ACFLS Family Law Blog

Marriage of Jill and Victor D. (2010) 185 Cal.App.4th 491, 110 Cal.Rptr.3d 369

Decided by the Third District on June 9, 2010

Summary of the facts: H and W married in 1991, had three children and separated in 2000 when W took the children and fled to a domestic violence shelter. She filed a petition for legal separation and requested restraining orders and the Yolo County Superior Court issued a TRO that allowed H no visitation until after the parties attended mediation. The parties stipulated that if the mediator found it appropriate, he could have supervised visitation and telephone the children. After a hearing at which H failed to appear, the court suspended visitation based on the mediator’s recommendation, awarded W sole legal and physical custody of the children and issued a permanent restraining order against H.

When W amended her petition to request a dissolution of marriage, H attempted to get the court to set aside the orders, but it refused. Over the next year, the parties did agree to some supervised visitation, but according to the mediator H was “obsessive” and had ongoing problems with drug use, emotional problems and violence. Ultimately, the mediator recommended that H undergo a psychological evaluation before being allowed to visit with the children and the trial court so ordered. H violated the RO on several occasions resulting in jail sentences; the trial court granted W’s request to renew it and extended it until the youngest child turned 18. When H moved to modify visitation, the trial court repeated the requirement that he have a psychological evaluation first and ultimately denied his motion, as well as his next motion for the same relief.

In May of 2006, W filed a petition in the Sacramento Superior Court requesting that the court terminate H’s parental rights and permit their adoption by her current husband. At about the same time, H filed another motion in the Yolo County dissolution action to modify visitation, but the trial court denied his motion “and ordered that father not file further such motions until he had completed the previously ordered psychiatric evaluation, anger management classes, individual counseling, and he had proof of random drug testing.” When the matter came on for trial, the court terminated H’s parental rights but on appeal, the Third District reversed on jurisdictional grounds. W refiled a petition in Yolo County alleging that H had abandoned the children “within the meaning of Family Code section 7822, in that he had not visited them since March 2001 and had ‘economically and emotionally abandoned his children.’” In opposition, H claimed that he did not leave the children and did not intend to abandon them. He also filed another visitation modification motion claiming that he had fulfilled the requirements of the prior order. At trial on W’s petition, H claimed that W and her family thwarted his visitation. As of that date, he owed $336,648.02 in back child support, but H claimed he did not pay because he was “broke.”

“The court found that father had abandoned the minors within the meaning of Family Code section 7822 and that termination of his parental rights was in the minors’ best interests. Specifically, the court found that father left the minors in mother’s custody and care in early 2001, for over a period of one year without any provision for support or communication from him; that father had intended to abandon the minors, as shown by his failure to support and communicate with them; and that father had not rebutted the statutory presumption of Family Code section 7822. Pointing out that father did not provide support for almost 23 months, the court found that father’s evidence about his financial condition was not credible, and that father had pursued work ‘under the table to avoid paying taxes and child support since 2003.’ As to father’s failure to communicate with the minors, the court noted ‘pounding your chest and saying you want to see your children is not the same as taking steps to do it…. [M]any of the steps that [father] took were more about the anger of his wife th[a]n they were about an intent to see his children.’ The court observed that, until 2006, father never took steps necessary to meet the court-ordered requirements to visit the minors. Finding it would be in the best interests of the minors to terminate father’s parental rights, the court did so.” H appealed; noting that “the facts … amply support the finding” that termination of parental rights was in the children’s best interests, the Third District affirmed.

The result on appeal: Stating that under the Family Code, “abandonment” for purposes of termination of parental rights “occurs when a ‘parent has left the child in the care and custody of the other parent for a period of one year without any provision for the child’s support, or without communication from the parent, with the intent on the part of the parent to abandon,” the panel stated the issue as “whether, and if so when, a parent “left” his or her child in the care and custody of another person with the intent to abandon the child.” H argued that the court erred in starting its analysis with the date on which he first ceased contacting his children, contending that it should have considered the factors leading up to that time, including that W had sole legal and physical custody of the children. However, the court held that “(t)he relevant factual context for the trial court to examine in determining whether a parent has ‘left’ a child is the point at which there is a claimed voluntary relinquishment of custody and control by the parent. This may or may not be the same point at which the child came into the care and custody of the other parent. In this case, it is not the same.” Noting that “(t)here is no allegation that he, by action or inaction, abandoned the minors prior to February 2001,” but “(r)ather, the allegation was that, by his inaction, father abandoned the minors after February 2001,” it held that “the relevant factual circumstances to examine to determine whether he did so began in February 2001.”

