CA Courts, California Sixth District Court of Appeal: Fraud Against the Court

Time to talk about

MY BIG FAT SILICON VALLEY DIVORCE!

UPDATE: On September 24, 2004, 6th District California Court of Appeals affirmed the Judgment in total. I will post the decision within the month. Affirmed: sanctions; sanction based attorney fees; undereporting income to wife, court and IRS; business has goodwill; Epstein credits not mandatory. The Court of Appeals decided the trial court did not abuse its discretion and the husband took unfair advantage of wife. (Bradley v Bradley) We are entering year 7 and working in a collaborative law process to get the court ordered judgment of 2002 paid.

They lie, they lose, they complain, and finally they appeal.

Fraud Against the Court and Breach of Fiduciary Duty Continues: A Lighthearted Look at Some Tough Stuff starring opposing counsel, missing attorneys and "never gonna give her anything as long as I live" ex spouse.
7 years ago when Ann was naive she had some money. Now ex has her money, opposing counsel has everyone's money, and missing appeals attorney abandoned Ann and all his clients. But before he did that, he said "I'll read the brief, outline the issues and you do the research." That was the deal - who else would work for nothing but a missing attorney and have the client do the work? It's the fun house of divorce, the roller coaster ride with twists and turns you never expected. It's the House of Horrors come alive.

"Shall I hit her over the head with a 2x4?"
asked opposing counsel, Jeffrey Kaufman of Palo Alto
Let the good times roll....
Thanks to testosterone fueled psychosis this divorce took on a life of its on. From the time ex said, "I want to save money in attorney fees" to my attorney who never told me opposing counsel should not be talking to me to the court of appeals, we have tasted the smorgasbord of a tad bit of everything the divorce industry has to serve up. Opposing counsel works magic! He takes the guy who wants to save money in his divorce and counsels him to go to trial in the face of evidence that proves the fraud, who will now owe more to the IRS, and he will end up paying all the attorneys for years to come. It's alchemy. Do they teach this in Legal Sleight of Hand 101?
Here is my Respondent's Brief, followed by their Reply Brief. They are anything but (brief). I include them here as warning: talk to your spouse when s/he wants to talk. It is cheaper than attorneys. A trial, an appeal....none of this should have happened. I tried to talk, they called it bad. I tried to settle, they called me greedy. In the end, the attorneys got more than the judge ordered. And when I said I was willing to settle for $13,500...well.....someone should have listened to me instead of his attorney!
I can only shrug at all they do. Years as hostage to divorce, a crash course in legal ethics, if I don't turn it into humor and find the fun, it becomes despair. And that I cannot do.
Coming soon - Appellant Brief

(The first page had to be revised for citation problems, they were corrected but are only minor and were filed with the court)

I INTRODUCTION

This appeal seeks review of a family law judgment after trial. It
presents important specific breach of fiduciary issues where James Bradley
(Respondent below and Appellant in this Court, hereafter James) was found
by the trial court to have concealed income from his wife, Ann Bradley
(Petitioner below and Respondent in this Court, hereafter Ann) from the
court below, and from the IRS by concocting a fraudulent set of business
records. The trial court found the fraud to have commenced during the
marriage and continued to time of trial. It approximated James' income on
the basis of the evidence before it and then set child and spousal support,
declined to allow Epstein credits, valued the goodwill at $20,000, awarded
Ann attorney's fees and imposed sanctions of $10,000.00 against James on
the express basis that James' extraordinary deceptions had needlessly
forced the case to trial.

On appeal James argues that the trial court's findings had no evidentiary
basis and its rulings were arbitrary and capricious. The simple truth is
that James was caught violating his fiduciary duty to Ann and deceiving
the trial court. The carefully laundered version of facts and proceedings
set forth in James' brief cannot change the fact that the trial court's
findings were based on substantial credible evidence. The trial court's
rulings were not just consistent with, but compelled by, that evidence.
There was and is no error, much less reversible error, by the court below
and its judgment must be affirmed.

II STATEMENT OF FACTS
James and Ann married in 1987 and separated in 1998, a marriage of eleven
years. Reporter's Transcript of December 16, 2002 trial (hereafter "R.T.")
11:18-19; 12:7-8. There is one child of the marriage, born in
1987. R.T. 11:27-12:2.

Ann was a stay-at-home mother and housewife throughout the marriage.
R.T. 20-26. James does residential and commercial remodeling work. R.T.
44:8-13. His clients are primarily high-end homeowners. R.T. 94:21-25.
He does this work without a contractor's license. R.T. 94:6-8. James does
not advertise, and obtains all of his work by repeat clients and
referrals. A.A. at 97, ¬* 3. James has one person who works for him
basically full time and others who work for him on a regular basis. R.T.
142:24-143:12. For many years James kept a daily journal of work performed
and employees hours but he ceased keeping this work journal as soon as the
underlying motion to modify support was filed. R.T. 147:3-12.
In 1998, Ann retained attorney Anne Cone, who filed a petition for
dissolution and a motion to set child and spousal support. R.T. 13:1-7.
James chose not to seek separate counsel and asked Anne Cone to represent
both of them. R.T. 13:8-12. Based on James' claimed income
a stipulated order was entered setting temporary child support at
$700.00 and temporary spousal support at $1,000.00. R.T. 15-26.

At the end of June, Ann moved to New Mexico, and was joined by the minor
child in August. 13:27-14:5. Ann returned with Jamie to Palo Alto in the
fall of 1999. 16:12-14. James told Ann there was no money for child
support and that she and Jamie would have to live with him. R.T.
45:12-16.

Ann was still sharing a house with James in the summer of 2001, when James
informed Ann he was concealing income by shredding invoices and cashing
checks. R.T. 46:11-12. At Ann's request, James presented Ann with stacks
of neatly organized documents consisting of invoices to clients, materials
invoices, etc. and tax returns (R.T. 160:10-12), and Ann obtained copies of
a few invoices. R.T. 160:8-12; see, R.A. Tab 1, Bates 1, Tab 2, Bates 3,
Tab 3 Bates 5 and Tab 4, Bates 7. Ann consulted counsel and was advised
that since the business was a marital asset, she should begin to copy
business records. R.T. 46:12-15. She found cash and documents in the
filing cabinet and copied some of those documents, but was not able to
access his computer where most of the information was kept. R.T.
46:15-21. Invoices James had given Ann and invoices that Ann had found in
the file cabinets for the same jobs have significantly different charges,
with the ‚"undisclosed' invoices billing far higher amounts than the
invoices provided to Ann by James. Compare, R.A. Tab 1, Bates 1 with Bates
2; R.A. Tab 2, Bates 3 with Bates 4; R.A. Tab 3, Bates 5 with Bates 6;
and R.A. Tab 4, Bates 7 with Bates 8.

Ann filed a motion to modify support on February 21, 2002, seeking
guideline child and spousal support based on James' income as revealed by
double invoices and child support arrearages for the two years prior.
That motion ultimately led to the trial sub judice.

III. PROCEEDINGS BELOW

James' Brief refers repeatedly to the "soul searching" which he claims led
him to his "admission" that he had understated his income. See, e.g.
Opening Brief at pg. 6. This spin-doctoring does not accurately portray
events. As noted above, on February 21, 2002 Ann filed an Order To Show
Cause seeking a retroactive modification of temporary child and spousal
support. The OSC was initially continued to the long cause calendar, then
the Court reserved the issue for Trial. The matter was placed on the short
cause trial calendar for December 16, 2002 and a Settlement Conference was
set for December 4, 2002. Ann's Settlement Conference Statement estimated
James' income to be under-reported by some 40% and disclosed that Ann had
obtained records from some of James' clients. James then filed an Income &
Expense Declaration which James claimed accurately stated his income,
although what it actually did was conform to the limited documentary
evidence of his fraud that Ann had, at that point, presented.

