Existence of several outstanding disso issues is good cause to protect wife's community interests. . .
In affirmance, Second District holds that trial court did not err by limiting husband's FLARPLs after they had been recorded where limitation would protect wife's community interest in escrow proceeds from sale of family home to which they attached.
In re Marriage of Bittenson
(October 22, 2019)
California Court of Appeal 2 Civil B288233 (Div 6) 41 Cal.App.5th 333, 254 Cal.Rptr.3d 209, 2019 FA 1910, per Yegan, Acting PJ (Perren and Tangeman, JJ, concurring). Ventura County: Johnson, J, affirmed. For husband: Debra Opri, (323) 658-6774. For wife: Jeffrey Johnsen, (805) 218-1232. CFLP §§A.1, A.65.2.3, A.65.2.7.
In 2013, Mark Bittenson filed for divorce after 26 years of marriage to his wife Terri. As the case progressed, Terri moved out of their family home, which was to be sold by a receiver. Between February 8, 2017 and October 2, 2017, Mark's attorney recorded three separate FLARPLs, which totaled $250,000, as security for payment of her fees. Terri filed objections, claiming that the FLARPL notices were defective, the amount of the liens exceeded Mark's community share of the escrow proceeds, and that part of the FLARPL funds were being used to pay attorney's fees for a separate domestic violence case currently pending. On November 6, 2017, a month before the escrow closed, the trial court ordered the escrow proceeds placed in a blocked account for later distribution.
In opposition to Terri's objections, Mark contended that the net proceeds from the sale of the family home totaled $622,000, and at $250,000, the FLARPLs did not encumber Terri's $311,000 share of the proceeds. Mark's attorney admitted having billed $207,000 in fees for the civil action and disso, and anticipated that Mark would incur "thousands of dollars" more in litigating the FLARPL issues, which should be moot since the liens had been released. The trial court, however, found that there was good cause to limit the FLARPLs in order to protect Terri's community interest in the proceeds. Accordingly, the lower court ordered Mark's attorney to deposit $100,000 of the escrow funds into a blocked account and released the remaining $150,000 in satisfaction of the FLARPLs.
Mark appealed, but the Second District affirmed.
Too little and too late. . .
The justices first addressed the trial court's finding that the defects in the FLARPL notices were moot. They noted that per Fam.C. §2033, a notice of the lien must be served personally or on the other party's attorney, at least 15 days before it is recorded. Further, the notice must contain a description of the real property, its estimated fair market value, the amount of the attorney's fees, and other information. Here, none of the FLARPLs was served on Terri before they were recorded or she had the opportunity to file objections. At that point, only the trial court had the authority to resolve disputes over the FLARPLs and any notice defects were moot.
Wait and see. . .
The panel then turned to Mark's contention that allowing the full amount of the FLARPLs would not result in an unequal division of property or impair his ability to meet his share of the community obligations. The justices recognized that Fam.C. §2034(a) authorizes a trial court to deny a FLARPL if the encumbrance would result in an unequal division of the community property by impairing the lienor's ability to meet his or her share of the community obligations or would be otherwise unjust in the circumstances of the case. Here, the panel noted, there were several unresolved issues whose resolution could substantially affect the value of the community assets and debts; for example, the parties' dispute as to the date of separation, Terri's share of Mark's pension and 401k. Therefore, the panel found, there was good cause to protect Terri's community interests through the orders that the trial court made.
Never too late. . .
The justices emphasized that under Fam.C. §2034(c), the trial court has jurisdiction to resolve any dispute that arises regarding the FLARPLs, without time limits or consideration of whether they have been recorded. That means, they said, that the lower court may "revisit the propriety of the lien at any time and, in an appropriate case, expunge or limit the lien." Given the facts here, the panel concluded that the trial court did not err in making its limitation order and it affirmed that order.
Some family law attorneys may remember when FLARPLs first came along and were welcomed as a way to make sure that we could collect our fees. In those days, housing prices went steadily and reliably up. Then, the bottom fell out of the real estate market, housing prices went down and not up, and FLARPLs didn't look so secure. Add to that the trial court's ability to limit or expunge the lien, as this case shows, and family law attorneys now would be wise to be skeptical of using a FLARPL to secure fees, especially where the family home is the parties' greatest asset.