Marriage of Schleich
8 Cal. App. 5th 267
| Cal. Ct. App. | 2017Background
- Charles Schleich (Husband) and Lori Holek (Wife) litigated a lengthy dissolution involving two ranches, multiple vehicles, business interests, and alleged nondisclosures of assets and income; trial court issued two statements of decision (May 2013 property/support; May 2014 attorney fees/sanctions).
- Wife alleged numerous breaches of fiduciary disclosure duties under Family Code §§1100, 1101 and sought remedies under §1101(g)/(h) (50% or 100% of undisclosed assets) plus sanctions under §2107 and need-based fees under §2030.
- Trial court found multiple breaches by Husband, awarded Wife property/equalization payments, permanent spousal support, $318,510 in fees as §1101/§2107 sanctions, and $412,485 in need-based fees (offsets applied).
- Husband appealed, challenging (inter alia) use of §1101 remedies for separate-property and pre-separation dissipated assets, alleged double recovery (duplicative awards), spousal support ability to pay, and fee awards.
- Court of Appeal agreed that some §1101 remedies were misapplied (separate property and pre-separation dissipated income) and that duplicative awards resulted in double recovery; it reversed and remanded fee/sanctions awards for recalculation but otherwise affirmed.
Issues
| Issue | Plaintiff's Argument (Wife) | Defendant's Argument (Husband) | Held |
|---|---|---|---|
| Whether §1101(g)/(h) remedies (50%/100% of asset) apply to nondisclosure of Husband’s separate property | §1101 remedies apply broadly to fiduciary breaches (cites §721 reference in §1101(h)); remedies not limited by explicit “community” language | §1101 remedies apply only to breaches impairing a spouse’s community interest; §1101 is a community-property provision so does not cover separate property nondisclosure | Court agreed with Husband (following Simmons): §1101(g)/(h) limited to community assets; separate-property nondisclosures are sanctionable under §2107 but not remediable by §1101 awards |
| Whether post-separation nondisclosure of pre-separation income (spent during marriage) supports §1101 remedies | Income is an asset upon receipt; nondisclosure can impair community interest and justify §1101 relief | Once pre-separation income was spent before the post-separation disclosure omission, it was no longer part of the community estate at the time of the breach; therefore §1101(a) impairment prerequisite is missing | Court held post-separation nondisclosure of pre-separation dissipated income does not support §1101 remedies; such conduct may be sanctionable under §2107 but not under §1101 |
| Whether awarding §1101 remedies and then also awarding the same community interest in property in the property division results in double recovery | §1101 remedies are mandatory penalties and separate from property division; awarding both is appropriate to punish breaches | §1101 awards of 50% (or 100%) are the claimant’s community share (or the entire asset) and cannot be awarded twice; statutory text and community-property principles require harmonization | Court held awards were duplicative: once §1101 awards a party 50% (or 100%) of an asset, that interest cannot also be awarded again in property division; remand to eliminate double recovery |
| Whether trial court abused discretion in awarding permanent spousal support (ability to pay) | (Wife) support justified by disparity, Husband’s assets and earning capacity | (Husband) court failed to correctly calculate his ability to pay and relied on overstated asset figures; award requires ability-to-pay analysis and should account for offsets | Court upheld support award as within discretion: court reasonably imputed income, considered assets and earning capacity, and did not err in balancing §4320 factors |
| Whether trial court properly determined ability to pay and amount of attorney’s fees (need-based §2030 and sanction fees §1101/§2107) | Fees justified by disparity, Husband’s concealment, and litigation conduct; sanctions attributable to Husband’s breaches | Husband argues court failed to make required ability-to-pay findings under §270 as to sanctions, awarded excessive need-based fees (over 1.5× his fees), and included fees for claims that were not fiduciary breaches | Court found trial court did consider ability to pay and related factors but could not determine from record whether fee awards depended on reversed §1101 findings; therefore reversed and remanded the attorney-fee judgment for recalculation under §1101 and §2107 in light of appellate holdings |
Key Cases Cited
- In re Marriage of Simmons, 215 Cal.App.4th 584 (Cal. Ct. App.) (§1101(h) remedy limited to community assets)
- In re Marriage of Fossum, 192 Cal.App.4th 336 (Cal. Ct. App.) (pre-separation nondisclosure that creates community debt may support §1101 relief)
- In re Marriage of Rossi, 90 Cal.App.4th 34 (Cal. Ct. App.) (§1101 relief for undisclosed community winnings)
- In re Marriage of Geraci, 144 Cal.App.4th 1278 (Cal. Ct. App.) (sanctions for post-separation false earnings; remand when fiduciary relationship not found)
- In re Marriage of Prentis-Margulis & Margulis, 198 Cal.App.4th 1252 (Cal. Ct. App.) (scope of §1101; remedies tied to impairment of community interest)
- In re Marriage of Quay, 18 Cal.App.4th 961 (Cal. Ct. App.) (abuse-of-discretion review for property division)
- In re Marriage of Feldman, 153 Cal.App.4th 1470 (Cal. Ct. App.) (review of sanctions and attorney fee awards under Family Code)