Dale v. Dale

Page 513

78 Cal.Rptr.2d 513

66 Cal.App.4th 1172, 98 Daily Journal D.A.R. 10,323,

98 Daily Journal D.A.R. 7445

Joanne Sandra DALE, Plaintiff and Appellant, v. Thomas Redding DALE, et al., Defendants and Respondents.

No. D024756.

Court of Appeal, Fourth District, Division 1, California.

Sept. 25, 1998.

Rehearing Denied Oct. 20, 1998.

Review Denied Jan. 13, 1999. ^*

Mazur & Mazur and Janice R. Mazur, San Diego, for Plaintiff and Appellant.

Stephen Temko, Kim Cheatum, Sharron Voorhees, San Diego, Alan L. Nobler, San Jose, Gollub and Golsan, Lorraine C. Gollub, Culver City, Susan Berke Fogel and Pamela A. Kelley, Los Angeles, as Amici Curiae on behalf of Plaintiff and Appellant.

Meisenheimer and Herron, Matthew V. Heron, Robert M. Steele and Robert S. Gerstein, for Defendants and Respondents.

NARES, Associate Justice.

In this action, Joanne Sandra Dale ("Joanne") alleged that during the course of a marital dissolution proceeding her former husband, defendant Thomas Redding Dale ("Thomas"), and the bookkeeper for his medical practice, defendant Chun Wei Dale ("Chun Wei"), concealed from Joanne certain community assets related to the practice. Joanne claimed that as a result of the concealment, she was induced to forego spousal support and to stipulate that Thomas be awarded the practice without full knowledge of the assets contained therein. Joanne sought compensatory and punitive damages under a variety of tort theories. The trial court dismissed the action for lack of jurisdiction, concluding Joanne's exclusive remedy lay in seeking to set aside the judgment of dissolution in the family court. We hold that in the absence of a pending dissolution proceeding, a plaintiff who contends she suffered injury because her former spouse tortiously concealed community assets from her, thereby preventing her from fully presenting her case in the dissolution proceeding, is entitled to bring a subsequent tort action based on the alleged concealment. Accordingly, we reverse the order of dismissal.

FACTUAL AND PROCEDURAL BACKGROUND

Because the trial court dismissed the action based on the pleadings, for purposes of review we accept as true all material facts alleged in the third amended complaint, which was the operative version of the complaint at the time of dismissal. (See Macias v. State of California (1995) 10 Cal.4th 844, 847, fn. 1, 42 Cal.Rptr.2d 592, 897 P.2d 530.)

Joanne and Thomas were married in 1970. In 1984 Joanne initiated a marital dissolution proceeding. A judgment of dissolution was entered in 1985; however, the court reserved jurisdiction over the disposal of certain community assets. In 1988 pursuant to stipulation, a supplemental judgment was entered disposing of those assets, including Thomas's medical practice, which was awarded to Thomas.

Five years later, in August 1993, while seeking to increase child support for her two children, Joanne obtained from a certified public accountant certain financial documents related to the medical practice. Upon review of those documents, Joanne discovered that financial documents Thomas produced to her in the course of the dissolution proceeding had been altered. According to Joanne, beginning in 1984, when Thomas was served with notice of the dissolution proceeding, Thomas and Chun Wei withheld from billing patients, withheld monies received as payments to the accounts receivable of the medical practice, and otherwise acted so as to artificially reduce the value of the practice. Chun Wei prepared false ledgers, financial statements, income tax returns and other business records to conceal the withheld billings and payments. Thomas actively concealed the existence of the withheld billings and payments and affirmatively misrepresented to Joanne that his practice was experiencing financial difficulties and was near insolvency. As a result of the concealment of the withheld billings and payments by Thomas and Chun Wei, Joanne was induced to forego spousal support and to stipulate that Thomas be awarded the practice as his separate property.

In December 1993 Joanne commenced this action against Thomas and Chun Wei based on their alleged concealment of Thomas's true income and financial condition. Following several demurrers, Joanne filed a third amended complaint which stated claims against Thomas and Chun Wei on a variety of legal theories, including breach of fiduciary duty, fraud, constructive fraud, intentional and negligent misrepresentation, conversion, conspiracy, fraudulent conveyance, constructive trust, and declaratory relief. Joanne sought both compensatory and punitive damages.

