Marriage of Thieriot CA1/3 ( 2013 )

Filed 12/18/13 Marriage of Thieriot CA1/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
In re the Marriage of ELIZABETH
THIERIOT and CHARLES THIERIOT.
ELIZABETH THIERIOT,
Appellant, A132703
v.
(Marin County
CHARLES THIERIOT, Super. Ct. No. FL081905)
Respondent.
Appellant Elizabeth Thieriot (Wife) appeals from a judgment entered on July 14,
2011, resolving her marital dissolution action against respondent Charles Thieriot
(Husband). Wife challenges the trial court’s rulings that during the marriage Husband
transmuted his separate real property to community property, and on dissolution of the
marriage he was entitled to and had not waived reimbursement for the equity value of the
real property on the date of the transmutation. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Before Wife and Husband were married on September 22, 2001, they entered into
a prenuptial agreement, which included the following pertinent provisions:
3.1 . . . [E]ach party intends that certain property described herein, owned by
them at the time of their marriage, and all additional value, or property of any
nature which comes to either of them during their marriage from their respective
separate interests, shall be the separate property of the person owning or receiving
that property. . . .
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3.3 . . . [E]ach party intends that there be no community property and to the
extent that they can so agree, they expressly agree that the community
property laws in the Family Code of the State of California or any law of
California or any other jurisdiction that creates or bestows rights and
obligations upon them as married persons after they are married to one another,
either during their lifetimes or upon their death, shall not apply to them.
13.1 The parties agree that there be no community property as a result of their
marriage. They agree that all property acquired by them during their marriage
shall be and remain the separate property of the acquiring party at the time of
acquisition . . . .
19.1 Notwithstanding any other provision of this Agreement, unless the parties
have agreed otherwise in a writing, executed by both parties, which refers
specifically to this Agreement, title shall determine the ownership interest of each
party in any real property held by them or in any personal property which is
specifically titled. The parties understand that holding property as community
property, tenants in common, in joint tenancy, or in other forms may have
important legal consequences to each of them. They have been advised that they
should review and understand the consequences of the form of ownership at any
time they take title to assets or property in any form as joint owners. . . .
Sandy Surf was listed as Husband’s separate property in an exhibit attached to the
prenuptial agreement.
On February 18, 2004, the parties both signed a limited warranty deed in which
Husband transferred title of Sandy Surf from “CHARLES C. THIERIOT, Trustee of the
Charles C. Thieriot Revocable Trust dated February 27, 1991” as “ ‘Grantor’ to
CHARLES C. THIERIOT, Trustee of the Charles C. Thieriot Revocable Trust dated
February 27, 1991, and ELIZABETH L. THIERIOT, Trustee of the Elizabeth L. Thieriot
Revocable Trust, under agreement dated December 21, 2001, both with full powers to
sell, lease, mortgage, convey, assign or otherwise deal with and dispose of all lands of the
trust estate. . . ., hereinafter called the “ ‘Grantee[s][ 1][.]’ ” The deed further provided,
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The deed provides that “the terms ‘Grantor’ and ‘Grantee,’ as and when used
herein, or any pronouns used in place thereof, shall mean and include . . . the singular or
plural number . . . .”
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“That in consideration of the sum of TEN DOLLARS ($10.00) and other valuable
consideration in hand paid, the receipt of which is hereby acknowledged, the Grantor
does hereby grant, bargain, sell, and convey unto the Grantee[s] [Sandy Surf] . . . [¶] And
the reversions, remainders, rents, issues, and profits thereof and all of the estate, right,
title, and interest of the Grantor, both at law and in equity, therein and thereto; [¶] TO
HAVE AND TO HOLD the same, together with all buildings, improvements, rights,
easements, privileges, and appurtenances thereon and thereto belonging or appertaining
or held and enjoyed therewith, unto the Grantee[s] and Grantee[s]’s heirs, devises, and
personal representatives, absolutely and forever, in the following proportions and estates:
[¶] CHARLES C. THIERIOT, Trustee as aforesaid, and said Grantee’s successors in trust
and assigns, an undivided fifty percent (50%) interest, IN TRUST; [¶] ELIZABETH L.
THIERIOT, Trustee as aforesaid, and said Grantee’s successors in trust and assigns, an
undivided fifty percent (50%) interest, IN TRUST; [¶] and as between Grantee[s] as
listed above in their respective shares. The whole of said property shall be Community
Property of Charles C. Thieriot and Elizabeth L. Thieriot (husband and wife) under the
laws of the State of California where they are both domiciled.” The deed also included
the following paragraph: “This transfer of title is an exception to paragraphs 3.3 and 13.1
of Prenuptial Agreement between Charles C. Thieriot and Elizabeth Huntley, signed
June 27 and 28, 2001, and is not intended to modify or invalidate paragraph 3.3. or 13.1
or any other provision of the Prenuptial Agreement between Charles C. Thieriot and
Elizabeth Huntley, signed June 27 and 28, 2001, which shall remain in full force and
effect.” The parties separated about one year after signing the deed. They remarried on
December 20, 2006, but separated 16 months later in April 2008 and Wife sought
dissolution of the marriage.
