Filed 10/4/24 Marriage of DeBenedetti and Ensberg CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

In re the Marriage of CHRISTINA 

DeBENEDETTI and MORGAN 

ENSBERG.

CHRISTINA DeBENEDETTI,

Respondent,

v.

MORGAN ENSBERG,

Appellant.

 D081607

 (Super. Ct. No. 17FL000014N)

APPEAL from a judgment of the Superior Court of San Diego County, 

Christine K. Goldsmith, Judge (Ret.). Affirmed.

Bickford Blado & Botros and Andrew J. Botros for Appellant.

Dick& Wagner and Stephen J. Wagner; Complex Appellate Litigation 

Group, Gregory R. Ellis and Kelly A. Woodruff for Respondent. 
2

Morgan Ensberg (Morgan) appeals from a judgment in favor of his 

former wife, Christina DeBenedetti (Christi).1 The trial court found Morgan 

breached his fiduciary duty to Christi, including by failing to disclose how he 

spent and invested community funds during their marriage, and by not

accounting for such funds after the couple separated. The court awarded 

Christi $1,831,250, which equaled her share of community funds that “simply 

vanished” while under Morgan’s management and control; and $100,000 in 

attorney fees and costs as a sanction for his breaches of fiduciary duty.2 

(Fam. Code, § 1101, subd. (g).)3

On appeal, Morgan contends (1) Christi waived her breach of fiduciary 

duty claim based on a general release she signed in a “civil settlement” 

involving In His Grip JM, LLC (IHG), the partially community-owned 

company that Morgan managed; (2) there is a lack of substantial evidence he 

engaged in intentional, reckless, or grossly negligent conduct as managing 

spouse of the community estate; (3) Christi “ambushed” him at trial with a 

new theory of recovery based on his failure to account for community assets 

under his management and control; and (4) the $100,000 sanctions award 

cannot stand because the court failed to find Morgan had an ability to pay, as

required by section 1101, subdivision (g).

1 As is traditional in family law cases, for clarity we refer to the parties 

by their first names. No disrespect is intended. (See In re Marriage of Loyd

(2003) 106 Cal.App.4th 754, 756 fn. 1.)

2 The trial court also assigned Morgan the 2015 and 2016 community tax 

debt and penalties; and awarded Christi $130,000 in sanctions due to 

Morgan’s “evasive” discovery answers. (Code Civ. Proc., §§ 2033.220 & 

2033.420.) Morgan does not challenge this portion of the judgment. 

3 All further undesignated statutory references are to the Family Code.
3

As we explain, we conclude the general release signed by Christi is not 

relevant here because her damage award was based on Morgan’s breach of 

fiduciary duty in failing to disclose and account for how he spent millions of 

dollars of community funds, not as a result of his admitted mismanagement 

of IHG which included embezzling funds from it; ample evidence supports the 

trial court’s finding that his conduct was intentional, reckless, or grossly 

negligent in managing the community estate, in which millions of dollars in 

assets disappeared; Christi did not “ambush” Morgan at trial with a new 

theory of recovery, as it was his burden as managing spouse to prove what 

happened to the missing assets, a burden he admittedly could not meet; and 

the $100,000 sanctions award was proper because subdivision (g) of section 

1101 requires such an award as part of the statutory remedies for a spouse’s 

breach of fiduciary duty, and Morgan did not oppose this award in his 

objections to the court’s proposed statement of decision (proposed SOD).

Therefore, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

A. Overview

Christi and Morgan married in September 2000 and separated in 

October 2016. They are the parents of three children. Christi filed a petition 

for dissolution of marriage in January 2017. The trial court entered a status 

only judgment of dissolution in January 2019, leaving for trial a variety of 

other issues. 

In May 2022, the parties participated in a seven-day trial. Relevant to 

this appeal are issues of Morgan’s alleged breaches of his fiduciary duty to 

Christi; liability for federal and state taxes and penalties owed by the 

community due to Morgan’s management of the parties’ finances, Morgan’s 

embezzlement of funds from IHG; and sanctions sought by Christi against 
4

him. The trial court issued a proposed SOD in July 2022, and issued a final 

SOD in December 2022, after Morgan’s timely objections. The court entered 

judgment on reserved issues in December 2022.

B. Management of the Community Finances

During the parties’ marriage, Morgan became a professional baseball 

player. His total earnings received between 2002 and 2008, came to over 

$11 million. His Major League Baseball career ended in the spring of 2009. 

Morgan felt relief when he stopped playing professionally due to the pressure

it put on him but became “nervous” about his transition away from baseball.

Over the entirety of their 16-year marriage, Morgan was “secretive” 

about the parties’ finances, including “financial decisions, his finances, [and] 

his bank accounts.” Christi “constantly” asked Morgan to share their 

“financial standing and what was going on financially,” but he always refused 

to provide that information, leaving her feeling “in the dark.”

Morgan limited Christi’s financial responsibility to the community to 

paying the household bills out of a joint account they opened shortly after 

marriage. During Morgan’s highest earning years playing baseball, Christi 

made about $2,000 a month, which she deposited into the joint account, 

Morgan also deposited his baseball salary into the shared account. About 

“every other month,” Morgan wired “large chunks of money” from that 

account into brokerage accounts to which he alone had access, one of which 

Christi only learned about after they had separated. Morgan, however, did 

not “permit[]” Christi to make wire transfers from that account or use 

community funds to make her own investments. 

Christi knew about Morgan’s wire transfers and repeatedly asked what 

he was doing with their money. He told her, “ ‘I’m investing it.’ ” When she 

inquired further, he responded he was investing in the stock market and
5

ignored her repeated requests to be part of the decision-making regarding

how their money should be invested. Morgan explained to Christi that she 

“wasn’t intelligent enough” to help with those financial decisions.

