Court Opinion

ID: 4854992
Source: CourtListenerOpinion
Date Created: 2021-08-24 18:03:09.668282+00
Date Added: 2024-06-11T08:11:48.551972
License: Public Domain

Filed 8/23/21 Marriage of Daneman CA1/5
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                  DIVISION FIVE

 In re the Marriage of DEBORAH
 and ALEX G. DANEMAN.

 DEBORAH DANEMAN,
           Respondent,                                                  A159773
 v.
                                                                        (Marin County
 ALEX G. DANEMAN,
                                                                        Super. Ct. No. FL 000821)
           Appellant.

         Appellant Alex G. Daneman (Husband) appeals from a January 2020
spousal support order in favor of respondent Deborah Daneman (Wife). We
affirm the trial court’s order.
                                                   BACKGROUND
         Husband and Wife filed a stipulated judgment of dissolution in May
2011, which was accompanied by an attachment and a May 2006 marital
settlement agreement (MSA). According to the MSA, the parties were
married in 1977, and Wife filed the dissolution action in 1996.
         The MSA divided the marital property, and provided that Wife would
receive certain investment income from Husband and would not seek spousal
support from Husband unless he failed to make the investment income

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payments, if he bore responsibility for that failure. The attachment to the
2011 stipulated judgment specified that Husband would pay Wife $1,277 per
month. During 2019, Husband failed to make a number of the monthly
payments, and, in August 2019, Wife petitioned for an order of postjudgment
spousal support. Husband opposed the request, and the trial court conducted
an evidentiary hearing on January 2, 2020 that included testimony from
Husband, Wife, and an expert retained by Wife.
      On January 8, 2020, the trial court entered an order granting Wife’s
request for spousal support, ordering Husband to pay her $3,000 per month,
commencing in September 2019 “and continuing until Wife’s death or
remarriage, or further order of court, whichever shall first occur. In view of
the parties’ agreement in their stipulated judgment, spousal support shall
not terminate upon Husband’s death.” The trial court also concluded there
were arrearages of $11,493, plus interest, because Husband failed to pay Wife
the $1,277 a month owed to her in nine months in 2019. The court also
ordered Husband to pay Wife $7,500 for attorney’s fees.
      The present appeal followed.1
                                DISCUSSION
      On appeal, Husband challenges the duration and amount of the trial
court’s support order. We reject his claims.

      1According to Husband, in November 2020 the trial court entered a
contempt order against him due to his failure to comply with the trial court’s
support order. Husband challenges the entry of the order and the sentence
imposed by the court in two writ proceedings (A161532, A161937) that will be
decided separately.

                                       2
I.    Background
      A.    The Stipulated Judgment and MSA
      The attachment to the 2011 stipulated judgment stated that, since
execution of the MSA, “certain events have transpired which are the basis for
the additional terms set forth herein. Except as specifically modified here,
the terms of the MSA are incorporated herein.”
      The MSA contains provisions disposing of various marital assets,
including, as relevant on appeal, the proceeds from the sale of a home in
Tiburon held in trust at a title company. Paragraph 2.4 of the MSA requires
Husband to invest his share of those proceeds. Paragraph 2.4 further states,
“All of the investment income emanating from Husband’s investment of his
share of the house sale proceeds shall be distributed to Wife on a quarterly
basis after first deducting the projected federal and state income taxes
attributable to said investments . . . .”
      Paragraph 2.4 of the MSA also contains a provision specifically
addressing termination of the obligation, stating, “Should Wife predecease
Husband, all obligations with respect to the income distributions to [W]ife
under this paragraph 2.4 shall cease and be of no further effect. Should
Husband predecease Wife, the obligations under paragraph 2.4 shall continue
in full force and effect and shall be an obligation of Husband’s estate.” That
language is consistent with a prior general statement in the MSA that “The
objective of this Agreement is to maximize the income from the remaining
community assets for use by Wife during her lifetime in lieu of spousal
support from Husband.”
      Paragraph 3.2 of the MSA explains that the investment income is a
substitute for spousal support, stating, “It is the intention of the parties that
by reason of Husband’s agreement to share his investment income under the

