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Le v. Johnson (In re Marriage of Johnson)

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE
Nov 8, 2018
No. A151110 (Cal. Ct. App. Nov. 8, 2018)

Opinion

A151110

11-08-2018

In re the Marriage of JERRY C. JOHNSON and NANCY LE. NANCY LE, Appellant, v. JERRY C. JOHNSON, 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. MSD-16-00982)

Nancy Le appeals from a superior court order she asserts denied her community property interest in a house held in joint tenancy with her soon-to-be ex-husband Jerry Johnson. Le contends the court erred in finding that Johnson inherited the house as his sole and separate property. She also contends the court incorrectly disregarded a declaration Johnson executed during their marriage in which he promised to give her his inheritance even in the event of divorce. We affirm.

BACKGROUND

Le and Johnson married in June 2012. Johnson's mother died the month before their wedding and contentious probate proceedings ensued between Johnson and his siblings to determine the distribution of her assets, including two houses in El Sobrante.

On September 3, 2012, Johnson executed a one-page document declaring his intention to leave everything he "will inherit from [his] mother or anybody else including property, money, or anything that I have the right to dispose of" to Le. On September 13, 2012, Johnson executed a will with the assistance of an attorney and signed by witnesses. He reiterated his bequest of "any and all of [his] property" to Le. In February 2013, Johnson also executed the following declaration (the "2013 Declaration"): "To my wife Nancy Le if we decided to divorce or stay together or live separate from one another, I will give everything I have. . . . From this day . . . I give everything to my wife including my inheritance 100%, my union health insurance and benefits including retirement and Social Security. [¶] I do not hold her responsible for any of its debt that we have incurred while married and I will give her 50% of any income that I earn thereafter. [¶] . . . I promise that I will never divorce her and I will love honor and cherish her for the rest of my life."

Johnson's mother's estate settled in 2015, nearly three years after her death and two years after the 2013 Declaration. Johnson and his sister memorialized a settlement agreement resolving the estate. On May 7, 2015, the probate court approved the settlement agreement and closed the estate. The court ordered the two El Sobrante houses be distributed to Johnson and his sister, as agreed upon in the settlement. Johnson received the house at 4811 San Pablo Dam Road ("Property"), while Johnson's sister received the house at 4918 Hilltop Drive plus an equalization payment from Johnson. The settlement agreement specified, "After distribution of the 4918 Hilltop Drive, El Sobrante property to [sister], distribution of the sum of one hundred and seventy-three thousand dollars ($173,000) to [sister], and satisfaction of the remaining costs of administration, the remaining balance of Decedent's estate shall be distributed to [Johnson] specifically including the in-kind distribution of 4811 San Pablo Dam Road, El Sobrante property subject to the mortgage described above."

Le requests we take judicial notice of 4 documents related to Johnson's mother's estate and its settlement. We deny the request since the documents are unnecessary to our resolution of the appeal. (See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6.)

On August 20, 2015, Johnson and Le jointly borrowed $300,000 on a loan secured by the Property. They used $173,000 from the loan to make the equalization payment. On August 26, 2015, Johnson's sister executed a grant deed for her potential interest in the Property to Johnson and Le "as husband and wife, as Joint Tenants." On October 20, 2015, Le executed a grant deed purporting to grant the Property to the Nancy Le Revocable Trust.

Months later, Johnson and Le separated, and in February 2016, Johnson petitioned for dissolution of the marriage.

In December 2016, Johnson filed a request for an order finding his 2013 Declaration to be void for all purposes and to quiet title to the Property as his sole and separate property based upon the inheritance. Both sides were represented by counsel, and in February 2017, the trial court heard the request.

The court quieted title to the Property in Johnson's favor. It determined Johnson inherited 4811 San Pablo Dam Road "as his sole and separate property." The court found that Johnson's 2013 Declaration was "too vague and drafted so one-sided" and granted Johnson's request to find the declaration "void for all purposes." Johnson "was unduly influence[d] when executing the Declaration," and Le "did not meet her burden of proof to overcome [Johnson's] assertion of Undue Influence."

Le now appeals from the order. In designating the record on appeal, Le elected to proceed by appendix. We have no reporter's transcript of the proceedings in the superior court. No respondent's brief has been filed on appeal, and the matter was submitted based on the appendix and Le's opening brief.

DISCUSSION

Lack of Respondent's Brief and Reporter's Transcript

As an initial matter, Johnson's failure to file a respondent's brief is neither a default, nor an admission of error. Rather, the burden is always on the appellant to show error. So, we examine the record, appellant's brief, and any oral argument by appellant to see if it supports any claims of error made by Le. (See In re Marriage of Riddle (2005) 125 Cal.App.4th 1075, 1078, fn. 1; In re Marriage of Schultz (1980) 105 Cal.App.3d 846, 853.)

