Opinion
G042033 Super. Ct. No. 06D000344
09-02-2011
In re Marriage of AHMAD and FATEMEH HASHEMIAN. AHMAD HASHEMIAN, Appellant, v. FATEMEH HASHEMIAN, Appellant.
Law Offices of Marjorie G. Fuller, Marjorie G. Fuller, J.E.T. Rutter and Lisa R. Wiley for Appellant Ahmad Hashemian. Edward Stephen Temko for Appellant Fatemeh Hashemian.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
Appeal from a judgment of the Superior Court of Orange County, Renee E. Wilson, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed.
Law Offices of Marjorie G. Fuller, Marjorie G. Fuller, J.E.T. Rutter and Lisa R. Wiley for Appellant Ahmad Hashemian.
Edward Stephen Temko for Appellant Fatemeh Hashemian.
In their 21-year marriage, Ahmad and Fatemeh Hashemian accumulated substantial wealth. They agreed to much of the property division without a trial. However, a trial was required to establish a valuation for the community business, Capital Aspects, LLC (Capital Aspects), and to determine spousal support. Ahmad appeals from the court's valuation of the business, contending that there is no substantial evidence to support the valuation of the expert witness upon whom the court relied and that the expert's methodologies were faulty in several respects. He also appeals from the awards of spousal support and attorney fees in favor of Fatemeh and from the court order precluding him from filing objections to the proposed statement of decision that his own attorney prepared. Fatemeh contends the judgment is correct in all respects, but has filed a protective cross-appeal in the event this court modifies the property valuation.
"Hereafter, we refer to the parties by their first names, as a convenience to the reader. We do not intend this informality to reflect a lack of respect. [Citation.]" (In re Marriage of Balcof (2006) 141 Cal.App.4th 1509, 1513, fn. 2.)
We affirm. Without question, the valuation of the business was a little bit of a sticky wicket. Nonetheless, the record contains substantial evidence to support the $911,100 valuation affixed by expert witness Glenn Mehner and adopted by the court. Mehner's testimony provided substantial evidence in support of his opinion, even though his written calculations were excluded from evidence based on hearsay. Furthermore, Ahmad has not shown that the court should have rejected Mehner's excess earnings and formula approaches to valuation. Finally, we are unpersuaded by Ahmad's arguments concerning the spousal support and attorney fees awards and the order precluding late-filed objections to the proposed statement of decision, for reasons we shall show.
I
FACTS
A. Background and Procedural History:
Ahmad and Fatemeh were married in November 1985 and separated in January 2006. A judgment of dissolution as to status was entered on January 29, 2007. On October 4, 2007, the court ordered Ahmad to pay Fatemeh $30,000 per month in temporary spousal support and, based on the stipulation of the parties, reserved jurisdiction to modify the amount either up or down, based on Ahmad's actual 2007 cashflow as shown at the time of trial. A stipulation and order for judgment on reserved issues, pursuant to which much property was divided, was entered on November 30, 2007.
A judgment on reserved issues, from which Ahmad and Fatemeh each appeal, was entered on April 7, 2009. The court found that the parties were quite well to do and "were able to live an extremely high lifestyle." Their assets were so extensive that the property division resulted in a 29-page judgment on reserved issues. Each party received approximately $4,500,000 in assets.
The parties owned Capital Aspects. Ahmad's gross controllable cashflow from that business for the 12 months preceding the date of the judgment on reserved issues was $125,000 per month. Ahmad's tax returns for each of 2006 and 2007 reflected an adjusted gross income over $1.5 million, while he had a controllable cashflow of $1,893,300 for 2006. Capital Aspects was awarded to Ahmad, at a value of $911,000.
Fatemeh, on the other hand, had been employed at Neiman Marcus at one point, earning $10 per hour. Her earning capacity was $1,720 per month.
The court ordered Ahmad to pay Fatemeh $26,000 per month in spousal support, beginning April 1, 2008. It also ordered him to pay her retroactive temporary spousal support in the amount of $45,000 per month from April 1, 2006 through March 31, 2008. Ahmad was entitled to offsets for prior payments including a payment of $150,000. The total amount owing to Fatemeh in respect of retroactive spousal support was $666,000.
B. Nature and Viability of Business:
Matthew Hudack, a regional director for John Hancock Life Insurance Company, was called by Ahmad, with whom Hudack had been doing business. Hudack described nonrecourse policies or life settlement transactions as follows: "The nonrecourse premium financing type of sale is a transaction where the insured is encouraged to purchase a policy . . . more than likely with borrowed funds from a lender. There is an agreement that that insured will not pay anything for that insurance during a 24-month period of time. [¶] Then after that 24-month period of time, the insured will give the policy back to the lender and the lender will typically sell it in the life settlement or secondary market. That's how this transaction takes place." He explained that 24 months is the period of time in which the policy can be contested.
Mehner explained the business in this way. An individual insured can purchase life insurance in an amount up to 80 percent of the value of his or her estate. Then, at a certain age, he or she can sell that policy to a life settlement company. After that, the individual can purchase a new policy. Ahmad may make a commission on the new policy and may or may not make a commission on the sale of the existing policy to a life settlement company. When the insured dies, the proceeds of the policy that has been sold to the life settlement company is paid to that company.