It then cited previous cases and held that “(i)n determining the threshold issue of whether a parent has ‘left’ his or her child, the focus of the law is ‘on the voluntary nature of a parent’s abandonment of the parental role rather than on physical desertion by the parent.’ Thus, this court has held that a parent will not be found to have voluntarily left a child in the care and custody of another where the child is effectively ‘taken’ from the parent by court order; however, the parent’s later voluntary inaction may constitute a leaving with intent to abandon the child.” Analyzing the facts of the case under this law, the court concluded that

“(h)ere, as of February 2001, father stopped seeking to schedule visits with the minors. He left them in the care and custody of their mother for six months before the final custody and visitation orders were entered. The mediator could not find father after April 2001; indeed, father left California in August 2001 and did not notify the court or the mediator of his new address until October 2004. Father failed to attend the dissolution proceedings or oppose the relief sought by mother on the issues of custody, visitation, and child support. Father made no attempt to appeal the judgment and did not seek modification of the order for over three years. He made no effort to comply with the conditions that would have allowed him to contact the minors. And he did not provide for his children’s care in any way, did not seek any type of parental relationship with them, and did not pay child support until it was extracted from him through garnishment of his wages. This inaction is substantial evidence that father voluntarily surrendered his parental role and left the minors within the meaning of section 7822.”

In a footnote, the court said that “Father submitted evidence that he complied with drug testing in 2000 and had individual therapy sessions in 2000. As this was before the order specifying conditions necessary to contact the minors, it was not evidence of an effort to comply with the order. In addition, he submitted evidence that he signed up for chemical dependency classes in 2004; but there was no evidence he attended such classes or a parenting class in 2005. Evidence of simply signing up for classes, but not attending them, is not evidence of compliance with the court’s order that would have allowed father to contact the minors.”

Finally, H contended that there I was insufficient evidence that he intended to abandon his children. He admitted that that he did not pay child support or communicate with tyem for at least one year, and admitted that his failures to do so gave rise to the presumption that he intended to abandon them. However, he claimed that he rebutted that presumption “because he loved his children and wanted to see them.” He also argued that his repeated motions to modify his visitation rights “showed that he did not intend to abandon his children” and that although he moved to Florida, he “tried to communicate with the children through [mother] and his efforts resulted in him being arrested for violation of the restraining order.” He also admitted that he “never made any real concerted effort to comply with the support order,” but that what is “most important in looking at [his] failure to support is [mother's] feelings about that failure: she did not care if he[ ] ever paid support if he would voluntarily relinquish his parental rights. Hence, although there was a support order in place, [mother] essentially did not demand payment and [father] showed that he was unable to pay the support….”

The court disagreed, concluding that “the trial court was not required to believe father’s testimony regarding his intent and, in light of the other evidence, father’s testimony did not overcome the presumption of abandonment. Father need not have intended to abandon the minors permanently; it was sufficient that the evidence supports a finding he intended to abandon them during the statutory period.” It said that “(a)lthough father initially opposed mother’s efforts in court regarding custody and visitation, he did not appear at the hearing in August 2001, did not appeal the judgment from that hearing, and made no effort to modify the orders for over three years.” It also said that

“Father’s claim that he tried to communicate with the minors through mother rings hollow. Father knew there was a restraining order in place prohibiting him from contacting mother, and he knew that contacting her would not put him in communication with the minors. His leaving telephone messages and e-mails for mother and her parents was consistent with his earlier behavior of utilizing the minors as a cover to speak with mother. Father left signs for mother at the mediator’s office and attempted to pass messages to mother through the mediator, claiming that they were cards for the minors. However, when he earlier had supervised visitation with the minors, father obsessed with wanting to discuss mother and the divorce. When viewed in context, father’s behavior supports the court’s factual finding that the messages were more about father’s anger at mother than genuine attempts to communicate with or see the minors. Father knew what was required to allow him contact with the minors, namely his compliance with the court-ordered conditions. Yet, he made no effort to comply with those orders until 2006, some five years after they were issued. Equally telling is father’s failure to provide support for the minors. He made no support payments for almost two full years after he left the minors. At the time of trial, he was well over $300,000 in arrears in his child support payments. Over the course of seven years, he made a single voluntary child support payment, in the amount of $75.

… Based on the evidence presented, the court reasonably could find that, since 2003, father hid his earnings to avoid paying taxes and child support, which he thought was ‘absurd’ and had ‘no intention of paying if he [could not] see his children.”’ Mother’s ‘feelings’ about father’s failure to pay child support were irrelevant. … In any event, even if mother did not demand such payments, this did not relieve father of his responsibility to provide child support for the minors. In sum, father did not rebut the presumption that he abandoned the minors.”