C. IHG

In 2013, Morgan founded IHG, with the plan to become a franchise

owner in Jersey Mike’s, a sandwich shop. Before 2013, Morgan had 

volunteered as an assistant baseball coach at a local university, and 

occasionally appeared as a commentator on various sports networks.

Morgan first learned of the opportunity to become a franchise owner in 

Jersey Mike’s after the family moved to Solana Beach. Morgan met with 

corporate representatives, who offered him the opportunity to open three 

stores in the Oceanside area. Morgan signed three franchise agreements 

with Jersey Mike’s. The agreements required Christi’s signature also. 

Although Morgan knew it was wrong, he forged Christi’s signature on the 

agreements “out of convenience” and without her permission. Morgan used 

money from a community retirement account to open the first store in 2013;

and convinced close friends, including two former teammates, to invest in 

IHG and launch the other two Jersey Mike’s in 2014 and 2015. Christi and 

Morgan ended up with a 56 percent ownership interest in IHG, which then 

owned three stores managed by Morgan.

With additional investors and three stores, ownership of IHG was 

transferred to an LLC. Morgan and the partners signed an operating 

agreement. Morgan also signed Christi’s name on the operating agreement 

without her knowledge, again merely for “convenience.” 

Months after signing the operating agreement, Morgan accepted 

$65,000 from another friend and former teammate, who wanted to invest in 

IHG. Morgan did not inform Christi or the other partners about this new 
6

investor; and, instead of getting the former teammate to execute the 

operating agreement, Morgan had him sign a contract Morgan created as 

“proof that [this investor] had put money into the business.” Morgan later 

“regret[ted]” not telling Christi and his partners about this new investor.

Morgan and the partners subsequently acquired three more Jersey 

Mike’s franchises in Carlsbad and Encinitas, which were also operated 

through IHG and managed by Morgan. Morgan initially paid himself a 

salary to manage IHG based “sort of [on] the amount of money [IHG] . . . 

made in the business.” In 2015, IHG officially set Morgan’s salary at

$120,000 a year. 

D. Morgan’s Unauthorized Distributions and Other Wrongdoings

Morgan knew his IHG salary was insufficient to support his family, 

given their substantial expenses including from the remodel of the family 

house. Morgan began taking “distributions” from IHG beyond his agreed 

salary, paying himself about $15,000 a month, plus additional sums “as the 

need arose.” In total, Morgan started collecting a total annual salary 

between $240,000 and $250,000. Morgan’s embezzlement of funds from IHG 

came to light in October 2016, when IHG was unable to make a $70,000 

payroll tax. Morgan contacted his partners and inquired whether they would 

be willing to contribute additional capital to the business. They refused and

grew concerned because the profit and loss statements of IHG showed on 

paper the business had sufficient funds to pay the tax. 

On October 26, 2016, while on a conference call which included an 

accountant and an attorney for one of the partners, Christi learned for the 

first time that Morgan had embezzled money from the business. Prior to this 

call, Morgan had never provided Christi with “a single balance sheet or 
7

[profit and loss] or bank statement or operating agreement or franchise 

agreement or any documents” regarding IHG. 

During the call, Christi also learned that Morgan had done “lots of

[other] illegal things” including “taking cash out of the ATM”; “using the 

company ATM Visa for his own personal use”; “leasing a car on the business 

without the business partners’ consent”; and taking “a loan out from the 

seller of his most recent acquisition without the partners’ consent.” They 

estimated Morgan owed IHG at least $1 million. Thereafter, Christi worked 

for weeks with the other partners to “unravel” the various transactions by 

Morgan.

After the October 26 call, Christi discovered that for the last three 

years Morgan had not paid administrative fees on a community owned 

retirement account, leading to the early distribution of that money and 

resulting tax liability and penalties to the community. About five days after 

the October 26 conference call, Christi and Morgan separated.

In October 2017, as a result of “Morgan’s improper use of business 

funds, . . . [his] entering into the loan agreements and improper use of loan 

funds, his failure to pay payroll taxes and business taxes, and his several 

forgeries of Christi’s name on documents,” he and Christi entered into a “civil 

settlement” with the other IHG partners. This settlement required Christi 

and Morgan to divest their entire ownership interest in IHG. Morgan also 

stepped down as manager of IHG, assumed responsibility for various debts he 

caused the business, and IHG and the other partners agreed to hold Christi 

harmless from any additional liabilities incurred by the business or the 

partners. 

Before the IHG settlement agreement, Christi and Morgan entered into 

a written stipulation regarding the marital residence and Christi’s interest in 
8

IHG. Their agreement provided that, in return for Christi’s transfer to 

Morgan of her 28 percent share in IHG, she would receive the community 

property marital home (along with the debt secured by it) as her separate 

property; that this “partial pre-distribution [would] not impact any other 

division or equalization of the balance of the marital estate”; and that 

enforcement of the stipulation depended on the execution of the settlement 

agreement by IHG and the other partners.

E. The SOD and the Resulting Judgment

1. Management of IHG

Based on the above evidence, the trial court in its SOD found that 

Morgan “himself has acknowledged most, if not all” the “inappropriate 

transactions” he undertook while managing IHG, including taking more cash 

from the business than he was entitled to; forging Christi’s signature on 

many business documents; gifting 5 percent of the community’s interest in 

IHG to his brother without Christi’s knowledge; bringing another partner 

into the business without amending the operating agreement; running 

personal expenses through the business; and using IHG assets to “personally” 

invest in the stock market. Morgan also admitted “hid[ing] these activities” 

from Christi and the other IHG partners because “he knew they would not 

approve.” The court found Morgan’s conduct in the “handling of [IHG] was 

grossly negligent, reckless, and constituted intentional misconduct.” 

