Opinion
C053954
7-30-2008
In re the Marriage of DANIEL J. BALAGUY and MICHELLE L. BALAGUY. DANIEL J. BALAGUY, Respondent, v. MICHELLE L. BALAGUY, Appellant.
Not to be Published
Appellant Michelle Balaguy appeals the courts final judgment on reserved issues after trial in a marital dissolution proceeding. She contends the court erred by failing to apply applicable law regarding the burden of proof as to an interspousal transfer of real property. We shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Michelle Balaguy (Michelle) and Daniel Balaguy (Daniel) were married on March 24, 1985.
Given that the parties share a common surname, we shall refer to them by their first names for ease of reference and with no disrespect intended.
On August 1, 1997, Michelle recorded an "Interspousal Transfer Grant Deed" transferring real property located on Cole Drive in San Jose, California (Cole property) to herself and Daniel "as community property."
On February 25, 2004, Daniel filed a petition for dissolution of marriage.
In addition to filing a Pre-Trial Statement and an Income and Expense Declaration, Michelle filed a Statement of Issues and Contentions which lists the Cole property as Michelles separate property and explains that she inherited the property from her uncle, Chester Clark, for the express purpose of holding it in her name while Clarks son, David, lived there rent-free. That document further explains that, after becoming concerned about what would happen to the property if she predeceased David and Daniel, Michelle deeded the property to herself and Daniel "as joint tenants" with the "clear understanding as to the purpose of this conveyance in terms of continuing the same arrangement with David, and that for all intent and purpose [sic], it was Davids house." She further noted that the "transfer was to be for purposes of insuring the survivorship passed to Daniel in the event of her death, and that he would continue to abide by her uncles wishes regarding David."
In supplemental letter briefing, the parties both agree that characterization of the subject interspousal transfer as "joint tenancy" rather than "community property" was inadvertent and such characterization by them, as well as by the trial court in its judgment, has no practical effect on the outcome of this appeal.
Admitting in the Statement of Issues and Contentions that "there was no duress at the time Michelle put Daniel on title to the [Cole] property," Michelle nonetheless cited In re Marriage of Haines (1995) 33 Cal.App.4th 277 (Haines) and In re Marriage of Delaney (2003) 111 Cal.App.4th 991 (Delaney) for the proposition that "Daniel has the burden of proof to rebut the presumption that he has gained an advantage by Michelles interspousal transfer" of the property. Michelle requested that the court set aside the interspousal transfer and restore the Cole property to her sole and separate property.
Michelles citation to Haines was incorrect, referring to 22 Cal.App.4th 277 instead of 33 Cal.App.4th 277, as was her citation to Delaney, referring to 11 Cal.App.4th 991 instead of 111 Cal.App.4th 991.
Daniels Pretrial Statement of Issues and Contentions countered that Michelle inherited the Cole property "as a result of her uncles death pursuant to his trust" and conveyed the property to herself and Daniel as community property. Daniel requested that the property be sold and the proceeds divided equally between the parties.
On June 23, 2006, following a court trial, the court rendered its Statement of Decision which included the following findings: "During the marriage, the uncle of [Michelle], Mr. Chester Clark, created a will and living trust in which [Michelle] was made beneficiary and trustee. The main asset of the trust is a home located at 14619 Cole Dr., San Jose, Ca. During the marriage, pursuant to the powers granted to her in the will and trust, [Michelle] deeded the house to herself and [Daniel] in joint tenancy. There was no showing of duress in the transfer. [Michelle] never sought to void the transfer. The citations given to case law in [Michelles] statement of issues and contentions as to the cases of [Haines] and [Delaney], at official cites, are incorrect. [Michelle] alleges that the purpose of the trust established by her uncle, Chester Clark, was to make her the trustee and to manage the property for the benefit of Mr. Clarks son, David. No persuasive evidence was presented in that regard, and in fact, David Clark was specifically excluded from his fathers will. Evidently, [Daniel and Michelle] had allowed David Clark to live in the home rent free since just after the death of his father. Again, the court can find no factual or legal basis upon which to overcome the presumptions of ownership set forth in Evidence Code section 662, and Family Code section 721. The home is owned in joint tenancy as community property."
The parties elected to proceed with trial without a court reporter to transcribe the proceedings.
Evidence Code section 662 provides as follows: "The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof."
Family Code section 721 provides, in relevant part, as follows: "(b) Except as provided in Sections 143, 144, 146, 16040, and 16047 of the Probate Code, in transactions between themselves, a husband and wife are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other."
In the absence of any evidence as to the current value of the property, and given Michelles expressed interest in maintaining the home, the court ordered that Michelle be given two months in which to have the property appraised and attempt to refinance the property in order to buy out Daniel. Otherwise, the court ordered that the property be sold and the proceeds divided equally between the parties.
On July 17, 2006, Michelle filed an amended motion for reconsideration, requesting that the court consider a "recently discovered" appraisal of the Cole property and, based thereon, characterize the property as Michelles sole and separate property as a result of her separate inheritance. In the alternative, Michelle requested that the court set aside the judgment pursuant to Code of Civil Procedure section 473, subdivision (b), due to her admitted mistaken failure to argue she was entitled to the full value of the Cole property at the time Daniel was added onto title.