My comment: What struck me about this case is that H’s actions are not all that uncommon in high conflict cases. He visited with the children initially but was too focused on getting back together with W to have meaningful visits. He lost his visitation rights due to his anger issues but could have regained them if he had complied with the court’s requirements for doing so. He was ordered to pay child support but felt that he was not going to pay if he could not see the kids. He could still have communicated with them by phone but was apparently so angry with W and convinced that her family was trying to keep him from the kids that he stopped calling.

Obviously, it was not enough for H to argue that he couldn’t lose his parental rights because he loved his kids. Something more was required, but this case does not answer the question of exactly where the line is between “not enough” and “just enough.” What is clear is that H’s attitude problems eventually resulted in termination of parental rights on a finding that he had abandoned the children. He obviously did not have the advice of counsel, or heed it if he had it.

Your comments:

Marriage of Tejeda (2009) 2009 WL 4068594

Decided by the Sixth District on November 25, 2009

Holding: The trial court has no discretion to refuse to divide quasi-marital property when it determines that a marriage is a putative marriage under Family Code §1551.

Summary of the facts: Petra and Pablo Tejeda married in 1973. Unbeknownst to Petra, at the time of their marriage Pablo was still married to Margarita Tejeda. He petitioned for dissolution from Margarita in 1975 and that marriage was terminated in 1976. Starting in 1994, Petra began acquiring real property, taking title in her name alone together with other relatives. Pablo’s name was on none of this property.

Pablo filed a dissolution action against Petra in 2006, and Petra responded with her own request for dissolution. She later amended her response to seek a judgment of nullity, alleging that the marriage was void for bigamy under Family Code §2201. She stated that she was not seeking putative spouse status for herself and argued that Pablo could not establish his own good faith belief in the validity of their marriage. At the hearing on the issue, she testified that she did not know that Pablo was still married when she married him, and that she did not discover the true facts until 2006.

Based on Petra’s testimony, the trial court held that the parties’ marriage was “either void or voidable” because “at all times, Mrs. Tejeda believe[d] that she was married to someone who at the time of their marriage ceremony was single.” Thus, held the trial court, under Family Code §2551 it was required to “declare the party or parties to have the status of a putative spouse,” making all of the real property W acquired during the marriage quasi-marital property. “The court found that since ‘either party (here, specifically Petra Tejeda) or both parties believed in good faith that the marriage was valid,’ the court was statutorily required to ‘declare the party or parties to have a status of putative spouse.’ Under ‘the mandatory language’ of section 2251, the court stated, it was ‘obligated to find that the property of the parties is quasi-marital . . . property.’” After the trial court certified the issue for immediate appeal, W appealed the judgment entered thereon.

The result on appeal: The Sixth District affirmed the trial court, disagreeing with Petra that the “plain language” of §2551 “is ambiguous to the extent it is susceptible to the interpretation applied by the Trial court.” Rather, after reviewing the history of §2551, it held that “(u)pon declaration of putative spouse status, the court is required to divide the quasi-marital property as if it were community property. … Upon a finding that the marriage is invalid, the statute requires the court to declare any party with the requisite good faith belief to be a putative spouse.” Petra argued that the status of putative spouse required either innocence or a good faith belief in the marriage’s validity. The court held that “(w)hat Petra fails to acknowledge, however, is that once either party is a putative spouse, the union is a putative marriage. … Thus, even where only one party has the requisite good faith belief in the validity of the marriage, thereby qualifying as the sole putative spouse, the court’s declaration of his or her status operates as a declaration that the union itself is a putative marriage.”

This, held the panel, requires the court to divide quasi-community property equally. It stated that “(n)othing in the language of section 2251’s property division mandate suggests that it is limited to cases where both parties are putative spouses. To the contrary, read in combination with the preceding sentence – the grant of putative spouse status to ‘the party or parties’ – it plainly compels division of the quasi-marital property regardless of whether both parties have been declared putative spouses.”
Undaunted, Petra asked the court to construe §2551 as only being applied at the request of, and to the benefit of, the “innocent” spouse. However, after analyzing Sections 2254 and 2555, the court concluded that “(b)ased on the plain language of the statute, read in context and with due regard for the purposes of the broader law of which it is a part, we conclude that the mandate of section 2251 must be applied, without regard to guilt or innocence, when the court makes the predicate findings that (1) the marriage is void or voidable, and (2) at least one party to the union maintained a good faith belief in the validity of the marriage.” It thus affirmed the trial court’s holding that it was required to equally divide all of the parties’ quasi-marital property.

