Marriage of Shannahan

CourtCalifornia Court of Appeal
DecidedMarch 14, 2016
DocketD067258
StatusUnpublished

This text of Marriage of Shannahan (Marriage of Shannahan) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marriage of Shannahan, (Cal. Ct. App. 2016).

Opinion

Filed 3/14/16 Marriage of Shannahan NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

In re the Marriage of SARACIA and WILLIAM P. SHANNAHAN. D067258 SARACIA SHANNAHAN,

Respondent, (Super. Ct. Nos. D483710, 37-2009-00091569-CU-MC-CTL, v. 37-2009-00095945-CU-MC-CTL)

WILLIAM P. SHANNAHAN,

Appellant;

HIGGS, FLETCHER & MACK LLP,

Appellant.

APPEALS from an order of the Superior Court of San Diego County, Robert C.

Longstreth, Judge. Affirmed.

Higgs Fletcher & Mack, John Morris and Maggie Schroedter for Appellant Higgs

Fletcher & Mack, LLP.

RSR Law Group; Law Office of James Reynolds and James Reynolds, for

Appellant, William P. Shannahan. Law Office of S. Temko and Stephen Temko; Janis Law Group and Dean T. Janis;

Law Office of Beatrice L. Snider and Win Heiskala, for Respondent Saracia Shannahan.

Appellant and third party claimant Higgs Fletcher & Mack, LLP (Higgs) appeals

from a family court order denying its third party claim to ownership of certain insurance

funds at issue in the divorce proceedings of its former client, appellant William P.

Shannahan. The family court ruled the funds, which Higgs held in trust, belonged at all

times to William's former spouse, respondent Saracia Shannahan; Higgs had no right to

the funds in part because William's1 purported assignment of those funds to Higgs was

invalid as in violation of an automatic temporary restraining order (ATRO; Fam. Code,2

§ 2040, subd. (a)(2)) barring transfer or hypothecation of any property that remained in

effect until the final division of William and Saracia's property; and Saracia had a lien

over the funds that was superior to William's assignment to Higgs.

Higgs appeals from the order, and William joins in its arguments. It contends (1)

the family court's determination that the funds always belonged to Saracia is internally

inconsistent, which is itself grounds for reversal; (2) the court erred by making its

findings without permitting a hearing before a special master on the issue in

contravention of the parties' prior judgment on reserved issues and Higgs's right to due

process; and (3) the court erred by ruling Saracia's interest in the insurance funds had

priority over Higgs's interest. We affirm the order denying Higgs's claim of ownership

1 We refer to William and Saracia by their first names for convenience and clarity.

2 Statutory references are to the Family Code unless otherwise stated. 2 on grounds William's assignment and pledge of the funds to Higgs violated the ATRO,

and on that basis the family court did not err by invalidating the purported transfer and

Higgs's interest.

FACTUAL AND PROCEDURAL BACKGROUND

William and Saracia were involved in divorce proceedings, in connection with

which they disputed the characterization and division of personal property (furniture and

furnishings) destroyed in a fire. In March 2008, following trial, a privately compensated

temporary judge (Hon. Thomas Ashworth III (Ret.)) entered a final statement of decision

on reserved issues. In part, the court appointed a special master pursuant to Code of Civil

Procedure section 639 to make recommendations to it concerning which items of

furniture or furnishings were separate property, as well as an appropriate equal division

of the community items. Several months later, the court ordered that any insurance

proceeds relating to the personal property be deposited into an interest bearing segregated

trust account of William's counsel, Higgs, for the benefit of the parties. Thereafter,

Saracia sought, and the family court stated it would grant, a "judicial lien" in Saracia's

favor against William's assets.

On August 29, 2008, the court entered a judgment of dissolution on reserved

issues in the matter. In addition to appointing the special master with respect to the

characterization and division of furniture, the court reserved jurisdiction over the

disposition of the insurance proceeds.

In October 2008, the court entered its findings and order after hearing granting

Saracia a judicial lien "against all assets in [William's] name . . . ." The court also

3 ordered that the parties' ATRO's would "remain in effect until a final division of all the

assets under the judgment has been made."

In April 2009, William executed an assignment of his interest in $179,297 of the

personal property insurance proceeds (the insurance proceeds) within the Higgs trust

account. At the same time, William executed a $100,000 promissory note in Higgs's

favor and a concurrent pledge agreement granting Higgs a security interest in the

insurance proceeds for his timely and complete payment of the amounts owing on the

note.

In June 2010, Saracia filed a notice of lien under Code of Civil Procedure section

708.410 et seq. based on the August 29, 2008 judgment.

In early 2012, the court ordered on the parties' stipulation that all of the insurance

proceeds held in trust by Higgs "on behalf of [William] or any third party on his behalf,

shall be held on deposit pending disbursement pursuant to court order or judgment that

specifically authorizes disbursement."

In late 2012, Saracia sought a hearing to address, inter alia, the division of the

insurance proceeds held in trust. She asked the court to order those proceeds be deemed

William's property on condition that the funds be released to her in partial satisfaction of

the $3,400,000 judgment in her favor in the matter. In a sworn declaration, Saracia

acknowledged that Higgs had asserted a lien against the proceeds, but she averred any

such lien had not been disclosed to her until July 2012.

4 The hearing on Saracia's request did not take place until September 2013, with

William represented by different counsel.3 The court observed that there had not been an

adjudication of the characterization and division of the insurance proceeds, which was to

be done by the appointed special master. Saracia proposed to concede her interest in the

funds to William as long as they were applied to her judgment. Observing that the

proposal made sense, the court ruled Higgs had no right to the funds held in trust; it

determined that the owner of the funds "is and has always been [Saracia] to satisfy her

judgment" and its determination "extinguishe[d] any rights that Higgs might have" in

them.

In its findings and order after hearing, the court found given Saracia's concession

of her interest in the insurance proceeds, "the funds are and have always belonged to

[Saracia] to be applied to the Judgment." The court further ruled: "The claim of

assignment to Higgs . . . is denied because as Trustee of the funds by prior court order,

Higgs . . . has no rights to the funds and any rights it purports to have are extinguished by

the claim of [Saracia], and therefore denied. Said funds are to be released to [Saracia]

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