Opinion
D071237
11-02-2017
In re the Marriage of HEATHER MINTO and GARFIELD MINTO. GARFIELD MINTO, Appellant, v. HEATHER MINTO DUREN, Respondent.
Law Office of Carolyn Chapman and Carolyn Chapman Holman, for Appellant. Stephen Temko, for Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. DN142264) APPEAL from an order of the Superior Court of San Diego County, Michael D. Washington, Judge. Affirmed. Law Office of Carolyn Chapman and Carolyn Chapman Holman, for Appellant. Stephen Temko, for Respondent.
Garfield Minto (Husband) appeals a post-dissolution order enforcing the terms of a 2009 marital settlement agreement (MSA) between him and his former spouse, Heather Minto Duren (Wife), under which each of them received a 50 percent interest in their family residence. In enforcing the MSA, the trial court ordered Husband to pay Wife one-half of the calculated equity in the residence based on its appraised value. Husband's opposition to the order derived from a post-dissolution 2013 event in which he and Wife agreed to sign a grant deed transferring title to the residence to Husband so that he could refinance the home. Pointing to the fact that Wife no longer held title to the residence, Husband asserted a variety of arguments regarding why Wife could not enforce the parties' MSA. After an evidentiary hearing, the court rejected Husband's arguments based principally on equitable considerations.
For reasons we explain, Husband has not established any trial court error and we accordingly affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
Husband and Wife married in 1995 and separated in 2006. In connection with their separation, the parties signed the MSA, which was "intended to be the final, complete, and exclusive agreement of the Parties on the matters it covers." As set forth therein, the parties had three minor children and jointly owned a family residence in Oceanside, California. Under the MSA, Husband and Wife would each receive a one-half, separate property interest in the family residence upon their marital dissolution; however, Husband had the exclusive right to use and possess the residence until it was sold and Husband was required to pay "all indebtedness" related to the residence. A number of circumstances could trigger a sale (and possibly Husband's option to purchase Wife's equity interest in the residence), including the circumstance that the youngest of their children reached the age of 18.
In 2009, the family court entered a judgment of dissolution, incorporating by reference the attached MSA.
In 2013, Husband could no longer afford the existing interest-only loan on the residence. In addition, the house was "under water," i.e., it could not be profitably sold. If Husband obtained favorable financing based on his veteran status, a foreclosure could be avoided and the children allowed to remain living in the home. To secure a veteran's loan, Husband told Wife he needed to "tak[e] [her] off the title." Wife agreed and executed a grant deed (Grant Deed or 2013 Grant Deed), which transferred title of the residence from the parties as "Joint Tenants" to "Garfield L. Minto, an unmarried man." According to Wife, she believed she was simply doing the "right" thing "in cooperating towards a common goal of keeping the house for the kids," she understood the MSA was still in effect, and she received no compensation for signing the Grant Deed.
In late 2015, Husband and Wife's youngest child turned 18. Wife filed a request for an order to enforce the MSA. She wished to list the house for sale and/or have her equity interest bought out.
Husband opposed Wife's request. He submitted his declaration and various exhibits, including the parties' 2006 declarations of their assets and liabilities, the Grant Deed, and documents showing that the residence could not have been profitably sold in October 2013. At the court's evidentiary hearing, Wife and Husband were both sworn and permitted to testify. Wife testified to the circumstances surrounding the execution of the 2013 Grant Deed, discussed ante.
The court then heard argument from Husband's counsel, who contended that Wife no longer had an interest in the home because she signed the 2013 Grant Deed. Husband's counsel argued that the Grant Deed had the effect of modifying the terms of the parties' MSA, in particular, its provisions giving Wife a one-half equity interest in the home and requiring Husband to either buy her out or sell the home once the youngest child emancipated. Husband posited that once Wife signed the 2013 Grant Deed, "she signed away any right to get anything out of the house." He also claimed Wife was compensated for her interest when she took her half portion of a home equity loan before their divorce (amounting to roughly $70,000).