My comment: This case seems to undermine the general fairness and equity that should govern interpretation of Family Code statutes. If H was still married to W-1 when he married W-2, their marriage was “void and illegal from the beginning” under Family Code §2201(a). Thus, there was never any marriage. However, according to this court Family Code §2251(a) requires the court to equally divide quasi-marital property acquired during a void marriage between the parties even if the party innocent of the true facts resulting in a bigamous marriage does not want it to, simply because the marriage was void. There was apparently nothing W could have done to avoid this result.

Your comments?

Marriage of Kacik (2009) 2009 WL 3862452

Decided by the Fourth District on November 19, 2009

Holding: There is a time limit on a supported spouse’s ability to obtain a modification of spousal support based on the cessation of child support under Family Code Section 4326.

Summary of the facts: Laurie and Richard Kacik were married for 16 years and had one child, who was 11 years old when they separated. They were divorced pursuant to a stipulated judgment filed June 8, 2001. According to the opinion, “(e)ach was represented by counsel. The stipulated judgment provided for $1,125 a month in child support from Richard to Laurie, which was to last until Alexander reached the age of 18. Richard was also to pay Laurie $1,625 in spousal support for seven years, after which spousal support was to be reduced to zero on February 15, 2008, but the court was to retain jurisdiction over support until death, remarriage or further order of the court.”

The parties’ son reached age 18 in August of 2006. 17 months later, on February 15, 2008, which was the exact date on which support was to reduce to zero, W filed an OSC requesting modification of the stepdown. She claimed an inability to be self-supporting and also based her modification request on the loss of child support. After the matter came to hearing, the trial court granted W’s modification request, announcing her decision prior to any argument. While the judge was stating the reasons for her decision, she stated that “’the child no longer lives with her” was the change in circumstances justifying modification of the spousal support order. When Richard’s counsel asserted that the change was ‘over two years ago,’ the trial judge acknowledged the passage of time, then changed the subject.” The court ordered H to pay W $1,625 per month retroactive to February 15, 2008. H appealed, and the Fourth District reversed.

The result on appeal: The panel held in a case of first impression that although the phrase “in effect” in Family Code Section 4326 does not require child support to be presently payable, there is a limit on the time after cessation of child support that the support payor can request a spousal support modification on that basis alone.

Family Code Section 4326 provides that “(a) In a proceeding in which a spousal support order exists or in which the court has retained jurisdiction over a spousal support order, if a companion child support order is in effect, the termination of child support pursuant to subdivision (a) of Section 3901 constitutes a change of circumstances that may be the basis for a request for modification of spousal support.” Holding that “(t)he key word in section 4326 is . . . is,” it said that

“(t)he question of first impression is what the Legislature meant by the words ‘if a companion child support order is in effect,’ and particularly what it meant by the phrase, ‘is in effect.’ Or, put another way: How much time can elapse before is becomes was?’ It held that ‘the phrase ‘is in effect’ should not be narrowly construed to deprive the family court of jurisdiction to make an order under section 4326 just because the child has already reached the age of the majority, even though, under section 3601, a child support order is, technically, no longer ‘in effect’ the day after a child reaches the age of majority. Thus a family law court is not deprived of jurisdiction to make an order under section 4326 simply because a child, for example, turned 18 a few days before the supported spouse made a request for modification under section 4326.’

To reach this conclusion, it reasoned that its job was to determine ‘(w)hat did the Legislature mean – or intend – when it wrote the words, ‘a companion child support order is in effect’?’ It said that neither prior cases nor the bill’s committee reports directly addressed this issue. It observed that Family Code §3601 ‘directly addresses when a child support order is ‘in effect’’ by stating that ‘(a) child support order is ‘in effect until the order is (1) terminated by the court, or (2) terminates by operation of law pursuant to Sections 3900, 3901, 4007, and 4013,’ that is, until the child reaches the age of majority and support is terminated under section 3901.’ However, held the panel,

“there’s a problem with a construction of section 4326 that simply imports the literal language of 3601 into section 4326. The problem is the word ‘termination,’ as in the phrase, ‘the termination of child support pursuant to subdivision (a) of Section 3901 constitutes a change of circumstances . . . .’ Construing the conditional words, ‘is in effect’ to exclude any time at all after the formal ‘termination’ of the child support order reads the words ‘the termination’ to mean, in practicality, ‘the upcoming termination’ or ‘the prospective termination.’

