Court Opinion

ID: 9927407
Source: CourtListenerOpinion
Date Created: 2024-01-26 23:02:15.58887+00
Date Added: 2024-06-11T09:23:30.472939
License: Public Domain

Filed 1/26/24 (unmodified opn. attached)

                  CERTIFIED FOR PARTIAL PUBLICATION

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                       DIVISION TWO

 In re the Marriage of QUIN
 WHITMAN and DOUGLAS F.
 WHITMAN.

 QUIN WHITMAN,
        Appellant,                              A157055
 v.
                                                (San Mateo County
 DOUGLAS F. WHITMAN,
                                                Super. Ct. No. FAM0117304)
        Appellant.
                                             ORDER MODIFYING OPINION
                                             AND DENYING REHEARING
                                             [NO CHANGE IN JUDGMENT]

BY THE COURT:

       The Petition for Rehearing filed by appellant Douglas F. Whitman is
denied. New factual or legal arguments will not be entertained for the first
time in a petition for rehearing. (Reynolds v. Bement (2005) 36 Cal.4th 1075,
1092; accord, In re Foster (2022) 85 Cal.App.5th 499, 512, fn. 8.)
       It is ordered that the opinion filed herein on December 29, 2023, be
modified as follows: On page 15, the reference to “July 3” in the first
sentence of the second paragraph under the heading “1. Background” is
changed to “July 12” so that the sentence, as modified, states: “The evidence

                                            1
showed that nine days later, on July 12, 1995, the parties bought a home for
$1.45 million financed with a $1 million mortgage and a $450,000 down
payment.”
     There is no change in the judgment.

Dated:_____________
                                          STEWART, P.J.

                                      2
Trial Court:San Mateo County Superior Court

Trial Judge:     Hon. Elizabeth M. Hill

Counsel:

California Appellate Law Group, Complex Appellate Litigation Group,
Charles Kagay, Robert A. Roth, and Kelly A. Woodruff, for Defendant and
Appellant.

McManis Faulkner, James McManis, William Faulkner, Brandon Rose, and
Beverly Bergstrom, for Plaintiff and Respondent.

                                    3
Filed 12/29/23 (unmodified version)
                  CERTIFIED FOR PARTIAL PUBLICATION*

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FIRST APPELLATE DISTRICT

                                      DIVISION TWO

 In re the Marriage of QUIN
 WHITMAN and DOUGLAS F.
 WHITMAN.

 QUIN WHITMAN,
           Appellant,                       A157055
 v.
                                            (San Mateo County
 DOUGLAS F. WHITMAN,
                                            Super. Ct. No. FAM0117304)
           Appellant.

       Douglas F. Whitman (Doug), the founder of a once highly successful
hedge fund, and Quin Whitman (Quin) each appeal from a judgment entered
after a lengthy court trial in their contested divorce.
       We affirm the judgment in all respects but one. We conclude:
       (1) The trial court did not err in ruling that Doug failed to prove he
retained any separate property interest in the hedge fund at the time of
dissolution, despite an initial $300,000 capital investment of his own
separate funds.

       * Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110,
this opinion is certified for publication with the exception of Discussion
parts I, III and IV.

                                           1
      (2) The community is not financially responsible for any of the legal
fees Doug incurred to defend against criminal charges brought against him
for insider trading or the $250,000 fine imposed on him in that case. The
trial court thus did not err in characterizing those as Doug’s separate debts.
It erred in holding the community responsible for the $935,000 penalty the
Securities and Exchange Commission (SEC) imposed on Doug in the parallel
enforcement action for engaging in illegal insider trading while running the
hedge fund during the marriage. It did not err in holding the community
responsible for $290,000 in legal fees Doug incurred in that parallel SEC
enforcement case.
      (3) Quin has not demonstrated the court erred in holding the
community responsible for legal fees expended by the hedge fund when it
intervened as a third party into these proceedings.
      (4) The court did not err in concluding Quin failed to prove her claim
that Doug breached his fiduciary duty in connection with the sale of the
couple’s luxury home.
                               BACKGROUND
      Quin and Doug married in 1992. By then, Doug had spent nearly a
decade working as a highly compensated financial analyst at several
investment firms and had amassed substantial separate property savings.
During the first two years of their marriage, the couple lived frugally, while
Doug continued to work in the financial sector and earn a high income. In
1994, Doug was terminated from his position at the investment bank where
he had been working and decided to form his own investment fund (or “hedge
fund”).
      To launch the hedge fund and attract outside investors, Doug invested
$900,000 of capital in three rounds of funding during 1994. A major

                                       2
contested issue at trial was whether any portion of that capital infusion was
Doug’s separate property and, if so, whether it could be adequately traced
decades later at the time of dissolution. We will discuss that subject in
greater detail below in the unpublished portion of this decision.
      By the end of 2011, the hedge fund had proved a tremendous success,
having grown cumulatively 2118.7 percent from its inception. At its peak, it
had more than 60 outside investors and nearly $300 million in assets.
      But in February 2012, the U.S. Attorney in the Southern District of
New York charged Doug with crimes and the SEC filed an enforcement action
against him and Whitman Capital for insider trading.1 Within months, by
the end of March 2012, all the outside investors had withdrawn from the
hedge fund, leaving only about $29 million in equity belonging to Doug
(effectively). The following year, in January 2013, Doug was convicted of four
counts of insider trading, sentenced to 24 months in prison, assessed a
$250,000 criminal fine and ordered to forfeit $935,306. Then in March 2013
Doug settled the SEC action and paid a $935,306 civil penalty.
      Over time, the hedge fund had earned handsome profits and Doug was
extremely well compensated. During their marriage, Doug reinvested all of
his annual compensation back into the fund, and the parties withdrew more
than $88 million from the fund.

      1 Doug created three related entities when he formed the hedge fund:
a limited partnership called Whitman Partners, L.P. (WPLP) that constituted
the actual investment fund itself, in which Doug and outside investors were
limited partners; Whitman Capital, LLC, which was owned and managed by
Doug and was the general partner of WPLP (effectively making Doug the
managing general partner of WPLP); and Whitman Capital, Inc., of which
Doug was the president, director and sole shareholder, which was a member
of Whitman Capital, LLC. Whitman Capital, Inc. was used to pay all
operating expenses of the hedge fund, including employee salaries.

                                       3
      On April 11, 2012, two months after the civil and criminal charges were
filed, Quin filed a petition for legal separation that was later amended to a
petition for dissolution. The following year, in June 2013, the hedge fund was
granted leave to intervene in the case after Quin sought the appointment of a
receiver to wind it down. Her efforts in that regard were ultimately not
successful, and we discuss in greater detail below (in the unpublished portion
of this opinion) the trial court’s ruling concerning the legal fees the hedge
fund incurred to appear in the case.
      The case proceeded to 30-day bench trial between March 2017 and
January 2018 on the characterization and division of numerous marital
assets. The court issued a 133-page statement of decision, entered judgment
and denied the parties’ new trial motions. Both parties then timely appealed.
                                DISCUSSION
                                        I.
     Characterization of the Parties’ Interests in the Hedge Fund
      The largest marital asset at issue in the contested trial was the parties’
interest in the hedge fund, which by the time of trial was valued at
approximately $31.6 million. Doug testified he started the fund with
separate funds, specifically, a capital investment of $900,000 of savings he
had accumulated before the marriage. He testified he made three separate
deposits in 1994: a $500,000 investment in July, a $300,000 investment on
October 1 and another $100,000 on November 25.
      It is undisputed that after the initial investment, Doug continued to
invest into the hedge fund capital account the compensation he earned from
managing the hedge fund. Since he concedes that the compensation was
community property, this resulted in the capital account being a commingled
account. Doug does not dispute that those subsequent investments of

                                        4
community property funds and the growth associated with them are
community property.
      The source of the initial $900,000 capital contribution was a major
contested issue at trial. Doug asserted that the bulk of the hedge fund’s
value was traceable to his initial $900,000 separate property investment and
its associated gains, a separate property interest he now values at nearly $18
million.
      In a portion of the statement of decision encompassing 20 pages, the
trial court concluded the entirety of the parties’ remaining interest in the
hedge fund is community property, subject to equal division. First, it found
Doug had proved only that the $300,000 portion of the $900,000 initial
capital investment was traceable to his separate property. Second, it found
that Doug’s withdrawal of $900,000 on July 3, 1995, less than a year after the
initial investment was made, exhausted any separate property interest he
had in the fund from that date forward.
      On appeal, Doug argues the court erred by rejecting his contention that
July 1994 investment of $500,000 and the November 2024 investment of
$100,000 into the hedge fund capital account were traceable to his pre-
marital separate property. He also challenges the trial court’s conclusion
that the $900,000 withdrawal depleted his separate property interest in the
fund. In addition to asserting there was no error, Quin argues that even if
any traceable separate property remained in the account, the gains
attributable to community efforts must be allocated to the community. It is
unnecessary to address the latter issue because we will affirm the court’s
characterization of the entire fund as community property.

                                       5
      A. Legal Principles
      Property acquired during marriage is presumed to be community
property (Fam. Code, § 760),2 a principle that “ ‘is perhaps the most
fundamental . . . of California’s community property law.’ ” (In re Brace
(2020) 9 Cal.5th 903, 914.) On the other hand, property owned by a spouse
before marriage is that spouse’s separate property, including all of the “rents,
issues, and profits” of such property. (§ 770, subds. (a)(1), (a)(3); Brace, at
p. 914.) Thus, “a spouse may rebut the Family Code section 760 presumption
by tracing the source of funds used to acquire property [during the marriage]
to separate property.” (Brace, at p. 914.) “ ‘Separate funds do not lose their
character as such when commingled with community funds in a bank account
so long as the amount thereof can be ascertained.’ ” (In re Marriage of Mix
(1975) 14 Cal.3d 604, 612 (Mix).) But it is the spouse who asserts a separate
property interest in property acquired during marriage who bears the burden
to prove it. (Estate of Murphy (1976) 15 Cal.3d 907, 917 (Murphy).)
      When separate property is commingled in an account with community
property, as it was here, tracing is a factual issue for the trial court.
“ ‘Whether separate funds so deposited continue to be on deposit when a
withdrawal is made from such a bank account . . . , and whether the intention
of the drawer is to withdraw such funds therefrom are questions of fact for
determination by the trial court.’ ” (Mix, supra, 14 Cal.3d at p. 612.)
      B. Standard of Review
      “ ‘In general, in reviewing a judgment based upon a statement of
decision following a bench trial, “any conflict in the evidence or reasonable

      2All further statutory references are to the Family Code unless
otherwise indicated.

                                         6
inferences to be drawn from the facts will be resolved in support of the
determination of the trial court decision.” ’ ” (In re Marriage of Ciprari (2019)
32 Cal.App.5th 83, 94 (Ciprari).)
      “ ‘In a substantial evidence challenge to a judgment, the appellate court
will “consider all of the evidence in the light most favorable to the prevailing
party, giving it the benefit of every reasonable inference, and resolving
conflicts in support of the [findings]. [Citations.]” [Citation.] We may not
reweigh the evidence and are bound by the trial court’s credibility
determinations. [Citations.] Moreover, findings of fact are liberally
construed to support the judgment.’ ” (Ciprari, supra, 32 Cal.App.5th at
p. 94.) “ ‘ “[A]ny conflict in the evidence or reasonable inferences to be drawn
from the facts will be resolved in support of the determination of the trial
court decision.” ’ ” (Ibid.) Furthermore, “ ‘[t]he substantial evidence standard
applies to both express and implied findings of fact made by the superior
court in its statement of decision rendered after a nonjury trial.’ ” (Ibid.)
      C. The Starting Capital
      As noted, the trial court concluded that Doug failed to prove that his
separate property was the source of the initial $500,000 investment he made
to the hedge fund in July 1994 and the subsequent $100,000 investment he
made in November 1994. As to each one, Doug argues that the
uncontroverted evidence satisfied his burden that the funds did come from a
separate property source, and that the trial court misapplied the law in
concluding otherwise. On the latter point, he contends the court erred by
imposing an unduly high burden of proof by faulting him for not introducing
records showing how the funds moved to the hedge fund from his separate
property pre-marital brokerage accounts, which he says is not required.