The trial court found the value of IHG was not “well-documented”; that 

an accountant for one of the partners reviewed various records, “whose 

veracity he did not know,” and estimated the entire business was worth 

between $2.5 and $3 million. Further, the court concluded that because 

Christi and Morgan owned a 56 percent interest in IHG, when they separated 

the community’s interest in the business was about $1.4 million, “not 
9

accounting for the array of debts that the partners ultimately discovered 

Morgan owed to them.” 

2. Failure to Pay Taxes

The trial court found Morgan also caused the community to “suffer 

serious tax consequences and penalties” when, as manager of IHG, he 

withdrew money from a community retirement account to invest in additional 

Jersey Mike’s franchises. The court also found that Morgan failed to pay the 

2015 and 2016 administrative fees to maintain another community 

retirement account, resulting in additional tax liabilities and penalties for the 

community.

The trial court further found that some of the community tax liability 

for 2015 and 2016 was the result of Morgan’s “additional ‘draws’ 

(embezzlement) from the community business.” The court noted that for tax 

years 2015 and 2016, Christi “secured an ‘Innocent Spouse’ exemption from 

the IRS and FTB” because she was unaware of Morgan’s wrongdoing. The 

court determined that due to Morgan’s “fraudulent[] misappropriate[ion]” of 

money belonging to IHG, he alone was “responsible for the consequences,” 

including the tax debt and resulting penalties.

3. Large Cash Expenditures During Marriage

Since the community was missing millions of dollars in resources, 

presumably by Morgan’s asset mismanagement, Christi asked the court to 

“infer intentional breaches of fiduciary duty to the community.” Christi

further asked the court to make “findings as to the parties’ average monthly 

expenditures, and subtract[] those sums from the estimated earnings over a 

period of years when Morgan was at his highest earning potential.” Because 

the court found the parties “were left with nothing or next to nothing” at the 

time of the October 2016 phone call, Christi asserted these computations 
10

were her measure of damages. Morgan, however, argued these damages were 

too speculative to be recoverable. The court agreed with Christi and awarded 

her $1,831,250, equal to half the value of the community assets that went 

missing under his management and control.

DISCUSSION

A. Statutory Framework

Section 1100, subdivision (a) provides in part: “[E]ither spouse has the 

management and control of the community personal property, . . . with like 

absolute power of disposition, other than testamentary, as the spouse has of 

the separate estate of the spouse.” In turn, section 1100, subdivision (e) 

provides: “Each spouse shall act with respect to the other spouse in the 

management and control of the community assets and liabilities in 

accordance with the general rules governing fiduciary relationships which 

control the actions of persons having relationships of personal confidence as 

specified in Section 721, until such time as the assets and liabilities have 

been divided by the parties or by a court.”

With exceptions not applicable here, section 721, subdivision (b) 

imposes “a duty of the highest good faith and fair dealing on each spouse, and 

neither shall take any unfair advantage of the other. This confidential 

relationship is a fiduciary relationship subject to the same rights and duties 

of nonmarital business partners, as provided in Sections 16403, 16404, and 

16503 of the Corporations Code . . . .”

Section 721’s incorporation of the “same rights and duties of nonmarital 

partners” described in section 16403 of the Corporations Code, “makes clear 

that the duty to disclose relevant information concerning transactions 

affecting the community property is an affirmative and broad obligation.” (In 

re Marriage of Prentis-Margulis & Margulis (2011) 198 Cal.App.4th 
11

1252, 1269 (Margulis), quoting Corp. Code, § 16403, subd. (c) [requiring each 

partner to “furnish to a partner . . . [¶] (1) Without demand, any information 

concerning the partnership’s business and affairs reasonably required for the 

proper exercise of the partner’s rights and duties under the partnership 

agreement or this chapter; and [¶] (2) On demand, any other information 

concerning the partnership’s business and affairs, except to the extent the 

demand or the information demanded is unreasonable or otherwise improper 

under the circumstances”].)

Section 16404 of the Corporations Code, also referenced by Family Code 

section 721, subdivision (b), states that a partner owes to the partnership and 

the other partners the “duty of loyalty and the duty of care.” (Corp. Code, 

§ 16404, subd. (a).) As relevant here, the duty of loyalty requires a partner to 

“account to the partnership and hold as trustee for it any property, profit, or 

benefit derived by the partner in the conduct . . . of the partnership business 

or derived from a use by the partner of partnership property or information” 

(id., subd. (b)(1)); and to “refrain from dealing with the partnership in the 

conduct . . . of the partnership business as or on behalf of a party having an 

interest adverse to the partnership” (id., subd. (b)(2)). The duty of care 

requires a partner to “refrain[] from engaging in grossly negligent or reckless 

conduct, intentional misconduct, or a knowing violation of law.” (Id., 

subd. (c).)

The Family Code explains that “[a] spouse has a claim against the 

other spouse for any breach of the fiduciary duty that results in impairment 

to the claimant spouse’s present undivided one-half interest in the 

community estate, including, but not limited to, a single transaction or a 

pattern or series of transactions, which transaction or transactions have 

caused or will cause a detrimental impact to the claimant spouse’s undivided 
12

one-half interest in the community estate.” (§ 1101, subd. (a).) The remedies 

for a breach “shall include, but not be limited to, an award to the other 

spouse of 50 percent, or an amount equal to 50 percent, of any asset 

undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees 

and court costs.” (§ 1101, subd. (g).) And, under subdivision (h), that award 

increases to 100 percent of such assets if the breach falls within the ambit of 

Civil Code section 3294 (§ 1101, subd. (h)).

