Ron Starr appeals from the judgment entered after the family law court found that the house he bought in his name only while married to former wife Martha Starr was community property and ordered him to convey the property to them both as tenants in common. The evidence shows that Martha quitclaimed her interest in the house based on Ron's promise to put her on title after the purchase was completed, but that Ron failed to do so. As a result, the evidence supports a finding that the house was community property based on Ron's violation of his fiduciary duties to Martha. We also conclude that the trial court properly valued the community and separate property interests in the house, and did not err in denying Ron's request to refund his overpayment of child support credits. We therefore affirm the judgment.
In late 1996, Ron Starr bought a house in Glendora, taking title in his name only as his separate property even though he was then married to Martha Starr.
Ron testified that the house was bought in his name only because the $50,000 downpayment came from his separate property funds, and he and Martha intended all along that the house would be his separate property. In accord with that plan, Martha quitclaimed her interest in the house before escrow closed. Property taxes and mortgage payments came from community property earnings, Ron testified.
Under Family Code section 721, Ron had the burden of proving that the quitclaim transaction satisfied his fiduciary duties to Martha. She testified that because of her poor credit history, the lender recommended she agree to the quitclaim so she and Ron could qualify for a better interest rate. The loan broker told Martha and Ron they could add Martha back onto the title by way of a quitclaim deed within 45 days of the close of escrow. Martha had a discussion with Ron about adding her onto the title, and he said he would do that. Martha said she and Ron jointly offered to buy the house, and that the deed to Ron was mailed to them both after it had been recorded. Although Ron never added Martha onto the title, she never worried about it because "He's my husband. I just don't . . . mistrust him. You know, it was our house." She signed the quitclaim deed freely and voluntarily.
Ron was impeached with his deposition testimony, where he said title was taken in his name in order to facilitate the financing. When asked on cross-examination about the statement on his divorce petition that the house was community property, Ron said he could not recall whether his former lawyer went over his assets with him before signing the petition, and that he probably did not read it before signing.
The trial court found that the house was community property, but that Ron was entitled to reimbursement of the $50,000 downpayment from his separate property funds. Ron was ordered to convey the house to himself and Martha
Ron contends the trial court erred because it relied on the "lender's intent" theory, which is applicable only to determining whether loan proceeds obtained during marriage are community or separate property. Instead, according to Ron, the court should have applied the reasoning of the factually similar Mathews, supra, 133 Cal.App.4th 624, and found that he satisfied his fiduciary obligations to Martha based on her testimony that she signed the quitclaim deed freely and voluntarily.
Because of this, our courts have long held that when an interspousal transaction advantages one spouse, public policy considerations create a presumption that the transaction was the result of undue influence. (Haines, supra, 33 Cal.App.4th at pp. 293-294.) A spouse who gained an advantage from a transaction with the other spouse can overcome that presumption by a preponderance of the evidence. (Mathews, supra, 133 Cal.App.4th at pp. 631-632.)
In Haines, a wife who quitclaimed her interest in the house she jointly owned with her husband sought to invalidate the deed during their divorce proceedings because she was coerced into signing it. The wife testified that she and her husband had several arguments about signing the deed as their marriage deteriorated. She claimed the husband ranted and raved, pulled her hair, and threw water in her face during one of these arguments. Later, the husband agreed to cosign a loan for the wife so she could buy herself a car that she would need once she was on her own. While the husband was driving the wife to her credit union to cosign the loan, he told her he would not do so unless she agreed to the quitclaim deed. She signed the deed because she felt she had no alternative.
The facts in Mathews are similar to this case. While a husband and wife were in the process of buying a house, the wife quitclaimed her interest in the house to the husband in order to obtain a better interest rate. Title to the house was taken in the husband's name alone. The wife knew title was taken in that manner, but believed she would be added to the title later on. The wife contested the validity of the quitclaim deed, primarily on the basis that she was a Japanese native and did not speak English well enough to fully understand what she was doing. The trial court refused to apply section 721's presumption of undue influence and awarded the house to the husband as his
Citing to Haines, supra, 33 Cal.App.4th at page 296, the Mathews court held that the husband had to prove the quitclaim deed was freely and voluntarily made, with full knowledge of all the facts and a complete understanding of its effects. (Mathews, supra, 133 Cal.App.4th at p. 631.) The trial court's error was harmless, the Mathews court held, because the evidence supported the trial court's finding that the wife freely and voluntarily quitclaimed her interest in the house with full knowledge of the facts. This included evidence that: the wife asked questions when she did not understand something, but asked none when she signed the quitclaim deed; husband put no pressure on her to sign; and she did so in order to get better financing, and completion of the purchase did not depend on her signing the quitclaim deed. Although the wife was a native of Japan, evidence that she was fully fluent in English, handled her own separate finances as well as their joint finances, and admitted knowing her name was not on title but "assumed it would be added later," led the court to conclude the quitclaim deed was "valid and executed freely and voluntarily in good faith." As a result, the husband "rebutted the presumption of undue influence by a preponderance of the evidence." (Mathews, supra, 133 Cal.App.4th at pp. 631-632.)
