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In re Marriage of Minkin
Citation: 11 Cal. App. 5th 939Docket: G052947
Court: California Court of Appeal; April 24, 2017; California; State Appellate Court
Original Court Document: View Document
The Court of Appeal of California addressed the appeal by Patricia J. Minkin concerning the interpretation of "annual bonus" in a spousal support agreement with Robert A. Minkin. The 2004 agreement stipulated that Robert would pay Patricia 41 percent of his annual bonuses as additional spousal support for ten years. Following a job change, Robert's compensation structure evolved, prompting Patricia to seek a determination regarding which components constituted annual bonuses. The trial court ruled that an "annual bonus" refers specifically to discretionary performance-based payments, rejecting Patricia's broader interpretation, which included all payments exceeding base salary. The court affirmed a finding that Robert underpaid Patricia by approximately $200,000, but denied her claim for an additional $700,000. Patricia's request for full recovery of attorney fees incurred during enforcement was also partially denied, as the court clarified that the stipulation's language did not guarantee full recovery as a matter of law, and Patricia did not prove the court abused its discretion in the fee determination. Additionally, the court rejected Patricia's motion to reinstate spousal support after the expiration of the original ten-year term, citing her failure to demonstrate a material change in circumstances. Lastly, the court found no due process violation regarding limitations on cross-examination and the exclusion of live testimony about attorney fees, noting that these objections were not raised in the trial court and lacked merit. The court affirmed all lower court rulings. After separating, Patricia took jobs as a restaurant hostess and in sales and marketing. In September 2004, she and Robert reached a final dissolution settlement, which the trial court formalized in January 2005. This stipulated judgment mandated Robert to pay Patricia $7,000 monthly in spousal support, effective until Patricia remarried, either party died, or July 15, 2014. Additionally, Patricia was entitled to 41% of Robert's annual bonuses from St. Joseph Hospital for ten years, starting in 2005, contingent on the bonuses being awarded. Robert was required to provide annual documentation regarding these bonuses. Patricia received approximately $670,000 from the couple’s community property and the judgment included a provision for attorney fees in enforcement actions. In July 2006, Robert left St. Joseph Hospital to become CEO at Exempla Healthcare, negotiating a substantial compensation package. He lost this position in January 2010 due to a management change but received about $960,000 under a change of control agreement. During his tenure at Exempla, Robert earned approximately $1,656,000 in salary and additional amounts from various incentive plans, paying Patricia the agreed monthly support and 41% of the senior management incentive but disputing the classification of other compensation as annual bonuses. Meanwhile, Patricia worked as a store manager, pursued an interior design degree, and borrowed substantial funds to open a failed boutique, leading to her bankruptcy in 2009. In July 2010, Robert began working as a healthcare consultant at The Camden Group, earning a salary between $350,000 and $370,000, with bonuses of $33,000 in 2011 and $200,000 in 2012, plus an additional bonus of about $98,000 in December 2012. Shortly before receiving a $48,000 bonus, Robert filed a request to terminate or reduce spousal support after learning that Patricia was in a romantic relationship with Stan Burnett. While his motion was pending, he paid Patricia approximately $122,000 as her share of bonuses from The Camden Group but withheld a $98,000 bonus received after filing his request. In August 2013, the court granted his request, reducing monthly spousal support to $4,500 and confirming its termination in July 2014, while also terminating additional support based on Robert's bonuses effective December 2012. In December 2013, Patricia sought to determine spousal support arrearages, claiming Robert owed approximately $387,000 in unpaid support and $184,000 in interest, along with attorney fees. Robert contested this, arguing that some payments were not classified as bonuses per the stipulated judgment. A special master was appointed in August 2014 to review the case. After Robert's obligation to pay monthly support ended in July 2014, Patricia requested reinstatement of support, citing her lack of income and difficulties in her pepper farming venture. Robert opposed, stating no significant change in circumstances had occurred. In November 2014, the special master found that Robert owed approximately $219,000 in support and interest, determining that only certain payments from Exempla Healthcare qualified as bonuses. The special