Mehner testified he "[had] learned . . . that the insurance industry . . . had some concerns with respect to independent third parties owning a policy on an unrelated person" and that there were some problems in the industry. Yet he also testified that he had spoken to a wholesale life insurance underwriter who opined that the life settlement industry was viable and would continue, that there was a significant amount of business available, but that each person's business practice was unique. Hudack stated that since the first quarter of 2006, his company no longer engaged in investor owned policy transactions anymore. It was his understanding that other companies were taking the same position, but that investor-owned policies were not illegal.
In contrast, Christopher Erwin, a life settlement attorney, registered life insurance agent and owner of a life insurance brokerage, called by Fatemeh as her expert witness, testified to a more promising picture. He opined that the life settlement business was not decreasing, but rather was increasing. He stated that it was a $10 billion industry in 2007 and that he expected it to be a $15 billion industry in 2008. Erwin said that he was familiar with Ahmad's business and opined that it was on the increase.
However, Mehner testified that the life settlement income represented 79 percent of Capital Aspects's gross revenue in 2005, 77 percent in 2006, and 66 percent in 2007. It was his understanding, based on Ahmad's own representations, that Ahmad's life settlement business might experience some deterioration, but would also continue to produce some income. Ahmad does not run a traditional insurance agency. However, in addition to the life settlement business, he does insurance consulting with other agents. He assists in designing life insurance plans for clients, using three approaches. He can design a plan and receive 10 percent of the commission. He can become involved with the underwriting, in which case he receives a 25 percent commission. Or, if he works with the client and tries to close the deal, he receives a 50 percent commission.
As Ahmad admits, he previously qualified for the Million Dollar Round Table—an organization for insurance agents, whose members have to meet certain qualifications. In fact, at one point Ahmad had even qualified for the top tier of the Million Dollar Round Table—an elite group of the top 250 insurance agents in the nation.
II
DISCUSSION
A. Introduction:
Ahmad makes several assertions of error: (1) the court erred in dividing the community business, Capital Aspects, inasmuch as there was no rational basis for the evaluation; (2) the court abused its discretion in awarding Fatemeh $26,000 per month in prospective spousal support and $45,000 per month in retroactive spousal support; (3) the court abused its discretion in awarding Fatemeh $100,000 in attorney fees and costs; and (4) the trial court erred in precluding Ahmad from filing objections to the proposed statement of decision. In her protective cross-appeal, Fatemeh maintains that the judgment is correct, but contends that if this court nonetheless modifies it, the matter should be remanded for increases in the awards of spousal support and attorney fees.
B. Valuation:
(1) Statement of decision
In its February 3, 2009 statement of decision, the court observed that Ahmad wanted Capital Aspects sold and the proceeds divided, whereas Fatemeh wanted the business to be awarded to Ahmad, with half of the value of the business to be awarded to her. The statement of decision provides: "This Court finds that during the marriage [and] . . . since the date of separation, [Ahmad] has had exclusive control over the business, including all profits, and even to the extent that [he] has attempted to sell the business without a court order or consent of [Fatemeh]. This court finds further that there are sufficient community assets (including cash assets) to award the business to [Ahmad] and one-half of the value to [Fatemeh] without requiring its sale; that the sale of said business would render [Ahmad] without the monthly income established during the marriage, especially in light of [Ahmad's] testimony that he would not be returning to work but instead planned to write a book."
Regarding the valuation of Capital Aspects, the statement of decision observed that Ahmad and Fatemeh had hired Glenn Mehner of Duckworth and Mehner as a joint forensic accountant to value Capital Aspects. In addition, Ahmad hired expert Phillip Liberman and Fatemeh hired expert Christopher Erwin. Liberman opined that Capital Aspects had a value of $100,000 and did not meet the criteria of a "business." The court found that Capital Aspects was an ongoing business grossing over $1 million per year and rejected Liberman's opinion of valuation as tenuous and lacking in credibility.
The statement of decision also provides: "Capital Aspects is a company that deals primarily with the purchase and sale of life insurance and the sale of life settlements. Much testimony was presented on the status and future of life settlements as they relate to Capital Aspects. The testimony was clear that there have been some changes and some deterioration in the use of life settlements and non-recourse premium financing which affects the value of Capital Assets. Mr. Mehner gave a fifty percent (50%) discount in his valuation as a result of said changes. [Fatemeh's] witness, Christopher Erwin, testified that a fifty percent discount was too high. [¶] This Court finds that the testimony of Mr. Mehner as to the fifty percent (50%) discount is credible. Any other discount, more or less, would be speculative. This Court finds further that the valuation methods utilized by expert Glenn Mehner, excess earnings approach and formula approach were proper methods of valuation and resulted in the credible value of the business. This Court finds that the community business known as Capital Aspects . . . has a current value of $911,000."
(2) Substantial Evidence
Mehner prepared five reports, including a valuation report of Capital Aspects and an analysis of Ahmad's gross cashflow. The reports were marked for identification and the court and the attorneys had copies. They all followed along during Mehner's testimony. Mehner was questioned at length concerning various figures and calculations shown in those reports, as well as the methodologies he applied in his analyses, and he repeatedly referenced the reports in his testimony.
Counsel for Fatemeh moved that Mehner's reports be admitted into evidence. Counsel for Ahmad objected on the basis of hearsay and other grounds. He stated, inter alia: "Cumulative. The individual has testified. . . . [W]e have no problem in the court's keeping these for demonstrative purposes . . . , but I believe the evidence is the person who prepared them, his testimony which he has given." The court sustained the objection on the basis of hearsay.