It is easy to see why Ron relies on Mathews. The factual setting seems virtually identical to this case, with the added bonus of Martha's testimony that she signed the quitclaim deed freely and voluntarily. There is a critical— and we believe fatal—distinction, however. In Mathews, the wife said she merely assumed she would be added onto the title after escrow closed, while Martha testified that Ron told her he would do so. The importance of this distinction is tied up in both section 721 and its statutory predecessor, and the sometimes confusing use of the term "undue influence" by decisions interpreting those provisions.
Section 721 never mentions undue influence. Instead, it states that spouses are in a confidential and fiduciary relationship and have a duty to each other of the highest good faith and fair dealing. Its predecessor, Civil Code former
Despite that omission, the court in Haines, supra, 33 Cal.App.4th 277, relying on Brison I, supra, 75 Cal. at page 529, noted that an interspousal transaction that benefits one of the spouses creates a presumption of undue influence, requiring the husband who obtained his wife's quitclaim deed to the family home to show that the deed was freely and voluntarily made. Mathews, supra, 133 Cal.App.4th at page 630, cited Haines for the same proposition. The trial court's statement of decision in this case made findings concerning whether Martha's quitclaim deed was freely and voluntarily made, and Ron has understandably focused his appellate arguments on the concept of undue influence as expressed in Mathews.
However, there is another type of conduct that amounts to undue influence: the use of confidence or authority to obtain an unfair advantage. (Civ. Code, § 1575, subd. 1.) This is triggered by one party's breach of a confidential relationship. (O'Neil v. Spillane (1975) 45 Cal.App.3d 147, 152-153 [119 Cal.Rptr. 245].) It is also the type of conduct at issue in Brison I, supra, 75 Cal. 525, which, as we next discuss, explains not only how "undue influence" became shorthand for conduct that violates section 721, but why the evidence in this case supports the judgment.
Brison I and II are significant for three reasons. First, they announced the overarching principle that constructive fraud due to breach of a confidential relationship amounts to undue influence, terminology that was adopted by other courts. Second, they differentiated such constructive fraud from the other forms of undue influence based on acts of coercion or overpersuasion. Third, they established a paradigm fact pattern of constructive fraud arising from one spouse's conveyance of property to the other spouse based on an unfulfilled promise by the other spouse to reconvey. This fact pattern has been applied by our courts many times in cases involving spouses and other persons in confidential relationships. (See, e.g., Alaniz v. Casenave (1891) 91 Cal. 41, 46 [27 P. 521] [in action to reconvey deeds conveyed to trusted family member, court held that if a deed is obtained without consideration by way of an oral promise to reconvey in a transaction between those in a confidential relationship, the breach of promise is constructive fraud];
Perhaps most notable of these for our purposes is Jones v. Jones (1903) 140 Cal. 587 [74 P. 143] (Jones), where a wife conveyed land to her husband on the advice of a lawyer who told them the transfer was required in order to bring an action to eject a tenant in possession of the land. Instead, the husband conveyed the land to a third party so the third party could bring the action, and the third party then claimed he was the true owner. The wife sued her husband and the third party. The trial court found those facts were true, but found that the husband had not acted fraudulently, but instead intended to carry out the plan to eject the tenant. The trial court entered judgment for the wife and enjoined the husband and the third party from making any claims to the property.
The Supreme Court affirmed, partly in reliance on Brison I, supra, 75 Cal. 525. (Jones, supra, 140 Cal. at p. 590.) Even if the attorney who advised the wife had been employed by her, the husband was not exonerated because, "by accepting the deed upon the statement made in his presence of the purposes for which he was to hold the land, [he] became a party to the transaction, and by implication promised to fulfill the purpose of the trust." (Id. at p. 591.) As a result, the failure to fulfill this agreement was constructive fraud, allowing the wife to have the deed declared void. (Id. at p. 590.) In short, even when the suggestion to convey came from a third party adviser and no express promises were made by the husband, he impliedly promised to fulfill the conditions of the transfer, and the failure to do so was constructive fraud.
By substituting the Starrs' loan broker for the lawyer in Jones, and adding in an express promise to essentially reconvey Martha's quitclaimed interest by Ron in place of an implied promise, we believe Jones is applicable here. Viewing the evidence most favorably to the judgment, Martha and Ron were told by the lender they should have Ron take title in his name only, with Martha quitclaiming her interest in the house, so they could get a better
For the same reason, we hold that Mathews is not applicable here. While the Mathews court mentioned in passing that the wife "assumed" or "believed" she would be added onto the title, there is no indication that her husband ever promised that would happen. The Mathews court did not develop the point, and it played no part in that court's analysis. Because the Brison-Jones fact pattern was not present in Mathews, and was not part of its decision, we hold that Mathews is not applicable here. We next consider whether the trial court's statement of decision allows us to affirm based on such a finding.