Code of Civil Procedure section 473, subdivision (b), provides that "[t]he court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect."
The court summarily denied the motion for reconsideration without hearing.
The judgment on reserved issues filed on August 22, 2006, reiterated verbatim the courts June 23, 2006, Statement of Decision as to disposition of the Cole property.
Michelle filed a timely notice of appeal.
DISCUSSION
I
Undue Influence in Interspousal Property Transfer
Michelle contends the trial court failed to properly apply the legal principles set forth in Haines and Delaney such that Daniel should have been, but was not, required to present evidence to rebut the presumption of undue influence related to the interspousal transfer of the Cole property. We disagree.
We first turn to the cases upon which Michelle relies. In Haines, the husband first deeded his separate property to himself and his wife as joint tenants for the purpose of qualifying for a refinance loan, the proceeds of which were to be used to pay the settlement of a lawsuit filed by the husbands ex-mother-in-law. Five years later, the wife executed a quitclaim deed conveying her joint interest in the property back to the husband. She testified she did so while under physical and emotional duress, a claim which the husband disputed. (Haines, supra, 33 Cal.App.4th at pp. 283-285.) The parties reconciled one year later and, during that period, the husband reconveyed his separate property to himself and his wife as joint tenants. The wife filed for dissolution the next year. The trial court found that the real property became the husbands separate property by virtue of the wifes quitclaim deed, and his subsequent transfer of that property to himself and his wife entitled him to reimbursement for his separate property contribution to the acquisition of community property. (Id. at pp. 285-286.)
The appellate court reversed the trial courts award of reimbursement of the husbands separate property interest, concluding that the presumption of undue influence (Fam. Code, § 721, subd. (b) [formerly Civ. Code, § 5103, subd. (b)]) trumped the conflicting presumption of record title (Evid. Code, § 662), and that the husband failed to rebut the wifes claim of duress related to her transmutation by quitclaim deed. "We conclude that application of [Evidence Code] section 662 is improper when it is in conflict with the presumption of undue influence that emanates from former [Civil Code] section 5103, subdivision (b) (Fam. Code, § 721, subd. (b))." (Haines, supra, 33 Cal.App.4th at pp. 301-302.)
That reasoning was applied in Delaney where a conflict arose between the presumption under Family Code section 721 and that under Family Code section 2581. In Delaney, the husband executed a grant deed conveying his separate real property to himself and his wife as joint tenants. The purpose of the transmutation was to secure financing to be used to improve the property. Three years later, the parties divorced. The trial court found the grant deed conveying the property from husband to husband and wife as joint tenants was void because the wife had not given sufficient consideration for the transfer; she, as a fiduciary, bore the burden of establishing that the grant deed was not the product of undue influence (Fam. Code, § 721, subd. (b)); and she failed to sustain that burden. (Delaney, supra, 111 Cal.App.4th at pp. 993-994.)
Family Code section 2581 provides as follows: "For the purpose of division of property on dissolution of marriage or legal separation of the parties, property acquired by the parties during marriage in joint form, including property held in tenancy in common, joint tenancy, or tenancy by the entirety, or as community property, is presumed to be community property. This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following: [¶] (a) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property. [¶] (b) Proof that the parties have made a written agreement that the property is separate property."
Applying the reasoning in Haines, the appellate court rejected the wifes argument on appeal that the trial court should have applied the presumptions derived from Evidence Code section 662 and Family Code section 2581 instead of that derived from Family Code section 721, subdivision (b). (Delaney, supra, 111 Cal.App.4th at pp. 996-997.) The court concluded the presumption of undue influence found in Family Code section 721, subdivision (b), "applies to any interspousal property transaction where evidence is offered that one spouse has been disadvantaged by the other," regardless of whether the conveyance was from joint tenancy to separate property or otherwise. Accordingly, the burden fell on the wife "to establish that [h]usbands transmutation of the Property to joint tenancy was freely and voluntarily made, with full knowledge of all the facts, and with a complete understanding of the effect of a transfer from his unencumbered separate property interest to a joint interest as [h]usband and [w]ife." (Id. at pp. 998-1000.)
Here, Michelle contends the court disregarded the legal principles set forth in Haines and Delaney and dismissed those cases based solely on the fact that the citations she provided were incorrect. The Statement of Decision shows otherwise. The court specifically found there was no evidence of duress, and further found there was no evidence that Michelle ever attempted to void the interspousal transfer prior to dissolution of the marriage. Applying both Evidence Code section 662 (presumption that owner of legal title to property is owner of full beneficial title) and Family Code section 721 (presumption of undue influence arising from interspousal transaction benefiting one spouse), the court found there was no factual or legal basis under either statute upon which to overcome the presumption of ownership as joint tenants in community property.