To be sure, the two readings can be literally harmonized by treating the words ‘the termination’ as a fixed point in time and space, regardless of whether one is looking forward toward an upcoming termination, or backward toward one that has already happened. Thus harmonized, one would read section 4326 to apply only to modification requests made prior to the termination of support, that is, while the ‘companion child support order’ was still ‘in effect.’

Even so, such a reading seems at odds with the basic purpose of the statute. The basic purpose of the statute is to allow supported spouses no longer receiving child support to ‘make the case’ for a modification of spousal support because of the termination of child support. Basically, a reading that precluded all modifications filed after formal termination would deprive trial judges of the data they would need to make an informed decision concerning the modification request.

…

We therefore decline to construe the words ‘is in effect’ in pari materia with section 3601 such that section 4623 would automatically not apply the day after a child reached his or her majority. Given the purpose of the statute, it seems that Legislature wanted to treat the termination as the change of circumstances warranting modification. It would defeat the purpose of section 4326 to require the modification be filed before the actual change even though the literal language of section 3601 would point in that direction, and we decline to do that.”

It then directly tackled the issue, stating that “if a supported spouse is not required to file a modification request prior to the day the child support order expires, the question remains how long after may such a request be filed? Indefinitely?” In order to answer this question, it reasoned that

“(a) reading of section 4326 that would allow an unlimited amount of time to bring a spousal support modification request after a child support order literally went out ‘of effect’ (under section 3601) would read the words ‘is in effect’ totally out of the statute. If the Legislature had wanted a rule whereby any case in which there had ever been a child support order in effect at any time to be a change of circumstance that could possibly justify a modified spousal support order, it could easily have said so — indeed, all the Legislature needed to do was change one word: is to was, as in ‘was in effect.’ It did not. The Legislature said: ‘ . . . is in effect,’ not ‘was in effect’ or ‘has been in effect at any time.’

Back to the purpose of the statute: The idea was that a spousal support order (typically in a long-term marriage) might be sub-par because a child support order essentially left insufficient money for a par spousal support order. Hence the termination of the child support order would leave the supported spouse with the sub-par order, and no ground to correct it. That suggests that the modification should be brought within a reasonable amount of time after the termination of the child support order, and – given what we have said above about the section 4320 factors that would go into the modification calculus – allowing for enough time for some ‘post-termination’ data to be collected.

A rule requiring a reasonable relationship between the event that the Legislature said could be a change of circumstance justifying a possible modification — the termination of the child support order — and the request both (a) satisfies the purpose of the statute while respecting the Legislature’s choice of words, ‘is in effect.’ For shorthand, we might call such a rule a requirement of reasonable contemporaneousness.”

It then applied the rule to the facts of the case. “(G)uided by what the Legislature has said about deadlines in other contexts, particularly contexts where the burdened party is necessarily aware of some need to act at the time of the event,” it held that

“(i)n light of the Legislature’s concern that a given spousal support award might be the product of the law’s own (i.e., § 4055’s) squeeze out effect because of a high level of child support, it seems hard to justify a modification made after more time has expired than might have been the case of a family law judgment procured through mistake, fraud or perjury. After all, to the degree that a supported spouse in a stipulation, or a judge making a spousal support order, recognized that a given spousal support was sub-par (lower than it otherwise would be absent the child support order), that information was known to the parties at the time of the original order. They would have less excuse than a litigant who had a suspicion that his or her spouse had gained an unfair advantage through a fraud or perjury to sit on their rights.”

“the time period was 17 months, and the OSC was filed on the very day the spousal support order was set to step down to zero. The supported spouse did not bring her OSC for modification in the immediate wake of the termination of the child support, but in view of the impending reduction of spousal support. … Seventeen months belies any temporal relationship between the modification request and the end of child support. Rather, the temporal relationship was clearly the scheduled step down of negotiated support to zero.”

Because of the unusual circumstance of construing a piece of legislation that has less than 18 months before it sunsets, we address the Legislature directly: Section 4326 is scheduled to terminate on January 1, 2011. If you decide to renew it, please consider saying exactly what you mean by ‘is in effect.’ One easy solution: Specify a time frame around the termination date of child support: say, plus or minus six months, when a spousal support modification request based on the termination of child support may be filed. (Cf. Code Civ. Proc., § 473.)”

It reversed the order modifying W’s spousal support with instructions to the trial court “to enter a new order denying the request for modification” without prejudice to W’s filing another motion “based on any changed circumstance other than the termination of child support in 2006 or the step-down that was accounted for by the parties back in 2001.”

My comment: For an appellate court to directly address the Legislature in an opinion is unusual, to say the least. However, this court apparently felt that because the section it applied was scheduled to sunset soon, the Legislature could take that opportunity to clarify its intent with regard to the time period after cessation of child support during which such cessation would constitute a change of circumstances.

