A California Court of Appeals has ruled that a Trial Court was not wrong by deciding that a lender had not written-off the balance of a line of credit on the parties’ family home and thus, deducting the balance of the line of credit from the value of the family home which was awarded to Mother. Trial Court was also not wrong, according to the Appellate Court, by sanctioningFather for failing to make the required disclosures to Mother about another house, by declining to order reimbursement of property taxes paid by Father, or by its orders regarding other community property assets. In the case of In re Marriage of Gutierrez, Mother and Father were married in 2001, and subsequently had two children. In 2006, they bought a house in Hacienda Heights(Family Home), financing the purchase with a loan of $204,000 from Washington Mutual.
After Mother and Father separated in 2008, Mother and the kids remained in Family Home. Also, during marriage, Mother and Father bought property in Havasupai, Arizona, for $135,000.
After the parties separated, Mother was unable to keep up the payments on the Family Home, the value of which had dropped, and she stopped making payments on the mortgage and the line of credit. When Chase Bank acquired Washington Mutual, it referred Mother’s delinquent loans to a collection agency, which pursued Mother for payment of $170,000. Mother lacked the funds to pay, but she was able to negotiate with the bank to forestall foreclosure. Mother began making payments of $700 month in 2011, and was able to bring both loans current.
Meanwhile, in 2008, Trial Court ordered Father to sell the Arizona property and pay Mother half of the proceeds to alleviate the financial distress she was under from Father’s lack of financial support. Father sold the property in 2011, but he did not tell Mother and kept the sale proceeds of$38,000 for himself.
At their 2015 divorce trial, Father called two witnesses to testify in support of his claim thatChase Bank had written-off the loans on the Family Home. A mortgage bank Research Officer repeatedly claimed that the loans had been written-off, but on cross-examination by Wife’s attorney, he admitted that he was unclear as to when in 2009 the write-off occurred. ResearchOfficer also could not explain why Mother was still making payments on the loans in 2013, if they had been written-off in 2009, and he admitted that he had no documentation regardingMother’s agreement with the bank. Research Officer stated that the bank’s policy was to refund payments made after a loan was charged off, but he did not know why Mother had not received any such payments.
Father’s other witness, a tax preparer and paralegal, testified that he concluded that the write-off had occurred from his interpretation of documents given to him by Father. This witness also had no explanation for the bank’s accepting of Mother’s monthly payments if the loans had been written off.
As the trial progressed, Trial Court found that Father had breached his fiduciary duty to Mother by concealing an asset when he failed to disclose the existence of another house in Rosemead on his Preliminary Declaration of Disclosure and his Final Declaration of Disclosure. Trial Court ordered sanctions for the breach of fiduciary duty pursuant to California Family CodeSection1101 and Section 271.
Other evidence revealed that Father failed to share the proceeds from the sale of the Arizona property until the time of trial, some three years later. Father claimed that he had used the funds to pay property taxes and balances on joint credit cards, but he provided no documentation of those payments. Nonetheless, Father sought reimbursement of $3,578 for his tax payment.
Father made other allegations concerning Mother’s sale of a jeep and an old all-terrain vehicle, her conversion of a watch belonging to him, and Mother’s retention of $20,000 to $30,000 worth of tools he had left in the garage.
After the trial concluded, Trial Court issued a lengthy and detailed statement of decision in which it determined that the loans on the Family Home had not been written-off and deducted the remaining balance of $171,099 from the value of the Family Home awarded to Mother, and repeated its sanctions order. Trial Court declined to order reimbursement for the taxes Father paid on the Arizona property because it would be unfair and unreasonable to do so, givenFather’s failure to pay Mother’s share of the sale proceeds for three years, leaving her in financial straits and in fear of losing Family Home. Trial Court found that Father’s other contentions regarding the vehicles sales, his watch, and his tools were not supported by the evidence.
F appealed, but California Court of Appeals has now issued a ruling affirming Trial Court’s decisions. The Appellate Court has ruled that (1) Father’s contentions regarding the loan write-off fail because they are not supported by the record [Father’s two witnesses could not explain why Mother had been paying on the loan and the bank had not returned her payments to her when that is the bank’s policy when someone makes a payment they should not have made; they also admitted that they got their information from Father; and they had not seen the agreement for payment between Mother and the bank]; (2) Trial Court did not err in ordering sanctions under California Family Code Section 271 and Section 1101, which are intended to spur good conduct and full disclosure between divorcing parties (not as redress of injury) [Father had argued that it didn’t matter that he didn’t disclose it on his Disclosures because Mother knew about the other property]; (3) Trial Court did not abuse its discretion by failing to order reimbursement on equitable grounds (Mother was left to struggle financially while Father sat on the sale proceeds) where the court order clearly required him to pay Mother her share of the sale proceeds within a reasonable time; and (4) substantial evidence supported Trial Court’s ruling on the other allegations (tools left in garage; his watch; and vehicles).