Prior to trial, Ann served subpoenas on a few of James' customers
directing them to produce the invoices he had provided them; James fought
admission of those documents as irrelevant (R.T. 2-6) an objection the
trial court understandably overruled. Notably, these customer invoices
(R.A. Tabs 4-8) showed that James' income was in fact even greater than
estimated in Ann's Settlement Conference Statement and far more than
admitted to by James. James attempted to explain the ‚Äòdouble books'
revealed by her examination of the files and by the subpoenaed records from
James' clients by testifying that sometimes he would bill a client, later
realize that he had ‚Äòomitted' time and or materials and then send a
revised bill to that customer. See R.T. at 111:6-10. With a sample of
subpoenaed invoices from James' clients, and comparing the invoices to
James' transaction report, Ann proved that at least $30,000 of James'
income in a single year was not reported. (RT 58:12-59:18)
With regard to the value of his business, and using the income figures
from James' trial testimony (which his own attorney later admitted were
inaccurate (see A.A. at 57),) James had gross sales of well over
$100,000.00 every year. Again, James does no advertising and all of his
business was either repeat clients or referrals from past clients. A.A. at
97, ¬* 3. Despite these facts, James claimed that his business had
absolutely no goodwill value whatsoever. However, James introduced no
expert business valuation, although he admitted in a personal communication
to Ann that the business had a value and an appraisal would be required. R.A. at Tab 9.

Finally, James testified that there had been no quarterly tax payments
made on his business income during tax years 1992 through 1994. R.T.
140:20-24. He assert an Epstein claim for $16,400 he had allegedly paid on
what he claimed to be community debt for those tax years and a further
Epstein credits for post-separation payment of community credit card debt.
A.A. at 29. Ann argued that at least $5,000 of the post-separation
payments claimed by James had been made by him using funds loaned to James
by Ann (funds received by Ann as an inheritance), negating the Epstein
credit in that regard. A.A. 120.

At the conclusion of testimony the trial court instructed James to produce
his income tax returns within 10 days and set a post-trial briefing
schedule. Instead of producing tax returns which he had filed during the
years in question, 1998-2000, James admitted that those returns had
understated his income (see A.A. at 59) and submitted amended returns with
what he claimed were accurate figures. A.A. 60-89. Notably, those
restated figures are also fraudulent, as they fail to include certain
subpoenaed invoices admitted into evidence at the trial. Thus, even after
he admitted his fraud, James continued to mislead the trial court.
On January 13, 2003 the trial court issued its findings and orders. A.A.
96-98. The Court made the following specific factual findings:
1. James' construction work constituted a "Family Business" in which two
people work for him regularly, that James "gets clients by referral only"
and that he receives a "lucrative income" from this business. On this
basis, the Court found that "the Family Business does have value that
includes goodwill." A.A. 97 at ¬* 3.
2. James' "income that has been reported by [James] to [Ann] since 1998
has been under-reported intentionally," that [James] falsified billing
statements that he gave to [Ann] and that he created separate billing
statements for his clients." A.A. 97 at ¬* 11, 98 at ¬* 13.
3. James' misconduct "caused a delay in settling the trial." A.A. 98 at
¬* 13.
4. "The credibility of [James] and any evidence that he presented during
trial is questionable." A.A. 98 at ¬* 14.
On the basis of these factual findings the trial court made the following
orders which James challenges in this appeal:
1. Based on the DissoMaster printout submitted by Ann's counsel (see A.A.
131) that showed James as having self-employment income of $7,666 per
month, James was ordered to pay Guideline child support of $1,379 and to
pay spousal support of $2,000 per month (slightly less than Guideline),
retroactive to 1998, with the resulting arrearage to be paid forthwith.
A.A. 97 at ¬* 11.
2. James was ordered to pay Ann $10,000 for the community interest in the
goodwill of the family business. A.A. 98 at ¬* 16.
3. James was ordered to pay all of Ann's attorney's fees and an additional
sanction of $10,000 was imposed based on James' misconduct. A.A. 98 at ¬*
13, 15.
James objected to many of these findings, including the omission of any
mention of his Epstein credit claims. A.A. at 112. In response to the
latter, Ann argued that at least $5,000 of the post-separation payments
claimed by James had been made by him using funds loaned to him by Ann
(funds received by Ann as an inheritance), that negated the credit card
payment claims. A.A. at 120. In the final form of judgment, the trial
Court did grant James' request to award ¬* of the tax liability for 1992-94
to Ann. A.A. at 141.
The judgment substantially conformed to the initial findings and was in
fact the form of judgment submitted by Ann's counsel, although the copy of
the Final Judgment provided to this Court in Appellant's Appendix (A.A.
135-143) fails to include the DissoMaster printout on which the support
figures were based; a copy of that document is, however included in
Appellant's Appendix at page 131.
James timely filed his notice of appeal.

IV STATEMENT OF APPEALABILITY
The appeal herein seeks review of various orders embodied in a judgment
entered after trial. The judgment is appealable under Cal. Code of Civ.
Proc. ¬ß 904.1(a)(10).

V QUESTIONS PRESENTED
1.     With regard to child and spousal support orders, was there any
credible evidence, or inferences from that evidence, on which the trial
court could base its findings as to James' income?
2.     With regard to valuation of the family business, was there any
credible evidence, or inferences from that evidence, on which the trial
court could base its findings as to the value of the goodwill?
3.     Given the trial court's findings as to James' income, that James
had intentionally under-reported his income, and that this fraudulent
misconduct had delayed resolution of the case, was the award of attorney's
fees and imposition of sanctions against James an abuse of discretion?
4.     Given the evidence of Ann's post-separation debt payments, did the
trial court abuse its discretion in denying a portion of James' claim for
Epstein credits?

VI STANDARDS OF REVIEW
James claims that the trial court's decision regarding support should be
reviewed under an abuse of discretion standard.   However, what he
substantively attacks is the trial court's factual findings regarding his
income from the business. See Opening Brief at 21-24. Thus, the standard
of review is the highly deferential inquiry as to whether there was any
substantial credible evidence on which the trial court could base its
factual findings. Lammers v. Superior Court (Lammers) (2000) 83 Cal. App.
4th 1309, 1317.
James does not assign a standard of review to his challenge as to the
findings regarding goodwill value of the family business. However, this is
a finding of fact. Findings of fact are, again reviewed under the
substantial credible evidence standard.   Lammers v. Superior Court
(Lammers), supra 83 Cal. App. 4th at 1317.
Generally speaking, an award of attorney's fees is reviewed under the
abuse of discretion standard. Marriage of Keech (1999) 75 Cal. App. 4th
860, 866. However, in the case at bar James argues that the Court did not
have sufficient evidence on which to base the award. See Opening Brief at
31-34. Accordingly, the standard of review as to the factual findings is,
again, that of substantial credible evidence. Marriage of Mix (1975) 14
Cal. 3d 604, 614.
The trial court's award of monetary sanctions is reviewed under the abuse
of discretion standard.   Marriage of Petropoulos (2001) 91 Cal. Ap. 4th
161, 178.
/ / /
/ / /
/ / /
VII THE FINDINGS AND ORDERS REGARDING
CHILD AND SPOUSAL SUPPORT ARE BASED ON
FINDINGS REGARDING JAMES' INCOME THAT
ARE SUPPORTED BY SUBSTANTIAL EVIDENCE
AND WERE IN NO WAY AN ABUSE OF DISCRETION
Before turning to his cavils with regard to support, several things must
be noted. First, James does not in any manner challenge the trial court's
findings that he intentionally and fraudulently under-reported his income.
Second, James does not in any manner challenge the trial court's
modification of support retroactive to 1998 based on his intentional and
fraudulent under-reporting of his income. Third, James does not in any
manner challenge the trial court's finding that his testimony regarding,
inter alia, his income was not credible. With those predicates
established, Ann turns to the arguments proffered by James.