                                        7
      Although Doug frames these questions as two distinct issues, in reality
they are just opposite sides of the same coin. That is to say, Doug, who
rightly acknowledges that the burden was on him to prove that the funds he
used to invest in the new Whitman entities were derived from a separate
property source, contends that his evidence leaves no room for a judicial
determination that it was insufficient on this score. (See Sonic
Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011)
196 Cal.App.4th 456, 466 (Sonic Manufacturing); Dreyer’s Grand Ice Cream,
Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 838.) In other words, he
contends that he proved his case as a matter of law. (Ibid.) His separate
contention that the court committed a legal error because it found his
evidence wanting for lack of specific documentary proof is just another way of
saying the same thing—that he proved his case as a matter of law, even in
the absence of such documentary evidence. So that is the question to which
we now turn.
             1. The $500,000 Investment
      Doug testified that the initial $500,000 investment in July 1994 came
from his pre-marital brokerage account at Hambrecht and Quist. He
introduced documentary evidence to substantiate that claim, which the trial
court examined in detail and which it ultimately concluded “fail[ed] to
establish” that the Hambrecht account was the source of the $500,000
investment. The principal document was the hedge fund’s brokerage account
statements (with Bear Stearns), which contained a cryptic entry3 that Doug
testified reflected a journal transfer to the hedge fund of $500,000 in funds,
by means of a letter of authorization from Doug’s personal account at Bear

      3   The notation states: “LOA JRL FR 500 02100 TO PURCHASE L.P.”

                                       8
Stearns (his so-called “manager” account, which was set up for him when the
hedge fund’s prime broker relationship with Bear Stearns was established).
Doug testified that he funded that personal account with money from his
Hambrecht account. He testified his Hambrecht account was worth between
$600,000 and $700,000 when he and Quin married and continued to grow
after that. He testified he transferred “a good amount” of his money from
Hambrecht to his personal account at Bear Stearns, and “would have
imagined” he moved more than $500,000 because he used his Hambrecht
account to fund the initial investment. And he testified the reason he used
money from his Hambrecht account was because his broker there (a cousin)
wouldn’t invest in the hedge fund or help him find investors.
      Doug also testified that Quin was risk-averse and didn’t want him to
invest any community property in the fund. He also asserts that Quin
testified “they did not agree to put any community funds” into the hedge fund
and “agreed with Doug that the parties only agreed to use $50,000 in
community funds to start Whitman Inc. and not to invest in the Fund.”
      Doug argues this evidence compels a finding in his favor. We disagree.
      In the first place, Doug misstates Quin’s testimony. Quin did not
testify that she objected to investing their money in the hedge fund or that
they agreed Doug would not do so. The only conversation she specifically
recalled was that when he initially told her he wanted to start his own
investment firm, he said he wanted to use $50,000 of their money to start the
business.4 She testified Doug never told her how much money he put into the

      4  Doug testified that $50,000 was used to pay initial operating costs
(through Whitman Capital, Inc.) not seed the actual investment fund. He
testified initially there was no need for more startup capital, because it would
take some time to actually set up the hedge fund and “you don’t really pay

                                       9
fund and she didn’t know any of the details where the initial money came
from. And in portions of testimony not cited by Doug, she testified he never
told her he intended to invest any of his own money from before the marriage
in the hedge fund and recalled he had already made a significant amount of
money that year in his prior job (i.e., community earnings) and was “pretty
sure” he put a portion of it into the hedge fund. To the extent Quin’s
testimony proves anything about the source of the funds, it supports a
reasonable inference that Doug used community property to start the hedge
fund.
        But the even greater problem, and dispositive one, is that the court
ruled that even if oral testimony alone could satisfy Doug’s burden of proof,
his testimony about the source of the $500,000 investment was “unreliable”
and not “persuasive,” because he “suffered a serious failure of recollection”
concerning that subject until shortly before trial. Throughout pre-trial
discovery, Doug consistently claimed that the source of the $500,000
investment was a different pre-marital brokerage account (Alex Brown), and
even hired an expert who accepted and relied on that assertion. Then at
trial, they both claimed they had been mistaken because Doug had
erroneously recalled his Alex Brown account as the source of the $500,000
deposit based on a different entry on the same page of the hedge fund’s
brokerage account statement reflecting another $500,000 cash deposit the
same date which Doug had misinterpreted.
        Doug contends that his pre-trial “failure of recollection” does not affect
the calculus. But his argument on this point essentially asks us to second-

until after the fund’s up and running” and so “I just remember not needing
that much money of the community to start.”

                                         10
guess the court’s credibility determination and reweigh the evidence, which
we cannot do. (See Ciprari, supra, 32 Cal.App.5th at p. 94.) The trial court
could and did find Doug’s recollection about the source of the $500,000 he
used to fund the initial capital investment was not reliable. We are bound by
that assessment.
         2. The $100,000 Investment
      Doug introduced documentary evidence that $100,000 was credited to
his capital account on November 25, 1994. The hedge fund’s brokerage
account statement reflected a $100,000 deposit the same day from a Northern
Trust account.
      Doug testified that the source of the $100,000 deposit was his pre-
marital brokerage account at Gardner Lewis, which was the same account he
had used to fund the $300,000 investment he made the prior month (on
October 1). On August 31, 1994, Doug had written to Gardner Lewis
expressing his intention to liquidate all of his holdings there in order to
invest it all in the hedge fund. The trial court found that Gardner Lewis then
wired $300,000 directly to the hedge fund (on September 30) and sent Doug
two checks totaling $212,152: one for $150,000 on September 30 and one for
$62,152 on October 21. Doug testified he deposited the checks into his
personal Bear Stearns account, invested $100,000 of those proceeds in the
hedge fund and, over time, invested most of the $112,000 balance in another
outside investment and used some for community purposes. Doug’s expert
testified, based on research of public SEC filings, that Northern Trust had a
banking relationship with Bear Stearns (consisting of an unexplained
“lending relationship”).
      Because Doug presented no evidence that the Gardner Lewis checks
were deposited into a Northern Trust account and, indeed, failed to proffer

                                       11
any Northern Trust account statements, the trial court found insufficient
evidence that Gardner Lewis was the source of the $100,000 that Northern
Trust transferred to Doug’s capital account at the hedge fund.
      Doug asserts that no such documentary evidence was required, because
his “credible, uncontroverted testimony, supported by contemporaneous
business records” left no room for a determination that his evidence was
insufficient to carry his burden of proof. Citing Mix, supra, 14 Cal.3d 604,
Huber v. Huber (1946) 27 Cal.2d 784, and In re Marriage of Ficke (2013)
217 Cal.App.4th 10, he argues the trial court misapplied the law by requiring
specific records showing how the $100,000 moved from account to account.
Again, we are not persuaded.
      The authorities Doug cites stand for the proposition that a judgment
supported by uncorroborated testimony about a separate property source of
contributions to a dispute asset may be affirmed.5 They do not stand for the
proposition that a judgment rejecting uncorroborated testimony about the

      5   See Mix, supra, 14 Cal.3d 604 at p. 614 (giving respondent the benefit
of all reasonable inferences on appeal, “the trial court was warranted in
inferring . . . that the bank records if introduced would fully
verify . . . [respondent’s] testimony” about separate property contributions to,
and withdrawals from, commingled bank accounts); Huber v. Huber, supra,
27 Cal.2d at pp.790-791 (respondent’s testimony he purchased real estate
with funds from separate property bank account “is clearly sufficient to
support a finding that the property was paid for from his separate funds”); In
re Marriage of Ficke, supra, 217 Cal.App.4th at pp. 25-27 (where there was
conflicting evidence as to whether account from which mortgage payments
were made was commingled, trial court “was perfectly entitled to believe
[husband] . . . and impliedly find there was no commingling or payments from
a community account,” and was not required to assume the payments came
from community property absent specific documentation to the contrary).

                                      12
source of funds used to invest in, or purchase, a disputed asset must be
reversed.
      Here, Doug’s evidence left ample room for doubt that Gardner Lewis
was the source of the $100,000 deposit. There was no corroborating evidence
that Doug actually deposited the Gardner Lewis checks into his Bear Stearns
account. As Quin puts it, “the trail ends” after Gardner Lewis mailed those
checks out. Nor does the mere fact that the funds came through a financial
institution (Northern Trust) that had a banking relationship with the
brokerage firm (Bearn Stearns) where Doug claims he deposited his Gardner
Lewis money indicate (much less compel a finding) that Doug’s Bear Stearns
account was the source of that transfer (as opposed to Northern Trust
transferring the money from another account at either Bear Stearns or
another financial institution that also had a banking relationship with
Northern Trust). Finally, Doug made no attempt to show that, at the time
the capital investments were made, there were no community assets on
deposit at Northern Trust.6
      Doug’s letter expressing his intentions to use all of his Gardner Lewis
money to invest in the hedge fund also does not help him, because it cuts both
ways. He indisputably acted in accordance with his expressed intentions
when, as found by the trial court, he invested $300,000 of that money in the
hedge fund. But he also quite concededly used at least $112,000 of that

      6 He asserts in his brief that he “did not maintain any accounts at
Northern Trust” but does not cite any evidence to support that assertion. We
disregard statements of fact unsupported by citations to the record.
(Madrigal v. Hyundai Motor America (2023) 90 Cal.App.5th 385, 408, fn. 14,
review granted August 30, 2023, S280598.)

                                      13
money for other purposes. The letter thus does not tend to show that Doug
used the remainder of the Gardner Lewis money to invest in the hedge fund
as opposed to other purposes, such as those to which he admittedly devoted
some part of those funds.
      So, we are left with questions and holes that were the province of the
trial court to evaluate. Although Doug’s evidence would have been sufficient
to sustain a ruling in his favor, the “ ‘weight and character’ ” of his evidence
was not “ ‘such that the [trial] court could not reasonably reject it.’ ” (Trinity
v. Life Ins. Co. of America (2022) 78 Cal.App.5th 1111, 1121.)
      Tracing funds to a separate property source must be done “ ‘not by way
of surmises and probabilities, but by plain and connected channels.’ ” (In re
Boody’s Estate (1896) 113 Cal. 682, 687.) The trial court was not required to
believe Doug’s testimony, much less accept it as a conclusive, accurate
recollection. It was free to give the testimony whatever weight it deemed
appropriate under the circumstances, including just the passage of time, the
failures of his recollection and the complexity of his financial holdings. In the
absence of adequate records tracing the $100,000 contribution to a separate
property source, the trial court was not required to rule in his favor. (See,
e.g., Murphy, supra, 15 Cal.3d at pp. 912, 918 [affirming ruling that heirs
failed to overcome presumption that various assets had been purchased with
decedent’s separate property, because “[n]one of the separate income was
directly traced into any particular bank account or other asset” and “no
records adequate to identify any particular portions of . . . commingled funds
as derived from community or separate property sources”]; In re Marriage of
McLain (2017) 7 Cal.App.5th 262, 266, 273 [no error to deny request for
reimbursement of separate property funds withdrawn from retirement
account and other sources that were allegedly used to construct residence,

                                        14
where there was only “testimony about the money used to construct the
house, [but] no documents”].) “[T]he burden of establishing a spouse’s
separate interest in presumptive community property is not simply that of
presenting proof at the time of litigation but also one of keeping adequate
records.” (Murphy, at p. 920.) Doug failed to do that, and he bore the risk
that, decades later, it might redound to his detriment.
      D. The $900,000 Withdrawal
      Because the trial court found that Doug proved he invested $300,000 of
his own separate pre-marital earnings in the hedge fund, we next turn to its
conclusion that Doug nevertheless had no separate property interest
remaining by the time of trial because he withdrew $900,000 from the hedge
fund a short time later, in July 1995.
            1. Background
      It is undisputed that on July 3, 1995, less than a year after Doug
started the hedge fund, he withdrew $900,000. There was no documentary
evidence showing how those withdrawn funds were used. However, he
testified at trial that he deposited the $900,000 into one of his separate pre-
marital accounts.
      The evidence showed that nine days later, on July 3, 1995, the parties
bought a home for $1.45 million financed with a $1 million mortgage and a
$450,000 down payment. It also showed they spent another $1.5 million to
perform extensive upgrades and renovations to the home (the precise timing
of which is not specified) and to furnish it.
      Doug testified that he withdrew $900,000 because he was advised that
was the maximum he could take out of the hedge fund capital account tax-
free. He testified he deposited the $900,000 into a brokerage account he
maintained at Alex Brown, which was one of many pre-marital brokerage

                                         15
accounts he maintained, that he used $450,000 of it for the down payment on
the house, and that the rest went toward the expense of renovating the newly
purchased home. He denied that he had any intention of withdrawing his
initial separate capital investment in the Fund. Quin testified she believed
the down payment came from Doug’s marital earnings from both his prior job
at Montgomery Securities and from managing the fund but couldn’t recall
details.
      The trial court concluded the $900,000 depleted Doug’s separate
property investment in the hedge fund. It ruled that Doug had “not met his
burden [of proof]” to trace his separate property interest in the fund due to
the absence of any “records of separate and community property payments as
they occurred” after the money had been withdrawn. It also rejected Doug’s
testimony that the withdrawal was used in connection with the home
purchase and the assumption of Doug’s tracing expert to the same effect,
because Doug testified that he deposited the withdrawn funds into his
separately titled Alex Brown account. The court concluded that Doug’s
“testimony establishes that he removed $900,000 from the [hedge fund]
capital account to an account that, at the time of the removal, was [a]
separately titled account established before marriage at Alex Brown,” and
that in light of Doug’s failure to “provide any documentary evidence at trial to
trace use of the funds after they were deposited into that account,” there was
“insufficient evidence to conclude that the funds were expended for
community purposes.” The court later amended its statement of decision on
this issue when it denied Doug’s post-trial motions, adding a finding that
Doug “offered general testimony to a web of pre-marriage brokerage accounts
with money moving between them at various times, but there was no precise
evidence of what separate property was held in which brokerage accounts at

                                       16
the time of marriage, nor any attempt to quantify when and in what amounts
separate and community property were commingled in those accounts.” This
was because Doug “focused his tracing evidence on only one account—the
WPLP capital account.”
        2. Analysis
     Doug argues the court erred by failing to presume that the withdrawal
was for a community expense, which he contends is a legal error subject to
our de novo review. Relying principally on Ciprari, supra, 32 Cal.App.5th 83,
he maintains the law presumes that any withdrawal from a commingled
account is withdrawal of community funds used for community expenses
unless the spouse challenging the tracing analysis proves otherwise. So, he
argues, the $900,000 withdrawal was presumptively a withdrawal of
community funds unless Quin proved a separate use of those funds. He
contends the trial court committed legal error by instead placing the burden
on him to prove the withdrawn $900,000 was put to a community use.
     Alternatively, he argues the court erred because the uncontradicted
evidence proved that the $900,000 withdrawal was made for community
purposes—namely, for the purchase and renovation of the couple’s new home.
     It is unnecessary to decide whether the court erred by failing to apply
the favorable legal presumption that Doug posits. We agree with Quin, who
contends that the trial court also properly found that any such presumption
had been rebutted. In effect, Quin’s argument (although not framed as such)
is that any error regarding who bore the burden of proof was harmless.
     Specifically, Quin argues that “[e]ven if the trial court were to have
presumed that any withdrawals were used to pay community expenses . . . ,
the trial court found such a presumption would be rebutted by Doug’s
testimony that he deposited the funds into his separately titled Alex Brown

