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California Family Court Orders Sale of Property to Pay for Attorney's Fees

February 2, 2022

California

,

United States of America

Issue

If the family residence has not yet been characterized as community or separate property, can the court order the residence to be sold to pay one party's attorney fees?

Conclusion

Cal. Fam. Code § 2030 requires a trial court to ensure that each party has access to legal representation and, if necessary, the court shall order one party to pay the other party's reasonably necessary attorney's fees. (Smith v. Smith (In re Smith), Cal. Fam. Code § 2030, Hofer v. Hofer (In re Hofer))

Cal. Fam. Code § 2032(c) provides that payment of an award made pursuant to Cal. Fam. Code § 2030 may be ordered from any type of property, whether community or separate, principal or income. (Smith v. Smith (In re Smith), Cal. Fam. Code § 2032, Meguerian v. Hunanyan (In re Meguerian), Hofer v. Hofer (In re Hofer))

The family court has considerable latitude in fashioning or denying an attorney fees award; however, the court's decision must reflect an exercise of discretion and a consideration of the appropriate factors as set forth in Cal. Fam. Code § 2030 and Cal. Fam. Code § 2032, including to the extent relevant, the circumstances of the respective parties described in Cal. Fam. Code § 4320. (Sharples v. Sharples (In re Marriage of Sharples), Hofer v. Hofer (In re Hofer), Meguerian v. Hunanyan (In re Meguerian), Cal. Fam. Code § 4320, Cal. Fam. Code § 2032, Cal. Fam. Code § 2030)

While no decisions were identified that discussed a court ordering the sale of the family residence to pay a party's attorney's fees, an unpublished case in which a family court ordered an uncharacterized asset to be sold in order to pay for the parties' attorney's fees may be instructive.

In the unpublished decision of Meguerian v. Hunanyan (In re Meguerian), the parties agreed that the litigation should be funded by the sale of an asset or assets, but disagreed on what asset(s) should be sold. The parties disputed whether a property in Long Beach was separate or community property. The California Court of Appeal for the Second District found that regardless of whether the Long Beach property was separate or community property, the trial court had jurisdiction over it and could order its sale to fund the attorney fee award pursuant to Cal. Fam. Code § 2032(c). The Court held that the trial court did not abuse its discretion in ordering the Long Beach property to be sold to pay for each party's attorney fees and costs. (Meguerian v. Hunanyan (In re Meguerian))

Law

In Smith v. Smith (In re Smith), 242 Cal.App.4th 529, 195 Cal.Rptr.3d 162 (Cal. App. 2015), the California Court of Appeal for the Fourth District explained that Cal. Fam. Code § 2030 requires a trial court to ensure that each party has access to legal representation, and if necessary, the court shall order one party to pay the other party's reasonably necessary attorney's fees. Cal. Fam. Code § 2032(c) provides that payment of an award made pursuant to Cal. Fam. Code § 2030 may be ordered from any type of property, whether community or separate, principal or income (at 533):

Section 2030 requires that the trial court "ensure that each party has access to legal representation ... by ordering, if necessary based on the income and needs assessments, one party ... to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding." (§ 2030, subd. (a)(1).) In determining the necessity of making such an award, the trial court must determine what award would be "just and reasonable under the relative circumstances of the respective parties." (§ 2032, subd. (a).) The factors to be considered in determining the relative circumstances of the parties include, to the extent relevant, those used for determining spousal support, enumerated in section 4320, including the catchall "[a]ny other factors the court determines are just and equitable." (§§ 4320, subd. (n); 2032, subd. (b).) Payment of an award under section 2030 may be ordered "from any type of property, whether community or separate, principal or income." (§ 2032, subd. (c).)

Cal. Fam. Code § 2030 states:

(a)

(1) In a proceeding for dissolution of marriage, nullity of marriage, or legal separation of the parties, and in any proceeding subsequent to entry of a related judgment, the court shall ensure that each party has access to legal representation, including access early in the proceedings, to preserve each party's rights by ordering, if necessary based on the income and needs assessments, one party, except a governmental entity, to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding.

(2) When a request for attorney's fees and costs is made, the court shall make findings on whether an award of attorney's fees and costs under this section is appropriate, whether there is a disparity in access to funds to retain counsel, and whether one party is able to pay for legal representation of both parties. If the findings demonstrate disparity in access and ability to pay, the court shall make an order awarding attorney's fees and costs. A party who lacks the financial ability to hire an attorney may request, as an in pro per litigant, that the court order the other party, if that other party has the financial ability, to pay a reasonable amount to allow the unrepresented party to retain an attorney in a timely manner before proceedings in the matter go forward.

