Opinion
B318037
06-15-2023
In re Marriage of LOUIS ANTHONY and TEOFILA MUNOZ. v. TEOFILA MUNOZ, Respondent. LOUIS ANTHONY MUNOZ, Appellant,
Linda T. Barney for Appellant.
NOT TO BE PUBLISHED
APPEAL from a postjudgment order of the Superior Court of Los Angeles County, No. SD032818 Alison M. MacKenzie, Judge. Affirmed as modified.
Linda T. Barney for Appellant.
No appearance for Respondent.
PERLUSS, P. J.
Louis Anthony Munoz appeals the family court's order requiring Teofila Munoz to refinance Louis and Teofila's former residence in Midway City, California, within 60 days or list the property for sale and thereafter to pay Louis $23,663 for his share of the equity at the time the parties' 2016 judgment of dissolution was entered. We modify the order to include an award of postjudgment interest to Louis and otherwise affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The 2016 Judgment of Dissolution and the Midway City Family Residence
In a February 3, 2016 marital settlement agreement, incorporated into a May 3, 2016 judgment of dissolution, Louis Anthony Munoz and Teofila Munoz agreed to award to Teofila as her separate property the community property residence they owned in Midway City, California, along with the encumbrances on the property, "subject to Equalization." The agreement and judgment required Louis and Teofila to obtain an appraisal of the property "for the purpose of determining a buy-out amount or for sale" of the property and specified, "If Respondent [Teofila] is unable to obtain financing for buy-out purposes within a reasonable time (within 60 days), the house will be sold and both parties will equally share in the sale proceeds."
An appraisal of the property dated April 21, 2016 was prepared recommending listing the home for sale at $600,000 with a probable final sales price of $595,000. As of that date, there was an outstanding loan on the property, secured by a deed of trust, with an unpaid principal balance of $547,673.14. In her declaration in this postjudgment proceeding Teofila calculated an equity of $47,327 and the buy-out amount as $23,663. In his competing declaration Louis stated he had calculated the equity at the time of the 2016 appraisal as between $55,000 and $60,000 based on a fair market value of $600,000.
2. The Competing Requests for Orders
Teofila did not refinance or sell the property in 2016 or thereafter and did not make any equalization payment to Louis. On August 2, 2021 Teofila filed a request for order to require Louis, along with other matters not pertinent to the instant appeal, to sign a quitclaim deed to the Midway City property and to cooperate with her in the refinancing of the property. In a supporting declaration Teofila explained, following their 2016 dissolution, Louis would not cooperate in her effort to refinance the home and, in particular, would not provide her with a quitclaim deed that she needed to proceed with the refinancing. Teofila declared, "Between May and August [2016], I repeatedly asked Petitioner if he would cooperate so I could refinance the loan and [he] said he would not sign a quitclaim deed. On 8/17/16, I sent Petitioner's counsel a request to have him sign a quitclaim deed (attached hereto as Exhibit 'D'). Petitioner's counsel would not respond to me. Petitioner has repeatedly refused to sign the quitclaim deed." Exhibit D to the declaration is a copy of a handwritten note (apparently a fax coversheet) from Teofila to "Kathy" asking for assistance in having the quitclaim deed signed.
On August 20, 2021 Louis filed his own request for order, asking the court to enforce the terms of the May 2016 judgment requiring Teofila to sell the former family residence. In his supporting declaration Louis asserted Teofila had refused his repeated requests to comply with the terms of the judgment to place the real property for sale, adding that, whenever he attempted to raise the issue with her, Teofila would respond that she did not have the time to discuss it. According to Louis, "I did not continue to press the issue because my children were living there and I didn't want to disrupt the status quo."
In September 2020 Louis asked Teofila to meet with him to discuss the matter. When the two met on October 2, 2020, Louis proposed that the house be sold or that Teofila buy him out based on the current fair market value for the home. Teofila responded that she would not sell the home. Several weeks later Teofila emailed Louis asking that he sign a quitclaim deed so she could refinance the home. Louis replied that he would not sign a deed and repeated that the house needed to be sold or Teofila had to buy him out. A similar exchange between Louis and Teofila occurred in April 2021.