A. The trial court's findings as to James' income were based on
substantial evidence and/or reasonable inferences from the evidence before
the trial court.

California imposes a high standard of fiduciary duty between husband and
wife, emphasizing the mutual obligations and duties and
the highest degree of good faith and fairness. This standard includes
refraining from intentional misconduct, and requires spouses to a) provide
one another access to books and records, b) provide accurate information
about transactions affecting the community, and c) account for and share
any profits or benefits. Fam. Code ¬ß¬ß 1100, 1101. The evidence showed
overwhelmingly that James violated his fiduciary duty to Ann.
The child and spousal support orders were predicated on the trial court
finding that James' income was $7,666 per month. James argues that the
trial court erred because the only evidence regarding his income was his
testimony that his then-current income was $47,817 for the first 10 months
of 2002. James also complains that the Court disregarded his testimony
that he had suffered a diminished income due to an alleged general economic
downturn. James' arguments miss the mark for several reasons.
First, the issue before the trial court was modification of interim
support retroactive to 1998 based on James' fraudulent under-reporting of
income during the years 1998 through 2002. Thus the trial court was
required to consider his income for that entire period.
Second, James' amended income tax returns admitted to re-stated gross
sales of $80,946 in 1998, $91,527 in 1999, and $124,962 in 2000. He
reported $152,935 in 2001. However, the re-stated sales figures still
omitted income which Ann had discovered through subpoenaing invoices from
just a few of James' customers. The sampling done by Ann related to less
than 10% of all transactions reported by James during the relevant period.
That sampling revealed an under-reporting by James of just over 38.3%.
James' admitted income for 1998-2001 totaled $226,904, or $4,727 per month;
the finding of $7,666 per month represents a mere 32% more than James'
admitted average income for the period in question, less than the 38%
under-reporting demonstrated by the evidence. James testified that he
earned $8,851 net income in the month prior to the trial. (RT 145:2-5) He
also testified that he earned $6,129 monthly net income for 2001. James'
amended tax return for the year 2000 (A.A. 76-78) shows additional income
of $25,610, whereas the sampling of subpoenaed invoices for that year
showed at least $30,000 of undisclosed income. (RT 59:115-18). Under the
circumstances, it was not "mere speculation" for the trial court to assign
income to James of $7,666 per month.
The proper standard of review regarding the trial court's findings of fact
regarding James' income is whether there was any substantial credible
evidence to support the trial court's income findings. The way in which
the substantial evidence rule must be applied on appeal was succinctly
stated in Bowers v. Bernards, (1984) 150 Cal. App. 3d 870, 873-74 as
follows:
"When a trial court's factual determination is attacked on the ground that
there is no substantial evidence to sustain it, the power of an appellate
court begins and ends with the determination as to whether, on the entire
record, there is substantial evidence, contradicted or uncontradicted,
which will support the determination [and] the appellate court must affirm
[e]ven if the reviewing justices personally would have ruled differently
had they presided over the proceedings below, and even if other substantial
evidence would have supported a different result."

Moreover, an appellate court must indulge all reasonable inferences that
may be deduced from the facts in support of the party who prevailed in the
proceedings below. Kuhn v. Department of General Services, (1994) 22 Cal.
App. 4th 1627, 1632-33. Given the above-discussed evidence presented at
trial, the trial court's findings as to James' income must be sustained
under the substantial evidence rule as enunciated in Bowers, supra and the
corollary inferences rule stated in Kuhn. However, even assuming arguendo
that the abuse of discretion standard urged by James was applicable, the
trial court's ruling must be affirmed.
A reversible abuse of discretion occurs when the trial court "exceeds the
bounds of reason, all of the circumstances before it being considered"
(Marriage of Connolly (1979) 23 Cal. 3d 590, 598) and the resulting order
or judgment constitutes "a miscarriage of justice." Blank v. Kirwan, (1985)
39 Cal. 3d 311, 331. James simply cannot meet this standard here when the
circumstances before the trial court are considered, and especially when
the facts are considered in the light most favorable to Ann as the
prevailing party below. Simply stated, the evidence established James'
pervasive and fraudulent under-reporting of income over a four year period
and the trial court's finding that James' income was 32% more than he
claimed during that period cannot be characterized as a "miscarriage of
justice." Blank v. Kirwan, supra.
James further claims the trial court should have based its support orders
on his claimed current income, which he asserted to be an average of
$4,781over the first 10 months of 2002. However, several facts must be
noted. First, shortly after Ann filed her motion based on his fraudulent
under-reporting, James ceased keeping a daily journal of hours worked and
employees. When asked at trial why he changed his practice, James testified
that he did not want to do any more "paperwork". (RT 147:8-13) Second,
James failed to provide all of his invoices for the year 2002. In short,
James had eliminated the primary means for revealing his true income.
Moreover, investigation of even the limited raw financial data that James
had provided relative to 2002 showed that James was still understating his
income. The trial court's finding that James' income was $7,666 represents
a figure only 37% greater than that claimed by James for 2002. That
calculation by the trial court is entirely consistent with James'
demonstrated historical under-reporting. Lastly, it must be noted that in
his pre-trial brief James proposed that support be set based on his alleged
(though demonstrably understated) "current and prospective income of $5,266
per month" (A.A. 31, line 16). Given the repeated findings of James'
fraudulent under-reporting of income, the trial court's express finding
that James' testimony regarding his income was not credible, his net income
of $8,851 the month before trial, his net income of $6,129 in 2001, the
fact that he continued the fraud to the trial court with his amended
returns, it cannot rationally be said that it was a "miscarriage of
justice" (Blank v. Kirwan, supra) for the trial court to set support based
on an income figure of $7,666 for James; thus, his attack on the trial
court's findings regarding income are without merit.

B. James' claim that the trial court abused
its discretion by failing to consider the factors
that are applied to permanent support under
Family Code ¬ß 4320 is without a scintilla of merit.