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provisions of paragraph 2.4 for Wife’s life, spousal support will not be paid by
Husband to Wife. Only in the event that (a) Husband deliberately defaults
on the obligation to provide income or (b) the income from Husband’s share of
the investment income is not paid to Husband for reasons within his control
may Wife seek spousal support from Husband. The Court retains jurisdiction
to award spousal support under a proper showing by Wife in these limited
circumstances. Otherwise, Wife waives spousal support from Husband and
recognizes that she will not be able to seek spousal support at any future date
for any reasons other than the circumstances described in this paragraph.”
      The attachment to the 2011 stipulated judgment states that “[a]fter the
MSA was signed and proceeds from the sale of the Tiburon residence were
distributed, Husband used a portion of his share of the proceeds [from sale of
the parties’ home] to acquire a business, Hench Control Systems [HCIS]. . . .
Husband represents that his income averages about $4,000 per month at this
time.” The attachment also stated that Wife’s medical condition had
worsened and that she was living at “subsistence level only.” The attachment
to the stipulated judgment provides that Husband “will continue the monthly
payments of $1,277 per month to Wife so long as he is financially able to do
so. In addition he will on a voluntary basis provide whatever other
assistance he can.”
      B.    Evidence at the Contested Hearing and the Trial Court’s Ruling
      At the evidentiary hearing on January 2, 2020, Husband testified he
worked sixty hours a week and earned on average $400 per week from his
company, HCIS. He also received $2,400 per month in Social Security. He
testified that he had loaned HCIS around $300,000, and that the company
had not made a profit in recent years. Husband also presented somewhat
unclear testimony regarding his personal and real property assets, as well as

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his expenses. He was unable to explain certain significant discrepancies on
his income and expense statement and on corporate tax returns filed by
HCIS.
      Also at the January 2020 hearing, Wife presented expert testimony
from a forensic accountant, Richard Schiller. He testified, “It’s very difficult
to make any sense out of anything that [Husband] has said or that the tax
returns reflect. I believe that they are significantly incorrectly prepared.”
Importantly, Mr. Schiller testified that HCIS had improperly taken an
amortized deduction for $2 million in software that Husband testified the
company did not pay for. Mr. Schiller called the return “a completely
fabricated tax filing” and observed that the $2 million was being amortized
over a 15-year period. Deductions had already been taken for nine of the
years, leading Mr. Schiller to comment, “So, in effect, he’s under reported his
income taxes for the last nine years by $133,000.00.” The expert also
testified that business activity from HCIS before it was incorporated should
have been reflected on Husband’s 2017 individual tax returns, but was not.
Mr. Schiller testified the corporate tax returns reflected a deduction for
interest expenses even though Husband had testified the company had no
debts. The expert also referenced a “very questionable” $387,000 “earn out
payable.” He commented, “So, once again, what we’re seeing is that there’s
line items that don’t appear to make any sense.” On cross-examination,
Husband’s attorney elicited from Mr. Schiller that the HCIS tax returns
showed a negative taxable income, but he did not question the expert about
any of the irregularities the expert had identified. Neither did Husband offer
additional testimony or documentary evidence to explain any of the
irregularities.

                                        5
      Wife was the final witness at the evidentiary hearing. She testified
that, among other things, Husband was nine months in arrears on the $1,277
payments specified in the 2011 stipulated judgment and that she was
requesting $4,500 per month in support because that was the amount
necessary to cover her living expenses.
      On January 8, 2000, the trial court entered a written order granting
Wife’s request for spousal support. The main thrust of Husband’s opposition
to the request for spousal support had been that Wife was required to show a
material change of circumstances in order to obtain a support order (see
Marriage of West (2007) 152 Cal.App.4th 240, 246), and that Wife had not
shown that either of the conditions described in paragraph 3.2 of the MSA
had been satisfied. The trial court rejected those contentions, concluding
that, under the MSA, the relevant question was not whether there was a
change of circumstances but whether the circumstances described in the MSA
had occurred. Based on the evidence at the January 2 hearing, the trial court
concluded that both of those circumstances had occurred. That is, the court
concluded that Husband had deliberately defaulted on his obligation to pay
Wife his investment income and/or that the income had not been paid to him
for reasons within his control. The trial court observed that the stipulated
judgment contemplated that Husband would pay Wife from his return on his
HCIS investment, stating, “Although it was not specified in the stipulated
judgment, it is clear from the parties’ submissions that the $1,277 per month
figure relates to Wife’s share of Husband’s income from HCIS, Inc.,
Husband’s wholly owned corporation.” Appellant does not challenge any of
those findings on appeal.

