Grimes v. Mou (In re Grimes)

45 Cal.App.5th 406

258 Cal.Rptr.3d 576

IN RE the MARRIAGE OF Jeffrey GRIMES AND Mingming MOU.

Jeffrey Grimes, Respondent,

v.Mingming Mou, Appellant.

H046035

Court of Appeal, Sixth District, California.

Filed January 28, 2020

Counsel for Appellant Mingming Mou: Adam R. Bernstein, West Palm Beach, Law Offices of Adam Richard Bernstein

Counsel for Respondent Jeffrey Grimes: Christopher C. Melcher, Woodland Hills, Walzer Melcher LLP

Danner, J.

In this dissolution of marriage action, appellant Mingming Mou appeals from an order characterizing marital property and awarding spousal support. Mou claims insufficient evidence supports the trial court's finding that certain money in Mou's brokerage account was a loan from Mou's relatives to the marital community. In addition, Mou contends the trial court abused its discretion by awarding permanent spousal support in an amount far below her needs based on the marital standard of living and for an unreasonably short period of time. For the reasons explained below, we affirm the trial court's order.

I. FACTS AND PROCEDURAL BACKGROUND

A. Procedural History

Respondent Jeffrey Grimes and Mou married in January 2004 and separated in July 2015. Grimes filed a petition for dissolution of the marriage in April 2016.

On April 26 and May 10, 2018, the trial court held a hearing on reserved issues in the action, including property division and permanent spousal support requested by Mou. On May 24, 2018, the trial court entered its Findings and Order After Hearing on Spousal Support and Division of Scottrade Account.¹ Mou filed a notice of appeal of the May 24 order on July 23, 2018.²

On October 29, 2018, the trial court issued further Findings and Order After Hearing, appending to that order a document titled "Attachment 7 to Findings and Order After Hearing." In the attachment, the trial court ordered Mou to transfer half of the funds then in the brokerage account to Grimes and ordered Grimes to pay directly to Mou his one-half share of the debt owed to Mou's relatives on their loan to the marital community.

On January 23, 2019, the trial court entered an uncontested judgment of dissolution. The judgment incorporated and appended the May 24, 2018 order.³

B. Evidence Presented at the Hearing

At the hearing held on April 26 and May 10, 2018, that led to the order at issue in this appeal, the trial court heard testimony from Grimes, Mou, forensic accountant Reagan Wade, and vocational expert Richard Lyness.

Grimes and Mou lived in San Francisco for a few years after they married in 2004—first in a rental property and then in a condominium they purchased.⁴ They had a child in November 2005. Around August 2008, the family moved into a rental property in Palo Alto. In November of that year, Grimes and Mou had their second child.⁵

In 2013, Grimes and Mou had talked about purchasing a home. According to Grimes, during their conversations Mou said her family was willing to give them money for the home purchase. Grimes testified that his "understanding, initially, was that [the money from Mou's relatives] was to be a gift."

In a December 2013 e-mail exchange, Grimes and Mou communicated about a $2 million potential bid on a particular home and the funds they could marshal for the purchase. Mou wrote that she "can always borrow some [money] from [her] brother to cover" a temporary shortfall in their bid due to Grimes's inability to sell certain stock until February 2014. Mou described in an e-mail the money that she had for purchasing the home as "my cash (400K at today's stock price, though $300K is from my brother but we can use it for a while)."

The money that Mou described as being "from [her] brother" had initially been deposited into Mou's account at Wells Fargo and then transferred into Mou's Scottrade brokerage account. Grimes testified that he did not know about the amounts or dates of these deposits and transfers when they were made. In addition, Grimes said he did not know in 2013 about Mou's brokerage account, and Mou did not give him an IRS Form 1099 for her brokerage account when he prepared their jointly-filed 2013 tax return. In 2015, the IRS notified Grimes and Mou of their failure to report on the brokerage account in their 2013 tax return.⁶ Grimes testified he first became aware that Mou had the brokerage account when he received the 2015 IRS notice.