James claims that in setting what James characterizes as "permanent"
support the trial court failed to consider the factors set out in Family
Code ¬ß 4320. James errs both conceptually, by characterizing the support
order as permanent, and concretely because the record makes clear that the
trial court did in fact consider each of the factors enumerated under ¬ß
4320.
Section 4320 sets forth the following 14 factors for the trial court to
consider in setting permanent support:
"(a) The extent to which the earning capacity of each party is sufficient
to maintain the standard of living established during the marriage, taking
into account all of the following:
(1) The marketable skills of the supported party; the job market for
those skills; the time and expenses required for the supported party to
acquire the appropriate education or training to develop those skills; and
the possible need for retraining or education to acquire other, more
marketable skills or employment.
(2) The extent to which the supported party's present or future earning
capacity is impaired by periods of unemployment that were incurred during
the marriage to permit the supported party to devote time to domestic
duties.
(b) The extent to which the supported party contributed to the attainment
of an education, training, a career position, or a license by the
supporting party.
(c) The ability of the supporting party to pay spousal support, taking
into account the supporting party's earning capacity, earned and unearned
income, assets, and standard of living.
(d) The needs of each party based on the standard of living established
during the marriage.
(e) The obligations and assets, including the separate property, of each
party.
(f) The duration of the marriage.
(g) The ability of the supported party to engage in gainful employment
without unduly interfering with the interests of dependent children in the
custody of the party.
(h) The age and health of the parties.
(i) Documented evidence of any history of domestic violence, as defined in
Section 6211, between the parties, including, but not limited to,
consideration of emotional distress resulting from domestic violence
perpetrated against the supported party by the supporting party, and
consideration of any history of violence against the supporting party by
the supported party.
(j) The immediate and specific tax consequences to each party.
(k) The balance of the hardships to each party.
(l) The goal that the supported party shall be self-supporting within a
reasonable period of time. Except in the case of a marriage of long
duration as described in Section 4336, a "reasonable period of time" for
purposes of this section generally shall be one-half the length of the
marriage. However, nothing in this section is intended to limit the court's
discretion to order support for a greater or lesser length of time, based
on any of the other factors listed in this section, Section 4336, and the
circumstances of the parties.
(m) The criminal conviction of an abusive spouse and the elimination of
the award in accordance with Section 4325.
(n) Any other factors the court determines are just and equitable."

While James' Opening Brief consumes a number of pages enunciating the
general law regarding consideration of the ¬ß 4320 factors, in the end
James' argument relating to ¬ß 4320 as applied to this case is a single
paragraph, at page 24:
"There is no showing that the [trial] court took into account [James']
income or the effects of the economic downturn. Neither is there any
analysis of the impact on [James'] finances of the $52,000 income tax
obligation and the immediately payable obligation of $10,000 for
goodwill/family business and the $96,179 in arrearages."

It must be noted that although James filed repeated and extensive
objections to and proposed modification of the trial court's statement of
decision (see A.A. at 111-118 and 133-34), James never once made any of the
objections and arguments presented here as to permanent support. James is,
of course, precluded from raising these new arguments for the first time on
appeal. Marriage of Arcenaux, (1990) 51 Cal. 3d 1130, 1138. Even assuming
that these claims were properly before this Court, they are meritless. Ann
addresses these contentions serriatim:
1.    Although James argues that the trial court did not consider James'
income, this claim is simply false. The trial court not only considered
James' income, it made specific findings as to the amount of that income,
findings supported (as discussed supra) by substantial credible evidence.
2.   Although James' brief makes much of a supposed economic downturn in
Santa Clara County during 2002, James' own testimony demonstrates the
fallacy of this argument as applied to the case at bar. Even using James'
demonstrably understated income figures for 1998 through 2001 his average
income for that period was $4,727 per month, and his claimed income for the
first 10 months of 2002 was an average of $4,781. In other words, James'
admitted (though demonstrably understated) income for 2002 was actually
higher than his admitted four year average. Thus, even assuming that the
trial court had taken judicial notice of the alleged "economic downturn" in
Santa Clara County the fact remains that James was not suffering from a
"downturn" in his income.
3.     With regard to the alleged $52,000 tax debt, several things bear
mention. First, the trial court divided that debt between the parties.
Second, James testified he was paying that obligation at a rate of $300 per
month, a mere 3.9% of James' monthly income. This figure is so trivial
that James cannot show (and in fact does not even bother to actually argue)
that its consideration would have altered the outcome in any fashion.
Thus, no error is established.   Marriage of McLaughlin (2000) 82 Cal. App.
4th 327, 336-337 ("appellant bears the duty of spelling out in his brief
exactly how the error caused a miscarriage of justice").
4.   James claims, without elaboration, that in setting permanent support
the trial court did not consider the fact that James was obliged to pay
$10,000 to Ann for her share of the family business' goodwill and, further,
that the trial court did not consider James' support arrearage of $96,179.
Nonsense. These two obligations were established in the same order that
set support and the trial court manifestly considered these two obligations
when concurrently issuing its support rulings.
In sum, James' attacks on the trial court's support order are uniformly
ill-taken. The trial court had more than ample evidence before it to
justify the income figure it reached for James. That figure is not
speculation but is based on James' own invoices to his clients and
rudimentary mathematics. Even assuming that the subject order could be
characterized as one for permanent support rather than a modification of
temporary support, one that was expressly retroactive based on James'
admitted fraud, the trial court made findings as to all of the factors
specified under ¬ß 4320. Plainly stated, that James does not like the fact
that he was caught hiding income is simply not a basis to reverse a
well-reasoned and legally justified support order.

VIII THE TRIAL COURT'S FINDING AS TO THE GOODWILL VALUE OF THE FAMILY BUSINESS
WAS APPROPRIATE UNDER CONTROLLING LAW

James sought to have the family business allocated to him as part of the
division of community property. Under these circumstances, James plainly
had the burden of proof in terms of establishing the value of the business
for purposes of division. James provided no expert valuation of the
business, arguing that he could not afford the fee for an expert
evaluation. RT . 175:4-11. Instead, James argued that the business had
no goodwill value, an opinion which the trial court rightfully found not
credible. At the close of trial the court: (1) noted James' failure to
provide any expert testimony on the goodwill value; (2) indicated its
skepticism as to husband's zero dollar valuation; and (3) stated that it
would do its best to assign a value based on any relevant evidence it found
in the record. R.T. 174:21-175:3.
Post-trial briefing was requested by the Court. Ann suggested that the
valuation issue was resolved by the Court in Marriage of Foster (1974) 42
Cal. App. 3d 577, 581. There the expert testified that there was no one
definite method for valuing goodwill and based his opinion of Goodwill on
three months' net earnings, but testified that one could use a multiplier
as well. Foster, supra, 42 Cal. App. 3d at 580-581. Ann urged the trial
court to use the admitted income ($6,509) from James' Trial Brief, multiply
it by 3 months, so that the value of his business for a single year would
be $19,527, including Goodwill. She argued that a 3 year multiplier should
be utilized to give the reasonable value of Respondent's business to be
$58,581.
The trial court found that "the Family Business does have value that
includes goodwill," The Court partially rejected Ann's valuation argument
and on the basis of the evidence before it determined the goodwill to have
a value of $20,000, from which Ann was awarded $10,000. James attacks the
trial court's finding as being contrary to his ‚Äòtestimony' that the
business had no goodwill value. James also, tangentially, objects that the
valuation may have been based on value at the time of separation rather
than at the time of trial. These quibbles are without merit and do not
justify vacating the trial court's findings.
Where there is a family business that is part of the community property
the court is required to determine whether goodwill exists and, if it does
exist, the goodwill must be assigned a value and be factored into the
property division. Marriage of Nichols (1994) 27 Cal. App. 4th 661, 673;
Marriage of Fenton (1982) 134 Cal. App. 3d 451, 460-63. Thus the trial
court had a mandatory duty to make the findings now attacked by James, and
could only do so on the basis of the evidence available to it.
Bus. and Prof. Code ¬ß 14100 defines goodwill as "the expectation of
continued public patronage" which has been explained in case law as
"[T]he general public patronage and encouragement which it receives from
constant or habitual customers, on account of its local position, or common
celebrity, or reputation for skill or affluence or punctuality, or from
other accidental circumstances, or necessities, or even from ancient
partialities or prejudices. [I]t is the probability that the old customers
will resort to the old place. It is the probability that the business will
continue in the future as in the past, adding to the profits of the concern
and contributing to the means of meeting its engagements as they come
in." Marriage of Foster, supra, at 581-582.