B. Standards of Review

“The existence and scope of a fiduciary duty is a question of law that we 

review de novo. (Castaneda v. Olsher (2007) 41 Cal.4th 1205, 1213.) 

However, ‘the factual background against which we [answer that question] is 

a function of a particular case’s procedural posture.’ (Id. at p. 1214.) Thus, to

the extent the court’s decision below ‘turned on the resolution of conflicts in 

the evidence or on factual inferences to be drawn from the evidence, we 

consider the evidence in the light most favorable to the trial court’s ruling 

and review the trial court’s factual determinations under the substantial 

evidence standard. [Citation.]’ [Citation.] Where there is a fiduciary duty, 

breach of the duty is a question of fact. [Citation.] We review the trier of 

fact’s finding a breach occurred for substantial evidence, resolving all 

conflicts and drawing all reasonable inferences in favor of the decision.” (In 

re Marriage of Kamgar (2017) 18 Cal.App.5th 136, 144 (Kamgar).)

C. The “Spousal Release and Consent” Agreement Does Not Bar 

Christi’s Recovery

Morgan’s primary contention on appeal is that Christi was barred from 

recovering her share of the community interest in IHG at the time of 

separation. The trial court found the community’s interest in IHG “was, 

conservatively, $1,400,000.” The trial court based its value estimate on 
13

testimony from an accountant who reviewed the unverified documents from 

IHG. The accountant gave a range of possible values assigned to the couple’s 

share of the business, with $1.4 million being the lowest valuation.

As relevant here, the settlement provided that Christi “releases and 

forever discharges Morgan, [the other investors of IHG,] and [IHG] . . . from 

any and all claims, debts, liabilities, and causes of action of any nature, 

character or description, known or unknown, latent or patent, which the 

undersigned have held, now hold or may hold in the future against the 

Released Persons [as defined] relating to the Jersey Mike’s franchises” 

described in the IHG settlement agreement.

Christi counters that the release issue is irrelevant because the trial 

court did not award her any damages due to Morgan’s mismanagement of 

IHG, which was the subject of the Spousal Consent and Release and the IHG 

settlement agreement. Instead, she contends the court merely estimated the 

value of the community interest in IHG at the time of separation, without 

regard to the “array” of debts Morgan owed IHG and/or the partners. We 

agree with Christi.

We read the trial court’s opinion not as assigning Christi money based 

on her community share of IHG. Rather the trial court recited how much 

money Morgan lost to describe the scale of his breach of fiduciary duty to 

Christi and the community. Indeed, the judgment entered on December 22, 

2022, specifically states that Christi is awarded $1,831,250 in “damages for 

her undivided one-half share of the unaccounted monies over which 

Respondent [Morgan] exercised management and control.” (Italics added.) 

Not surprisingly, Morgan in his reply brief agrees with Christi’s assertion 

“that he does not owe [her] this additional $1.4 million” or any part of it.

Instead, Morgan asserts that we should consider the release for the “limited 
14

purpose of addressing Christi[]’s argument that the trial court’s $1,831,250 

fiduciary duty award consists of breaches related to Jersey Mike’s.” (Italics 

added.) 

But the trial court’s damage award was not “related to” Morgan’s 

breach of fiduciary duty in managing the IHG business. Rather, the court 

tied its decision to the sheer scale of Morgan’s failure to both disclose to 

Christi how he spent community funds, and his inability to account for funds 

over which he exercised exclusive management and control. Given the 

underpinning to the trial court’s approach, it is unnecessary for us to decide 

whether the Spousal Consent and Release Christi signed in the IHG “civil 

settlement” barred her recovery in the current dissolution action. That’s 

because the issue here is Morgan’s breach of his fiduciary duty to Christi

which does not implicate the Spousal Consent and Release.

Our conclusion also resolves Morgan’s other contentions about the trial 

court erring when “it failed to consider ‘the value of the marital residence’ 

given” to Christi, and the “ ‘$680,000 in excess compensation received from 

IHG,’ ” when it purportedly awarded Christi $1.4 million for “Morgan’s 

breach related to IHG.” (Italics added.) However, because the court’s award 

of damages to Christi was unrelated to Morgan’s management of IHG, these 

additional arguments are unpersuasive. 

In any event, the undisputed evidence shows Christi’s receipt of the 

marital home was in consideration for her giving up a 28 percent interest in 

IHG, per the parties’ written stipulation. There is no evidence Christi was 

“given” the martial home as part of the dissolution proceeding, nor has 

Morgan cited us to any. (See Cal. Rules of Court, rule 8.204(a)(1)4 [a brief 

4 All further rule references are to the California Rules of Court.
15

must “(C) Support any reference to a matter in the record by a citation to the 

volume and page number of the record where the matter appears.”].) 

In addition, the trial court found Christi “enjoyed the benefit” of money 

that Morgan embezzled from IHG, since it was “used to pay household bills 

and to support the family’s lifestyle.” However, the trial court also found 

Christi did not know the “source” of those additional funds and she “did not 

participate in the embezzlement.” 

These findings, Morgan leaves unchallenged on appeal. They are also

amply supported by the record (see Kamgar, supra, 18 Cal.App.5th at p. 144).

Therefore, we reject Morgan’s claims the trial court erred either by refusing

to offset Christi’s damage award with the value of the family home Christi 

acquired through the parties’ stipulation, or with half the money Morgan 

stole from the business without her knowledge and consent.

