A California Appellate Court has ruled that Trial Court was wrong in refusing to review the billing records of Mother’s attorney, to conduct a needs-based analysis, or to consider the records and reports showing Father’s uncooperative and dilatory conduct before denying Mother’s requests for awards of attorney’s fees, and fees as sanctions. In fact, the Appellate Court ordered the case assigned to another judge on remand because the trial judge’s actions raised appearance of bias. In the case of In re Marriage of Tharp, Mother and Father were married on October 11, 1992, and later had three children. When Father filed for divorce on August 27, 2007, his divorce petition stated that he, Wife, and their counsel had signed a prenuptial agreement which provided that all of the property owned by Father, along with all of his income earned before, during, or after the marriage, was Father’s separate property. Father attached no schedule of debts and assets, but promised to file one in a timely fashion. Father also asked for joint legal and physical custody of the children. In response, Mother sought joint legal custody, but sole physical custody of the children. Mother’s response stated that the full extent of the parties’ community property assets and debts would be discovered later.
On November 6, 2007, Mother filed a Motion seeking spousal and child support, plus $50,000 as advanced attorney’s fees and $20,000 for a forensic accountant; Mother also sought parental custody assessment. In supporting declaration, Mother asserted that Father’s annual income in 2005, as an employee of and a shareholder in his family’s multimillion-dollar corporation, was $132,534, over and above family expenses paid by the corporation (such as family cars, property taxes and insurance on the family home, housekeepers and ranch hands employed at family home, telephones, utilities, health insurance, country club dues, and credit card bills). Mother explained that the forensic accounting was necessary to unravel Father’s interests in various subsidiary companies and to uncover any community property funds transferred to remove them from community property estate. Mother denied signing the prenuptial agreement and asserted that Father had ignored her requests to produce that document. In his response to Mother’s Motion, Father agreed to pay guideline support, plus $1,000 of Mother’s attorney’s fees; Father claimed that forensic accounting was unnecessary.
On December 18, 2007, Trial Court issued an order finding that Father’s monthly income was $10,000, and that "vast majority" of family’s expenses were paid by corporation and "not reflected as taxable income" to Mother and Father. Trial Court awarded Mother $5,000 per month for family support and physical custody of the child, with some timeshare for Father. Trial Court also ordered Father to have the corporation continue to pay certain family expenses, but reserved the right to characterize payments later and to recalculate the support. Trial Court told Mother to make the best efforts to become employed full time by June 1, 2008. In addition, Trial Court recognizing the disparity of incomes, ordered Father to pay $2,500 to Mother’s attorney and the same amount for accounting evaluation.
On January 25, 2008, Mother filed a motion to have the parties’ divorce case designated as a "complex" case under California Family Code Section 2032(d) [Trial Court may order case management of complex cases and allocate fee payments] because of complicated financial issues, and renewed her request for $50,000 in fees and $20,000 for forensic accountant. Mother stated that she was without independent financial means, was unemployed, and needed help of attorney and experts to enable her to litigate case adequately. Trial Court found that the divorce case was complex under California Family Code Section 2451 [case management designation and contents of plan] and ordered the development and implementation of case management plan. Trial Court then ordered Father to pay $20,000 to Mother’s attorney and scheduled a case management conference. Trial Court also designated psychologist to prepare a custody evaluation and submit a report, which the psychologist did on March 21, 2008.
At the March 28, 2008, case management conference, Father appeared with new counsel, and obtained a continuance to May 8, 2008. In April of 2008, Mother filed a motion to compel answers to form interrogatories and document requests, and to join corporation and Father’s parents’ trust as parties to the divorce case.
On May 2, 2008, Trial Court personally selected therapist to conduct an individual and family therapy recommended in the psychologist’s report, stating that the therapist had no conflicts of interest. At the May 8, 2008, hearing, Trial Court threatened Father with a writ of execution if he did not pay $20,000 for attorney’s fees previously ordered, granted Mother’s motion to compel further responses, and ordered Father to pay sanctions of $1,500 to Mother’s attorney. Trial Court ordered the corporation (but not parents’ trust) joined, and gave Father 45 days to produce state and federal tax returns, stock books and corporate records, and other documents requested by forensic accountant.
In subsequent proceedings, Trial Court bifurcated the issue of existence and validity of premarital agreement and scheduled a trial for July 28, 2008. Trial Court ordered Father and his attorney to either produce signed copy of that agreement or notify Trial Court and remove the matter from the calendar. When Trial Court dealt with the remaining motions to compel on May 30, 2008, it looked unfavorably on Father’s attorney’s request for continuance and expressed concern with lack of progress in the case. Trial Court appointed a discovery referee to hold a hearing on pending motions to compel, and rejected Father’s request for stay of discovery until the forensic accountant finished his work.
In July, Mother filed two Order to Show Cause’s, seeking contempt orders against Father for lack of compliance with discovery and other orders, asking for permission to meet with forensic accountant to discuss the findings and obtain copies of documents, and seeking orders for fees and sanctions. When Mother and her attorney appeared for the bifurcated trial on July 28, 2008, they discovered that instead of appearing, Father and his attorney had faxed a letter stating that there was no prenuptial.
At the September 17, 2008, hearing on Mother’s two Order to Show Cause’s, Trial Court refused to award fees or order sanctions, but ordered Father to send to Mother copies of all documents previously sent to the forensic accountant. Mother later agreed to dismiss the contempt.