Here, the trial court specifically ruled that "the Family Business does
have value that includes goodwill" based on James' testimony that he does
not advertise and that all business is from repeat customers and referrals
by satisfied customers; indeed, the trial court expressly found that James
"has made a name for himself and gets clients by referral only" A.A. at 97,
¬* 3. Thus, there was substantial evidence supporting the trial court's
finding that the business had some goodwill as that term is defined by Bus.
& Prof. Code ¬ß 14100 and by case law.
The real issue is the trial court's valuation of the good will. In most
instances, a trial court will be provided with expert valuations. Those
valuations are sometimes based on the retained earnings approach, but that
is not mandatory; "'Goodwill value may be measured by 'any legitimate
method of evaluation that measures its present value by taking into account
some past result so long as the evidence "legitimately establishes
value.'" Marriage of Rosen (2002) 105 Cal. App. 4th 808, 819, quoting
Marriage of Foster (1974) 42 Cal. App. 3d 577, 584. Here, James failed to
provide an expert valuation, and with an income determined to be $300 per
month Ann plainly could not afford to hire an expert. That does not mean,
however, that the trial court had no evidence on which to base the goodwill
valuation of $20,000.
In valuing the good will of a ‚Äòsole proprietorship' family law courts
consider a number of factors, including the income history of the business,
the reputation of the business, the length of time the business has been
operating and the level of repeat patronage. Marriage of Winn, (1979) 98
Cal. App. 3d 363, 366-367. The trial court here undeniably considered
these factors. In its statement of decision, the trial court specifically
found that James "gets clients by referral only" and that he receives a
"lucrative income" from this business, an income eventually determined to
be an average of $7,666 per month over a nearly five year span.
Again, the court below had a mandatory duty to value the goodwill.
Marriage of Nichols, supra, 27 Cal. App. 4th at 673. Having failed to
provide expert testimony or any other admissible evidence of value, James
now complains that the trial court's ruling had no evidentiary basis. The
bottom line here is simple: the trial court did the best it could do with
the evidence before it. Even using James' own demonstrably under-reported
figures, over a four year period the business had average sales of $112,592
and average profits of $56,726. In mathematical terms, the $20,000
goodwill valuation comes to a mere 21% of what the trial court found to be
Husband's average annual income from the business.
The challenged ruling cannot be overturned simply because it was contrary
to James' disallowed testimony that the business had no good will value.
His claim that this constitutes an abuse of discretion is insupportable; it
cannot be said that the trial court's decision "exceeded the bounds of
reason, all of the circumstances before it being considered." Marriage of
Connolly (1979) 23 Cal. 3d 590, 598. Accordingly, the trial court's order
must be affirmed.

IX THE ORDER AWARDING ANN HER ATTORNEY'S FEES AND THE ORDER IMPOSING
SANCTIONS AGAINST JAMES WERE FULLY WARRANTED

James challenges as an abuse of discretion the trial court's order
awarding Ann "all of [Ann's] attorney's fees" and the additional order
imposing sanctions of $10,000 against James. Because both the applicable
legal criteria and the factual criteria for the two awards are different,
the issues are addressed separately.

A. The award of attorney's fees was warranted based on the trial court's
findings regarding the parties'
respective incomes and resulting ability to pay.

Section 2030 authorizes an award of attorney's fees in order to ensure
that both parties have the ability to afford counsel. Section 2030(a)(2);
Marriage of Kelso, (1998) 67 Cal. App. 4th 374, 384-85. An award of fees
under ¬ß2030 must be made after consideration of the income of the parties
and is intended to establish parity with regard to their ability to pay for
counsel. Section 2030(a)(1); Marriage of Sullivan (1984) 37 Cal 3d 762,
768; Marriage of Cheriton (2001) 92 Cal App. 4th 269, 318.
In the case at bar, the trial court found that James' income was $7,666
per month and Ann's income $300 per month. James cannot seriously contend
that an award of attorney's fees to Ann was not justified under ¬ß 2030. In
fact James does not actually contest this; James' quarrel is with the
amount of the fees.
James consumes over 4 pages of his brief with a discussion of local rules
regarding how the amount of fees should be calculated, what form of notice
should be given as to the amount that is being sought and case law
regarding the nature and extent of evidence needed to justify a specific
amount being sought.
In the case of Marriage of Ananeh-Firempong (1990) 219 Cal. App. 3d 272,
280 [268 Cal.Rptr. 83], the trial court awarded wife $20,000 in attorney's
fees even though the only evidence of the amount was wife's testimony that
she had been advised her legal fees were just over $15,000. The appellate
court affirmed that award as within the discretion of the trial court. The
court emphasized the role of the trial judge in determining the appropriate
amount of fees: "‚ÄòThe knowledge and experience of the trial judge afford
a sufficient basis for fixing the amount of a lawyer's fee, even though
there was no specific evidence on the subject.'" Marriage of
Ananeh-Firempong, supra, 219 Cal. App. 3d at 280, quoting Frank v. Frank
(1963) 213 Cal. App. 2d 135, 137. Among other factors, the court may
consider "‚Äòthe nature of the litigation, its complexity, the nature and
extent of the contest, the amount involved, the financial circumstances of
the parties, the skill required, the professional standing and reputation
of the husband's attorneys and the attorneys selected by the wife."
Marriage of Norton (1988) 206 Cal. App. 3d 53, 57 quoting Marriage of Hatch
(1985) 169 Cal. App. 3d 1213, 1219.
In the case at bar, the trial court was advised of the specific amount of
fees being requested in the course of post-trial proceedings. A.A. at
132. The trial court found those fees reasonable, and specifically awarded
Ann "all fees" so requested. Under the principles set forth in Marriage of
Ananeh-Firempong, supra, 219 Cal. App. 3d at 280 and Marriage of Norton,
supra, 206 Cal. App. 3d at 57, there is no basis for reversing the trial
court's finding that Wife is entitled to an award of all her attorney's
fees.

B. Given the findings that James fraudulently under-reported his income
and that James' misconduct delayed resolution by forcing the case to trial,
the imposition of monetary sanctions was fully warranted

