Simonis v. Simonis (In re Simonis)

95 Cal.App.5th 1129

314 Cal.Rptr.3d 91

IN RE the MARRIAGE OF Jennifer and Alan SIMONIS.

Jennifer Simonis, Respondent,

v.Alan Simonis, Appellant.

C095193

Court of Appeal, Third District, California.

Filed September 26, 2023

Certified for Partial Publication.^*

Barth Daly and Thomas W. Barth for Appellant.

Weintraub Tobin Chediak Coleman Grodin Law Corporation, Brendan J. Begley and Audrey A. Millemann, Sacramento, for Respondent.

HULL, J.

SUMMARY OF THE APPEAL

Jennifer and Alan Simonis were married for 27 years and separated in September 2015. For clarity, we will refer to the parties by their first names when referring to them individually. While married the parties ran a farm where they grew crops, and they raised cattle.

Evidence presented at trial suggests Jennifer bore some recordkeeping responsibility for the farm operations during the parties’ initial period of separation, and Alan maintains Jennifer was in control of accounting for marital assets for at least a month after the parties separated. But other than this early period of control over accounting records, between the date of separation and the date of trial on reserved issues to divide the community estate approximately five years later, Alan retained control of the three main non-real estate assets that belonged to the community: cash on hand, crop income from 2015 crops, and a herd of cattle we and the parties refer to as the TCB Herd.

In the time during which Alan controlled the assets, he commingled the cattle, cash, and income with his separate property. Alan also made payments on various community debts using commingled funds. At trial in 2020, the trial court looked to long-established precedent regarding the tracing of commingled assets during marriage, found that Alan had failed to meet his burden to trace his separate property interest in the cattle or his use of separate property to pay down community debts, and divided the bulk of the community estate accordingly. The court made no specific order regarding the value of the cash on hand or the 2015 crop income, but it noted the court's continuing jurisdiction over unadjudicated assets and liabilities under Family Code section 2556 (statutory section citations that follow are found in the Family Code unless otherwise stated) when ruling on posttrial motions.

On appeal, Alan argues the trial court incorrectly interpreted and applied case law regarding how to characterize the separate and community interests in commingled assets and payments on community debts. He argues that an aggregate tracing analysis—where the court would total up all cash derived from the three non-real estate assets and compare that to the total he paid on community debts to identify his separate property payments on debts without regard to when debts were paid—is an appropriate tracing analysis here.

Additionally, Alan argues that the trial court ought to have determined the value of the non-real estate community assets at the date of separation. He argues that the court contributed to its own inability to calculate a value for those assets at the date of separation in how it managed the admission of evidence about the value of community assets during the trial, be that in its questioning of Alan or in its treatment of possible documentary evidence in possession of both parties.

In short, Alan seeks to persuade this court that the trial court should have ignored precedent regarding the tracing obligations of spouses claiming a separate property interest in commingled funds and (1) calculated a value of the three community assets at the date of separation; (2) added those values up; (3) subtracted that total from the total amount that he paid towards community debts using commingled assets during the parties period of separation regardless of when those debts were paid and if there were community assets available to pay some of the debts at the time those debts were paid; (4) treated that difference as representing the total amount of separate property he paid towards community debts post separation; and (5) divided the remaining assets of the community estate relying on that calculation. Additionally, Alan asks this court to find the trial court abused its discretion in not seeking the admission of evidence during trial that would support his unprecedented theory for dividing the community estate.

Finally, Alan argues the trial court committed legal error when it made a postjudgment order for the release of certain proceeds to Jennifer from Jennifer's counsel's trust account. The proceeds were from the sale of a parcel of real property the community had owned.

We affirm the judgment and postjudgment order to release funds.

FACTS AND HISTORY OF THE PROCEEDINGS

Proceedings Pre-Judgment

We refer to cattle owned by the parties at the time of separation other than the TCB Herd as the "Original Herd." Pursuant to a stipulated order filed November 3, 2015, Alan was awarded the Original Herd for a price of $722,244, for which he owed Jennifer $361,122.