                                       6
      In making the spousal support determination, the trial court
considered the 14 factors listed in Family Code section 4320.2 The court
noted that Wife’s financial resources were minimal: her health was
“deteriorating,” the parties agreed in 2011 that she “was living at a
‘subsistence level only,’ ” her only asset is her home, and she is unable to
work. On the other hand, the trial court found that Husband reported no
obligations and that “[h]e owns a community interest in a waterfront home in
Richmond, an 80’ yacht, two cars, and his corporation, HCIS, Inc. The value
of his holdings is unknown, because Husband has not been candid with Wife
or with this court.”
      On the subject of Husband’s income, the trial court found that his
testimony and his financial disclosure form “are not credible on the issue of
his finances.” The trial court relied in part on Mr. Schiller’s expert
testimony, explaining that the expert had testified the corporate “tax returns
were inconsistent with [Husband’s] sworn testimony. Husband testified that
he purchased the software for HCIS, Inc. for nothing. Nevertheless, he
carries it on his books at an acquisition value of $2,000,000. Mr. Schiller
testified that Husband cannot write off software that he has not paid for, and
therefore, Husband has been pocketing about $133,000 per year for the last
11 years in illegitimate write-offs.”
      In determining Husband’s income at the time of the January 2020
order, the trial court noted that the parties agreed his income was $4,000 per
month at the time of the 2011 stipulated judgment, and stated, “It is difficult
to know exactly how much income Husband enjoys at the present time, but
based on Mr. Schiller’s uncontradicted analysis, it appears to be at least

      2   All undesignated statutory references are to the Family Code.

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$15,750 per month ($133,000 + $56,000 = $189,000 ÷ 12 = $15,750),3 and that
income appears to be tax free.” The trial court also observed, “when, as in
this case, a spouse has committed perjury on his income and expense
declarations, the court may rely on other evidence to determine that party’s
income.”
        As noted previously, the trial court ultimately ordered Husband to pay
Wife $3,000 a month in spousal support—continuing until Wife’s death or
remarriage, or further order of the court—in addition to arrears and attorney
fees.
II.     Analysis
        On appeal, Husband does not contend the trial court erred in
concluding that, under the MSA, Wife is entitled to seek spousal support.
Neither does Husband contend the trial court erred in ordering him to pay
$11,493, plus interest, in arrearages and $7,500 for attorney’s fees. Instead,
Husband contends that the duration of the trial court’s support order violates
section 4337 and that the court abused its discretion in determining the
amount of the support order. Husband has not shown error.
        A.   Section 4337
        Section 4337 provides, “Except as otherwise agreed by the parties in
writing, the obligation of a party under an order for the support of the other
party terminates upon the death of either party or the remarriage of the
other party.” “Although a written agreement between the parties is required
to waive the provision of section 4337, ‘[n]o particular words are required.
[Citation.] On the other hand, silence will not do. [Citation.]’ ”
(In re Marriage of Martin (2019) 32 Cal.App.5th 1195, 1199.)

       It appears the trial court mistakenly stated $56,000 rather than
        3

$48,000, which is $4,000 times 12 months.

                                        8
      The trial court’s support order states, “In view of the parties’ agreement
in their stipulated judgment, spousal support shall not terminate upon
Husband’s death.” Husband argues the 2011 attachment and the 2006 MSA
do not contain an agreement to continue support after Husband’s death, so
the support order is in excess of the court’s authority. Contrary to Husband’s
contention, the MSA expressly sets forth the parties’ intent to provide for
Wife after Husband’s passing. Thus, paragraph 2.3 states, “The objective of
this Agreement is to maximize the income from the remaining community
assets for use by Wife during her lifetime in lieu of spousal support from
Husband.” And paragraph 2.4.d states, “Should Husband predecease Wife,
the obligations under paragraph 2.4 shall continue in full force and effect and
shall be an obligation of Husband’s estate.” It was reasonable for the trial
court to construe the spousal support order authorized by paragraph 3.2 as a
replacement for the investment income support provided for in paragraph
2.4. And nothing in the 2011 attachment modifies that aspect of the MSA.4
      Husband’s briefs on appeal fail to address any of the specific language
in the MSA, so Husband has necessarily failed to show there is another
reasonable interpretation of the agreement. We observe that, if the
agreement is interpreted to terminate support under paragraph 3.2 upon
Husband’s death, then Husband could at any time eliminate the obligation to
provide lifetime support to Wife by intentionally defaulting on the investment
income payments. That would be directly contrary to the express intent of
the MSA to provide support for Wife’s lifetime, as set forth in paragraph 2.3.