master also deemed $25,000 in attorney fees reasonable for Patricia’s enforcement efforts. Robert paid the identified arrearages in January 2015, but Patricia objected to the report and requested a trial de novo. During the August 2015 evidentiary hearing, an expert testified that Robert's payments from Exempla Healthcare were bonuses linked to performance, confirming that bonuses are not guaranteed by continued employment. Robert's payments as salary and under various compensation plans were deemed not to be bonuses, as he was entitled to them regardless of performance. Two experts testified regarding Robert’s compensation: one certified public accountant and one management consultant. They agreed that payments from the senior management incentive plan were bonuses but disagreed on the nature of payments from the 457(f) long-term incentive plan, with Patricia's experts asserting that the entire amount constituted a bonus. They did not address the 457(b) deferred compensation plan, the change of control agreement, or the relocation plan. Patricia's experts concluded that Robert owed her a portion of a $98,000 bonus from The Camden Group for work performed before the termination of additional spousal support, countering Robert's claim that it was an advance bonus. The trial court ultimately sided with Robert’s expert, finding him more credible. It ruled that bonuses were discretionary and that Patricia was entitled to 41% of the senior management incentive plan and 41% of the identified bonus from the 457(f) plan. The court denied Patricia any portion of the $98,000 from The Camden Group, citing her failure to demonstrate it was a pre-termination bonus. Patricia's request to reinstate monthly spousal support was denied, as she did not prove a material change in circumstances. The court reinforced the agreed-upon 10-year term for support payments and noted Robert's recent job loss and unemployment status. Additionally, Patricia's request for attorney fees related to modifying spousal support was denied, while her request regarding enforcement proceedings was granted, resulting in a net award of $30,308 after offsetting an overpayment by Robert. The court found no error in interpreting the stipulated judgment's annual bonus clause as a discretionary payment. Marital settlement agreements in dissolution judgments are interpreted according to general contract law, focusing on the mutual intention of the parties. Clear and explicit contractual language takes precedence. The determination of mutual intent relies on objective manifestations, including the agreement's wording and relevant extrinsic evidence, such as the negotiation context and parties' conduct. If ambiguity exists, courts may review the record and consider extrinsic evidence to clarify the contract's meaning. The admissibility of extrinsic evidence hinges on whether the contract is reasonably susceptible to the proposed interpretation, which is a legal question subject to de novo review. In this case, the additional spousal support provision is deemed ambiguous due to the undefined term "annual bonus," which could mean either a discretionary payment based on performance or any payment exceeding the base salary. The circumstances surrounding the stipulated judgment indicate that both parties understood the bonus as a discretionary payment, given Robert's employment context at St. Joseph Hospital, where bonuses were not guaranteed. Additionally, the provision was referred to as an “Ostler/Smith” award, which is intended to account for fluctuations in income not covered by standard support amounts. This classification was acknowledged by both parties without objection, further solidifying the interpretation of the bonus as discretionary. In Ostler, Smith, and Mosley cases, a provision mandated that a husband pay a percentage of any performance bonus received from his employer as additional spousal support, beyond a fixed monthly amount. This type of award is justified because future bonuses are unpredictable, making it impractical for the obligor to seek modifications each time a bonus changes. Robert and Patricia's settlement agreement mimics this structure, indicating their intention for the annual bonus to refer specifically to discretionary performance bonuses rather than other forms of compensation. They provided no evidence that they anticipated Robert's compensation would include non-salary payments, such as the 457(f) long-term incentive plan from Exempla Healthcare. The case of Samson illustrates the application of similar support provisions. In Samson, after a stipulated support agreement, the husband received a severance payment that included various components. The wife argued for a percentage of the whole lump sum as it was compensation for a single month, while the husband contended it should be spread over several months. The trial court sided with the wife, but the Court of Appeal reversed, emphasizing that the stipulation was meant to address fluctuations in monthly