The lack of a reporter's transcript is also an obstacle Le must overcome to prevail in this appeal. "As with any civil appeal, we must presume the [order] is correct, indulge every intendment and presumption in favor of its correctness, and start with the presumption that the record contains evidence sufficient to support the [order]." (Steele v. Youthful Offender Parole Bd. (2008) 162 Cal.App.4th 1241, 1251.) "An appellant has the burden to overcome the presumption of correctness and show prejudicial error." (Silva v. See's Candy Shops, Inc. (2016) 7 Cal.App.5th 235, 260.) An appellant also has the burden of ensuring that an adequate record exists for review. (Roberson v. City of Rialto (2014) 226 Cal.App.4th 1499, 1507.) An appellant may not contend that the record lacks substantial evidence with respect to a factual issue in a case in which the appellant does not provide a proper reporter's transcript. (Estate of Fain (1999) 75 Cal.App.4th 973, 992 (Fain ).) "Where no reporter's transcript has been provided and no error is apparent on the face of the existing appellate record, the judgment must be conclusively presumed correct as to all evidentiary matters. To put it another way, it is presumed that the unreported trial testimony would demonstrate the absence of error. [Citation.] The effect of this rule is that an appellant who attacks a judgment but supplies no reporter's transcript will be precluded from raising an argument as to the sufficiency of the evidence." (Ibid.)

Characterization of Property

Le contends the trial court was wrong to conclude that Johnson inherited the Property as his sole and separate property. We disagree.

"Characterization of property, for the purpose of community property law, refers to the process of classifying property as separate, community, or quasi-community. Characterization must take place in order to determine the rights and liabilities of the parties with respect to a particular asset or obligation and is an integral part of the division of property on marital dissolution." (In Re Marriage of Haines (1995) 33 Cal.App.4th 277, 291 (Haines).) "As well-settled case law recognizes: 'The character of the property as separate or community is fixed as of the time it is acquired; and the character so fixed continues until it is changed in some manner recognized by law, as by agreement of the parties.' [Citation.]" (In re Marriage of Rossin (2009) 172 Cal.App.4th 725, 732.) There is a general presumption that property acquired during marriage by either spouse or both while domiciled in California is community property, except as provided by statute. (Fam. Code, § 760.) Inheritances, including those received after marriage, fall under such an exception and are considered separate property. (See Fam. Code, § 770.)

" 'Appellate review of a trial court's finding that a particular item is separate or community property is limited to a determination of whether any substantial evidence supports the finding. [Citation.]' " (Rossin, supra, 172 Cal.App.4th at p. 735; In re Marriage of Campi (2013) 212 Cal.App.4th 1565, 1572; Patrick v. Alacer Corp. (2011) 201 Cal.App.4th 1326, 1340.) A substantial evidence review equally applies where the property status determination turns on a characterization presumption or rebuttal thereof. (In re Marriage of Orchard (1990) 224 Cal.App.3d 155, 161.) "But de novo review is appropriate where resolution of 'the issue of the characterization to be given (as separate or community property) . . . requires a critical consideration, in a factual context, of legal principles and their underlying values, the determination in question amounts to the resolution of a mixed question of law and fact that is predominantly one of law.' [Citation.]" (Rossin, supra, 172 Cal.App.4th at p. 735.)

Even in the absence of a reporter's transcript, there is no question here that the court correctly concluded Johnson acquired the Property as a separate property inheritance from his mother's estate. The order for final distribution of Johnson's mother's estate reflects that Johnson's inheritance included "the in-kind distribution of [the Property]" subject to the mortgage secured to fund the equalization payment. While Le argues that Johnson only acquired the property because she assisted him in obtaining the loan for the equalization payment, her help with financing neither negates the fact that he acquired the property by bequest nor the evidence the court relied upon in making that finding. There is nothing in this record to suggest the court's finding was unsupported by substantial evidence.

Undue Influence Presumption

Le further contends the trial court erred when it applied the presumption of undue influence and that it was not her burden to overcome the presumption with proof she did not unduly influence Johnson. Even so, Le says she rebutted the presumption. On all points, we disagree.

"[I]n transactions between themselves, spouses are subject to the general rules governing fiduciary relationships that control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other." (Fam. Code, § 721, subd. (b).) In Haines the court interpreted this to mean that "when an interspousal transaction advantages one spouse over the other, a presumption of undue influence arises." (Haines, supra, 33 Cal.App.4th at p. 287.) Thus, " '[i]f one spouse secures an advantage from the transaction, a statutory presumption arises . . . that the advantaged spouse exercised undue influence and the transaction will be set aside.' " (In re Marriage of Fossum (2011) 192 Cal.App.4th 336, 344.) A spouse obtains an advantage when the "spouse's position is improved, he or she obtains a favorable opportunity, or otherwise gains, benefits, or profits." (In re Marriage of Mathews (2005) 133 Cal.App.4th 624, 629.)

"When a presumption of undue influence applies to a transaction, the spouse who was advantaged by the transaction must establish that the disadvantaged spouse's action 'was freely and voluntarily made, with full knowledge of all the facts, and with a complete understanding of the effect of' the transaction. [Citations.]" (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 738-739.) The advantaged spouse must make this showing by a preponderance of the evidence. (Fossum, supra, 192 Cal.App.4th at p. 344.) " ' "The question 'whether the spouse gaining an advantage has overcome the presumption of undue influence is a question for the trier of fact, whose decision will not be reversed on appeal if supported by substantial evidence.' " ' [Citation.]" (Ibid.)