This being the case, Ahmad now claims there is no substantial evidence to support Mehner's valuation of the business, as adopted by the court. Ahmad maintains that Mehner's conclusions are unsupported by any calculations and the record is incomplete as to what methodology Mehner used.
We disagree. Even without consideration of the reports, substantial evidence supports the trial court's finding that Capital Aspects was worth $911,000.
Mehner's testimony was lengthy and detailed. He clearly testified as to his bottom line. He explained that, in reaching the $911,000 value, he used two approaches—an excess earnings approach and a formula approach. Under the excess earnings approach, Mehner arrived at a figure of $876,000. Under the formula approach, Mehner valued Capital Aspects at $954,000. Mehner averaged the figures determined under those two approaches to reach the $911,000 value as of December 31, 2007. We now take a look at those two approaches.
(3) Excess earnings approach
(a) methodology and evidence
"'Pursuant to [the excess earnings] method, one first determines a practitioner's average annual net earnings (before income taxes) by reference to any period that seems reasonably illustrative of the current rate of earnings. One then determines the annual salary of a typical salaried employee who has had experience commensurate with the spouse who is the sole practitioner or the sole owner/employee. Next, one deducts from the average net pretax earnings of the business or practice a "fair return" on the net tangible assets used by the business. Then, one determines the "excess earnings" by subtracting the annual salary of the average salaried person from the average net pretax earning[s] of the business or practice remaining after deducting a fair return on tangible assets. Finally, one capitalizes the excess earnings over a period of years by multiplying it by a factor equal to a specific period of years, discounted to reflect present value of the excess earnings over that period. The period varies according to factors such as the type of business, its stability, and its earnings trend.'" (In re Marriage of Rosen (2002) 105 Cal.App.4th 808, 818.)
Under the excess earnings approach, Mehner arrived at a figure of $876,000 as of December 31, 2007. That figure represented the combined value of the tangibles and intangibles of the business.
In order to value the goodwill of Capital Aspects, Mehner made reference to a Million Dollar Round Table survey of salaries and income for Southern California. As noted above, the Million Dollar Round Table is an organization for insurance agents. Mehner compared Ahmad's income and expenses over a five-year period, 2003 through 2007, to the average income and expenses as shown on a Million Dollar Round Table survey. Mehner testified that, with respect to goodwill, he applied a capitalization rate of 100 percent for the December 2007 valuation. He further testified that he added the value of goodwill to the value of the net tangible assets to arrive at the total value for the business of $867,000.
(b) argument and analysis
Ahmad contends that Mehner's excess earnings analysis is faulty, as shown by In re Marriage of Rosen, supra, 105 Cal.App.4th 808. In that case, we faulted an expert witness's valuation of the law practice of a sole practitioner whose practice consisted almost entirely of handling state-funded criminal appeals. (Id. at pp. 821-822.) The expert witness had relied on two compensation surveys, one a national survey of lawyer compensation, and the other a survey of average compensation for officers and directors of various types of businesses. (Id. at p. 822.) We noted that the survey of lawyer compensation was of questionable application because it did not address average lawyer compensation in Southern California and it did not focus on state-funded criminal appeals. We also stated that the survey of officer and director compensation was inapplicable because the lawyer did not have officers and directors. (Ibid.)
In the matter before us, however, the same geographical concern does not apply. The Million Dollar Round Table survey that Mehner utilized was for the Southern California area including Orange County. But Ahmad contends that it was improper to use the survey in any event, because it was a survey of insurance agent income and Capital Aspects had a heavy concentration in the life settlement business. He also says Mehner failed to justify applying a survey published in 2003 to a valuation of Capital Aspects as of 2007.
Where the latter point is concerned, Mehner explained that a more recent survey was not available. Furthermore, Mehner did not look only at Ahmad's income in 2007, but his income from 2003 through 2007. An updated survey would have been preferable, but that does not mean that Mehner's analysis should be completely disregarded just because no more current survey was available.
The more ticklish issue is the usefulness of the Million Dollar Round Table survey. It pertains to insurance agents and Ahmad had been a licensed insurance agent for 24 years at the time of trial. In fact, as noted previously, he had been a member of the Million Dollar Round Table in the past.
On the other hand, it would appear Ahmad is correct that the Million Dollar Round Table survey does not provide information with respect to life settlement sales or the procurement of replacement insurance through nonrecourse premium financing. In other words, Ahmad says Mehner just valued the wrong business.
While the survey used may have been less than ideal, it was not without value in the analysis. For one thing, Mehner testified that there was an anticipated loss of life settlement commissions. He opined that Ahmad would continue to receive commissions from life settlements, but probably not at the same level as in the preceding two or three years. Mehner also reflected on the ability of Ahmad to replace that source of commissions with regular life insurance commissions. Mehner considered that Ahmad could redesign his sales strategy, because "[h]e [had] a long historical record making a substantial amount of money prior to life settlement." Mehner also considered the ability of Ahmad to buy pools of clients to market life insurance, and also considered that Ahmad had commission arrangements with 51 agents nationwide, with respect to both life insurance and life settlements. For example, he stated that Ahmad had fairly recently purchased about 200 client names for $40,000.