income without frequent modifications. The court noted that neither party had considered the possibility of a lump sum severance when they entered the agreement. Consequently, the court remanded for the trial court to allocate the severance payment over multiple months based on its intended purpose. Similarly, Robert and Patricia's agreement aimed to account for Robert's performance bonuses, without consideration for additional compensation types not envisioned at the time of their agreement. The interpretation of the annual bonus term is deemed appropriate as payments similar to those Robert received at the time of the stipulated judgment, specifically discretionary performance-based bonuses. Patricia's broader interpretation risks including forms of compensation unrelated to the intended bonuses, such as deferred payments that Robert’s employer promised regardless of performance, for which she provided no evidence of intent. She failed to substantiate claims that Robert negotiated his compensation to avoid annual bonuses or demonstrate any bad faith on his part. Instead of seeking to redefine bonus payments, Patricia should have pursued a modification of spousal support based on Robert's increased income. Her argument that annual bonuses encompass all compensation, apart from base salary, lacks foundation as she does not claim that Robert's deferred compensation plan, change of control agreement, or relocation plan qualifies as annual bonuses. Patricia also argues that the trial court improperly delegated its judicial role to the parties' experts, merely adopting Robert's expert's interpretation. However, the record indicates the court conducted its own analysis, considering all evidence, including both parties' expert testimonies and the context of the stipulated judgment. Patricia did not challenge Robert’s expert testimony, which can be relevant in interpreting ambiguous contracts. Furthermore, regarding the court's handling of testimony about the parties' understanding of the term "bonus," the court indicated it would not base calculations on either party's definitions, asserting a clear stance on its interpretation of the contract. The court emphasized that a bonus's classification is not determined by the parties' assertions, highlighting that Patricia’s understanding alone does not establish it as a bonus. Patricia was allowed to testify about her interpretation of the annual bonus term, but her complaint seems to challenge the trial court's assessment of the credibility and weight of this testimony, which is not within the appellate court's purview. The trial court's comments regarding this evidence align with the principle that the parties' expressed objective intent governs contract interpretation, rather than their subjective understandings. Patricia argued that evidence, including a letter from Robert indicating that bonuses are payments above base salary, demonstrated a mutual understanding of the term. However, the trial court acknowledged this letter but assigned it little weight based on Robert’s testimony, a determination Patricia did not contest. The court found the term ambiguous, with both parties providing substantial evidence for their interpretations. Ultimately, the court supported its interpretation of the annual bonus as a discretionary payment based on performance. Regarding attorney fees, Patricia contended that the trial court erred by awarding her only $30,308 of the nearly $80,000 incurred to enforce the stipulated judgment. She argued that the fee provision entitled her to all incurred costs and claimed the court abused its discretion by awarding her the specific amount that Robert overpaid according to the special master’s report. Patricia sought attorney fees under the enforcement provision of a stipulated judgment, which allows the prevailing party to recover all costs, including reasonable attorney fees set by the court. There is no dispute regarding her entitlement to recover fees; however, the contested issue is the amount awarded. The trial court has broad discretion to determine what constitutes reasonable fees, guided by equitable principles. The determination is case-specific, and the trial judge's assessment of professional service value is generally upheld unless there is clear evidence of abuse of discretion. Patricia's claim that the enforcement provision entitled her to all attorney fees is incorrect, as it specifically limits her to "reasonable attorney fees as set by the court." The court's discretion remains even when parties agree on fee recovery. Patricia failed to provide authority supporting her argument and did not demonstrate that the awarded $30,000 in fees was unreasonable given her attorneys' work. The trial court had previously referred the case to a special master, who found Robert had underpaid spousal support by nearly $220,000 and recommended a $25,000 fee award. Although the court's fee award matched Robert's overpayment amount, this alone does not indicate an unreasonable