The community property also included real property in Madison, California, which we refer to as the "505 Property" and real property in Esparto, California, which we refer to as the "Road 85 Property."

At some point in the action, the parties agreed that any debts Alan incurred post January 1, 2016, would be Alan's sole responsibility, and any crops planted after January 1, 2016—and any income from them—would be Alan's separate property and responsibility.

On April 17, 2018, the trial court entered an order regarding the distribution of funds from sale proceeds of the 505 Property. The order outlines various payments and credits to be awarded to each of the parties. Among the credits identified were credits Alan would receive from Jennifer because he had used some of his separate income to make payments on community debts. These credits totaled $642,281. However, the credits, as well as charges and other items identified in the order, remained "subject to reallocation as between the parties when the court [held] an evidentiary [hearing] on all remaining disputed credits/charges/offsets/claims between the parties" at a later date.

The trial court held a trial on reserved issues in June and July of 2020. Jennifer was represented by counsel at trial. Alan appeared in pro. per.

Following the trial, Jennifer's counsel informed the trial court that the Road 85 Property had sold. The net sale proceeds were $2,086,646.77.

On November 16, 2020, the trial court issued a tentative decision and proposed statement of decision. Both parties filed objections to the tentative decision. Notably, for our purposes, Alan, then represented by counsel, argued (1) that the TCB Herd was distinct from the Original Herd; (2) that the TCB Herd was sold off by "on or about May 18, 2016," with all proceeds totaling $402,075.58 paid toward the repayment of an outstanding Tri Counties Bank loan; and (3) that the "total of community debts paid by [Alan] ... after separation" exceeded the "total value of community funds received by [Alan] on or after [the] date of separation, exclusive of the value of the TCB Herd."

In December 2020, the parties entered a stipulated order to have the Road 85 Property net sale proceeds held in Jennifer's counsel's trust account pending further order of the court. In April 2021, the trial court presided over a hearing regarding the proposed statement of decision and other matters. Following the hearing, Jennifer's counsel prepared a proposed judgment packet and presented it to Alan's counsel. Alan's counsel objected to language in the proposed judgment that would have released funds from the sale proceeds to Jennifer upon entry of judgment.

In a later filing, Alan clarified that his objection was to language that he believed would release to Jennifer his share of the proceeds from the sale of the Road 85 Property. Among other reasons stated in his objection, Alan argued that he should be able to use the funds, at his discretion, as part of a cash deposit to stay the enforcement of the judgment pending appeal under Code of Civil Procedure sections 917.1, subdivision (b), 995.210, 995.730, and 995.710, subdivision (a).

Decision and Judgment

On August 2, 2021, the trial court entered a judgment on the reserved issues. The judgment contained orders regarding spousal support, the division of property, and the payment of attorney fees and costs.

In the first amended final statement of decision attached to the judgment, the trial court began by setting out what it believed was the governing law applicable to characterizing assets retained and then disposed of by Alan following the parties’ separation.

The court stated that when community and separate property are commingled, each type of property will retain its character so long as the components of the commingled assets can be adequately traced to their community and separate sources. Citing In re Marriage of Braud (1996) 45 Cal.App.4th 797, 823, 53 Cal.Rptr.2d 179, the court identified two primary tracing methods for tracing commingled property, the "direct tracing" method and the "family living expense tracing." "Under the ‘direct tracing’ method, the disputed asset ... is traced to the withdrawal of separate property funds from the commingled account. This method requires specific records reconstructing each separate and community property deposit, and each separate and community property payment as it occurs." ( In re Marriage of Braud, supra, 45 Cal.App.4th at p. 823, 53 Cal.Rptr.2d 179.) "Under the ‘family living expense’ or ‘recapitulation’ method, it is assumed that family living expenses are paid out of community property funds. [Citations.] Payments may be traced to a separate property source by showing community income at the time of the payments or purchase was exhausted by family expense, so that the payments or purchase necessarily must have been made with separate property funds. ( See v. See (1966) 64 Cal.2d 778, 783, 51...