(b) Attorney's fees and costs within this section may be awarded for legal services rendered or costs incurred before or after the commencement of the proceeding.

(c) The court shall augment or modify the original award for attorney's fees and costs as may be reasonably necessary for the prosecution or defense of the proceeding, or any proceeding related thereto, including after any appeal has been concluded.

(d) Any order requiring a party who is not the spouse of another party to the proceeding to pay attorney's fees or costs shall be limited to an amount reasonably necessary to maintain or defend the action on the issues relating to that party.

(e) The Judicial Council shall, by January 1, 2012, adopt a statewide rule of court to implement this section and develop a form for the information that shall be submitted to the court to obtain an award of attorney's fees under this section.

Cal. Fam. Code § 2032 states:

(a) The court may make an award of attorney's fees and costs under Section 2030 or 2031 where the making of the award, and the amount of the award, are just and reasonable under the relative circumstances of the respective parties.

(b) In determining what is just and reasonable under the relative circumstances, the court shall take into consideration the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately, taking into consideration, to the extent relevant, the circumstances of the respective parties described in Section 4320. The fact that the party requesting an award of attorney's fees and costs has resources from which the party could pay the party's own attorney's fees and costs is not itself a bar to an order that the other party pay part or all of the fees and costs requested. Financial resources are only one factor for the court to consider in determining how to apportion the overall cost of the litigation equitably between the parties under their relative circumstances.

(c) The court may order payment of an award of attorney's fees and costs from any type of property, whether community or separate, principal or income.

(d) Either party may, at any time before the hearing of the cause on the merits, on noticed motion, request the court to make a finding that the case involves complex or substantial issues of fact or law related to property rights, visitation, custody, or support. Upon that finding, the court may in its discretion determine the appropriate, equitable allocation of attorney's fees, court costs, expert fees, and consultant fees between the parties. The court order may provide for the allocation of separate or community assets, security against these assets, and for payments from income or anticipated income of either party for the purpose described in this subdivision and for the benefit of one or both parties. Payments shall be authorized only on agreement of the parties or, in the absence thereof, by court order. The court may order that a referee be appointed pursuant to Section 639 of the Code of Civil Procedure to oversee the allocation of fees and costs.

In Sharples v. Sharples (In re Marriage of Sharples), 223 Cal.App.4th 160, 166 Cal.Rptr.3d 818 (Cal. App. 2014), the California Court of Appeal for the Fourth District explained that when a court rules on a request for fees and costs made pursuant to Cal. Fam. Code § 2030, the court is guided by Cal. Fam. Code § 2032. The family court has considerable latitude in fashioning or denying an attorney fees award; however, the court's decision must reflect an exercise of discretion and a consideration of the appropriate factors as set forth in Cal. Fam. Code § 2030 and Cal. Fam. Code § 2032. A trial court's failure to exercise discretion in ruling on a request for fees and costs made pursuant to Cal. Fam. Code § 2030 is itself an abuse of discretion (at 164-165):

Section 2030 provides for the making of an order in a dissolution proceeding that one party pay for the other party's attorney fees and costs pendente lite. (§ 2030, subd. (a)(1).) The statute reflects the public policy of providing, “ ‘ “at the outset of litigation, consistent with the financial circumstances of the parties, a parity between spouses in their ability to obtain effective legal representation.” ’ [Citation.]” (In re Marriage of Keech (1999) 75 Cal.App.4th 860, 866, 89 Cal.Rptr.2d 525.) The purpose “is not the redistribution of money from the greater income party to the lesser income party,” but rather “ parity: a fair hearing with two sides equally represented.” (Alan S. v. Superior Court (2009) 172 Cal.App.4th 238, 251, 91 Cal.Rptr.3d 241.)

