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Case of the Month Archive

January 2018

Trial court lacked discretion to choose a different interest accrual date . . .

 

In partial reversal, Second District holds that interest began to run on equalizing payment on due date specified in parties’ stipulated judgment and not on date that trial court made postjudgment rulings on wife’s request re enforcement of equalizing payment

 

In re Marriage of Dalgleish and Selvaggio

(November 1, 2017; ordered modified and published November 30, 2017)

California Court of Appeal 2 Civil B266579 (Div 1) 17 Cal.App.5 th 1172, 225 Cal.Rptr.3d 900, 2017 FA 1816, per Lui, J (Rothschild, PJ and Chaney, J, concurring). Los Angeles County: Hofer, J, affirmed in part and reversed in part with directions. For appellant: Julia Kushner and Leslie Ellen Shear, CFLS, (818) 501-3691. For respondent: James Eliaser, (310) 820-7971. CFLP §J.100.33.3.

 

On December 7, 2009, Stacy Dalgleish and Piero Selvaggio signed, and the trial court approved, a “‘Stipulated Further Judgment on Reserved Issues’” dealing with all the issues in their disso proceeding except custody and visitation. This judgment provided, among other things, that the parties would “‘engage a joint real estate appraiser’” to appraise real properties they owned on Pico Boulevard in Santa Monica to determine their FMV as of September 2, 2008, and their FMV on May 1, 2003, the date of the parties’ transmutation agreement. Any increase in the FMV between those dates was to be divided equally between the parties, and Piero was to pay Stacy’s portion (tax free) to her as an equalizing payment, within 10 days of receiving the appraisal report. The judgment contained no provision re challenging the appraiser’s report in connection with the equalizing payment.

 

Between late 2012 and early 2013, the attorneys for the parties communicated with each other and with appraiser Larry Sommer about his conducting the appraisal. Understanding that he had been retained, Sommer began working on the appraisal, communicating with the parties’ attorneys as he went along. In a report sent to the parties on July 26, 2013, Sommer set the FMV of the properties at $1,618,542 on May 1, 2003, and at $3,810,645 on September 2, 2008. Thus, one half of the appreciation of the FMV was $1,096,051.50. In February, 2014, after dueling communications between the parties regarding clearing title to the Pico property, Piero’s business attorney wrote to Sommer, questioning his methodology and appraisal results, as well as whether the parties had actually retained him. This prompted further communication on those issues.

 

The issues remained unsolved on August 6, 2014, when Stacy filed a request for an order (RFO) to enforce the stipulated judgment as to the equalizing payment and asking the trial court to find that Piero was required to pay her $1,095,000 on August 5, 2013, plus interest of 10% per annum from that date until fully paid. In opposition, Piero contended that Stacy had never agreed to retain Sommer and that the appraisal was not a joint appraisal as required by the stipulated judgment.

 

After a hearing on October 31, 2014, the trial court announced tentative findings that (1) Piero had no right under the judgment to challenge the appraisal; (2) Sommer was hired as a joint appraiser under the terms of the judgment; and (3) Piero was estopped from challenging whether or not the appraisal was a joint appraisal. In the ensuing discussion, Piero’s attorney asked to be allowed to cross-examine Sommer, despite having failed to file a written request to do so under Fam C §217. After further argument, the trial court told Stacy’s attorney that if no cross-examination occurred, interest would run from the current date and “‘not last summer’” but if counsel agreed to a further evidentiary hearing, at which she prevailed, interest would run retroactively from October 31, 2014. Counsel then agreed to a further hearing.

 

After an evidentiary hearing on March 11, 2015, the trial court announced its findings that the appraisal was joint, Piero owed Stacy half of $2,192,103 (the appreciated value), and the payment date was extended from 10 days to 90 days, with interest accruing from October 31, 2014. Piero’s attorney then argued that the interest could run only from the date that the sum owed was certain and that there was no sum certain until the trial court ruled that day. The trial court agreed and ordered that interest on the equalizing payment would begin to run on March 11, 2015. The trial court reasoned that its current ruling was “‘a type of final judgment’” which specified a certain sum owed and interest could not have begun to run earlier. The court later filed a written order regarding its findings.

 

Stacy appealed and Piero cross-appealed the trial court’s ruling regarding the joint retention of Sommer, and the Second District affirmed in part and reversed in part with directions.

 

Stick to the stip . . .
The justices began by affirming that the equalizing payment is a money judgment subject to statutory interest provisions, and that per CCP §685.020, interest on a money judgment begins to accrue on the date of entry of judgment. However, they noted, in this case the parties had agreed in their stipulated judgment that the equalizing payment was due 10 days after they received the appraiser’s report; thus interest on the payment began to run on the date that payment was due, not on the date that judgment was entered. “A contrary ruling,” the panel reasoned, “would deprive Dalgleish of the value of the money she was due from her share of the Pico Property while Selvaggio continued to enjoy the benefit of appreciation on that property.”

 

That’s no judgment . . .
The panel noted that the lower court “apparently concluded” that the judgment on which interest would begin to run was the ruling it made on March 11, 2015, which it characterized as a “‘type of final judgment.’” That was error, the justices found. They explained that the March 11 ruling was not a new judgment, but was an order enforcing the stipulated judgment in which interest began to run according to the date specified in it. Moreover, contrary to the trial court’s finding, the amount that Piero owed was clearly established by the appraiser’s report; it was not, as the lower court reasoned, uncertain until it issued its ruling regarding the appraisal. The ruling, the panel continued, did not establish the amount owed; it determined the joint nature of the appraisal and whether payment was due.

 

Sorely lacking . . .
The justices disagreed with Piero’s contention and the trial court’s assumption that it had discretion to award interest based on “‘various factors’” that it had noted. The trial court had no such discretion, the panel found, absent Stacy’s consent to a different date. In addition, the justices concluded that Piero had forfeited his cross-appeal, in which he contended that the appraisal was not a joint appraisal, by failing to frame the issues properly or to consider contrary evidence supporting the judgment. But, even if he had, the panel said, there was “abundant evidence” in the record to support the lower court’s ruling that the appraisal was a joint one. Summing up, the justices reversed the trial court’s orders filed on May 29, 2015, and June 17, 2015, insofar as they set a calculation date for interest and remanded with directions to the trial court to enter an order awarding interest on the equalizing payment as calculated from August 5, 2013.

 

 

Comment

  

This case deals with some relatively complex facts about when interest begins to run on a money judgment and what effect the parties’ stipulation may have on the basic rules on that issue. Keep this in your file for future reference.

 

 

 
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