                                      17
brokerage account, as opposed to a joint checking account where community
expenses were paid.” And, she contends, we have no power on substantial
evidence review to second-guess that finding, citing Schmidt v. Superior
Court (2020) 44 Cal.App.5th 570, 582 (Schmidt). We agree.
      As noted, the court concluded that Doug’s “testimony establishes that
he removed $900,000 from the WPLP capital account to an account that, at
the time of the removal, was [a] separately titled account established before
marriage at Alex Brown,” and that in light of Doug’s failure to “provide any
documentary evidence at trial to trace use of the funds after they were
deposited into that account,” there was “insufficient evidence to conclude that
the funds were expended for community purposes.” Doug implies that Quin
misconstrues the statement of decision. He asserts this was “not [a] find[ing]
that the fact [he] put the withdrawn funds into his Alex Brown account
established he used them for a separate property purpose.” But we do not
read it that way. Doug’s gloss on the court’s comments violates the principle,
expressed in the very authority he urges us to follow, that “ ‘findings of fact
are liberally construed to support the judgment.’ ” (Ciprari, supra,
32 Cal.App.5th at p. 94; accord, Gajanan Inc. v. City and County of San
Francisco (2022) 77 Cal.App.5th 780, 792.)
      At best, the court’s comments are ambiguous, which means the doctrine
of adverse implied findings steps in to fill the gap. “[I]f the statement [of
decision] . . . is ambiguous the defect[] must be brought to the court’s
attention to avoid presumptions in favor of the judgment.” (In re Marriage of
Arceneaux (1990) 51 Cal.3d 1130, 1136 (Arceneaux); Code Civ. Proc., § 634.)
When a party fails to do this, then “ ‘[u]nder the doctrine of implied findings,
the reviewing court must infer, following a bench trial, that the trial court
impliedly made every factual finding necessary to support its decision.’ ”

                                       18
(Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.) Here, nothing in the
record indicates Doug objected that the foregoing aspect of the court’s
statement of decision was ambiguous or unclear.7 On the contrary, when
Doug filed objections to the court’s proposed statement of decision earlier on,
he acknowledged the court had made a factual finding on this issue in Quin’s
favor: he said the court had “erred” in making what he characterized as an
“implied finding that the $900,000 withdrawal is traceable to Respondent’s
separate property because it was deposited in his Alex Brown account.” For
all of these reasons, we construe the court’s decision as encompassing a
finding that Doug intended to withdraw his separate property from the fund,
as evidenced by his deposit of the funds into his own separately titled pre-
marital account.
      As noted by Quin, that finding is supported by substantial evidence.
Under the highly deferential standard of substantial evidence review, we
must “accept all evidence supporting the trial court’s order,” “completely
disregard contrary evidence,” “draw all reasonable inferences to affirm the
trial court” and “we do not reweigh the evidence.” (Schmidt, supra,
44 Cal.App.5th at p. 581.) “Under this standard of review, parties
challenging a trial court’s factfinding bear an ‘enormous burden.’ ” (Id. at
p. 582.) Here, Doug had a “web of pre-marriage brokerage accounts” that had
“money moving between them at various times.” The trial court could
reasonably infer that by immediately depositing the withdrawn funds into
one of them that he maintained in his sole name rather than into a joint
checking account, Doug reflected an intention to withdraw his separate

      7  His new trial motion asked the court to clarify certain other findings,
but it did not ask for any clarification of the court’s comments concerning the
$900,000 transfer of funds to his Alex Brown account.

                                       19
property capital from the hedge fund. That was a factual issue for the trial
court to resolve, and we are bound by its determination. (See Mix, supra,
14 Cal.3d at p. 612 [Whether separate funds “ ‘continue to be on deposit when
a withdrawal is made from . . . a [commingled] bank account . . . , and
whether the intention of the drawer is to withdraw such funds therefrom, are
questions of fact for determination by the trial court’ ”].)
      Doug’s only argument on the substantial evidence point is that “it is
irrelevant if [he] put the withdrawn funds into a premarital brokerage
account because neither [he] nor Quin tried to prove the funds were then
used for a separate property acquisition.” (Italics added.) But that is a non-
sequitur. He cites no authority such proof was required. The question was
whether at the time of the withdrawal he was intending to withdraw his
separate property (see Mix, supra, 14 Cal.3d at p. 612), not what became of
the money later at another point in time (including whether he might have
subsequently gifted it to the community and/or hopelessly commingled it past
the point of discernible tracing).
      Doug also asserts that “the uncontradicted evidence established that
the withdrawn cash was eventually used for community purposes.” We do
not agree. The trial court was not required to credit Doug’s testimony about
how the money was spent even though it was uncontradicted. (See Hicks v.
Reis (1943) 21 Cal.2d 654, 659-660; Schmidt, supra, 44 Cal.App.5th at
p. 582.) Furthermore, the trial court could reasonably infer there were ample
other community sources to fund the new home purchase and subsequent
renovations rather than this particular withdrawal from the hedge fund.8

      8Doug testified he had over $1 million in his brokerage account at
Montgomery by the time he started the hedge fund in 1994, which he
concedes in his brief is the account that held all his community earnings that

                                        20
      In sum, Doug has demonstrated no basis to reverse the court’s
characterization of the hedge fund as entirely community property.
                                       II.
      Legal Fees and Fines Arising from Doug’s Insider Trading
      Between 2007 and 2009, while the parties were married, Doug engaged
in insider trading, purchasing interests in Google and two other companies
based on tips he received from company insiders. The question of who should
be responsible for the financial repercussions of Doug’s criminal conduct
divided the parties below and remains an issue in this appeal.
      Both parties challenge the trial court’s ruling on Quin’s request that it
treat as Doug’s separate obligation, and reimburse the community for, the
debts incurred as a result of his criminal conduct, including the debts for the
civil penalty, the criminal fine and the attorney fees incurred for his defense
in the parallel criminal and SEC cases. The trial court ruled the community
was responsible for the $935,000 civil penalty and $290,000 in attorney fees
and costs associated with the SEC action. It held that the $9.4 million in
attorney fees spent defending him against the criminal action and the
$250,000 criminal fine were Doug’s separate debts for which he, not the
community, was responsible.
      Doug claims the trial court erred in failing to allocate the entire cost of
his criminal conduct to the community. Quin, who knew nothing about
Doug’s criminal wrongdoing until after the fact, and therefore had no

pre-dated his launch of the hedge fund. In addition, there was documentary
evidence that over the course of a year and a half after the couple bought
their new home, Doug withdrew another $1.4 million from the fund in total
(during 1996), including $625,000 on January 1, 1996, which was about six
months after the couple bought the home in the summer of 1995.

                                       21
opportunity to avoid it, argues the trial court should not have allocated any of
these losses to the community.
      In the alternative, Doug also challenges the amount of legal fees and
costs the trial court attributed to the SEC action, contending the trial court
erroneously excluded evidence that resulted in the court vastly
underestimating those expenses.
      We affirm the trial court’s decision in all but one respect. It erred only
to the extent it characterized the SEC penalty Doug was ordered to pay in the
SEC case as a community obligation. The penalty he paid to settle the SEC
case, the criminal fine imposed against him, and all but $290,000 of the
attorney fees Doug incurred to defend himself are Doug’s separate
responsibility. And our reasoning for affirming the allocation of the $290,000
to Doug is distinct from that of the trial court and renders it unnecessary to
address Doug’s challenge to the amount of legal fees the court allocated to his
defense of the SEC case.9
      A. Background
      In January 2011, Doug retained the law firm Sidley Austin to assist
him in connection with investigations into his trading activities launched by
federal prosecutors in New York and the SEC. His legal team spent the next
year negotiating with both sets of New York investigators in an attempt to
convince them not to charge Doug, while simultaneously investigating the
case and preparing a defense.

      9 Our analysis concerns the allocation of financial responsibility
between divorcing spouses arising from one spouse’s criminal conduct. We do
not address either spouse’s or the community’s liability to third parties for
such conduct.

                                       22
      Their negotiating efforts failed, and in February 2012, a grand jury
returned an indictment. Doug was charged in the federal district court for
the Southern District of New York with four federal criminal securities law
violations, including two charges for conspiracy to commit securities fraud
and two charges of securities fraud. The charges alleged Doug engaged in
two insider trading schemes that involved purchasing securities in three
publicly traded companies based on inside information obtained from two
different sources.
      Contemporaneously, the SEC filed a complaint against Doug and
Whitman Capital arising out of some of the same insider trading as was
alleged in the criminal indictment. The complaint alleged that based on the
insider information, “Whitman Capital hedge funds reaped approximately
$980,000 in ill-gotten profits.” It sought injunctive relief, disgorgement and
civil penalties.
      Two months later, in April 2012, Doug and Quin separated.
      After pleading not guilty in the criminal action, Doug was tried by a
jury, which in August 2012 found him guilty on all four counts. In
January 2013, the court sentenced him to two years’ imprisonment, a year of
probation, a fine of $250,000 and forfeiture of $935,306. The forfeiture
amount represented “the amount of proceeds obtained as a result of the
offenses” charged in the indictment.
      About two months later, on March 19, 2013, Doug and Whitman
Capital consented to entry of judgment against them in the SEC action. The
judgment permanently enjoined them from violating the antifraud provisions
of the Securities Exchange Act of 1934 and the Securities Act of 1933;
imposed joint and several liability on them for “disgorgement in the amount
of $935,306, representing profits gained as a result of the conduct alleged in

                                       23
the Complaint” (plus prejudgment interest), which was to be “credited” by the
amount paid for the criminal forfeiture; and also required Doug to pay a “civil
penalty in the amount of $935,306” to the SEC. Doug also agreed he would
“not seek or accept, directly or indirectly, reimbursement or indemnification
from any source” or claim any tax deduction or credit with regard to the civil
penalty. The settlement also included an order barring Doug from
associating with brokers, dealers, investment advisors and other securities
industry entities.
      The disgorgement payment was charged against the limited partners’
shares, about two-thirds of which were the “public” limited partners and one-
third Doug’s and his companies’ shares. The civil penalty was paid out of
Doug’s partnership account at Whitman Partners.
      Doug posted bail and apparently avoided serving prison time while he
appealed the criminal conviction, but ultimately, the Second Circuit affirmed
his convictions, the United States Supreme Court denied his petition for
certiorari, and he served all or some part of a 24-month prison sentence.
      The trial court found that Doug’s intentional, criminal conduct
benefitted the community in the amount he and Whitman Capital were
ordered to disgorge ($935,306)10 and “arose from the operation of the

      10 The SEC complaint alleged that the proceeds of the insider trading
went to the Whitman Capital hedge fund, and Doug admitted that he charged
the disgorgement to the limited partners, including his one-third share. This
suggests that only a third of the $935,000 in proceeds from Doug’s insider
trading ultimately were disbursed to the community. However, the trial
court found that the community benefited from Doug’s criminal conduct “in
the amount of the $935,306 disgorgement that [Doug] was obligated to pay,”
and the parties do not challenge this finding. Further, Quin withdrew her
request for reimbursement of the disgorgement payment in the trial court for
reasons that are not clear. Therefore, we need not address the issue of the

                                      24
community business” but that Quin had no knowledge of it or any
opportunity to “avoid it.”
      However, one thing is clear from the undisputed facts: the cost of
Doug’s criminal conduct far exceeded the amount of short-term financial gain
to the community as found by the trial court. First, the gain was completely
wiped out by the criminal forfeiture, which was dollar for dollar offset by the
amount of the civil disgorgement remedy. On top of that, there was the
additional civil penalty of $935,000 and the criminal fine of $250,000. And
dwarfing even that substantial penalty and fine combined was the
$9.7 million Doug spent for the Sidley Austin law firm to defend him in the
parallel actions. Even assuming the community benefited in the amount of
$935,000 from Doug’s insider trading (see fn. 10, ante, page 24), the combined
total of the civil penalty, criminal fine and attorney fees Doug incurred
($11,885,000) is almost 13 times that amount. And it is impossible to
quantify the ongoing loss of income available to support the community that
resulted after Doug’s criminal conduct was discovered and the limited
partners withdrew from the fund and it was effectively shut down.
      In allocating responsibility between Doug and Quin for the financial
consequences of Doug’s insider trading, the trial court distinguished between
the SEC case and the criminal case. It ruled that the community was
responsible for all the costs associated with the SEC enforcement action: the
$935,306 civil penalty Doug paid to the SEC, along with the legal fees and
costs attributable solely to Doug’s defense of that action, which it determined

precise amount of money the community received as a result of Doug’s insider
trading.