As for whether the courts findings were based on evidence presented by Daniel for the purpose of rebutting the presumption of undue influence, we are unable to make that determination without a reporters transcript of the trial proceedings. An appellant who attacks a judgment but supplies no reporters transcript will be precluded from raising an argument as to the sufficiency of the evidence. (Sui v. Landi (1985) 163 Cal.App.3d 383, 385-386; National Secretarial Service, Inc. v. Froehlich (1989) 210 Cal.App.3d 510, 521-522.) Where no reporters transcript has been provided and no error is apparent on the face of the appellate record, it is presumed that the unreported trial testimony would demonstrate the absence of error. (Ehrler v. Ehrler (1981) 126 Cal.App.3d 147, 153-154.)
In the absence of the reporters transcript here, we presume the factual and evidentiary findings made by the court were correct.
The record, such as it is, supports that conclusion. Michelle admits that "there was no duress at the time Michelle put Daniel on title to the [Cole] property," emphasizing only that Daniel made demands that she encumber the property to pay community debts seven years after the transaction. Additionally, in explaining the impetus for the transfer, Michelle does not describe any undue influence by Daniel; instead, she states that "the intent of this transfer was two-fold: (1) to avoid probate in the event of her death and (2) to ensure, that should she predecease Daniel and David, that Daniel would carry out their original agreement regarding Davids exclusive use and possession of the house pursuant to her uncles wishes."
The burden of rebutting the presumption of undue influence is by a preponderance of the evidence. (In re Marriage of Matthews (2005) 133 Cal.App.4th 624, 631 (Matthews ).) The presumption of undue influence can be dispelled by evidence that the disadvantaged spouse entered into the transaction freely and voluntarily, with a full knowledge of all the facts and with a complete understanding of the transfer. (Ibid.) By Michelles own admission, she effected the transfer of the Cole property free from any influence whatsoever from Daniel and with a specific intent and purpose. There is substantial evidence in the record to support the conclusion that Daniel satisfied his burden of proof by a preponderance of the evidence and rebutted the presumption of undue influence by virtue of the statements and admissions contained in the documentation submitted by Michelle to the court.
Michelle contends we must review this matter de novo, arguing the court made no factual findings, only legal issues to be reviewed as a matter of law. However, the courts Statement of Decision proves otherwise. The court clearly made findings of fact, including, but not limited to, the fact that the transfer was not the result of duress and the fact that there was insufficient evidence to support Michelles claim that Clark intended for her to manage the Cole property for the benefit of Clarks son, David.
"The question `whether the spouse gaining an advantage has overcome the presumption of undue influence is a question for the trier of fact, whose decision will not be reversed on appeal if supported by substantial evidence. (Matthews, supra, 133 Cal.App.4th 624, 632.)" (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 737.) Having rejected Michelles argument that the Statement of Decision contains no findings of fact or controverted evidence, and in the absence of a transcript in the appellate record reporting the proceedings at trial, we conclude there was substantial evidence to support the Statement of Decision, and consequently conclude the statement supports the trial courts judgment.
II
Daniels Request for Attorneys Fees and Costs
Daniel requests that this court award him attorneys fees and costs he incurred as a result of this appeal.
The prevailing party in a civil case is entitled to costs on appeal. (Cal. Rules of Court, rule 8.278(a).) A respondent is the prevailing party if the judgment is affirmed on appeal without modification. (Ibid.) "Unless the court orders otherwise, an award of costs neither includes attorneys fees on appeal nor precludes a party from seeking them under rule 3.1702." (Cal. Rules of Court, rule 8.278(d)(2).)
Rule 3.1702 "applies in civil cases to claims for statutory attorneys fees and claims for attorneys fees provided for in a contract." (Cal. Rules of Court, rule 3.1702(a).)
Daniel provides no statutory authority to support his claim for attorneys fees, nor does the record reflect an agreement between the parties providing for the recovery of attorneys fees under the facts or circumstances of this case. Citing Vo v. Las Virgenes Municipal Water Dist. (2000) 79 Cal.App.4th 440 (Vo), Daniel contends the trial court "clearly announced its decision" for which there was substantial evidence, "there is no evidence to overturn the decision," and Michelle admitted any mistakes in the proceedings below were hers, not the trial courts. As such, claims Daniel, he is entitled to attorneys fees. We are not persuaded.
In Vo, a plaintiff in a civil action for violations of the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) was awarded attorneys fees and costs by the trial court after a jury verdict in his favor. (Vo, supra, 79 Cal.App.4th at p. 442.) The defendant appealed but failed to provide the court with an adequate record to enable the appellate court to determine relevant factual and procedural matters. (Id. at p. 442, fn. 2.) After the plaintiff successfully defended the lower courts award of attorneys fees in his favor, the appellate court found he was entitled to recovery of attorneys fees incurred in defending the action on appeal pursuant to statute (Gov. Code, § 12965). (Id. at pp. 447-448.) Given the absence of any statutory authority for recovery of attorneys fees here, Vo has no application to the facts of this case.
We conclude Daniel may not recover his attorneys fees incurred on appeal, but is entitled to an award of costs as the prevailing party on appeal.
DISPOSITION
The judgment is affirmed. Respondent Daniel J. Balaguy shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
We concur:
NICHOLSON, J.
ROBIE, J.