to vacate a default and default judgment on equitable grounds such as extrinsic fraud or extrinsic mistake.” (Bae v. T.D. Service Co. of Arizona (2016) 245 Cal.App.4th 89, 97; see Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981 (Rappleyea).) However, “[w]hen a default judgment has been obtained, equitable relief may be given only in exceptional circumstances.” (Rappleyea, at p. 981.) “ ‘To set aside a [default] judgment based upon extrinsic mistake one must satisfy three elements. First, the defaulted party must demonstrate that it has a meritorious case. Second[], the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action. Last[], the moving party must demonstrate diligence in seeking to set aside the default once... discovered.' ” (Rappleyea, at p. 982, 1st bracketed insertion added, italics omitted.)
In Rappleyea, supra, the high court concluded defendants successfully met this standard by, inter alia, identifying two undisputed facts: The clerk's office misinformed them about the amount of money due to answer the complaint, and plaintiff's counsel incorrectly told defendants they had forfeited their legal right to seek statutory relief from default. (8 Cal.4th at pp. 979-980 [cautioning that defendants' naïveté in believing they could protect their substantial legal interests without assistance from counsel was not grounds for equitable relief from default].)
Here, Karen relies upon her multiple medical concerns, the effects of her medication, and Daniel's assurances that he would cooperate with her in the dissolution proceedings to excuse her failure to respond to the amended petition. Rejecting these excuses below, the trial court found: “The action was filed at least a year prior to entry of default, with an amended petition that was personally served in May 2019. Respondent did not act with reasonable diligence in attempting to obtain counsel between being served with the amended petition on or about May 10, 2019 and hiring counsel on July 23, 2019. Also, she was able to travel to Egypt for medical treatment in approximately April-May 2019, and also handle some personal legal matters there. This shows that the California proceedings were not given the level of attention or seriousness that the law requires.”
The record supports the trial court's findings. Given Karen's demonstrated ability to travel to Egypt to attend to personal legal and medical matters abroad, we cannot accept her claim that she was physically or mentally unable to attend to legal matters here. As such, we conclude Karen has failed to meet the three-part standard for obtaining equitable relief from default by failing to “ ‘articulate a satisfactory excuse for not presenting a defense to the original action.' ” (Rappleyea, supra, 8 Cal.4th at p. 982.)
Having rejected Karen's identified excuses for failing to answer the amended petition, we turn to whether the court abused its discretion in finding there was no other statutory basis for granting her relief from default.
II. The trial court did not abuse its discretion by declining to set aside the default.
Karen argues that the trial court abused its discretion in denying her set-aside motion because, in doing so, the court “rubber-stamp[ed]” certain legal errors in the resulting judgment. We address these alleged errors below.
A. The Property Order.
Karen first contends the evidence was inconsistent with the characterization of certain assets in the amended petition that became incorporated into the final judgment, including the calculation of Daniel's average annual income and the treatment of his Apple 401(k) as his separate property.
With respect to Daniel's income, Karen claims he significantly understated his income in the amended petition, directing us to their jointly filed 2018 tax return in which Daniel reported a total taxable income of $325,834. However, as Daniel explained to the trial court, his average salary plus bonus for the five years prior to separation was $165,679.96. The 2018 tax return reflected an unusually high annual income because, in 2018, Apple sold a portion of his RSU's to offset taxes on the RSU's that vested in 2018 and calculated the proceeds as part of his income. As evidence, Daniel offered an Apple corporate document that explained its RSU policies. Daniel also offered documents from Apple's human resources department that confirmed his total annual income and bonuses for 2013 to 2017, which he used to calculate a base monthly salary of $13,370. This evidence supported Daniel's methodology and calculations that were adopted by the court. (See In re Marriage of Connolly (1979) 23 Cal.3d 590, 597 [“In reviewing the evidence in support of a section 473 motion, we extend all legitimate and reasonable inferences to uphold the judgment”].)
Karen also faults the court for not using Daniel's annual income from the two most recent years, 2018 and 2019. However, Daniel filed his initial petition for dissolution, in which he used his 2013-2017 income information, in June 2018, before his 2018 and 2019 annual income figures were available. Karen did not object, much less provide her own income information. Under these circumstances, the court did not abuse its discretion in relying on Daniel's information. (Cf. In re Marriage of Riddle (2005) 125 Cal.App.4th 1075, 1084 [abuse of discretion found where the trial court relied upon an unrepresentative sample of husband's monthly income to calculate support].)
Daniel's income increased to $173,000 in 2018 and $178,503 in 2019.
Karen argues that Daniel “took advantage of [her] inability to participate....” The record, however, demonstrates that he repeatedly invited her to participate, yet she refused.
With respect to treating Daniel's Apple 401(k) as his separate property, we likewise find no abuse of discretion. Daniel characterized each of their 401(k)'s in this manner in the amended petition, asking the court to confirm Karen's BlackRock, Inc. 401(k) as her separate property and the Apple 401(k) as his. Again, Karen raised no objection before the default judgment was entered, and, as discussed, she has identified no valid excuse for her silence. Accordingly, the court's order stands. (See Rappleyea, supra, 8 Cal.4th at p. 982.)
We reach the same conclusion with respect to Karen's belated claim that the court erred by failing to assign a value to Daniel's Apple RSU's and his Apple 401(k) account. Having unjustifiably ignored Daniel's repeated requests to provide financial information and to cooperate in drafting an MSA, Karen's complaint about these omissions in the judgment rings hollow. Moreover, in any event, even if we were to conclude that the court erred by failing to assign a particular value to the RSU's, we would find no prejudice to Karen given that the RSU's were treated as community property and equally divided between them.
B. The Spousal Support Order.
Last, Karen challenges the trial court's spousal support order of $711 per month, payable through September 25, 2025.
Daniel responds that seven years of spousal support, or support for half the length of their 14-year marriage, is reasonable, particularly where Karen provided no information regarding her past or present income and was employed until approximately 2015 as a successful asset manager for BlackRock, Inc., a large financial firm. While Daniel acknowledges Karen's recent health woes, he notes there is no evidence that she will be unable to rejoin the work force in the future. We agree with Daniel's position.
Karen does not dispute these facts regarding her education and profession that are set forth in Daniel's brief. The record reflects only that Karen possesses a BlackRock, Inc. 401(k) and that their jointly filed 2018 tax return identifies her as a “financial advisor.” (All caps omitted.)
Karen refers us to case law holding that “ ‘the requirement that parties should be self-supporting after one-half the length of the marriage does not apply to a marriage of long duration.' In re Marriage of Shaughnessy (2006) 139 Cal.App.4th 1225, 1233, emphasis added.” However, this holding does not limit a court's discretion to decide in a long-duration marriage case that one-half the length of marriage is a reasonable time frame for a spouse to become self-supporting. Here, the court did not abuse its discretion in so deciding given the limited facts before it. Karen had the opportunity, which she ignored, to counter Daniel's facts. In the absence of a valid excuse or justification for Karen's failure to participate, we decline at this late juncture to disturb the court's support order. (See Rappleyea, supra, 8 Cal.4th at p. 982.)
Finally, Karen maintains a right under Family Code sections 4320 and 4336, subdivision (a) to move the court to modify the spousal support order if she can establish changed circumstances.
DISPOSITION
The judgment is affirmed.
WE CONCUR: Fujisaki, Acting P. J., Petrou, J.