                                       25
was $290,608.63 of the $9.7 million he spent.11 By contrast, it ruled that all
the costs associated with the criminal case were Doug’s sole and separate
obligation, which included the $250,000 criminal fine and the $9,423,596 in
attorney fees and costs he incurred in defending that action.
        The trial court opined, “the spouse who knowingly commits a crime
willfully accepts the risk that he will be caught and have to face the
consequences, whereas the spouse who was unaware of the risk and could do
nothing to avoid it should not bear the same burden.” We could not agree
more.
        B. Standard of Review
        “ ‘ “Appellate review of a trial court’s finding that a particular item is
separate or community property is limited to a determination of whether any
substantial evidence supports the finding.” [Citations.] [¶] But de novo
review is appropriate where resolution of “the issue of the characterization to
be given (as separate or community property) . . . requires a critical
consideration, in a factual context, of legal principles and their underlying
values, [such that] the determination in question amounts to the resolution of
a mixed question of law and fact that is predominantly one of law.” ’
[Citation.]” (In re Marriage of Walker (2012) 203 Cal.App.4th 137, 152.)
        C.    Characterization of the Debts Arising from Doug’s Insider
              Trading
        Throughout the parties’ briefing in the trial court and initially on
appeal they treat the relevant statutes as secondary and focus much of their

         The amount the trial court allocated to fees and costs for the SEC
        11

enforcement action was based on evidence showing Sidley Austin billed
$290,608.63 in fees and costs exclusively for the defense of the SEC matter,
finding Doug was “only partially successful in proving the amount of fees
expended on the SEC action separate and apart from the criminal action.”

                                          26
argument on the relatively few relevant appellate decisions.12 But division of
property and debts upon dissolution is, first and foremost, governed by
statute. As Doug acknowledges, the Family Code specifies that, “Except . . .
as otherwise provided in this division [7]” of the Family Code, which governs
property division (or an agreement between spouses), community property
must be divided “equally.” (§ 2550.) Therefore, trial courts have no
discretion to divide the community estate unequally unless authorized by a
provision in Division 7 of the Family Code to do so. (See In re Marriage of
Peterson (2016) 243 Cal.App.4th 923, 937; see also Hogoboom & King, Cal.
Practice Guide: Family Law (The Rutter Group 2023) ¶ 8:900 (“Hogoboom &
King”) [“Property division jurisdiction must be exercised in the manner
provided by Fam. [Code,] § 2500 et seq. . . .”].)
      Other provisions in Division 7 of the Family Code qualify the equal
division principle of section 2550, including provisions that specifically
address debt. It is to those provisions we now turn.
           1. Under the Plain Language of the Relevant Statutes, the
              Civil Penalties, Criminal Fine and Attorney Fees Were
              Doug’s Separate Obligations.
             a. The Statutes
      Section 2551 requires trial courts, for “purposes of division and in
confirming or assigning the liabilities of the parties for which the community
estate is liable,” to “characterize liabilities as separate or community and
confirm or assign them to the parties in accordance with Part 6 (commencing
with Section 2620).” As the leading practice guide states, “Characterizing the
status of property interests as ‘community’ . . . or ‘separate’ property is the

      12 We requested supplemental briefing asking the parties to address
the relevant statutes more specifically.

                                        27
foundational starting point for the resolution of marital property rights and
obligations. ‘Characterization must take place in order to determine the
rights and liabilities of the parties with respect to a particular asset or
obligation and is an integral part of the division of property on marital
dissolution.’ ” (Hogoboom & King, supra, ¶8:30; see § 2551, second italics
added.)
      As a general rule, “the community estate is liable for a debt incurred by
either spouse before or during marriage, regardless of which spouse has the
management and control of the property and regardless of whether one or
both spouses are parties to the debt or to a judgment for the debt.” (§ 910,
subd. (a), italics added.) The general rule has a proviso, that it applies
“[e]xcept as otherwise expressly provided by statute.” (Ibid.)
      Under the Family Code, “Debt” is defined as “an obligation incurred by
a married person before or during marriage, whether based on contract, tort,
or otherwise.” (§ 902.) The Code further specifies when debts are “incurred”:
a debt arising because of a contract is incurred when the contract is made
(§ 903, subd. (a)); a debt arising from a tort is incurred “at the time the tort
occurs” (id., subd. (b)); and all other debts are incurred “at the time the
obligation arises.” (Id., subd. (c)).
      Under section 2620, “The debts for which the community estate is liable
which are unpaid at the time of trial, or for which the community estate
becomes liable after trial, shall be confirmed or divided as provided in this
part.” Further, section 2626 authorizes the trial court to “order
reimbursement in cases it deems appropriate for debts paid after separation
but before trial.”

                                        28
        Several statutes in Part 6 of Division 7 of the Family Code address
characterization and division of debts, three of which are potentially relevant
here.
        First, section 2625 states: “Notwithstanding Sections 2620 to 2624,
inclusive, all separate debts, including those debts incurred by a spouse
during marriage and before the date of separation that were not incurred for
the benefit of the community, shall be confirmed without offset to the spouse
who incurred the debt.” Section 2625 thus requires a trial court to determine
whether a debt incurred during the marriage is a separate debt, and if it is
separate, to confirm it without offset to the spouse who incurred it.
Section 2625 makes clear that a debt “not incurred for the benefit of the
community” is a separate debt that “shall be confirmed without offset” to the
spouse who incurred it during the marriage.
        Second, section 2627 provides in relevant part, “Notwithstanding
Sections 2550 to 2552, inclusive, and Sections 2620 to 2624, inclusive, . . .
liabilities subject to paragraph (2) of subdivision (b) of Section 1000 shall be
assigned to the spouse whose act or omission provided the basis for the
liability, without offset.” Section 1000, subdivision (b)(2), addresses “the
liability of a married person for death or injury to person or property” that “is
not based upon an act or omission which occurred while the married person
was performing an activity for the benefit of the community.” Under
section 2627, then, liability for “death or injury to a person or property” that
resulted from an act or omission of one spouse is a separate debt if it was not
based on an act or omission that occurred while performing an activity for the
benefit of the community.
        Notably, sections 2625 and 2627 both address debts or liabilities
incurred by one spouse during the marriage, but they are distinct.

                                        29
Section 2625 broadly defines debts incurred during the marriage that were
“not incurred for the benefit of the community” as separate debts.
Section 2627 is narrower. It addresses the liability of a married person “for
death or injury to person or property” and requires the liability to be assigned
to the person whose act or omission provided the basis of the liability,
without offset, if the liability is “not based upon an act or omission which
occurred while the married person was performing an activity for the benefit
of the community.” (§ 1000, subd. (b)(2), italics added.) Unless a debt or
liability of a married person is “for death or injury to person or property”
within the meaning of sections 2627 and 1000, it is not governed by section
2627 and must be analyzed under the more general provisions of section
2625.13
      Finally, section 2623 addresses debts incurred “after the date of
separation but before entry of a judgment of dissolution of marriage or legal
separation of the parties.” (Italics added.) It states in relevant part, “(a)
Debts incurred by either spouse for the common necessaries of life of either

      13 The parties disagree as to whether the debts are a “liability for
death or injury to person or property” within the meaning of section 1000,
subdivision (b)(2).
      Quin argues they are because insider trading causes harm to the
investing public.
      Doug argues they are not. He asserts that although injured investors
might have sued to recover compensation for actual losses, that did not
happen here.
      We agree with Doug. The fact that his actions might have caused
property injury to individual investors does not mean that the specific debts
he was required to pay represent a “liability” for any such injury (rather
than, for example, a fine or punishment). Indeed, Quin concedes that the
criminal charges and the SEC action were brought to vindicate public
interests not the interests of private parties. We elaborate further below.

                                        30
spouse or the necessaries of life of the children of the marriage for whom
support may be ordered, in the absence of a court order or written agreement
for support or for the payment of these debts, shall be confirmed to either
spouse according to the parties’ respective needs and abilities to pay at the
time the debt was incurred. [¶] (b) Debts incurred by either spouse for
nonnecessaries of that spouse or children of the marriage for whom support
may be ordered shall be confirmed without offset to the spouse who incurred
the debt.” Section 2623 thus requires the court to confirm any post-
separation debts not incurred for the necessaries of that spouse or children of
the marriage “without offset to the spouse who incurred the debt.”
      The Code treats certain other debts as separate, but the parties do not
contend any of those other sections apply here, and we do not address them.14
            b. Analysis
      Although the parties disagree as to whether the division of the debts
incurred as a result of Doug’s insider trading must be treated as an all-or-
nothing proposition, there are multiple distinct debts here, each of which
must be analyzed under the appropriate statute.15 These include: the

      14 See, e.g., §§ 2621 (debts incurred before marriage); 2624 (debts
incurred by one spouse after entry of judgment of legal separation or
dissolution); see also § 2602 (court may award from party’s share amount it
determines to have been deliberately misappropriated by the party to the
exclusion of the interest of the other party).
      15  The parties clarified their positions about this in supplemental
briefing. Doug argues there is “no reason to” evaluate them separately
(“because they all arose from a single act”), whereas Quin argues that the
court should look at “the matter as a whole” but also ask whether a particular
debt was incurred for the benefit of the community. She argues that “While
it is necessary to consider the underlying act . . . the Court must also
determine whether a specific debt was incurred for the benefit of the
community.”

                                      31
$935,000 civil penalty incurred in the SEC enforcement action16; the
$250,000 criminal fine incurred in the contemporaneous criminal action; the
attorney fees incurred to defend Doug in the criminal action; and the attorney
fees incurred to defend Doug and Whitman Capital in the SEC enforcement
action. While the trial court treated the debts relating to the SEC action
differently from those relating to the criminal action, it did not, expressly at
least, apply the Family Code provisions to ascertain whether each debt was a
separate or community debt, including whether the debts arose before or
after the parties separated or otherwise satisfied the criteria of the relevant
statutes. Proper characterization of these debts depends on the resolution of
those issues.
      The debts for the $935,000 SEC penalty and the $250,000 criminal fine
are post-separation debts governed by section 2623. That is because they are
neither contract nor tort debts, and therefore under section 903 were incurred
“at the time the obligation ar[ose].” (§ 903, subd. (c)). The obligations arose
when Doug became obligated to pay them, which happened after the parties
separated when the criminal judgment was entered and the SEC settlement
took place.17 (See U.S. v. Davani (N.D. Cal., Mar. 22, 2023, No. 04-cr-00224-

      16  The penalty amount of $935,000 is in the same amount as the
restitution/disgorgement of profits Doug was required to pay. However, the
two were separate obligations, each of which he had to pay. Only the penalty
is at issue here because, as we have indicated (see fn. 10, ante, page 24), Quin
withdrew her request for reimbursement with respect to the
restitution/disgorgement payment.
      17 The trial in the criminal action resulted in a guilty verdict in
August 2012, and in January 2013 the court imposed a prison sentence and
ordered Doug to pay a $400 assessment, “forfeiture in the amount of
$935,306” and a fine of $250,000. Thereafter, Doug settled the SEC action,
with the result was that he paid a $935,306 criminal penalty and was
obligated to disgorge $935,306, with the latter being credited dollar for dollar

                                       32
JSW-1) 2023 WL 2601354, at p. *4 [under section 903, husband incurred debt
for criminal restitution when court imposed it as part of criminal judgment,
not earlier when he committed criminal offenses].) We therefore affirm the
trial court’s decision that the criminal fine and assessment were Doug’s
separate obligation but reverse its characterization of the $935,000 penalty
as a community obligation.
      Citing no legal authority, Doug argues all the debts were incurred pre-
separation, and thus section 2623 does not apply. He asserts that because
his actions constituted a tort, the debts were incurred at the time the tort
occurred under section 903, subdivision (b). We do not agree. No tort claims
were asserted against Doug, and thus no tort debt is at issue.
      The criminal fine and civil penalties sought in those actions were not
tort remedies; they were in no sense damages to compensate victims of a tort
for injuries. Instead, they were sanctions imposed to punish Doug and to
deter him and others from engaging in the crimes for which he was convicted.
“Fines arising from convictions are generally considered punishment.”
(People v. Alford (2007) 42 Cal.4th 749, 757.) SEC enforcement proceedings,
while civil in nature, serve to “prevent and punish more serious securities
law violations,” to “protect the integrity of the markets” and to “vindicate the
public interest.” (Jones v. S.E.C. (4th Cir. 1997) 115 F.3d 1173, 1180.) The
imposition of monetary penalties in an SEC enforcement action are
“disciplinary” and “intended to discourage and punish legal and ethical

by the amount of the criminal forfeiture. Under section 903, subdivision (c),
the criminal fine and the forfeiture were incurred in January 2013, and the
civil penalty was imposed as part of the SEC settlement sometime after that.
Both of those obligations were incurred after the parties’ separation in
April 2012.

                                       33
misconduct.” (Lang v. French (5th Cir. 1998) 154 F.3d 217, 222-223; see also
Kokesh v. S.E.C. (2017) 581 U.S. 455, 459 [in 1990, Congress added monetary
penalties as additional “enforcement tool[]”].) They are distinct from
disgorgement, and are payable directly to the United States Treasury. (See
15 U.S.C., § 78u, subds. (d)(3)(A)(i), (d)(3)(B), (d)(3)(B)(C)(i).) 18 In bringing
an enforcement action, the SEC “ ‘acts in the public interest, to remedy harm
to the public at large, rather than standing in the shoes of particular injured
parties.’ ” (Kokesh, 581 U.S. at p. 463.)
      Doug also argues, in the alternative, that “[t]o the extent the
commission of a crime can be considered an ‘other case’ under section 903[,
subdivision] (c),” he “became subject to” the criminal fine and other
punishment when he committed the crime and thus “the obligations flowing
from those activities were incurred during [the] marriage.” Again, we
disagree. He became subject to those penalties when sentence was imposed
in the criminal case and he settled the charges brought against him by the
SEC. Doug’s contrary position disregards the federal authority addressing
this issue (see U.S. v. Davani, supra, 2023 WL 2601354, at p. *4; U.S. ex rel.
Simoneaux v. E.I. duPont de Nemours &Co. (5th Cir. 2016) 843 F.3d 1033,
1040 [“most regulatory statutes . . . impose only a duty to obey the law, and
the duty to pay regulatory penalties is not ‘established’ until the penalties are
assessed”].) Doug also disregards the statutory text. Unlike the statutory
definitions of when a contract or tort debt is incurred, notably absent from
the definition of when “other” debts are incurred is any reference to the

      18  Private persons who are injured by insider trading may file civil
suits against the perpetrator. (Freeman v. Decio (7th Cir. 1978) 584 F.2d 186,
191.) Sometimes they are also permitted to join in an SEC action, although
there is no evidence that occurred here.