In a further declaration submitted in response to Teofila's request for order, Louis disputed Teofila's statement that he had failed to cooperate in refinancing the property in 2016, asserting, as he had in his prior declaration, it was Teofila who refused to discuss the issue. Louis additionally stated that within the 60-day period following the appraisal Teofila had not directly presented him with a quitclaim deed to sign or any "relevant information" regarding the loan application/refinance process. He also declared the fax number written on Exhibit D to Teofila's declaration was not associated with the attorney who represented him at the time, "Kathy" was not his attorney, and the individual who did represent him never communicated with him regarding Teofila's request to sign the quitclaim deed.
Teofila did not file a response to Louis's request for order. At the hearing her counsel explained the declaration filed with Teofila's request for order addressed the same issues: "Both of the declarations are addressing how we handle the terms of the judgment."
3. The Family Court's Ruling
The competing requests for orders were heard on December 15, 2021. Neither Teofila nor Louis testified. Counsel representing each party presented argument. Louis's attorney acknowledged that Teofila had been living in the home (with the children) since she and Louis separated and had paid the secured loan and all other expenses after 2016.
Teofila's counsel asked the court to direct Louis to cooperate in the refinancing process. Louis's counsel argued the time for refinancing had long since expired; the property should be sold now; and Louis was entitled to 50 percent of the current equity in the home, not simply 50 percent of the equity as of 2016.
The court, after observing that the terms of the judgment were not a model of clarity and that nothing in the document required Louis to sign a quitclaim deed, stated, "You guys, this [is] kind of a mess. So I'm just trying to figure out a solution that gets you guys to the end." The court denied Louis's request for order and granted Teofila's in part. The court gave Teofila 60 days from the date of the order to refinance the home and ordered Louis to cooperate with Teofila and the loan agent in the process of refinancing. Teofila was ordered to pay Louis $23,663 for his share of the equity at the time judgment was entered. In the event Teofila could not refinance the home, it was to be listed for sale by March 16, 2022 (that is, 30 days after the 60-day refinance period). The court declined to direct Louis to sign a quitclaim deed, other than as required by his cooperation as part of a refinance process.
After the court made its order, counsel for Louis asked for findings of fact and conclusions of law. The court responded that it believed counsel needed to make a request for a statement of decision before the ruling, but stated, "If you're entitled to a statement of decision, I'll prepare one. Sitting here right now, I don't think this meets that standard, but I will look." No statement of decision was prepared. (See Code Civ. Proc., § 632 [if a trial is concluded within one calendar day, the request for a statement of decision must be made prior to the submission of the matter for decision].)
After the court's ruling Louis's counsel stated, although disagreeing with the ruling, at least his client was entitled to accrued interest on the sum that should have been paid in 2016. The court did not respond to that point, and the issue of interest is not addressed in the minute order or the formal findings prepared at the court's direction by counsel for Teofila.
Louis filed a timely notice of appeal.
DISCUSSION
1. Governing Law and Standard of Review
A marital settlement agreement that has been incorporated into a judgment of dissolution is merged with the judgment and becomes the final determination of the property rights of the parties. (In re Marriage of Nassimi (2016) 3 Cal.App.5th 667, 691-692; In re Marriage of Thorne & Raccina (2012) 203 Cal.App.4th 492, 499.) Once that judgment becomes final, "the court loses jurisdiction to modify or alter it." (In re Marriage of Thorne & Raccina, at p. 499.)
We construe the language of the incorporated marital settlement agreement under the rules governing the interpretation of a contract. (In re Marriage of Schu (2014) 231 Cal.App.4th 394, 399; In re Marriage of Thorne & Raccina, supra, 203 Cal.App.4th at p. 499.) "'Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. [Citation.]' [Citation.] In determining this intent, '[t]he rules governing policy interpretation require us to look first to the language of the contract in order to ascertain its plain meaning or the meaning a layperson would ordinarily attach to it.'" (Hartford Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 288; accord, Wind Dancer Production Group v. Walt Disney Pictures (2017) 10 Cal.App.5th 56, 69 ["[w]e ascertain '"the intent and scope of [an] agreement by focusing on the usual and ordinary meaning of the language used and the circumstances under which the agreement was made"'"].)