Meanwhile, it had to impose its own rule. As a reversal, the case tells us that 17 months is too long, at least where that date is tied directly to a scheduled stepdown in support. Whether or not the holding would still apply if there was no scheduled stepdown is unclear; however, it is obviously a good idea to file the motion as soon after child support ends – or even before it ends if the motion will be heard after that date. It’s not as if that date is difficult to determine or the end of child support is unexpected.

Your comments?

Hot Off the Press: Marriage of Lund

Marriage of Lund (2009) 2009 WL 1415965

Decided by the Fourth District on May 21, 2009

Summary of the facts: H and W married in 1990; on December 12, 1990, H had W review and sign a number of documents in his attorney’s office, including an “Agreement to Establish Interest in Property,”  her Will and “The Earl E. Lund, Jr. Trust.” She spent 20 minutes reviewing and signing the documents. The “Agreement to Establish Interest in Property” provided, inter alia, as follows:

“C. At the date of marriage, Husband owned property, real or otherwise of substantial value and wife had assets of de minimus value; and

D. The Husband, for estate planning purposes desires to convert said separate property into community property.

NOW, THEREFORE, in order to evidence, confirm and ratify their agreement and intention it is agreed as follows:

A.    SEPARATE PROPERTY: The following properties are acknowledged to be the separate property of:
1. Husband
(a) 6014-6030 Gifford Avenue, Huntington Park, CA
(b) 4601 E 58th Street, Maywood, CA
(c) 218 Ogle Street, Costa Mesa, CA
(d) 12 Wildwheat, Irvine, CA5

B.     COMMUNITY PROPERTY
1.    All other of the6 property, real and personal, of the parties hereto, whether title thereto is held in the names of one or the other of the parties or both of the parties as joint tenants or otherwise, is the community property of the parties hereto, each having a present, existing, and equal interest therein.
…
C.    CONVERTED PROPERTY
All of the property, real and personal, held in the name of Husband having its origin in his separate property no matter how received and/or earned, is hereby converted to community property of Husband and Wife, and shall thereafter be the community property of the parties for estate planning hereto, each having a present, existing, and equal interest therein.
…
E. HEADING7
This Agreement is intended as a document of transfer for estate planning purposes to the extent necessary to conform the record ownership of the properties of the parties to the within Agreement. It is not intended by this Agreement to make any transfer of property between the parties hereto, nor shall this Agreement be construed for any purpose to affect any such transfer, but this Agreement is executed solely for the purpose of recognizing as between the parties the type of ownership of the properties acquired and now owned by them. In addition, the parties agree to join in the execution of such other deeds, assignments or documents as may be required to reflect the formal record ownership in accordance with this Agreement.

5 The parties crossed out this portion of the agreement and initialed next to the change. Neither party contests the legitimacy of this alteration.
6 The parties also crossed this phrase out and initialed next to this change; neither party contests the legitimacy of this alteration.
7 The word “HEADING” is the actual heading for this section of the contract. The court and the parties speculated that this was merely a drafting oversight on the part of the drafting attorney.
…
I have carefully read and understand all of the provisions of the foregoing Agreement and approve of and agree to all of the terms hereof. [Signed Earl E. Lund, Jr. and Anne K. Lund.]”

H had established his Trust shortly after the parties married, and the parties restated it on December 12, 2002, making both parties Trustees and settlers. On that date, H and W signed wills. The wills included a no-contest clause and a “construction” paragraph that stated “it is my intent that all of my estate planning documents ARE INTEGRATED so that if there is a breach, contest, violation or attack of one instrument, document or transfer of mine . . . then there is a breach, contest, violation or attack of any and/or all instruments, documents or transfers of mine as to that breaching, thwarting, contesting, violating or attacking party or entity.”

In their dissolution proceeding, the parties bifurcated the issue of whether the Agreement to Establish Interest in Property transmuted H’s separate property to community property.  Each party called an estate planning expert witness to testify regarding the effect of the documents on each party’s property upon their death while still married. H did not testify, but W did. The trial court held that it the Agreement to Establish Interest in Property did not transmute H’s separate property, reasoning that some language in the agreement conflicted with the apparent statement regarding transmutation. It held that it was ambiguous “when read in conjunction with the trust,” and that if it was not ambiguous, “the most reasonable construction of the documents is the parties objectively intended the agreement to change separate property to community property only if they were married when one spouse died.” It also held that if it did validly transmute H’s separate property, it was procured by undue influence.
W appealed, and the Fourth District reversed.