D. Substantial Evidence Supports the Finding Morgan Breached His 

Fiduciary Duties to Christi

Morgan next contends the trial court abused its discretion when it 

found he breached his fiduciary duty because of his inability to account for 

community funds after separation. He bases this contention on the court’s 

comment in the SOD that he “exhibited, at best, a very casual and 

disengaged attitude toward the management of the parties’ financial affairs 

and, at worst, a grossly negligent and reckless handling of their investments

and money.”5 According to Morgan, this comment suggested the court was 

unable to make a finding his conduct amounted to a breach of fiduciary duty. 

We are not persuaded.

5 The trial court overruled Morgan’s objection to this finding in the 

proposed SOD.
16

1. Morgan Engaged in Intentional, Reckless, and Grossly 

Negligent Financial Conduct as Managing Spouse

Contrary to Morgan’s contention, the trial court in its SOD found that 

Morgan engaged in “intentional and reckless, as well as grossly negligent” 

conduct in breaching his fiduciary duties to Christi. The court wrote it found

“that Morgan breached his fiduciary duty to Christi and the community by 

mismanaging the [IHG] business; by mismanaging the parties’ retirement 

funds, resulting in early distributions causing taxes and penalties; by failing 

to keep Christi informed of the parties finances and investments, even when 

asked; [and] by mismanaging large sums of money from his salary during his 

years as a Major League player. There is no defense to these activities. 

There is no laches. Christi acted as soon as she knew of these actions by 

Morgan, all of which were intentional and reckless, as well as grossly 

negligent. Christi’s interest in her share of the parties’ community property 

estate was severely hampered by Morgan’s breaches. . . . Christi’s retirement 

assets are virtually nil. Millions in cash has been squandered.” (Italics 

added.) 

Thus, the record belies Morgan’s contention that the trial court could 

not, and therefore did not, determine whether his conduct amounted to a 

breach of fiduciary duty, based on his intentional, reckless, and grossly

negligent management of the community estate.

2. Morgan Breached His Duty of Disclosure

In addition, the above summary shows the trial court also found that 

Morgan breached his fiduciary duty to Christi by failing to keep her informed 

of the parties’ finances, even when asked. The decision in Kamgar, supra, 

18 Cal.App.5th 136 provides meaningful guidance regarding the duty of 

disclosure between spouses.
17

In Kamgar, the husband claimed the evidence did not support the trial 

court’s finding that he breached his fiduciary duty to his former wife, when 

he failed to disclose that he had risked millions more community assets than 

the $2.5 million she had agreed he could trade in the stock market. (Kamgar, 

supra, 18 Cal.App.5th at p. 139.) Not unlike Christi in the instant case, the 

wife in Kamgar trusted her husband with the “basic management and control 

of the finances.” (Ibid.) During their last five years of marriage, he made 

investment decisions for the family, only some of which he discussed with his 

wife. (Id. at p. 140.) He also had not shown his wife bank statements and 

financial documents for many years, after he rented an office away from 

home. (Ibid.) 

At some point, the husband began options trading. He opened a selfdirected trading account, and with his wife’s consent, deposited $2.5 million 

into that account, or about 25 percent of the parties’ net worth. (Kamgar, 

supra, 18 Cal.App.5th at p. 140.) To increase the potential return in options 

trading, with the concomitant risk of loss, he had to pass a test 

demonstrating his financial knowledge and awareness of trading risks. (Id. 

at p. 140.) The husband took the test for himself and, unknown to his wife, 

for her as well, signing her name on the application verifying she had 

“extensive options trading experience.” (Id. at pp. 140–141.)

Over the next year and without his wife’s knowledge, he deposited

additional community funds into this trading account, for a total community 

investment of more than $10.5 million. (Kamgar, supra, 18 Cal.App.5th at 

p. 141.) The husband’s account at one point peaked above $19 million, then 

suffered catastrophic losses, leaving only about $410,000 in that account. 

(Ibid.) 
18

The trial court ruled the husband breached his fiduciary duty to his 

wife by “failing to disclose the ‘series of investment transactions made by 

him’ ” (Kamgar, supra, 18 Cal.App.5th at p. 143); and by “grossly negligent 

mismanagement of the parties’ assets in the trading account” (ibid.). The 

court awarded her about $1.95 million, “as her share of community funds lost 

in [the husband’s] undisclosed and reckless trading.” (Ibid.)

In affirming the trial court’s award, the Kamgar court concluded that, 

because “ ‘ “each spouse has equal management and control rights, . . . they 

must provide the other “without demand, any information concerning” the 

management and control of the community property,” ’ ” and that their 

failure to do so is a breach of fiduciary duty. (Kamgar, supra, 18 Cal.App.5th 

at p. 146, quoting Cal. Family Law Practice & Procedure (Matthew Bender 

2d ed. 2014), § 24.11; accord, Margulis, supra, 198 Cal.App.4th at p. 1269 [the 

duty to disclose relevant information affecting community property “is an 

affirmative and broad obligation”].)

The Kamgar court agreed with the trial court that the husband 

“breached his fiduciary duty of disclosure when he unilaterally decided to put 

at risk and lose in options trading a sum beyond the amount [his wife] agreed 

to risk” (i.e., $2.5 million). (Kamgar, supra, 18 Cal.App.5th at p. 147.) The 

Kamgar court concluded that in “unilaterally deciding to risk the additional 

$8,188,605 in community funds, which was virtually all of the couple’s liquid 

net worth, [the husband] interfered with [his wife’s] equal right of 

management and control over those funds (§ 1100, subd. (a)). . . . Absent 

disclosure, he thwarted [the wife’s] ‘proper exercise of [her] rights and duties’ 
19

as a partner concerning those assets ([Corp. Code,] § 16403, subd. (c)(1)).” 