fee. Patricia's dissatisfaction led her to demand a trial de novo, despite the special master's findings. Patricia's trial outcome was less favorable than anticipated, as the trial court aligned its findings with the special master's conclusions but corrected several mathematical errors that previously favored her. The court determined that Patricia's choice to pursue a claim for higher spousal support was "unwise" and noted her rejection of a reasonable settlement offer from Robert prior to trial. Consequently, the court awarded her significantly less than requested, emphasizing the need for attorney fees to be reasonable and taking into account the overlitigation. Patricia failed to demonstrate the court abused its discretion regarding the fee award, particularly as she did not justify why the awarded amount was unreasonable. She contested the court's consideration of her access to funds for attorney fees, arguing it was irrelevant to her fee request under the stipulated judgment. However, since Patricia initiated the discussion about her financial access, the court's response was appropriate. The trial court's decision indicated that her financial situation did not warrant additional fees beyond those specified in the stipulated judgment. Regarding the denial of Patricia's request to reinstate monthly spousal support, the court found no legal basis for modification despite her claims of changed circumstances, including her non-cohabitation with Burnett. Under Family Code section 3651, the court can modify spousal support at any time but requires proof of a material change in circumstances since the last order. While a change can justify modification, it does not guarantee it. The court evaluates modifications based on criteria in Family Code section 4320 and is bound by the marital settlement agreement's terms, limiting its discretion to mere reevaluation of support. The burden rests with the spouse seeking modification to demonstrate a material change. Criteria for determining spousal support modification include the earning capacities of both parties, the supported party’s contributions to the supporting party’s education or career, the supporting party's ability to pay, each party's needs based on the marriage's established standard of living, obligations and assets, marriage duration, the supported party's potential for gainful employment, both parties' ages and health, the balance of hardships, the goal of self-support for the supported party, and any other relevant factors per Family Code § 4320. A trial court's decision on modifying spousal support is reviewed for abuse of discretion, presuming correctness unless the appealing party shows error. In this case, Robert was to pay Patricia $7,000 monthly spousal support from October 1, 2004, until July 15, 2014. In August 2013, support was reduced to $4,500 due to Patricia's cohabitation with Burnett, and the obligation was confirmed to expire in July 2014. After the expiration, Patricia sought to modify and reinstate support, citing her separation from Burnett as a change in circumstances. The trial court denied this request, emphasizing the parties' agreement and Patricia's failure to demonstrate a change in circumstances warranting a modification. The court noted that her previous cohabitation had justified support reduction but did not affect the termination agreement. It concluded that the finite duration of spousal support was intended to provide the supported spouse time to achieve self-sufficiency. Patricia's reliance solely on cohabitation did not sufficiently establish an abuse of discretion or warrant a reinstatement of support. Patricia's failure to confront her unmet expectations negates the relevance of evidence regarding Robert's job loss and her attempts to achieve self-sufficiency through businesses like a children's boutique and a pepper farm. It is established that a supported spouse cannot make poor decisions that hinder their self-sufficiency while expecting the supporting spouse to bear the financial burden, as cited in *In re Marriage of Schaffer* (1999). Patricia also argues that the trial court denied her due process by curtailing her cross-examination of Robert regarding his credibility and preventing live testimony for her attorney fee request. However, these due process claims were forfeited because she did not raise them in the trial court. Typically, constitutional issues not addressed in earlier proceedings are considered forfeited, as noted in *Hale v. Morgan* (1978) and *Neil S. v. Mary L.