In resolving the parties’ dispute regarding the division of Sandy Surf, the trial
court found, in pertinent part, that the limited warranty deed was both a conveyance and
binding contract between the parties, creating “a specific exception to paragraphs 3.[3]
and 13.1 of the Parties’ Prenuptial Agreement, so that title as is stated in the [deed]
determines ownership of Sandy Surf.” The court further found the effect of the parties’
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execution of the deed was to transmute Sandy Surf from “being [Husband’s] sole and
separate property into the Community Property of [both parties] under the laws of the
State of California,” and Husband’s right to reimbursement of his separate property
contribution to the community asset survived and was not waived by the language in the
deed. The court also found that Sandy Surf was worth $14,500,000 on the date of trial,
Husband was entitled to be reimbursed $12,958,000 (fair market value of the property on
the date of the transmutation), and therefore, the net community interest in the property
was $1,542,000 ($14,500,000 less $12,958,000). A final judgment of dissolution was
entered on July 14, 2011. Wife timely appeals.
DISCUSSION
Wife presents several arguments challenging the trial court’s division of Sandy
Surf after dissolution of the parties’ marriage, none of which requires reversal.
At issue here is a transmutation of Husband’s separate property interest in Sandy
Surf by a limited warranty deed. (Fam. Code, § 850. 2) “In deciding whether a
transmutation has occurred, we interpret the written instruments independently, without
resort to extrinsic evidence.” (In re Marriage of Starkman (2005) 129 Cal.App.4th 659,
664.) “Under the modern rule of interpretation at least, deeds are to be construed like any
other contract, and the intent of the grantor arrived at, if possible, from the terms set forth
in the instrument.” (Sherriff v. Sherriff (1917) 32 Cal.App. 681, 685 (Sherriff).) “When
an appeal depends solely upon the construction to be given to the language of a contract,
from the instrument itself, the reviewing court is called upon to determine the meaning
thereof, as a matter of law. Under such circumstances, the rule on appeal, which
precludes the appellate court from disturbing the determination of the trial court, where
2
All further unspecified statutory references are to the Family Code. Section 850
reads, in pertinent part: “. . .[M]arried persons may by agreement or transfer, with or
without consideration, do any of the following: [¶] (a) Transmute community property to
separate property of either spouse. [¶] (b) Transmute separate property of either spouse to
community property. [¶] (c) Transmute separate property of one spouse to separate
property of the other spouse.”
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there is substantial evidence to support its conclusions, has no application. [Citations.]
[Because] no evidence, other than the deed itself, [was] received [in this case in the trial
court], the construction of the deed is a question of law for this court to determine on
appeal.” (Mitchel v. Brown (1941) 43 Cal.App.2d 217, 222.)
Wife contends the language in the deed does not support a finding that Husband
transmuted Sandy Surf from his separate property directly to community property.
According to Wife, the language in the deed shows there were two transmutations: a
transmutation of Husband’s separate property to the separate property of each spouse,
and then a transmutation of both spouses’ separate properties to community property.
We cannot agree with Wife’s interpretation of the deed. “The deed itself . . . does not
purport to convey [to Wife] a fee interest to the extent of one-half of [Sandy Surf]. While
it contains general terms, it also contains terms of limitation when it is recited that the
estate conveyed is” an undivided 50 percent interest with the whole being community
property. (Sherriff, supra, 32 Cal.App. at p. 685; see id. at pp. 683, 685 [husband’s
bargain and sale deed did not convey a fee interest to wife to the extent of one-half of the
property but only a community interest as the deed recited that the estate conveyed was
“ ‘an undivided or community interest’ ”].) Thus, the only reasonable interpretation of
the language in the deed is that there was one transmutation of Husband’s separate
property to community property by placing the title to Sandy Surf into joint ownership,
with the whole to be community property. (See Fam. Code, §§ 25813, 26504; see In re
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Section 2581 reads: “For the purpose of division of property on dissolution of
marriage or legal separation of the parties, property acquired by the parties during
marriage in joint form, including property held in tenancy in common, joint tenancy, or
tenancy by the entirety, or as community property, is presumed to be community
property. This presumption is a presumption affecting the burden of proof and may be
rebutted by either of the following: [¶] (a) A clear statement in the deed or other
documentary evidence of title by which the property is acquired that the property is
separate property and not community property. [¶] (b) Proof that the parties have made a
written agreement that the property is separate property.”
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Marriage of Weaver (2005) 127 Cal.App.4th 858, 865 (Weaver); In re Marriage of Neal
(1984) 153 Cal.App.3d 117, 123-124 (Neal) [discussing predecessor statute to § 2581,
Civil Code former § 4800.1], disapproved on other grounds in In re Marriage of Buol
(1985) 39 Cal.3d 751, 758, fn. 8, 763, fn. 10, and In re Marriage of Fabian (1986) 41
Cal.3d 440, 451, fn. 13.)