In nonjury trials, unless a statement of decision has been requested and rendered, we will presume that the trial court made all the factual findings necessary to support the judgment, so long as those implied findings are supported by substantial evidence. If a statement of decision is given, it provides us with the trial court's reasoning on disputed issues and "is our touchstone to determine whether or not the trial court's decision is supported by the facts and the law." (Slavin v. Borinstein (1994) 25 Cal.App.4th 713, 718 [30 Cal.Rptr.2d 745].) Ron contends the trial court's statement of decision shows that the trial court's reasoning was flawed and that we should reverse the judgment because (1) of the four decisions listed in the trial court's statement of decision, only one—Mathews—is legally and factually applicable; and (2) the trial court's finding that the quitclaim deed was not signed freely and voluntarily is based on the lender's intent doctrine, which is also inapplicable.
Implicit in Ron's contentions is the notion that the statement of decision clearly and unambiguously shows the trial court erred. We disagree. Instead, we conclude that the statement of decision is ambiguous. Because the record does not show that Ron (or Martha) objected to the statement of decision, "whatever uncertainties may exist in the findings of the trial court are to be so resolved, if reasonably possible, as to support the judgment rather than defeat it [citation] . . . ." (Reinsch v. City of Los Angeles (1966) 243 Cal.App.2d 737,
The first "finding" Ron relies on is the paragraph in the statement of decision listing the four appellate decisions that the trial court believed were controlling. This is not a finding of fact, however. Instead it is immaterial surplusage that we may disregard. (Canadian Indem. Co. v. Motors Ins. Corp. (1964) 224 Cal.App.2d 8, 17-18 [36 Cal.Rptr. 159].)
The second finding Ron points to as the source of the trial court's error is the statement that he did not meet his burden of showing by a preponderance of the evidence that Martha signed the quitclaim deed "freely and voluntarily. The reason [Martha] did not sign the quitclaim deed freely and voluntarily was because the intent of the lender controlled title to the [property] when the lender suggested that [Martha's] name be left off of the mortgage for the purposes of financing, and [Martha] agreed to execute the quitclaim deed based on the lender's suggestion."
According to Ron, this shows the trial court was relying on a family law property characterization doctrine known as the lender's intent theory, which applies to only the characterization of loan proceeds obtained during marriage. Ron correctly cites to In re Marriage of Grinius (1985) 166 Cal.App.3d 1179 [212 Cal.Rptr. 803] (Grinius) for the definition and applicability of that theory. (Id. at p. 1186 [the character of credit acquisitions during marriage is "`determined according to the intent of the lender to rely upon'" either the separate property of one spouse or the community property of both].) He is wrong in contending that the trial court was unambiguously referring to that doctrine in its statement of decision.
Nothing in the record shows that this theory was ever mentioned at trial. Martha's lawyer did not raise it during his closing argument, contending
We do not believe Family Code section 2580 somehow prevents a court from awarding separate property contributions to a spouse under these circumstances. Family Code section 2640, subdivision (b) states that reimbursement is awarded upon "division of the community estate," and says nothing about the requirement that the property have first been acquired in joint title form. Furthermore, Ron's contention is based on the assertion that the judgment did not change the fact that title was in his name as his separate property. He overlooks that the trial court ordered him to convey the property to himself and Martha as tenants in common, however. More fundamentally, we fail to see how Ron has been harmed by this award, when it in fact ensures that he is reimbursed for his separate property contribution. He does not contend that the $50,000 amount is in error, and does not suggest some other means of calculating the amount of his reimbursement. Because he has failed to show any harm from the trial court's ruling, we will affirm.
Ron and Martha have two children. In 2005, they stipulated to a DissoMaster-generated child support payment from Ron that was erroneously based on the entry of data showing they had four children. As a result, Ron overpaid his child support obligation by $3,112. In 2006, the court modified the support order to reflect the proper amount, and reserved for trial the issue of whether Ron was entitled to reimbursement of the overpayment. At trial, the court found that the then current support order was inadequate, increased the amount, and declined to reimburse Ron for his overpayments. Ron contends the trial court erred because it did not make the findings required to justify a child support award above the guideline amounts. Martha contends that under In re Marriage of Peet (1978) 84 Cal.App.3d 974 [149 Cal.Rptr. 108] (Peet) the court had discretion to deny the reimbursement claim.
Peet involved a spouse's claim for reimbursement of voluntary overpayments, which the trial court granted. The Court of Appeal affirmed, holding that the trial court had discretion in such matters. We hold that Peet is applicable here. This is not a case where the trial court awarded child support above the guideline amounts in the first instance. Instead, based on a clerical error, the parties stipulated to an amount they believed was correct, and the
The judgment is affirmed. Respondent shall recover her appellate costs.
Flier, J., and Grimes, J., concurred.