Furthermore, there was a reason why Mehner was comfortable with the $867,000 valuation under the excess earnings approach. The amount of commissions from regular life insurance sales in 2007 was $882,715. So, if you completely excluded the amount of the commissions derived from the life settlement business in 2007, you would arrive at commissions approximately equal to the value of the business as he determined it under the excess earnings approach.
In the context of a changing business, and in the particular context of this case, we cannot say that Mehner's reliance on the Million Dollar Round Table survey was inappropriate.
(4) Formula approach
(a) evidence
Under the formula approach, Mehner looked at an average of the gross revenues of Capital Aspects over five years. From that $2 million figure, Mehner backed out $34,458 in life insurance premium renewals, as opposed to one-time commissions. He felt it was important to establish a value for just the nonrenewal business.
Mehner applied a 90 percent industry revenue multiplier to the figure that represented the revenue from nonrenewals. He selected the 90 percent figure based on his review of two reference materials. One was "the handbook small business formulas, which actually [said] that rate [could] be significantly higher than that. [¶] The second was a valuation guide that [Ahmad] gave [him] . . . which indicated that [with respect to] commissioned financial practices, that 1 to 1.1 would be an appropriate multiplier."
So, Mehner applied the industry revenue multiplier of 90 percent and came up with a value of over $1.7 million for nonrenewal business. Then, Mehner applied a 50 percent discount to that figure, to arrive at a total value for nonrenewal revenue. Mehner testified that he applied the 50 percent discount because while he did not assume that the life settlement commissions would completely evaporate by the end of 2007, he did assume, based on Ahmad's representations, that there would not "be any significant life settlement" commissions coming in after 2008. Mehner further stated that Ahmad's 2007 commissions, completely excluding those based on life settlements, were still $882,000, essentially the same number as he obtained by applying his one-time multiplier under the formula approach.
After Mehner established the total value of the nonrenewal revenue, he established a value for the renewal business. He took the $34,458 amount of renewal business and multiplied it by 150 percent. He explained that he used the multiplier because it is easier to generate renewal income, or the receipt of renewal premiums after a policy is sold, than it is to generate a flat commission for a new policy.
Having determined the total value of the nonrenewal business and the total value of the renewal business, Mehner was able to set the total value of Capital Aspects at $954,000.
(b) argument and analysis
Ahmad labels Mehner's formula approach a "fair market value approach." Although Ahmad acknowledges that a fair market value approach may be a valid approach to valuation, he complains that Mehner did not in fact use a valid fair market value approach.
Ahmad calls our attention to the portion of the reporter's transcript showing his counsel read aloud a passage from In re Marriage of Hewitson (1983) 142 Cal.App.3d 874 wherein the court cited United States Treasury Regulations defining fair market value "as 'the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell' and both having reasonable knowledge of relevant facts. [Citations.]" (Id. at p. 882, fn. 8.) The attorney asked Mehner whether he applied that definition to value Capital Aspects. Mehner said that he did not. Ahmad now claims that Mehner erred in failing to utilize the factors set forth in In re Marriage of Hewitson to value Capital Aspects, a closely held business. We disagree. While Mehner may not have applied that particular definition, he did apply the relevant valuation factors discussed in the case.
In In re Marriage of Hewitson, supra, 142 Cal.App.3d 874, each party's expert witness valued a closely held corporation using the price-earnings ratio method. The trial court accepted the valuation of the wife's expert witness and the appellate court held this was prejudicial error. (Id. at pp. 877-879.) The appellate court stated it is "improper to determine the value of a closely held corporation by the sole use of the price-earnings ratio of publicly traded corporations . . . ." (Id. at p. 880.)
By way of background, the Hewitson court distinguished between investment value and fair market value and described different methods of ascertaining either value. (In re Marriage of Hewitson, supra, 142 Cal.App.3d at pp. 881-883.) In its discussion of "fair market value," the Hewitson court noted the definition of the term as set forth in the United States Treasury Regulations and used for federal tax purposes (the same definition Ahmad's attorney quoted at trial). (Id. at p. 882.)
The court did not state that in the context of marital property division the value of an asset must be set at fair market value. To the contrary, the court specifically stated that California statutory law did not require the value of a closely held business to be established at fair market value and that the determination of the value of the business by its investment value would satisfy statutory requirements. (In re Marriage of Hewitson, supra, 142 Cal.App.3d at p. 887.)
The court was referring to Civil Code former section 4800, subdivision (a). (In re Marriage of Hewitson, supra, 142 Cal.App.3d at p. 887.)
The Hewitson court also stated: "We recognize the determination of the value of infrequently sold, unlisted, closely held stock is a difficult legal problem. Most of the cases illustrate there is no one applicable formula that may be properly applied to the myriad factual situations calling for a valuation of closely held stock. [Citation.] It is, therefore, incumbent upon a court faced with such a problem to review each factor that might have a bearing upon the worth of the corporation and hence upon the value of the shares. Unless there is some statutory or decisional proscription on their use, the factors listed in Revenue Ruling 59-60 . . . should be consulted and used to evaluate closely held stock." (In re Marriage of Hewitson, supra, 142 Cal.App.3d at p. 888.)