In ruling on a request for fees and costs under section 2030, the court is guided by section 2032, which provides that an award of fees and costs

[223 Cal.App.4th 165]

under section 2030 may be made “where the making of the award, and the amount of the award, are just and reasonable under the relative circumstances of the respective parties.” (§ 2032, subd. (a); see In re Marriage of Cryer (2011) 198 Cal.App.4th 1039, 1055, 131 Cal.Rptr.3d 424.) In determining what is just and reasonable, “the court shall take into consideration the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately ... .” (§ 2032, subd. (b).) In addition to the parties' financial resources, the court may consider the parties' trial tactics. (In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 975, 138 Cal.Rptr.3d 44; In re Marriage of Tharp (2010) 188 Cal.App.4th 1295, 1313–1314, 116 Cal.Rptr.3d 375.)

“[T]he family court has considerable latitude in fashioning or denying an attorney fees award... .” (In re Marriage of Tharp, supra, 188 Cal.App.4th at p. 1313, 116 Cal.Rptr.3d 375.) However, the court's “decision must reflect an exercise of discretion and a consideration of the appropriate factors as set forth in code sections 2030 and 2032.” (Ibid.; see In re Marriage of Falcone & Fyke, supra, 203 Cal.App.4th at p. 975, 138 Cal.Rptr.3d 44 [the record must reflect that the trial court exercised its discretion and considered the pertinent statutory factors].) The trial court's failure to exercise discretion is itself an abuse of discretion. (In re Marriage of Gray (2007) 155 Cal.App.4th 504, 515, 66 Cal.Rptr.3d 87; Richards, Watson & Gershon v. King (1995) 39 Cal.App.4th 1176, 1180, 46 Cal.Rptr.2d 169.)

In Hofer v. Hofer (In re Hofer), 208 Cal.App.4th 454, 145 Cal.Rptr.3d 697, 12 Cal. Daily Op. Serv. 9262, 2012 Daily Journal D.A.R. 11241 (Cal. App. 2012), the California Court of Appeal for the Second District noted that pursuant to Cal. Fam. Code § 2032(c), the trial court has very broad discretion in ordering the payment of attorney fees and costs. The trial court may order payment of the award of attorney fees and costs from any type of property, whether community or separate, principal or income. Additionally, no authority prohibits the trial court from making orders that require a party to borrow money under appropriate circumstances (at 460):

John claims the uncontradicted evidence is that he will be forced to borrow money. He points to his own declaration to that effect. But John confuses uncontradicted evidence with credible evidence. The trier of fact may reject even uncontradicted evidence as not credible. (See Sprague v. Equifax, Inc. (1985) 166 Cal.App.3d 1012, 1028, 213 Cal.Rptr. 69.) Indeed, in light of John's refusal to respond to discovery demands, there is little reason

[145 Cal.Rptr.3d 702]

for the trial court to find anything he says about his finances credible.

In any event, section 2032, subdivision (c) provides the trial court may order payment of the award of attorney fees and costs “from any type of property, whether community or separate, principal or income.” The subdivision shows the court has very broad discretion in ordering the payment of attorney fees and costs. Neither the subdivision nor any other authority prohibits the trial court from making orders that require a party to borrow money under appropriate circumstances. As the trial court noted, John paid his attorney over $300,000.

While no decisions were identified that discussed a court ordering the sale of the family residence to pay a party's attorney's fees, an unpublished case in which a family court ordered an uncharacterized asset to be sold in order to pay for the parties' attorney's fees may be instructive.

In the unpublished decision of Meguerian v. Hunanyan (In re Meguerian), B268831 (Cal. App. 2017), the California Court of Appeal for the Second District found that the trial court did not abuse its discretion in ordering a Long Beach property to be sold to pay for each party's attorney fees and costs. Cal. Fam. Code § 2032 requires a court ruling on a request for fees and costs made pursuant to Cal. Fam. Code § 2030 to determine what award would be just and reasonable under the relative circumstances of the respective parties. While the trial court has considerable latitude in fashioning or denying an attorney fees award, its decision must reflect an exercise of discretion and a consideration of the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately, and, to the extent relevant, the circumstances of the respective parties described in Cal. Fam. Code § 4320. Cal. Fam. Code § 2032(c) sets out that payment of an award under Cal. Fam. Code § 2030 may be ordered from any type of property, whether community or separate, principal or income (at 6-8):

It appears undisputed both parties require liquid assets to pay for attorney fees and costs in this complex matter. From what we can discern, the only dispute concerns which property should be sold to finance the litigation. We find the trial court did not abuse its discretion in choosing the Long Beach property to be sold rather than the ones suggested by Hunanyan.

