Opinion
G036085
12-13-2006
In re Marriage of KELLI and MARC AHUMADA. KELLI SNELL-AHUMADA, Respondent, v. MARC AHUMADA, Appellant.
Law Offices of Jeffrey W. Doeringer and Jeffrey W. Doeringer for Appellant. Law Offices of John K. York, John K. York; Law Offices of Brian G. Saylin and Brian G. Saylin for Respondent.
A husband and wife acquired a family residence during their marriage. They also entered into an agreement pursuant to which they agreed for the wife to act as a surrogate mother to carry embryos belonging to the other contracting parties. Before the pregnancy came to term, the husband and wife separated and the wife filed dissolution proceedings. At trial, the court awarded the family residence to the wife as her sole and separate property, ordered the parties to pay $17,500 apiece to the husbands mother in reimbursement for certain monies she had loaned to them, and awarded to the wife as her as her sole and separate property $21,000 in postseparation payments that had been received under the surrogacy agreement.
The husband appeals on numerous grounds. We agree that the court erred in awarding the residence to the wife as her sole and separate property. The wife essentially admitted, in her petition for dissolution, in her schedule of assets, and in her answer to interrogatories, that the property was the community property of the parties. She is bound by these judicial admissions. We also agree that the court erred in ordering that the parties each pay $17,500 in reimbursement of monies the husbands mother had loaned to them, inasmuch as the award is inconsistent with the undisputed facts concerning the amount of the loan. However, we disagree with the husbands final argument, i.e., that the surrogacy agreement is a community property asset, a share of which belongs to him. Family Code section 771 provides that postseparation earnings are the separate property of the earner.
We reverse the portion of the judgment awarding the residence to the wife as her sole and separate property, reverse and remand the portion of the judgment requiring each party to pay $17,500 to the husbands mother for monies loaned, and affirm the portion of the judgment awarding the $21,000 in postseparation surrogacy payments to the wife.
I
FACTS
Kelli and Marc Ahumada were married on August 4, 2000. In 2002, they borrowed money from Marcs mother for the purchase and refurbishment of a family residence. Kelli owned a business known as Creative Conception, Inc., which provided infertility services focusing on egg donations and surrogacies. In January 2003, Kelli and Marc executed a surrogacy agreement, pursuant to which Kelli agreed to act as a surrogate mother and carry the embryos belonging to the other contracting parties. In February 2003, the embryos were implanted, resulting in a successful pregnancy. Kelli and Marc separated in August 2003, at which time Kelli petitioned for dissolution of marriage.
"Hereafter, we refer to the parties by their first names, as a convenience to the reader. We do not intend this informality to reflect a lack of respect. [Citation.]" (In re Marriage of Balcof (2006) 141 Cal.App.4th 1509, 1513, fn. 2.)
At the conclusion of trial, the court entered judgment providing: (1) the residence was the separate property of Kelli; (2) Kelli and Marc were each liable to repay Marcs mother $17,500 with respect to money loaned in connection with the purchase of the residence; and (3) certain postseparation payments under the surrogacy agreement were the separate property of Kelli.
Marc appeals. He contends that the court erred in awarding the residence to Kelli as her separate property. He also argues that if this court should nonetheless affirm that award, it was error to require him to repay half of the monies owed to his mother, when the residence in its entirety was awarded to Kelli as her separate property. Finally, Marc maintains that the surrogacy agreement was a community property asset, the postseparation payments thereunder were community property, and he is entitled to half of those payments.
II
DISCUSSION
A. Title to Residence:
(1) Introduction
Marc and Kelli borrowed $53,000 from Marcs mother for the down payment on a $472,800 home and the refurbishment thereof. They used approximately $25,000 of that amount towards the down payment. Marcs father made a gift of $10,000 to complete the down payment.
Marc and Kelli each had bankruptcies on their credit histories. However, Marcs bankruptcy was more recent. He sought the help of his childhood friend, David Greek, who was a loan broker. Greek explained that Kelli would have to apply for the loan and take title, because of Marcs credit history. Accordingly, the loan was taken out solely in Kellis name and title was acquired solely in her name.
A grant deed, by which the prior owners of the property conveyed title to the property to Kelli, as her sole and separate property, was recorded on November 6, 2002. An interspousal transfer grant deed, by which Marc granted his interest in the property to Kelli, as her sole and separate property, was recorded that same date. At trial, Marc testified that he understood that this meant title was in her name. At the same time, he also testified that he understood the property would be their "joint" property and that it would be theirs "together." Kelli testified that "the house [was] for the family so each child could have their own bedroom."