                                         34
timing of the conduct that is the debt’s underlying source. (Compare § 903,
subds. (a) & (b) with subd. (c).) We find that omission significant. Unlike
tort and contract damages, the responsibility for which arises when the tort
or breach of contract occurs, imposition of regulatory and criminal fines is
discretionary and it is not until that discretion is exercised that the legal
liability to pay them arises.
      Applying section 2623, then, which addresses post-separation debts, the
conclusion that these are Doug’s separate debts is not even debatable. Under
section 2623, debts incurred after legal separation that are not for the
necessaries of the spouse or children are separate debts of the spouse who
incurred them. (See § 2623.) The parties agree that the criminal fines or
civil penalties do not constitute the “common necessaries of life.” (See Direct
Capital Corp. v. Brooks (2017) 14 Cal.App.5th 1168, 1174 [“common
necessaries are those that all families need (e.g., food, clothing, & shelter)”].)
Thus, the trial court correctly treated the criminal fine as Doug’s separate
obligation but erred in characterizing the civil penalty imposed by the SEC
and agreed to by Doug to settle the enforcement action as a community
obligation.
      The bigger question by far both monetarily and otherwise is the
treatment of the attorney fees Doug incurred in both cases. Although the
criminal and SEC actions were not filed until February 2012, the evidence
suggests Doug retained Sidley Austin to represent him in those matters in or
about January 2011, which was during the marriage and before the parties
separated in April 2012. Because those debts were contractual, under
sections 902 and 903 they were “incurred” when the contract was made,
which was during the parties’ marriage. Accordingly, the legal fees are pre-
separation debts governed by section 2625 and are community debts or

                                        35
separate debts depending on whether they were “incurred for the benefit of
the community.” (§ 2625.)19
      Where, as here, the “benefit to the community” presents a
predominantly legal question, it is subject to de novo review. (See In re
Marriage of Nassimi, 3 Cal.App.5th 667, 684, fn. 31 (Nassimi); In re Marriage
of Rossin (2009) 172 Cal.App.4th 725, 734.) Having considered the parties’
briefing on this issue, including the supplemental briefing, we conclude the
arguments present no real factual disputes. Rather, their dispute is
fundamentally a question of law, namely, the meaning of the statutory
language, “incurred for the benefit of the community.” That is a legal
question subject to de novo review.
      Here, the trial court addressed whether the attorney fees and costs,
which it found totaled $9.7 million, were “incurred for the benefit of the
community.” We quote parts of its discussion here.
      “[Doug] focuses on the assertedly enormous monetary benefit the
community received from his operation of the Whitman entities, including the
profits generated by the offenses of which he was convicted. He further
argues that [Quin] is not truly an ‘innocent’ spouse, because ‘in the current
environment’ the spouse [of] a long-term technology investment manager

      19 It should be noted that, Section 2627 does not apply to the attorney
fees Doug incurred for the defense in the criminal and SEC actions any more
than it did to the penalties, fines and disgorgement remedies imposed in
those actions. Attorney fees are not “liabilit[ies] . . . for death or injury to
person or property” within the meaning of section 1000, subd. (b) and, by
incorporation, section 2627. The attorney fees Doug incurred arose from the
contract he entered for counsel to defend him in the criminal and SEC
actions. In his supplemental brief, Doug concedes this point.

                                       36
either knows or should know that the other spouse may eventually be
charged with ‘insider type trading’. . . .
      “The evidence shows that the community did benefit from [Doug’s]
criminal conduct, in the amount of the $935,306 disgorgement that [Doug]
was obligated to pay. [Quin] first asserted then abandoned a claim for
reimbursement of this amount. In the Court’s view, the evidence also fails to
show that [Quin] was aware of [Doug’s] criminal conduct. . . .
      [¶] . . . [¶]
      “Respondent’s argument implies that his legitimate investment
management activities somehow inevitably led to his conviction of insider
trading. In briefing, he devoted attention to distinguishing his conduct from
‘bald faced theft’, and arguing that his conduct was more like the ‘business
tort’ situation in Hirsch [In re Marriage of Hirsch (1989) 211 Cal.App.3d 104
(Hirsch)] rather than the ‘theft tort’ of Stitt [In re Marriage of Stitt (1983)
147 Cal.App.3d 579 (Stitt)] and Bell [In re Marriage of Bell (1996)
49 Cal.App.4th 300 (Bell)]. The Court views the purported distinction with
skepticism and finds this line of reasoning unpersuasive. Insider trading is
not an inevitable consequence of being an investment manager. [Doug] was
convicted of a crime requiring willful behavior, not a ‘business tort’. His
argument attributing ‘tens of millions of dollars’ of community benefit to his
conduct vastly overstates the benefit to the community of the criminal
conduct that he asks the community to share in the cost of defending. That
benefit was determined to be $935,306.”
      The trial court’s description is apt. Doug argues his operation of the
hedge fund in general benefited the community, and there is no question that
it did. But section 2625 presents a narrower question. The debts at issue
were incurred not by Doug’s overall operation of the hedge fund throughout

                                         37
the course of the parties’ marriage. Rather, they were incurred because Doug
violated the securities law by conspiring to commit and committing multiple
acts of insider trading. The question is whether the amounts Doug expended
on attorney fees to defend himself in the criminal and SEC cases were
incurred for the benefit of the community.
      Addressing that question requires an understanding of the phrase
“incurred for the benefit of the community.” Here, the trial court found there
was some potential benefit to the community, but it was at most $935,000,
the amount of ill-gotten gains the community might have, but ultimately did
not, receive had the attorneys succeeded in avoiding liability for
disgorgement. As the court also observed, the attorney fees Doug expended
to defend against the criminal and SEC actions totaled $9.7 million, which of
course dwarfed any potential community benefit. Further, as we shall
discuss, the evidence reflects that the primary purposes for which Doug
incurred the $9.7 million in fees were not to defend a community asset.
      Fundamentally, we do not think the question whether a debt was
“incurred” or “not incurred” “for the benefit of the community” within the
meaning of section 2625 in all circumstances presents a binary question. As
we have said, the Family Code defines “[d]ebt” to mean “an obligation
incurred by a married person before or during marriage, whether based on
contract, tort, or otherwise.” (§902.) The ordinary meaning of both “debt”
and “obligation,” used in the singular, “a debt” or “an obligation,” is a duty or
commitment to pay a person or entity.20 Here, the debt we must address is

      20See Merriam-Webster <https://www.merriam-
webster.com/dictionary/obligation> (as of Dec. 29, 2023) (“a commitment (as
by government) to pay a particular sum of money” “an amount owed under
such an obligation”);

                                       38
Doug’s contractual obligation to pay the attorneys who defended him in the
two cases.
      In some circumstances, a debt may be incurred for multiple purposes
some of which are for the benefit of the community and some which are not.
For example, funds borrowed on a home equity line of credit used to pay for
improvements to the marital home and to cover the college expenses of a
child of one spouse from a prior marriage. Family Code section 2556
indicates that unequal allocation of a debt or liability is permissible.21
      Marriage of Nassimi, supra, 3 Cal.App.5th 667 demonstrates that
attorney fee debt may be incurred partly for the benefit of the community and
partly for non-community purposes. There, the husband incurred attorney
fees both to defend himself against claims arising from his operation of a

Britannica Dictionary <https://www.britannica.com/dictionary/debt> (as of
Dec. 29, 2023) (“an amount of money that you owe to a person, bank,
company, etc.”); Cambridge Dictionary
<https://dictionary.cambridge.org/us/dictionary/english/debt> (as of Dec. 29,
2023) (“something, especially money, that is owed to someone else”);
Dictionary.com
<https://www.dictionary.com/browse/debt?adobe_mc=MCMID%3D242594943
35274820210782707502712756703%7CMCORGID%3DAA9D3B6A630E2C2A
0A495C40%2540AdobeOrg%7CTS%3D1703205150> (as of Dec. 29, 2023)
(“something that is owed or that one is bound to pay or perform for another:
a debt of $50”).)
      21   Section 2556 specifically addresses division of unadjudicated assets
and debts after a judgment of dissolution. In relevant part, it states, “In
these cases, the court shall equally divide the omitted or unadjudicated
community estate asset or liability, unless the court finds upon good cause
shown that the interests of justice require an unequal division of the asset or
liability.” There is no reason that this principle cannot apply to a debt that is
allocated as part of the dissolution where, because the debt was incurred in
part for community and in part separate purposes it would not be in the
interest of justice to divide it unequally.

                                        39
community business during the marriage and to pursue a counterclaim that
was his separate property. The court held that while the community was
responsible for the fees incurred to defend the claims against the former
family business, it was not responsible for the fees incurred to pursue the
husband’s separate property counterclaim. (Id. at pp. 694-695.) Ultimately,
the court declined to require the wife to reimburse the community for any of
the fees because the husband failed to meet his burden to establish the
amounts of the fees he incurred for each. (Id. at p. 695.)
      We need not address all circumstances under which an allocation of
debt between the community and the spouse who incurred it may be
appropriate. We hold only that where, as here, one spouse, expends an
extraordinary sum that is out of proportion to any community benefit for
purposes that are predominantly for his or her separate benefit, nothing in
Family Code section 2625 requires the court to order the other spouse to
share equally in that burden. Here, Doug, incurred a huge debt to defend
himself against criminal and civil enforcement actions in an effort to avoid
being convicted of serious crimes, being subjected to criminal fines, civil
penalties and a substantial prison sentence. Those consequences, which he
sought to avoid, were the product of criminal acts he knew he had engaged in,
and his expenditure of huge sums in an attempt to avoid the consequences
served primarily to benefit him, not Quin. Whatever temporary benefit the
community may have received from the crimes, the expenditure of more than
ten times that amount for attorney fees cannot logically be attributed simply
to avoiding repayment of the $935,000 in ill-gotten gains the community had
received. The court could infer that the primary reason Doug spent $9.4
million defending himself in the criminal and SEC actions was
predominantly to benefit himself, and there is uncontradicted evidence that,

                                       40
far from benefiting the community, Doug’s conduct had both monetary and
personal consequences that were exceedingly harmful to the community.
      While the trial court did not expressly address the statutory
interpretation question, it implicitly understood that the attorney fee issue
was not a binary one and ultimately arrived at the right conclusion. Rather
than treating the “benefit of the community” question as requiring a yes or no
answer, the court appreciated that neither Doug’s conduct, nor the monetary
and other consequences that flowed from it, on balance benefited the
community, and its allocation reflects that. It allocated the lion’s share of the
attorney fees, the $9.4 million Doug expended to defend himself in the
criminal action, to Doug as his separate obligation. It allocated a share of the
fees expended on the SEC action to the community. While its rationale for
that is not altogether clear, we affirm its allocation of $290,000 in fees to the
community for reasons we shall explain.
      As we have said, the answer to the question whether there was a
benefit to the community from Doug’s expenditure of $9.7 million to defend
the two actions is, “not for the most part,” and “on balance, no.” In this
situation, the statute permits the trial court to allocate the attorney fees
between the community and the spouse who incurred them in reasonable
proportion to the value of the community and separate benefits the fees were
expended to achieve.
      As we shall discuss further below, while the trial court did not clearly
articulate the rule we interpret section 2625 to embody, it effectively
allocated the attorney fee debt in a manner consistent with this opinion. But
before we explain why we so conclude and therefore affirm its allocation of
$290,000 in fees to the community, we turn to the case law and explain why

                                        41
it does not support the all-or-nothing result the parties suggest should apply
in this case.
      2. The Caselaw Does Not Change the Analysis.
      The parties cite several cases involving tort liabilities and debts, which
we will discuss. We focus first on the three California cases that have
addressed the allocation of financial responsibility for debts resulting from
one spouse’s criminal misconduct for purposes of property division upon
dissolution. (See Bell, supra, 49 Cal.App.4th 300; In re Beltran (1986)
183 Cal.App.3d 292 (Beltran); Stitt, supra, 147 Cal.App.3d 579.) Although
the cases differ somewhat in their analytical approaches, in two, the innocent
spouse was held to have no financial responsibility for the resulting losses.
(See Stitt, at pp. 582, 586-588 [wife who embezzled from employer held solely
responsible for attorney fees incurred in civil and criminal cases]; Beltran, at
pp. 293-295 [convicted child sex abuser held solely financially responsible for
military pension benefits the community forfeited due to his crimes].) The
third reached a split result, holding the community was responsible only for
repaying the victim for the ill-gotten gains to the community and not
responsible for any of the resulting legal fees, tax liabilities or penalties. (See
Bell, supra, at pp. 308-310 [where wife embezzled from her employer,
community held responsible only for repaying embezzled funds used to
benefit the community and wife held separately responsible for all legal fees
incurred to defend civil and criminal cases and for tax liabilities including tax
penalties].)