I. Applicable Law

"'"California's public policy in favor of expeditious and final resolution of marital dissolution actions is best accomplished by providing at the outset of litigation, consistent with the financial circumstances of the parties, a parity between spouses in their ability to obtain effective legal representation."'" (Keech, supra, 75 Cal.App.4th at p. 866, quoting Droeger v. Friedman, Sloan & Ross (1991) 54 Cal.3d 26, 41, fn. 12.) Sections 2030 and 2032 attempt to effectuate this public policy by setting forth the trial court's authority to make attorney fee orders during or after the litigation.

Section 2030, subdivision (a)(1), directs the trial court to "ensure that each party has access to legal representation, including access early in the proceedings, to preserve each party's rights by ordering, if necessary based on the income and needs assessments, one party, except a governmental entity, to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding." "[T]he purpose of section 2030 is not the redistribution of money from the greater income party to the lesser income party. Its purpose is parity: a fair hearing with two sides equally represented. The idea is that both sides should

Page 7

have the opportunity to retain counsel, not just (as is usually the case) only the party with greater financial strength." (Alan S. v. Superior Court (2009) 172 Cal.App.4th 238, 251, italics omitted (Alan S.).) "The vicissitudes of family law proceedings dictate that trial judges must have maximum flexibility in ensuring that each party has the means to pay for counsel. To hold otherwise would frustrate those policies." (In re Marriage of Hobdy (2004) 123 Cal.App.4th 360, 371.)

Thus, section 2031, subdivision (b), permits a trial court to award attorney fees "without notice by an oral motion" at the time of the hearing of the cause on the merits. The trial court must determine what award would be "just and reasonable under the relative circumstances of the respective parties." (§ 2032, subd. (a).) "In determining what is just and reasonable under the relative circumstances, the court shall take into consideration the need for the award to enable each party, to the extent practical, to have sufficient financial resources to present the party's case adequately, taking into consideration, to the extent relevant, the circumstances of the respective parties described in Section 4320."4 (§ 2032, subd. (b).) Payment of an award under section 2030 may be ordered "from any type of property, whether community or separate, principal or income." (§ 2032, subd. (c).)

Page 8

While the trial court has considerable latitude in fashioning or denying an attorney fees award, its decision must reflect an exercise of discretion and a consideration of the appropriate factors as set forth in sections 2030 and 2032. (Alan S., supra, 172 Cal.App.4th at p. 242.) The trial court's ruling on a request for attorney fees is subject to review for an abuse of discretion. (Keech, supra, 75 Cal.App.4th at p. 866.) We will not reverse such a ruling absent a showing that "no judge could reasonably have made the order, considering all of the evidence viewed most favorably in support of the order." (In re Marriage of Falcone & Fyke (2012) 203 Cal.App.4th 964, 974-975.)

In this case, the parties agreed that the litigation should be funded by the sale of an asset or assets, but disagreed on what asset(s) should be sold. The parties disputed whether the Long Beach property was separate or community property. The Court found that regardless of whether the Long Beach property was separate or community property, the trial court had jurisdiction over it and could order its sale to fund the attorney fee award pursuant to Cal. Fam. Code § 2032(c) (at 8-9):

Here, the trial court's order ensured the parties had access to funds to present his or her case adequately as required under sections 2030 and 2032. To that end, the trial court relied on subdivision (c) of section 2032, which granted it the flexibility and authority to order the fee award to be made "from any type of property, whether community or separate, principal or income." (§ 2032, subd. (c).) We conclude the trial court properly exercised its discretion.

The parties agree the litigation should be funded by the sale of an asset or assets and that the trial court has authority to order such a sale. The parties merely disagree which asset should be sold—the Long Beach property, the Caltrana property, or the Basset property. The record supports the trial court's decision to order the sale of the Long Beach property because there is no question the trial court has jurisdiction over it. Hunanyan contends the Long Beach property is his separate property while Petitioner contends it is community property. In either case, it unquestionably falls within the parameters of

Page 9

section 2032, subdivision (c), in that it is "community or separate, principal or income." As to the Caltrana or Basset properties, it is disputed whether these properties are "community or separate" or entirely owned by third parties. If the property is owned by Lucine, John, or anyone else and not the estate, the trial court has no jurisdiction to order its sale. Here, Petitioner advised the trial court in the reply papers and at the hearing that neither property is available for sale under these circumstances because they are owned by the heirs or by a third party.

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