Husband testified that Wife's testimony was "not true" with regard to telling him that she expected to enforce the MSA when their youngest child reached the age of 18. He did not dispute the reason why the parties had agreed to put legal title to the residence in his name, which was for him to be able to refinance the residence as a veteran. He admitted that he and Wife did not amend the MSA in writing.
The court found that the parties did not reach any agreement to amend the MSA in 2013. Based on principles of equity, the court decided that the 2013 Grant Deed, executed to enable Husband to refinance the residence, did not void the applicable provisions of the MSA, which required the house to either be sold or for one party to buy the other out when the youngest of the children turned 18. The court noted there was no evidence at the time Wife signed the Grant Deed that she was also giving up her right under the MSA to force the sale of the house or recover half the proceeds. The court rejected Husband's claim that Wife had already been compensated for the home through her $70,000 share in the proceeds of the equity loan on the basis that the parties entered into the MSA after Wife already had her share of those funds.
Husband timely appealed. We granted Husband's motion to augment the record with the 2009 judgment of dissolution, which attached the parties' MSA.
Husband also filed a request for judicial notice of various deeds and documents. With the exception of the 2013 Grant Deed, which was lodged as an exhibit below and is already part of the record on appeal, none of the other documents were presented to or considered by the trial court. Husband has not stated any reason why the documents, if they were relevant, could not have been submitted to the trial court. We find no exceptional circumstances to take judicial notice of the requested documents and deny his request for judicial notice. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3 [" '[W]hen reviewing the correctness of a trial court's judgment, an appellate court will consider only matters which were part of the record at the time the judgment was entered.' "].)
DISCUSSION
Broadly speaking, Husband challenges Wife's ability to enforce provisions of the MSA that required the parties to sell and split the equity in the family residence upon the event of their youngest child turning age 18. Husband contends Wife lacks standing to enforce the MSA because she did not assert her claim within 30 days of their youngest child's 18th birthday, which he argues is a requirement under the MSA. Further, he raises several arguments relating to the 2013 Grant Deed, which he claims terminated, amended, or otherwise invalidated the provisions of the MSA that allocated a 50 percent interest in the family residence to Wife. To the extent the trial court's findings with respect to the 2013 Grant Deed were correct, Husband claims the court should have considered setoffs for mortgage and other payments made from his separate property pursuant to In re Marriage of Epstein (1979) 24 Cal.3d 76 (Epstein), In re Marriage of Watts (1985) 171 Cal.App.3d 366 (Watts), and In re Marriage of Jeffries (1991) 228 Cal.App.3d 548 (Jeffries). We address these arguments in turn. A. Husband's Standing Argument is Without Merit
Regarding standing, Husband argues the MSA required any claim of right to the residence to be exercised within 30 days of the parties' youngest child turning age 18, i.e., by December 12, 2015. Wife filed her request for an order with the family court on December 16, 2015. Husband cites section 7.8.3 of the MSA, which states in pertinent part: "Option Process. The Purchasing Party's Option must be exercised in writing no later than thirty (30) days after the first to occur of the events listed in Section 7.2." The "Purchasing Party" is earlier defined in the MSA as "Husband," and section 7.2 lists the events that trigger a sale of the residence.
Husband's argument is meritless. The parties explicitly agreed the family court retained jurisdiction to enforce relevant provisions of the MSA, which also authorized "either party" to "apply to the court" for enforcement orders. The procedural requirements contained in section 7.8.3 of the MSA plainly applied only to Husband, not Wife, and related to his option to purchase Wife's equity interest in the residence in lieu of listing the home for sale. For instance, other provisions of the MSA, e.g., section 7.8.5, provide that if Husband, and then Wife, failed to exercise their respective options to buy out each other's interests in the residence, the property would "be immediately listed for sale upon mutually acceptable terms[.]" The court was authorized to hear Wife's request for an order to enforce the judgment and MSA. B. Effect of 2013 Grant Deed
Husband argues that the 2013 Grant Deed effected a transmutation, changing the legal nature of the residence from either community or Wife's separate property to his separate property. In addition, he argues that Wife's executing the 2013 Grant Deed terminated her legal interest in the residence, and relatedly, nullified or voided provisions in the MSA regarding deferred division of equity in the residence. Finally, Husband argues that Wife cannot enforce the MSA as a lien on the property. Wife contends there was no transmutation of property, Husband's arguments ignore the court's factual findings and equitable considerations, and he forfeited certain arguments. As we will explain, Wife's contentions have merit.