* (2011). Although there are circumstances where a party may raise pure legal questions based on undisputed facts, Patricia did not provide justification for her failure to present these issues earlier, and her reply brief did not address them. Furthermore, the trial court’s actions did not prevent Patricia from effectively cross-examining Robert; it merely ruled that the definition of a bonus was not relevant to his credibility. Patricia failed to provide legal authority or evidence to support her claim of due process violations regarding the court's use of declarations instead of live testimony for attorney fee amounts. The court indicated it would consider the evidence submitted on support arrears and did not deny her due process in this matter, despite her reference to *Elkins v. Superior Court* (2007), which addressed a different issue regarding presentation of evidence in family law cases. The Supreme Court clarified that its ruling is applicable only to trials and does not extend to hearings on motions. In this case, the trial court evaluated a request for attorney fees during a postjudgment enforcement proceeding, not a trial. The order from the trial court was affirmed, with Robert being awarded costs on appeal. The opinion filed on April 24, 2017, in the matter of In re Marriage of Patricia J. and Robert A. Minkin was modified as follows: 1. The phrase "to become a stay-at-home mom" was removed from the sentence detailing Patricia's cessation of work as a surgical technician after their first child was born in 1983. 2. A comma was deleted in a sentence about Robert losing his position at Exempla in January 2010. 3. Adjustments were made in a sentence regarding Robert's payment of bonuses to Patricia, clarifying the nature of his compensation components. 4. A sentence regarding Patricia's condition in the following year was entirely deleted. 5. A dollar amount was changed in a sentence about Robert's bonus received shortly before he requested a modification of spousal support due to Patricia's cohabitation. 6. The wording was updated in a sentence about agreement with Robert's experts concerning the classification of incentive plan payments as bonuses. 7. Finally, it was concluded that Patricia was not entitled to any portion of the $98,000 bonus Robert received from The Camden Group, as she failed to demonstrate it was received prior to the termination of additional spousal support. Corrections to the legal document include: 1. Footnote 2 on page 8: Change “was” to “totaled,” resulting in “Robert’s combined overpayments totaled $30,308.” 2. Page 16, first paragraph: Remove “fails to establish any error because they” for clarity, making it read, “Moreover, the court’s comments about this evidence are consistent with the rule of contract interpretation that the parties’ expressed objective intent governs, not their unexpressed subjective understanding.” 3. Page 16, first paragraph: Remove “fairly” from the sentence discussing Patricia’s testimony, clarifying it as “Patricia’s testimony about her understanding of the term may be viewed as her unexpressed subjective intent rather than the parties’ expressed objective intent.” 4. Page 16, second paragraph: Replace “testimony” with “explanation” in reference to Robert’s evidence, adjusting it to “The trial court received and acknowledged this evidence, but expressly gave it little, if any, weight based on Robert’s explanation during the hearing.” 5. Page 18, first full paragraph: Remove "a" for accuracy in “Whether an award of attorney fees is based on statutory or contractual provisions,” emphasizing the trial court's broad discretion in determining reasonable fees governed by equitable principles. 6. Page 18, second full paragraph: Amend citations to read “PLCM, supra, 22 Cal.4th at p. 1095; Hill, supra, 226 Cal. App.4th at p. 1196,” noting that a fee award will be reversed only for manifest abuse of discretion. 7. Page 18, last paragraph: Change “what amounts to” to “the precise amount of,” stating that the trial court has discretion in determining reasonable attorney fees even when parties agree on fee entitlement. 8. Page 19, first full paragraph: Remove “the court” at the beginning, resulting in, “Although awarding the exact amount of overpayment may be evidence the trial court abused its discretion, it is not enough to overcome the presumption in favor of the court’s decision and establish an abuse of discretion as a matter of law.” 9. Page 19, first full paragraph: Capitalize “even” in “Even though the two amounts match,” clarifying that their matching does not imply the fee was unreasonable. 10. Page 20, second paragraph: Change “lacked of access to” to “shortage of,” indicating the court found Patricia’s shortage of funds did not justify excessive fees under the stipulated judgment. 11. Page 24, last paragraph: Replace “she” with “Patricia” for specificity, making it clear that “The court did not more broadly prevent Patricia from attacking Robert’s credibility, and Patricia made no effort to explain she purportedly sought to challenge Robert’s credibility on when he received the bonus payment, not on how he defined a bonus.” These modifications do not alter the judgment. The Association of Certified Family Law Specialists' request for publication certification of the opinion is granted, as it meets the standards outlined in California Rules of Court, rule 8.1105(c). Concurrence is noted from Aronson, J., O’Leary, P. J., and Bedsworth, J.