In her August 2003 petition for dissolution of marriage, Kelli listed their residence on Carranza in Mission Viejo as community property. In addition, in her answer to certain interrogatories, Kelli identified her premarital property as her separate property; she did not identify the residence as her separate property. Furthermore, in her October 6, 2003 schedule of assets, she listed the residence as an asset, but did not mark it as a separate property asset.
After Kelli signed her answer to the interrogatories, Kellis attorney contacted the recorders office and obtained a copy of the deed by which title was acquired. That was when they discovered the state of the title. Thereafter, Kelli asserted that the residence was her separate property. She took that position in her trial brief. In his trial brief, Marc argued, to the contrary, that the residence was their community property. At trial, both parties engaged in extensive questioning of witnesses on points directed to proving the character of the property as community or separate and made extensive argument concerning the same. The court, as previously noted, found that the property was the separate property of Kelli.
Marc continues to assert, on appeal, that the property is community property. He makes a number of separate arguments in support of his position: (1) Kelli is bound by the recitation in her petition for dissolution that the property is community property; (2) he provided sufficient evidence to rebut the presumption that title was as reflected in the deed; (3) the court erred in determining that he had not acquired any community interest in the property under the Moore-Marsden rule; (4) the property acquisition was tainted by undue influence; and (5) he did not transmute his community interest in the property to the separate property interest of Kelli.
See In re Marriage of Moore (1980) 28 Cal.3d 366 and In re Marriage of Marsden (1982) 130 Cal.App.3d 426.
(2) Judicial admissions
First, Marc insists that in her petition for dissolution, in her answer to interrogatories, and in her schedule of assets, Kelli made judicial admissions that the property is community property and that those admissions are conclusive. In support of his argument, he relies heavily on Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264.
We are uncertain from the record whether Marc raised this precise argument in the trial court. However, to the extent he did not do so, we note that this "court has the discretion to consider a new issue on appeal where it involves a pure question of the application of law to undisputed facts. [Citations.]" (Yeap v. Leake (1997) 60 Cal.App.4th 591, 599, fn. 6.)
In Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th 1264, a subcontractor was awarded a painting contract. He signed and returned the contract to the general contractor, but failed to supply the performance bond that was required under the contract. (Id. at pp. 1266-1267.) The general contractor repeatedly informed him that it had not yet received the bond and that the failure to provide the bond was holding up the execution and processing of the contract. (Id. at p. 1267.) This notwithstanding, the subcontractor commenced performance of the work described in the contract. Ultimately, the subcontractor sued for payment, alleging both breach of an express written contract and quantum meruit. The general contractor filed a cross-complaint. (Ibid.)
In his answer to the cross-complaint, the subcontractor admitted that the parties had "`entered into a written construction services trade contract . . . ." (Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th at pp. 1267-1268.) Furthermore, in his response to requests for admissions, the subcontractor more than once described the content of the "`written contract" between the parties. (Id. at p. 1268.) Seven months before trial, the subcontractor stated in a trial management conference statement that after reviewing certain discovery it had become clear that the general contractor had never signed the contract. (Ibid.) However, the subcontractor "did not move to dismiss the breach of contract claim, nor did he amend his answer to the cross-complaint or his responses to [the general contractors] request for admissions." (Ibid.) The trial court found that there was no written contract, but held that the subcontractor was entitled to recover on the quantum meruit theory. (Id. at p. 1266-1267.)
The appellate court reversed the judgment in favor of the subcontractor. (Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th at p. 1266.) In so doing, it stated: "[The subcontractor] admitted the existence of a written contract in his answer to the cross-complaint. The admission of fact in a pleading is a `judicial admission. Witkin describes the effect of such an admission: `An admission in the pleadings is not treated procedurally as evidence; i.e., the pleading need not (and should not) be offered in evidence, but may be commented on in argument and relied on as part of the case. And it is fundamentally different from evidence: It is a waiver of proof of a fact by conceding its truth, and it has the effect of removing the matter from the issues. Under the doctrine of "conclusiveness of pleadings," a pleader is bound by well pleaded material allegations or by failure to deny well pleaded material allegations. [Citations.] [Citation.]" (Id. at p. 1271.)