The Hewitson court observed that Revenue Ruling 59-60 listed eight factors to be considered in valuing the shares of a closely held corporation. "The listed factors are: [¶] '(a) The nature of the business and the history of the enterprise from its inception. [¶] '(b) The economic outlook in general and the condition and outlook of the specific industry in particular. [¶] '(c) The book value of the stock and the financial condition of the business. [¶] '(d) The earning capacity of the company. [¶] '(e) The dividend-paying capacity. [¶] '(f) Whether or not the enterprise has goodwill or other intangible value. [¶] '(g) Sales of stock and the size of the block of stock to be valued. [¶] '(h) The market price of stocks of corporations engaged in the same or a similar line of business having their stocks actively traded in a free and open market, either on an exchange or over-the-counter.'" (In re Marriage of Hewitson, supra, 142 Cal.App.3d at p. 883, fn. 9, italics omitted.)
The record reflects that Mehner considered most of these factors. Ahmad asserts that Mehner failed to address the last factor listed in the revenue ruling, because he did not compare similar businesses. However, the last factor has to do with a comparison of stocks of corporations sold on an exchange or over-the-counter. Here we are talking about ownership interests in a limited liability company formed in New Mexico. It is not readily apparent to us that there is a means of comparing the value of those ownership interests to the values of ownership interests in similar limited liability companies in a simple way like consulting a stock exchange. Consequently, we do not see a way for Mehner to have taken the last factor (or for that matter, the second to the last factor) into consideration in the literal sense.
At the same time, Ahmad's point is that Mehner's valuation is not optimum inasmuch as Mehner did not come up with a method of comparing the value of Capital Aspects to the value of other companies involved in both life settlements and life insurance sales. While this is true, Ahmad himself testified that the majority of his life settlement business over the last couple of years had come from only four clients and that he was not attempting to replace lost business or solicit new clients. It was Mehner's understanding that life settlement commissions would continue to be generated in some amount into 2008, but would deteriorate substantially by the middle or end of that year. In applying his formula approach, then, Mehner discounted the value of the business by 50 percent because of the deterioration of the life settlement business. After discounting by 50 percent, he arrived at a figure that coincided with the amount of non-life settlement regular commissions generated in 2007. That alone, he said, could justify the value he arrived at. Regular commissions for 2007 were $882,715.
"[T]he court has broad discretion to select a valuation method that will most effectively achieve substantial justice between the parties as long as that method is within the range of the evidence presented. [Citations.]" (In re Marriage of Duncan (2001) 90 Cal.App.4th 617, 636.) "The trial court's determination of the value of a particular asset is a factual one and as long as that determination is within the range of the evidence presented, we will uphold it on appeal. [Citations.]" (Id. at p. 632.) In this matter, the court's determination was within the range of evidence presented.
C. Spousal Support:
(1) Introduction
As noted at the outset, the court ordered Ahmad to pay Fatemeh $26,000 per month in spousal support, beginning April 1, 2008. It also ordered him to pay her retroactive temporary spousal support in the amount of $45,000 per month from April 1, 2006 through March 31, 2008. Ahmad was entitled to offsets for prior payments including a payment of $150,000.
Ahmad claims the court erred in making these prospective and retroactive spousal support awards. He argues the court failed in its statutory mandate to consider Fatemeh's needs, assets and obligations, or the goal that the supported party become self-supporting within a reasonable period of time. (Fam. Code, §§ 4320, subds. (d), (e), & (l), 4322).
(2) Analysis
(a) permanent spousal support
"Spousal support is governed by statute. (See [Family Code,] §§ 4300-4600.) In ordering spousal support, the trial court must consider and weigh all of the circumstances enumerated in the statute, to the extent they are relevant to the case before it. [Citations.] The first of the enumerated circumstances, the marital standard of living, is relevant as a reference point against which the other statutory factors are to be weighed. [Citations.] The other statutory factors include: contributions to the supporting spouse's education, training, or career; the supporting spouse's ability to pay; the needs of each party, based on the marital standard of living; the obligations and assets of each party; the duration of the marriage; the opportunity for employment without undue interference with the children's interest; the age and health of the parties; tax consequences; the balance of hardships to the parties; the goal that the supported party be self-supporting within a reasonable period of time; and any other factors deemed just and equitable by the court. [Citation.]" (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 302-304, fns. omitted.)
"'In making its spousal support order, the trial court possesses broad discretion so as to fairly exercise the weighing process contemplated by [Family Code] section 4320, with the goal of accomplishing substantial justice for the parties in the case before it.' [Citation.] In balancing the applicable statutory factors, the trial court has discretion to determine the appropriate weight to accord to each. [Citation.] But the 'court may not be arbitrary; it must exercise its discretion along legal lines, taking into consideration the applicable circumstances of the parties set forth in [the statute], especially reasonable needs and their financial abilities.' [Citation.] Furthermore, the court does not have discretion to ignore any relevant circumstance enumerated in the statute. To the contrary, the trial judge must both recognize and apply each applicable statutory factor in setting spousal support. [Citation.] Failure to do so is reversible error. [Citations.]" (In re Marriage of Cheriton, supra, 92 Cal.App.4th at p. 304.)
We start with Ahmad's assertion that the court did not consider Fatemeh's needs. Family Code section 4320, subdivision (d) requires the court to consider "[t]he needs of each party based on the standard of living established during the marriage." Contrary to Ahmad's assertion, it is clear that the court did consider Fatemeh's needs based on the marital standard of living.
In the statement of decision, the court observed that the parties lived "an extremely high lifestyle." It noted that they had a controllable cashflow of approximately $1,478,527 during the last year of marriage. The court stated that the spousal support award of $26,000 per month was based on Fatemeh's needs as established during the marriage and evidenced during trial.