(Kamgar, at p. 148.)6

Turning to the instant case, substantial evidence supports the trial 

court’s finding that Morgan breached his fiduciary duty to Christi under 

sections 721 and 1100 by failing, inter alia, to “[r]ender[] upon request, true 

and full information of all things affecting any transaction that concerns the 

community property” (§ 721, subd. (b)(2)); “to make full disclosure . . . of all 

material facts and information regarding the existence, characterization, and 

valuation of all assets in which the community has or may have an interest 

and debts for which the community may be liable” (§ 1100, subd. (e)); and “to 

provide equal access to all information, records, and books that pertain to the 

value and character of those assets and debts, upon request.” (Ibid.; Kamgar, 

supra, 18 Cal.App.5th at p. 148.)

Indeed, during the entirety of their 16-year marriage, Morgan was 

“secretive” about the parties’ finances, leaving Christi “in the dark” when it 

came to the investments he was making, the couple’s overall “financial 

standing,” and what he was doing with “large chunks of money” he wired

from their joint account into various accounts only he had knowledge of and 

could access. And, when pressed by Christi regarding his management and 

control of community finances including his investment of community funds, 

Morgan would usually give one of two responses. Either Morgan ignored 

Christi or he belittled her by telling her she would not understand their 

finances because she “wasn’t intelligent enough.”

6 Because the Kamgar court held the husband breached his duty of 

disclosure, it declined to decide whether substantial evidence supported the 

trial court’s finding that he also breached his fiduciary duty “by engaging in 

grossly negligent and reckless behavior” in options trading of community 

funds. (Kamgar, supra, 18 Cal.App.5th at p. 148.)
20

Like the husband in Kamgar, there is substantial evidence here that 

Morgan deprived his spouse of “true and full information of all things 

affecting” the community estate (see § 721, subd. (b)(2)); failed to disclose, 

much less “full[ly] disclose . . . all material facts and information” regarding 

their estate, including how he was investing community funds and the status 

of those investments (see § 1100, subd. (e)); and prevented her from having 

“equal access to all information, records, and books” pertaining to the value 

and character of the estate, including its assets and debts (ibid.). This 

evidence supports the trial court’s finding that Morgan breached his duty of 

disclosure to Christi, depriving her of “equal right of management and 

control” of the community estate. (See Kamgar, supra, 18 Cal.App.5th at 

p. 148.)

3. Morgan Breached His Duty of Accountability

The trial court also found that Morgan breached his fiduciary duty to 

Christi by failing to account for large sums of community funds that “simply 

vanished” while under his management and control.

“[A]ccountability for the management of community assets is a 

fundamental aspect of the fiduciary duties owed between spouses.” 

(Margulis, supra, 198 Cal.App.4th at p. 1269.) Viewed together, sections 721, 

1100, and 1101 “impose on a managing spouse affirmative, wide-ranging 

duties to disclose and account for the existence, valuation, and disposition of 

all communities assets” during the marriage and from the date of separation 

through final property division. (Margulis, at pp. 1270–1271, original italics 

omitted, italics added.)

Here, the trial court relied on a chart prepared by Christi showing 

Morgan’s “larger earning years” during their marriage when he was playing 

Major League Baseball. (Boldface and capitalization omitted.) It shows 
21

between 2002 and 2008, Morgan earned $11,230,000, and his after-tax 

income (i.e., less 35 percent) was $7,299,500. Based on the chart, the court 

found that between 2002 and 2016 their family expenses totaled $2,816,000, 

broken down into four different time periods “as testified to by both Morgan 

and Christi.” This left $4,483,500 of community funds that Morgan could not 

account for, despite being managing spouse of the estate. (See Margulis, 

supra, 198 Cal.App.4th at p. 1271 [imposing a “sua sponte duty on the 

managing spouse to advise the nonmanaging spouse of the existence and 

value of the community property”].)

However, the court noted this number did not include the following 

expenses, based on the testimony of both parties: $34,000 (truck); $57,000 

(Mercedes); $60,000 (Range Rover); $80,000 (a second Range Rover); 

$100,000 (G-Wagon); $40,000 (Navigator); $450,000 (loss on Solana Beach 

home); and $300,000 (stock losses during recession). The court found these 

expenses totaled $821,000. The court then subtracted this number from 

$4,483,500, the unaccounted-for community funds, for a new total of 

$3,662,500. The court then awarded Christi damages of $1,831,250, or onehalf of the “measure of unaccounted for monies . . . over which Morgan 

exercised management and control.”

We conclude Christi satisfied her burden to produce prima facie

evidence to establish the value of community assets that “simply vanished” 

while under Morgan’s management and control, leaving the estate with 

virtually no assets at the time of separation. (See Margulis, supra, 

198 Cal.App.4th at p. 1257 [the nonmanaging spouse has the initial burden 

to produce “prima facie evidence” to establish the value of missing assets by 

the managing spouse].) 
22

Morgan breached his duty of disclosure to Christi by ignoring her 

repeated requests for information affecting the community estate, including 

how he was spending and investing their assets, and by preventing her equal 

access to information regarding the value and character of the estate, 

including its assets and debts. We conclude this breach further supports the 

finding Christi made a prima facie showing of the value of assets missing 

from the estate. In our view, it would be unfair, on the one hand, to hold her 

to more precise calculations regarding such assets when, on the other hand, 

Morgan, throughout the course of the marriage, kept material information 

from her about their finances and the value of the estate. He can’t have it 

both ways.

“Once a nonmanaging spouse makes a prima facie showing of the 

existence and value of community assets in the other spouse’s control . . . , the 

burden of proof shifts to the managing spouse to prove the proper disposition 

or lesser value of those assets. Failing such proof, the court should charge 

the managing spouse with the assets according to the prima facie showing.” 

(Margulis, supra, 198 Cal.App.4th at p. 1258.) 