In response to the subcontractors argument that he had apprised the general contractor of his change in theory, the appellate court stated: "An admission in a pleading is conclusive on the pleader. [Citation.] `He cannot offer contrary evidence unless permitted to amend, and a judgment may rest in whole or in part upon the admission without proof of the fact. [Citation.] While a court has inherent power to relieve a party from the effects of judicial admissions by amendment to the pleadings [citation], [the subcontractor] never sought to amend his answer to the cross-complaint." (Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th at p. 1272.) In addition, the court, citing Code of Civil Procedure section 2033, also noted that the subcontractors admissions in response to the general contractors requests for admissions conclusively established the matter against him, since he made no request to amend or withdraw the admissions. (Id. at pp. 1272-1273.) It concluded by stating that "informal notification to the opposing party of a change in case theory does not obviate the conclusive effect of judicial admissions." (Id. at p. 1274.)
Marc says that Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th 1264 is dispositive of the property characterization issue. That is, Kelli stated in her petition that the property was community property and, in other filings, she twice identified her separate property without reference to the residence. According to Marc, Valerio shows that these judicial admissions conclusively establish the community property character of the asset and preclude Kelli from offering any evidence to show that the asset is separate property. (Id. at p. 1271.)
In response to this argument, Kelli, citing In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, argues that Marc, having failed to request a statement of decision, waived the right to challenge implied findings in support of the trial courts decision. She avers that there is an implied finding that Marc had adequate notice of her change in position and argues that he cannot challenge this implied finding.
This argument is nonresponsive to Marcs point, however. Marc does not argue that he had insufficient notice of the change in Kellis position — although we observe under Valerio Marcs knowledge of her change in position is irrelevant. (Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th at p. 1274.) Rather, Marc argues that, as a matter of law, Kelli is bound by her pleadings and precluded from offering contrary proof.
Kelli counters that In re Marriage of Umphrey (1990) 218 Cal.App.3d 647 shows that the court is not bound by her recitations. In Umphrey, the parties entered into a marital settlement agreement that recited the date of separation to be "`September, 1979." (Id. at p. 653.) The agreement was approved by the court and incorporated into the judgment of dissolution. (Id. at p. 654.) The wife later moved to set aside the judgment on the basis of extrinsic fraud, contending that the husband had failed to disclose a community property asset. The asset in question was a lease acquired on September 17, 1979. (Ibid.) The court vacated the judgment and denied the husbands motion for reconsideration. (Id. at pp. 654-655.)
In reviewing the jurisdiction of the trial court to reevaluate the date of the parties separation, the appellate court stated that the date of separation "was never adjudicated in any meaningful sense" and did not appear in the judgment itself. (In re Marriage of Umphrey, supra, 218 Cal.App.3d at p. 656.) It also stated that the trial court was required to determine the date of separation in order to determine whether in fact the purportedly hidden asset was community property, as acquired before the separation date, or separate property, as acquired after the separation date. (Ibid.) Clearly, a recital that the separation took place sometime in September 1979 did not answer the question of whether an asset acquired on September 17, 1979 was acquired before or after the date of separation. The appellate court stated that "[i]n order to determine that issue, the [trial] court was not only entitled but duty bound to consider all of the relevant evidence."
(Id. at p. 657.) It also commented, without citation to authority, that recitals contained in the petition and in the marital settlement agreement could be considered as evidence, but should not be viewed as conclusive. (Ibid.)
Kelli makes note of that comment, presumably as an implied argument that the position she asserted in her papers cannot be considered to be conclusive. However, we disagree, for several reasons. First, in In re Marriage of Umphrey, supra, 218 Cal.App.3d 647, both parties recited, in the marital settlement agreement, that the date of separation was "September, 1979." Neither party offered a particular date. Clearly, the recital could not be conclusive as to the specific date of separation, because it did not provide one.
Second, In re Marriage of Umphrey, supra, 218 Cal.App.3d 647 addressed the jurisdiction of the court to entertain the separation date issue, not the question of whether either party was bound by the doctrine of judicial admission. Moreover, as previously stated, neither party had specified a precise date in September 1979 to which he or she could be bound under that doctrine. While the appellate court did address the question of whether the husband should be "estopped" from asserting a separation date other than September 1979 (id. at pp. 658-659), the doctrine of estoppel, as discussed in that case, is distinguishable from the doctrine of judicial admission, as argued before us.
Third, Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th 1264, unlike In re Marriage of Umphrey, supra, 218 Cal.App.3d 647, specifically addresses the doctrine of judicial admissions — the issue before us. Valerio controls. "The law on this topic is well settled by venerable authority. Because an admission in the pleadings forbids the consideration of contrary evidence, any discussion of such evidence is irrelevant and immaterial. [Citation.] `"When a trial is had by the Court without a jury, a fact admitted by the pleadings should be treated as `found."" (Valerio v. Andrew Youngquist Construction, supra, 103 Cal.App.4th at p. 1271.) Kelli, having declared before the court that the residence is community property, and never having amended her petition, schedule of assets, or answer to interrogatories to say otherwise, is bound by her declaration. The court erred in finding the residence, contrary to Kellis declaration, to be Kellis separate property. The residence was the community property of Kelli and Marc.