1. The Transmutation Statutes Do Not Apply
Husband bases many of his arguments on principles of property transmutation, which Wife contends do not apply to this matter. Under the transmutation statutes (Fam. Code, § 850 et seq.), only "married persons" may agree to transmute their community or separate property. (§ 850.) In addition, a "transmutation of real or personal property is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected." (§ 852, italics added.) References in the Family Code to " 'spouses' " or " 'married persons' " include "persons who are lawfully married to each other and persons who were previously lawfully married to each other, as is appropriate under the circumstances of the particular case." (§ 11.) Case law in this area indicates that transmutations may occur before and during marriage, but not after dissolution. (See, e.g., In re Marriage of Rossin (2009) 172 Cal.App.4th 725, 733 [" 'Both before and during marriage, spouses may agree to change the status of any or all of their property through a property transmutation.' "]; see generally, Hogoboom & King, Cal. Practice Guide: Family Law 2 (The Rutter Group 2017) ¶ 9:3, p. 9-2 [Marital agreements are those "executed by husband and wife during marriage and affecting marital rights and obligations incident to an ongoing marriage . . . . [¶] This is a broad category, encompassing, among other things, 'transmutation' agreements altering property status[.]"].)
Further unspecified statutory references are to the Family Code.
We do not consider it appropriate to apply the transmutation statutes and related case law to the facts presented here, where the family residence was part of the marital estate equalized under the MSA and the parties divorced for several years by the time of the 2013 Grant Deed execution and claimed property transmutation. Husband has not pointed us to, nor are we independently aware of, any cases applying the transmutation statutes to determine property interests based on an event that occurred after a court has already ordered a division of all marital property through an MSA, which was incorporated into a judgment of dissolution. In fact, the "effect of a judgment of dissolution of marriage when it becomes final is to restore the parties to the state of unmarried persons." (§ 2300.) Thus, we hold to the general principle that transmutations do not occur after dissolution of marriage.
An oral transmutation of property was neither permitted under the Family Code (§ 852) nor the parties' MSA.
2. The Trial Court Was Authorized to Order an Appraisal and Payment to Wife
Based on our review of the record, in ruling on Wife's request for an order to enforce the MSA, the court used its equitable powers to impose a constructive or resulting trust in favor of Wife with regard to the marital residence, which was held in Husband's name after the parties executed the 2013 Grant Deed.
The court stated that "equity" required it to "do the thing that's fair" as it was making its findings.
A trial court possesses "broad equitable powers to fashion a remedy which would prevent defendant from being unjustly enriched at plaintiff's expense. 'A constructive trust is a remedial device primarily created to prevent unjust enrichment; equity compels the restoration to another of property to which the holder thereof is not justly entitled.' " (Martin v. Kehl (1983) 145 Cal.App.3d 228, 237 (Martin) [constructive or resulting trust was appropriate when defendant refused to pay plaintiff one-half of property's proceeds; plaintiff contributed 50 percent to purchase property, expected half the proceeds, and agreed that record title would be put in defendant's name only because defendant needed a place to live].)