The result on appeal: The panel held that “(t)he most factually similar California case to the instant one is In re Marriage of Holtemann (2008) 166 Cal.App.4th 1166 (Holtemann), a case published after the court reached its decision in this case.” It reasoned that Holtemann’s holding that a party cannot conditionally transmute property to be effective only in the event of his or her death. The agreement either effectively transmutes property or it does not; in this case, held the Fourth District, the Agreement to Establish Interest in Property “unambiguously effects a transmutation of Earl’s separate property into community property” as a result of the language in Section C of the Agreement with its statements that H’s separate property “is hereby converted to community property of Husband and Wife, and shall thereafter be the community property of the parties for estate planning hereto, each having a present, existing, and equal interest therein.” It also held that the parties’ strikethrough of Section A “manifested their intent to eliminate any potential argument that the real properties identified in section A were not subject to the transmutation provided for in section C.”

It also held that the trial court was incorrectly “influenced” by the “language in the recitals and in section E of the agreement indicating the agreement was executed for ‘estate planning purposes,’ as well as the existence of other ‘estate planning’ documents (the trust and the wills);” under Holtemann, said the panel, “’the motivations underlying the documents’ are irrelevant;” the only thing that matters is

“whether ‘they contain the requisite express, unequivocal declarations of a present transmutation.’ It simply does not matter that the agreement, the trust, and the wills were all executed together as part of a single ‘estate planning’ strategy. The parties hotly dispute the question of whether we should interpret the agreement alone or in conjunction with all of the estate planning documents. But all the ‘estate planning’ documents show is the parties had a comprehensive estate plan which would operate to provide the surviving party with tax benefits had the marriage survived until the death of the other party. The ‘estate planning’ documents do not have any bearing on whether the agreement at issue contains the ‘requisite express, unequivocal declarations of a present transmutation.’”

H argued that the provision in section E of the agreement stating that “(i)t is not intended by this Agreement to make any transfer of property between the parties hereto, nor shall this Agreement be construed for any purpose to affect any such transfer, but this Agreement is executed solely for the purpose of recognizing as between the parties the type of ownership of the properties acquired and now owned by them” created an ambiguity that was not present in Holtemann and that given the ambiguity, the court must find that he did not intend a transmutation. The panel disagreed, reasoning as follows:

“Interpreting section E to simply undo or call into question the work done by sections B and C violates basic principles of contract interpretation. (Civ. Code §§1641 [‘The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other’], 1643 [‘A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violation the intention of the parties’], 3541 [‘An interpretation which gives effect is preferred to one which makes void’].) Sections B and C clearly transmute Earl’s separate property into community property; if at all possible, section E should be interpreted to be consistent with sections B and C. This can be accomplished by interpreting the contract as suggested by Kathryn. The agreement was not a deed. It was an agreement to transmute Earl’s separate property to community property. (See §850 [married persons may transmute separate property to community property ‘by agreement or transfer’ (italics added)].) The agreement transmutes Earl’s separate property to community property, but it does not ‘transfer’ title of the real property at issue.

Reduced to its essentials, Earl’s argument, if accepted, would interpret the agreement as effecting a transmutation of his separate property to community property only if he or Kathryn died while married. But the language of the agreement clearly disclaims the notion of a conditional future transmutation. ‘All of the property, real and personal, held in the name of Husband having its origin in his separate property no matter how received and/or earned, is hereby converted to community property of Husband and Wife, and shall thereafter be the community property of the parties for estate planning hereto, each having a present, existing, and equal interest therein.’ (Italics added.) A ‘present, existing, and equal interest’ is the antithesis of a ‘conditional future transmutation.” We suggest that only persons overschooled in the law could read this clear language to find an ambiguity where none exists. Persons unschooled in the law would read this language to mean exactly what it says. And the termination provision in the trust, whereby the trust is automatically revoked upon filing of a petition for dissolution of marriage, cannot be interpreted as automatically retransmuting the property upon the filing of a dissolution petition. ‘Community property, including any income or appreciation, that is distributed or withdrawn from a trust by revocation, power of withdrawal, or otherwise, remains community property unless there is a valid transmutation of the property at the time of distribution or withdrawal.’ (§761, subd.(b) (Italics added).)
Moreover, the notion that parties may execute a ‘conditional’ transmutation (or, as colorfully described by the court, cross their fingers while signing the agreement) was rejected by Holtemann, supra, 166 Cal.App.4th at p. 1173-1174. The transmutation either occurred in December 2002 (as we find it did) or it did not. We also note that interpreting the contract as a mere tax strategy and not an effective transmutation (i.e., the agreement would serve as documentary support for a representation to the IRS that a transmutation occurred notwithstanding the lack of an actual transmutation) seems to contravene section I of the agreement, which states: ‘Nothing contained herein shall be construed so as to require the commission of any act contrary to law . . . .’ We will not assume the parties intended to execute the agreement for the sole purpose of providing documentary support to a future materially false representation to the IRS.”