Of course, not all the evidence at trial was reiterated in the statement of decision. However, we observe that Ahmad testified that $30,000 per month was sufficient for him to live on. With some reticence, he agreed that $30,000 per month was "probably" enough for Fatemeh to live on as well. Fatemeh, on the other hand, testified that her needs, consistent with the marital standard of living, were accurately reflected in her income and expense declaration. Her income and expense declaration stated that her needs, consistent with the marital standard of living, were $56,868 per month. Mehner testified that Fatemeh's cost of living for 2005 was $44,948 per month. He determined that the parties spent or invested an average of $75,295 per month for the years 2004 and 2005. He allocated about $36,200 of that amount to Fatemeh. The evidence adduced at trial supported the court's award as being within the marital lifestyle.
Ahmad is also incorrect that the court failed to consider Fatemeh's assets, as required by both Family Code section 4320, subdivision (e) and Family Code section 4322. The court specifically noted that Fatemeh was receiving approximately $4,500,000 as a result of the community property division. It charged her with a return on liquid investments of $5,000 per month and rental income in the amount of $2,000 per month. In addition, the court stated that Fatemeh had the ability to earn $1,720 per month. This amounts to a total of $8,720 per month in imputed income. When added to $26,000 per month in spousal support, this results in a total of $34,720 in monthly income. That is less than the amounts Mehner allocated to Fatemeh, less than the amount Fatemeh claimed, and only slightly more than the amount Ahmad himself acknowledged would constitute sufficient support for her.
Family Code section 4322 provides: "In an original or modification proceeding, where there are no children, and a party has or acquires a separate estate, including income from employment, sufficient for the party's proper support, no support shall be ordered or continued against the other party."
--------
That leaves the assertion that the court failed to consider Family Code section 4320, subdivision (l). Under that subdivision, the court shall consider: "The goal that the supported party shall be self-supporting within a reasonable period of time. Except in the case of a marriage of long duration as described in Section 4336, a 'reasonable period of time' for the purposes of this section generally shall be one-half the length of the marriage. However, nothing in this section is intended to limit the court's discretion to order support for a greater or lesser length of time, based on any of the other factors listed in this section, Section 4336, and the circumstances of the parties."
Here, the court found that the marriage was one of long duration. Indeed, it lasted over 20 years. The court also found that Fatemeh was then 54 years old and had no skills that would permit her to enter the job market at other than the lowest level. Although she had a bachelor's degree, she had been able to find employment at Neiman Marcus paying only $10 per hour plus commissions. The court found that the Neiman Marcus employment was "consistent with her ability and marketability." It charged her, as noted above, with the ability to earn $1,720 per month.
As Family Code section 4320, subdivision (l) provides with respect to the goal that the supported spouse shall become self-supporting within a "reasonable period of time," that time period is deemed to be one-half the length of the marriage, except in a marriage of long duration. Here, one-half the length of the marriage would be more than 10 years. But of course, since this was a marriage of long duration, the court had the discretion to order support for a greater length of time. Furthermore, it had the discretion to consider the other factors enumerated in section 4320, such as the marital standard of living, the supporting spouse's ability to pay, and the supported spouse's earning capacity and age. Although the court did not specifically reference subdivision (l), it appears that it did consider and apply the applicable factors under that subdivision.
(b) temporary spousal support
With respect to temporary spousal support, the statement of decision recited: "On August 8, 2007, this Court made a temporary order, to which the parties stipulated on the record was without prejudice and subject to retroactivity to time of trial, of $30,000 per month based upon [Ahmad's] monthly cashflow of $127,748. [¶] [Ahmad's] 2006 Federal Tax Return indicated that he had a taxable income of $1,476,835. The testimony of the joint forensic accountant, Glenn Mehner, was that [Ahmad] had a controllable cashflow of $1,893,000 for that year (or $157,775 per month)." We interpret this to mean that the monthly cashflow of $127,748 was based on Ahmad's 2006 federal tax return, but that once Mehner prepared his analysis it showed that the $127,748 figure was erroneous and the correct figure was $157,775. Consequently, the court increased the temporary spousal support from $30,000 per month to $45,000 per month, retroactively. It would appear that the court took the additional cashflow of $30,000 per month, as reflected in Mehner's analysis, and divided it equally between the parties.
Ahmad also interprets the statement of decision this way. He complains that "[t]here was no explanation of why a $30,000 purported increase in 'controllable cash flow' required a $15,000 increase in [temporary] spousal support." He also says the court made no finding regarding Fatemeh's needs.
"The purpose of temporary spousal support is to maintain the status quo as much as possible pending trial. [Citations.] By contrast, permanent spousal support is supposed to reflect a complex variety of factors established by statute and legislatively committed to the trial judge's discretion, including several factors which tend to favor reduced support, such as the 'goal' that the supported spouse should become self-supporting within a reasonable period of time. [Citation.] [¶] Furthermore, not only are the legal bases for the two kinds of support different, there is also a disparity in practice. Because dissolution of marriage is, in the mathematical sense, a negative-sum game where each party will not have the same access to the whole of the marital property he or she had during the marriage, permanent support orders will usually be lower than temporary orders." (In re Marriage of Schulze (1997) 60 Cal.App.4th 519, 525.)