      In Stitt, the wife embezzled from her employer. Her obligation to repay
her employer for the embezzled funds was not at issue, apparently because
the statute governing liabilities of spouses, then Civil Code section 5122,
required the employer to look first to the wife’s separate property to satisfy

                                        42
that obligation and it had done so. (Stitt, supra, 147 Cal.App.3d at pp. 582,
583-584, 587-588.) The only issue was whether the wife had to reimburse the
husband for attorney fees paid using community assets to defend the wife in
the civil and criminal proceedings. (Id. at p. 586.) The court held the
attorney fee debts were separate debts of the embezzling wife for which her
the community was entitled to reimbursement. (Id. at p. 582.) It based its
conclusion on equitable principles, and a “legislative direction” it discerned
from section Civil Code 1714, subdivision (a),22 and subdivision (a) of former
section Civil Code 5122 (current Family Code section 1000)23 that the mere
fact of marriage should not change the usual rules of personal responsibility

      22 Civil Code section 1714, subdivision (a), provides in relevant part,
“(a) Everyone is responsible, not only for the result of his or her willful acts,
but also for an injury occasioned to another by his or her want of ordinary
care or skill in the management of his or her property or person, except so far
as the latter has, willfully or by want of ordinary care, brought the injury
upon himself or herself.”
      23  Former section 5122 provided in subdivision (a), “A married person
is not liable for any injury or damage caused by the other spouse except in
cases where he or she would be liable therefor if the marriage did not exist.”
(Former Civ. Code, § 5122; Stats. 1984, ch. 1671, § 11, p. 6023.) It then went
on in subdivision (b) to address the liabilities of spousal property to victims of
a spouse’s torts, requiring that if the liability was based on an act or omission
while the tortfeasor spouse “was performing an activity for the benefit of the
community,” it would first be satisfied from community property and second
from the separate property of the tortfeasor spouse, and that if the liability
was not based on such an act or omission it would be satisfied first from the
separate property of the tortfeasor spouse and second from the community.
(Id., subd. (b); see Stitt, supra, 147 Cal.App.3d at p. 587.) Family Code
section 1000 retains the same provisions. As the court in Stitt recognized,
although section 5122, subdivision (b), exposed the husband’s community
property to the tort liability, including apparently, the attorney fees, that
section was not determinative of the division of the debt as between the
spouses themselves. (See Stitt, at pp. 587-588.)

                                       43
for the consequences of criminal or tortious activity. (Stitt, at p. 588.) It
concluded, “No principle of law required the innocent spouse to share the loss
created by the other party. . . . Therefore it was proper for the court to make
orders which carried out the law’s intention that only responsible
participants in crime or tort bear the loss.” (Id. at p. 588.)
      In Beltran, an army colonel was convicted of lewd and lascivious acts on
a child, court-martialed for that crime, “dismissed from the Army and
stripped of all military benefits, including his pension and accrued leave.”
(Beltran, supra, 183 Cal.App.3d at p. 294.) The trial court found the portion
of the pension and the leave amounts that accrued during the marriage were
community property, charged the husband with constructive receipt of those
community assets and then “equalized” the community property by requiring
the husband to pay half of the combined amount ($59,230) to his wife. (Ibid.)
Relying on Stitt, it reasoned, “husband’s criminal conduct diminished the
wife’s share of the community property to which the wife was otherwise
entitled upon dissolution. [Citation.] In our view, wife should not be made in
effect to share in a penalty imposed upon husband for his criminal conduct.
We accordingly conclude as a matter of equity that criminal conduct on the
part of husband which directly caused forfeiture of pension benefits justified
the trial court’s conclusion that wife was entitled to reimbursement for her
share of such lost community property.” (Beltran, at p. 295.)
      Neither Stitt nor Beltran discussed or expressly applied the statutory
provisions governing characterization and division of debts on dissolution
that we have cited,24 because those provisions were not in effect at the time

      24 Stitt cited and discussed former section 5122 of the Civil Code, which
has been recodified as section 1000 of the Family Code. (Stats. 1992, ch. 162,
§ 10.) That section, as the court in Stitt recognized, “spells out the order in

                                        44
those cases were decided.25 Both applied equitable principles and principles
gleaned from other statutes. (Stitt, 147 Cal.App. 3d at p. 587-588; Beltran,
183 Cal.App.3d at p. 295.) In neither case was the spouse’s criminal conduct
shown to have benefited the community at all. And Beltran did not involve a
claim of reimbursement for attorney fees. For these reasons, neither Stitt nor
Beltran is dispositive.
      In Bell, the wife embezzled funds from her employer, was arrested and
subsequently convicted, and in the meanwhile was sued along with her
husband by her former employer to recover the embezzled funds. (Bell,

which creditors may satisfy tort claims from the property of the spouses, [but]
it does not forbid one spouse from later disclaiming responsibility for the tort
liability of the other in a dissolution proceeding.” (Stitt, supra,
147 Cal.App.3d at p. 588.) It also discussed former Civil Code section 5116,
which is a predecessor of current Family Code section 910. (Stitt, at p. 588.)
Section 910, on which Doug relies in his combined appellant’s reply and
cross-respondent’s brief, likewise addresses the liability of the community
estate for debts, not the rights of spouses as between themselves. (See Stitt,
at p. 588; § 910.)
      25  Family Code section 2623 (post-separation debts) was adopted in
1992 but “continues former Civil Code Section 4800(c)(3) without substantive
change.” (23 Cal.L.Rev. Comm. Reports 1 (1993), reprinted in West’s Ann.
Fam. Code (2023) foll. § 2623, p. 70.) Former section 4800, subdivision (c)(3),
was adopted in 1986. (See 1986 Stats., ch. 215, § 1, pp. 1145-1146.)
      Family Code section 2625 (pre-separation separate debts) “continues
former Civil Code Section 4800(d) without substantive change.”
(23 Cal.L.Rev. Comm. Reports 1 (1993), reprinted in West’s Ann. Fam. Code
(2023) foll. § 2625, p. 74.) Former section 4800, subdivision (d), also was
adopted in 1986. (See 1986 Stats., ch. 215, § 1, p. 1146.)
      Family Code section 2627 (educational loans, liabilities for death or
injury) “continues former Civil Code Section 4800(b)(5) without substantive
change” (23 Cal.L.Rev. Comm. Reports 1 (1993), reprinted in West’s Ann.
Fam. Code (2023) foll. § 2627, p. 80), which also was adopted in 1986. (See
1986 Stats., ch. 215, § 1, p. 1145.)

                                      45
supra, 49 Cal.App.4th at pp. 302-303.) The parties settled the civil suit for
$150,000. (Id. at p. 303.) The wife showed she had used the embezzled
money for community purposes, including investing in certificates of deposit,
depositing them in joint bank accounts and giving her husband a monthly
allowance and gifts. (Id. at pp. 303-304.) The husband knew nothing of the
embezzlement until she was arrested, and he and his wife subsequently
separated. (Id. at p. 303.)
      The trial court had held all the debts resulting from the embezzlement,
including the restitution-based settlement with her former employer, were
separate debts of the wife. (Bell, supra, 49 Cal.App.4th at p. 307.) It focused
on the fact that the wife had engaged in criminal, not merely tortious,
activity and that “ ‘in the long run . . . this didn’t benefit the community. It
destroyed it.’ ” (Id. at p. 306.)
      The Court of Appeal disagreed with the trial court that the $150,000
restitution-based settlement amount was the separate debt of the wife,
because there was “uncontradicted testimony that the community received
the benefit of the embezzlement” and “that all the embezzled funds had been
put to community, and not separate, use.” (Bell, supra, 49 Cal.App.4th at
p. 310.) The court concluded, “directing payment of the settlement by the
community would do no more than bring it back to where it had been.” (Ibid.)
      However, the appellate court in Bell reached a different conclusion
regarding “the attorney fees required for [the wife’s] defense in both the civil
and the criminal actions” and “the state and federal tax liability arising out of
the embezzlement, including interest and penalties.” (See Bell, supra,
49 Cal.App.4th at p. 309.) It affirmed the trial court’s characterization of
those obligations as the wife’s separate debts, reasoning that she had
“engaged in intentional tortious and criminal activity and knowingly accepted

                                        46
the risk that she would be caught and would have to face the consequences”
and that “Husband, who knew nothing of the risk and could do nothing to
avoid it, should not in fairness bear the same burden once it did go wrong.”
(Ibid.) In so holding, it relied in part on Stitt. (Ibid.)
      Bell is consistent with the statutes governing division of debts in that it
did not treat all the financial consequences of the wife’s crime as a single
debt. Instead, it evaluated each obligation separately. Because there was no
evidence that the funds the wife had embezzled were used for anything other
than the benefit of the community, it reversed the trial court’s
characterization of the debt for repayment of those funds (i.e., the civil
settlement) and held the debt was a community obligation. It in essence
affirmed the trial court’s conclusion that because wife’s embezzlement overall
did not benefit, but destroyed, the community, the expenditures for attorney
and accounting fees in defense of the civil or criminal actions and the state
and federal tax liability imposed on the wife in the criminal case should be
treated as wife’s separate debts.
      In this case, we have applied section 2625 and, as the court did in Bell,
evaluated the different debts and obligations incurred because of Doug’s
crime separately, determining when each was incurred, and for those
incurred during the marriage, whether each such debt benefited the
community. Because Quin abandoned her contention the
forfeiture/disgorgement payment was Doug’s separate obligation, we do not
review the trial court’s findings on that issue. (See p. 24 & fn. 10, ante.)
However, we note that much as in Bell, the trial court here did not find that
the community was benefited significantly from the attorney fees incurred in
either the criminal action or the civil enforcement action or by the criminal
fine or civil penalties judgment. In that respect, Bell supports Quin’s

                                         47
argument and undermines Doug’s. The only difference between this case and
Bell is that here, the trial court implicitly found the attorneys’ fees conferred
some benefit on the community, albeit a limited one, because they were
incurred in part to defend the community from liability for the ill-gotten
gains the community received as a result of Doug’s acts. In light of that, we
will not reverse its allocation of a proportionate share of the fees ($290,000)
to the community. But for the reasons we have discussed in Part II.C.1 of
this opinion, we do not interpret the statute to preclude allocation of the
lion’s share of the fees to Doug where outsized fees he incurred were
predominantly for his own personal benefit.
      Doug relies on Hirsch, supra, 211 Cal.App.3d 104, which criticized Stitt
(Hirsch, at p. 110), and on Nassimi, supra, 3 Cal.App.5th 667. He contends
they stand for the proposition that if the criminal activity “substantially
benefited the community,” then “attorney’s fees and costs incurred in defense
are a community obligation.”
      In Hirsch, the parties had separated and the trial court had entered an
interlocutory decree of divorce when the husband was sued for conduct
arising from his service, during the marriage, on the board of a bank which
had subsequently collapsed. (Hirsch, supra, 211 Cal.App.3d at p. 106.) The
suits alleged violations of statute, breach of contract, negligence and
intentional misconduct. (Ibid.) The husband settled all three suits and then
sought an order in the dissolution case to characterize the settlement
amounts he had paid and the defense costs he had incurred as community
property and to reimburse him for half those amounts. (Ibid.) The trial court
ruled the liabilities were husband’s separate responsibility because his
conduct had been tortious. (Id. at p. 108.) The Court of Appeal reversed,
concluding the evidence showed the husband’s conduct benefited the

                                       48
community and his exposure to liability arose out of his actions as a director
which took place for the most part during the parties’ marriage. (Id. at
p. 111.) There was no evidence that his service on the board was to protect
his separate property or to further any other separate property interests.
(Ibid.)
      Hirsch did not treat the liability and the attorney fee obligations as
separate debts or analyze each accordingly, and to that extent we disagree
with its approach. However, we do not quarrel with the result in that case
because there, unlike here, the defense of the litigation was not undertaken
to advance any non-community interests. Hirsch did not address the
question we address here, in which the defendant engages in criminal
conduct that entails huge risk of harming the community and incurs fees
disproportionate to any potential community benefit to protect himself from
punitive repercussions for which he alone is responsible. Indeed, as Hirsh
recognized, “intentional torts and crimes rarely benefit the community.”
(Hirsch, supra, 211 Cal.App.3d at p. 110, fn. 8.)
      Likewise, Doug cites Nassimi, supra, 3 Cal.App.5th 667. In that case,
the husband allegedly defrauded a third party to buy the family business by
concealing the fact that its products did not comply with federal regulations.
(Id. at pp. 672-673, 676, 693 & fn. 37.) After the parties separated, the buyer
sued the husband for breach of contract and misrepresentation, seeking to
rescind the transaction, and the husband eventually settled the case. (Id. at
pp. 676, 677.) A rescission would have meant the community had to repay as
much as much as $16 million it had already gained in proceeds from the sale,
and the husband had spent about $1.1 million on attorney fees and costs and
reached a settlement of $2 million. (See id. at 672-673, 679-680.) Nassimi
held both the settlement payment and the husband’s attorney fees were a

                                       49
community debt because the underlying sale of the business had yielded
millions of dollars in profit to the community, which was a benefit to the
community. (See id. at pp. 684-687, 693-694.) Nassimi cited Hirsh for the
proposition that “separated spouses are obliged to share in the costs of
defending lawsuits threatening community assets.” (Nassimi, at p. 686.) As
a general proposition, we do not disagree, but insofar as Doug reads it as
advancing a categorical rule that if there is any community benefit there
must be an equal division of the spouses’ obligations, no matter how excessive
in relation to that benefit, Nassimi no more supports that proposition than
Hirsch. Neither involved a situation like this case and Bell, in which the
spouse engaged in criminal conduct with a risk of negative repercussions for
the community that far outweighed any potential benefit, from either the
conduct itself or, in this case, from the expenditure of outsized attorney fees
that served, primarily, the interests of that spouse alone.
      In short, none of the case law changes our analysis.
      3. The Trial Court Exercised Its Discretion in This Case.
      While the trial court did not clearly explicate the rules it was applying
in allocating the attorney fees and costs, it considered the relevant factors
and exercised discretion in an appropriate way by allocating none of the
criminal fees, and a relatively small portion of the fees spent on the SEC
enforcement action, to the community.
      The portion of the SEC enforcement-action fees the trial court allocated
to the community were those Doug had demonstrated were “expended on the
SEC action separate and apart from the criminal action.” It prefaced that by
interpreting Nassimi to “suggest[] that it would be appropriate for the
community to share in the attorney’s fees and costs for defending the SEC
action.” (Italics added.) It had already determined that the criminal conduct