      4Husband points out that the 2011 attachment only requires him to
make payments “so long as he is financially able to do so,” but that is not
inconsistent with the trial court’s order. The court found he is able to pay
and any question as to his estate’s ability to pay is premature.

                                       9
      “ ‘Section 4337 does not go so far as to require a written agreement
expressly stating that the’ ” death of the party providing support “ ‘will not
terminate spousal support.’ ” (In re Marriage of Martin, supra,
32 Cal.App.5th at p. 1202.) Husband has not shown the trial court erred.
      B.     The Amount of the Support Award
      “Permanent spousal support ‘is governed by the statutory scheme set
forth in sections 4300 through 4360. Section 4330 authorizes the trial court
to order a party to pay spousal support in an amount, and for a period of
time, that the court determines is just and reasonable, based on the standard
of living established during the marriage, taking into consideration the
circumstances set forth in section 4320.’ [Citations.] The statutory factors
include the supporting spouse’s ability to pay; the needs of each spouse based
on the marital standard of living; the obligations and assets of each spouse,
including separate property; and any other factors pertinent to a just and
equitable award.’ ” (In re Marriage of Ciprari (2019) 32 Cal.App.5th 83, 108.)
“ ‘ “In making its spousal support order, the trial court possesses broad
discretion so as to fairly exercise the weighing process contemplated by
section 4320, with the goal of accomplishing substantial justice for the parties
in the case before it.” ’ ” (Ibid.)
      Husband argues the trial court “miscalculated” his income in
determining the appropriate amount of support. He argues there was no
foundation for Mr. Schiller’s testimony because it was based only on tax
returns for the 2017–2018 period. But he fails to explain why he was
prejudiced by any testimony that contained assertions regarding prior
periods. Husband also complains that the court predicated its support order
in 2019 in part on the expert testimony based on the 2017–2018 returns, but
Husband’s counsel represented to the court that the returns provided were

                                       10
“the most recent year prepared” and “all that was available.” Husband fails
to explain how it was error for the court to base its support order on the most
recent information he provided. (See In re Marriage of Berman (2017)
15 Cal.App.5th 914, 925–926 [“Nor did the court abuse its discretion in using
the 2014 income in particular, as this was the only tax return presented to
the court.”].)
      Husband also argues it was improper to treat the $133,000 in improper
annual deductions taken by HCIS as Husband’s income. He points out that
“[a] tax deduction is applied to reduce income before determining the tax
owed,” and that the deductions “increased HCIS’ post-tax profits, the funds
used to pay” Wife. He continues, “[t]here is no evidence that those profits
were paid to [Husband], who reported none on his taxes.”
      At the outset, we observe that Husband has forfeited his claims by
failing to raise them below. “ ‘As a general rule, issues not properly raised at
trial will not be considered on appeal.’ ” (In re Marriage of Olson (1993)
14 Cal.App.4th 1, 15; see also In re Marriage of Brewster & Clevenger (2020)
45 Cal.App.5th 481, 512 [“A party implicitly waives or forfeits claims of error
if he or she fails to bring the error to the trial court’s attention in an
appropriate manner.”].) This is because “ ‘[i]t is unfair to the trial judge and
to the adverse party to take advantage of an alleged error on appeal where it
could easily have been corrected at trial.’ ” (Cabrini Villas Homeowners Assn.
v. Haghverdian (2003) 111 Cal.App.4th 683, 693.) Although Husband made
general objections to Mr. Schiller’s testimony below regarding Husband’s
underreported income (“[m]isstates the evidence; misstates prior testimony
. . . [i]t lacks foundation”),5 he did not cross-examine Mr. Schiller on the issue,