As we recall, Ahmad and Fatemeh separated in January 2006. Mehner testified that in the prior year, 2005, Fatemeh's cost of living was $44,948 per month. An award of $45,000 per month in temporary spousal support, then was properly "'"utilized to maintain the living conditions and standards of the parties in as close to the status quo position as possible pending trial and the division of their assets . . . (In re Marriage of Schulze, supra, 60 Cal.App.4th at p. 525.) Given that, the court did not abuse its discretion in making the award.
At oral argument on July 19, 2011, counsel for Ahmad argued that retroactive spousal support is no longer allowed and that the award of retroactive temporary spousal support had to be reversed as a matter of law. She cited In re Marriage of Goodman & Gruen (2011) 191 Cal.App.4th 627 for this proposition, and she explained that she could not have cited the case earlier because it was decided after the briefing on appeal was completed. But Gruen was decided on January 4, 2011 and counsel had plenty of time to provide proper notice to this court and to Fatemeh's counsel that she desired to cite a supplemental authority at oral argument. Counsel is admonished to follow proper procedures in the future. We need not consider the issue based on Gruen because it was raised for the first time at oral argument (Dudley v. Department of Transportation (2001) 90 Cal.App.4th 255, 265, fn. 3) and also because it was not raised at trial (Hogan v. Country Villa Health Services (2007) 148 Cal.App.4th 259, 269).
This notwithstanding, we have a few comments about In re Marriage of Goodman & Gruen, supra, 191 Cal.App.4th 627. That case provides: "It is well established that . . . a 'court may not retroactively modify a prior order for temporary spousal support.' [Citations.]" (Id. at p. 638.) As Gruen and the authorities cited therein make clear, this is not a new rule. It is one that could have been raised previously. As Gruen also makes clear, the rules of estoppel apply. (Id. at p. 641, and fn. 7.)
The October 4, 2007 findings and order after hearing states: "The parties stipulated, and it is so ordered, that jurisdiction is reserved to modify and/or correct this spousal support award, up or down, at the time of trial based upon [Ahmad's] actual cash-flow for 2007. In addition, jurisdiction is reserved over the retroactive commencement of spousal support to April 1, 2007 . . . ." Thus, even were we to consider the issue Ahmad raised for the first time at oral argument, we would conclude that he was estopped to argue that the temporary spousal support award could not be modified retroactively.
D. Attorney Fees:
Ahmad requested attorney fees and costs in the amount of $40,000 and Fatemeh requested attorney fees and costs in the amount of $113,030.24. The court ordered Ahmad to pay $100,000 as a contributive share of Fatemeh's attorney fees and costs.
In its statement of decision, the court said: "This Court finds that the fees and costs were to some extent increased as a result of [Ahmad's] unreasonable position that Capital Aspects had 'no' value, a position which was not support[ed] by the evidence, and further [Ahmad's] complete failure to submit at any time an accurate Income & Expense Declaration for the determination of income. [¶] This Court has little doubt that the nature and complexity of this case required the expenditure of the fees as set forth in the attorney declarations. Nor is there any doubt that both parties have the ability to pay such fees given the considerable assets awarded to each. However, even factoring the amount [Ahmad] will be paying to [Fatemeh] for spousal support, and the income received or attributed to each party as set forth above in the spousal support findings, [Ahmad] nevertheless has considerably more income each month than [Fatemeh]. [¶] Pursuant to Family Code [sections] 2031 and 2032, the Court must not only consider the need of a party and the ability to pay, but also the reasonableness of the fees for maintaining or defending the proceeding. In addition, the Court must take into consideration the complexity of the case and the cooperation between the parties to attempt to settle the matter. Also, pursuant to Family Code Section 2032(b), 'the fact that the party requesting an [award of] attorney's fees and costs [has resources from which the party could pay the other party's own attorney's fees and costs is] not itself a bar to an order that the other party pay all of the fees and costs. Financial resources are only one fact for the Court to consider.'"
Ahmad claims the court erred in awarding Fatemeh attorney fees and costs absent a finding of need. He emphasizes the portions of Family Code section 2030, subdivision (a)(1) providing that in a marital dissolution proceeding "the court shall ensure that each party has access to legal representation . . . by ordering, if necessary based on the income and needs assessments, one party . . . to pay to the other party . . . whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding . . . ." (Italics added.) He argues that this language shows a finding of need is required.
Ahmad maintains this interpretation is underscored by certain language from Family Code section 2032. Section 2032 provides in pertinent part: "(a) The court may make an award of attorney's fees and costs under Section 2030 . . . where the making of the award, and the amount of the award, are just and reasonable under the relative circumstances of the respective parties. [¶] (b) In determining what is just and reasonable under the relative circumstances, the court shall take into consideration the need for the award to enable each party . . . to have sufficient financial resources to present the party's case adequately, taking into consideration, to the extent relevant, the circumstances of the respective parties described in Section 4320. The fact that the party requesting an award of attorney's fees and costs has resources from which the party could pay the party's own attorney's fees and costs is not itself a bar to an order that the other party pay part or all of the fees and costs requested. Financial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances." (Italics added.)
Looking at Family Code section 2032, subdivision (b), Ahmad again emphasizes the language regarding "need." He says the italicized language confirms that a finding of need is required before the court may award attorney fees and costs.