                                       50
had benefited the community in the amount of $935,000, the ill-gotten gains
Doug was later required to disgorge. It recognized that in “attributing ‘tens
of millions of dollars’ of community benefit to his conduct” Doug had “vastly
overstate[d] the benefit to the community of the criminal conduct that he
asks the community to share in the cost of defending” and reiterated “[t]hat
benefit was determined to be $935,306.”
      The trial court also found that in defending against the criminal and
civil actions, Doug spent $9.7 million. It implicitly recognized this was
grossly out of proportion to any tangible benefit the community derived.
Although the court did not expressly so find, the record also reflected that
Doug alone controlled the Whitman entities and the parties’ interests in them
and he alone chose to spend $9.7 million to defend the two actions. Based on
the facts, the court concluded it was appropriate for the community to “share”
in the defense costs of the SEC action in the amount of $290,000. Ultimately,
the trial court exercised its discretion in a manner consistent with this
opinion by allocating an amount of attorney fees and costs that was
proportionate to the limited community benefit at stake in that litigation.
      For the foregoing reasons, we affirm the trial court’s characterization of
the debts incurred as a result of Doug’s criminal conduct, except to the extent
the trial court characterized the SEC penalty as a community obligation.
Like the criminal fine, that penalty was incurred after the parties separated,
it was not to repay any obligation of the community, and it is Doug’s sole
obligation to bear.
                                   III.
                Attorney Fees Incurred by the Hedge Fund
      After the hedge fund intervened below, Doug used approximately $1.3
million of his own separate property to pay its legal fees and then sought

                                       51
reimbursement of them as a community expense. Over Quin’s objection, the
trial court ordered Quin to reimburse Doug for half of that amount
($640,996.18).
      Quin now challenges that ruling on two grounds. She argues the court
erred because it applied the wrong legal standard. She also argues the court
erroneously failed to rule on her request for an accounting of all of the hedge
fund’s legal fees. Quin’s arguments are not very focused, and we conclude she
has not demonstrated the court erred.
      A. Background
      In April 2012, about 11 days after Doug was served with the petition
for legal separation, Quin sought an order for an accounting of all community
funds spent by Doug and freezing all community assets including those of
Whitman Capital and Whitman Partners. She testified she did this in order
to gain transparency over the legal expenses that were being incurred by
those entities for Doug’s defense of insider trading charges, because Doug
was being secretive about it. Doug was concerned this would prevent the
hedge fund from making any distributions to limited partners. The matter
was resolved by stipulation in June 2012, permitting the hedge fund to pay
its regular operating expenses and legal fees relating to the criminal and
SEC actions, and giving Quin access to some financial information concerning
the hedge fund (audits and monthly statements).
      Quin then issued subpoenas to numerous financial institutions with
whom the fund had business relationships, including trading partners, its
prime broker, investment banks and the fund’s independent accounting
auditor.
      In April 2013, Quin filed a request asking for the appointment of a
receiver to take over the fund and either wind it down or freeze all business

                                       52
accounts, premised on claims Doug had breached his fiduciary duty. Doug
testified about the consequences this would have had on the business,
including preventing distributions to investors, severing the fund’s banking
relationship, and triggering investor lawsuits. He also testified that the
appointment of a receiver would be expensive, and that liquidating the fund
would have forgone lucrative profits and also would have triggered about $15
million in immediate tax consequences for him and Quin.
      Doug felt Quin’s actions were damaging the fund. In addition to her
request for a receiver, he was concerned that her subpoenas were impairing
the privacy rights of the fund’s investors (by seeking information about their
identities) and also “destroying” the fund’s business relationships. So he
decided the partnership should intervene.
      On June 11, 2012, it was granted leave to do so, and sought declaratory
relief touching on a wide range of issues relating to discovery Quin was
attempting to undertake in the case (including from the hedge fund itself),
the appointment of a receiver, the confidentiality of its investors’ identities
and investment activity, and corporate governance issues.
      The fund participated extensively in the proceedings. It opposed Quin’s
attempts to freeze or wind down the business, and the trial court found it was
successful in that regard.26 It also attempted to limit Quin’s efforts to

      26 In September 2014, the court deferred a ruling on Quin’s request for
a receiver and instead appointed two independent monitors to oversee all of
the fund’s business operations. The monitors had full and complete access to
the fund’s business records and were required to submit monthly reports
concerning all of its expenses, activities and dealings, accompanied by a
voluminous and exhaustive set of supporting documentation and detail, down
to the very last trade confirmation. They were charged with reporting any
irregularities, financial discrepancies or concerns about the fund’s operations,
and they also had to approve any payments or transactions not in the

                                       53
procure discovery, which the trial court found was a major focus of litigation.
The court found that the discovery battles were not one-sided, and that
although the fund’s motions to quash Quin’s subpoenas to various financial
institutions were denied, the fund succeeded in securing protective orders in
connection with the subpoenas, and “[n]either party appears to have achieved
unqualified success in their discovery litigation.” The court also found the
fund took reasonable measures to protect the privacy rights of its limited
partners, and that Quin’s opposition to those measures was “excessive.” In
addition, the fund joined sides with Doug to litigate other issues that had
little, if anything, to do with protecting its legitimate business interests.27
      Beginning in December 2013, Doug began using his own separate funds
to pay the fund’s operating expenses because the fund’s cash had been
depleted. As noted, he then sought reimbursement for $1.2 million in legal
fees he paid relating to the fund’s intervention in the case, on the ground they
were used to preserve a community asset and were reasonable and necessary.
Quin asked for an accounting of all of the fund’s legal fees and for an order
requiring them to be reimbursed to the community. The trial court granted
Doug’s request and ordered Quin to reimburse him 50 percent of the fees he
paid from his separate property funds ($640,996.18). It denied Quin’s request
for an accounting.

ordinary course of business, which included any payment of attorney fees or
costs and any distributions to Doug. The fund later filed a motion to
terminate the monitors, but it was denied. After the monitors were
appointed, Quin still sought to have a receiver appointed to wind the
business, which ultimately did not happen.
      27 Most notably, for example, the trial court found it actively opposed
Quin’s efforts to shift responsibility for its own legal fees to Doug. Other
examples are detailed in Quin’s briefing.

                                        54
      B. Doug’s Request for Reimbursement
      Quin argues, first, that the court applied the wrong legal standard in
ruling on Doug’s reimbursement request. She contends it applied the rule
governing reimbursements to the community rather than the rule governing
reimbursements to a paying spouse. She argues that in ruling on Doug’s
request to be reimbursed, the court should have, but did not, consider
whether Doug proved that the fund’s intervention benefitted the community.
In support of this contention, she relies on a portion of the statement of
decision in which the trial court stated that the evidence did not “support[]
[Quin’s] allegation that the [fund’s] attorney’s fees were incurred for [Doug’s]
personal benefit nor that they represent waste in the management of a
community asset.”
      We are not unsympathetic to Quin’s fundamental point, which is that
she was forced to finance the legal expenses of an entity that was aligned to a
very large degree with her husband in these divorce proceedings, and joined
with him to engage in expensive litigation against her. Nevertheless, Quin
has not presented an intelligible legal argument for reversal.
      In the first place, we agree with Doug who asserts that Quin misreads
the trial court’s decision. As Doug points out, the trial court made specific
factual findings that the fund’s intervention and litigation activities were
necessitated in part by Quin’s attempts to liquidate and wind it down, which
threatened the very existence of that income-producing community asset.
Under the principles discussed in connection with the court’s findings about
the $900,000 withdrawal, here again we must liberally construe the court’s
factual findings to support the judgment, and also infer the court made every
factual finding necessary to support its decision. (Ciprari, supra,
32 Cal.App.5th 83, 94; Gajanan Inc. v. City and County of San Francisco,

                                       55
supra, 77 Cal.App.5th 780, 792.) In light of these other findings about the
necessity of intervention to keep the fund alive and operable, the portion of
the statement of decision that Quin attacks—i.e., the court’s observation that
she failed to prove that the legal fees were incurred for Doug’s personal
benefit—is at best ambiguous. But Quin did not object to the statement of
decision. Therefore, here again, we must resolve all ambiguities in favor of
the court’s judgment. (See Arceneaux, supra, 51 Cal.3d 1130, 1136; Code Civ.
Proc., § 634). Doing so, we interpret the decision as encompassing a finding
that the legal fees were incurred for the community’s benefit and that Quin’s
evidence simply did not persuade the court to conclude otherwise. Under the
principles governing our review of a judgment based on a statement of
decision issued after a bench trial, Doug’s assertion the court found the fund’s
legal fees “benefitted the community rather than Doug personally” is correct.
That finding refutes Quin’s argument that the court misapplied the law in
this regard.28
      Second, Quin’s argument that the court should have “requir[ed] Doug
to prove the expenses he voluntarily paid were incurred for the benefit of the

      28 For the same reason, we also reject Quin’s argument that the court
erroneously granted Doug’s request for reimbursement under “the rule in In
re Marriage of Czapar (1991) 232 Cal.App.3d 1308, 1318, that courts may
order reimbursement to the community when a spouse who has management
of a community asset abuses his right of management and control.” Indeed,
in context it appears the court’s observation pertained to Quin’s separate
request that the community be reimbursed for all legal fees and costs the
fund had incurred since November 15, 2017. Citing the standard applied in
Czapar, the court found that those legal fees were not incurred for Doug’s
personal benefit nor represented waste in the management of a community
asset, thereby denying Quin’s request for Doug to reimburse the community.
That ruling in no way infects with error the court’s adjudication of Doug’s
request for reimbursement from the community.

                                      56
community” is new. Doug does not dispute that the applicable legal standard
entails proof of a community benefit. But nothing in the record indicates that
Quin asserted it was Doug’s burden to prove that, rather than her burden to
disprove it. Nowhere in her closing trial briefs or new trial motion did she say
this. In fact, her trial court papers addressing this issue do not contain any
discussion of the law governing reimbursement claims. For the most part
(other than ancillary legal points), her trial court papers just argued the
facts.29 The court cannot be faulted for allegedly misapplying the law when
the law was not brought to its attention. (See Johnson v. Greenelsh (2009)
47 Cal.4th 598, 603 [“ ‘issues not raised in the trial court cannot be raised for
the first time on appeal’ ”]; cf. California Building Industry Association v.
State Water Resources Control Board (2018) 4 Cal.5th 1032, 1050 [burden of
proof issue forfeited].) “ ‘Bait and switch on appeal not only subjects the
parties to avoidable expense, but also wreaks havoc on a judicial system too
burdened to retry cases on theories that could have been raised earlier.’ ”
(Green v. Healthcare Services, Inc. (2021) 68 Cal.App.5th 407, 419.)
      C.    Quin’s Request for an Accounting
      Next, Quin argues the court failed in its statement of decision to rule
on her request for an accounting of the fund’s post-separation legal fees and
requests a remand for the court to decide that issue. We agree with Doug
that this contention is forfeited because she did not file any objections to the

      29 Below, Doug cited no law in support of his request for
reimbursement of these expenses, and Quin just argued the equities. The
same was true in her motion for a new trial, where she argued only that it
was “inherently unfair” to require her to pay those legal fees. And Doug cited
no law in opposition to that aspect of her new trial motion.

                                       57
statement of decision or move for a new trial on that basis. When a party
fails to bring a defect in the statement of decision to the trial court’s
attention, we infer that the trial court resolved the issue in favor of the
prevailing party. (See, e.g., Uzyel v. Kadisha (2010) 188 Cal.App.4th 866,
896-897.) “It is clearly unproductive to deprive a trial court of the
opportunity to correct . . . a purported defect by allowing a litigant to raise
the claimed error for the first time on appeal.” (Arceneaux, supra, 51 Cal.3d
at p. 1138.)
      In addition, the court did address her request for an accounting. The
court expressly denied the request, albeit without analysis. In her reply
brief, Quin acknowledges this, stating that “[a]lthough the court denied [her]
request for an accounting, it made no factual and legal findings on the issue.”
She then pivots and argues instead that the court failed to provide a legally
sufficient statement of decision on this issue. But that contention is twice
forfeited: both because she never raised this asserted deficiency in the trial
court and because the argument belonged in her opening brief. 30 (See
Herrera v. Doctors Medical Center of Modesto (2021) 67 Cal.App.5th 538, 548
[“ ‘It is elementary that points raised for the first time in a reply brief are not
considered by the court’ ”].)

      30 Her contention in the reply brief that she brought the deficiency to
the court’s attention simply by moving for a new trial is not well-taken.
Although her new trial motion addressed Doug’s claim to be reimbursed for
the fund’s legal fees, it did not raise any issue about the sufficiency of the
statement of decision concerning that or any other issue.