Inasmuch as we so conclude, we need not address Marcs additional arguments concerning the rebuttable presumption regarding record title, the application of the Moore-Marsden rule, the effect of undue influence, and the lack of any transmutation.
B. Reimbursement of Down Payment:
On appeal, Marc contends that if, despite his protestations, this court should affirm the portion of the judgment holding that the residence is the sole and separate property of Kelli, then it should reverse the portion of the judgment providing that he must reimburse his mother for half of the money she loaned towards the down payment on the residence. He says Kelli would be unjustly enriched if she were awarded the entirety of the residence but only had to repay half of the debt associated with it. Inasmuch as we hold that the trial court erred in awarding the residence to Kelli as her sole and separate property, we need not address Marcs unjust enrichment issue. He makes no argument that he ought not be required to repay half of the borrowings if this court concludes that the residence is community property.
However, Marc notes that the judgment orders each party "to pay one-half of the debt incurred to [his] mother for her contribution of $35,000.00 to the down payment of the residence . . . ." He says that the figure should be $53,000 and that the judgment contains either a clerical error or a legal error. In his prayer, he requests that this court properly divide the $53,000 figure.
Kelli, on the other hand, says that they put a total of approximately $ 35,000 down on the house, so this was the correct figure for reimbursement. She contends that we should imply a finding that the borrowed funds exceeding the $35,000 figure were not used for property improvements and so were not reimbursable under Family Code section 2640, subdivision (c). Family Code section 2640, subdivision (c), however, pertains to the right of one spouse to be reimbursed for his or her separate property contributions to the acquisition of the other spouses separate property estate during marriage. The provision is clearly inapplicable to the right of Marcs mother to a return of the money she loaned to the two of them.
In any event, as the record reflects, it is undisputed that Marcs mother loaned the parties $53,000. It is also undisputed that approximately $25,000 of that amount was applied towards the down payment on the residence and that a $10,000 gift from Marcs father made up the remainder of the approximate $35,000 down payment. If the court intended to order the parties to reimburse Marcs mother for the portion of the down payment received from her, then the judgment should have stated that the parties were ordered to reimburse her for the approximate $ 25,000 figure. If it intended to order the parties to reimburse Marcs mother for all of the monies she loaned to them in connection with the acquisition and refurbishment of the residence, then the judgment should have stated that the parties were ordered to reimburse her for the $53,000. Clearly, there was an error one way or the other. We remand the matter for a determination of the amounts owing by each of Kelli and Marc, considering that the funds were borrowed in connection with the acquisition and refurbishment of a community property asset.
C. Surrogacy Agreement:
As indicated at the outset, Kelli and Marc executed the surrogacy agreement in January 2003. The embryos were implanted in February 2003. Kelli and Marc separated in August 2003. Kelli delivered twins in October 2003. She stopped working about a month before the babies were born. She returned to work in January 2004.
Periodic and incidental payments were made under the agreement prior to the date of separation. After separation, Kelli received one $3,000 monthly payment, plus a $19,000 balloon payment that was due after the twins were born. At trial, Kelli argued that the postseparation payments were her separate property earnings. The judgment provides: "The court finds that the sum of $21,000.00 paid to [Kelli] post-separation pursuant to Family Code § 771 are the earnings and accumulations of [Kelli] and her separate property." On appeal, Marc challenges the judgment on this point. In his opening brief, he seeks $11,000 of the postseparation payments. At oral argument, he urged that he should at least receive $8,800, i.e., eight-tenths of the $11,000, based on having lived with Kelli for eight out of the ten months between the January 2003 signing date and the October 2003 delivery date.
In their briefing on appeal, the parties reference the figure in question as $22,000. However, they do not specifically request a correction of the dollar figure in the judgment should this court affirm the judgment.
Marc argues that property acquired during marriage is presumed to be community property (Fam. Code, § 760), and that the burden of rebutting this presumption is on the spouse asserting that a particular asset is separate property (Estate of Duncan (1937) 9 Cal.2d 207, 217). Specifically, he contends the surrogacy agreement is a community property asset, and Kelli has the burden to rebut the presumption by demonstrating that it is her separate property. Similarly, Marc asserts that, under Family Code section 2581, when title to an asset, here the surrogacy agreement, is held in joint form, it is presumed to be community property and the burden is on the spouse asserting that the asset is separate property to rebut the presumption by pointing to a clear statement in the document evidencing title that the asset is separate property. The thrust of either argument is that the surrogacy agreement is property required to be divided equally under Family Code section 2550.