Here, Morgan admitted during his deposition (read at trial) that he 

could not account for millions of dollars missing from the community estate. 

Instead, he claimed that Christi’s damage award could not stand because 

Christi “ambushed” him with this theory of recovery, leaving him unprepared 

to counter the figures in her chart.7 

We agree with Christi that her damages can be upheld based on the 

finding that Morgan breached his fiduciary duty of disclosure, as discussed 

7 Morgan objected to the proposed SOD on this ground, which the trial 

court overruled while observing that the “testimony at depositions provided 

notice of [Christi’s] theory of breach of fiduciary duty” for his lack of 

accountability.
23

ante. (See § 1100, subd. (e); Kamgar, supra, 18 Cal.App.5th at p. 148.) And, 

based on the entirety of the record, we separately conclude substantial 

evidence supports the trial court’s finding that Christi did not “ambush” 

Morgan at trial.

First, in her responses to special interrogatories in January 2022, 

Christi stated under oath: “Morgan was a cash spender during our marriage. 

I begged and pleaded with him to use the credit cards for tracing, budget 

purposes, and to accumulate travel points but he ignored me and went to the 

bank weekly to withdraw cash . . . . He would withdraw thousands of dollars 

per month (even toward the end of our marriage when we had nearly 

$100,000 in credit card debt we could not pay) and I have no idea where he 

spent the money . . . . I wondered if he used some of this cash for drugs, 

alcohol, gambling or strip clubs. I don’t know.” (Italics added.) 

Second, in the same interrogatory responses, Christi also noted that

Morgan became a “day trader” between 2011 and 2013, trading “options and 

shorting stocks.” Christi “begged” him to stop, leading to daily arguments

because she was “scared” by the high-risk investments. She added, “He 

finally stopped. I’m not sure if he lost a bunch of money and it scared him 

and that’s why he stopped or if actually listened to me . . . . I think he lost a 

big chunk of money and that’s why he stopped. I don’t know how much he 

made or lost doing this. I was never on any of these accounts.” (Italics added.)

In addition, in early April 2022, about 45 days before trial, in her 

Prayer for Relief re Property and Unresolved Issues Christi specifically 

requested that the trial court order the community “to be reimbursed from 

Morgan’s separate estate in the amount of $5,000,000 to $8,000,000” for his 

breach of fiduciary duty; and that he be held responsible for “all liabilities 
24

resulting from [his] wrongful conduct.” This was another indicator that 

Christi was seeking substantial damages from him as managing spouse.

Further, in her trial brief filed on May 11, 2022, Christi noted that 

“throughout the entirety of the marriage Morgan owed [her] a fiduciary duty 

without request to provide . . . her all material facts and information she 

needed so that she could exercise her right to equally manage and control the 

community property.” She specifically noted that in “Morgan’s high earning 

years [playing Major League Baseball], he grossly mishandled the parties’ 

funds and admitted in his depo that he cannot account for millions of 

dollars,” and included in her trial brief portions of his deposition testimony 

backing up this claim. (Italics added.)

We conclude Morgan was on notice at least four months before the 

May 2022 trial that Christi lacked information about what he had done with 

millions of dollars of community funds, other than the fact that such funds 

had disappeared under his management and control. It therefore was 

incumbent on him to be prepared at trial to present evidence showing where 

the money went, with the risk that his failure of proof would result in his 

liability for the missing funds. (See Margulis, supra, 198 Cal.App.4th at 

p. 1258.) 

Once Christi made a prima facie showing of the estimated value of the 

missing funds, it was Morgan’s burden to explain where the money went (i.e., 

tracing such funds through bank and brokerage account records, credit card 

receipts and statements, and similar evidence) (see Margulis, supra, 

198 Cal.App.4th at p. 1258). To the extent he could not account for those 

funds, as turned out to be the case, Morgan would be liable to Christi for onehalf of such funds (see ibid.). We thus reject this claim of error.
25

E. The Sanctions Award Was Proper

Morgan next contends the trial court erred when it sanctioned him 

$100,000 under section 1101, subdivision (g) because (1) the court failed to 

make a finding he had the ability to pay the sanction and (2) any such finding 

would have been inconsistent with its separate finding that both parties 

lacked the financial resources to pay the other’s need-based attorney fees 

under section 2030. We find no error.

“The objective of statutory interpretation is to ascertain and effectuate 

legislative intent. To accomplish that objective, courts must look first to the 

words of the statute, giving effect to their plain meaning. If those words are 

clear, we may not alter them to accomplish a purpose that does not appear on 

the face of the statute or from its legislative history. [Citation.] Whenever 

possible, we must give effect to every word in a statute and avoid a 

construction making a statutory term surplusage or meaningless.” (In re 

Jerry R. (1994) 29 Cal.App.4th 1432, 1437.) 

Section 1101, subdivision (g) provides: “Remedies for breach of the 

fiduciary duty by one spouse, including those set out in Sections 721 and 

1100, shall include, but not be limited to, an award to the other spouse of 

50 percent, or an amount equal to 50 percent, of any asset undisclosed or 

transferred in breach of the fiduciary duty plus attorney’s fees and court 

costs. The value of the asset shall be determined to be its highest value at 

the date of the breach of the fiduciary duty, the date of the sale or disposition 

of the asset, or the date of the award by the court.” (Italics added.) 

Here, the Legislature’s intent is clear that if a spouse’s breach of 

fiduciary duty falls within subdivision (g) of section 1101, the statutory 

remedies to the other spouse “shall” include, but not be limited to, an award 

of attorney fees and costs. “ ‘ “It is a well established rule of statutory 
26

construction that the word ‘shall’ connotes mandatory action and ‘may’ 

connotes discretionary action.” ’ ” (In re Marriage of Hokanson (1998) 

68 Cal.App.4th 987, 993 (Hokanson); accord, § 12 [“ ‘Shall’ is mandatory and 

‘may’ is permissive.”].)