Johnson acquired the Property by inheritance as his sole and separate property. The trial court property determined the statutory presumption of undue influence was triggered by the change of title to joint tenancy. In these circumstances, the court did not err in placing the burden on Le to establish that Johnson changed the title freely and voluntarily with full knowledge of the consequences.

In addition, we cannot conclude the court erred when it determined that Le did not meet her burden. Le's inability to provide this court with a reporter's transcript not only impairs her ability to demonstrate error, but also precludes our review of the record for a lack of substantial evidence. (See Fain, supra, 75 Cal.App.4th at p. 992.) Absent an adequate record, we must presume the evidence supported the finding that Le failed to rebut the presumption of undue influence.

Le contends the escrow package for the loan demonstrated Johnson's full knowledge and consent to the grant deed establishing the joint tenancy as community property. Le points out that Johnson signed the escrow package's "Vesting Information" in which the escrow holder was instructed to record the grant deed to Johnson and Le as "Husband and Wife" as "Joint Tenants." Emphasizing that there was "no deception, ambush, or undue influence," Le contends "Johnson knew about his sister's deed before, during and after the fact, was advised in writing to seek advice of counsel, and had a lawyer." That Johnson learned from his sister of the terms in the grant deed does not mean his intent to transmute the Property to community property was freely and voluntarily given or that it was without undue influence. We will not disturb the trial court's finding that Le failed to rebut the undue influence presumption by a preponderance of the evidence.

Le makes no effort to rebut the presumption with respect to the second grant deed transferring the Property to Le's individual revocable trust, so we need not address the validity of that conveyance.

2013 Declaration

Finally, regardless of the trial court's characterization of the Property as community or separate, Le contends Johnson's 2013 Declaration effectuated a valid, enforceable transmutation. We again disagree.

"Both before and during marriage, spouses may agree to change the status of any or all of their property through a property transmutation. ([Fam. Code,] § 850.) A transmutation is an interspousal transaction or agreement that works a change in the character of the property." (In re Marriage of Campbell (1999) 74 Cal.App.4th 1058, 1061.) "In order for a transmutation of property to occur, statutory formalities must be met." (Ibid.) "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." ([Fam. Code,] § 852, subd. (a).) To determine whether a transmutation occurred, we independently review the written instrument. (In re Marriage of Starkman (2005) 129 Cal.App.4th 659, 664.)

Further, even a purported transmutation that is evidenced by the required writing can result from undue influence, and be invalid, if it advantages one spouse over another. (Haines, supra, 33 Cal.App.4th at p. 293.) As we have explained, to rebut this presumption, the advantaged spouse must show by a preponderance of the evidence that the purported transmutation was freely and voluntarily made, with full knowledge of all the facts, and with a complete understanding of the effect of the transfer. (Fossum, supra, 192 Cal.App.4th at p. 344.) The trial court's determination of whether the undue influence presumption has been overcome will not be reversed on appeal if supported by substantial evidence. (Ibid.)

Even assuming arguendo, the 2013 Declaration was a valid transmutation in form, we cannot conclude that Johnson freely and voluntarily altered the characterization of the Property two years before he inherited it with full knowledge of all the facts and with a complete understanding of the effect of the transfer. In voiding the 2013 Declaration, the trial court found Johnson was unduly influenced by Le when he executed it. While the court's order did not explain how Le failed to meet her burden of showing a free and voluntary transmutation, absent a complete record, we must presume the state of the evidence supports the court's order. (See Fain, supra, 75 Cal.App.4th at p. 992.)

There is also evidence in the record to support the court's conclusion. Johnson stated in his declaration accompanying his quiet title request that Le "wrote the [2013] Declaration" and told him "the only way to prove to her that [he] loved her was to sign the Declaration she wrote." In applying the substantial evidence standard, " 'we must consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the judgment. [Citations.] [¶] It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact.' " (Regalado v. Callaghan (2016) 3 Cal.App.5th 582, 595-596.) The trial court found Johnson's declaration was neither free nor voluntary. We are not in the position to substitute a different conclusion. (See Bowers v. Bernards (1984)150 Cal.App.3d 870, 873-874.) Accordingly, we conclude that Le has not established that the trial court erred in determining the 2013 Declaration was an invalid transmutation.

Le's alternative argument that the 2013 Declaration may also qualify as a valid marital settlement agreement fails under the same undue influence analysis.

DISPOSITION

The judgment is affirmed. Each party shall bear his or her own costs on appeal.

/s/_________

Siggins, P.J. We concur: /s/_________
Pollak, J. /s/_________
Ross, J.


Summaries of

Le v. Johnson (In re Marriage of Johnson)

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE
Nov 8, 2018
No. A151110 (Cal. Ct. App. Nov. 8, 2018)
Case details for

Le v. Johnson (In re Marriage of Johnson)

Case Details

Full title:In re the Marriage of JERRY C. JOHNSON and NANCY LE. NANCY LE, Appellant…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE

Date published: Nov 8, 2018

Citations

No. A151110 (Cal. Ct. App. Nov. 8, 2018)