The trial court had also held that if the Agreement to Establish Interest in Property was a valid transmutation agreement, it was subject to the presumption of undue influence that W had failed to overcome it. W did not argue that she did not obtain an advantage over H as a result of the agreement. However, the trial court held that she demonstrated that H had “entered the transaction voluntarily with an understanding of all relevant facts, but failed to rebut the presumption that Earl did not understand the legal effect of the transaction…. The court also based its ruling on the perceived complexity of the agreement, which led the court to its conclusion that Earl was unlikely to understand its legal ramifications.” This holding, held the court, was not based on substantial evidence because H did not testify and thus presented no evidence as to his understanding of the agreement’s legal effect. It also said that

“(j)ust above Earl’s signature in the agreement is the following statement: ‘I have carefully read and understand all of the provisions of the foregoing Agreement and approve of and agree to all of the terms hereof.’ The agreement is only five pages long, including the signature page. And, as detailed above, the court wrongly interpreted the agreement to include ambiguity. Earl’s attestation to his understanding of the agreement served to rebut the presumption that he did not understand the legal import of the agreement.”

The panel thus reversed the trial court’s holding that the Agreement to Establish Interest in Property was not a valid transmutation agreement.

My comment: There’s a lot to say about this case. First is the fact that this is the second published transmutation case in a row to hold that the writing in question constituted a valid transmutation. Coming on the heels of 15 years of post-MacDonald cases that consistently held that the writings at issue did not constitute transmutations, this may signal a swing of the pendulum. On the other hand, both this case and Holtemann involved estate planning documents in which the party seeking to invalidate the apparent present transmutation of his property argued that he intended only a transmutation in the event of one party’s death during marriage. Both of these cases held that the writing either effected a valid transmutation under Family Code §852 or it did not, but there was no such thing as a “conditional” transmutation.

This is also one of the few cases involving a transmutation by agreement rather than by transfer, both of which §850 authorizes. Most of the transmutation cases involve deeds or other transmutations by transfer; this case and Holtemann involved estate planning documents and it was not considered relevant whether the assets in question had actually been transferred under the agreement’s terms; the Lund court said that

“the lack of evidence of additional deeds, assignments, or other documents reflecting community property ownership of the property at issue does not affect the interpretation of the other provisions of the agreement. Three of the properties at issue had been transferred to Earl as trustee before the December 2002 amendment and restatement of the trust, and the fourth property was transferred to Earl and Kathryn as trustees. We will not speculate as to whether Earl was required under the agreement to execute a deed reflecting community property ownership of his previously separate real properties. Even if Earl had been required to execute additional documents, a party’s alleged failure to meet executory obligations under a contract does not affect the meaning of other provisions in the contract.”

Lund, like Holtemann, points up the need for estate planning attorneys to know the family law effect of the documents they are drafting. Mr. Lund will surely look to his estate planning attorney for restitution for the loss of half of the value of his separate property that he thought he would own until they passed after his death or he changed his estate plan. Obviously, there is also a danger in trying to structure an estate plan that “looks like” a transmutation to the IRS but isn’t really; the family law court will enforce such a transmutation and “will not assume the parties intended to execute the agreement for the sole purpose of providing documentary support to a future materially false representation to the IRS.”

Your comments:

Marriage of Brooks and Robinson (2009) 169 Cal.App.4th 176, 86 Cal.Rptr.2d 624

Decided by the First District on December 16, 2008

Holding: The marital residence was W’s separate property because H consented to title being taken in her name alone at the suggestion of their real estate agent, even though he made the down payment from separate funds and the parties purchased the property during marriage.

What is the problem with Marriage of Brooks and Robinson? On March 25, 2009, the California Supreme Court not only denied review in Marriage of Brooks and Robinson (2009) 169 Cal.App.4th 176, 86 Cal.Rptr.2d 624, but also denied the requests of several attorneys and legal organizations to depublish it. As a result, it is the “law of the land” for the foreseeable future. This article will discuss the issues that formed the basis of so many requests that the court depublish the opinion. What is the problem with Brooks and Robinson?

Summary of the facts: After the parties married, they purchased their family residence. Their real estate agent (!!) recommended that title be taken solely in W’s name because it would be Continue reading Hot Off the Press: Marriage of Brooks and Robinson