The trial court apparently overruled a demurrer to the third amended complaint based on the "litigation privilege" (Civ.Code, § 47, subd. (b)). ¹ Defendants later filed a motion for summary judgment on the same ground, asserting that Joanne's claims were barred by the privilege because the claims were based on statements and communications by parties to a judicial proceeding. The trial court denied the summary judgment motion without prejudice due to a deficiency in defendants' evidence, and defendants later refiled the motion. The court issued a tentative ruling denying the motion and then took the matter under submission following oral argument.

While the motion for summary judgment was still under submission, the case was called for trial. At the outset, the trial court indicated that it would allow the jury to decide the issue of fraud, but it would not allow the jury to fix damages. The court indicated that if the jury found fraud, the court would send the case to the family court ² for "further adjudication." After an extended discussion with counsel during which defense counsel argued the family court had "exclusive jurisdiction" over the matter, the court agreed to allow the parties to brief the issue of the court's jurisdiction. Defendants argued that because the family court had continuing jurisdiction to determine spousal support and to award community assets not previously adjudicated, Joanne's sole remedy lay in that court. Joanne argued that she was entitled to elect between pursuing a remedy in the family court and pursuing an independent civil action for damages and equitable relief.

Following the completion of briefing, the trial court issued an order tentatively dismissing the case on the grounds that the court did not have jurisdiction "to hear matters previously determined and adjudicated by the Family Court" or "to hear damages testimony relating to community property assets including, but not limited to, spousal support and valuation of the medical practice...." The court transferred the case to the presiding judge for a determination of whether the case should be dismissed or transferred to the family court. The presiding judge issued a minute order dismissing the case and later denied a motion for reconsideration. Joanne appeals the dismissal.

DISCUSSION

I Subject Matter Jurisdiction

The parties suggest the issue presented here is whether the trial court had subject matter jurisdiction over this action. We disagree. In this case, Joanne seeks an award of compensatory and punitive damages for pecuniary injury she allegedly sustained as a result of defendants' tortious conduct. ³ The superior court has subject matter jurisdiction over a tort action where the amount in controversy exceeds $25,000. ⁴ (See Ash v. Hertz Corp. (1997) 53 Cal.App.4th 1107, 1109-1110, 62 Cal.Rptr.2d 192; Code Civ. Proc., § 86.) Likewise, to the extent Joanne seeks declaratory relief as to her interest in the community assets defendants allegedly concealed from her, the superior court has subject matter jurisdiction. (See Code Civ. Proc., § 1060.)

We believe that in dismissing this case for lack of "jurisdiction," the trial court used that term in its broader sense, as articulated by the California Supreme Court in Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 109 P.2d 942. In Abelleira, the court explained: "Lack of jurisdiction in its most fundamental or strict sense means an entire absence of power to hear or determine the case, an absence of authority over the subject matter or the parties.... [p] But in its ordinary usage the phrase 'lack of jurisdiction' is not limited to these fundamental situations. For the purpose of determining the right to ... dismissal of an action, a much broader meaning is recognized. Here it may be applied to a case where, though the court has jurisdiction over the subject matter and the parties in the fundamental sense, it has no 'jurisdiction' (or power) to act except in a particular manner, or to give certain kinds of relief...." (Id. at p. 288, 109 P.2d 942.)

In ruling that it lacked jurisdiction in this case, the trial court cited several provisions of the Family Code which provide that the court in a dissolution proceeding has continuing jurisdiction to order the payment of spousal support and to award community assets which have not been previously adjudicated. (See Fam.Code, §§ 2552, 2556, 4330, 4336.) Because the damages sought here relate to spousal support and community assets Joanne claims she forfeited as a result of defendants' tortious conduct, the trial court apparently concluded that it had no "jurisdiction" to grant Joanne the relief she sought and that her only recourse was to seek to reopen the dissolution proceeding so she could pursue directly in that proceeding an award of spousal support and a division of the concealed assets. Accordingly, the question presented here is not one of the court's subject matter jurisdiction, but of the court's "jurisdiction" (or power) to grant relief in an action for damages stemming from the tortious concealment of community assets in a dissolution proceeding. For the reasons that follow, we conclude that the court does have the power to grant relief in such an action.

II Viability of Tort Action for Concealment of Community Assets

In defense of the trial court...