Kelli, on the other hand, essentially argues that the surrogacy agreement is not an item of property to be divided, but rather is an agreement specifying the monies to be paid to her over time for her services. She cites Family Code section 771, subdivision (a), which provides: "The earnings and accumulations of a spouse . . . , while living separate and apart from the other spouse, are the separate property of the spouse." When payments are made to an individual for services rendered after separation, pursuant to a contract signed during marriage, the payments are the separate property earnings of the individual rendering the services. (Garfein v. Garfein (1971) 16 Cal.App.3d 155.)
Here, the surrogacy agreement is replete with references to the services Kelli is to provide and the compensation she is to receive for each service. For example, but not by way of limitation, the agreement contains schedules specifying amounts Kelli is to be paid each time a particular drug is administered to her, each time she undergoes an embryo transfer procedure, if she has an abortion with no D&C, if she has a labor induced abortion, if she suffers a selective reduction of fetuses, if she has an ectopic pregnancy with tube removal or one without tube removal, if she has a hysterectomy, if she has a miscarriage, if she has a cesarean section delivery or if she has amniocentesis.
In addition, the agreement provides: "The Parties agree that the reimbursement paid pursuant to this agreement constitutes reasonable monetary reimbursement for all foreseen, and unforeseen losses, costs, and expenses incurred, and the pain, suffering, and inconvenience by [Kelli] in carrying out her obligations hereunder . . . . All of the following items payable directly to [Kelli] shall be paid from a trust account . . . ." (Boldface omitted.) The agreement continues: "In consideration therefore, The Intended Parents jointly and severally agree to pay to [Kelli] . . . :
[¶] . . . [¶] D. Single Birth: The total sum of $40,000.00 . . . . [Kelli] will also receive, in addition to the total sum of $ 40,000.00, a payment in the amount of $500.00 within five days of the first confirmation of fetal heartbeat; and a payment in the amount of $500.00 within five days of the second confirmation of fetal heartbeat. The remaining payments shall be made in monthly payments of $3,000.00 per month starting thirty days thereafter and continuing on the same day every month thereafter so long as [Kelli] is pregnant. . . . Should [Kelli] . . . give birth anytime after 35 weeks from the date of the embryo transfer, [Kelli] will be entitled to a one lump sum payment within one week of the birth in an amount sufficient to bring the total paid to [Kelli] under this subparagraph to $40,000.00." (Underscoring omitted.)
The surrogacy agreement is framed as a service agreement and the trial court correctly held that the monies in question were Kellis postseparation earnings and, hence, her separate property. Kelli was the only one carrying the babies and she was paid, per the agreement schedule, for carrying them to term and delivering them. After the delivery, the lump sum payment was due and payable to her.
Marc argues that Kelli was not the only one who had obligations under the surrogacy agreement. He notes that he was required to undergo psychological evaluation at the outset, that the agreement prohibited Kelli from having sex during the period of time specified by the treating physician and that this obviously affected him, and that he was required to sign any necessary documentation to release all interests in the babies upon their birth. In other words, some of the monies paid under the surrogacy agreement must have been in consideration for his burdens, as a signatory to the agreement and as Kellis husband.
However, substantial payments were made under the agreement before the date of separation, i.e., during the period of time Marc was burdened by the agreement. After the date of separation, the only burden on Marc was to sign off on required legal documents. Marc has neither identified any portion of the agreement specifying a particular amount of compensation to be paid for this service, nor even suggested what the value of this service should be. The burden is on him, as the appellant, to demonstrate reversible error. (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 766.) He has not met this burden.
D. Attorney Fees:
Marc requests attorney fees pursuant to Family Code sections 271, 2030 and 2032. However, Marc has not demonstrated either that Kelli has engaged in conduct for which she should be sanctioned or that an award of attorney fees is necessary for him to have access to legal representation. His request is denied.
III
DISPOSITION
We affirm the portion of the judgment awarding the $21,000 in postseparation surrogacy payments to Kelli, reverse the portion of the judgment awarding the residence to Kelli as her sole and separate property, and reverse and remand the portion of the judgment requiring each party to pay $17,500 to Marcs mother for monies loaned. The parties shall bear their own costs on appeal.
We Concur:
OLEARY, ACTING P. J.
IKOLA, J.