Section 271 authorizes a trial court to award monetary sanctions when a
party's conduct "frustrates the policy of the law to promote settlement of
litigation." The trial court here imposed $10,000 in sanctions against
James and did so based on its findings that "income that has been reported
by [James] to [Ann] since 1998 has been under-reported intentionally," that
[James] falsified billing statements that he gave to [Ann] and that he
created separate billing statements for his clients," and that this
misconduct "caused a delay in settling the trial."
James does not actually challenge these findings. Indeed, careful review
of his brief reveals that although he seems to seek reversal of the
sanctions award the only challenge to that award is the claim that "the
court filed [sic] to demonstrate consideration of the financial burden
imposed by the combined sanctions and attorney's fees." Opening brief at
34. While it is true that a sanctions award cannot impose an unreasonable
financial burden against the sanctioned party (¬ß 271(a); Marriage of Quay,
(1993) 18 Cal. App. 4th 961, 969), there is no requirement in either
statutory or case law that the trial court make a specific finding to that
effect, and James makes no argument that the $10,000 sanctions award in
fact imposes an unreasonable burden on him. James makes no such effort
because the evidence belies such an argument.
A trial court's sanctions order is entitled to great deference on appeal.
Marriage of Abrams, (2003) 105 Cal. App. 4th 979, 991 (in reviewing
sanctions award, appellate court "must indulge all reasonable inferences to
uphold the court's order."). However, it requires no great indulgences to
see the justification for the order here. James was sanctioned for
persistent, deliberate and highly fraudulent under-reporting that extended
over a 4 year period. It is important to recall that James' misconduct did
not just involve ‚Äòsins of omission'; the trial court specifically found
that James "falsified billing statements that he gave to [Ann] and that he
created separate billing statements for his clients." Based on the trial
court's finding that James' actual income was $7,666 per month rather than
his claimed $4,727 per month, James under-reported his income during that
four year period by at least $141,064. A sanction amounting to less than
7% of James' fraudulently concealed income, and amounting to less than 3%
of his admitted income during the relevant period cannot rationally be held
to impose an unreasonable financial burden. As the party attacking the
amount of an award of sanctions James must show that "considering all of
the evidence viewed most favorably in support of its order, no judge could
reasonably make the order." Marriage of Burgard, (1999) 72 Cal. App. 4th
74, 82, quoting Marriage of Daniels, (1993) 19 Cal. App. 4th 1102, 1106.
James has failed to even attempt such a showing, much less achieve it, and
the sanctions order must be affirmed.

X THE TRIAL COURT DID NOT ABUSE ITS DISCRETION IN DISALLOWING SOME OF
JAMES' CLAIMS FOR EPSTEIN CREDITS

James claimed the following Epstein credits:
1. $16,400 which he claimed to have paid towards the IRS debts for the
years 1992 - 1994.
2. $4,942 in alleged community credit card debt that he claimed to have
paid after separation.
James' claim for Epstein credits is barred by the doctrine of unclean
hands. "Under the ‚Äòunclean hands' doctrine, a party is barred from relief
if he has engaged in any unconscientious conduct directly
related to the transaction or matter before the court." DeRosa v.
Transamerica Title Insurance Co. (1989) 213 Cal. App. 3d 1390, 1395. As
the Court stated in a family law context, "In any event, dissolution
proceedings, despite our highly detailed statutory scheme, still retain
some vestige of equity and the trial court properly relied upon equitable
principles. Jess's wilful destruction of Cindy's jewelry certainly
constitutes "unclean hands and precludes his seeking judicial relief. He
may not complain when his conduct is so egregious." Marriage of Hebring
(1989) 207 Cal. App. 3d 1260, 1276.
In the present case, James' misconduct defeats his claim on two counts.
First, with regard to the credit card debts, Ann had loaned James $5,000
and these sums were the source of James' credit card payments, or at least
should be credited against them. Second, James utilized the concealed
community income to pay the debts. The trial court held that Ann was
liable for one half of the tax obligations for the years up to 1994 and
ordered her to pay one half of those debts. The court further held that
the tax obligations were the only community debts which James had proven,
and on that basis denied the requested Epstein credits.
On appeal, James asserts that the trial court denied all of his Epstein
claims. This is not accurate. The trial court has ordered Ann to pay one
half of the tax debts. This renders James' tax-payment-related Epstein
credit claim moot.
With regard to the credit card debts, James admitted that long after
separation Ann had given him $5,000 and that Ann said it was to be used
towards community debt. R.T. 150:5-27 James claimed that it had been for
other purposes. However, as James himself concedes, "the trier of fact is
free to reject uncontradicted testimony in appellant's favor." Opening
Brief at page 36. On that basis, coupled with James' unclean hands, the
trial court's denial of Epstein credits as to the credit card payments was
proper.

XI CONCLUSION
Most of James' attacks on the trial court's orders are based on James
claims of inadequate evidence to sustain the factual findings. As noted
supra, such attacks cannot prevail if there was any credible evidence to
support the factual findings in the court below. Marriage of Mix, supra,
14 Cal. 3d at 614; Lammers v. Superior Court (Lammers), supra 83 Cal. App.
4th at 1317. The only way that James' Opening Brief can mount even a
marginally colorable attack on the factual findings is by simply failing to
inform this Court of the plethora of evidence introduced below that
contradicts James' view of the facts; in short, there was more than
substantial credible evidence to support the factual findings below and
reversal would be impermissible under well-settled rules on appeal.
James' attempts to argue abuses of discretion below also must fail.
Reversal for abuse of discretion can support reversal "only if, considering
all evidence viewed most favorably in support of the order, no judge could
reasonably make the order." Marriage of Keech (1999) 75 Cal. App. 4th 860,
866. James does not even come close to meeting that standard, because he
cannot. The trial court's orders were a reasoned and reasonable response
to what the evidence unequivocally established to be James' four year
history of breaching his fiduciary duties and not just omitting income
information but actively defrauding Ann by concocting duplicate records,
shredding records and hiding cash income
For all of the above-stated reasons, James has wholly failed to
demonstrate any reversible error by the trial court, and the judgment must
be affirmed.

Dated: April 25, 2004 Law Offices of Patrick Talbot Hall

       By: ____________________________
     Patrick Talbot Hall
     Attorneys for Respondent CERTIFICATION REGARDING WORD
COUNT Respondent's Brief was created on a computer, using WordPerfect
software. The word count function of that software states that Appellants'
Opening Brief contains 7,834 words, exclusive of tables and this
declaration.

Dated: April 25, 2004 Law Offices of Patrick Talbot Hall

       By: ____________________________
     Patrick Talbot Hall
     Attorneys for Respondent TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES iii

INTRODUCTION 1

II STATEMENT OF FACTS 2

III. PROCEEDINGS BELOW 4

IV STATEMENT OF APPEALABILITY 8

V QUESTIONS PRESENTED 9

VI STANDARDS OF REVIEW 9

VII THE FINDINGS AND ORDERS REGARDING
CHILD AND SPOUSAL SUPPORT ARE BASED ON
FINDINGS REGARDING JAMES' INCOME THAT
ARE SUPPORTED BY SUBSTANTIAL EVIDENCE
AND WERE IN NO WAY AN ABUSE OF DISCRETION 11

A. The trial court's findings as to James' income were based on
substantial evidence and/or reasonable inferences from the evidence
before the trial court. 11 TABLE OF CONTENTS (cont.)

B. James' claim that the trial court abused
its discretion by failing to consider the   factors that are applied to
permanent support
   under Family Code ¬ß 4320 is without
   a scintilla of merit. 16

VIII THE TRIAL COURT'S FINDING AS TO THE GOODWILL VALUE OF THE FAMILY
BUSINESS WAS
APPROPRIATE UNDER CONTROLLING LAW 20

IX THE ORDER AWARDING ANN HER ATTORNEY'S FEES AND THE ORDER IMPOSING
SANCTIONS AGAINST JAMES WERE FULLY WARRANTED 25

A. The award of attorney's fees was warranted based on the trial court's
findings regarding the parties'
respective incomes and resulting ability to pay. 25

X THE TRIAL COURT DID NOT ABUSE ITS DISCRETION IN DISALLOWING SOME OF
JAMES' CLAIMS
FOR EPSTEIN CREDITS 29

XI CONCLUSION 31
TABLE OF CITED AUTHORITIES

Cases:

Blank v. Kirwan, (1985)
39 Cal. 3d 311 14, 15

Bowers v. Bernards, (1984)
150 Cal. App. 3d 870 13, 14

DeRosa v. Transamerica Title Insurance Co. (1989)
213 Cal. App. 3d 1390 29

Frank v. Frank (1963)
213 Cal. App. 2d 135 26

Kuhn v. Department of General Services, (1994)
22 Cal. App. 4th 1627 14

Lammers v. Superior Court (Lammers) (2000)
83 Cal. App. 4th 1309 10, 31

Marriage of Abrams, (2003)
105 Cal. App. 4th 979 28

Marriage of Arcenaux, (1990)
51 Cal. 3d 1130 18

Marriage of Ananeh-Firempong (1990)
219 Cal. App. 3d 272 26

Marriage of Burgard, (1999)
72 Cal. App. 4th 74 29

Marriage of Cheriton (2001)
92 Cal App. 4th 269 25

TABLE OF CITED AUTHORITIES (cont.)