In a March 2014 e-mail exchange regarding "Taxes/Gifts from foreign persons," Grimes told Mou, "Looks like we need to file [IRS] Form 3520 to avoid being penalized on any gifts received from foreign persons by April 15th." Mou responded, "[T]hanks. [C]an you take care of that? [W]hat do you need?" Grimes said he "just need[ed] details to fill out the form." Later, in an e-mail from Mou to Grimes regarding "info for tax filing," dated April 15, 2014, Mou listed four dates and dollar figures (totaling $299,936)⁷ and wrote: "those are not gifts, those are loans from my brother. I'm not sure if you need to file differently."

Grimes testified that he and Mou filed joint tax returns for 2014 and 2015, and those returns included income from Mou's brokerage account. He reiterated his belief that the $299,936 received from Mou's relatives "was originally intended as a gift or at worst an interest[-free] loan."⁸ Grimes claimed that Mou "recharacterized it as a loan" over time, including in the December 2013 e-mail. Grimes said that he and Mou did not enter into any agreement about how the money should be characterized. In addition, Grimes explained that he did not exchange any documents concerning the money with Mou's relatives or otherwise discuss with them the money, its repayment, or payment of interest on it. Mou's family did not attempt to join the dissolution action to claim the money.

Mou testified that the $299,936 in her brokerage account "was originally borrowed from her family members. At the time it was borrowed, it was intended to be used to help [Mou and Grimes] as a loan for the down payment on a piece of property that they were looking to purchase."⁹ At the time the money was received, Mou discussed with Grimes "that this was money that they would be borrowing and that they would be responsible to repay the money." "When the money was not used for the purchase of a home, [Mou] had deposited this money in a Scottrade account under her name solely, which she managed. She offered to return the funds to her relatives and they asked her to continue to manage the money on their behalf. [Mou's] understanding with her relatives was that she would be managing it for them and that gains or losses on that money would be for her relatives, not for her benefit." The home Mou and Grimes intended to purchase would have been a community property home and the $299,936, had it been used to fund the purchase, would have been a community property debt. After depositing the money from her relatives into the brokerage account, in 2013 Mou deposited approximately $40,000 belonging to the community into the account and, in 2014, an additional $33,000 of community funds.

In response to questioning by the trial court, Mou testified that when she and Grimes decided not to purchase a home, she told Grimes that she was going to return the $299,936 to her relatives. Mou stated that, in spring 2014, she made a verbal offer to her relatives to return the money, but they told her to keep the money and invest it on their behalf. Mou's relatives did not provide her written authorization to invest the money for them, and Mou did not discuss with her family how the taxes on the investment would be paid. Mou informed Grimes of her plan to invest her relatives' money around the time her relatives told her to do so, but Mou and Grimes did not discuss how any taxes would be paid. Mou's relatives were not able to open a brokerage account in the United States. Mou acknowledged that she was not a "registered broker/dealer or anything of that nature."

When asked on cross-examination if there were any letters sent by her relatives "indicating that [the money] was a gift or a loan," Mou answered, "Not letter. It's something like we just casually draft it [sic ]." When asked further if there were "any documents that indicated that [her relatives] would get interest on their alleged money," Mou said, "It was -- Yeah. They were saying it's to be determined." Mou offered no documentary evidence to corroborate this portion of her testimony. None of her relatives testified at the hearing.

Mou withdrew $67,800 from the brokerage account after she and Grimes separated. According to the parties' joint forensic accountant Reagan Wade, as of March 31, 2017, the brokerage account included $91,177.60 in community funds and $340,217.03 in Mou's relatives' funds; that is, it was 21.14 percent community funds and 78.86 percent relatives' funds. Wade testified that she was unable to determine which specific funds in the brokerage account were used when securities had been purchased and sold. Thus, Wade used a pro-rata approach based on the total amount of community funds and relatives' funds in the brokerage account to apportion the funds as of March 31, 2017.¹⁰ Wade testified that because Mou had deposited her relatives' money and community funds into the account, Wade could not accurately attribute the gains in the account to the different sources of capital. Wade stated, "if [Mou] had wanted to maintain her relatives' securities as a whole, she could have and should have probably set up her own account without commingling."

During the marriage, the family enjoyed what Grimes described as a middle to upper-middle class lifestyle. One child attended private school. The family owned three cars: a Subaru Legacy station wagon purchased new in 2005, a 2002 Lexus purchased around 2008, and a 2012 Porsche 911 purchased in 2013. The family went on vacation regularly during marriage, at a cost of around $5,000 annually. They dined out about once per month, spending about $60 to $70 per meal. At the...