On November 26, 2008, Mother filed another motion for attorney and forensic accounting fees and sanctions under California Family Code Section 271 and 2100 because of Father’s failure to comply with prior discovery and fee orders. In supporting declaration, Mother estimated Father’s monthly income at $47,000, listed additional corporations in which Father had an interest, detailed Father’s failures to provide discovery or comply with existing orders, and stated that her only asset was a 401(k) plan and her temporary spousal support payments from Father. She said that she had paid attorney’s fees of $12,770 in addition to the $22,500 that Trial Court had ordered Father to pay. Mother’s attorney submitted a lengthy and detailed declaration regarding the attorneys’ fees earned, expenses incurred, and the estimated future fees and costs; counsel requested current and future fees of $310,000. Mother’s attorney’s declaration provided a 53-page chronology of procedural and substantive history of the case, and included copies of rulings, discovery requests, meet and confer letters, and briefing letters; the declaration also asserted that Father’s pattern of conduct and failure to provide discovery or to comply with Trial Court orders unnecessarily increased the litigation costs.
On February 17, 2008, the court-appointed discovery referee filed a report stating that Mother’s contempt motion had merit because of Father’s extremely tardy responses to discovery requests and her motion to compel was equally justified by Father’s failure to respond to the requests. The referee recommended awards of fees and sanctions, and noted that Mother’s attorney had "significantly aided" him in dealing with Father’s delays. In the referee’s view, $31,286 attorney’s fees incurred in connection with the discovery assistance "was time well spent and earned."
Meanwhile, when therapist filed an initial report and recommendation, Mother became concerned about missing information and, on Trial Court’s order, therapist submitted a supplemental report. After that, Mother began to believe that therapist was hostile to her. In September 2008, Trial Court ordered therapist to conduct a co-parenting counseling with Mother and Father alone; instead, therapist began meeting with Father and the children, but not with Mother. When Mother questioned this, therapist told her that she was attempting to reunify Father and children because Mother had withheld the children (Trial Court had made no such findings). In November of 2008, Mother learned that therapist was acquainted with Father’s grandfather and that therapist’s husband, son, and brother-in-law were long-time regular customers of Father’s family corporation. In January 23, 2009, Trial Court presented parties’ attorneys with report from therapist expressing doubts about continuing to work with the family and accusing Mother of "making accusations against her." Around that time, Mother submitted a declaration seeking full disclosure of therapist’s family’s ties to Father’s family and business and moved to recuse therapist. Trial Court refused Mother’s counsel’s request for informal resolution of possible conflict and required formal motion filed within five days. After therapist provided additional clarifying information, Mother withdrew her recusal motion, but Trial Court kept the hearing date on calendar and therapist filed three more reports.
On February 16, 2009, Trial Court denied from the bench Mother’s most recent request for needs-based fee order. Finding no basis for it, Trial Court told Mother to encumber her share of community property if she needed funds to pay for her attorney. When Mother moved for reconsideration, presenting four items of new evidence, Trial Court denied her motion. In written order issued March 11, 2009, Trial Court called Mother’s fee requests "grossly excessive," took Mother to task for failing to find employment, told Mother to sign a Family Law Attorneys’ Real Property Lein or pay her attorney from her spousal support, and refused to examine detailed billing statements from Mother’s attorney. Trial Court said it was not its responsibility to "ferret out and determine" whether fees requested were fair. After Mother filed final fee request on March 26, 2009, Trial Court refused to make order covering existing fees, but ordered Father to pay $20,000 in future fees at conclusion of the trial. Mother appealed. She also filed an Order to Show Cause seeking stay of proceedings pending the appeal. Trial Court determined that the stay would not apply to custody or support issues and continued hearing to May 21, 2009.
On May 11, 2009, at the hearing on custody and visitation issues, Trial Court, apparently in response to therapist’s reports, granted Father sole legal and physical custody of children and awarded visitation of three weekends a month to Mother. In a 14-page written order, Trial Court found that Mother had "sabotaged" therapist’s therapy "by conjuring up conflicts of interest," and warned that Mother’s visitation would be limited to supervised visits if she continued to engage in unspecified unacceptable behaviors. Trial Court later denied the stay. When Father filed motion to remove Mother from the family home so he could live there with the children, Mother petitioned the California Court of Appeals for a writ of supersedeas, seeking stay of all pending matters.
On July 31, 2009, the Appellate Court granted the petition and issued the requested writ. Now, acting on Mother’s appeal, the Appellate Court reverses Trial Court’s rulings and remands the case back to Trial Court for further proceedings in light of its decision. Regarding the fees portion of Trial Court’s rulings, the Appellate Court finds that Trial Court abused its discretion by (1) failing to make statutorily-required review and consideration of Mother’s attorney’s time records, (2) refusing to make needs-based analysis of disparity in parties’ incomes, (3) ignoring its obligation to ensure that Mother was awarded sufficient fees to retain counsel and experts necessary to litigation (level playing field), (4) refusing to award fees as sanctions under Family Code Section 271 for Father’s conduct that frustrated settlement and Section 2107 for Father’s breaches of fiduciary duty of full disclosure. The Appellate Court reverses and remands the case with directions to Trial Court to conduct needs-based analysis and review billings before awarding needs-based fees, and order fees as sanctions under Family Code Sections 271 and 2107. Regarding the reassignment of the case, the Appellate Court concludes that on remand, this case must be assigned to another Trial Judge because (1) this case is out of control, (2) current judge’s words and conduct in at least eight instances create doubt that he could be impartial on remand, and (3) this matter requires a Judge who will use tools available in statutes and rules to bring it under control and move it to completion.