      5 Husband does not argue the trial court erred in overruling his
objections.

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he did not present evidence controverting Mr. Schiller’s testimony, and he did
not argue at the end of the hearing that the trial court could not rely on
Mr. Schiller’s testimony for the reasons posited on appeal.
      Furthermore, financial records provided by Husband support the trial
court’s finding that Husband could pay support from HCIS’s profits,
regardless of how the improper deduction impacted HCIS’s taxes. In
particular, Husband cites to HCIS’s 2017–2019 “Profit & Loss” statements to
support his assertion that there were no profits for HCIS to disburse to Wife.
The 2017 statement shows a “Net Income” of negative $110,355.38, but it
lists as expenses $112,837 for “Depreciation/Amortization”6 and $17,735.42
for “Interest Expense.” Mr. Schiller testified there was no basis for those
claimed expenses. Regarding the latter expense, Mr. Schiller testified any
claimed interest expenses were improper in light of Husband’s testimony the
company had no debts. The 2018 statement shows a “Net Income” of only
$3,213.84, but it lists an improper “Interest Expense” of over $20,000. And
the 2019 statement, which covers through October 2019, actually shows a
profit—a “Net Income” of over $66,000, which should actually be higher
under Mr. Schiller’s analysis because the statement includes an improper
“Interest Expense” of over $11,000.7 Thus, documents provided by Husband,

      6Mr. Schiller explained the 2017 depreciation was less than $133,000
because it was for a ten-month period. In his testimony he said 2017
depreciation was $111,000, which was the amount on the corporate tax
return. It is not clear why the 2017 Profit & Loss statement lists the
amortized depreciation amount as $112,837, but the trial court could infer
that was the same depreciation testified to by Mr. Schiller because there is no
evidence of other significant sources of depreciation.
      7The 2019 statement also lists an unexplained “Bad Debt Expense” of
over $59,000.

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when viewed in light of Mr. Schiller’s uncontroverted testimony, support the
trial court’s finding that Husband has the ability to pay the ordered support.
      Further, Husband’s argument disregards the trial court’s finding that
Husband’s financial evidence was not credible. (See In re Marriage of
Brewster & Clevenger, supra, 45 Cal.App.5th at p. 500 [“As the judge of
credibility, the trial court may reject evidence, even uncontradicted evidence,
as unworthy of credence.”]; In re Marriage of Dick (1993) 15 Cal.App.4th 144,
160 [“It is clear that the trial court utterly disbelieved [the husband], and its
assessment of husband’s credibility is binding on this court.”].) Indeed, the
trial court stated that Husband had “committed perjury on his income and
expense declarations.” Husband does not challenge that finding on appeal,
which is supported both by Husband’s evasive testimony and by Mr. Schiller’s
testimony regarding the irregularities in HCIS’s tax returns. Given the trial
court’s finding regarding Husband’s dishonesty, it was not obligated to take
any of the financial records or Husband’s testimony at face value, including
Husband’s claims about the amount of HCIS’s profits, about his ability to
pay, or about the accuracy of the corporate and personal tax returns.
      Finally, Husband fails to show any error was prejudicial. “ ‘It is a
fundamental principle of appellate jurisprudence in this state that a
judgment will not be reversed unless it can be shown that a trial court error
in the case affected the result.’ ” (In re Marriage of Falcone & Fyke (2008)
164 Cal.App.4th 814, 822.) Husband does not argue the trial court erred in
finding he continued to make the $4,000 in income described in the 2011
stipulated judgment; he does not show he realized no benefit from HCIS’s
improper deductions and other accounting irregularities; he does not argue
his assets could not support the award (including his loan to HCIS, his
80-foot yacht, and his interest in his current home) (see § 4320, subds. (c) &

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(e)); and he does not deny Wife’s dire health and economic circumstances (see
§ 4320, subds. (e), (h), & (k)). In other words, Husband articulates no
argument why, in light of the statutorily mandated considerations, it is
“reasonably probable” the support order would have been more favorable,
even if we assume the trial court erred in treating the entirety of the
improper deductions as Husband’s income. (Falcone & Fyke, at p. 822.)
      Husband has not shown the trial court erred in entering the challenged
spousal support order.8
                                DISPOSITION
      The trial court’s order is affirmed. Costs on appeal are awarded to
respondent Wife.

                                                    SIMONS, Acting P. J.

We concur.

NEEDHAM, J.

BURNS, J.

(A159773)

      8 We also reject Husband’s argument that the trial court’s order “fails
to identify any source of income from which that support is to, or even could,
derive.” Husband has not shown the court erred in concluding Husband was
able to pay the ordered support.

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