"The principal constructive trust situations are set forth in Civil Code section 2223 and 2224." (Martin, supra, 145 Cal.App.3d at p. 237.) Civil Code section 2223 provides that "[o]ne who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner." Civil Code section 2224 provides that "[o]ne who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he . . . has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it." (Italics added.) While married persons or formerly married persons are in a "confidential relationship" and "subject to the general rules governing fiduciary relationships" (§ 721) until marital property "has actually been distributed" (§ 2102, subd. (b)), a constructive trust does not require a confidential or fiduciary relationship (Martin, supra, 145 Cal.App.3d at p. 237). "The only conditions necessary to create a constructive trust are those stated in the [Civil Code] sections. [Citations.] In order to provide the necessary flexibility to apply an equitable doctrine to individual cases, these sections state general principles for a court's guidance rather than restrictive rules. [Citation.] Thus, it has been pointed out that 'a constructive trust may be imposed in practically any case where there is a wrongful acquisition or detention of property to which another is entitled.' " (Id. at pp. 237-238.)
In addition, a "resulting trust arises by operation of law from a transfer of property under circumstances showing that the transferee was not intended to take the beneficial interest." (Lloyds Bank California v. Wells Fargo Bank (1986) 187 Cal.App.3d 1038, 1042.) A resulting trust is sometimes referred to as an "intention-enforcing" trust since "the resulting trust carries out the inferred intent of the parties." (13 Witkin, Summary of Cal. Law (10th ed. 2005) Trusts, § 311, p. 885; Martin, supra, 145 Cal.App.3d at p. 238; Calistoga Civic Club v. City of Calistoga (1983) 143 Cal.App.3d 111, 117-118 ["Like a constructive trust, the resulting trust is a creature of equity and need not be evidenced by writing or even by an express declaration."]; see also Millard v. Hathaway (1865) 27 Cal. 119, 139 [trusts implied or presumed from the "supposed intention of the parties and the nature of the transaction" are known as "resulting trusts"].) A resulting trust on property commonly arises in family situations. (See, e.g., Novak v. Novak (1967) 249 Cal.App.2d 438, 441-443 (Novak) [children deemed to hold title in trust for father]; Bishop v. Freeman (1949) 90 Cal.App.2d 861, 861-862 [son deemed to hold title in trust for mother and stepfather].)
It is a question of fact for the trial court, in determining the existence of a trust, whether the evidence is clear, satisfactory and convincing. (Novak, supra, 249 Cal.App.2d at pp. 441-442.) We review the trial court's findings for substantial evidence. (Viner v. Untrecht (1945) 26 Cal.2d 261, 267.)
Here, the court made a number of findings that establish a trust situation, which are supported by substantial evidence as follows: The MSA granted Wife a 50 percent equity interest in the house. When Wife signed the Grant Deed, it was not her intent to give up her rights under the MSA; her actions merely "allow[ed] [Husband] to refinance and keep the house." Wife did not understand that signing the Grant Deed impacted her ability to enforce the MSA if that was the "legal consequence" of her actions. Indeed, "neither party understood the [Grant Deed] when they signed it." Wife's share of funds from a home equity line of credit did not serve as compensation for her signing the Grant Deed. Wife received no compensation for signing the Grant Deed. Husband did not disclose his intent to nullify/amend the MSA to Wife at the time she executed the Grant Deed.
In making its ruling, the court effectively imposed a constructive trust on the residence in favor of Wife to prevent Husband's unjust enrichment, or alternatively, implied a resulting trust on the residence based on the parties' intent in executing the 2013 Grant Deed. The MSA, which is a very detailed, 35-page document, clearly established the family residence was originally community property that was to be equally divided between Husband and Wife. The MSA was thoroughly negotiated with assistance of counsel and constituted a final, comprehensive agreement concerning division of the parties' marital property interests. It was effective in 2013 and could not be amended or terminated "except by an instrument in writing." The court reasonably found that the 2013 Grant Deed did not amend the MSA given the "uncontroverted" reason for the Grant Deed's existence—to put title to the residence in Husband's name so that he could refinance the property, which would allow the children to continue living in the home.
