Second District, Division 3 Reverses $200,000 Award Under Family Code Section 2107(c), But Sustains $100,000 Fee Award Under Section 271.
Facing a novel issue of statutory interpretation, the Second District, Division 3 in In re Marriage of Fong, Case No. B217038 (2d Dist., Div. 3 March 3, 2011) (certified for publication) decided that a wife who had not complied with her financial disclosure obligations could not seek an award of attorney’s fees as sanctions with noncompliant husband under Family Code section 2107(c). Even though section 2107(c) did not use the term “complying party” when mentioning who is entitled to fees, this limitation is implicit in the statute based on the prior references in section 2107(a), (b). In this regard, the appellate court accepted dicta from prior decisions indicating this was the correct interpretation of subdivision (c). This meant the trial court’s award of $200,000 in fees to wife under section 2107(c) had to be reversed.
Quite a different matter on the lower court’s award of $100,000 in fees/costs against husband for failing to cooperate and reduce the costs of litigation under Family Code section 271. The record showed he had an ability to pay, given the existence of nine rental properties, a ranch, ten cars, a yacht, savings accounts, gold coins, and other items. The amount was reasonable, given that wife asked for $50,000 more. Husband’s best argument (to us) was that the award was unjustified because wife, too, was cantakerous, but the appellate court rejected that one because section 271–unlike section 2107(c)–has no requirement that the moving party be in compliance with particular obligations before moving for an award.
Finally, the appellate court has a nice discussion of why no statement of decision is required for section 271 sanctions determinations. Hearings on these matters are not trials, and it refused to expand the narrow exception recognized in Gruendl v. Oewel Partnership, Inc., 55 Cal.App.4th 654 (1997) to 271 hearings (with Gruendl holding that a statement of decision was required when adding a party as a judgment debtor based on an alter ego theory).
Fong was a 3-0 decision authored by Justice Croskey.
BLOG UNDERVIEW–In deciding the section 2107(c) issue, the appellate court banked its holding on an argument not raised by husband. However, because the appeal involved an issue of law based on undisputed facts, it had discretion to reach the issue, and did so to husband’s benefit. (Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1, 24 (1995).)