His argument was squarely rejected in In re Marriage of O'Connor (1997) 59 Cal.App.4th 877. The court there said such an argument was "nothing more than a refusal to acknowledge the unequivocal meaning of the language of [Family Code section 2032, subdivision (b)], which permits an award to a spouse even if that spouse has sufficient resources to pay attorney's fees and costs from his or her own pocket." (Id. at p. 883.) The court in In re Marriage of Duncan, supra, 90 Cal.App.4th 617 construed the statute in the same manner, stating "section 2032, subdivision (b) permits an award to a spouse . . . who has sufficient resources to pay . . . ." (In re Marriage of Duncan, supra, 90 Cal.App.4th at p. 631.)
Furthermore, we disagree with the assertion that the trial court failed to make findings showing that it considered appropriate statutory factors. We also disagree with the statement that the court just "picked a number" to award without factual basis. It stated Fatemeh requested $113,030.24 in attorney fees and costs and that it "[had] little doubt that the nature and complexity of this case required the expenditure of the fees as set forth in the attorney declarations." Rather than awarding the entire amount Fatemeh requested, however, it reduced the amount sought to an even $100,000. Ahmad has no reason to complain about a reduction.
Finally, Ahmad complains about the court's consideration of purported increased litigation costs due to what it characterized as Ahmad's unreasonable assertion that Capital Aspects had no value and his failure to submit an accurate income and expense declaration. He says the court erred in failing to specify the amount of time or fees that were purportedly increased as a result of these actions. Martino v. Denevi (1986) 182 Cal.App.3d 553, upon which Ahmad relies, is inapposite. In that case, having to do with a partnership dissolution, increased litigation costs were not at issue. The attorney whose fees were sought had simply requested "a flat fee for 'services rendered.'" (Id. at p. 559.) He admitted at oral argument that "he [had] determined the fee to be paid by his clients based on a general 'feeling' about the case and the amount of work done on the client's behalf, and not by referring to detailed time or billing records." (Id. at p. 560.) The appellate court concluded such "'evidence' was not sufficient to support the award of . . . attorney fees." (Ibid.) Here, in contrast, the court specifically made reference to the attorney declarations as undoubtedly supporting the expenditure of fees. In any event, Ahmad's litigation tactics were not the only ground for the court's award.
"'[A] motion for attorney fees and costs in a dissolution proceeding is left to the sound discretion of the trial court. [Citations.] In the absence of a clear showing of abuse, its determination will not be disturbed on appeal. [Citations.] "[T]he trial court's order will be overturned only if, considering all the evidence viewed most favorably in support of its order, no judge could reasonably make the order made. . . ."' [Citation.]" (In re Marriage of O'Connor, supra, 59 Cal.App.4th at p. 881.) Ahmad has not made a clear showing of abuse.
E. Objections to Proposed Statement of Decision:
As California Rules of Court, rule 3.1590(g) provides: "Any party may, within 15 days after the proposed statement of decision and judgment have been served, serve and file objections to the proposed statement of decision or judgment." Ahmad claims that the court's failure to permit him to file objections to the proposed statement of decision is reversible error per se. In making this argument, Ahmad omits to mention material facts regarding his lack of compliance with the 15-day requirement.
Ahmad filed a request for a statement of decision. That being the case, the court ordered Ahmad's attorney to prepare and submit a proposed statement of decision, due December 5, 2008. Ahmad filed the proposed statement of decision by the December 5, 2008 deadline set by the court. The court then set the matter for hearing on January 9, 2009.
On December 19, 2008, Ahmad requested an extension of time to file objections to the proposed statement of decision. By minute order of December 23, 2008, the court denied the request, for two reasons. The court first said it was "axiomatic that one cannot object to one's own work product." The court further stated "the second and more pertinent reason is that even if a same-party request for an extension of time to file objections were permissible, this court finds that [Ahmad] has caused undue delay in the statement of decision process." The court made note of Ahmad's prior request for an extension of time to file the proposed statement of decision and of his delay in contacting the court reporter concerning, and remitting payment for, the preparation of the reporter's transcript.
In his opening brief on appeal, Ahmad only mentions the court's first ground for denying his extension request. He contends the court's reliance on the axiom that one cannot object to his or her own work product demonstrates a basic failure to understand the statement of decision process. This is a matter we need not address. Even were the court in error in relying upon that axiom, the court provided a second reason why it denied the extension request—undue delay. Ahmad does not even acknowledge this second ground in his opening brief, let alone challenge it.
In his appellant's reply brief, Ahmad argues that the court's refusal to grant him an extension was arbitrary and capricious and an abuse of discretion. However, inasmuch as this argument is raised for the first time in his reply brief, we do not consider it. (Schubert v. Reynolds (2002) 95 Cal.App.4th 100, 108; Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764.)
F. Cross-Appeal:
Fatemeh argues that if the decision of this court results in an award to her of less property than the trial court awarded her, then her spousal support and attorney fees awards should be remanded for increases. She cites Family Code sections 2032, subdivision (b) and 4320, subdivisions (a), (c), and (n). She explains that if her property award is reduced, then her assets and income may be reduced and Ahmad's assets and income may be increased. Inasmuch as our decision does not alter the property division, Fatemeh's protective cross-appeal is moot.
III
DISPOSITION
The judgment is affirmed. Fatemeh Hashemian shall recover her costs on appeal.
MOORE, J.
WE CONCUR:
BEDSWORTH, ACTING P. J.
FYBEL, J.