Our conclusion that an award of attorney fees and costs is mandatory 

under section 1101, subdivision (g) finds further support when comparing 

this provision to related subdivision (h), which applies when a spouse’s 

breach of fiduciary duty involves more severe conduct. Section 1101, 

subdivision (h) provides: “Remedies for the breach of the fiduciary duty by 

one spouse, . . . when the breach falls within the ambit of Section 3294[8] of 

the Civil Code shall include, but not be limited to, an award to the other 

spouse of 100 percent, or an amount equal to 100 percent, of any asset 

undisclosed or transferred in breach of the fiduciary duty.”

The inclusion of an attorney fees award in section 1101, subdivision (g), 

and the exclusion of such an award in related subdivision (h), supports 

our interpretation that breaches of fiduciary duty involving less severe 

conduct entitle the nonbreaching spouse to a mandatory award of attorney 

fees and costs, where his or her damages are capped at 50 percent of the 

undisclosed or transferred asset. (See Borden v. Stiles (2023) 92 Cal.App.5th 

337, 345–346 [in interpreting a statute, “ ‘[w]e consider the provisions’

language in its “broader statutory context” and, where possible, harmonize 

that language with related provisions by interpreting them in a consistent 

fashion’ ”], quoting ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 189.)

8 Civil Code section 3294, subdivision (a) provides: “In an action for the 

breach of an obligation not arising from contract, where it is proven by clear 

and convincing evidence that the defendant has been guilty of oppression, 

fraud, or malice, the plaintiff, in addition to the actual damages, may recover 

damages for the sake of example and by way of punishing the defendant.”
27

Our conclusion that the remedies in subdivision (g) of section 1101 

include a mandatory award of attorney fees and costs is consistent with other 

courts that have addressed this identical issue. (See In re Marriage of 

Fossum (2011) 192 Cal.App.4th 336, 348 [trial court was “mistaken” in 

believing it had the discretion to refuse to award the husband attorney fees 

and costs for wife’s breach of fiduciary duty because the language of § 1101, 

subd. (g) requiring such an award is “unambiguous and mandatory”)]; ibid. 

[“Once a breach is shown, the trial court lacks discretion to deny an aggrieved 

spouse’s request for attorney fees.”]; Hokanson, supra, 68 Cal.App.4th at 

p. 993 [trial court “lacked discretion” to deny husband’s request for attorney 

fees under § 1101, subd. (g) for wife’s breach of fiduciary duty].) We thus 

conclude the trial court was obligated to award Christi attorney fees and 

costs as a sanction for Morgan’s breach of fiduciary duty, without regard to 

his ability to pay that award.

Moreover, Morgan did not oppose this sanction, including on the 

ground of inability to pay when he filed objections to the proposed SOD. 

“When a statement of decision does not resolve a controverted issue, or if the 

statement is ambiguous and the record shows that the omission or ambiguity 

was brought to the attention of the trial court . . . prior to entry of 

judgment . . . , it shall not be inferred on appeal . . . that the trial court 

decided in favor of the prevailing party as to those facts or on that issue.” 

(Code Civ. Proc., § 634.) 

“It is axiomatic that a party may not complain on appeal of rulings to 

which it acquiesced in the lower court. [Citation.] ‘ “[F]orfeiture” is the 

correct legal term to describe the loss of the right to raise an issue on appeal 

due to the failure to pursue it in the trial court.’ [Citation.] It is unfair to the 

trial judge and the adverse party to attempt to take advantage of an alleged 
28

error or omission on appeal when the error or omission could have been, but 

was not, brought to the attention of the trial court in the first instance.” 

(Porterville Citizens for Responsible Hillside Development v. City of Porterville

(2007) 157 Cal.App.4th 885, 912 (City of Porterville).) “It follows that when a 

trial court announces a tentative decision, a party who failed to bring any 

deficiencies or omissions therein to the trial court’s attention forfeits the right 

to raise such defects or omissions on appeal.” (Ibid. [where cause of action 

not directly addressed in tentative statement of decision but no objections 

were raised, the party forfeits the claim on appeal]; accord In re Marriage of 

Arceneaux (1990) 51 Cal.3d 1130, 1133–1134 (Arceneaux) [“The clear 

implication of [Code of Civil Procedure section 632], of course, is that if a 

party does not bring such deficiencies to the trial court’s attention, that party 

waives the right to claim on appeal that the statement was deficient in these 

regards, and hence the appellate court will imply findings to support the 

judgment.”].)

Here, because Morgan failed to oppose the $100,000 sanction in his 

objections to the proposed SOD, we may infer from this silence that the trial 

court made the implied factual finding that he had the ability to pay 

$100,000 in support of this portion of the judgment. (See Arceneaux, supra, 

51 Cal.3d at pp. 1133–1134; City of Porterville, supra, 157 Cal.App.4th at 

p. 912.) For this separate reason, we reject Morgan’s claim of error regarding 

imposition of the sanction.

Lastly, we reject Morgan’s contention that the trial court made 

inconsistent rulings when it imposed the sanction, despite finding that 

neither party had the means to pay need-based attorney fees to the other 

under section 2030. As Christi points out, at trial she did not seek an award 
29

of attorney fees from Morgan under this statute. We find no inconsistency in 

the court’s rulings.

DISPOSITION

The judgment is affirmed. Christi to recover her costs on appeal. (Rule 

8.278(a)(3).)

RUBIN, J.

WE CONCUR:

BUCHANAN, Acting P. J.

KELETY, J.