Importantly, the parties had no discussions regarding, and reached no agreement that Wife was gifting Husband her 50 percent interest in the residence or giving up her right to enforce the property sale or buy-out provisions under the MSA when their youngest child turned age 18. Wife signed the Grant Deed only because Husband needed a new loan to avoid foreclosure. The court credited Wife's testimony that she did not intend to amend the MSA or give away her 50 percent interest in the residence and that she received no compensation for executing the 2013 Grant Deed. The record shows Husband did not contemplate in 2013 that the Grant Deed voided the MSA, or if he did, he did not reveal his intention to Wife. The court found Wife was unaware or mistaken regarding the legal effect of her actions if the effect of signing the 2013 Grant Deed was to invalidate the MSA, and that it was "not fair" for Husband to "convince" her to sign the Grant Deed. Given the foregoing, we have no basis to reverse the trial court's order granting 50 percent of the residential equity to Wife. Despite Husband's title to the residence after execution of the 2013 Grant Deed, Wife retained her beneficial interest in the property.
The trial court's order was justified regardless of whether Husband and Wife were in a confidential relationship. A constructive or resulting trust may exist without a confidential relationship. (Martin, supra, 145 Cal.App.3d at pp. 237-238.)
Husband argues that he and Wife entered into an oral agreement to amend the MSA, which was evidenced by the Grant Deed. He further argues that Wife was compensated for the Grant Deed in 2005 prior to entering the MSA when she received her share of the home equity loan. The court reasonably rejected his arguments, finding there was no oral agreement to amend the MSA and Wife's receipt of half of the home equity loan proceeds was not compensation for her 50 percent interest since it preceded the MSA, which equally divided the residence. We are not entitled to reweigh the evidence or draw alternative inferences on appeal. (Novak, supra, 249 Cal.App.2d at pp. 441-442.)
Husband also claims the court erred by accepting Wife's "hearsay" testimony during the hearing. His claim is forfeited because he never objected to Wife's testimony. (People v. Dykes (2009) 46 Cal.4th 731, 756 ["[T]rial counsel's failure to object to claimed evidentiary error on the same ground asserted on appeal results in a forfeiture of the issue on appeal."].) Regardless, Wife offered evidence of Husband's statements against his interest, which were thus admissible as a party admission, an exception to the hearsay rule. (Evid. Code, § 1220.)
In summary, Husband held title to the residence partially in trust for Wife. She was entitled to recover her interest in the property.
3. Wife Was Not Required to Place a Lien on the Property in Order to Enforce the Judgment
Husband claims that Wife was required to place a lien on the property in order to enforce the judgment and MSA, which he asserts she did not do. The claim is forfeited. Husband never raised the claim during the family court proceedings, and he may not raise it for the first time on appeal. (Natkin v. California Unemployment Insurance Appeals Board (2013) 219 Cal.App.4th 997, 1011 (Natkin) ["Issues presented on appeal must actually be litigated in the trial court—not simply mentioned in passing."].)
Notwithstanding forfeiture, a family court may order a deferred sale of a family home without requiring a party to record the order to be enforceable. (§§ 3800-3810, 3804 [permitting but not requiring a deferred sale of home order to be recorded]; see Hogoboom & King, Cal. Practice Guide: Family Law 1 (The Rutter Group 2017) ¶ 6:565, p. 6-339 [recordation not mandatory].) A " '[d]eferred sale of home order' means an order that temporarily delays the sale and awards the temporary exclusive use and possession of the family home to a custodial parent of a minor child[.]" (§ 3800, subd. (b).) Such orders are intended to "minimize the adverse impact of dissolution" on the welfare of dependent children of the marriage. (Ibid.)
In this case, Husband and Wife agreed in the MSA, incorporated in a judgment, to a deferred sale of their home so that their minor children could remain living in it until they turned age 18. A recorded lien showing Wife's interest in the property was not required to enforce the judgment and may have thwarted the parties' shared intent for Husband to obtain a loan that was available only to him as a veteran and which would allow the children to remain living in the home. Both parties believed the loan (and keeping the house) was in the best interest of their children. Under the circumstances, the court did not err in requiring Husband to pay Wife 50 percent of the residential equity. C. Credits for Separate Payments under Epstein, Watts, and Jeffries
Husband claims the court erred by failing to consider credits or setoffs for his payments relating to the residence after the parties separated. Wife contends the claim is forfeited, and in any event, credits are barred by the MSA.