Absent any conflict in extrinsic evidence, we review de novo issues regarding the proper interpretation of a contract. (See City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395; Garcia v. Truck Ins. Exchange (1984) 36 Cal.3d 426, 439; Gilkyson v. Disney Enterprises, Inc. (2021) 66 Cal.App.5th 900, 915.) But where "the facts to which a contract provision must be applied are disputed or require the weighing of evidence, the application of that provision presents a question of fact," and our review is for substantial evidence. (Scheenstra v. California Dairies, Inc. (2013) 213 Cal.App.4th 370, 391, fn. 15.)
Here, because no timely request for a statement of decision was made and no statement was prepared, under the doctrine of implied findings we infer all findings in favor of the family court's order. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 11331134 [judgment is presumed to be correct; absent a statement of decision making specific findings, the reviewing court will infer the trial court made implied findings of fact on all issues necessary to support the judgment]; see Hall-Villareal v. City of Fresno (2011) 196 Cal.App.4th 24, 34-35.) "The doctrine of implied findings requires the appellate court to infer the trial court made all factual findings necessary to support the judgment. [Citation.] The doctrine is a natural and logical corollary to three fundamental principles of appellate review: (1) a judgment is presumed correct; (2) all intendments and presumptions are indulged in favor of correctness; and (3) the appellant bears the burden of providing an adequate record affirmatively proving error." (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58; see also Marriage of Arceneaux, at p. 1133.)
2. The Family Court Acted Within Its Jurisdiction in Reinstating the 60-day Period for Teofila To Refinance the Property
Emphasizing that far more than 60 days had elapsed since entry of the May 3, 2016 judgment, Louis characterizes the family court's order granting Teofila a renewed opportunity to refinance the property as an unauthorized modification of a final judgment. To the contrary, based on its implied finding that Louis had failed to cooperate with Teofila in refinancing the property in 2016, the court simply enforced the judgment and the parties' agreement that Teofila would have a reasonable time, anticipated to be 60 days, to refinance the property and make the required equalizing payment.
During argument at the hearing on December 15, 2021, the family court asked Louis's counsel why it should order the property sold immediately with Louis awarded 50 percent of its current fair market value if it was assumed "that he wasn't agreeing to help her with the refi in the way that she understood was required by the lender." The court's ruling denying Louis's request for an order and granting Teofila's in substantial part necessarily accepted that factual premise.
Louis's proposed interpretation of the judgment and the related jurisdictional argument have several fatal flaws. First, the judgment awarded the former family residence to Teofila as her separate property and did so in the section of the parties' agreement that also confirmed as Teofila's separate property various items of personal property (for example, a 2001 Chevy Tahoe), whether or not previously held as community property. The judgment also made Teofila solely responsible for the secured loan on the residence, formerly a community obligation. As the family court pointed out, once the judgment was entered, Teofila made all the loan payments and covered all other expenses relating to the home-undisputed extrinsic evidence that confirms this interpretation of the parties' agreement and the judgment incorporating it. (See City of Hope National Medical Center v. Genentech, Inc., supra, 43 Cal.4th at pp. 393-394 [a party's predispute, postcontracting conduct is powerful evidence of that party's intent and understanding of the contract at the time it entered into the agreement]; Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744, 753-754 [same].)
To be sure, Teofila was obligated to make a buy-out or equalizing payment based on the home's value as reflected in the appraisal ordered by the court and was given only "a reasonable time (within 60 days)" to obtain financing to do so. If Teofila was unable to obtain financing, the property had to be sold-the provision at issue in this appeal. But nothing in the judgment indicated the required payment was a condition precedent to the separate property award, as Louis contends. (See Rubin v. Fuchs (1969) 1 Cal.3d 50, 54 ["[t]he rule is that provisions of a contract will not be construed as conditions precedent in the absence of language plainly requiring such construction"]; Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1183 ["'courts shall not construe a term of the contract so as to establish a condition precedent absent plain and unambiguous contract language to that effect'"].) As of May 3, 2016 the home was Teofila's and remained so to the date of the parties' conflicting requests for orders.
As for the requirement that Teofila list the property for sale if she did not obtain the refinancing necessary for the equalizing payment, the parties' marital settlement agreement and the ensuing stipulated judgment, like all contracts, included an implied covenant of good faith and fair dealing. (See generally Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 400 [every contract contains an implied covenant of good faith and fair dealing that "'neither party will do anything which will injure the right of the other to receive the benefits of the agreement'"].) The implied covenant "finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith." (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 372; accord, Ladd v. Warner Bros. Entertainment, Inc. (2010) 184 Cal.App.4th 1298, 1306-1307.)