                                        58
                                       IV.
                         Sale of the Faxon Property
      A.    Background
      In November 2012, the parties stipulated to work together to sell their
high-end, luxury home on Faxon Road in Atherton, California (“Faxon”)
“forthwith.” They signed a listing agreement on May 15, 2013, listing it for
sale at a price of $25 million, and Quin concedes that, although she thought
that listing price was too high, she “initially chose to go along with” it. The
home ultimately sold about three years later in February 2016 for $16.5
million.
      There was a tremendous amount of litigation over the sale of Faxon,
and the asking price was reduced several times. After several months of
marketing the property at $25 million, the original listing agent
recommended dropping the price to $20.1 million. Doug declined, because he
disagreed with the agent’s assessment the property had been adequately
advertised in foreign markets. When the property was listed at $25 million,
the couple received two offers for $18 million, one of which was increased to
$18.75 million in February 2014, and neither of which was accepted.31 Quin
testified she wanted to accept the $18.75 million offer but Doug refused. But
she also vaguely recalled that her lawyer at the time wanted her to counter
it. By then, Quin had secured an appraisal valuing the property at $18.5
million.
      The initial listing agreement had expired the previous November,
however, and so in March 2014, the court appointed two co-listing agents who

      31 Quin sought an order requiring the parties to accept an $18 million
offer which the court denied.

                                       59
were to “determine the appropriate listing price” together (otherwise, the
court would do so). The court-appointed agents set the price at $22 million.
After a few months of receiving no offers, they recommended lowering the
price to $19.8 million (in July 2014). Quin agreed but Doug refused.
      Finally, at Quin’s request, the court appointed a receiver in
February 2015 with full authority over the sale, including sole authority to
determine its asking price. The receiver’s agent listed the property in
April 2015 for $20.7 million. He later turned down (and countered) several
offers in the $16 to $17 million range, before ultimately accepting the $16.5
million offer.
      Below, Quin asserted that Doug breached his fiduciary duty to her by
delaying and hindering the sale of Faxon, including by insisting on an
inflated asking price and by refusing to accept reasonable offers on the
property. The trial court rejected her claim in an eight-page portion of its
statement of decision. The court found that Doug “steadfastly rebuffed every
recommendation of real estate agents to lower the list price,” made no
findings about what a reasonable price would have been (and when), found
that “both parties participated in an amount of litigation over [the] sale of
Faxon that the Court finds excessive” (italics added), and found that Doug’s
conduct did not breach his fiduciary duty. She now appeals, arguing that the
undisputed evidence establishes that he did, by refusing reasonable offers on
the property and insisting on an inflated asking price against brokers’
recommendations, all of which resulted in a $2.25 million loss (measured,
presumably, by the highest offer that was not accepted, i.e., $18.75 million)
plus two years of property taxes and other expenses.

                                       60
      B. Standard of Review
      Our standard of review is more stringent than either party
acknowledges. Quin argues we must review this question de novo because
the facts are undisputed, and Doug asserts it is a substantial evidence
question. But Quin bore the burden of proving this claim below, and in
substance the trial court determined she did not prove it. So now on appeal,
the question is whether the evidence as a matter of law compels a finding
that Doug breached his fiduciary duty. (Sonic Manufacturing, supra,
196 Cal.App.4th 456, 466.) This standard requires us to evaluate not only
whether Quin’s evidence was “ ‘ “uncontradicted and unimpeached” ’ ” but
also “ ‘ “of such a character and weight as to leave no room for a judicial
determination that it was insufficient to support a finding” ’ ” in her favor.
(Ibid.) Quin has not demonstrated that it is.
      C.    Analysis
      Spouses owe each other “a duty of the highest good faith and fair
dealing” and may not “take any unfair advantage of the other.” (§ 721,
subd. (b).) But mere negligence in the management of a community asset is
not a breach of a spouse’s fiduciary duty. To establish a breach of fiduciary
duty in the management of a community asset, a spouse’s improvident
decision(s) must be “grossly negligent,” “reckless,” “intentional,” “or a
knowing violation of law.” (Corp. Code, § 16404, subd. (c), incorporated by
Fam. Code, § 721, subd. (b); In re Marriage of Kamgar (2017) 18 Cal.App.5th
136, 149.) “[A] spouse’s ‘bad business judgment’ in making [community
property] investments, to the extent it amounts only to ordinary negligence, is
not a breach of fiduciary duty; and the managing spouse, in such
circumstances, cannot be held responsible to the other spouse for [a decision]
that (by hindsight) has gone bad.” (Hogoboom & King, supra, ¶ 8.606.2.)

                                       61
      Quin has not demonstrated the evidence compelled a finding that
Doug’s actions concerning the sale of the Faxon home were grossly negligent,
reckless or even worse (“intentional”).
      To begin, her arguments fail to consider our standard of review. (See
In re I.B. (2020) 53 Cal.App.5th 133, 156 [summarily rejecting appellate
argument for similar reasons].) “ ‘Arguments should be tailored according to
the applicable standard of appellate review,’ ” and the “[f]ailure to
acknowledge the proper scope of review is a concession of a lack of merit.”
(Sonic Manufacturing, supra, 196 Cal.App.4th at p. 465.) Quin has not
attempted to explain why her evidence was not just uncontradicted but also
of such a character that it compelled a finding Doug breached his fiduciary
duty. It was her burden, and on appeal we must “ ‘ “consider the evidence in
the light most favorable to the prevailing party, drawing all reasonable
inferences in support of the findings.” ’ ” (Gola v. University of San Francisco
(2023) 90 Cal.App.5th 548, 557.) We also are not required to credit a
witness’s testimony on appeal simply because it is undisputed. “ ‘[S]o long as
the trier of fact does not act arbitrarily and has a rational ground for doing
so, it may reject the testimony of a witness even though the witness is
uncontradicted. [Citations.] Consequently, the testimony of a witness which
has been rejected by the trier of fact cannot be credited on appeal unless, in
view of the whole record, it is clear, positive, and of such a nature that it
cannot rationally be disbelieved.’ ” (In re Marriage of Grimes & Mou (2020)
45 Cal.App.5th 406, 422.) Her arguments do not heed these principles.
      Even if we considered her argument on the merits, we would reject it.
The evidence at most suggests that had Doug not refused the $18.75 million
offer the parties’ home would have sold for that price, whereas ultimately,
several years later, it sold for $2.25 million less. But Quin has not

                                          62
demonstrated that Doug’s refusal of the $18.75 million offer in early 2014,
while in hindsight a poor decision, was grossly negligent. Although there is
evidence Quin herself wanted to accept the $18.75 million offer, Doug was not
the only one who thought it was too low. The trial court could reasonably
infer that even Quin’s own counsel at the time thought so too, as evidenced by
Quin’s recollection that her lawyer at the time thought she should counter the
offer. Furthermore, despite the fact that Quin herself had an appraisal
valuing the property at $18.75 million, both the court-appointed co-realtors
and, later, the court-appointed receiver, listed the property for sale at prices
considerably higher after the $18.75 million offer had been made ($22 million
and $20.7 million, respectively), from which it can be reasonably inferred that
they too believed the home could potentially fetch a higher price. And there
was testimony that the co-listing agents had been willing to list it for even
more, $22.9 million. This record does not compel a finding that Doug’s
refusal to accept $18.75 million was grossly negligent.
      Nor has Quin demonstrated that Doug’s refusal to lower the asking
price was grossly negligent. As noted, Quin initially agreed with the
$25 million asking price. And when Doug declined the initial listing agent’s
recommendation to lower it a few months later, he did not refuse arbitrarily.
Rather, he gave a facially reasonable explanation which was a concern with
the adequacy of advertising in foreign markets. Quin has not shown that his
concern was a pretext, or grossly unjustified given the marketing efforts that
had been undertaken to date. And although it is undisputed Doug later
would not agree to drop the price further from $22 million to $19.8 million
when the co-listing agents recommended it, here again, he provided a lengthy
written explanation of his reasons, supported by a detailed analysis of the
comparable sales data and other market information. The specifics are

                                       63
immaterial; Quin hasn’t demonstrated his reasons were grossly unjustified or
arbitrary. In addition, the court-appointed receiver subsequently listed the
property above the $19.8 million reduced price they recommended (as noted,
at $20.7 million). We agree with Doug that, at best, rational minds could and
did differ about how to price the property, with Doug (and initially Quin)
favoring an aggressive asking price. Quin’s own chosen listing agent testified
that pricing real estate “isn’t an exact science. One never knows.” Nothing
that Quin has cited or discussed establishes as matter of law that Doug’s
actions were grossly negligent (or worse). In her opening brief, she does she
does not even contend otherwise.32
      Finally, Doug’s expert testified the home’s value was depressed by the
rancorous litigation involved in selling it. And the trial court laid equal
blame for that on Quin. It found that “both parties generated an
extraordinary amount of litigation regarding all aspects of the sale” and the
litigation they each engaged in was “excessive.” Quin does not challenge that
finding on appeal. We thus agree with Doug the court could reasonably infer

      32 In her reply brief for the first time she asserts, without citing any
legal authority, that his actions “constituted gross negligence” because the
real estate market was “ ‘incredibly fast,’ ” where the median number of days
on the market was 50 days. The contention has been forfeited because it was
not made in Quin’s opening brief. (See Dameron Hospital Assn. v. AAA
Northern California, Nevada & Utah Ins. Exchange (2022) 77 Cal.App.5th
971, 997; Herrera v. Doctors Medical Center of Modesto, supra,
67 Cal.App.5th at p. 548 [“ ‘It is elementary that points raised for the first
time in a reply brief are not considered by the court’ ”].) It also is forfeited
because it is unsupported by any legal authority and analysis of “gross”
versus ordinary negligence. We may and do disregard conclusory points such
as this because it is an appellant’s burden to supply a cogent legal argument
supported by legal authority. (See Doe v. McLaughlin (2022) 83 Cal.App.5th
640, 654; United Grand Corp. v. Malibu Hillbillies, LLC (2019)
36 Cal.App.5th 142, 153.)

                                       64
that the depressed sales price resulted from the parties’ combined inability to
work together without court intervention, not Doug’s unilateral
intransigence.
      Neither of the two cases Quin cites compel reversal. In re Marriage of
Kochan (2011) 193 Cal.App.4th 420 held that substantial evidence supported
a determination that a husband breached his fiduciary duty by failing to pay
the mortgage on the parties’ home, and by deliberately refusing to put the
home on the market for sale during a period in which he had exclusive use
and occupancy of the home and a restraining order barred wife from the
home while he was present. (Id. at pp. 431-433.) On appeal, the husband
only challenged three specific, subsidiary trial court findings as unsupported
by the evidence, but did not argue that the findings, if supported by
substantial evidence, were legally insufficient to constitute a breach of his
fiduciary duty and so that question was not at issue. (See id. at pp. 431-432.)
Without any discussion of the law concerning marital fiduciary duties, the
appellate court rejected his sufficiency of the evidence challenges and
concluded, “the evidence establishes that [husband] just did not want to take
any responsibility, or exert any effort, to preserve the value of the residence
through a sale.” (Id. at p. 433.) The facts of Kochan are entirely dissimilar;
the legal sufficiency of the court’s findings was not at issue in that case. And
critically, unlike in Kochan, the question here is not whether there is
substantial evidence that would have supported a finding in Quin’s favor but
whether her evidence compelled that determination.
      In re Marriage of Hokanson (1998) 68 Cal.App.4th 987 (Hokanson) is
irrelevant for similar reasons, chiefly because it also does not address the
sufficiency of the evidence to compel a finding of spousal breach of fiduciary
duty. The appeal arose from a trial court’s determination that a wife’s

                                       65
dilatory conduct in the sale of the marital home breached her fiduciary duty
(again, under different circumstances than here), but the principal issues had
nothing to do with the wife’s conduct.33 In a footnote, Hokanson also rejected
a “conclusory” argument by the wife about her conduct: it summarily upheld
the court’s finding she breached her fiduciary duty in the sale of the home
despite no proof she ever prevented the broker from also communicating with
her husband. In holding that no such proof was required it reasoned that,
under the law, she herself had a fiduciary duty to cooperate in the sale of the
home, and it also noted there was “ample evidence in the record that she
delayed the sale and failed to communicate information to [husband].” (Id. at
p. 992, fn. 3.) The lack of any analysis on the latter point renders it of little
utility. More to the point, Hokanson is distinguishable, principally because
the finding of breach of fiduciary duty was premised on the wife’s failure to
list the home for sale sooner (in January 1995), not her refusal to lower the
listing price, although she did indeed refuse. (See id. at pp. 990, 991.) Above
all, like Kochan, Hokanson does not address whether the evidence in that
case compelled a finding of breach of fiduciary duty, only whether it was
sufficient.
      In sum, the trial court did not err in rejecting Quin’s claim for breach of
fiduciary duty.

      33 The main issues were the prevailing husband’s contentions he was
improperly denied an award of attorney fees (Hokanson, supra,
68 Cal.App.4th at p. 992), substantial evidence did not support the court’s
finding about the price at which the house would have sold had it been listed
sooner (id. at p. 994; see also id. at p. 990), a claimed error in the calculation
of husband’s damages (id. at pp. 994-995), and wife’s challenge to the
admission of expert valuation evidence (see id. at p. 995).

                                        66
                                DISPOSITION
      The judgment is reversed insofar as it characterizes the penalty
assessed in the SEC action as a community obligation, and the matter is
remanded with instructions to characterize the penalty as Doug’s separate
obligation and to re-calculate the parties’ respective financial obligations
accordingly. In all other respects the judgment is affirmed.

                                       67
                                         STEWART, P.J.

We concur.

MILLER, J.

MARKMAN, J. *

Whitman v. Whitman (A157055)

     * Judge of the Alameda Superior Court assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

                                    68
Trial Court: San Mateo County Superior Court

Trial Judge: Hon. Elizabeth M. Hill

Counsel:

McManis Faulkner, James McManis, William Faulkner, Brandon Rose, and
Beverly Bergstrom, for Appellant Quin Whitman.

California Appellate Law Group, Complex Appellate Litigation Group,
Charles Kagay, Robert A. Roth, and Kelly A. Woodruff, for Appellant
Douglas F. Whitman.

                                      69