Cases (cont.):

Marriage of Connolly (1979)
23 Cal. 3d 590 14, 24

Marriage of Daniels, (1993)
19 Cal. App. 4th 1102 29

Marriage of Fenton (1982)
134 Cal. App. 3d 451 22

Marriage of Foster (1974)
42 Cal .App. 3d 577 21-23

Marriage of Hatch (1985)
169 Cal. App. 3d 1213 26, 27

Marriage of Hebring (1989)
207 Cal. App. 3d 1260 30

Marriage of Keech (1999)
75 Cal. App. 4th 860 10, 31

Marriage of Kelso, (1998)
67 Cal. App. 4th 374 25

Marriage of McLaughlin (2000)
82 Cal. App. 4th 327 19

Marriage of Mix (1975)
14 Cal. 3d 604 10, 31

Marriage of Norton (1988)
206 Cal. App. 3d 53 26

TABLE OF CITED AUTHORITIES (cont.)

Cases (cont.):

Marriage of Nichols (1994)
27 Cal. App. 4th 661 22, 24

Marriage of Petropoulos (2001)
91 Cal. Ap. 4th 161 10

Marriage of Rosen (2002)
105 Cal. App. 4th 808 23

Marriage of Quay, (1993)
18 Cal. App. 4th 961 28

Marriage of Sullivan (1984)
37 Cal 3d 762 25

Marriage of Winn, (1979)
98 Cal. App. 3d 363 24

Statutes:

Cal. Code of Civ. Proc. ¬ß 904.1(a)(10) 8, 10

Cal. Bus. & Prof. Code ¬ß 14100 22, 23

Cal. Fam. Code ¬ß 1100 11, 16

Cal. Fam. Code ¬ß 2030(a)(1) 25

Cal. Fam. Code ¬ß 2030(a)(2) 25

Cal. Fam. Code ¬ß 271 27

TABLE OF CITED AUTHORITIES (cont.)

Statutes (cont.):

Cal. Fam. Code ¬ß 271(a) 28

Cal. Family Code ¬ß 2030 25

Cal. Family Code ¬ß 4320 16, 18, 20

No. H026074

IN THE COURT OF APPEAL
OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT

MARRIAGE OF BRADLEY

Petitioner/Respondent: ANN BRADLEY
Respondent/Appellant: JAMES BRADLEY
No. H026074[Santa Clara Sup. 1-98-FL-075581]

APPELLANTS' REPLY BRIEF

INTRODUCTION

As stated in his Opening Brief, Appellant submits that the trial court
abused it discretion in its rulings on spousal support, child support,
attorney's fees, good will and reimbursement, in reaction to Appellant's
admitted understatement of income. Appellant urges that these rulings were
based on speculation and improper imputation of income, did not have an
adequate factual basis, and went beyond the legally authorized sanctions
available to punish appellant for understating his income. Respondent fails
to dispel the notion that the trial court overreacted to Petitioner's
conduct, and attempts to uphold the rulings by making assertions about what
happened in the trial court which are unsupported by the record.

STANDARD OF REVIEW

In an effort to put nearly every argument made by James under the magic
rubric of "insufficient evidence," Ann claims that James has set forth the
wrong standards for review. [RB 9-10] James submits that his Opening Brief
accurately expresses the appropriate standards supported by well-established
authorities. [AOB 3-4]

Ann makes the point that the support order need not be supported by a
showing that the trial court considered the Family Code section 4320 factors
because the ultimate support order actually arose from a request for
temporary support. [RB 16, first paragraph] This argument should be
rejected, because the support issue was deferred to time of trial [AA
25:20-22], was adjudicated as part of a final judgment of dissolution [AA
135-143; see Family Code section 4330, which mandates application of the
4320 factors at the time of judgment], and involved the usage of the
Dissomaster calculator as baseline. [see AOB 23; Marriage of Schulze (1997)
60 Cal.App.4th 519, 526-527] Moreover, in her Petitioner's Trial Brief, Ann
requested "permanent Guideline Spousal Support." [AA 48] Accordingly,
compliance with Family Code section 4320 was required, and if the trial
court failed to comply, this was by definition an abuse of discretion.
Marriage of Cheriton (2001) 92 Cal.App.4th 269, 305.
Ann ignores James's contention that as to attorney's fees, James is
challenging the legal basis of the award as well as urging that the award
was an abuse of discretion. [AOB 3-4] Ann's suggestion that the only basis
for the attack on the attorney fee award is lack of "sufficient evidence" is
erroneous. [RB 10, second full paragraph]

In her discussion of what is "substantial evidence," Ann fails to
note that such evidence is not just any evidence, but evidence which is credible,
reasonable in nature, and of solid value. Estate of Teed (1952) 112
Cal.App.2d 638, 644. Such evidence does not include speculation. Marriage
of Prietsch & Calhoun (1987) 190 Cal.App.3d 645, 656.

CONTENTIONS OF RESPONDENT WHICH ARE NOT SUPPORTED BY THE RECORD

In an effort to demonstrate that there is "substantial evidence to
support the trial court's orders, and to discredit James's arguments and suggest
that he "continues to mislead the court," Ann makes numerous assertions
which are incorrect and which have no support in the record:

1. There is no meaningful support in the record for Ann's
suggestion that James continued to misrepresent his income to the court even after the
admission came to light. For example, there is no support whatsoever, for
Ann's assertion that "James had gross sales of well over $100,000 every
year." [RB 5, first full paragraph] Notably, there is no citation to the
record for this assertion.

2. Nor does Ann provide a citation to any part of the record for
her false assertion that the restated figures in James's amended tax returns shown to
the trial court failed to include certain subpoenaed invoices admitted into
evidence at trial. [RB 6, second paragraph]. Therefore, there is no support
for Ann's bald assertion that "[E]ven after he admitted the fraud, James
continued to mislead the trial court."

3. Ann states in her brief that a sampling of the subpoenaed
invoices for the year 2000 "showed at least $30,000 of undisclosed income," (compared to
the $25,610 additional income shown by James on the 2000 amended return).
[RB 13] In support of this statement, she cites only her own testimony at
RT 59:15-18. In this part of her testimony, she referred to her own
"Exhibit 9" a transaction report for the year 2000 prepared by James. Due
to an apparent oversight, Ann's Exhibit 9 has not yet been made a part of
the record [Respondent's Appendix includes Exhibits 1 through 8 and Exhibit
10], and it is anticipated that James or Ann will make an application for
later transmittal of the exhibit pursuant to California Rules of Court, Rule
18(c). A comparison of James's copy of this exhibit with the corresponding
invoices shown in Ann's Exhibits 5, 7, and 8 does not at all support the
conclusion that James failed to disclose $30,000 of income. Although Ann
had control over many of the relevant documents which she took from the
premises [RT 132:20-28] she has never demonstrated how she reconstructed the
alleged $4,390 difference between James's amended additional gross income
figure of $25,610 for the year 2000 and the claimed $30,000 spread between
two sets of selected invoices. There is simply no basis for suggesting that
the numbers provided by James in the amended returns were false.