The claim is forfeited. Husband did not raise the issue of setoffs or credits before the trial court, and his arguments on appeal rely on documents that were not considered below. The issue of whether Husband is entitled to reimbursement for certain separate payments or claimed losses relating to the house, from 2006 until 2016, cannot be fairly resolved for the first time on appeal. (Natkin, supra, 219 Cal.App.4th at p. 1011.)
Moreover, as Wife points out, Husband expressly waived any claim to credits. The MSA states: "[E]ach party waives each of the following: [¶] 1. Epstein credits (In re Marriage of Epstein (1979) 24 Cal.3d 76) and all rights to reimbursement to which a Party may be entitled to as a result of the payment of community obligations since the Separation Date. [¶] 2. Watts credits (In re Marriage of Watts (1985) 171 Cal.App.3d 366) and all rights of reimbursement to which a Party may be entitled to as a result of one Party's use of community assets since the Separation Date." The parties also waived "all rights" to reimbursement under Family Code section 2640.
Finally, the record is insufficient to determine whether Husband would even be entitled to reimbursement for his post-separation payments, since he had exclusive possession and use of the residence. "Reimbursement should not be ordered if payment was made under circumstances in which it would have been unreasonable to expect reimbursement, for example, where there was an agreement between the parties the payment would not be reimbursed or . . . where the payment was made on account of a debt for the acquisition or preservation of an asset the paying spouse was using and the amount paid was not substantially in excess of the value of the use." (In re Marriage of Smith (1978) 79 Cal.App.3d 725, 747, italics added.) Husband has not established trial court error. D. Due Process
Husband argues for the first time in his reply brief that he was deprived of due process under the federal and state constitutions because he did not have the opportunity to present all of his relevant evidence before the trial court. The argument is baseless.
The argument is also forfeited since it was raised for the first time on reply. (People v. Clayburg (2012) 211 Cal.App.4th 86, 93 [arguments are forfeited when not raised in opening brief unless good reason is shown for the failure to present them before].) Husband does not state any reason why a due process claim could not have been raised in his opening brief.
"The core of due process is the right to notice and a meaningful opportunity to be heard." (LaChance v. Erickson (1998) 522 U.S. 262, 266.) It is undisputed Husband received notice of the trial court proceedings, throughout which he was represented by counsel. Assuming he did not present "all" of his relevant evidence to the trial court, he certainly had the opportunity to do so. His counsel lodged various exhibits in support of Husband's position. Husband confusingly claims he was "never allowed to take the stand and testify in his behalf," but the record shows that he was sworn, the court asked him questions, and he responded under oath. He also filed a sworn declaration, which the court considered. Thus, Husband testified. His counsel made numerous arguments on his behalf. There was no deprivation of due process.
MOTION FOR SANCTIONS
After the conclusion of briefing on appeal, Wife filed a motion for sanctions against Husband, arguing that his arguments were totally and completely without merit. Husband filed an opposition. We decline to impose sanctions.
Our Supreme Court has cautioned that sanctions should be awarded "most sparingly to deter only the most egregious conduct." (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 651.) "Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win on appeal." (Id. at p. 650.) "Thus, an appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit." (Ibid.)
Here, although Husband's appeal is not meritorious, neither party raised case law that squarely addressed the key appellate issues in the same context. Thus, we cannot say the appeal was "prosecuted for an improper motive" or that "any reasonable attorney would agree that the appeal is totally and completely without merit." (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650.)
DISPOSITION
The order is affirmed. Costs on appeal are awarded to Wife.
IRION, J. WE CONCUR: McCONNELL, P. J. HALLER, J.