Similarly, we see no merit to Wife’s argument that Husband waived his right to
reimbursement for his contribution of Sandy Surf to the community. Section 2640
provides, in pertinent part, that “[i]n the division of the community estate under this
division, unless a party has made a written waiver of the right to reimbursement or has
signed a writing that has the effect of a waiver, the party shall be reimbursed for the
party’s contributions to the acquisition of property of the community property estate to
the extent the party traces the contributions to a separate property source.” (Id., subd.
(b).) “The effect of the statute is to overturn a long line of cases which had held that
absent an agreement to the contrary, separate property contributions to the community
were deemed to be gifts to the community. [Citations.] Apparently, the Legislature
concluded it was fairer to the contributing spouse to permit reimbursement for separate
property contributions upon dissolution of the marriage. [Citation.] Thus, under section
[2640], ‘the tables are turned so that the separate property interest is now preserved
unless the right to reimbursement is waived in writing.’ ” (In re Marriage of Perkal
(1988) 203 Cal.App.3d 1198, 1201-1202 (Perkal) [discussing predecessor statute to
§ 2640, Civil Code former § 4800.2].)
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Section 2650 reads: “In a proceeding for division of the community estate, the
court has jurisdiction, at the request of either party, to divide the separate property
interests of the parties in real and personal property, wherever situated and whenever
acquired, held by the parties as joint tenants or tenants in common. The property shall be
divided together with, and in accordance with the same procedure for and limitations on,
division of community estate.”
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To establish a waiver of the right of reimbursement, Wife must demonstrate that
Husband actually intended to relinquish his right to reimbursement or acted “ ‘so
inconsistent with the intent to enforce th[e] right in question as to induce a reasonable
belief that it has been relinquished.’ ” (Perkal, supra, 203 Cal.App.3d at p. 1203.) Wife
attempts to meet her burden of showing waiver by relying on the language in the deed in
which Husband grants to both spouses as grantees “the reversions, remainders, rents,
issues, and profits thereof and all of the estate, right, title, and interest of [Husband], both
at law and in equity, therein and thereto.” However, Wife’s argument ignores the fact
that we do not read the language of the deed in isolation. As we have concluded, despite
the general language in the deed Husband transmuted his separate property directly to
community property. We therefore necessarily reject Wife’s claim of waiver as “simply
too strained an argument to accept” (id. at p. 1203), especially in the absence of any clear
statement in the deed or other documentary proof that the parties agreed Husband’s
separate property contribution was either a gift to the community (id. at p. 1204) or a
conveyance of separate property to Wife. (See Weaver, supra, 127 Cal.App.4th at p. 870
[court follows “the current trend in construing section 2640 broadly to allow
reimbursement for real property contributions, unless there is a written statement, apart
from a joint tenancy deed, which specifically waives the right to reimbursement”]; In re
Marriage of Kahan (1985) 174 Cal.App.3d 63, 71-72 (Kahan) [court held joint tenancy
deed itself was not sufficient as a written waiver of a right to reimbursement for spouse’s
separate property contribution to acquisition of community property].)
Lastly, we see no merit to Wife’s assertion that there is no basis in law or fact to
allow a spouse to recover the equity value of separate property after transmutation by
joint ownership deed to the other spouse. She correctly concedes the courts have
consistently held to the contrary by allowing this type of reimbursement on the
dissolution of the parties’ marriage. (See, e.g., In re Marriage of Rico (1992) 10
Cal.App.4th 706, 710; In re Marriage of Witt (1987) 197 Cal.App.3d 103, 108-109;
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Kahan, supra, 174 Cal.App.3d at p. 72; Neal, supra, 153 Cal.App.3d at p. 124 & fn.11.)
Contrary to the Wife’s contentions, we see nothing unfair about allowing Husband
reimbursement for the equity value of Sandy Surf on the date of transmutation. During
the marriage Wife could use and enjoy Sandy Surf without providing any separate
financial contribution to the original purchase price of the property. Husband’s
reimbursement for the equity value of Sandy Surf “is supported by important policy
considerations.” (In re Marriage of Walrath (1998) 17 Cal.4th 907, 919 (Walrath).) It
“encourages married persons to freely and without reservation contribute their separate
property assets to benefit the community, and alleviates the need for spouses to negotiate
with each other during marriage regarding continuing reimbursement rights. Under this
interpretation, section 2640 protects the general expectations of most people in marriage,
i.e., that spouses will be reimbursed for significant [financial] contributions to the
community should the community dissolve.” (Walrath, supra, at p. 919.)5
In sum, we conclude the trial court properly ruled that during the marriage
Husband transmuted Sandy Surf from his separate property to community property, and
on the dissolution of the marriage he was entitled to and had not waived reimbursement
for the equity value of Sandy Surf on the date of the transmutation.
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In light of our determination, we do not need to address Wife’s other contentions.
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DISPOSITION
The judgment is affirmed. Respondent Charles Thieriot is awarded costs on
appeal.
_________________________
Jenkins, J.
We concur:
_________________________
Pollak, Acting P. J.
_________________________
Siggins, J.
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