4. There is no citation supporting Ann's statement that her "sampling"
revealed an under-reporting by James of just over 38.3%. [RB, bottom page
12] This unverified statement is made in support of an argument that
completely misses James's point: Ann compares James's amended return numbers
with the numbers the court was speculating to be the correct income figures
(which she says yields a difference of 32%), whereas her original estimate
of 38.3% was presumably based on a "sampling" of invoices that were compared
before James's amended returns were prepared. [see AA 46:5-21] James's
argument is that the court apparently made assumptions that James's amended
numbers were significantly understated. [AOB 12-14] Neither Ann nor the
record demonstrate that the court had any basis for these speculative
conclusions.

5. Ann states that her "sampling" of invoices related to less than
10% of all of the transactions reported by James during the relevant period [RB 12,
last paragraph] However, she does not demonstrate how one arrives at the
conclusion that James under-reported all of his income by 38.3 per cent, or
explain how this extrapolation squares with her admission that there were a
lot of "matches" between the invoices that demonstrated that the amount
billed to the client was exactly what James reported. [RT 57:9-16] An
examination of Exhibit 9 and exhibits 5 through 8 will show that 21 of the
34 entries have invoices that exactly match.

6. There is no citation to or support in the record for Ann's
assertion that the "re-stated sales figures still omitted income which Ann had
discovered through subpoenaing invoices from just a few of James's
customers." [RB 12, last paragraph, third sentence] Nor does Ann explain
how it makes sense to compare "adjusted gross income" figure on the amended
return (a figure which is essentially net profit less adjustments for Social
Security tax, etc.) with the gross sales figure on the invoices.

7. Ann suggests that the fact that James had a net income of
$8,851 in the month prior to trial is a factor justifying the trial court's ultimate
assumed income figure of $7,666. [RB 13, first full sentence] Since James's
self-employment income fluctuates widely from month to month [see, for
Example, James's Exhibit F], a net income figure from a single month is
nearly meaningless. If Ann is suggesting that it is reasonable to split the
difference between the net income for one month in 2002 and the admitted
net income for 2001 [RB 13, first, second and fourth full sentences, RB 15
near bottom], then she is suggesting that speculation is itself reasonable.
8. There is no support in the record for Ann's incorrect assertion
that James failed to provide all of his invoices for 2002 [RB 15, third full
sentence], and therefore it is not proper for her to assume that the court
took this factor into consideration in arriving at an income figure.

9. There is no basis for Ann's characterization of James's
clientele as "primarily high-end homeowners" [RB 2, second paragraph]. The testimony
cited by Ann does not support this characterization at all: "Quite often
owner-builders take on projects themselves but need more expert help." [RT
94:21-25]

10. James has not claimed, as Ann asserts (RB 4) that James's
post-trial "soul-searching" led him to his admission that he had understated his
income. In fact Ann herself acknowledges that James admitted to
understating income in the summer of 2001. [RB 3: RT 46:11-12]

11. Ann suggests that James has omitted his income and expense
declaration. [RB 4, footnote 1] In fact, this document was lodged as
Exhibit B with James's Designation and List of Appellant's Exhibits, served
on Ann's counsel October 2, 2003 and filed with this Court and approved by
the Clerk on October 6, 2003.

LEGAL DISCUSSION

1. The Trial Court Abused Its Discretion in Setting
Support by Engaging in Speculation and Ignoring the
Analysis Required by Family Code Section 4320

James has demonstrated the extent to which the trial court's award of
support is based on factors which are speculative. The support award is also
reversible for lack of compliance with Family Code section 4320.
The court does not have discretion to ignore any relevant circumstance
enumerated in the Family Code section 4320, and "must both recognize and
apply each applicable statutory factor in setting spousal support." Marriage
of Cheriton (2001) 92 Cal.App.4th 269, 304.

Ann argues that James cannot complain of the trial court's failure to
demonstrate consideration of the section 4320 factors, because he did not
raise the issue in the Statement of Decision process. [RB 18]
However, since consideration and application of the factors is a mandatory
duty of the trial court, and the court has not discretion to ignore any of
the factors, Marriage of Cheriton (2001) 92 Cal.App.4th 269, 302-304, the
error inherent in the court's failure to do so is not waived by James's
alleged failure to include it in his Objections and Proposed Revisions. In
any event, James's Objections to Findings and Order After Trial included the
objection that the proposed Statement of Decision was "ambiguous and
incomplete." [AA 111:19-20] The ambiguity and incompleteness is evident
from the face of the ultimate judgment: although the Final Judgment of
Dissolution recites that "The Family Code section 4320 factors were
considered, as listed in Attachment 3b" [see AA 139 paragraph 3b], there is
no such attachment to the judgment. [AA 135-143]

2. The Doctrine of Unclean Hands is Not
A Proper Basis for Denying James Epstein Credits

Ann argues that the doctrine of "unclean hands" justifies the court's
disallowance of Epstein credits to James [RB 29] This argument must fail
for at least four reasons: (1) the trial court did not mention the doctrine
of unclean hands or otherwise invoke it, it simply said that James was not
credible [AA 141, first and third paragraphs]; (2) there is no precedent in
any Family Law case for application of the doctrine of unclean hands to the
question of Epstein credits; (3) although the credits claimed by James were
denominated "Epstein" credits, they were essentially based on the court's
obligation to equally divide the community debts and therefor grounded on a
legal obligation rather than a purely equitable principle; and (4) refusal
to allow the credits is not supportable under any established Epstein
equitable guidelines defining when reimbursement would be inappropriate
(contrary agreement, payment intended as gift, payment not in excess of
value of use by payer, discharge of support duty). [See Hogoboom & King,
CAL. PRAC. GUIDE:FAMILY LAW (the Rutter Group 2004) paragraphs 8:845-8:89]

CONCLUSION

The Appellant's Opening Brief and Appendix amply demonstrate that
the trial court abused its discretion as to support, goodwill, Epstein credits, and
attorneys fees and costs, in an excessive reaction to James's admission that
he had understated income. In setting spousal support, the court ignored
the mandate of Family Code section 4320. James submits that the judgment be
reversed and that the matter be remanded to the trial court for further
proceedings on the issues of support, attorney's fees, goodwill, and
reimbursement credits.

Dated: June 14, 2004 Respectfully submitted,
_____________________________
BRIAN BECKWITH
Attorney for Respondent/Appellant
JAMES BRADLEY

COUNSEL'S CERTIFICATE OF WORD COUNT

I, Brian Beckwith, certify as follows:
I am the attorney of record for Respondent/Appellant JAMES BRADLEY herein
and the author of the above computer-generated Appellant's Reply Brief.
According to the Word Count feature of the Microsoft Word program used in
preparing this brief, said brief consists of 2,107 words, exclusive of
caption, tables, this certificate, and attachments.

Dated: June 14, 2004 ____________________________
BRIAN BECKWITH
Attorney for Respondent/Appellant
JAMES BRADLEY