Here, as explained in a declaration impliedly credited by the family court, because Louis and Teofila were both on the title to the property, Teofila's continued ownership of the Midway City residence was dependent on Louis's cooperation with her refinancing efforts. Yet Louis repeatedly refused Teofila's requests to execute the quitclaim deed she needed (or at least believed she needed) to obtain the new secured loan. Louis's breach of the implied covenant deprived Teofila of a reasonable opportunity to refinance the property and excused her from the requirement to list the property for sale in mid-2016. Indeed, Louis would seem to have implicitly conceded that point by his failure to take any action to require Teofila to proceed with a sale or to otherwise enforce the judgment for more than five years.
3. The Family Court Did Not Err in Limiting Louis's Rights to One-half the 2016 Equity Value but Incorrectly Omitted an Award of Postjudgment Interest
Louis equates the 2016 unpaid equalizing sum ($23,663 according to the parties' appraiser, inflated to $27,500-$30,000 by Louis) to an investment by him in the property. As such, citing In re Marriage of Janes (2017) 11 Cal.App.5th 1043, he contends he is entitled to participate equally in any appreciation in value, whether he is paid by Teofila or shares in the proceeds of a sale. But the court of appeal in In re Marriage of Janes, which involved the wife's right to appreciation on $113,392 awarded to her from the husband's 401k retirement account, expressly held the unpaid sum was not an equalization payment, but a division of community property. (Id. at p. 1050 ["[w]e see nothing in the agreement indicating the $113,392 was an equalization payment, as opposed to part of the regular division of community property"].) Here, in contrast, Louis was awarded, and Teofila was directed to make, an equalization payment. After May 3, 2016 Louis did not own-either as separate or community property-any interest in the property. Louis was, in effect, Teofila's creditor, not her partner in co-owning the property.
Holding the wife was entitled to any gains or losses on the sum she had been awarded, the court explained, "$113,392 of the 401(k) account was Wife's separate property as of April 19, 2010. Whatever gains or losses occurred on that money after that date belonged to Wife." (In re Marriage of Janes, supra, 11 Cal.App.5th at p. 1050.)
Although the family court correctly interpreted the judgment to award Louis a sum equal to 50 percent of the May 2016 equity as determined by the appraisal it had ordered, it erred in omitting an award of interest on that sum, as Louis's counsel had requested as an alternative to an equal share of the current equity in the home. When the family court, as here, orders an equalizing payment rather than making an in-kind division of nonmonetary community property, that award "is a money judgment on which interest accrues from the date of its entry." (In re Marriage of Pollard (1988) 204 Cal.App.3d 1380, 1382; accord, In re Marriage of Dalgleish &Selvaggio (2017) 17 Cal.App.5th 1172, 1178.) Not to award postjudgment interest in a case like the one at bar, as the court explained in In re Marriage of Dalgleish &Selvaggio at page 1178, "would have permitted the wife to enjoy the use of the home and benefit from the appreciation on its value while depriving the husband of the use of his money award." The same principle applies here:
Louis, although at fault for not cooperating with Teofila's efforts at refinancing and dilatory in seeking enforcement of the judgment, was entitled to interest on the past-due equalizing sum at the statutory rate of 10 percent per annum.
Dissolution proceedings are generally subject to the same rules of practice that govern civil actions. (Fam. Code, § 210.) In particular, Family Code section 155 acknowledges that the Code of Civil Procedure applies to judgments in family law proceedings and that only an initial support order is to be considered an "installment judgment" payable over time. Interest commences to accrue for all other money judgments on the date of entry. (Code Civ. Proc., § 685.020, subd. (a).) Pursuant to Code of Civil Procedure section 685.010, subdivision (a), "interest accrues at the rate of 10 percent per annum on the principal amount of a money judgment remaining unsatisfied."
DISPOSITION
The December 15, 2021 postjudgment order is modified to include postjudgment interest of 10 percent per annum commencing May 3, 2016 when the judgment including the equalizing payment to Louis was entered. In all other respects the order is affirmed. Because Teofila did not participate in the appeal, Louis is to bear his own costs.
We concur: SEGAL, J., FEUER, J.